Lynn EA USTCP in Louisiana

Tax Sheltered Insurance Deductions

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Lynn

Notary Public income is reported on line 21 with a notation. I believe the program is correctly rejecting the return.

Thanks, Pacun. I'll review that tomorrow when I return to the office. As you pointed out, it may well be a case of 'operator error'.

Lynn

I thought this issue was to have been solved with the 3/30 6 pm drain and update. But I'm still getting this reject code. Anyone else having the same issue?

Problem arises with 2 sch C for same t/p on the tax return - one schedule C is for EA activity and the other is for notary public activity which is exempt from SE tax. The SE health ins is established under the EA business.

Thanks, Lynn

Or claim the excess contribution on Line 69 of the 1040?

Catherine that's available only if there are more than one employer.

This client lives in NJ. Box 3 social security wages are OVER the soc sec limit of $106,800 by $225.00. The reconciliation for social security wages reflects

gross pay $113,089

less 401(k) n/a

less medical fsa ($1,000)

less other cafe 125 ($2574)

wages over limit ($2,490)

to yield Reported Soc Sec wages/W2 $107,025

I have an email to the client but wonder if ANYONE ELSE has ever seen something similar and could comment.

My turn to be 'brain dead'. Employer erred - employee should ask employer to refund the overwithheld soc sec taxes, all of $13.95.

No further responses required.

Thanks, Lynn

Lynn Jacobs, EA, FNTPI, NP

Kenner, LA

I've become brain-dead. I've got a fairly simple 1041. Pg 1 line 2a total ordinary dividends=5,125; line 4 capital gain (loss)= -3,000.

The question: Should the -3,000 from the Sch D (1041) be on the K-1 ? If so, where?

Thank you.

I've gone through decades of tax seasons, but I feel this has been the hardess one yet.

What 'little' I do know of 1041's is that the -3000 capital loss does NOT go on the k-1, EXCEPT if in the final year. Capital losses stay within the trust until it becomes final.

Lynn

Lynn Jacobs, EA, FNTPI, NP

Enrolled Agent

Notary Public

Kenner, LA

9 AM this morning received a phone call from a young lady from TRX asking if I was ready to renew for next year, locking in my $299 price for the $699 package. Deadline to renew is May (31st ? ).

Does she NOT know the date?

I told her that since the deadline to decide wasn't until May, then that's when I would make my decision.

Geez,

Lynn

I created one last evening and noticed the same thing. I transmitted it and just now pulled down the ack and both the fed and the state, neither of which had an assigned dcn, are showing as accepted.

Entity returns haven't been assigned DCN's; or if they are they are not printing on the 8879's. I think it's because they go through the MeF system and not the legacy system which uses DCN's.

Lynn

Lynn Jacobs, EA, FNTPI, NP

Kenner, LA

LLC is owned by 2 brothers, each brother owning 50%. LLC is taxed as a partnership, and the income is considered self-employment income of the owners. One of the wives is on the payroll of this company. Her wages are included in all the payroll filings and she receives a W-2 each year.

This company was randomly selected for audit by the Del Dept of Labor. Their only finding was to say that wife is not employed by the company. The dept adjusted the state unemployment filings by removing her wages. They cited Del law Title 19, sec 3302 11(C ). Sec 3302 pertains to unemployment compensation and 11 is part of the definitions. It is as follows:

11 - "Employment" does not include:

( C) Service performed by an individual in the employ of the individual's child or spouse and service performed by a child under the age of 18 in the employ of the child's father or mother.

What am I missing? Is she not considered an employee of this company?

She IS an employee, for all BUT unemployment purposes. Weren't her wages shown an exempt on the 940? Or was a 940 not even filed? In many states, the spouse of a schedule C owner, and apparently in your state the spouse of a partner, is exempt from state unemployment.

Lynn Jacobs, EA, FNTPI, NP

Kenner, La

fiscal year end 9/30 being done in the '09 program, can this still me efiled?

Yes, it may still be efiled. Entity returns may be efiled - current year, and prior 2 years.

Lynn

Lynn Jacobs, EA, FNTPI, NP

Kenner, La

New clients just left my office - moved to LA from Ohio in late Sept 2010.

W2's reflect W/H from OH, Village of Delta, Bryan, and Toledo.

What are the quirks to Ohio returns?

Thanks, Lynn

Lynn Jacobs, EA, FNTPI, NP

Kenner, LA

The only strange thing happening with me is when I'm editing the client's federal letter, which has 'this return will be e-filed' in the options box, it will all by itself remove that check-box, and revert to the 'mail' letter instructions. When I go back to the options box to again check 'this return will be e-filed' there's a red message that states something like 'this return was rejected - please fix the errors and try again'.

So I again check the e-file box and go back to editing my letter.

Very strange.

Lynn

For an asset placed and taken out of service in the same year, I believe the depreciation equals zero.

Hi Ranger, that part I am well aware of.

I just wondered if Tom had found another solution to his dilemma.

Thanks, Lynn

Lynn Jacobs, EA, FNTPI, NP

Kenner, LA

Advise your client to take the 2010 RMD ASAP.

