Terry D EA

ILLMAS, check out pub 4681. I put a link here if you want to use it. Seems that page 4 & 6 may be of help to you. 2021 Publication 4681 (irs.gov)

I have a single shareholder S-Corp that each year cannot get the books done on time to get me the P&L and balance sheets. Thus, extensions are filed each year, and then the shareholder extension gets filed as well. They usually don't want to pay any estimated taxes and do not pay anything at all with the extension which results in penalties and interest. In some years, due to large income, the penalties are significant. Yes, I have been trying to get them to do things differently without much success. it took a number of years of paying late filing penalties to get the S-Corp done in a timely manner whether extension or not. 2K each year was beginning to hurt so now the S-Corp usually files by Sept 15th. All's well in the neighborhood except the individual shareholder return. So, I am looking at the possibility of changing tax years. If this S-Corp elects, let's say June 30th as a fiscal tax year. how does this change affect the shareholder? Does his tax year change as well, is there a process to go thru requiring IRS approval? Looking at form 1128, understanding the short year; etc, nothing says how the shareholder's tax year is affected. During a conversation this morning with the shareholder, I tried my best to stress the importance of getting me the S-Corp financials as early as possible and to make it a priority. Does this sound like a reasonable idea or not?

Found this below. My thinking was exactly as yours but I thought there were either limits or ordering rules "Yes, but there are limits. Losses on your investments are first used to offset capital gains of the same type. So, short-term losses are first deducted against short-term gains, and long-term losses are deducted against long-term gains. Net losses of either type can then be deducted against the other kind of gain."

No, I have not. After discussing this, the bonus is solely based on reaching on the job goals and profit goals.

Yes, this is for 2021 and thanks for verifying my thinking.

S-Corp contractor paid supervisors a bonus for meeting production goals. No problem so far. The S-Corp paid the bonus as a 1099NEC. This should have been included in each supervisor's W-2. When I questioned the S-Corp, they said they knew this and made each of supervisor's aware that moving forward, any bonus pay would be included in their respective W-2 forms. Isn't the employer required to do catch up/backup with holdings and adjust their payroll liabilities and pay the employer's portion of the payroll taxes? My thoughts are yes. Opinions please.

My client passed away Aug 31, 2021. A revocable trust was created in 2015. My client never informed me they had a trust. While I know this trust is considered a Grantor Trust and does not pay any tax. I have asked the fiduciary/trustee if an EIN was applied for. If it wasn't, it appears things become fairly simple. I can only assume (dangerous thing) that the Option 1 filing method has been used each year. If an EIN was not applied for or granted for the trust, does the trust just automatically terminate and no filing is required? I know the trust itself becomes irrevocable upon death. Should the trustee apply for an EIN, file a final zero 1041? I don't have any information regarding which assets are or were placed in the trust or even if it matters at this point. I did tell the trustee(s) to contact the law office that created the trust for their guidance. I am just now getting the documentation to file the decedent's personal return which no extension was filed. The trustee(s) contacted me in January, and we spoke regarding what needed to be done but I heard nothing and assumed they had taken care of this through other means. Of course, I was wrong. I don't think any of this will have an impact on the decedent's final return. Any advice is appreciated.

Ya know, I try to do this but not boast about it. For the longest time, I did not increase prices and when I did, no one complained. I have taken on a couple of resolution cases and no complaints about the retainer. This upcoming season will be one where prices will increase maybe by 10% across the board. Like all of us, everything has increased. Drake increased the software this year and with the basic budget for basic office needs, to start preparing returns for 2022, I'm close to 5K to open the door. If I have a client that wants to whine about my fees, or a few dollars increase they can move on.

I have been looking to see the status of the proposal to raise the EA renewal fee from $67.00 to $140.00. I checked the docket on the Federal Register and from what I see, it is assumed there has not been a final ruling. If this proposal becomes final, the cost to maintain the EA license, like everything else, will have gone up significantly. I enrolled in the third year of the renewal cycle for my SS# and have to renew by January 2023. $140.00 renewal $35.00 PTIN On the above two fees, I am wondering what do we really get for $175.00? Just the right to practice and be held accountable? $600.00 (Average 100 hours CE Package give or take) Yes, you have to stay updated and it seems it is never ending. I wonder how folks that are seasonal do this without performing some type of work or study all year. My practice started years ago with the idea to work four months in my retirement years and cruise on the beach the rest. That idea was a great plan but, I am now year round and try to only work from 9 till 1 each day M-F. $386.00 NAEA membership & Two states (This is me personally, while some find this as not helpful, I have found it to be very useful for now. I do like their discussion board, but the ATX Community has been the best for me for over 20 years. Other resources such as verifyle and others from the NAEA are useful as well) So, for me, $1,161.00 is the magic number to maintain my EA status. I'm not complaining but I sure hope my clients are appreciative of the additional cost that will cause my fees to increase.

Thanks Judy for doing this. I didn't know if it would be a good thing or not. Quite a bit to read but not tremendously bad either.

The link from the IRS below may help. New rules and limitations for depreciation and expensing under the Tax Cuts and Jobs Act | Internal Revenue Service (irs.gov)

Here is a link to an article that I received this morning. I know some don't like to click on links but I don't know any other way to do this. The article does answer a lot of questions. The Biden-Harris Administration's Student Debt Relief Plan Explained (studentaid.gov)

FYI- I have called on behalf of a client and they were very helpful at stopping the draft.

cbslee, I would agree but the OP said the daughter received the payment just not the letter. Following to see how this comes out.

