Pacun

The loan is not secured by the 401(k) otherwise it will be prohibited transaction. The loan comes out of the 401(k) and it is autolent to the owner of the 401(k). This is the idea. On his left pocket he has the 401(k). On the other pocket, he has the rental property. His right pocket pays interest to his left pocket. Got the idea? Ignore completely that a loan was made because it is a non-taxable and allowable transaction permited by the IRS and some 401(k) plans. Employers have the choice to get a 401(k) plan that will allow loans or not. My 401(k) plans allows me to auto borrow 50% of my vested amount to a maximum of $50K. So, if I have $80K on my 401(k), I make a request on line and I am guaranted a loan for 40K with very low interest from my own money. My 401(k) investements will be reduced to 40K. As I pay my loan and interest back, my 401(k) grows from 40K. At the end, I will pay myself (maybe) 2K in interest which is placed in my 401(k) plan. No taxable event occurs, unless I default on my loan. Payments for my loan are automatically taken from my paycheck each pay period. The loan is not conditioned to anything, so I can spend it whichever way I want. I don't have to give any explanation as to why I need the money.

The clock starts when you got your first HOPE credit or your first year at a University, whichever happens last. By the way, the answer I posted came from a professional organization which have research questions as a benefit to the members.

You are absolutely correct. Except that this one was already rejected precesily because of a problem with the credit. Efile matches the credit and then rejects. If he sends it by paper, client will get a letter and there is no need for that.

Don't paper file. Go to the form and indicate that taxpayer got $250 advance Make work credit and you should be fine. Everybody who was collecting SS benefits in Nov 2009 got the $250 in 2010.

Same here. It seems there is a queue at ATX and another at IRS. I have some with a message that reads "Transmitted to EFC" and "Transmitted to Agency". I think the IRS is not allowing Software developers to send more returns.

Client is coming tomorrow and said that she bought a new personal car on Jan 4, 2010. She paid the taxes on Jan 04, 2010 also. I believe you have to buy the car in 2009 and pay taxes in 2010 in order to get a little break in 2010, correct?

Thank you for figuring this out for all of us. This forum is lovely... which reminds me that I should make a donation now that I am making some money. At least I will feel good because I will help pay the electricity and internet access bill for this forum.

If you only had shared this info yesterday. I would have efiled for this client. I never saw the letter so I didn't know what it says.

I got a client today and he said that the IRS instructed him to paper file and include a copy of the letter with the return. The IRS told him not to show the letter to anyone. I agree with the IRS and the client that the letter should not be shown to anyone. I prepared the return, attached form 8948 and gave him the envelop.

Good point. Last time, I was lecturing a client, explaining that he should not have taken a distribution and the client said... "I didn't receive the check". I asked him to call the issuer of the 1099-R and I continued preparing the return. When entering the info, I realized it was code G.

Did you disposed the asset? Maybe you can try to lower the business use to 1% and see if that triggers recapture.

OK. That brings me back to my original questions. Grandmother made $40K. Daughter made $12K and was 19 years old on 11-25-10 and NOT a full time students. Daughter of daughter lived with them all year and was supported by grandmother more than 50%. Can mother get EIC by filing single and claiming child? Can Grandmother file as HH without claiming granddaughter? Will mother of the child win the tie breaker against grandmother? Is everyone in agreement with David1980?

How about this. Since granmother paid more than 50% of little girl. She is the ONLY one entitled to the exemption. If she doesnt' claim the exemption, NO ONE can take it. Is that correct? If that's the case, can mother get EIC without claiming the exemption? At this point, grandmother will be able to get exemption, file as HH and get $1000 child tax credit. Correct?

This is the answer I got: "In response to your question, this information is provided: Unless the employer has a section 127 plan in place, it is likely taxable – see below for details. If an employer reports income to an employee for employer-paid education, it usually is on the w-2. I assume that he put it on a 1099 because it was for a dependent. I assume that you have to put it on line 21, as this is not business income for schedule C."

You can paper file by attaching form 8948 with 1040 and keeping one for your records. If efile is rejected with an error code, you mention that error code in form 8948.

I agree. In Virginia, you can get married within minutes even if you don't live in the state. There are requirments though!!!!! For men, they have to meet 3 requirements: 1.- $20 (twenty dollar) fee 2.- a woman of legal age 3.- willingness to be married When a client comes to me and they ask me about my oponion about filing jointly I ask: Do you have $20 dollars? is you girlfriend of legal age? ALL THE TIME they say yes. All you need is number 3 and if they meet that requirement, I suggest you to go drive 10 minutes and get married and then you are ready for next year. If they bring me a marriage certificate before April 15th, and they have lived together the last year and they want to file jointly, I do it. Be carefull taxpreparers when you file jointly if they are not married. Keep in mind that by doing that, (it is possible) you became a judge and married those persons and that will have lasting effects.

TPs have a child in high school. He is 14 and their dependent. Diocesis and school provided 8K in scholarship to the student and father's employer provided another 8K for the student. School costs 16K a year and student lives with parents and go to schools every morning and comes back in the afternoon. No room or board involved (emphasis added). Father got a W-2 form for 51K and a 1099-misc with 8K on box 7 misc income. Where do I report this so that the IRS 1099-misc matching is satisfied? To me, this is not taxable scholarship but I have to deal with the 1099-misc and the easiest way is file Sch C with 0 expenses. If you see it from another angle, in order to get paid 8K from this employer you have to spend as much in tuition for you or your children. Thanks for your answers.

I agree. How about the other questions?

Common law marriages are not considered marriages for income tax purposes. Domestic partners cannot file MFJ either, correct?

I asked: New client came to me yesterday. He got his his bachelors degree this year and will start his masters this year. 2005 claimed the Hope credit 2006 claimed the hope credit 2007 claimed the Life Learning credit 2009 Claimed life learning credit by mistake, since he qualify for the American Opportunity credit. Can I amend 2009 and claim the American Opportunity Credit? Can I claim the American Opportunity for 2010? If I don't amend 2009, can I claime the AOC for 2010 and 2011? In response to your question, this information is provided: The expanded Hope credit, called the American Opportunity credit, can only be used for the first four years of undergrad. It was expanded to four years, from two, initially for 2009 and 2010. Then this fall, it was extended for 2011 and 2012 in the most recent tax bill. You did not mention 2008 in your question, but he only could take the Hope credit for two years, 2005 and 2006. Then he had to switch to the Life Time Learning for 2007, which he did. If 2009 was his fourth year, he could have used the American Opportunity credit if that gave him more money. It probably would make sense to amend. After his fourth year, whether that was 2008 or 2009, the Life Time learning is his only credit. However, don’t forget the tuition deduction provision, which also was extended in the new bill. That can be used for graduate school and is extended through 2011.

I like your title and to the best of our knowledges, it is true.

I read that when there is identy theft, the IRS will provide a pin to the victim. The victim will file taxes using that pin on the return and the IRS will process that return without taking into consideration other returns or W-2s. My guess is that you will overwrite the "making work pay credit" line.

Grandmother made $40K. Daughter made $12K and was 19 years old on 11-25-10 and NOT a full time students. Daughter of daughter lived with them all year and was supported by grandmother more than 50%. Can mother get EIC by filing single and claiming child? Can Grandmother file as HH without claiming granddaughter? Will mother of the child win the tie breaker against grandmother? I am pretty sure I have the right answers but I want to check with the group and also share this info.

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