Lee B

"The IRS is advising taxpayers who received a suspicious incorrect Form 1099-G for unemployment benefits they didn’t receive to contact the state agency that issued it to ask for a revised Form 1099-G indicating they didn’t receive the benefits. Besides unemployment benefits, the Form 1099-G can also be for other government payments such as state and local tax refunds, agricultural payments, taxable grants and reemplyment trade adjustment assitance payments. Many state unemployment agencies have been overwhelmed with unemployment claims over the past year and have been slow to respond. The IRS said taxpayers who can’t get a timely, corrected form from their states should still file an accurate tax return, reporting only the income they received. “A corrected Form 1099-G showing zero unemployment benefits in cases of identity theft will help taxpayers avoid being hit with an unexpected federal tax bill for unreported income,” said the IRS. The IRS noted that it previously issued guidance that states had requested about identity theft and unemployment compensation reporting, specifying that no Forms 1099-G should be issued to those individuals whom the states have identified as ID theft victims. Nevertheless, incorrect forms have been going out anyway. The IRS added that taxpayers don’t need to file a Form 14039, Identity Theft Affidavit, with the IRS about an incorrect Form 1099-G. The identity theft affidavit should only be filed if a taxpayer’s e-filed return has been rejected because a tax return using the same Social Security number has already been filed. If taxpayers are worried their personal information has been stolen and they want to protect their identity when filing their federal tax return, they can ask for an Identity Protection PIN from the IRS. The IP PIN is a six-digit number that stops an identity thief from filing a tax return using the taxpayer’s Social Security number. The IP PIN is known only to the taxpayer and the IRS, helping the IRS verify the taxpayer’s identity when filing their electronic or paper tax return."

Boy, we have we have a lot of opinions about this question, if all else fails go to the IRS FAQ page "Q A5. Does someone who died qualify for the payment? Why did the IRS send payments to deceased individuals? (updated November 10, 2020) A5. No, a payment made to someone who died before receiving the payment should be returned to the IRS by following the instructions in Topic I: Returning the Economic Impact Payment. Joint filers with a deceased spouse: For payments made to joint filers with a deceased spouse who died before receiving the payment, return the decedent’s portion of the payment. This amount will be $1,200 unless your adjusted gross income exceeded $150,000" "Will a deceased individual receive the payment? (added January 5, 2021) A payment won’t be issued to someone who has died before January 1, 2020. If you filed a joint return in 2019 and your spouse died before January 1, 2020, you won’t receive a $600 payment for your deceased spouse, but you’ll still be issued up to $600 for you and $600 for any qualifying children, if all other eligibility criteria are met. Regarding eligible individuals who died in 2020, the Recovery Rebate Credit may be claimed on line 30 of their 2020 tax return. Please refer to the instructions for the 2020 Form 1040 for more information."

"Most tax professionals found last season’s filing extension to July 15 helpful and want another this season, according to a recent survey from the National Association of Tax Professionals. Of the 589 respondents, 61.8 percent reported that they thought the July 15, 2020, filing extension for individual returns was positive for them as a practitioner, and 77 percent of tax pros thought the extension was positive for their clients. More than half (53 percent) of respondents favor another filing extension in 2021. Other findings of the survey include: 73 percent of respondents expect the lack of guidance from the IRS on new tax provisions related to COVID-19 relief to be the biggest challenge for 2021. Two out of three respondents expect the biggest challenge for taxpayers in the 2021 filing season to be understanding the tax impacts of COVID-19, including the Economic Impact Payments, COVID distributions and the Earned Income Tax Credit. Almost four out of five (78 percent) believe the delay in processing 2019 returns will affect the 2021 season."

Where I was going with this now that I have time, in my state Partnerships and LLCs are required to have Operating Agreements which spell out what needs to be when depending on changes in the organization which would include dissolution, formation etc.

I have always reported it then claimed the exemption to ensure that my client doesn't get a letter, which I would have discuss with the client and respond to the letter.

You may be in a situation where the taxpayer can meet Head of Household requirements but not dependent requirements. Meeting the 50 % support requirements may be a tough hurdle. You don't say anything about Mom's income and what it pays for.

Yeah, this was another reason I left ATX for Drake 3 Tax Seasons ago, tax form approvals consistently being several weeks later than Drake!

Did they also execute the necessary partnership legal documents and LLC Documents to do the same. You can't just retitle things without these documents.

The key question is did they legally move and retitle the assets? The answer to this question will determine what you do If not, then the LLC is just a shell with nothing in it.

As a practitioner I would go further and give my client a copy of the IRS Identity Theft Guidelines because what our clients need to do more than just get a pin: https://www.irs.gov/pub/irs-pdf/p5027.pdf I would also give them this link to the FTC's Identity Theft Resources: https://www.consumer.ftc.gov/features/feature-0014-identity-theft

IRS FAQ regarding the 2nd Stimulus Payment dated January 19th: "Receiving My Payment Will my second Economic Impact Payment be offset if I owe a federal tax liability, have a payment agreement with the IRS, or owe other federal debts? (updated January 19, 2021) No" Apparently the right hand doesn't know what the left hand is doing?