If I remember correctly, when all the laws surrounding the EIPs, no provision was made that allowed the IRS to collect on errors. Now, I could be seriously wrong here. I am still in possession of the first EIP for my deceased mother. Of course, the check is void now as it has been well over a year. However, no communications from the IRS looking for that payment. I have always wondered if the same applies to those who received the EIP2 & EIP3 in error. For what its worth, if the client has spent the funds or has cashed the check, I would tell them to watch for a letter. There is no provision in any tax software to include an overpayment or payment in error on the client's tax return. Please correct me if I'm wrong.

AWLAYS use separate mailings. Putting multiple mailings in one envelope is opening the door for trouble. Individual mailings will have an individual tracking or certification proving post mark. Grouped together not so much. Good Luck

Yes, they can claim the education credits using amounts paid by their parents or any other 3rd party institution. The fact the daughter is a step daughter has no impact. Just remember, there may be no refund as the tax credits are used to reduce tax liability. I always run the education credits for both the parents and student to see which returns the best outcome. The student MUST meet the eligibility requirements below: Eligible Students The student must be the taxpayer, spouse, or a dependent claimed by the taxpayer. The student must meet all the following requirements to be eligible. •The American Opportunity Credit has not already been claimed for the student for any four prior tax years. •As of the beginning of the tax year, the student had not completed the first four years of postsecondary undergraduate edu-cation, as determined by the educational institution. •For at least one academic period beginning during the tax year, the student was enrolled at least half time in a program leading to a degree, certificate, or other recognized educational credential. •The student had no federal or state felony conviction for possessing or distributing a controlled substance as of the end of the tax year Expenses paid by parents and others. Students who qualify to claim an education credit can use payments by their parents or third parties to claim education credits. Payments are considered gifts to the student

This thing comes down to a reimbursement for medical expenses. Any opinions on putting the contribution or reimbursement amount as other income with the medical expenses as a negative figure to zero out the other income. It doesn't make sense to pay tax on a reimbursement that was less than what was paid out.

Judy, I scanned through the articles you posted and yes, they are helpful and I will research this more. It is my understanding the client was reimbursed from the Christian Care ministry for medical expenses they paid. I'm still waiting on additional clarification on this. I guess you're right on needing to slow down a bit. I agree with you regarding not being able to deduct expenses paid by someone else. So, if the client did receive reimbursement for medical expenses paid, then it should be a wash correct? The discussion within the articles you posted evolve around deductibility of the contributions or monthly share. I'll post more as to what I find.

Ok, I'm bumping this up. After waiting I now have all of the documents and will add the following: 1. This is a Christian Health Care Ministry and DOES NOT qualify as a high deductible plan. 2. form 5498-SA shows total contributions of $37,220.13 3. Form 1099-SA shows distributions of $38,935.42 By the statement received from the HSA, all distributions were taken well before the filing of the 2021 tax return. Essentially, this client never qualified for a HSA because they are not covered by a HDP. So, on form 8889 do I put zero in for the contributions so no deduction is taken? Showing the distribution and the qualified medical expenses isn't a problem. Should a statement outlining what and why be included with the amendment? Another direction, would it be better to show the contributions as other income with the medical expense deduction? Using either of these methods does not change the original return balance due. I'm not sure what the IRS has in the client's transcript. I don't know if the trustee of the HSA has reported anything to the IRS. I can only tell the client they are required to file an accurate return. The only apparent reason is for accuracy and to avoid the 6% excise tax. On the surface seems simply enough. But...... I'm struggling here and need advice. Wondering if contacting the IRS for a ruling would help?

Check this out to see if it helps https://www.berkshireelderlaw.com/life-estate-ownership

If this is. Lifetime estate, the heirs get a stepped up basis after the lifetime tenet passes away. A lot depends on how this was written up. Ask to see the documents. You state the language says the property transfers when it is no longer used. Need to research this further

Not sure yet. I don’t have an official 1099SA that shows the total distributions. I am working from a trustee statement, 5498-SA and that’s it. When I get more info, I’ll post it

Client had received payments from a Christian Care insurance that is promoted by Dave Ramsey. The client chose to have the payments deposited into their individual HSA account. Those deposits are shown as a contribution on form 5498-SA as a total of $37,220.13 for TY 2021. The statement from the Trust Company shows $27,547.73 in distributions used to pay medical expenses. The difference is a contribution in the amount of $9,672.40 which exceeds the limits of $4,600.00 (client is 63) by $5072.40 which is subject to the 6% excise tax. I am trying to determine if the client can withdraw the excess now to avoid the excise tax. All distributions occurred prior to Dec 31, 2021. The client just now sent me the form 5498-SA. No contributions were shown on the 2021 tax return. If I amend the tax return to show the contributions, I'm not sure how all of this will look to the IRS. I did suggest to not have funds deposited this way. Any help with this is appreciated.

Early morning for me as well. Start calling at 6:58 am. I can understand the delays. The last call I made I was on the phone with the agent for 45 minutes, so I guess it makes sense for a back log to occur rather quickly.