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Terry D

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About Terry D

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    ATX Guru

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  1. Margaret, the 529 earnings are only tax free if withdrawn for educational purposes. The remaining basis in a 529 plan should have come from post tax dollars and I can't see why those distributions would be taxable. Maybe because the Aussie schools aren't recognized by the IRS is the reason for the earnings to be taxable. That taxability of the earnings is pretty straight forward in the regs.
  2. Just to add a different wrinkle, if this is a total distribution then all of the responses regarding the earnings as taxable and subject to the penalty due to the TP age are correct. I am assuming this was a total distribution. If not then the ordering rules apply. Just did one involving the ordering rules and what a PITA to get the broker, who was the third broker to handle this, to come up with what was contributions and what was earnings because my guy was under 59 1/2 and held this thing for 20 years.
  3. To add to my response, is the child under 24 and still a student in school? If so, that would negate my response about supporting onself.
  4. Margaret, I agree something is weird with ATX. Here is the rules from the IRS The additional standard deduction amount increases to $1,600 for unmarried taxpayers. For 2018, the standard deduction amount for an individual who may be claimed as a dependent by another taxpayer cannot exceed the greater of $1,050 or the sum of $350 and the individual's earned income.Mar 7, 2018 Is the child in the OP under 18? While it doesn't seem reasonable that a person could support themselves on 14K per year, it certainly can be questionable when asking if they have provided more than 1/2 of their own support.
  5. I think you are getting confused as to who can claim the AOC. The student cannot claim any part of the AOC if they meet the conditions below. However, the parents can claim the credit for both non-refundable and the refundable portion. There are other conditions for students over 25 who are part-time that can claim the refundable portion of the AOC. All of this stems on the condition that the credit has not been claimed for four years. Yes, the parents can take the AOC if they are claiming their child as a dependent. Usually, income earned by the student doesn't come into play when they are under 24 and still attending college for dependency purposes. In your situation, you have to determine if the student is better off to claim themselves or the parents. If the student's income is below the filing requirement and there are withholdings then it is a no brainer. Student files a return to get the withholdings back and parents claim the dependency to get the education credits. Below is a blurb from the IRS instructions for the AOC. If you were under age 24 at the end of 2018 and the conditions listed below apply to you, you cannot claim any part of the American opportunity credit as a refundable credit on your tax return. Instead, you can claim your allowed credit, figured in Part II, only as a nonrefundable credit to reduce your tax. You don't qualify for a refundable American opportunity credit if 1 (a, b, or c), 2, and 3 below apply to you. 1. You were: a. Under age 18 at the end of 2018, or b. Age 18 at the end of 2018 and your earned income (defined later) was less than one-half of your support (defined later), or c. Over age 18 and under age 24 at the end of 2018 and a full-time student (defined later) and your earned income (defined later) was less than one-half of your support (defined later). 2. At least one of your parents was alive at the end of 2018. 3. You're not filing a joint return for 2018.
  6. Terry D


    Also, and as SaraEA said, these expenses used to go on the Sch A.
  7. Terry D


    The only reason I can see here is the 2106 unreimbursed employee expense has been eliminated. So, if he is indeed an employee and not a sub contractor, then I agree he cannot use the home office expense as the 2106 was used for such expenses.
  8. Terry D

    Online Fax

    Yeah I know and I have never had an IRS agent refuse to fax a transcript. Guess it is all in who you talk to. I wonder if my existing fax number can be ported over to a new fax. Hmmm.
  9. Terry D

    Sch C 199A

    IRA, SEP, & Simple Plans are NOT a business operating expense. Correct me if I'm wrong, but I thought SE Health Ins, SEP and simple plans were deducted on the 1040 and not the C. These items are not used to calculate the QBI.
  10. Terry D

    Online Fax

    I'm curious what type of fax system, preferably online is everyone using? I have been using RingCentral for a number of years and the price keeps going up. Just got a notice they are upgrading me again which will not cost $152.00 per year. Has to be something more reasonable out there. No, I don't have a land line. Suggestions please.
  11. Going out on a limb here. How and why would his pension be Federal Government if he worked for the City of Washington in the District of Columbia? I think it would be a local or State Government pension. I am an NC State employee (teacher) and I don't see the difference here. To be a Federal Government pension, your client would have to have worked for the Federal Government in some capacity. It will be interesting to see what others say.
  12. I really think you have to go with Catherine' suggestion. Get the trust document it very well may help you understand what to do.
  13. Form 8868 is for tax exempt entities. You stated there are form 1041's. I would be extremely careful here the IRS likes to penalize heavily for wrong form filings, late filings and using the wrong extension form. So, be sure the extension form you are using is for the right form to be filed. Google the 8868 and bring look at the form. The form shows which forms to use the 8868 for.
  14. I wonder if the congressmen's proposal includes extending the time to pay? By the OP statement it would seem that is the direction they were looking for.
  15. Follow Lion EA's guidance. Get the statements from the college. I've had two situations within the last two years of the IRS questioning the amounts on the 8863. I have noticed this year the colleges are now putting amounts in Box 1 of the 1098-T. I have also notice those amounts are not entirely accurate either. I make copies (digital) of everything and put them in the client's file just in case my client's get a letter.
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