Pacun

ERC,

When preparing your own retur, anyone of us will tell you what exactly to do. You do not have to tells us the exact figures just ask. Also a lot of us will do your return for free, afterall you are not pay for your valuable service on this forum.

There is a similar post on Time donation but I want to start a new one.

What's the rule on this situation?

A teen ager makes a software program with FMV of $3,000. His out of pocket expenses are zero. He donates the program to a non-profit organization. At tax time, the teenager files schedule C and pays his share of SS, he is claimed as a dependent on his parents return, and he deposits $3,000 on his roth IRA. The IRS audits the return and says, you did not have earned income and we are going to refund your SE taxes that you paid but you have to take out the money from your Roth IRA. You are the preparer of the return. What is the answer you send to the IRS?

To me, the teenager cannot file schedule C and none one can say... I choose to file schedule C on this situation because the rules prohibit you from doing it.

For a moment forget that the teenager put money on the Roth IRA, that should not change the rule that prevents the teenager from filing schedule C. I know the IRS will be happy and never audits this return but I want to know the regulation.

Thank you in advance for your responses and keep in mind that our intention is not to offend anyone on this forum, we are here to share and learn.

I have not moved to dual monitors because my computer is not that new. I am going to purchase one in December and I will install 2 monitors. Sometimes, as I answer to some post on this forum, I see the need for two monitors and I cannot imagine that I work with only one monitor. My best blessing has been efiling but now I will have to pay some money to ATX since they will only give 100 returns, I hope you (JohnH) will share this efiling feeling down the road.

Pacun:

---> You are completely wrong and thinking like my clients... They think that if they donate $5000, the IRS will refund them $5,000. <----

So YOU'RE the one who's been stealing my clients. I was wondering where they went...

You are right, they come to me and they said "John said that I will get a big refund" lol.

"We don't know that he would be worse off with just this income amount known. It would depend on his "Other" income...his itemized deductions, if he has enough to exceed the standard.

If he exceeds the standard by a substantial amount, then the $2,000 becomes significant in reducing his "taxable income" and the $283 SE tax on the $2,000 would still give him a net savings of $1,717.

Moreover, while we're talking about insignificant mileage amounts, the cost of the disk would be deductible.

So without knowing ALL of his annual details, it would be difficult to answer his question, except to repeat that his services are NOT deductible."

You are completely wrong and thinking like my clients... They think that if they donate $5000, the IRS will refund them $5,000. Sometimes they are married filing jointly and the $5,000 donation is the only itemized deduction they have. I tell them "the $5,000 donation will benefit you... ZERO".

The only time you will benefit by reporting $2,000 on Schedule C and deducting $2,000 on donations on Schedule A is... if you need to increase your SE income for retirement plans or you need additional income in order to get SS credits. Keep in mind that your salary is increased by $2,000 and then it is reduced by $2,000... leaving you with the same taxable income at the federal level but you have to pay $283 on SE taxes.

If your client has to pay SE taxes on the donation, why bother?

"Suppose you design and build a lawnmower, or any such device and you donate it to some non-profit...is that not deductible as far as its FMV is concerned?"

If I build a Lawnmower with my own efforts, I build the metal and the engine, paint it, test it, no FMV, my basis would be zero and no deduction.

Even if you donate a program that's worth $2,000, if you made the program with your time and effort, no deduction.

The simple answer is no. Sorry. You wanted a simple answer.

In the future, as you go through the different scenarios, save the first scenario and close the client. On return manager, highlight the client and pull down the file menu and select duplicate and you will have a chance to name the second (and subsequent) scenario properly.

Call ATX and ask them you want to try their product. They will send you 2006 for free. Use you great great grand father's name. When you call ATX, don't start saying... I was your loyal client for 4 years but last year I switched to another software...

It is like when an ex-client calls me, and says, I lost my previous year tax return which you prepared but last year I changed tax preparer and I have a house closing tomorrow and I need a copy of my previous year tax". Trust me, I will tell him, you will have to pay for the copies and call us next week to see if they are ready.

Margaret, you said on your original post "He is about 55 but the university does not want to offer an early retirement package. "

Trust me, once a lawyer is involved, the university will make this offer at once. Of course you still have the other issues to deal with, but why to try to maximize his returns on future years where you have an opportunity to make a bunch of money on the forced sale of his house?

No offense, let other professionals do their job, this job is for a lawyer and a tax professional as a consultant.

Withholding has nothing to do with the fact that income could be taxable. Please make sure that that income is not taxable to Non-residents.

Changing the odds and class action will not fly because the rules of the drawing clearly stated that ATX can cancel, call off, stop, abandon, withdraw, annul, revoke, terminate, rescind, repeal the drawing as they wish. They also can change, alter, modify, vary, transform, revolutionize, adjust, amend your odds as ATX wishes.

Do you see how important is to read the rules of engagement?

I am just kidding... but I believe that somewhere ATX has covered its back and made a disclaimer like the one above.

