Pacun

I sent form 23 to the IRS with the $30 fee to enroll as EA. Within a couple of weeks, I got my certificate and my enrolled agent number. The number assigned is something like 00100XXX-EA. I thought my EA number was going to replace my PTIN but I think I was wrong. I was also looking where in ATX I was going to enter my EA number and I didn't find a place for it. Do you know where I can use that number and designation when I prepare returns for my clients?

No. It it not a phantom income. It is income for services/rental. This is other income to the home owner because he must provide a service/rental(whatever you want to call it) in order to qualify for the discount. "Do you have a cite of this" Why don't you look for a cite and share with us that this IS NOT income because the homeowner or his property will not perform a service in order to get the discount? For those who prepare cab drivers returns.... next time ask the cab driver if he has a marlboro sign over his head while working and ask him how much they pay him/her and report it as other income.

your client needs to report the discount as income, deduct the discount as advertising expense and issue a 1099misc to the owner as other income.

two schedules SE.

Marco, Put your explorer's hat on and add Polo to your name and let's explore. I would suggest: 1.- Buy the new computer with windows 7 Professional and 64 bit and a lot of memory. 4G should be the bare minimum but 8G should be enough if you have less than 1K clients. 2.- Copy the database folder from each ATX year you will install on the new computer (it might be a good idea to back up and over write the backup folder too for each year). I would install ONLY 2008, 2009, 2010 on the new computer (After all, you will keep the old computer handy should you need very old ATX years. 3.- Install ATX 2008, over write the database folder and test. Every thing should be there including company and preparers’ info. Testing should include: opening a client, printing forms and making a copy of the client. Then, closing the client, opening the copy and change form 1040 to 1040A and print. Create a new client, print and prepare an efile for this client. If everything works… 4.- Install ATX 2009, over write the database folder, roll over the “copy” client, open it, and do all the test you did for 2008. If everything works…. 5.- Install ATX 2010, over write the database folder and roll over a client (even if rolled over during regular tax season). Do all the tests above and if everything works, share your experience with us.

Thank you for your replies. I will ask the client to pay the $60 for the tax court and once docketed, I will check with the IRS.

I bet you Mexico has something like "income directly associated with Mexico" in their tax laws. Most likely, the trust will pay taxes in Mexico and get a credit on taxes paid to a foreign country on the US form. I am just trying to motivate others to post their answers, anyways.

You could start by reading the tax treaty between the US and Mexico.

Correct... in addition, both have to report their global income and they both have to sign a statement electing to be treated as resident and you have to file 1040.

My friend has a beaty salon and he has 5 hair stylists. He makes a schedule and gives each two days off at least every week. If a customer asks for a particular stylist, that stylist takes care of that customer. If not, the customer is assigned to the "next" stylist or whoever is available. Stylists must follow his schedule and must be there the whole day while the business is open. All of the stylists have their own licenses and tools but the salon provides the chair and mirors, etc. What is charged to the customer is divided 60%/40% with the bigger portion going to the stylist who is paid weekly. As part of "employment", stylists should promote and sell products available at the salon but sales are scarce. Are these stylist employees or contractors?

http://www.flixxy.com/laptop-fan-repair.htm This might help you make up your mind.

Who owns the other 50% of the S corp? If your client owns more than 50% of the S corporation after you consider his relatives, you might not have a choice and you will have to provide the documentation. Checking with his attorney is the best way to go.

You are right. I forgot that one. I always check line 10 on W-2s because once I forgot one.

Answer. I Agree with Jack... in addition: No extra information is needed... title is sufficient. Both Parents need to work AND make some income or go to school. The preparer ALSO needs to check "spouse W-2" in ATX. Children/dependents need to be under 13 years old or permanently disabled. Preparer needs to check "qualified person", qualified amount paid and SS#, ITIN, or FEIN for the care provided.

Think about the logic... if you carry it back 5 years and amend 2006, you will not get a refund because it is two late to claim a refund for 2006 and 2007.

