Margaret CPA in OH

Yeah Kea!!!

Thanks all for these really good ideas. Lion, I will create a sheet based exactly on the text and have her complete it but fill in first the student loan amount as his provided support. Let's see where they end up. And you're right, Jack. Even with reducing my practice, I'm not ready to throw in the towel and really want to avoid any of that manure!

Thanks, JohnH, for this suggestion. I will use a modification of it. This person is also my insurance agent, her husband's S-corp is my client, and they have an LLC with rental property as my client. And she is my faith buddy and monthly Margarita pal. I know, I know, too incestuous but it is what it is. We've been through other trying times so will likely weather this one, too. She certainly isn't using me these past 15+ years but I know it will be a financial blow. Maybe she will try someone else and I really don't know everything (can you tell?) - her choice to make and I will offer. Thanks again!

According to the QF summary, LLC can be claimed for a dependent for undergraduate or graduate education. And in the Student Loan Interest section, it states that the interest deduction would not be allowed when the parents claim a dependency deduction and the student takes out the loan because the parents are not legally obligated to repay. However, "it may make sense for the student/child to take out the loan when payments will not be due until after graduation, at which point the child will likely no longer be claimed as a dependent and can, therefore, deduct the interest on his loan." But I guess if the loans total more than half the support, he could not be dependent as the borrowed funds count then, not when repaid. That seems to me that he does qualify from both those perspectives and seems to be clear that the loans can be in the name of the student. But I do believe that the total is pretty clearly more than half his support. I think it would be easier to swallow and for me to explain that the money refunded to him was in excess of the $3700 dollar limit but am not sure that it counts as 'income.' She won't be a happy camper but I don't think it's possible to exceed even the lower amount as 50%. Sigh, because he had no income outside of $56 in dividends, this credit is totally lost. It's a shame that he worked so hard to get this far and arrange his life to be able to finish this degree without having to work and now there is no benefit to him or mother who is providing the home. I suppose he didn't have to choose such expensive education.... Thanks!

Client has 28 year old son living at home finishing doctoral degree. He had no (wage) income in 2011, qualified tuition and other charges of $17,958, nonqualified charges of $1541 and student loans of $23,716. And $4217 refunded back to him. Is the refund back to him 'income' in excess of $3700 which would kick him out of qualifying relative status? QF says "Borrowed funds used for support are counted when support is furnished, not when repaid." But does that apply here? The real issue is more than half the support. So is the education portion of support only the qualified expenses? That plus the unqualified expenses? The total of the loans minus the refunds? I'm already getting some kick back because the client 'cannot answer (my) questions about how much it costs to feed him or provide shelter.' He makes a lunch EVERYDAY (her emphasis) so I assume that she provides all the fixin's. He became engaged in 2011 giving a huge rock to the intended but I wouldn't think gifts would be part of total support - or would they? And I haven't any answers yet about transportation costs (school is about 15 miles from home) or entertainment with intended or travel to and from end of state where she lives. I may lose a friend with this as it would amount to about $2000 with the income tax savings and LLC education credit, depending. And she owes $6000+ without it already. I hate it when things are, to me, a bit murky. Any guidance appreciated!

Congratulations, Ron! Hope you are in compliance ^_^

I hear you. This was supposed to be the beginning of easier tax seasons for me. Called it quits at 2 this morning. And have already 2 new clients and 2 returnees after some absence. Deep breaths and hang in there!

Thanks for the replies. I certainly was inclined to think it a legitimate expense in this business but don't know what sort of account to use. I do have a Truck/Auto Maintenance and Repairs but that is for the business trucks and car. Other suggestions? Thanks again!

Contractor damaged a car with his truck on a job and, instead of reporting to insurance, reimbursed the car's owner for the repairs. This is a first for me. I'm not sure how to handle it. It's $1061 and makes a difference. I couldn't find anything on point is Pub. 535. Thanks for help!

I'm with MAS. I bought my S1500 3 years ago and can't imagine life without it now and only regret I didn't get it sooner.