My own mother one year forgot to take her RMD. We filed the return without the 5329 and it was never questioned. But if it had been then we'd have responded, explaining the circumstances, that the RMD was taken as soon as it was discovered to have have been missed, procudures now in place to make sure it doesn't happen again, etc.

The proper way would be to file the return with the 5329. Some preparers recommend paying the penalty tax and then asking for it to be refunded, while others (and I'm in this camp) recommend filing the 5329 without paying the penalty and waiting to see what happens.

Lynn

Lynn Jacobs, EA, NP

Kenner, La

Never mind. I got it.

Tom

Lodi, CA (but in Fresno today)

Tom, for those of us who don't know the answer to your question, would you tell us what you figured out?

Thanks, Lynn

Lynn Jacobs, EA, NP

Kenner, La

This is what ATX put out just this afternoon (2/8)-

"We received the following from the Louisiana Department of Revenue:

Subject: LA acknowledgements

Sorry for the delay. Due to inclement weather Thursday and Friday of last week our office was closed. We will get the acknowledgements out as soon as possible."

And now an updated message on 2/9 - "LA acks-- We had expected Louisiana to begin posting acks last week, but we have not received any LA acks yet. The state has notified us that they experienced hardware issues and expect to get acks posted by Feb 15"

Lynn

Cathy, so far not yet. I've e-filed one LA return on 2/2 - federal ACK received right away. Still waiting on the State ACK.

Lynn

>>the agreement is that we get to take this deduction<<

See what happens when I take a month or two off? I would never have let such a statement go unchallenged. The authors of The Tax Book are pompous idiots--if you aren't using Quickfinder, you deserve the bad information you get.

Yes, this year the instructions to Form 1040 say "can" in a paragraph that has said "cannot" forever. That is an obvious typo, not a change in the IRS position. Instructions have no authority, so can you point to any actual ruling that supports this deduction? Quickfinder cites its sources exactly; where does TTB send you for verification? The IRS position has been steady since the Chief Counsel decision in 1995. Medicare is not "established" under your sole proprietorship.

Immediately after that flawed paragraph, the instructions refer us to Pub 535 where it says in italics "Medicare Part B premiums are not considered medical insurance premiums for purposes of the self-employed health insurance deduction." Let's see if the wording gets changed there too, when Pub 535 is updated next month.

Jainen, this is NOT a typo. It is a reversal of position. One of my NAEA peers corresponded with the person that re-wrote that section of the rules, and the reversal of position has been confirmed.

Lynn Jacobs, EA, FNTPI, NP

Kenner, La

2nd try - think it worked this time.

Lynn

TAx Minimum_fee_schedule_Sample_template_and_with_samplefees_2011.pdf

I figured out how to add a link to a file. Attached is a sample fee schedule @ big firm prices.

Guess I didn't - will try again.

Lynn

Lynn Jacobs, EA, NP

Kenner, La

Link does not work.. but I looked on IRS site pub 535 page 18 middle of the page and it says it is not deductable for purposes of self employed health insurance deduction

From the NAEA Webboard - for 2010 the IRS apparently has reversed its position on this issue, as follows from a discussion begun by another EA:

The following is the response received from the IRS:

"Thank you for your inquiry dated 01/18/2011, I apologize for the delay in responding to your question. There was a change for 2010 allowing Medicare Part B Premiums to be used to figure the Self-Employed health insurance deduction. In previous years, Medicare Part D payments were allowed, but not Part B payments. As you mentioned, the 1040 Instructions do state that you can use Part B payments in calculating the deduction for 2010."

Lynn Jacobs, EA

Kenner, La

This question was posed to me by a colleague:

"I have a brother/sister controlled group, (2 C-Corporations 100% owned by same individual). Looks like they need to put an apportionment plan in place in order to avoid a flat 35% tax rate. Anyone out there have experience in this document and how to create/word such a plan? Any feedback would be greatly appreciated!"

Thank you,

Lynn Jacobs, EA

Kenner, LA

I appreciate the fact that people are sharing the fact that a deal is available. Just curious, what do you guys use for tax research and what is the cost?

For years had Kleinrock, then ATX, then Intelli.... This year dropped ATX TTO down to MAX. Instead purchased TRX Alliance $299 deal which is 'supposed' to come with RIA Research. the Research part of the subscription does not yet work. In addition have Tax Analysts research @ ~ $370 per year. If I can ever get the RIA research to work, and like it, then next year I'll drop Tax Analysts. Have to reserve judgement on the TRX/RIA research since it doesn't work, yet.

Lynn Jacobs, EA, FNTPI, NP

Kenner, LA

Customer and Technical Support:

Toll Free: 1-800-638-8291

If you use ATX tax software only through our Pay-per-Return System (PRS), please call 770-857-5602.

Rita, go to Preferences, Open Return and near the bottom you will find a box to check to "Enable Payer Manager". Hope this is what you are looking for.

And, when you Enable Payer Manager you have the option of the payers being listed by EIN or by name. I chose by name.

Lynn Jacobs, EA, FNTPI, NP

Kenner, LA