IRS sent 2 letters to client and they were opened when they came to do their 2010 taxes. IRS was asking for documentation on "COGS" (materials) and "Car and Truck Expenses" (mileage). Since IRS got no reply in time, they sent letter of deficiency asking for 45K for 2008 (which I didn't prepare) and 20K for 2009 (which I prepared). Client has until August 11, 2011 to petition the tax court. Since this seems to be an easy case, I asked client to petition the court by himself and maybe the IRS will give him a chance to show the receipts to back up his Schedule C expenses. Do you think the IRS will give him a chance to show his receipts before the court date and if agreedable, the case can be closed without going to court? I told him that he might need a lawyer to represent him if the case goes to court since my EA certification wouldn't cut it even if I get it in time. Does any one have a good explanation for these two entries? 5. Explain why you disagree with the IRS determination in this case (please list each point separately): 6. State the facts upon which you rely (please list each point separately):

ITIN numbers used to be 9XX-7X-XXXX or 9XX-8X-XXXX. The IRS ran out of number and now is using 9XX-9X-XXXX and the software is not updated yet. I called ATX and they say that they are waiting for the IRS to change the ITIN instructions and then they will be clear to update the software. In meantime, you cannot efile with the new ITINs because the software will give you and error "invalid ITIN number".

Only on the earnings for Federal. On everything (maybe) on the state.

It is my understanding that it is illegal to understate expenses in order to qualify for a bigger EIC. It is illegal to understate expenses if you are going to get another TAX benefit or a benefit from the social security administration. It is also illegal to understate expenses (contractor) in order to have your insurance premium lower. Can anyone else think of anything thing else where understating expense is not permitted or (as Jainen would say) give me quotes from the code when understating expenses is illegal? Remember that a lot of times, people say... I paid $700 cash to this contractor but I didn't issue him a 1099-misc, what do you do? Do you add that expense without substantiation or just leave it out since there is no 1099, receipt or cancelled check? In a sense that will constitute understating expenses, correct? On the other hand, entering expenses without substatiation is another violation of the code, correct?

Why are you basing your reasoning on Social Security Fraud? So, it will be OK for someone with ITIN to do it since a person with ITIN will never collect social security benefits.

Last time, I had a client who qualified for EIC and was getting a refund. Let's say of about 5K. He wanted to qualify for a $200K house and the loan officer told him that he needed to make about 65K. He wanted me to add about 40K in self employment income. I told him that that was illegal and that I would not do it. I went on and explained that the net result of another 40K on his income was about $20K in taxes. Instead of lying in his taxes and paying $20K to the IRS, I suggested to take those $20K to the loan officer as down payment. I ended up the conversation abruptly and asked him if he wanted to do the taxes correctly, I was willing and able to.

To give you an example of the questions answered every week, here is the latest one: "Question: In 2010, Ralph and Lynn installed new energy-efficient windows in their principal residence. They received a credit of $600 for the new windows on their 2010 tax return. In March 2011, the couple purchased a new energy-efficient furnace for the same home. Can they take a credit for this purchase in 2011? Answer: No. Under §25C, taxpayers that make investments in residential energy property are allowed up to $500 in tax credit for making the improvements on their principal residence in 2011. The credit has both a lifetime limit and a limit based on the type of property expenditure. The lifetime limit under §25C(B )(1) states the taxpayer cannot exceed $500 over the amount of the credit taken in any prior year ending after December 31, 2005. In this case, Ralph and Lynn have taken $600 in credits in the prior years, and thus they are not allowed a credit in 2011. Even if they would not have taken the credit in the prior years, the maximum amount of credit that would have been available for the furnace would have been $150 under §25C(B )(3)(B )." I guess we should ask for copies of their taxes for 2005, 2006, 2007, 2008, 2009 and 2010 if they are in this situation unless they didn't have a house on those years or are your clients since 2005.

I have been a member for the last 5 years or so. I get my folders with their logo as a member. They send tax information every other week on emails and a booklet. There is always a question (most of the time it's a tricky and important question) and answer. Every year, you can ask a question for free and they have good people working for them and answering that one question. It's $150-$200 yearly fee is well spent.

This is a quote that I liked from another post... "Just like your "personal banker", it's someone who runs interference for management, slows down the process while giving the appearance of being responsive, and forces customers to seek out their own answers rather than bother the Customer Service department with these pesky questions. After all, most Customer Service departments don't have time to waste on the non-productive tasks of actually assisting customers or answering questions - they're too busy upselling." During Tax season, my partner, who doesn't know anything about taxes, answers the phone. At that time, I am "the personal banker". I am not available to most of my clients unless they are new and have a question. I wonder how my existing clients feel about that. What are you doing to avoid lossing your existing clients and improve your customer service?

Whatever works the best for you, it is the best way of doing it. My way works best for me and that's how I use it. Most of the time, the erroneus return is easy to recreate AND don't make start with the state (for example, MD, which uses its own "1040X"), which will make my approach look better that yours.