Terry D EA

I have a client that owes NY 200.00. Thier check gets deposited Wednesday. If I transmit their return tonight, does anyone know when NY will initiate the draft?

Just off the cuff and without research, if the spouse is an employee the premiums paid would be deductible on Sch A. The husband/ taxpayer is self-employed and those premiums weren't paid for him so I don't see how they qualify for any SE deduction. I think partners in partnership and S-Corp shareholders are the ones who include premiums paid by the entity to be included in their respective W-2 forms. I know farms are special in many ways so maybe I am totally missing it. Something to think about.

JohnH, you are correct on being subject to the penalty. I see three 1099MISC forms but from his expenses he may have missed a couple. This guy is a mess. You would think the penalties would get his attention. Personally, I doubt it. I have been charging him a substantial rush/last minute too lazy to get docs in a timely manner PITA fee each year. He only complained once and threatened me with going to another preparer. Needless to say, I invited him to go. Well obviously, he didn't he's still here and still getting charged for causing me to sit in front of my computer to beat the 12:00 midnight time. I'm going to nail him this year as he is screwing up Monday night football. I would normally say too bad so sad, but if is willing to pay the fees then I'm willing to collect them. I think Forrest Gump said it best. "Stupid is as Stupid does"

That makes perfect sense. I'll hit this guy up for it.

One of my clients who thinks they can do everything on their own, has paid subcontractors and issued form 1099MISC with the amount paid in box 3. Form 1099NEC should have been used. Is there any way to correct this? I have never had this happen or dealt with it in the past.

Thanks Judy, that is exactly what I have done.

I agree totally. I am not preparing their individual return. My statement of the draws was a guess at what they may have done. The IRS is definitely missing easy catches with S-Corps and not paying reasonable compensation. To me what is worse is when clients are totally clueless of the tax laws rely on either wrong or incomplete information received from a professional. In this case a retired CPA who should have known the rules of the game. In defense of that CPA, maybe he/'she wasn't a tax accountant. But if he/she wasn't well versed in taxes, they should have handed this off to someone who was. I also noted from the 2021 1120S, in the signature line the words "Prepared by a non-paid preparer" which leaves the client with no recourse at all.

Just plain run around BS. No faxed form contains an original signature. They can't tell if it is a wet signature or copy on a fax. I have had them refuse a digital signature even when it was processed through docusign or verifyle which are both IRS approved. I have used all methods of uploading, faxing through normal channels and the portal plus client accounts, nothing is any faster and depends on the agent answering the phone. Faxing the 2848 to the CAF means it may or maynot ever get recorded.

Thank you for the explanation. If I am asked to prepare the individual shareholders returns, their "draws" as they call is subject to SE tax and that is the only way I can file those returns. Thanks again.

I just hope this will not be like when CCH took over ATX

You see this is why I throw stuff out there to my colleagues. Something about my plan bothered me. I didn't think about the bank account being in the corps name and that in and of itself says not a good idea and can't do it. I am not one to do anything creative or imaginative return preparation. I did advise the client of their non-compliance to cover me. I have prepared the 2022 return and have been questioning transmitting the return knowing full well the non-compliance. Almost like I am filing an inaccurate return on purpose.

New client has S-Corp with two shareholders 50/50 and been filing 1120S since 2012. Client stated they have worked with a retired CPA who has been filing tax returns. Neither person has been an employee and no wages paid since the beginning. No basis has been tracked. Books show both shareholders taking a draw on the balance sheet which at this time, I am assuming the draw is the way they were paid. They are going out of business within 6 months. 2023 the S-Corp has little income. Only asset is the cash in the cash/operating account. No fixed assets. The company is a housekeeping service, and they are only keeping a few commercial accounts going to stay afloat this year. My suggestion is to file 2022 as the final year and dissolve the S-Corp. File 2023 as a Sole-Proprietor. With needing form 7203, I can back into the basis without too much difficulty. Additional info- the balance sheet with form 1120S has never been completed because the gross receipts have always been under the requirements to complete so no M-1, no AAA, and no A&E. I may be able to recreate the AAA and A&E. Any suggestions of another direction to go with this will be appreciated. Of course, I told them I would have to see all previous filed returns to see if any amendments are needed. I wonder what the chances are of the IRS catching no payroll from the officers/shareholders. Both materially participate so this is not a passive activity.

I totally agree with Catherine and Sara EA and highly recommend you take their advice. Trying to prep the returns for both spouses in a divorce presents a conflict which you cannot be part of. I don't think a conflict waiver would work for me in this situation either. Can't even see how it would apply. Again best advice, return their documents to them with a letter outlining the conflict and wash your hands of it.

I can believe it and those are the same promises made to me. For a guy that promotes smart financial planning among many other things, this is not smart advice at all. Very poor decision to make an investment with less than sketchy return.

Ramsey Soultions?? I looked into being a Ramsey Pro and quickly declined. To join, they wanted $1,000.00 training fee plus $149.95 per month membership and 40% of your fee for individuals and 60% for business. I thought this was crazy. I had never heard of the Lampo Group, LLC and didn't know they offered any tax prep. I'm glad I refused.

