Pacun

Common law marriage is accepted in DC. If you want a divorce, the first thing they ask you is your marriage certicate, though. In your case, let's say that the wife becomes disabled and the husband dies, do you think the Social Security Administration will give the wife any benefits because her common-law husband died? As you said before, she didn't work, so she would not qualify for SS benefits on her own. I used to work for a lawyer and she said that for a common law marriage to be valid, they have to bring it in front of a judge and the judge will determine if you are common-law married. She said: Let's say, for example, that a disabled person lived with someone for a long time as husband and wife. Then the abled person dies and there is an inheritance to be shared with other beneficiaries. The disabled wife would have to go in front of a judge to validate their marriage. She went on to say, of course the judge most likely will certify the marriage since no one wants to leave a disabled person with nothing. In the case of two people with equal opportunities, the judge might not even hear the case. I had a case today where the boyfriend supports 100% his girlfriend (who didn't have any income) and she lived with him the whole 2009, I told him to claim her as a dependent. Why will I suggest MFJ? (I know... because the tax rate will be lower and the standard deduction will be doubled). Let's say that the wife says, since I didn't work, I do not want to file any taxes, nor do I want to be responsible for his taxes. What will you do, file him as MFS?

This reminds me that I have to make a donation to this forum so that the electrical bill can be paid. I really appreciate this forum. I think Jainen and a couple of others should be exempted from donating since they give excellent answers, but if they insist, their donation will be welcomed. Disclaimer: I am not part the of the team that run this forum, but I appreciate their effort in maintaining a place for us to hang and help each other.

Three LLC member-managers own collectively one residential rental property (and this constitutes the entire ownership interest of the LLC) that has for the last two years produced passive activity losses. Only two of the members have reported these losses, the third awaiting hoped-for capital gain on the sale of the property (since he has no other passive activity income with which to match this). The sale of the property then generates a loss. May the non-basis member declare any losses, including those of the last two years? If no, how do the two basis-holding members report the losses now permanently disallowed by the third, if any?

Very good question and maybe I am doing it wrong too. Since the bank didn't know the taxable amount when they issued the 1099-R, they didn't entered anything in box 2. Since I know that the whole thing is taxable, I enter it and no problem. Of course we all know that TP has to pay taxes and penalty if not over 59.5. So, I don't see any problems with my system.

For previous years, I charge 33% more than what I charge regularly.

I am not sure if $1,000 is actual amount paid or the amount paid in 2009 towards the loan. When you get a loan, you can deduct the full amount of the loan for classes in the year in question and the next 5 months of the following year. I believe I am correct.

You are right I messed up the dates. I thought Thomas was 18. I meant to say that Mark and Thomas were born in October 1991. I was on the telephone conference with the IRS and they said that the related taxpayer should make more money than ANY of the parents. Maybe more than both parents if parents are married. Now, mother is a citizen of mexico and crossed the border in 2008 and mother will apply for ITIN. Will that satisfy your head of house requirement? Will that change if she stayed in a nursing home in Mexico?

Jainen said: "An elderly parent in a nursing home in Florida with no Social Security or Medicaid is a common scenario for an illegal alien" Gues what, even is she entered the US crossing the border by foot in December 2008 and went to the nursing home at the end of december, the son can apply for an ITIN and claim her. But let's assume for the sake of the exercise that all persons involved here are U.S Citizens. "Let's see, Mark the son is 20 yet you believe his mother is "elderly"? That would make me at 65 super elderly! taxbilly" Why we are deviating from the original question. I don't see anywhere in the tax code to say that a mother cannot have a child if she is 80 years old or even 100. "His sister is 20 years older than him. Sounds like the taxpayer was an "oops". ;o) Having children 20 years apart will make you "elderly" in a hurry. Tom Lodi, CA" Again, why we are not addressing the questions? This is not a real situation, but Mark qualifies as head of household because he supported his mother 100% and she is in the US... AND he qualifies for EIC because he had a qualifying child living with him in 2009. He cannot claim the exemption for Thomas but he will be treated as his qualifying child because: Mark is 2 days older than Thomas (TP must be older than qualifying child) Mark had more income than one of the parents (Mother made only 0 and Mark made $14,000 plus $1,800. Thomas is not his dependent because Mark provided 0 for his support but Thomas is his qualifying child because he lived with him all year, Mark is older than Thomas and Thomas is a decendent of his sister. Based on what I have said, can we constructely discuss this situation? Thank you.

