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For the year the employee turns 21, you use the entire plan year's compensation, not just the portion after attaining age 21. One of the requirements for SEP plans is that the employee must have at least $650 in compensation in 2021 ($600 in 2019 and 2020) BUT PLANS MAY BE WRITTEN WITH LESS RESTRICTIVE REQUIREMENTS, and that sounds like that is the case of your client's plan. Be sure to recheck the plan documents for this though. If the plan is less restrictive by not having a minimum compensation requirement, then this employee would be a participant for 2021.

Does it also appear on the screen as black? Have you tried printing to your pdf printer first, or straight to your hard copy printer?

Agree with Dan, except that Pacun said that the taxpayer is a general partner. Pacun, keep in mind that the guaranteed payment of the majority partner is an expense against income to arrive at ordinary trade or business income, so it could be that the other partner paid enough in the 2020 year to create the loss you are reporting. It is possible that in a future year this partner may not draw out enough as guaranteed payments so that the restaurant shows some trade/business income, and your client's share of that will be on the K-1 and would be available to offset the loss that is being carried forward from 2020.

First, he has to have basis and have at-risk, which you say he has. I have no idea how to remove that check mark in ATX, so someone else will have to answer that. What type of business is it? Is it trade or business loss, or does it have something to do with rental real estate? His lack of participation or no other passive income is why the loss isn't currently deductible. PALs can only offset other passive income. If he doesn't have passive income and this is rental real estate, then the only way the loss would be allowed is if he has active participation, or material participation as a real estate professional) in this activity and under $100K of modified AGI, and that is phased out once the MAGI reaches $150K.

Yes, I'm usually done by now and I have a few clients that haven't brought in the raw data, are very slow to respond to questions or supply missing information, or are not interested in filing until closer to the May 17th deadline. I can't convince a couple that the returns can be e-filed now and pay the balance owed within the next month, so I haven't received the signed authorization forms back yet. It's annoying.

Pub 590 has a complete chapter on Roth IRAs, and you will use form 8606. I'd suggest you review both the pub and the form's instructions.

I am curious if this was a blunder to cash out wife's half in settlement of their assets due to divorce that could have been easily handled with a QDRO that would have avoided this headache and saved tax dollars too!

How about reporting wife's share of gain as a negative adjustment on Form 8949 with code N. This is from the 8949 instructions for code N: If you don't like that code, there's code "O" for any adjustments that don't fit any other codes listed, and you provide an explanation. Are you preparing the wife's return too?

Ed, clicking on the pdf within the post doesn't access your computer. You actually uploaded a copy of the pdf to the forum, so the pdf that people are accessing is stored there in your profile as an attachment. You are always able to delete the file from your list of attachments, but you can't alter the post. If you delete from your attachments it will just be shown in the post as a document that is no longer available.

We may know more about our clients than any other professional they interact with except maybe the hairdressers. The doctors, lawyers, and brokers know some pieces of the clients' puzzles, but we know just about all of it and then some - finances, employment problems, medical issues, education, debt troubles, relationship status and drama, all about their kids, vacations, family drama, you name it. Many subjects stem from the range of items that we deal with on the tax returns, and then they feel comfortable sharing all sorts of information! I guess they feel I'm a good listener and am nonjudgmental, and my home office may also allow them to relax and feel more comfortable compared to a more formal office setting. Some of my clients came from the firm I worked for and I've known them for over 40 years, so it's not hard to know a lot about their lives when the relationship spans many years. It's sad too, to see how some have declined in their old age or have died.

Yes, the software should attach the required copy if you are e-filing the returns. DE allows a part-year resident to choose to file either as PY or as full year resident return, so if you are choosing to file as full year resident, make sure to claim a credit for any tax paid to other states that is also being taxed in DE. Also, if you do claim other states' taxes as a credit, then don't take those as a deduction on the DE Sch A.