Yeah for sure!!! I don't get it. If I even tried something like this, they'd come get me in l ess than six months, plaster my face all over the news, lock me up and throw away the keys. I run away from clients who I have suspicions of not being honest.

I guess for those who will be put in the holding pattern, it is was it is. The bad eggs always spoil it for the honest ones. Every credit that is now heavily scrutinized is due to unscrupulous people. Interesting reading is the mega churches and other millionaire companies grabbed up the first round of PPP that was supposed to help the small business man. Kinda like the lawyers and mega firms that jumped on the ERC. Get this through before the IRS figures it out. Like joanmcq, I received way to many scam phone calls about how I qualify for the employees that I don't have. To me, all of the covid perks were off the seat of the pants creations that lacked any real thought. How did they write a bill for stimulus checks and not include a method or language to recover checks issued in error? It boggles the mind.

I agree the ERC gripes me as well. The ads always put out the amount of the refund, but never was there ever a mention of having to amend the filings or reduce the payroll expenses by the amount of the credit. I only have one client that Paychex did the ERC for them. I don't know if the payroll expenses were reduced or not. What I don't know or have knowledge of is ok. I just prepare the return. I wasn't told anything about the ERC until I asked if they got it. I also asked if they understood all of the facts surrounding the credit. They said yes and Paychex did a great job so there you go. Sometimes I wonder if the increase in income is anywhere near the credit amount. Folks always have to remember there is no such thing as a free lunch. All of those stimulus checks weren't free either or any advanced child tax credit. I'll be long dead before any of that gets paid back. but, my great grandchildren will pay for it and maybe their kids too.

15,000.00 in legal fees to boot. I too question the authenticity of the story. I wonder if Bob used any engagement letters to support his claim of preparing the return from the information provided. After a couple of years, I think the client should be told to take the reasonable salary or move on to someone else. I guess what you have knowledge of makes you guilty if you go along with it.

"Not sure about NC, but I'm assuming the 4.99% is an estimated tax that has to be paid." For NC this is indeed true. It makes sense to calculate the estimated tax payments based on the shareholder's rate and liability, then deduct that amount from the S-corp books. Reducing the Federal and State income/loss that passes through. I still have to keep reading cause not sure if any of this is correct yet.

I have been studying the PTE election specifically for NC and SC. I've not looked into SC yet or if they even permit it. From what I've learned from NC, I fail to see any benefit with this election at all. Example, S-Corp has income of 200K. If you elect the PTE, the tax is calculated at the shareholder's tax rate. This example is for NC resident shareholder. This does not appear to take into consideration the shareholder's individual deductions to arrive at the tax due. However, the NC instructions state to use 4.99% In the example, the tax due would be $9,980. After deductions, allowed losses; etc the shareholder has a balance due of $1800.00. With this information, I see absolutely no advantage or reason to make the PTE election. I understand the tax paid is deducted as an ordinary business expense but it still appears more tax is being paid than if the election wasn't made. To add a bit more confusion, the instructions from NC aren't clear when the expense is deducted. I'm assuming in the year it was paid. NC has a section of calculation that shows the common deductions etc. But, I'm using Drake, and there is no where to make any entries to reflect the shareholder deductions. There is a screen for shareholder K-1 withholding that the drake support person couldn't figure out what that was for either. As a test, I made entries on the form and the information did not flow anywhere. Anyone agree with me about the benefit of making this election that it appears there isn't any for a NC resident shareholder. I'm willing to play with this a bit more and am looking for other opinions.

Lion, we're both wrong. I looked this up. April 15, 2019 was a Monday. July 15, 2019 is a Monday as well. Here is a link from the IRS website: Payment Deadline Extended to July 15, 2020 | Internal Revenue Service (irs.gov) I have an amendment to do and will get it in this week. Hope this helps you in some way.

Interesting and good read. I always thought the code was pretty straight forward on this issue. About midway through the reading, I began to question the emotional distress as a possible injury. Also, I can side with the CPA for thinking the same thing. But... after reading further I think the judge was correct. I guess you can say she filed the suit honestly, relied on the CPA's advice hence the statement, "the advisor made a mistake". On another note, in January, I sat in a mediation to settle a lawsuit for our middle daughter for a dog bite. The dog did enough damage that she has lost a significant amount of use of her left arm and hand which is her dominant hand. We discussed the taxability of her settlement with the attorney. I did state this was a clear case of injury that was permanent and not to be included in her taxable income. This article made me rethink this whole scenario.

I gotta go with Abb's response. It is true, you are just making them whole so no income. However, in the HRB replies, the fact that Block paid the tax is a benefit to the client so it should be income as it doesn't have the character of a reimbursement.

Thanks Jim, I did get the four years answer and totally forgot this was the Covid year where we have until July 18th ( I think ) to claim a refund. Anyway, got the client onboard and moving forward.