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Joan might be correct. Is there a box to check to force itemizing for the federal to allow the Sch A input for the state? I have to do that with Delaware because it also allows the Fed to use the standard and itemized for state. In those cases, I e-file the federal in one transmission with the higher standard deduction, and then I go back and check the box to force itemizing to allow the Sch A to be included and then I transmit the state in a second e-file. The IRS doesn't care because it's already processed the 1040. If I don't do it this way, the Sch A isn't sent with the state return and the processing is held up while the state sends the client a letter requesting that the schedule be mailed or faxed in.

John, I read that too. To be clear, if the Fed uses the standard, aren't NC residents allowed to itemize for state purposes within those stated limits?. It sounds like what Terry is asking is why he isn't allowed to itemize on NC unless sch A is present on the Fed return also, because he said his input was greyed out. That's what I thought was weird and why I asked about the filing status, wondering if it was an MFS status causing his problem.

I'm thinking a lot of that should be a capital loss. See what you think after reading pub 535, page 3, middle column at the bottom under the heading "going into business", if you don't go into business and the expenses were incurred for a specific business or project. About the legal fees, were those to handle the purchase of the business and all that involves, or was part of that to try to recoup his deposit? The part of the legal fees that were for the investigation and purchase of the specific business, I'd consider part of the capital loss. If part of those legal fees were incurred in an attempt to recoup the deposit, I'd be inclined to separate that out and put that portion on Sch A as a miscellaneous itemized deduction as legal fees that are paid for the production or collection of income, or preservation of assets. Those are my thoughts right now on how I would consider this without research. Maybe some of our other members with more experience with purchasing businesses will chime in if I'm off the mark on this.

Weird, that's not really the way the instructions read though. Is it the filing status causing a problem?

The taxpayer can go online to the IRS site to get a variety of transcripts online without you having reconstruct the return. That is available for the current processing year and the 3 prior processing years. The FAQs says it takes about 3 weeks for the transcript in electronic format, so using this would depend on how big a hurry someone is in. It's definitely not an optimal solution, but might be a consideration for a return of a more complex nature. get transcript transcript type and method of delivery get transcript FAQs

JB, you and anyone else should never feel that way. I know I've made my fair share of mistakes on here, and research materials and internet searches have save my butt at times too. Everyone brings something of value to the site, and I can say unequivocally that I'd be begging for reassurance if I had to do some of the EIC returns that are presented that others here answer with ease. The same goes for obscure farm issues.

I agree with you. If the taxpayer can not check the box on line 61 of the 1040 and does not meet any of the exemptions, then the worksheets in the instructions are used to calculate the shared responsibility payment to be included on the return. The form 8965 is not filed with the return. The worksheets are not filed either but should be retained to document the calculations. I read your post from the other day on this subject, and at first it seemed to me that you were confusing the worksheet with the form. For what it's worth, the worksheets are never e-filed with the returns unless the IRS specifically requires it.

Is there also unemployment income shown on the 1099G or only the repayment? How much is the repayment?

Drake has general worksheets for the health care input and basic worksheets for the 8962 and 8965, but nothing that comes close to the calculations for this situation, at least not that I've found. As I said, I did all those calcs by hand on paper, and did make an error in looking up the one limitation. I didn't have the benefit of inputting the numbers into a return to see how the figures would change, so I was working only in theory. Tom's client had the added complication of having a social security limitation in the mix as well. One thing that I spotted was that Tom's client had only exceed the 400% of FPL limitation by a small amount, relatively speaking. When that limit is exceeded, any chance of the subsidy is lost and would result in a repayment. That is when it can be extremely beneficial to consider the contribution to the retirement account or HSA that can be made up until April 15th that may remedy some of the situations where the client has the shared responsibility penalty. If you don't have it, here's a link to Rev Proc 2014-41 with the 2 methods. The method #2 (the alternative method) has some examples to try to clarify the calculations.

There is no way to code the 1099G worksheet if the only amount shown is a repayment. If it is for a prior year and is less than $3000, you would have to enter it directly on line 23 of sch A, and if client can't otherwise itemize then there is no tax benefit derived from the repayment. Repayment of unemployment compensation. If you repaid in 2014 unemployment compensation you received in 2014, subtract the amount you repaid from the total amount you received and enter the difference on line 19 of Form 1040, line 13 of Form 1040A, or line 3 of Form 1040EZ. On the dotted line next to your entry enter “Repaid” and the amount you repaid. If you repaid unemployment compensation in 2014 that you included in income in an earlier year, you can deduct the amount repaid on Schedule A (Form 1040), line 23, if you itemize deductions. If the amount is more than $3,000, see Repayments , earlier. If over $3,000 and for a prior year, see pub 17 for general handling and possibly taking a credit against tax under a claim of right.

With all the new information, I agree that this is clearly a case for your client taking the deduction.

The message below was an email I received from my software vendor this morning. I can't say I'm surprised. IRS Processing Delays The IRS is having issues processing returns timely, causing longer than normal turnaround times. It is uncertain when they will catch up and return to normal processing. Rest assured, we will post Acks as soon as we receive them.

