Pacun

Yes, you can rollover directly to a Roth IRA and pay taxes in 2010 and 2011 or pay taxes in full in 2010 tax return. You have two choices: You can roll over to a rollover IRA or to a Roth IRA. You can ask your client to open a Roth IRA and then ask the Plan administrator to send 401K money to that Roth IRA.

How about deleting the database and backup folders on the secondary computer and copy both from the primary computer? You should back up both folders from both computers before the deletion.

You are right and since I know the rules, I am just making up answers to fit our excercise so that we have a nice end product with a little of understanding of some of the new and old rules. Maybe if you question a regular TP, which you are required to do so when inconsistencies are apparent, you might get a different answer and take out some credits. This is not an ordinary case and to complete a 1040 will require the most experienced preparer to recheck the rules. This is not a case that you will finish in 1 hour as H and R block tries to do. Please do not question "how was she a sucessful banker making millions without a bachelor degree", again this is for practice and hopefully we will get at least 5 different answers and we will discuss them. I have tried to cover a lot entries on the 1040 so that we test the software and our abilities too.

You can collect unemployment benefits even if employed. To satisfy your question, let me say that TP was a successful banker making a couple of millions up to halloween 2008. She was laid off and started collecting unemployment compensation. She didn't work Nov and Dec 2008 and start collecting unemployment compensation. Since she didn't make enough money, she continued collecting unemployment in January and February 2009. Trust me, if someone comes to my office to have their taxes prepared with a W-2 and a 1099-G(unemployment compensation), I do not CARE how and when they collected unemployment compensation. Neither will I ask them if they collected unemployment correctly. I will limit my practice to prepare their taxes with forms they brought me. This will be the extent of my conversation regarding unemployment: "I see you got a W-2G form, did you collect unemployment?" If the answer is yes. I will add that income to the return, period.

Almost everybody will come with different answers as Johnh pointed out that tax preparation is not pure math. It is the understanding of the rules and exceptions. I wish my clients would give me as much information as the scenario provides. I am going to readjust the original posting to include: TP went full time to a local qualified university. When she was employed doesn't matter, but let's say she was employed from January to April 2009 (she could even have a part time job, it doesn't matter). For clarification, TP was employed Jan to April, then TP work at daycare and went full time to school. When TP bought the house, she got one loan and that's why she is paying mortgage interest Remember the house was purchased a while ago and was rented out. Tenant moved out on December 31, 2008. After TP welcomed the new year and still with the Champaign glass raised, TP decided to open a daycare center. Starting cost were costs paid to the lawyers and to the government so that TP could have a license for the child care center. Child care center opened on May 1, 2009. Remember this a scenario so the tax preparation fee is part of that scenario which needs to be taken as an expense. Also, TP paid her own daily expenses and paid for TP's child. If you think this TP didn't make enough money this year, please see how much interest income this person had.

lol, I should have rephrased my statement. The idea is that we do the research before we are faced with a client. Remember she is a tenant. I should have said, provided that other conditions are met, the windows physically and by design qualify for the new energy credit.

Yes, it is in addition to the to the house modification cost. To make it more interesting and see how the new education credit plays, I added: Tax payer is 41 years old and high school graduate. Besides working on the day care she is trying to get her bachelors degree and paid $1,500 on tuition and related course materials. This is her first year at the local qualified university.

