Pacun

I thought you were asking a question... I read your post slowly today and I understand what you are saying. The problem here is ONLY in VA and ONLY when ITINs or only adults are involved on the return AND there is tax liability on VA return. You are right, ITINs qualify for the low income credit and you have to do it manually. Thanks for sharing.

According to other experts (KC is an expert), if box 5 is checked yes, and the amount of line 4 is less than line 2, this is reported as a sale AND the IRS has a copy of this. You need to report it this year as a sale and next year you will report the debt forgiveness.

Maybe improvements on the rental made it to the 75K basis (which coincidentally was exactly the amount paid originally). Also find out when it was converted to rental (maybe in 2005, who knows). If what I am saying is correct, all years are correctly filed.

The numbers you have entered don't make much sense... can you omit the cents? AND maybe use commas where appropriated. Not only can't you deduct any loss, but you are also required to pay taxes on the debt forgiveness! Luckily for your client, the President signed that law at the end of 2007 where debt forgiveness on primary residence is also forgave by the IRS.

Yes, it goes to schedule D for matching purposes. Did your client get a 1099-C? If not, s/he might get one for 2008 and you should advise them for that too.

Yes. If you qualify for the exclusion, the IRS doesn't care if you live under a bridge ever after or you move in with your in-laws.

thank you for your replies. Do you know the date we can start asking the IRS for W-2 info?

I am waiting for peer review but AGE is not a requirement for claiming someone as a dependent. I am 100% sure that the person can be claimed as a dependent. I am not 100% sure about the household status.

yes to both.

Jainen is right... since they made 5K, they can claim their children and get a big refund. Mother will file MFS.

Sounds good... Boyfriend should file single with no dependents, no question about that. Your client could claim all (son and wife and two children) and possible she could qualify as HH.

Change her ITIN to a valid social security number for your test. If Low income credit is calculated with the valid social security, then the credit is NOT meant for people with ITIN.

If she is a full time student MAYBE. But student could not claim her exemption (maybe father or mother could take exemption).

You shouldn't ignore it because it could be some taxable money included there. I think this is a Flexible Spending Account. Money taken out pretax from paycheck and if not used to pay babysitter, medical expenses, etc. amount should go back to box 1 of W-2. At least ask your client about it and ask for some paycheck stubs to see how it is calculated.

If income and household membership permit, there is only one more requirement (this requirement cannot be changed with student status or incapacity)... the child has to be under 17 on December 31 of the tax year.

I think you are not providing enough information for us to give a good advice. Let's say that on 12-31-2006 the value to be split was 20K (10K each). Since the money was not withdrawn until next year, the value split was $24K and the wife took 12K. Husband was given 1099 and needs to pay taxes on earning and possible penalty if not over 59.5. Since this money was distributed with a court order, he doesn't have to pay anything. I hope someone can elaborate on my thought or tell me I am completely off.

I think it is safe to do it. If for ANY reason the bank rejects a direct deposit, the IRS issues a paper check the following Friday. A lot of banks accepts deposits without checking names.

I have a client who has the last pay check stub. When can I start filing with substitute W-2 form? Can I efile using Substitute W-2? If yes, do I create a non-standard W-2 and form 4852? When can I start asking the IRS for W-2 copies for 2007? If you do not know all the answers, please help me with ones you know and others might help with the other answers.

Nothing automatically. You will have to devide the whole amount by 5 and then you divide it by 6. That will give the amount for office.

Can you give me filing status, head count and income amounts? Date of births might be important too.

Thank you for the clarification. This was my first answer... "YES, she can use the child for HH status and EIC if her home is the main home of the child." This is true for any year, including the years when the father claims the child. If there is no previous agreement between the parents, then the mother will prevail before the IRS if both of them claim the child this year (please make sure custodial parent didn't sign Form 8332 or equivalent for 2007). Regardless of who supports the child (as long as the child doesn't provide more than 50% for his own support), the mother (custodial parent) will be entitled to the exemption, EIC, Child tax credit, additional child tax credit, Hope credit, Lefe Learning credit and the $300 rebate. If the mother cannot prove that she maintains (more than 50%) her home, which is the main home of the child for 2007, then the IRS will not allow her the HH status, but she will be single, with a dependent and will qualify for all the credits stated above. (I listed some credits that might not apply to this situation but if any of those credits apply, she would be entitled to).

How about issuing a 1099 to ex.

There is a similar question going on here on this forum. In your case, I think the custodial parent will prevail before the IRS and in front of any divorce/custody court. For me, it is important that my clients prevail on both because the IRS or the courts can have my client amend their return if they feel it is against the rules.

YES, she can use the child for HH status and EIC if her home is the main home of the child. Are you suggesting your client to violate a legal agreement or court order?