Lee B

Issue Number: 2021-02 Inside This Issue New law provides additional flexibility for health FSAs and dependent care assistance programs Updated FAQs and new IRS form available for sick and family leave credits Employers can withhold, make payments of deferred Social Security taxes from 2020 New option available to electronically sign and submit Forms 2848 and 8821 Technical guidance: Correction of Form 1099-MISC for certain CARES Act subsidized loan payments A Closer Look: Protecting taxpayers from tax-related identity theft; Delivering the 2021 filing season New forms, publications and instructions on IRS.gov

The Oregon Legislature will be considering a bill just introduced to add back any reduction of the taxpayer's federal tax liability by the total stimulus rebates received. Well, if clients don't want to wait to see what happens, my crystal ball says there will be lots amendments for several hundred dollars. I wonder could you just file the federal tax return and put the state return on hold until the situation is clarified.

Interesting Tax Court Case about lodging and location of "tax home". https://casetext.com/case/soboyede-v-commr

I always used Option 1, but option 2 also works. I considered option # 2 but was always more comfortable with option # 1, of course I was doing the related 1040s.

I guess I am old enough now that I can "off the record" admit that I was not always perfect. Many years ago, I did not correctly include the premiums in W -2 Wages for more than one client. Frankly, what I did was classify the premiums as a M - 1 adjustment, then take the SEHI on the owners 1040. It always sailed thru with no questions. There now I feel much better.

Did the S Corp pay the Health Insurance premiums or did the S Corp reimburse the 2% owners for the premiums?

"Secure Access" sometimes called "Online Account" does the following: "Online Account is an online system that allows you to securely access your individual account information. You can view: The amount you owe, updated for the current calendar day Your balance details by year Your payment history and any scheduled or pending payments Key information from your most recent tax return Payment plan details, if you have one Digital copies of select notices from the IRS Your Economic Impact Payments (EIP 1 and EIP 2), if any You can also: Make a payment online See payment plan options and request a plan via Online Payment Agreement Access your tax records via Get Transcript"

Interesting, in Drake if you don't input the number received you get a red error message.

I set up my IRS Secure Access account several days ago. It took me about 10 minutes. It certainly was the most rigorous account set up that I have ever done. The simplest most direct link is irs.gov/account.

"The latest scam email states it is from “IRS Tax E-Filing” and carries the subject line “Verifying your EFIN before e-filing." "Tax professionals who received the scam should save the email as a file and then send it as an attachment to [email protected]. They also should notify the Treasury Inspector General for Tax Administration at www.tigta.gov to report the IRS impersonation scam. Both TIGTA and the IRS Criminal Investigation division are aware of the scam."

The title to this thread is somewhat misleading, since Oregon does not consider the stimulus rebates to be taxable income. However the calculation of Oregon Taxable Income can be affected in some situations. Oregon allows a subtraction for Federal Tax Liability capped at $6,950. Since the stimulus rebates are considered to to be credits which reduce Federal Tax Liability, some Oregon taxpayers may end up paying $ 300 or $400 more in Oregon Tax due to the reduction in their Federal Tax Liability. However many families whose Federal Tax Liability is zero due to EITC and or CTC wil not be affected. Also higher income taxpayers whose Federal Tax Liability is not reduced below the $ 6,950 cap will not be affected.

The only thing available is the $250 Educators subtraction.

Except that the employer is still required to withhold Medicare and apparently no withholding of any kind was was done.

If the employee is no longer working then it's the employer's responsibility.

Key Question: How was the Square account set up, under the Corporate Name or personal name or ? What was the reason for requesting abatement?

No, my post was the IRS position regarding the business expense deduction of educational expenses.

July 15th would be welcome because right now I have 4 PPP Loan Forgiveness Apps to deal with plus 2 Second Round PPP Loan Apps to prepare and submit. I have told my handful of 1040 clients, no appointments until after March 16th.

Yeah I have seen multiple articles. Generally I try to avoid discussing potential legislation unless it's fairly far along. This leigislation still has a long ways to go.

Your client could have fixed this problem by closing though a real estate attorney before year end. Don't try to fix this for your client because then it's becomes your problem.

I used to have a long time client with multiple businesses that always brought his tax info late and always expected me to have everything done quickly. For years I put up with that behavior although I did raise his fees well above my normal fee. Finally last year now that I am semi retired I told him 3 different times that I would have his return or project done a week later than he wanted. Thankfully he has moved on to inflict himself on another accountant. It just got to the point where the money didn't matter any more.

IRS Letter 1444 B dated Feb 18th, showed up in my mailbox today. Amazing , definitely wasn't expecting to even see one!

Excerpt from IRS Topic 513: "To be deductible, your expenses must be for education that (1) maintains or improves skills needed in your present work or (2) a law requires to keep your present salary, status or job. However, even if the education meets either of these tests, the education can't be part of a program that will qualify you for a new trade or business or that you need to meet the minimal educational requirements of your present trade or business."

I have been doing this on my own tax return since the first year it was allowed, just as Lion described. Very easy. Also have most of my clients who qualify doing this also.

Copied from IRS Website: "The IRS is now opening mail within normal time frames. The IRS has also made significant progress in processing prior year returns. As of January 29, 2021, we had 6.7 million individual tax returns in the processing pipeline. For refunds that could not be issued in 2020 because the tax return is being corrected, reviewed or awaiting correspondence from a taxpayer, the refund will be issued as a paper check in 2021 per our normal processes. Taxpayers are encouraged to continue to check Where’s My Refund for their personalized refund status. How long you may have to wait: It depends on where you sent your tax return and where it is in the process. We are processing returns we received over the summer due to the extended July 15 tax filing due date and, in some cases, are processing tax returns dated as early as July 15, 2020. However, we are rerouting tax returns and taxpayer correspondence from locations that are behind to locations where more staff is available, and we are taking other actions to minimize any delays. Tax returns are opened in the order received. As the return is processed, it may be delayed because it has a mistake, is missing information, or there is suspected identity theft or fraud. If we can fix it without contacting you, we will. If we need more information or need you to verify that it was you who sent the tax return, we will write you a letter. The resolution of these issues depends on how quickly and accurately you respond, and the IRS staff trained and working under social distancing requirements to complete the processing of your return. What you should do: Other than responding to any requests for information promptly, there’s no action you can take. We’re working hard to get through the backlog. Please don’t file a second tax return or contact the IRS about the status of your return. SPECIAL NOTE E-filing your 2020 tax return: To e-file you will need to enter your AGI from your tax year 2019 tax return. If your 2019 return has not yet been processed, you may enter $ 0 (zero) as your prior year Adjusted Gross Income. If you used the Non-Filers: Enter Payment Info Here tool last year to register for an Economic Impact Payment, enter “$1” as your prior year AGI."

The instructions for 1120S just say that it should be a separately listed line item under 17V.