Copied from the National Taxpayer Advocate's Blog: "Many Taxpayers May Not Receive the Full Amount of Economic Impact Payments to Which They Are Entitled, but the IRS Has the Discretion to Correct the Resulting Injustice. Since March 2020, we have watched as the IRS has worked tirelessly to issue approximately 160 million Economic Impact Payments (EIPs) in 2020 and approximately 147 million payments in January 2021 to eligible individuals, totaling over $413 billion in financial relief. However, millions of eligible individuals are still waiting to receive some or all of their EIPs and were told they would have to claim a Recovery Rebate Credit (RRC) on their 2020 individual income tax return during the upcoming filing season. A recent Treasury fact sheet estimated that “[a]s many as 8 million households may be eligible for but have not yet received payments from the Coronavirus Aid, Relief, and Economic Security (CARES) Act signed in March.” Many more households received a portion of the EIP but not the full amount to which they were entitled. The first round of advanced payments of the RRC (known as the EIP) was worth up to $1,200 per eligible adult and up to $500 for each qualifying child (so that a married couple with two children could receive $3,400). Add to this the second round of advanced payments paid to many, but not all, eligible individuals earlier this month, worth up to $600 per eligible adult and qualifying child. Changing Treatment of Economic Impact Payments and Recovery Rebate Credits Internal Revenue Code (IRC) Section 6402 generally authorizes the IRS to reduce a taxpayer’s refund through offset to repay outstanding federal tax liabilities and requires the IRS to make offsets to satisfy past-due child support, unpaid student loans, and certain other federal and state liabilities. The CARES Act provided that EIPs and the RRC could not be offset to satisfy outstanding debts, with the exception of past-due child support. Since the passage of the CARES Act, the IRS has continued to tell taxpayers that it could not correct or issue additional EIP payments due to lack of resources and that individuals who did not receive some or all of their EIPs would need to claim an RRC when they file their 2020 tax return. The Consolidated Appropriations Act, 2021 (CCA) went a step further and protected the second round of payments from all offsets, including past-due child support. However, it limited that exception only to advance payments and retroactively revised CARES Act Section 2201(d), subjecting RRCs to regular offset rules for unpaid federal taxes and certain other debts. As a result, RRCs are treated differently from EIPs paid in advance. What this means: If you are an eligible individual who has not yet received your full EIP and you have certain outstanding debts, some or all of your unpaid stimulus payment will be withheld to offset those debts. This approach – forcing eligible individuals to forgo receiving an EIP that was exempt from offset if paid timely – is a problem the law and the IRS have created. With the change in the law made by the CCA, the rug is being pulled out from under eligible individuals with outstanding debts. Since the spring, the IRS reassured these taxpayers that if they claim the RRC when they file their 2020 returns, they will get the full amount of stimulus money they are eligible for and be made whole. Now that reassurance turns out to be inaccurate based upon the law change" If you have read this carefully, the Consolidated Appropriations Act redefined round 2 of the EIP payments to now be Recovery Rebate Credits, an advanced tax credit thus subject to being offset by back taxes. Isn't this a wonderful profession ?

When you do that it will be interesting to see how many months returns like this will be hung in"processing" status before before they are finalized?

I agree, everything belongs on the 1099 NEC. Someone needs to advise the bookkeeper not to split up everything like that, although the accounting software that I currently use would total all of the payments no matter how many accounts were debited.

The President has instructed the Treasury Dept and the IRS to immediately expedite the payment to about 8 Million taxpayers, who did not receive either the first and or the second EIP payment(s). It will be crazy trying to reconcile this activity against client questions

"As a result of the new legislation, eligible employers can now claim a refundable tax credit against the employer share of Social Security tax equal to 70% of the qualified wages they pay to employees after December 31, 2020, through June 30, 2021. Qualified wages are limited to $10,000 per employee per calendar quarter in 2021. Thus, the maximum ERC amount available is $7,000 per employee per calendar quarter, for a total of $14,000 in 2021." Since the credit is limited to the employer share of social security( Gross Wages x .062) for 2 quarters, the total credit is limited for lower wage small business employers like retail and restaurants. Basically this credit will more lucrative for higher wage employers.

I would suggest turning off your modem and rebooting with the modem turned off. That would let you know whether the problem was internet related or internal to your computer.

My understanding is that if the taxpayer passed away before January 1, 2021, then the $600 needs to be returned..

Yeah, I efiled a 2019 Form 1040 with Drake 48 hours ago and it's still setting as "pending".

Very strange, I haven't had to use 2FA even once on Drake so far. However I have been using 2 FA on my payroll and accounting software for 3 or 4 years now.

Lion, I just took a quick look at their website and while tax1099.com does offer 1099 state filing, it does not appear to me that it is an integrated option. I may be wrong, but I get the distinct impression that their 1099 state filing is a standalone addon.

If there is no combined Federal/State filing this year what difference does it make?

Many states were never included in the combined Federal/State filing. In past years,I have always had to file 1099 Misc separately to Oregon. This year I have already filed 1099 NEC with Oregon, although it's not required until next year (one year moratorium).

Perhaps my clients are more laid back here in Oregon where we have huge surpluses of Marijuana, THC and CBD. I actually did not get a single call asking about any of this stuff However, I did spend many hours assisting with PPP Loans

It will depend on the situation. If my client me gives accurate detailed info and they received the EIP up front, then no charge. If i have to do extra work then there will be an additional fee, especially if the reconciliation generates a credit on their return.