Max W

If he filed an extension for 2013, there is no late filing penalty as long as the return is filed by Oct 15.

Late filing penalties are 5%/month to a max of 25%, so worst case for your clients would be about $325 plus late payment penalty & interest, about $37, if it is 6 months late.

YES. I have filed several three 540 and two 100 corp returns since Sep 1. All were accepted.

I know that PA does not allow deferred contributions for retirement plans.  However, from what I understand the earnings on an IRA are taxed.

Does this  apply to both Code 1 & 7 distributions.

What about distributions from a 401K?

TIA

The client can request his Wage & Income transcripts from the IRS which will show under form 5498 the contributions for each year and the FMV. 

Your practice must have far simpler returns than we see. NO SFR has ever been correct.

First of all you do not know what kind of practice we have, so why do make such a wild assumption.  Secondly, you make an absolute statement "NO SFR" has ever been correct. You are flat out wrong here as well.

Our practice is tax resolution and we get all kinds of tax delinquents, some going back into the nineties.  We see hundreds of SFR's every year and we prepare returns for those where it will make a difference.  However, there are number of SFR's where it would not make any difference.

I have yet to see an SFR that was correct. This is the reason to file the original return.

I have seen many SFR's that would not be changed. Usually it is a single person that didn't have enough withheld on their W-2 or 1099R, even some 1099-MISC. where they cannot claim expenses. 

No need to file an amended if you have not filed an original. An original filed return will supersede the return created by the IRS. However, it is far too late to expect any refund. However, if the client owes tax, he will be liable for it. Offer in Compromise will not even be considered until ALL returns are filed up to date.

If one or more years have been SFR'd it is not necessary to file an original return for an OIC nor for an Installment agreement as long as all the other years are filed. SFR'd years cannot be discharged in bankruptcy.

What the IRS did was prepare a Substitute for Return (SFR). What you want to do is prepare a 1040 and not a 1040X.

There are special addresses that SFR'd returns should be mailed to. If it is mailed to the normal address for returns in your area, it will eventually get to the ASFR Unit, but it will be delayed and this could cause problems for your client if the IRS is pursuing collections.  You can get the address from the IRS PPL line.

And wouldn't you know, most federal employees get a break on collection of their taxes.  The maximum their wages can be garnished is 15%.  There are some exceptions like the FAA where it is 25% (don't know the reason for this, though).

Admission only by male-female couples?

Since her income has been entered into the court records and there is a record of the income claimed on the return, his attorney might be able to go back to court and have the judge compel her to sign an amended return.

Otherwise, let sleeping dogs lie.

Neither innocent spouse nor whistle-blower are a slam dunk.  Your client may not be telling you everything, all the facts and circumstances.

He happily signed the joint return, so no innocent spouse there. If the return gets audited and additional tax is assessed, then that would be the time to file innocent spouse.

With whistle-blower it usually has to be a fairly substantial amount before they will even look at it. Essentially what he would be doing is reporting on his own tax return.  That could take unforeseen turns. The IRS does lengthy investigations, and you never know, they may turn up something on your client.

What he might try is to file the amended MFJ return, but only sign his name.  The IRS will send back a letter requesting her signature.  An official letter might put enough pressure on her to sign.

He can also amend to MFS- IF he can get the marriage annulled.  Then all the returns filed jointly would have to amended.

Here is a little insight into PA's law.

It may be that the person in question is an employee, but the others are not.

There is always the possibility of bureaucratic overreach.

43 P.S. §753(l)(2)( b ).

In Hartman v. UCBR (opinion here), [this link doesn't work, use the one below.]

the Pennsylvania Commonwealth Court applied that legalese gobbledygook to a real-life situation. I love it when a court comes right out and states the holding:

This is a little different than a late filing penalty. (R&TC Code 19131), which is similar to the IRS.  It is a demand for information (return) (Code 19133) and carries a flat 25% penalty.  Sometimes it is called a demand penalty.  Did your client receive a Filing Enforcement letter (FE)?  

