Max W

The bank account info can be changed at ssa.gov; or the form can be filled out and taken to the nearest SS office.

On HRB's they state that food stamps are included as income in the 50% support test.

I'll accept that.

1 hour ago, cbslee said:

From Line 23  Worksheet 3-1 in Pub 17

"3. Enter the amount others provided for the person's support. Include amounts provided by state, local, and other welfare societies or agencies. Don’t include any amounts included on line 1 .."

 

It appears that support provided by public benefit agencies does count toward the total in determining whether  the 50 % support test has been met.

Pub 17 is not definitive and only gives a generalization.  I would need to see the law stating what is included in income and what is excluded before making such a bold statement.  Under Sec. 8, HUD excludes food stamps from their income calculations, as one of 20 exemptions.  The IRS excludes food stamps as taxable income, which, of course, does not necessarily mean it is excluded from the income calculations for determining dependency.

I don't believe that food stamps are included as income and the Sec. 8 housing does not usually cover the full amount of the rent, but apparently does in this case.  If the support can be established, Mom can be still be claimed for HOH, even if she lives all year on her own.

On 2/1/2021 at 9:22 AM, JRS said:

$10.4 billion in fraud in California.

..... plus another $20 billion the auditors expect to uncover.

1700 claims went to one address.   

Now, we will probably be tod that taxes will have to be raised to pay for the fraud losses.

If there were no prior penalty issues in the last 3 years, then on the 843, write in at the top "First Time Abate", or just simply FTA.  

It can also be requested by phone calling the PPL.

33 minutes ago, JoeFreitag said:

It's a tax free repayment. From what I've read and what my software provider has said to do is claim you did an IRA rollover eliminating the distribution. Enter the amount as rolled over that they repaid. The way they distribute IRA rollovers to the client and then they forward it to the custodian -  it's common to have a 1099-R which was actually rolled into another IRA.

I think this is a recipe for a 100% chance of an audit.  You would be changing the the Code from 1 to G and you would be changing the taxable income (not the distribution) to zero.   This would not match the information reported to the IRS.

An adjustment to income as an offset to the 1099R is far more likely to avoid scrutiny.  

On 1/28/2021 at 10:52 AM, Abby Normal said:

I threw mine out without even scanning, but I have an IRS account and can download my transcript if I want. Also, I won't forget how much I got, but if I did, I can search my bank account for those deposits. I'll probably tell clients to search their bank account for the deposits. This will be easier for those who have direct deposit.

I just checked my Account Transcript for 2020 and it shows both last year's and this year's payments.

You have to report the amount on the 1099-R, then offset it as an Adjustment to Income

If the the 1099R is not reported, the client will receive a CP2000 and then the transactions will have to be documented.  

Are you sure it is an Irrevocable Trust?  If it is a Life Estate, yes it would be a Grantor Trust, which is a Revocable Living Trust.

32 minutes ago, joanmcq said:

I think she can either draw his benefit or her own but not both.  At least this is my understanding of the whole mess.  But why SS/RR wouldn't add in the 20 years of SS that he paid into at the army base I don't know.

You can take RRB, or SS, but not both.  Congress tried to change this 20 years ago under HR1140 which passed the House, but it died in the Senate.

For anyone that wants to confirm the number I provided, it is under paragraph 3, just after the SSA address.

https://www.ssa.gov/OP_Home/hallex/I-01/I-1-4-2.html

2 hours ago, Abby Normal said:

What happens if you enter a made up EIN (31-1111111)?

It will be rejected.  I have had that happen when I keyed in an EIN which had a typo.

Here it is. 

SSA's employer identification number (EIN) (52-6004813) 

8 hours ago, DANRVAN said:

That sounds right Max, thanks.

In actuality, it breaks down to 4.5% late filing and 0.5% late payment per month, so when the IRS issues a letter with the penalties it will show late filing as 22.5%.  The late payment penalty maxes out at 25%.  

