Margaret CPA in OH

Lion, from Church and Clergy Tax Guide, "The tax code specifies that self-employment tax does not apply to 'the rental value of any parsonage or any parsonage allowance (whether or not excludable under section 107) provided after the individual retires, or any other retirement benefit received by such individual from a church plan... after the individual retires' IRC 1402 (a)(8)." Also see Pub. 517.

You know, I didn't look into that but imagine that it must be 403(b) as set up by a nonprofit. In the cases I've had (current and one prior retired couple, both ministers), the plans were denominational. I think so long as the plan is a qualified plan, it doesn't have to be a 403(b) or annuity. I don't have time for further research but lists SEPs, IRAs, nonqualified deferred compensation plans, tax-sheltered annuities (403(b) plans), church retirement income accounts, qualified pension plans, 401(k) plan, and "rabbi trust."

Yes, retired ministers can and do have a designated housing allowance. See the Clergy Housing Allowance Clarification Act of 2002. There are some conditions, of course, but Rev. Ruling 72-249 allows a local church to designate a portion of the retirement distributions it paid to a a retired minister as a housing allowance. Rev. Ruling 75-22 allows a denominational pension fund (as is the case with my current retired minister) could designate a housing allowance because it was acting on behalf of local churches which have the authority to designate such if they maintain a retirement plan. IRS Letter Ruling 773408 reached the same result. This is also not subject to SE tax but one should still do the math (I have a great spreadsheet) to determine that it is not in excess of the FRV or actual expenses. If so, the excess is included in taxable income as usual.

Indeed, then another new one is a traveling nurse filing separately as spouse benefits from student loan repayments with lower income and in 2023 he inherited a taxable annuity. I convinced him to decline filing for tax refund from another state for $58 as he would get a $33 OH credit plus it would cost him $40 for another state plus my time. Then there is the caring big brother who moved a client with beginning dementia to OR to combine households for care giving. But he moved from WA (thankfully no part year as no tax) to OR, too, and had not gotten a new preparer yet so I'm doing both. And he just retired as a minister so pension is designated housing allowance and original client has OH tax free muni's now suddenly partially taxable in OR. I suggested a review of her portfolio. Keeps the little gray cells active but, oh, so tired now! And it's only mid-February! I'm pretty sure the Argentinians will just be MFS all the way.

New clients married 3 years finally living together mid-2023. They are scientists from Argentina, green cards, who lived and worked in CT at Yale and MD at NIH. For 2021 and 2022 they filed as single in their respective states not knowing differently. Their returns were self-prepared with Block software. I'm struggling with how to prepare separate part-year states for each and joint Ohio. Without preparing 9 returns (6 MFS each plus 3 MFJ) to see the outcomes, is there a quicker way to determine the best for them? They have no income other than wages so I'm thinking just MFS this year (and amended py) is the way to go. Sadly, I have now only 1040 program so each extra state is $40 (I already have my 3 selected and not CT or MD), then again, the 2023 income is rather substantial and they do understand this year will be a bit more costly before going back to normal. Suggestions? And thanks!

I am trying to e-file a client with a 1099MISC and 1099NEC. Only one 1096 pulled in but I thought okay. When I look at the 1096, only 1099MISC is marked as being included. Is a separate 1096 needed? If so, it seems that I cannot include in one client prep but need another. And I've already paid for both MISC and NEC. Grrrr.....

My understanding is that, at least in the past, it is separate and it charged separately. The two clients that I have had needing RITA returns, just went to their local office and had them completed for free on site.

I don't know the answer but hope you get it before I have to file and SD returns. I did note that they have to be filed separately now from the OH return.

I will have to get the date of marriage and location but it was in 2023. It's just that each filed single for 2022 in two different states (CT and MD) where they each resided until sometime in 2023 when married and had a single address. I don't know if they had a shared address before relocating to OH. I was just wondering as for Ohio, the prior address would be different for each and for the part year for each, it would be a different state and not married before joining households in 2023. I guess I will have 3 states for this return but just puzzling how to report currently married (yes, I know married as of Dec. 31) but each had a different state address before marriage. It will be interesting for me. Good to keep the little gray cells active, always learning!

This is a new one for me so I'm hoping it's obvious. Couple married in 2023, moved to OH, but each resided and filed in different states for 2022. So for MD and CT, I'm hoping the data entry is clear that each was single during the part-year in their respective states. Any 'watch out for' hints?

I mistyped an address so returned undeliverable after efiling accepted. I tried to login to ATX KB but after 10 minutes of waiting for a passcode, gave up. I looked at IRS Pub. 1220 but it isn't clear to me the steps for correcting and efiled return. Maybe just check corrected at the top of the one form, delete the others and efile again? Thanks!

Sorry I don't know the answer but I think their support is very good and responsive. At one time I even had a phone contact but have now lost it. I had a few bugs in initial set up and they really came through for me. But changing contacts? Weird!

Another resource is the Church and Clergy Tax Guide available through Church Law and Tax published by Christianity Today International. I have subscribed for many years and found it very useful both as a church treasurer and having several clergy as clients. To address your situation would require so many questions. Clearly there is a lack of communication between this church and the minister. My guess would be to begin with asking how the minister files her/his return and whether this person filed Form 4361. You can also check Pub. 517.