It has been in place as long as I can remember - nothing new.  Also, it can't go away as you can see, because otherwise your client would have had a refund.

California FTB is onerous in many ways.  They can assess an unfiled year based on income docs (same as IRS SFR). But they can also assess based on estimates.   Pay mortgage interest?  They multiply by four and use that as your income. $20K M.I. becomes $80K "income".

Have a CA licensed profession or tradesperson, which includes just about anybody in a service profession, contractors, insurance sales people, doctors, nurses, barbers, etc. etc.  They take the average earned by your trade or profession and assess based on it.

From Jack from Ohio

"I personally filed 2010, 2011, 2012 & 2013 for a client in CA in the last 6 months.  All refunds received and not a single notice like this one."

They were not under Filing Enforcement., otherwise they would have the penalty tacked on.

Could he have been using the retirement fund money to make margin calls?

Since this is a tax forum, it should be pointed out that the parents are unable to claim Justina for 2013, but it looks like she got home just in time for 2014.

I had a client with a similar state custodial situation spanning 3 tax years and the parents were unable to claim the dependent for 2 of those 3 years.  Ironically, it was MA, the child being held for some criminal charges.

it's all here

http://www.irs.gov/uac/Form-8843,-Statement-for-Exempt-Individuals-and-Individuals-With-a-Medical-Condition-1

The dividing line between freedom and tyranny gets blurrier every day.

Perhaps this was posted before, but just in case ....

http://www.ij.org/michigan-civil-forfeiture-release-9-25-2013

2010 is a closed year. Would have had to filed before Apr 15 of this year to receive a refund.

kc - " They call it a Demand to File Penalty."

The CA Demand Penalty comes only after several notices have been sent out and after Filing Enforcement has been imposed (FE).

It is similar to the IRS SFR, but some of it is based on guesswork rather than strictly on income reported. For example, if one has paid mortgage interest, then the FTB calculates the income to be 4 times the interest. If someone has a CA Consumer License, which covers barbers, doctors, sales persons, contractors, etc, etc. Then they take the average income for that category and compute the tax based on it.

The demand penalty (25% of the tax) is not applied until various notices have been sent out. However, once applied, it cannot be removed -Even if a subsequently prepared return shows no tax due.

It has to be for qualified expenses, which means - dependent.

For a person not eligible for a SSN, an ITIN must be obtained.

The first step is form W-7. (there is also a Spanish version).

This needs to be filled out and necessary documentation supplied (usually a passport, or in the case of illegals, a Certified Birth Certificate).

To avoid using the original docs, they can be approved by an Acceptance Agent (there is a huge list on the IRS website.)

After that it can be sent in with the tax return - Soc. Security box marked "Applied for"

to the ITIN Operation Austin TX.

http://www.irs.gov/pub/irs-pdf/iw7.pdf

His name, Lindo, translated into Spanish, is quite fitting; excellent, beautiful, fine,.

If the property was sold directly after the rental period, it belongs on the 4797. If it was personal residence after it was a rental, then the sale is on the 8949/Sch D.

You have to tweak the 4797.

If it is only rented for a short period, less than a year, and the intention at the time of rental is to sell and not keep it, you can still use Sch D.

Use form 8949 and click on the "Sale Principal Residence" worksheet.

Here you can account for the depreciation of the rental and put in the days of non-qualified use as a residence.

It will prorate the Sec 121 exclusion and carry the proper amounts to the form with codes appearing in col f indicating what was done.

No need for 4797.

"Personal return was refunds, so there was no need to verify if the IRS received the personal extension."

It may have been true in that case, but it is not always so.

Late filing of a refund return can result in losing elections required to be filed on a timely basis - Bonus depreciation, IRA contribs, NOL carry forward, to name just a few.

For some reason, the transfer of funds may have been rejected. In such case a check will be sent.

I do not know if it is still the case, but years ago, transfers to/from Savings accounts always ran into problems. Never with checking.