Tax payer had $200K savings at the beginning of 2009 and at the end of 2009, he had only $20K (this if for Jainen, mainly). No loans or gifts were involved in 2009 for any of the people mentioned here. No other source of income, only the W-2s mentioned. All the people I am going to mention here are single and lived in the same place the whole year. Tax payer (Mark) lived all 2009 with his sister (Rose), her boyfriend (Rob) and their son (Thomas). Tax payer (Mark) was born Oct 23, 1990 Sister (Rose) was born Jan 5, 1970. Boyfriend of sister (Rob) was born March 15, 1970 Rose's and Rob's son (Thomas) was born October 25, 1990. Rob supported 100% his girlfriend (Rose) and he also supported their child and his income from his only job was $150,000.00 (one hundred fifty thousand) Mark supported his mother 100% in 2009. She was in a nursing home in FL the whole year and Mark paid everything for the nursing home... everything. Mother had 0 savings at the beginning of the year and 0 savings at the end of the year. Again no gifts, loans, inheritance or found a bag full of money. Mother didn't have any social security or retirement income. Mark's W-2 shows that he made $14K and his money made $1,800.00 in interest. No other income. Rose and Thomas didn't work and didn't have any income, gifts, loans, or inheritances. Can Mark file as head of household and get earn income credit? Is he entitled to EIC under IRS laws? Can he enforce the law if the other members of the house where he lives don't want to cooperate?

The credit is $400 for each tax payer who is not a dependent. Forget about the W-2 and what happened at work with the withholding table.

I always appreciate Jainen comments. As I said before, I read every reply from him.

KEN, Based on what you said, I made an assumption AND based on what you said, Jainen made an assumption too. Please tell us who assumed the correct scenario. I assumed that if any of the adults were married, you would had mentioned it since you are not just a tax payer but a tax preparer. Am I correct in my assumption?

I assume you want to file his federal taxes. The answer is: if child is his son/daughter, he will file as Head of House and will claim child as his son or daughter and mother as dependent using other as the relationship.

At least you are not affraid to ask and I appreciate that because that gives us a chance to relearn and to remember every detail when we are talking to our customers. I bet you that there are many preparers reading this post with low level questions but they don't ask because they don't want to expose their level of knowledge. This is what I tell them... the most experienced person on this forum was at your the level at some point in the pass and they learned a lot because they asked questions.

I do not transmit for other preparers because I believe if something is wrong with their returns, the ERO (ME) will be blamed. Let's say I trasmitted 500 returns, 400 that I prepared and 100 from another preparer. If all my returns are flawlessly and 20 returns from the other preparer are with mistakes, I bet that me efile record will not be straight. It is a good subject but since there is no law yet and it is not exactly aimed to the whole preparer community, that's why I said that we are doing like the immigration attorney. Of course I love when there is something to read on this forum. By all means please bring in any tax related matters to the table (I mean to the forum).

"But then you still need the three out of last five to get the (prorated) exclusion, subject to the same old exceptions." Isn't it 2 out of 5? If it is 2 out of 5, KC, please correct my subtitle.

Limit on exclusion of gain on sale of main home. Generally, gain from the sale of your main home is no longer excludable from income if it is allocable to periods after 2008 when neither you nor your spouse (or your former spouse) used the property as a main home. Does this mean that the rule that you must have lived in the house as your primary home for three years out of the last five years is no longer in effect?

I agree with KC, so far everything seems to be working OK. I expected more issues but I am glad everything is flowing. None of my clients have received any refunds yet but I think it is just a matter of time.

An immigration attorney has a local radio program and for the last 10 years, people have been calling asking if they will qualify for the Immigration reform, he replies, "let's wait for the recommendation to become law and the we will comment about it". I think the same answer could apply here if I understand the concern properly.

I mentioned the house being paid off because if the house is not paid off, most likely they will itemized. If the house is paid off and that's the only itemizable deduction they have, we could forget. I have a couple who own a house which is paid off. I always tell them, not to bother about bringing the amount of taxes they paid for the house. This year, it is different.