I looked back at one I did in 2006 and, like you, I knew what the end result should be. I did input the percentage as a back calculation but see that I did have to override on the detail tab for some specific items decided by the shareholders in their agreement. I think that sometimes even the best software cannot accommodate the real world because people don't always do things in life and business exactly as they should according to rules and regs. I think it's more important to report what happened than try to fit square pegs into round holes. Sometimes we do after the fact stuff. Hopefully TaxCPANY or someone else will be able to offer the precise input for you to have a perfect outcome.

Another smallish help is to defrag your hard drive. I try to remember every month or so and it does seem to help.

That is strange. I don't understand why at least one of the listed phone numbers didn't work unless, if the taxpayer is deceased and the number checked was his, the program is to kick it out as it would not be helpful to call a deceased taxpayer. Just a guess...

I believe a phone number is required only when the choice of payment of balance due is a direct debit. At least that is the only time I have ever seen that message and I don't put in phone numbers. The message asks for a daytime phone number so, if appropriate, it could be a work number. Or mail in a paper check. I have a hard time thinking that this is an assault on freedom when the address, Social Security number, birthdate and tons of other information is already there. I should think, if there was a problem with the direct debit, I would almost prefer a heads-up phone call to clarify some anomaly with a live person than have it kicked out and potentially subject to penalities or other unfriendly responses. But that's me. The one with the dumb phone who is also paranoid about putting anything at all on a Facebook page created just within the last few weeks. And I think I'm going to delete it. It's scarier all the time, this privacy stuff!

KC, we do miss you very much as you can tell. Your responses going to the heart of the questions, your gentle humor, and strong encouraging support have set a very high standard for the rest of us. We keep trying and would all be grateful for your continued presence whenever you are able. And do let us continue to support you and your husband however we can. Thanks for dropping in today!

I don't disagree that there should be some support on Sunday at this time, but I was able to log into MyATX quite easily. Maybe try again but it isn't down now.

And we know he must have kept careful records of the purchasers and let them know how much money he was saving them - then. I wonder if he will continue this line of business...

It's real and not new. http://tax.ohio.gov/divisions/communications/news_releases/news_release_050208.stm

Yes, I see/saw that but it doesn't change my position. If the entity self-designates 'corporation' in whatever guise, no 1099MISC is required. But you don't know if you don't have the W-9. I prepare 1099MISC for all entities (for which I have a W-9) that are not, in any form, a corporation. If an LLC is a sm or partnership, I send it. The newer form jsut acknowledges that an LLC can opt to be taxed for federal purposes as a corporation or, if mm, a partnership. I still think sending one or more that may not technically be needed is better than to not send one and discover, on audit, that the expense was thrown out because no W-9 was on file and/or nor Form 1099MISC was issued. At least in my practice, the time spend pondering this is potentially more than the time it would take to enter the data and send it. And I do not believe there is a penalty for sending one unnecessarily. Your mileage may vary.

From my research, LLC's are not corporations, they are companies so I prepare 1099's for those recipients whether single or multiple member. I look at the W-9. If any of the corp boxes are checked, I don't send. I realize this form is about backup withholding and that a handful of corps still are to receive 1099MISC. I tend to follow the Instructions for Form 109MISC. And I have occasionally sent to corps. I don't think there is a big downside to erring on this reporting, in my opinion.

The way I handled a similar situation several years ago was to send a bill with a letter explaining that the returns were completed and ready to submit. For me, I indicated that they should pay what they thought the work was worth. They didn't pay and I never saw them again. I decided it was good riddance to bad rubbish, sighed heavily at the lost time and deemed it another learning experience. Maybe these folks are under tremendous financial pressure or maybe he is just a jerk and you don't want him around any longer anyway.

I hear you and besides, the wrinkles are already in full bloom!

So what do you want, Marilyn? Dry, wrinkled lean or soft, smooth fat? Oooh, phrased that way, I'm not so sure of my own answer now!

Just LOVE this! It explains my 'image' problem perfectly. Jack you are so very kind to share this invaluable advice with us! Your wisdom in all areas is to be admired - along with that new, improved figure.

I am also a one person office but have had an EIN from the beginning even before my PTIN. It's so easy to do you may want to just go online today and get one. I don't know if you will then have to amend your PTIN file or other things, though. Anyway, think about it. I don't want to use my SSN and am frankly surprised that your PTIN isn't enough.