I have only 4 or 5 that I've never met, all referrals from existing clients. I have met in person with only five clients this year; the rest have dropped off or sent documents electronically. I've waved or talked briefly with a few from a distance when they showed up in my driveway though. Of course I did see a few last year before the shut down but none after mid-March, so I really haven't seen most of mine in two years.

You don't prorate the DE Sch A deductions, the form will do that for you. The Federal AGI and full DE schedule A from pg 2 of the DE return come over to page one and the tax is calculated on that, and then the tax is prorated for the % of DE income compared to the Federal. That is how the state gets someone into the higher brackets.

To be clear, I wasn't suggesting that as a course of action and was providing anecdotal story of how little is done here to close out. Obviously everyone should follow the laws of the state(s) in which the entity is formed +/or operates.

You know, this is somewhat similar to the other topic we currently have about the NC couple that's always filed MFJ and are in common-law marriage that is not recognized in the state. I bet that if the parents of your deceased client walked into a chain tax prep outfit or preparer that didn't know the family, that this young man's final 1040 would be filed with the full W-2 and claim the mortgage interest too. It wouldn't be correct, but it would never be questioned either. I'm not suggesting anything, just a statement on how much that is wrong escapes scrutiny by preparers and the IRS.

I don't know offhand, and this is why it would be important to have that W-2 corrected. If I had to guess, I'd say that it would be net of the IRD because that is the correct amount that should have been reported on the W-2. If you go the route of filing with the W-2 as is, are you going to also include form 4852, and do you have the last pay stub as proof that the last pay and vacation time was paid after the DOD?

Same as Lee. I've maybe seen one 966 in my entire career. Most lawyers around here advise to not even notify the Sec of State but to just not pay the franchise tax and the corp will go into inactive/certificate not in good standing, and after 3 years of that status it drops off the state's record.

Yes, if he meets all the requirements of claiming the EITC, the fact that he didn't live a full year doesn't matter. IRC sec 32(e) addresses this:

Did the client receive a NJK-1 from the partnership? If not, if you complete the Partner's Reconciling Worksheet A? NJ doesn't split the different types of partnership into its various components like the Federal return does. If you look at the reconciling worksheet, you'll see that basically all the items on the K-1 are kept in the category of partnership income or loss, so it would be wrong for you to enter that loss directly on D/8949. This pdf is from the NJ Dept of Revenue's site that should explain this more fully: git9p.pdf

Yes, it is, and the client does need to file the 709 for that gift.

Has anyone looked at the Bitcoin investment that Paypal has. I have one client that says he bought some in Jan of this year, and the Paypal site says it does provide basis information. Whatever investment this is, it isn't like owning Bitcoin directly, and it can't be used to directly pay for anything. To me it sounded more like a mutual fund.

IRS made it official in IR-2021-84. Got this in an email today:

Thank you, all. I knew it was simple, and my quandry started with getting the asset off the depreciation schedule without it being only out of service. A former member from here gave me that easy solution over on the Drake forum. Everything has been harder where simple tasks are mountains to climb, but I'm trying to get through it. I'm going back to printing and stapling because I can't make too much of a mess of that.

It's my turn for the mental meltdown and brain fog. Partnership non-liquidating distribution to one partner of a depreciable asset that should not result in a taxable transaction. Partner has enough basis that this will not create a gain for him. Also, asset was purchased by the partnership, not contributed by any partner. No debt against it. FMV $10K, NBV $2K. Aside from how to make my software remove the asset without it flowing to 4797, do I have a distribution of the $10K FMV and an $8K gain not recognized entered as an M-1 entry? Is that where this goes? Sorry, I know this is a totally simple question. Told you, total brain fog and a weird headache too. I've been like this since yesterday as a reaction to the covid vaccine. It was so bad yesterday that I just moved all the remaining simple returns up in the queue and did nothing but print and assemble. I figured I couldn't wreck anything too bad doing only that!

I'm following Abby's method. Some that were in the phaseout range called during 2020 when they received the reduced payment, so that information was saved in their file at that time.