By PAUL CAMPOS I'm not much of a basketball player. Middle-age, with a shaky set shot and a bad knee, I can't hold my own in a YMCA pickup game, let alone against more organized competition. But I could definitely beat LeBron James in a game of one-on-one. The game just needs to feature two special rules: It lasts until I score, and when I score, I win. We might have to play for a few days, and Mr. James's point total could well be creeping toward five figures before the contest ended, but eventually the gritty gutty competitor with a lunch-bucket work ethic (me) would subject the world's greatest basketball player to a humiliating defeat. The world's greatest nation seems bent on subjecting itself to a similarly humiliating defeat, by playing a game that could be called Terrorball. The first two rules of Terrorball are: (1) The game lasts as long as there are terrorists who want to harm Americans; and (2) If terrorists should manage to kill or injure or seriously frighten any of us, they win. Photo illustration by John Kuczala Read More Crunching the Risk Numbers These rules help explain the otherwise inexplicable wave of hysteria that has swept over our government in the wake of the failed attempt by a rather pathetic aspiring terrorist to blow up a plane on Christmas Day. For two weeks now, this mildly troubling but essentially minor incident has dominated headlines and airwaves, and sent politicians from the president on down scurrying to outdo each other with statements that such incidents are "unacceptable," and that all sorts of new and better procedures will be implemented to make sure nothing like this ever happens again. Meanwhile, millions of travelers are being subjected to increasingly pointless and invasive searches and the resultant delays, such as the one that practically shut down Newark Liberty International Airport last week, after a man accidentally walked through the wrong gate, or Tuesday's incident at a California airport, which closed for hours after a "potentially explosive substance" was found in a traveler's luggage. (It turned out to be honey.) As to the question of what the government should do rather than keep playing Terrorball, the answer is simple: stop treating Americans like idiots and cowards. It might be unrealistic to expect the average citizen to have a nuanced grasp of statistically based risk analysis, but there is nothing nuanced about two basic facts: (1) America is a country of 310 million people, in which thousands of horrible things happen every single day; and (2) The chances that one of those horrible things will be that you're subjected to a terrorist attack can, for all practical purposes, be calculated as zero. Consider that on this very day about 6,700 Americans will die. When confronted with this statistic almost everyone reverts to the mindset of the title character's acquaintances in Tolstoy's great novella "The Death of Ivan Ilyich," and indulges in the complacent thought that "it is he who is dead and not I." Consider then that around 1,900 of the Americans who die today will be less than 65, and that indeed about 140 will be children. Approximately 50 Americans will be murdered today, including several women killed by their husbands or boyfriends, and several children who will die from abuse and neglect. Around 85 of us will commit suicide, and another 120 will die in traffic accidents. No amount of statistical evidence, however, will make any difference to those who give themselves over to almost completely irrational fears. Such people, and there are apparently a lot of them in America right now, are in fact real victims of terrorism. They also make possible the current ascendancy of the politics of cowardice—the cynical exploitation of fear for political gain. Unfortunately, the politics of cowardice can also make it rational to spend otherwise irrational amounts of resources on further minimizing already minimal risks. Given the current climate of fear, any terrorist incident involving Islamic radicals generates huge social costs, so it may make more economic sense, in the short term, to spend X dollars to avoid 10 deaths caused by terrorism than it does to spend X dollars to avoid 1,000 ordinary homicides. Any long-term acceptance of such trade-offs hands terrorists the only real victory they can ever achieve. It's a remarkable fact that a nation founded, fought for, built by, and transformed through the extraordinary courage of figures such as George Washington, Susan B. Anthony and Martin Luther King Jr. now often seems reduced to a pitiful whimpering giant by a handful of mostly incompetent criminals, whose main weapons consist of scary-sounding Web sites and shoe- and underwear-concealed bombs that fail to detonate. Terrorball, in short, is made possible by a loss of the sense that cowardice is among the most disgusting and shameful of vices. I shudder to think what Washington, who as commander in chief of the Continental Army intentionally exposed himself to enemy fire to rally his poorly armed and badly outnumbered troops, would think of the spectacle of millions of Americans not merely tolerating but actually demanding that their government subject them to various indignities, in the false hope that the rituals of what has been called "security theater" will reduce the already infinitesimal risks we face from terrorism. Indeed, if one does not utter the magic word "terrorism," the notion that it is actually in the best interests of the country for the government to do everything possible to keep its citizens safe becomes self-evident nonsense. Consider again some of the things that will kill 6,700 Americans today. The country's homicide rate is approximately six times higher than that of most other developed nations; we have 15,000 more murders per year than we would if the rate were comparable to that of otherwise similar countries. Americans own around 200 million firearms, which is to say there are nearly as many privately owned guns as there are adults in the country. In addition, there are about 200,000 convicted murderers walking free in America today (there have been more than 600,000 murders in America over the past 30 years, and the average time served for the crime is about 12 years). Given these statistics, there is little doubt that banning private gun ownership and making life without parole mandatory for anyone convicted of murder would reduce the homicide rate in America significantly. It would almost surely make a major dent in the suicide rate as well: Half of the nation's 31,000 suicides involve a handgun. How many people would support taking both these steps, which together would save exponentially more lives than even a—obviously hypothetical—perfect terrorist-prevention system? Fortunately, very few. (Although I admit a depressingly large number might support automatic life without parole.) Or consider traffic accidents. All sorts of measures could be taken to reduce the current rate of automotive carnage from 120 fatalities a day—from lowering speed limits, to requiring mechanisms that make it impossible to start a car while drunk, to even more restrictive measures. Some of these measures may well be worth taking. But the point is that at present we seem to consider 43,000 traffic deaths per year an acceptable cost to pay for driving big fast cars. For obvious reasons, politicians and other policy makers generally avoid discussing what ought to be considered an "acceptable" number of traffic deaths, or murders, or suicides, let alone what constitutes an acceptable level of terrorism. Even alluding to such concepts would require treating voters as adults—something which at present seems to be considered little short of political suicide. Yet not treating Americans as adults has costs. For instance, it became the official policy of our federal government to try to make America "a drug-free nation" 25 years ago. After spending hundreds of billions of dollars and imprisoning millions of people, it's slowly beginning to become possible for some politicians to admit that fighting a necessarily endless drug war in pursuit of an impossible goal might be a bad idea. How long will it take to admit that an endless war on terror, dedicated to making America a terror-free nation, is equally nonsensical? What then is to be done? A little intelligence and a few drops of courage remind us that life is full of risk, and that of all the risks we confront in America every day, terrorism is a very minor one. Taking prudent steps to reasonably minimize the tiny threat we face from a few fanatic criminals need not grant them the attention they crave. Continuing to play Terrorball, on the other hand, guarantees that the terrorists will always win, since it places the bar for what counts as success for them practically on the groun... This is Pacun and let me say that —Paul Campos is a professor of law at the University of Colorado. I cut the article on purpose, but you can see the whole article at: http://online.wsj.com/article/SB10001424052748704130904574644651587677752.html