Client can't deduct the mortgage interest because client has no ownership interest in the property. Mother can't claim the deduction because she didn't make the payments.

That's great, Tom, and I'm glad to have helped both you and your client. That is a big savings to not have to pay with the added bonus of saving for retirement too.

So I'm really curious about how ATX handled this. In calculating MAGI for purposes of the PTC reconciliation, isn't the program adding back the difference between lines 20a and 20b no matter what year it is for? That is what should happen according to §36B(d)(2)(B ). I couldn't find anywhere that said SSA payments of prior years received in the current year as a lump sum can be excluded.

Have you considered updating to the current version? Keeping older versions like that presents a security risk.

Go to MyATX, about 1/2 way down the list at left, click on ATX forms schedule. The page that is displayed shows that the planner is scheduled for release on 2/6.

What was the income the wife received? Was it SSA, SSI, or SSDI? It makes a difference in calculating household income depending on which it was.

8962, part 2, you are only filling in boxes for May to Dec, right? What is in col E. I think it should be ~ $13/month, and it appears that he was receiving about $200 too much each month from May - Dec. If that is the case, yes I'd agree that the repayment of the APTC is $600 in this case because it is capped at that. It appears that his household income just squeaks by at being less than the 200% of FPL. One percent more and he would have had a repayment of $1500, not $600.

Errrg! Tom, you are correct. In my haste I looked at the wrong column. The max payback is the $1250, and that makes the max sec 162 deduction under the alternative formula #2 to be $1595...if *I'm * on the right track with this mess. That will also raise his MAGI and AGI, so if trying to use the retirement contribution or HSA to get him below the 400% of FPL it will need a larger investment of funds.

Ok, trying to make sense of the 2nd optional calc in 2014-41, the max sec 162 deduction would be $2,845. That is made up of the net out of pocket prem of $345 (after the advanced credit he received ) plus $2500, his max amount of the repayment. That much seems clear (ha!), and kind of makes sense that if he has to repay some of that credit, then he should be given the opportunity to use that as part of the sec 162 limitation. So, going with that assumption... I think his MAGI and AGI would be : SE income 31666 SEHI (2845) SE tax (2036) subtotal 26785 SS inc @ gross 19746 MAGI = 46531 exceeds 400% FPL and would eliminate him ever having qualified for the PTC Actual - SE inc 31666 SS taxable 6759 162 SEHI (2845) 1/2 SE tax (2036) AGI 33544 I think.... I did this on scrap paper by hand including the taxable portion of SS, all late night. Don't hold me to it and please recheck. It does appear though that this person would benefit by making a contribution to an IRA or HSA, at least enough to have the MAGI to not exceed the 400% FPL and possibly limit that payback. I didn't go any further to calculate the actual premium tax credit to see if this all proves out either. I also started with the optional calculation since you said trying to use the iterative calculation wasn't working out, and I wasn't using a spreadsheet or program to easily plug in the continual changing of numbers to see if the differences were truly within $1.

Is this person single with 1 exemption, and were his total premiums before the advanced credit the $6179?

Tom, if you are using 2014-41 and the first method, the "iterative calculation", step 6 says that if repeat step 5 results in a difference in the SEHI and PTC of less than $1, then use the 162 deduction and the PTC with those specified premiums, but if the difference is more than $1, then basically it means that you have to keep playing with the amounts until you get the difference down to that $1 (basically fooling with the numbers until it works out). That is a maddening situation. If you can't get it to work, you are supposed to then use the second calculation in 2014-41. Let me ask you this - does he have a retirement plan established for the business that he could contribute toward to alleviate this problem, or fund an IRA? If he had a high deductible plan, he's still under the 65 age limit and could also still open and contribute to an HSA for 2014 up until 4/15 of this year. Any of those can be used to reduce AGI for a taxpayer that exceeds the MAGI and is in a situation where they might have to repay the advanced premium credit and haven't greatly exceeded the 400% of FPL amount that applies to them. Also, without repaying that advanced credit, if the return would otherwise show a refund, the refund could be used to help fund those contributions.

We are ALL still finding and learning intracasies of the ACA as we go along, and we are just now working with the forms and the worksheets to put it all together. No one here knows it ALL, not even you, Jack, and we all make mistakes from time to time too, so I'll ask you again to please stop with these type of comments. If you don't like my statement or think it doesn't apply to you, I'll gladly recall and review our "discussion" from last month about sec 5000A where you demanded that I find the definition of MAGI as it relates to the shared responsibility payment, which I did do by the way, or more recently where you and I were both wrong about the short coverage gap being "less than 3 months" and not "3 months or less" where you asked Pacun for a cite to prove that to you. No one posting here should be embarrassed, demeaned, or belittled for asking a question or making an incorrect assumption or statement.

I agree with Tom, or I might not even take the mileage. I've run into campsite park "attendants" that were doing this in the summer months. The last was a retired couple that did this as their vacation during the months of nicer weather when this little park was open. They'd drive their RV to the campground, park it there for free in exchange for acting as the attendant for park that didn't otherwise have staff and needed someone onsite to answer questions and collect the fees.