Christian

Judy, I have known the father since high school. When he asked if he could take his daughter and children as dependents I agreed he could. Daughter has no income children are on Medicaid the father(s) are missing in action. I asked him if they lived with him which he answered affirmatively. In having my hair trimmed last year I inquired how the grand kids were doing and asked concerning their living arraignments and only then found out they were NOT living with the couple. In any event it looks as if the EIC for them is gone. Both grandparents will be 65 and older this year (2015) which I read as ending their use of the credit in 2015 on the basis of age as well.

Thank goodness I survived another season! I have a number of extensions which I will address over time. Among them is a married couple (grandparents) who support a daughter in her thirties and her two minor children. They are carried as dependents and until now I understood lived with the grandparents. You can imagine my surprise when my barber (the couples wife) informed me they were living in town in a home owned by a relative but were being supported 100% by the grandparents. Unless I do not understand the EIC requirements or have overlooked an exception this disqualifies the couple from taking the EIC for the minor children. Any feedback would be appreciated but I believe their not living in the couple's home eliminates this tax break. I failed to add that both grandparents have earned income he from farming and she from being a beautician.

Rita, If the Service didn't catch the farm losses i discussed in an earlier post do you really suppose they will notice his mistake ?

​OOPs ! Rita is from Tennessee. It's been a LONG three months.

I can state unequivocally a lot of interesting critters are raised on farms in Virginia. And, I did not realize Rita (who looks vaguely familiar) and Gail who looks as if she might be a cuz are from Virginia.

I do very few returns involving the EIC. For those of you who do are you requiring records as indicated in Form 8867 with respect to the child's residence in making final determination as to eligibility? I have been making it mandatory and would appreciate any feedback.

I could not let the season close without adding this info. I talked with the grandfather age 95 who had been doing taxes since 1972. Apparently he deducted carryover farm losses as an expense item on the succeeding year's return Schedule F thus his clients avoided paying self employment as well as income tax. In 40 years plus no apparent audits related to this practice. So much for the vaunted IRS who is gonna get you !!! This error was right in front of any Service employee. I have always wondered why the old farmers I served drew such meager social security benefits. NOW I KNOW WHY !

Needless to say I'll let the Service adjust that loss discrepancy for 2013 if they ketch it.

That was my understanding KC. I figured he made a significant mistake He was a grandson who had bought out his grandfather's long established tax practice. Now after two years he has quit and is "out of the country" leaving this mess and not a few farmers without any attached depreciation schedules until such time as he reappears. What a year this one has been !

A new client came in awhile back. In reviewing his Schedule F I noted an entry on line 32 Excess Farm Loss Carryover with an amount in excess of S150,000. After running the figures for 2013 I found the client had a farm profit over $50,000 for 2013. His previous preparer simply totaled all his expenses PLUS the excess farm carryover loss deducting them from his sales. On line 34 he simply showed zero. This is something I have never seen. Most farmers with whom I deal deduct farm losses from other income they have over on Form 1040. The client had other income on his Form 1040 but there is no entry shown on line 18. Am I missing something here ? This client has a routine cattle farm noting fancy.

My guess is that he wanted to take the costs in a later year. His farm returns invariably show a loss. He pushed the envelope with regard to losses or rather burst the envelope out on all sides. He charged large fees to his clients owing to his ability to get refunds. Little wonder he kept a jar of tums on his desk and smoked like a stack sadly passing on from lung disease and being grossly overweight.

This is a simple side business farm. The owner has a regular job and basically raises a few cows from which he sells a few each year.

A well known local practitioner passed away last year in our area. A number of his former clients have called on me and while preparing one of those returns I noted on the depreciation schedule item listings for fertilizer, feed, and items I normally do not place on a depreciation schedule. I would appreciate any feedback on this as I have always expensed feed, hay ,and fertilizer in the year purchased.

The husband is a non-owner employee. The way I see it they have effectively exposed his HI benefit to regular income tax while denying him the ability to dedut the premiums on Schedule A as he formally did. In other words a foulup in the front office.

A client has come in with a W-2 unlike any I have seen. Her husband's company established a plan for 2014 which permits him to deduct his health insurance premiums pretax and therefore he cannot use the premiums on his Schedule A. All the W-2s I have seen show a LOWER amount in box 1 which shows his wages than is reported in box 3 Social security wages. Her husband's W-2 shows a lower amount in box 3 and the higher amount in box 1. If you subtract his premiums from the gross wages you come up with the amount reported in box 3. I could be wrong but this looks as if an error may have been made at the husband's company. Any info is appreciated.

A client wants to give $14,000 each to two nieces this year. Is the $14,000 limit what can be given by a person each year? Or, is it the limitation on how much he can to each person. I read it to mean he can give $14,000 to any one person which means if he wants he can give $14,000 to as many folks as he wishes.

I thank both of you for your timely response. He elected some time back to carry forward the loss so no problem there. I do a few farm returns but most of them turn a profit. I find it ridiculous that the loss cannot be deducted on Schedule F. I was reasonably sure it was deducted on the 1040 but it's great to have folks who can help.

I have a farm return with an existing operating loss carried over from a prior year (new client). In deducting this loss for 2014 (farm had a profit in 2014) is the loss deducted as an expense item on his farm Schedule F or shown as a separate line item deduction on Form 1040 ?

A couple who own a farm has come to me this year. They have not filed returns for 2012, 2013, & 2014. I have completed 2012 and given it to them. They have an insurance program they participate in called Agri Business which for an annual premium pays medical expenses for them. In addition, so long as the wife is shown as an employee of the farm at a nominal salary they can deduct the insurance premium and expenses as an employee benefit on their farm return thus reducing not only their regular tax but also their social security self employment tax as well. Their problem is they did not file their W-2 for 2013 in 2014 and pay the required social security tax on the wife. I will file the one for 2014 (no problem there as it is for them an annual one time payment). They are hoping to file one for 2013 thus allowing them to deduct an employee benefit from their farm return. As I do virtually no payroll accounting I am unable to answer whether at this late date social security would accept such a late filing even with payment of a substantial late filing penalty. Can anyone address this issue ?

Since a component of this rate is depreciation does it reduce after five years to reflect the full depreciation of a vehicle used for business? Oddly enough I have never needed to address this. In reading the regs I do not see where this is addressed.

Frankly for my part I would just use the sum $300 and applied it against maintenance expenses and let it go. Her former guy used EVERY conceivable thing to show a loss even a small one to decrease their taxes.

A client has come to me this year since her former taxman passed away. She has among her property a couple of timeshares. She rents one or two of these each year for nominal amounts. I have looked but can find no definitive info on deductions from this income. Her former taxman took deductions which I can easily identify but I cannot quite figure his taking depreciation on these units. Can anyone advise a definitive source on this or simply identify the few deductions allowed on a timeshare.

A client who lives out of state married in 2013. In filing her return she chose to file mfs listing her husband on her return as required. This year she sent me his info as well. Lo and behold he filed as hoh listing his daughter as his dependent for 2013. The couple lived together as man and wife for less than six months in 2013. I have never encountered this in 30+ years and am wondering if the Service will be sending him a notice down the road disallowing his filing status. Any info would be appreciated.

Thanks Judy. That's what I needed to confirm. I entered 50% of the reported amounts on Form 8962 and indicated on the second page an allocation of 50% under his social and 50% under hers. They are barely speaking soooooooooooooooooo.

He paid an additional monthly premium for both. She will be filing her own return but not through me. My only issue is if I am reading the division of the advanced premiums paid by the government for them. I am pretty sure I have it right but since this is likely going to be the only one of these I will see this year having additional input is a good idea.