How about if no one renew early? Will this hurt us since no money will be available to improve the program at the beginning of the cycle? Imagine (as a company), you are at the beginning of a venture, is it better for the consumers if the company knows for sure that will have 40,000 user or if the company thinks that will have only 20,000 users in January 2008.

From Mark Minassian,

Your Guide to Business Law / Taxes: U.S..

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Why the Social Security Administration Loves Illegal Immigrants

A few years ago our firm was processing year-end W-2s for one of our clients who owned a small convenience store. It was the first year we were e-filing his W-2s directly with the Social Security Administration (SSA). When we processed the W-2 for one of his employees (who had been an employee for the prior three years), the SSA immediately kicked out the W-2 because the employee's name did not match his Social Security number. We immediately notified our client about the situation.

The employee in question was an illegal immigrant and admitted to our client that the Social Security number and card that he was using was fake. Our client fired the individual and then went down to our local Social Security office to report the situation. To his astonishment, the SSA did nothing to either prosecute the individual nor investigate the situation. Their response was that they would take action if the fake Social Security number showed up again attached to another individual.

The lesson to be learned from this: The SSA doesn't really care if illegal immigrants are using fake Social Security numbers because they are still paying into Social Security and Medicare and will never be able to claim any of the benefits. The Social Security and Medicare systems face enormous shortfalls and will take whatever contributions they can get, even if such contributions are from illegal immigrants using fake Social Security numbers.

Tuesday May 22, 2007

Send this crook the same way he came. Don't get involved at all. I didn't pay attention to the disability portion of it, he might have a foot in jail already.

By requesting ITINs, I have helped the IRS collect thousands of dollars from people that want to violate one law and respect others. It is like being a good citizen by using your seat belt all the time but runing a yellow/red light from time to time. It is like going to church and having a lover. It is like being a good citizen by going to the army but kill people during war. It is like reporting all your income from tax preparation but leaving out those $20 you got when you returned a wallet you found on the street or that $20 tip you got when you drop off your friend to the airport or that $20 dollar you found on the street.

If the system created ITINs for illegals to comply with IRS rules, we have support that and comply with it... we do not chose what regulations we like and comply with only those, we have to comply with all of them. I do understand that you can refuse to prepare taxes to any one and if you feel unconfortable helping those people.

In any event, when a client sits in front of you to have his taxes prepared, do you know if your client in front of you has raped, killed or otherwise mistreated people, is using illegal drugs, steals things from the stores... we don't and our obligation is to prepare his taxes based on the rules. I try to limit my practice to taxes and let other government agencies to deal with problems under their jurisdiction.

Again, if under your believes, you feel the need to refuse preparing taxes to any one, please feel free... I do that from time to time and more often than you think.

If you want to put "him to work", just open schedule C have some "sales" and no expenses and pay federal, ss, and state taxes on that amount and no one will question you.

Whoever is greedy enough to believe that there are companies giving away money will fall for these scams. I feel sorry when my own bank calls me to offer me legit offers... my reply is "if I need additional services from your bank, I will initiate the communication... no matter how good your offer is, I have to hang up now." Also, when I see on the mail an envelope that reads that there is money waiting for me... I cut it in 100 pieces without reading it. I do the same for emails (do you believe me?). My point is that everyone is after your money and no one is giving away money. If you work, you have money... if not, you don't.

It seems that your security settings on your computer needs adjustment. What OS are you using?

Client lost investments on one company (all investment on company). Client filed a long term loss in 2004 for $3,000. From a Class action suit, client got $1,000 back in 2007. I know the IRS will love if I report it as other income since client salary is more that $200K but his loss reduced long term capital gains in 2004. Should I report it as other income, capital gain, or amend 2004 and pay interest on money owed? More info might be available if needed.

It is ilegal to hire an illegal alien but it is not illegal to be hired by an illegal alien. As long as you properly prepare the return, you should be OK.

Remember that people with ITIN do not get Earn Income Credit.

I just prepared 1999, 2000, and amended 2001 for a client. This client was using a fake social security number for those years but now he has his own social security number. His immigration attorney calls me and wants that all documentation to reflect his correct number. I said "that's wishful thinking. I cannot correct any W-2 that the client brings to me. My responsibility is to accurately prepare the 1040 returns for 1999, 2000, and 2001, and I have done that". I went on and said, even if you find the account that correctly prepared his 1999 W-2, based on the information at hand at that time, s/he cannot change that W-2 because the social security already has a copy of it and it is ilegal to do so".

I thought my answer (previous post) was original, but I like this one TaxmannEA:

"I got 24. Not sure what i missed: wasn't paying attention!"

People come to my office with returns prepared by crooks but they do not sign the return. To the eyes of the IRS, these returns were self prepared and believe me, these tax payers (AKA crooks) know exaclty what's going on and still they go to this places to have their taxes prepared. I think there is no crook preparer without crook tax payer. Most of these tax payers go back to these places when I tell they that this year they will owe or their refund will be much less than that of last year.