Thank you for saving them!!! I cannot believe that those markets still exist. I don't eat any meat any longer let alone dog. Different cultures, different values...

Ahh, the dreaded iphone photos... I had to download an app last year but it still took too much time, in my opinion. This year in my cover letter I stressed that photos cost billable time and were often illegible so encouraged those folks to get a FREE app, like Adobe DC, or even use the scan function that many phones now have then send/upload as pdf files. Although I do bill the time, the aggravation isn't worth it but I appreciate that not all folks have scanning capability outside of a phone. And, in my opinion, do waaaaayyyy too much private stuff, like tax info and documents, on their phones. At least I use Verifyle for client info so if a breach, it's on them.

At least your feline assistants appear to be productive. Mine just hold the papers in place. Well, they purr from time to time providing calming vibes.

I have a Surface Pro 7+ and love it. It's my second Surface Pro, needed to upgrade to Win 11 and more. My main desktop is custom built by my computer guru, no games, etc. and he knows everything about it because he built it.

A new client in Philadelphia has begun a multi-member LLC based in TX taxed as partnership. My understanding, shaky at the moment, is that she will have to file a Business Income and Receipts Tax AND a Net Profits Tax return. This seems overkill but here she is. I am confused, however, about the statement that if there are less than or equal to $100,000 in Philadelphia taxable gross receipts, a NTL (No Tax Liability) form can be filed instead. I'm wondering why gross receipts would be taxed if there may be a net loss and possibly even no money to pay tax. And I'm wondering whether this means 100% of the gross receipts or only this client's share, about 18%. The form seems to have a $100,000 exclusion before tax but not sure whether 100% or her share is to be shown. Maybe I can convince her to move to the suburbs... Thanks for any help!

As a CPA you can join AICPA and obtain insurance through it. I just renewed mine for the umpteenth year and have again added the cyber insurance for $190. It is for $100,000 but I think I need to revisit that in light of BrewOne's note. It does say for each 'claim' but I need to better understand the details. Definitions can be tricky.

Thanks all for rearranging my perspective. The client used the term 'donation' to the producer and I didn't think through the issue. I will be back in touch to confirm the likely scenario described by Lion EA which I think is correct. The fact that the producer is a personal friend of like mind and wants to help should not color the situation. Yes, my church (treasurer here) uses a for profit company owned by a member for printing materials. I just have too many things rattling around in the brain at this time. This forum is such a gem!

Thanks, Patrick Michael. This is helpful. My concern is that any 'profit' would not be only to the nonprofit but maybe some allocation, although I don't know that at this time. I wonder if your NP filed a 990-T. It would seem that it was receiving funds (program?) then using those funds to promote the NP or other cause so may have unrelated business income if it was not a program as defined in their 1023 rather business income. My head hurts.....

A very tiny nonprofit wants to donate/give money to a production company to make a film/documentary or something about a book owned by the np to further education about the topic. The production company is for profit. I am not finding outright bans against this but see something about a possible joint venture leading to unrelated business income if, in fact, the idea is profitable. I don't see where this would qualify as a grant or any kind of scholarship. I would anticipate a loss but also am uncertain as to how to report the use of this money. I know there will be an argument. Ideas?

kathyc2, rental property such as this has remaining gain (after 1245 and 1250 dpn recapture) is 1231 and tax at cg rates if held more than a year. This property was a business for the clients as a rental and fits the criteria for the treatment I expected and now have, thanks to 8582 and numbers going where they belong!

The client has never had PAL's. Usually there was small net income and never more than $25,000 loss so any loss was taken contemporaneously. There was ordinary income from 1245 or 1250 depreciation recapture as there was none. The remaining gain should be 1231 taxed as cap gains. But this gain shown on 4797 Part III line 24 and Summary of Part III Gains line 30. There is a small deduction from some small 1245 pieces with the full gain on line 32. Well, I'll be d*****! I finished lunch and just reopened this return, noting that 3 forms were downloaded at 2:43pm. Form 8582, the missing link. A thing of beauty which I completely missed that was missing. All is now right with my little world with this client. That Surprise entry up there? Gone! Without 8582, the data had no correct place to go so just landed in the wrong place. It's unfair to make my brain work so hard at my age but I am so grateful for folks chiming in. I was 90+% certain I was correct but...but... I hope this is the worst thing that happens this season!

Client sold a rental 4th quarter of 2023. I roughed up the gain by hand and now have input into the software. The last client that had a rental sale was in 2019 and the forms look a bit different but should still have similar result. Surprise! Part I line 2 shows PAL adjustment of -102,764. This should be the gain of 1231 property and the worksheet for this shows the gain. I cannot figure out how that became a loss. It should be CG. What am I missing? They need to make a substantial Q4 payment on this gain to avoid being dinged. Is it because the forms are still draft? I've reviewed the instructions again and still think I am right but don't know how to 'make it so.' Any help would be appreciated and I can't believe I'm asking about something I've done so many times but here it is!