Here is a start, but I wouldn't try to unravel this by myself.  SS is the oldest entitlement program and goes back 85 years.  During that time it has managed to create volumes of byzantine, ambiguous and contradictory rules and regulations, all written in legalese. What your client needs to do is consult an attorney that specializes in SS benefits. 

 https://maximizemysocialsecurity.com/what-if-im-eligible-both-railroad-retirement-and-social-security

On 1/10/2021 at 8:49 PM, DANRVAN said:

Is there a potential to minimize penalties for taxes owed?  For example, if an extension was filed, then I believe late filing penalties would jump from 15% to 20% after January 15th.  If an extension was not filed and tax owed, then probably already maxed out at 25%.

The IRS says "each month or part of a month" and nothing about the 15th of each month.  So, all of Jan is 5% and then after Jan 31 another 5%.

Glad to help!

The 2020 tax credit for solar panels is 26%.  If the client paid $23,077 for solar panels, the credit would be $6000.

The generator could also have some deductions (not credits) if it is used to power medical devices.   http://alternate-power-solutions.com/3-ways-installing-a-whole-home-generator-is-tax-deductible/

There is also a deduction if the generator was used as the primary power source during a federally declared disaster.

VA also has a deduction for 20% of the sales tax paid for purchasing solar panels.

As for the savings?  A lot of purchasers of solar panels increase the use of their electricity and that wipes out any of the savings that might have occurred.

According to the IRS ( https://www.irs.gov/individuals/international-taxpayers/fulbright-grants ) there is a good chance that a payment was received in December, as that is when the first payment goes out for a Fulbright Grant starting the following year. 

There are a lots of traps and pitfalls that could occur, such as, blocked foreign currency, foreign taxes paid, whether it is W-2 income or Other income, plus more.

3 hours ago, TAXMAN said:

I wonder when they will process the 2016 returns filed in March/April with c/o to 2017 of refunds. A couple of my TP's after filing 2017 got notices that their 2017 refund was incorrect along with a bill to pay. How to handle??????

Receiving an IRS bill to pay does not mean the account year is in collections.  When the client receives a CP504, Notice of Intent to Levy, that is a yellow warning light.  The next letter will be an LT11, FINAL Notice of intent to Levy.  There are 30 days to respond to this one before the IRS CAN levy/garnish wages, or bank accounts.

The designations CP504 and LT11 are found in the upper right corner of the letter.  The time gap between these is anywhere from 6 weeks to several months.  BTW, sometimes the IRS sends out a CP501, a CP503 and then the 504. 

If it were my client, I would just tell them to wait as the whole thing might be resolved before the Final Notice comes out.

42 minutes ago, ILLMAS said:

I agree 100%, TP has been inform to contact the IRS and the collections company.

This does not pass the smell test.  I have received dozens of these letters and do not recall that they requested calling the IRS.

If the TP has not defaulted on his payments, I would ignore it, anyway, even if legit.

There are 4 companies that are outsourced and you can check their phone numbers here - 

https://www.irs.gov/businesses/small-businesses-self-employed/private-debt-collection

This looks like it may be a good place to start.  It gives 4 different scenarios with bookkeeping entries.  Your case is simpler as there are only 2, not 3 persons involved.

https://www.yourarticlelibrary.com/accounting/partnership-account/admission-of-a-partner-goodwill-revaluation-and-other-calculations/54425

My question to Tom is - Is it Efax or the IRS?

I have been using efax for a long time and I do a lot of faxing to the IRS PPL while the agent is on the phone.  It is usually takes about 3-5 min. for a 2 page 2848.  Every once in a while there is no confirmation even after 10 minutes.  Then the agent will give me another fax number and the fax goes through smoothly.

The IRS computer system is notorious for technical problems with slowdowns and unplanned outages and this may also affect the fax system.

Happy Thanksgiving to everyone on this forum and their families.   Enjoy!