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Margaret CPA in OH

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Everything posted by Margaret CPA in OH

  1. If you think of the columns as specific periods of time with each succeeding column including the prior year to date, it should be possible if, as you say, you have all the statements. So were you to look at all (net)income on March 31, that would be the first line, column (a). Then for (b), look at all (net)income from the first of the year or year to date which will include column (a). Likewise for (c) and (d). It may be helpful to create a spreadsheet to do this listing all income items that you would see on the tax form whether or not you have any Jan. 1-March 31. If you will have any at any point, it goes in that column year to date. Maybe get some rest, reread the instructions, follow what TaxTexToo, described, and try again. Think about if you were preparing a tax return on March 31 with all it would entail, then prepare one on May 31 (which would include all the data through March 31 PLUS everything from April 1-May 31, then another on August 31 which would include everything from Jan. 1-August 31, then yet a final return through the entire year. Your income fluctuates but don't you keep track of how much you had as of March 31? How much by May 31 and how much by August 31? And if self-employed how much you spent in each time period? I use Quickbooks for my business and can pull a report for each time period. My Net Income for March 31 is almost 80% of the annual and at Aug. 31 about 95% of the annual because I do only income tax work. However, my adjusted gross income is smoothed out by regular monthly SS checks and monthly interest income. Then in October or so, I draw my RMD to withhold my SE tax for my SE income earlier in the year. Like you, my income from SE fluctuates but other income is regular and some irregular. However, with all my statements I can pretty easily determine my annualized income installments. I hope this helps a bit. Sometimes it is hard to see the forest for the trees. If you want to just send some numbers, I would be happy to sort them as best I can. They can be real or made up but with descriptions and dates so they go in the right bucket. Now try to enjoy today!
  2. I had a client finally decide to go elsewhere a couple of years ago with their partnership return because the family member managing the books got tired of my asking for so much detail and clarifications about iffy numbers. I am much happier now. It was the last of my business returns (outside of Sch. C's) and life is better. It's just too short, in my opinion, to try to deal with missing/incomplete/questionable data and still feel confident about signing a return.
  3. In the few times I've annualized on 2210, I prepared a spreadsheet and got real numbers from the clients. For the columns, note that they are not perfect quarters so I would not take quarter amounts. It isn't impossible to get real figures from monthly statements and, if for self employment, the financials from the client - well, shouldn't be impossible.
  4. This just made my day! I'll be smiling for hours.....
  5. Thanks, Elrod, for always keeping us in a good mood, sharing laughter!
  6. Once I input the signature date for the client on 8879, the message disappeared! Magic there somewhere, breathing easier...
  7. Which forms? All? If so, is the data saved to repopulate? I've used ATX since 1997 and this is a first. Thought I had experienced it all by now.
  8. In trying to finish a return today, the check shows an error message for the extension. "Payment Date must be today's date or later. If this e-file is being recreated due to a rejection, this date must be updated." The 4868 was e-filed May 9 with a debit date of May 10 for the $13,750 payment. It was accepted on May 9. I'm not recreating it. So why would I be getting this message? Will it go away when I input the signature date for the 8879? I've not seen this before and am puzzled. I'm hoping to e-file the return soon.
  9. Tom, this is wonderful and timely. I would replace the Tax Mommy as my son sort of kind of discussed maybe he might be considering starting his own business. While encouraging him, I did rattle off many of the things on your list but really stressed that he needs to have a conversation with his tax/business advisor. Good luck to and with your niece!
  10. Ah, I remember now! See what happens with age and frustration? I have to deal with this now so am anxious. Thanks, younger, helpful folks. I will go review the great insights presented then. My apologies.
  11. Extended client purchased property in July 2020, signed lease with brother for 6 months, $1000 security deposit, $0 rent, to serve as resident overseer while property was remodeled. So was it placed in service July 2020 since someone was living there? As it was clearly below market rent (or was it? may have been uninhabitable for most folks) does that come into play with no deductions? Or was 0 rent in lieu of hiring someone to oversee the project and secure the property? Client put this into her new LLC for which she also bought a new phone and separate line for $1000, logo, business cards, Google GSuite, and IPad for $1200. But no other business was conducted, just finding the property, arranging contractor, etc. Ugh! I really am uncomfortable although she is not disagreeable about not placing in service the rental until Jan. 2021. I think I have to see what happened so far this year. Insights? Her Articles of Organization mention real estate investment and creative services but she says she has done nothing with creative services. Given the expenditures,though, it seems as if she is prepared! The problem is she is a neurosurgeon earning $500,000 and needs to put some money somewhere.
  12. Lion, just wow! Take your time and don't forget to take care of you. At least it's perhaps a bit slower now overall for you.