Can we warm up with this scenario? Please post your refund or tax due answer without explaining. Later we will see how we came to the answer. Participation is voluntarily and without remuneration or incentive. You can use 2008 or 2009 software or BOTH years but please specify which one on your answer(s) but don’t forget to adjust the scenario and change 2008 to 2007 where appropriated. TP owns a house its cost is $300,000 which includes land. 1/3 of cost was assigned to land. Up to December 2008, the house was rented and $26,000 of residential depreciation had been taken. Tax payer is a tenant in an apartment building. In January 2009, TP decided to start a new day care center using the house. The FMV of the house in December was $220,000 including land. House FMV on May 1, 2009 (after repairs and windows change) was $180,000 which included land. Starting cost for the business $15,000. Wall modification costs on the house to accommodate day care was $10,000 (paid in March 2009) for which TP issued a 1099misc to the contractor. She also issued a 1099misc to another contractor for $6,000 to have the windows replaced. The new windows qualify for the new energy credit and were installed in April 2009. Day care was ready to open its doors on May 1, 2009. Because TP will make much more money starting next year, regular depreciation should be used whenever possible. 10 children paid a total of $25,000 and expenses on food and entertainment for the children were $4,000 and utilities cost from June to December was $,3179.00 1098 shows that TP paid $6,000 in interest (only 1 loan) and Real Estate taxes $2,400. Tax preparation will cost $1,200 of which $200 is for personal return. Tax payer worked for a company and her W-2 showed $18,500 income with $800 withheld for Fed and $400 for state. For her daycare business, tax payer paid $1,000 in estimated taxes for federal and $500 for state. Tax payer is single and has 10 year old child who is her qualified child and not the qualified child of anyone else. She paid $2,500 in day care expenses for his child who lived with her the whole year. Both TP and child are US citizens. Tax payer deposited $4,000 in an IRA on April 16th 2009. Personal donation to church $500. (She went to church 25 times and gave $20 each time). Medical expenses $2,000 for her and child. She made 3 trips to the casinos. The first one she lost $4,000. On the second trip she got a W-2G showing $8,000.00 in gains with $450.00 withheld for federal. Documented losses on this trip were $1,400. On the third trip she lost $3000.00 Her bank paid her $2,514 in interest and she collected $3,500 unemployment compensation. She had $350 withheld for federal and $175 for state from her unemployment. Tax payer is 41 years old and high school graduate. Besides working on the day care she is trying to get her bachelors degree and paid $1,500 on tuition and related course materials. This is her first year at the local qualified university. She got $5,000 from the government when she changed her car during the Cash for Clunkers program. CLARIFICATION: TP went full time to a local qualified university. When she was employed doesn't matter, but let's say she was employed from January to April 2009 (she could even have a part time job, it doesn't matter). For clarification, TP was employed Jan to April, then TP worked at daycare and went full time to school. When TP bought the house, she got one loan and that's why she is paying mortgage interest Remember the house was purchased a while ago and was rented out. Tenant moved out on December 31, 2008. After TP welcomed the new year and still with the Champaign glass raised, TP decided to open a daycare center. Starting cost were costs paid to the lawyers and to the government so that TP could have a license for the child care center. Child care center opened on May 1, 2009. Remember this a scenario so the tax preparation fee is part of that scenario which needs to be taken as an expense. Also, TP paid her own daily expenses and paid for TP's child. If you think this TP didn't make enough money this year, please see how much interest income this person had. How much will you charge for a return like this?

Do we know when efile tax season begins?

I try to efile every single return but sometimes I must paper file. Last year, I called ATX because I had someone with ITIN who was using a fake social security number. (IRS doesn't care and that's exactly why ITINs were created). This person was able to efile with no problems. I had another one who had an ITIN and was not using a fake social security number at work. This person had the W-2 under his correct ITIN while the previous one was using a fake social security. The person using fake social security number at work (on W-2) was able to efile his 1040 with ITIN and the other who was using his own ITIN at work, could not efile using his ITIN on 1040. I called ATX and they could not answer the question on the spot. I called the IRS and explained the situation to the officer. Without knowing the rules, the person told me that I was about to commit fraud and that I should stop immediately. I didn't have the regulations in front of me so I could point her to the IRS efiling regulations. IRS officer asked to talk to my partner who is the one registered (authorized by the IRS) to efile. Officer threatened my partner to cancel her ability to efile because I was about to commit fraud. My partner apologized and told IRS officer not to worry. Based on what KC says, I was about to be unplugged and that was at the very beginning of tax season. Next day a VP from ATX (the one in charge of efiling) called me and said that I was not doing anything wrong. VP said, the tax payer who uses ITIN on the W-2 and on the 1040 will have to paper file. VP also said that the one who has a social security number on the W-2 and uses an ITIN on the 1040 could efile with no problems, which I knew. My logic was if someone who has a fake social security on W-2, can efile, why not the one with his own ITIN on the W-2.

It is my understanding that you needed a log before this decision, NOT anymore. You just need the losses and winnings for the day the casino gets your social security number or when you want to comply with tax laws and report those $200 you won playing dimes and you won 5 dimes at a time. I guess that anyone who goes to a casino to gamble violates the tax laws since you should report any winning. Let's say someone goes to the casino, puts a quarter and wins $100. Continues playing and losses $200. That person needs to report $100 winnings and if that person doesn't itemize, he/she will pay taxes on those $100 if that person follows the law. Am I correct? What the wager ratio for it to be a taxable event in the eyes of the casino?

