MAMalody

I have a new client in NM and have run into something I have not see before. Apparently when you have income from municipla obligations you have a tax exclusion. I can't seem to find any info on this. E-mail NM three days ago and still no response. Any NM expertise out there. If this is not clear, e-mail me at [email protected] or let me know and I can call you.

As an employer, he give the car allowance. The expectation is that that covers her business related transportation expenses. There is no requirement to turn in the amount not used on the short months and no extra given on the long months. If the employer wanted exact accounting then he would establish a written accountable reimbursement plan in which the employees would turn in her mileage each month and be reimbursed accordingly. Just as a point of interest, the employee does not dictate terms of reimburseable expenses. The employer determines what he will and will not reimburse for. On top of that, he is not required to explain his "logic" to the employees. As it is, she is suppose to report the allowance as income and she can deduct all the mileage on her tax return, regardless of whether it is a long or short month. Publication 463 and 15B seem to cover this topic fairly well. I hope this help.s Mike

I have that happen a couple of times each filing season. I don't think you did anything wrong...just a program fluke.

What I have found is that all states honor IRS clearance for out-of-state preparers/filers. When you live within the state, they still honor it but may also require you to participate in their system also. Mike

Don't forget the polls close at 8:00PM, unless a judge intervenes because of high wind (traffic).

That would be business property and make it 39 year property.

I do a couple of dozen of those each year. Just file them like normal. Should be no problem. Mike

I answered this question on TTB board. I did some additional research and here is what I found. This situation is a little different that what I had. I had a church pastor where the church made all the normal employee deductions and that apparently is different that a state employee here. According to Richard Hammer in the instant case, he could qualify for the housing allowance and have the full normal employee deductions. That would also mean that he could deduct on line 21 the smaller of the amount spent, the amount designated or the fair rental value. Go for it. Mike

To qualify for clergy housing, you must be qualifed for what is called dual status. The dual status is that you are considered an employee for income tax purposes and self-employed for SS/med purposes. Hence you should receive a W-2 with not deductions. If there are deductions you have a contradiction in status and are considered an employee not eligible for the clergy housing allowance. The fact that a letter was attached to the return, doesn't really mean much since they are essentially never reviewed unless there is an audit situation. I'm not sure what happens when you send the clergy worksheet with the F8453. My guess is that there is not matching program. It is probably possible to file in the manner mentioned before, however, in the event of audit I believe there will be a problem. I have run a scenario similar to this past a tax attorney who specializes in clergy taxes and his feeling was they did not qualify for the housing allowance. Incidentally, when computing the housing allowance it is the smaller of three figures (not two as indicated in one of the prior posts): 1. designated amount 2. actual spent 3. fair rental value Also, the OP never indicated if this amount was desigated ahead of time, although, I suspect, it is a written policy of the state so it probably his. The post just never confirmed this. Technically, the way out of this is to have the W-2 corrected to reflect either clergy status, or, leave it like it is and the chaplain would be an employee. (For discussion purposes above, I am assuming the chaplain qualifies for the housing allowance - all of them do not.)

There may be another problem with the SE worksheet. I am going by memory, however, I don't remember seeing that it takes into account that you do not have to make the IRC 265 adjustment for SE purposes. Do you read the worksheet the same way I did?

I hear you. I had not tried to file one this way, I assume you did and it was rejected? Let's hope that ATX gets a fix in.

The exempt portion of the SE will handle items other than notary so you won't have to worry about that. Simply list what it is and the dollar amount. The big question if you go this way is what about the 1040 Clergy worksheet which will show SE income. When you send that in with the F8453 will it trip anything because it won't show up as taxable on the SE when the worksheet indicates it is taxable for SE purposes? That's why I think the worksheet fix is best. Mike

I don't know. If you use the exempt income worksheet, it is no different than if it was notary income and you can e-file those returns..or at least I have for the last 8 years or so. All ATX has to do is to add a F4361 check box on worksheet 4 of the 1040 Clergy worksheet. That checkbox would allow the clergy figures to be included in the bottom line computation therefore not being transferred to the SE.

Not only post, but would you e-mail me the fix at [email protected] The only other way around this that I can see is to list it as exempt income on the SE worksheet or on the 1040 Clergy worksheet for, reduce by non SE amount. In this way you don't mess with the SE form. What do you think? Mike

The I-9 is not an issue. You do what is required. If not an employee, don't do it. On the 1099Misc for all whether over $600 or not, I recommend that to my clients. While not required, I simply think it is easier to do them all instead of try to sort them out an it adds a "little" validity their deduction for contractors. These are for my Schedule C clients, I don't do parts and corps. Also I seldom have a Schedule C that grosses more that $150K.

I just noticed that when I prepare a return that has required attachments to the Form 8453 that it is automatically generated. Kinda cool. Now, question: I must have missed this somewhere also, since the F 8453 is not longer a signature form, do we also use a Form 8879? Don't the clients need to sign something?

I did that and it did not correct the problem. I will try it again. This is on 5 returns so far. Also, since you are required to send the worksheets with the F 8453, why would it not change the work sheet and NOT generate a worksheet 3 where it says the income IS subject to SE tax (or at least transferable to the SE)?

I have a problem. I must not be reading the worksheets correctly. When you look at the 1040 Clergy Worksheet, I do not see how you indicate on any of the worksheets that the pastor has an approved Form 4361 and therefore his clergy income is exempt from SE tax. I can override all the necessary figures, however, I don't like that. Plus, I need to send these worksheets to the IRS with Form 8453 and overridden figures will look like I did not fill out the forms correctly. I also don't have any confidence that the Form 8453 data entry people have a clue what happened on the tax return. I see huge problems. What have I missed on the forms? I guess I could use my own worksheets, which I have up til now, but they probably are not transmitted with the return. Jeez. Help. Mike

I have no clue what fixed my download problem, but, I tried it yesterday and it worked. In the last couple of days I had a sync problem with my pda and did a lot of updating in my operating system. Even though I update regularly, it looks like I must have missed something.

Thanks for the input. I'm lucky in this case because they are rented homes not owned. Solves the depreciation problem.

It has been a few years since I have a had a client with office in two different homes (moved during the year). Offices are qualifying. Schedule C. It seemed that last time I had them that I prepared two 8829s and then combined them into one and that is what went with the return. ATX allows you to make two different 8829s, home 1 and home 2 and send them to the Schedule C. All the math works, however, what is actually transmitted? Do I need to combine onto one 8829 if this was to be paper filed (it will probably be e-file as all but one return last year was e-filed). A quick search did not show any procedural help from the IRS that I could find. What say you? Mike

Tom, do you get a signed release from your client since you are disclosing his info.

I have not looked this morning, however, since I can only update through MyATX, I go there every day. Yesterday, the most current update for the program was listed as 21 January.

Thank you.

I would like to contact William, however, I do not have his e-mail address. Will you send it to me or post it so I can contact him? I have tried calling and the only respone I received was to go to MyATX and download from there.