If you puchased a new car after February 16, 2009, and paid state or local taxes, your standard deduction becomes higher. The car price before taxes has to be less than $49,500. If you have a house that has been paid off and you paid more than $1000 in real estate taxes, your MFJ standard deduction becomes higher. So your MFJ standard deduction becomes ("standard deduction" plus "taxes paid for the car" plus 1,000) Let's say that you paid $3000 on real estate taxes and 5,000 on sales tax on your new car purchased in March 2009, your MFJ standard deduction would be $17,400. I included this new standard deduction on the warm up exercise. It seems that you can deduct all the taxes paid on the car. So if a car cost $49,000 and a state charges 100% of the cost in taxes (no such state), your MFJ standard deduction would be $60,400. After all that information, my question is: Is the sales taxes on new cars still in effect for 2010? Also, let's say that I have good credit and in December 2009, I put my beautiful signature on the paper and I drive away with a car without paying a penny. I still qualify for the new standard deduction even though I didn't pay anything in 2009, correct?

How deep does the test get into the corp returns? I've never done any and really don't foresee it anytime soon? It is hard to tell. Since you already know the personal tax rules, you concentrate on the type of returns you don't prepare. Previous exams are very helpful. The problem is that they are not updated anymore. They used to publish them every year but since they computerized the exam, they don't publish them yearly anymore.

My clients, have cellular phones because they need it for work. I tell them that the IRS will not allow them to expense the full bill, but I have read somewhere that auditors will allow half of the cost of cell phone service. Let's say that you have an unlimited plan that costs you $80 monthly. In a year, the cost will be $960. Half of it will be $480. I don't think, the IRS will ask clients for detailed phone calls for 12 month from 2 years ago just to go through the business and personal calls. In any event, who will remember what calls were business or personal just by looking at numbers 2 years later. Let's say that the IRS checks the bills and realized that 40% were business calls. Then they will say, we are going to deduct $96 from your phone expenses.

Canada and the US have a tax treaty. Maybe you can issue a 1099misc to the canadian contractor and the contractor just has to pay taxes to Canada. Since your client is the employer, your client should ask his contractor to get an ITIN and then issue the 1099misc using that ITIN. This is outsourcing in its pure essense and there are a lot of companies doing it. Does anyone know about tax reporting requirement for companies that do outsourcing in countries where there is tax treaty?