Tax Court Accepts IRS Method for Determining Gambling Wins and Losses December 29, 2009 The Tax Court held in a memorandum decision released Monday that taxpayers who were casual gamblers recognized wins or losses when they redeemed their tokens and that they could not net their wins and losses across the year (Shollenberger, TC Memo 2009-306). In this decision, the court accepted the IRS’ methodology for determining wagering gains and losses, which the Office of Chief Counsel put forth in a legal memorandum in 2008 (AM 2008-011). The taxpayers in the case were a married couple who gambled occasionally at a casino in the small town of Charles Town, W.Va. On March 29, 2005, the husband hit a $2,000 jackpot at a dollar slot machine. The couple continued gambling and lost $400 from the jackpot; they left the casino that day with $1,600 in winnings. They did not report any gambling income on their tax return for 2005, and the IRS issued a deficiency notice for $2,000 in unreported gambling winnings. IRC § 165(d) states that “losses from wagering transactions shall be allowed only to the extent of the gains from such transactions” but does not provide a technical definition of the terms “gains” and “losses.” As AM 2008-011 explains, the term “transactions” in section 165(d) could mean every single play in a game of chance or every wager made. That interpretation would require a taxpayer to calculate the gain or loss on every transaction separately and treat every play or wager as a taxable event and also to trace and recompute the basis through all transactions to calculate the result of each play or wager. Because that method would be “unduly burdensome,” the IRS legal memo allows a casual gambler to recognize a wagering gain or loss at the time he or she redeems tokens. At trial, the IRS conceded that under that method, the taxpayers should have reported $1,100 in gambling winnings rather than the $2,000 in the deficiency notice. According to the court, the lesser amount would be calculated as follows: $2,000 in jackpot winnings minus $500 in wagering money originally brought into the casino by the taxpayers minus the $400 lost by the taxpayers after the jackpot that day. The taxpayers argued that they should be allowed to offset their gambling winnings with $2,264 of other gambling losses that they claimed to have incurred in 2005. Because section 165(d) uses the term “transactions,” the court held that the taxpayers could not net their gains and losses throughout the year. Instead, the court accepted the IRS’ treatment of transactions as occurring when the gambler cashes in his or her tokens at the end of play and held the taxpayers to have $1,100 of unreported gross income for the year. According to the court, to allow the taxpayers to net gains and losses throughout the year would defeat the purpose of IRC § 63, under which losses of casual gamblers are allowable only as itemized deductions.

Nice.

Tax payer never filed taxes and had $27,000 on 1099misc for 2002, 2003, 2004 and 2005. In 2004, 1099misc had $27,000 in both non-employee compensation and fish income. IRS prepared returns for 2003 and 2004 and TP owed more than 40K. Tax payer has been paying $300 for about 2 years. TP filed 2007 and his W-2 income was about $26,000 (no other income). His son was born on December 25, 2007 and his return showed $3,150 on dependent and child care expenses. He also claimed his girl friend who lived with him the whole 2007 and didn't work since she was pregnant most of the year. He filed as HH and itemized deductions. Both itemized deductions and dependent and child care expenses were invented by the tax preparer whose name and signature are invisible on the return. Tax Preparer even provided a name and EIN for child care center. I wonder, "who in the right mind will claim dependent and child credit for a child who only lived 6 days in 2007). I prepared his 2008 claiming girl friend, who lived with him all year and TP provided whole support. He also claimed his son and filed as HH with standard deduction and of course NO dependent and child care expenses. All 3 share an apartment and no one else lives there. After tax season, I requested 1099s and W-2s from the IRS for 2002 trough 2006. Based on this information, we filed all those years. We sent a letter for 2004 when we filed stating that 1099misc had a typo and that he never received any fishing income. IRS seems to have accepted our filing for 2004 and his liability was greatly reduced for that year. In October, TP received a letter from IRS regarding his 2007 taxes. Since he was receiving a lot of correspondence from the IRS for the other years he filed, he never brought it to me. At the beginning of December he received a second letter from the IRS stating that he failed to answer within the 30 days allowed. TP's next step would be to file a court petition by February. He brought those letters to me last week. I am hoping IRS will accept a 1040X for 2007 filing as HH using the standard deduction and no dependent and child care expenses. I know it is late but I know for sure this person will never have money to open a court case. Has any one had any luck with a 1040X after tax has been assessed? I have told him that this is my last attempt to help him since there is no much I can do. Remember he failed to file his taxes when he was making money. Should I try to help him more?

Thank you for your quick response JohnH. As always, it is a pleasure to hear from you. I went on line yesterday and I made a list of 1500 mailing addresses. Since, I used restricted demographics, I had to send my promotional document to infousa for approval. For less than $300, I received the list in excel format this afternoon and addresses look good. Now, I need 1500 lables, envelopes and mail stamps. If I am lucky, it will cost me 75 cents per letter and I will see how many replies I get, if any.

Are you nervous because he never signed the returns or just nervous in general?