  13. Thanks again for all this information. I believe the only outstanding debts at death were a small credit card bill which the attorney told executor not to pay and whatever the home had outstanding plus Medicaid payback. The gifts were, I believe, the funds realized from the IRA and annuity distributions and stock sale proceeds, again, well before death, about a year, so not strictly estate distributions. The deceased had just received a clean report from cancer bouts and expected many more years of life. Her death was a total shock to everyone. Sara EA, I'm not sure where you get the $10K per month payback. What do you mean? If you meant Medicaid, I believe that has already happened and it wasn't very much as for only 2-3 months. The executor said it was just a few hundred as she lived in a lower cost home. Regarding the 'income' of the 'estate:' I guess I won't be able to determine the size of the estate until the executor provides information. And if there is claw back of the gifts, how is income determined? The deceased had virtually nothing in the bank as I think most of her depleted income (SS, small pension) went to the home. I guess this will be taking some time as I have no updated information. The executor has been notified that she is the responsible party for the tax due and has, previously, acknowledged that she and sibs will have to pay. The final 1040 awaits until next tax season as she died in 2021. For the possible gift tax returns, if the gift recipients have to return a portion of the money to meet the tax liability, does that then reduce the amount of the gift?
  14. Thanks again for hints. The personal return for 2020 is finished but the deceased will have a final 2021 return. There is no estate tax return as the estate will not be large enough and assets were not even probatable as in trust. There may not be gift tax returns to do as I don't know how many people received how much. Her total gross income including all sources was about $115,000. There will be no gift tax in any event as way below the threshold. But good to know that only the amount above the $15,000 each is potentially available for inclusion. I think the Medicaid rules are a bit different but she qualified for only 3-4 months so not much to payback as I understand. It will be interesting to see what the executor replies. Thanks again to all for input.
  15. This liability might be the case and I don't know exact dates, but I believe the stock proceeds and the money from the IRA and annuity liquidations were passed out in spring of 2020, a year before death. The family, following assisted living staff advice, was trying to impoverish mother to qualify for Medicaid (already stated my feelings about that earlier). I do believe the executor is mostly prepared to pay up personally but having the 3 year aspect and possible gift tax returns needed may prompt her to apply some pressure to siblings. I don't know for sure, but think that some money went to grandkids for college expenses. I have emailed executor with this additional information and questions along with the note that a new engagement letter would be in order for me to further discuss and possibly act on the circumstances. I knew nothing of these transactions let alone the dollar amounts until the paperwork arrived in late February to prepare her returns and she died a month later, the day before we were to meet. The executor seems inclined to answer direct questions but not offer information. Whether this is just intentional or other, I don't know. She is an advanced practice nurse so perhaps, to give benefit of doubt, is unaccustomed to offering information freely that might be considered confidential. I don't suspect nefarious motives but money is a sensitive topic.
  16. I will have to check about who received how much but know that the money was distributed early in 2020, well before she died. Good point about gift tax returns but I did not realize about gifts within 3 years of death are estate assets. Again, nothing was ever mentioned to me until after death. So far as I know, all bills were paid, including mine, except for the attorney (no bill received as yet) and taxes. The attorney told the executor not to pay the credit card bill and I don't know of any others. As this is now getting more involved and taking more time, it may be time to send another engagement letter to address these issues. My original letter does state that IRS representation is a separate matter. I will mention that and see where it goes. This is a problem with new clients which I did not solicit. I was hoping to quietly muddle along with my steady regulars who have been 'trained' to contact me first not after money issues arise. All previous clients that have died have had either no complications with taxes or I have been trustee or executor or fully informed. Retirement continues to appeal...
  17. I will look at this but my recommendation to the executor was for the family to pay up. They got the money. The executor has mentioned that the sibling recipients just may have to cough up the money. I noted again that the balance due is not that great, about $2100 or so. Whatever the cost of trying to finagle a delay or compromise, etc., the money is still owed, these folks had the use of it for over a year. Had there been planning, withholdings would have been appropriate and the shares would have been less by that much.
  18. Thanks for the replies. I have been paid for the deceased's tax return prep and have just been asked about how to now proceed. As they are good friends and fellow church members, I won't be charging for a few words of advice on how to proceed but thank you for watching out for my welfare. They did pay all outstanding bills except IRS as they didn't know how much it would be. Surprise and shock were the reactions. I really don't care about the attorney, however. 'All the money' included gross proceeds from stock of $9800 but she also took a total distribution from an annuity for $15,000, and total distribution from IRA of $40,600 the sum of which and a bit more her SS max taxable. And of course any withholdings were at 10% at most for the 22% bracket. Did anyone consult me for tax ramifications before this took place? Ummm, no, they just listened to someone at the assisted living home who advised them to get her income down to whatever amount it would take to qualify. (In my unsolicited opinion, this scam to spend down to get onto the taxpayer dime while distributing funds to relatives is terrible. It may be legal but I think it is horribly unfair to the rest of us. Down from soapbox.) It's sad that she got a clean report from her last cancer check up about a month before she died of a ruptured intestine, perhaps from all the chemo she endured over the years. I am guessing that the stock was not distributed to save the recipients from cap gains, don't know. My inclination is to tell them the OIC will cost ??? How much??? so not worth it and that they should be prepared to pay. The executor did acknowledge that the kids got the money so are sort of prepared to cough it up. They all have kids in college so perhaps thought Grandma was doing a good thing for them. On the other hand, none of the children lost their jobs during COVID. So I have a message and thanks again for the replies on a summer day. Now go outside and play!