I understand that some companies have mailing lists for each state and demographic groups for sale. I am trying to get a mailing list for people living in Northern Virginia, Washington, DC and parts of Maryland. I want to make a mass mailing and I am wondering if any of you have used any company in particular. Was it worth it? How much does it cost? Did you get labels or just soft listings? If you haven't used any but know of a company, please let me know too.

Don't you love the title and subtitle to this post? I think a lot of people will read it. A complaint to the webmaster, links are truncated when you copy and paste it to this site.

Very true computers are so inexpensive now that you only concern should be your data. If you follow the instructions I gave you above, you should be able to see the message.

Keep IRS auditors away: Earn less than $200,000 WASHINGTON – Want to keep IRS auditors away? Keep your earnings under $200,000 and they won't bother you 99 percent of the time. IRS enforcement numbers, released Tuesday, show that returns under that amount have a 1 percent chance of getting audited. Returns showing income of $200,000 and above have a nearly 3 percent audit chance. The percentage jumps to more than 6 percent for returns showing earnings of $1 million or more. The percentages apply to both individual and joint returns. http://news.yahoo.com/s/ap/20091222/ap_on_bi_ge/us_irs_enforcement

The first thing to do is to find out what error message she gets when the computer blue screens. She first needs to right click on my computer, properties, Advanced, look for "starup and recovery" and click on settings, uncheck "automatically restart" and OK. On the dual monitor post, I gave some recommendations that could help.

Since the computer in this case is not a test computer but rather the computer that helps earn income, I will give a general (rule of thumb) suggestion to all in this community. If you need a new feature on your computer, see if a program already installed on your computer (Windows, ATX, MS Office, etc) has that feature. If not, you need to consider how much you will benefit from that feature and how frequent you will use it. Then you will make a decision to whether install or not. The problem with installing new programs for every little thing that you need is that they might conflict with core programs such as Windows, ATX, MS Office. Even if a conflict is not evident, a lot of these little programs start automatically when you boot up your computer and they stay resident all the time. Another problem is that when you uninstall a program, residues stay on your computer hard drive and registry and down the road your computer will not be as fast as before (sounds familiar?). Using a registry cleaner (which I don’t recommend) is a risky business depending on your computer and software installed. Another problem with installing and uninstalling programs is that it fragments your hard drive. One day I went to another preparer’s office and I saw she had a cool internet screen saver, I told her, “that coolness might hunt you down the road”. I told her, “You shouldn’t do that on your work computer, you could compromise it”. I explained to her that she had: Names, addresses, social security numbers and bank information for whole families, as well as employers information. About two months later, she called me and complained that her computer was not working at all because she had viruses. I explained to her that her computer was working and working hard to satisfy the demands from the viruses and that the computer didn’t have time to honor her requests. I hope no information was compromised. Going back to the case at hand, see what trash or programs are starting automatically on your computer by clicking on start, run and type msconfig and press enter. Click on the startup tab and most of those programs do not need to be resident all the time. Unselecting them from here doesn’t mean that you will remove that program but it means it will not start automatically. When you invoke the program from your short cut or from all programs, the program will start. If you unselect any program from the startup tab, you will get a message next time you reboot. Just select “don’t show me this message again” and OK. If you want to see if your hard drive needs to be defragmented, double click on my computer, right click “local disk C:” properties, defragment now, and analyze.

Turn off your computer and connect the monitor to it. Power the monitor up and the computer. When the computer boots up, you will have the exact same thing on both monitors. Right click on a blank (non icon)portion of your desktop, select properties, click on settings and click on the number 2. and select "extend my Windows desktop onto this monitor" click OK. In order to drag a program to the second screen, you have to "restore down" your screen by clicking the icon next to the red X that closes the window, then you drag it to the second monitor. If you physical arrange for the monitor is backwards with dragging and dropping, you go back to the settings scres and drag the number 2 (monitor) to the left and drop it.

I will tell you the steps in a generic way. The easiest way is to buy a docking station and two monitors. You dock your computer and make one of the monitors your primary one and the second one you make it extended. You could use the monitor of your laptop as your secondary monitor and only buy one monitor. The problem with this set up is that Windows sometimes forgets the settings and you need to redo them from time to time. The other problem is that laptop screens are smaller. If you do not want to spend a log of money, you can simply attach a monitor to your laptop and make it as your secondary/extended screen. The problem with this set up is that you need to be connecting cables each time you bring your computer to your desk. If you tell us what computer you have, maybe you will get more replies. Also tell us if you are planing to buy a docking station and 2 monitors.

Let me rephrase the question... Is this a house that the TP built based on the IRS definition or it is a house that was purchase new or used? If we agree that he built this house, then he qualifies for the credit, if not, then he doesn't.