  19. Taxpayer died suddenly after 'estate planning' to qualify for Medicaid. She sold all P&G stock and incurred a hefty CG bill. Daughter is executor. I filed the return and daughter paid about 1/3 with the filing but there are insufficient funds left for the balance of $2150. IRS offers OIC option on Notice CP14, installment agreement or delay collection. Of course daughter and brothers benefited from the stock sale proceeds but had to repay some of the Medicaid funds used for care. They are very reluctantly willing to pay the balance due. Any idea what an OIC costs to process? I've never had any clients in that position. They think it will save a lot of money, I'm not so sure. As executor, the daughter does have the obligation to pay from estate funds but that remains only about $1000 and the attorney has yet to present his bill, 5 months later. Ideas? And thanks!
  20. Wise decision and I misread the capital account amounts. I was thinking the figures were in parens but not reading as negative. Now I see how the number increased! I should know better, duh! Better you doing this than me, for sure.
  21. Sorry I can't help you with this as I purged my brain of partnership knowledge a few years ago after my last one left (whew!) I am puzzled, though, how the capital account can be higher at the eoy with a loss for the year. Is there a way you can add up the income for the years you have done to see whether it is enough to cover this loss? I'm sure someone still active and knowing about p'ships will chime in here soon. My husband also wants me to retire but I have just been shedding the business returns and not taking new clients so easing along that path. Without businesses, I am still (mostly) enjoying the work even with all the credits and more. But no virtual currency! I have already declined one possible new client. Won't do it. Good luck! And remember that amended returns are an option so long as you can honestly state that the returns are true to your knowledge, in my opinion.
  22. There is also an election that can be made to pass through the gains to the beneficiaries. I was trustee for several trusts so made this election titled, 'Trustee makes a regular practice of distributing capital gains. Pursuant to Reg. 1.643 (A)(B), trustee is making a regular practice of distributing capital gains to the beneficiary as trust instrument permits.' So, as Lion noted, read the trust document and see whether it is permitted and whether the trustee has made a regular practice of distributing the cap gains.
  23. Have you checked Pub. 970? I am looking also at QF Handbook. It shows awards 'given for outstanding educational..winner is selected without any action on his part, winner is not required to perform services, and he assigns the prize (my emphasis) to a government unit or tax-exempt charitable organization.. is not taxable. My bold is wondering if that means giving the prize over or noting that it was received from so not sure. In Pub. 970, it says ' a scholarship or fellowship grant is tax free (excludable from gross income) only if you are a candidate for a degree as an eligible educational institution...... and only to the extent: *it doesn't exceed your qualified educational expenses; and more on page 5 which you should read. I can't imagine that there was no tuition although Box 1 may have been blank because it was not paid by outside funds. Have you seen the account transcript? I have had students with scholarships that, on the transcript, show as offsetting the tuition. It would seem to start there and, if determined to be tax-free, I don't see how it could be subject to Kiddie Tax because it wouldn't be unearned (or earned) income which is taxable interest, divs, cg, taxable ss and pension payments, certain trust distributions, unemployment comp. and tribal gaming revenues (from QF). Maybe someone else will chime in here but Pub. 970 is the place to start and clarify with client any conditions of the scholarship and get an account transcript. I'm guessing the student didn't see any of it but if some was distributed as living expenses, that could be another issue. Pub. 970 has a worksheet to determine what is excludable from gross income. How nice that they give you so much time to do this 2 months after the due date and what, two whole days before kid leaves country. /s I say rush job surcharge is in order!
  24. 2026 I've read in multiple places. However, they have done a security update recently for Win 7 which supposedly was out of maintenance some time ago. My computer guy suggests to not worry. I've read several articles including one that stated that a lot of 11 features are already in 10. Also, I don't want to be the test user with multiple fixes and updates for the next year or so that seems to happen with every new OS. I'm good with 10 Pro for a while yet.
  25. You have some good questions here and made me think about my Aussie clients. They are both paid on salary so earn money when visiting in the US. I've never allocated foreign salary earned while in the US as the visits were in the range of a couple of weeks not months. Technically, though, I suppose the money was earned while in the US. I will look this up later, can't now. It would seem to me that both A and B income would be excluded by the 330 day rule but now I wonder if the 2 months income from A in the US would be different. I would think not, but not sure. I hope others chime in.
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