SunTaxMan

Old Jack, "Reallocating?" Why do you use this term? Taxpayer lives in MD - all income is subject to MD state tax, EXCEPT if and when there is a credit for taxes paid to another state. My only "allocating" is to the two states where the income was earned, which "allocation" (1) has not been made YET, (2) would definitely seem to be a requirement of the two states where taxpayer worked, and, (3) SHOULD HAVE BEEN DONE by the employer. My only "allocation" is to the states where income was earned. Are you saying that because the employer did not "allocate" the income to where it was earned, I should not do so? Does the fact that the employer did not track on the W-2 where the income was earned (by state), make the taxpayer not responsible for filing state income tax returns in the states where the income was earned? Doesn't completing this taxpayer's return WITHOUT correctly doing the state returns, where income was earned, open the door for unethical, erroneous behavior on my part? And I realize this does not YET address the potential of local earned income tax or local wage tax issue in those local jurisdictions - an "allocation" I think I will not venture into, because the various local jurisdictions may be (1) multiple and (2) many more than just one place in each state - potential of resulting in a confusing number of local returns in each state. Then again, where do we draw the line at giving the taxpayer a "correct" and "complete" set of returns? Are you saying that I should prepare the returns on the basis of the W-2, even if I know the W-2 is incorrect / incomplete? Thanks,

Every conversation I have had with IRS personnel and instructors who teach the various seminars would indicate that IRS "has ways of determining if a return was professionally prepared and WHO prepared it." Thus, no named preparer on a return that comes out of my computer would be a mistake - even if paper filed. No?

New client. Works multiple locations across USA. Sometimes a week, sometimes several months at a single location. Two locations in two different states in 2011, neither in his home state. My thought is to file state tax returns based on income in each of those two states. He says his employer does not track his location and does not report any income in any state but his home state. (W-2 shows all income in home state.) I am thinking employer has state employment responsibility in states where employees work, BUT employer is not my client. Employee tracks location via expense reports. Employer pays per diem for food, and employee uses company credit card for expenses. Lodging is direct bill to employer. (Employee expense reports track location during the year (via car miles reported and reimbursesd.) My thought is that a state income return should be filed for states where employee (my client) worked. Client says he has never done this and doesn't want to (based on "fact" that "employer is not tracking where he works.") Am I missing something? Am I not seeing the woods for the trees? Method of allocation - he commuted to both locations (weekly, home on weekends) for Jan - Sep and the other Oct - Dec. I see no reason not to simply allocate W-2 by 3/4 and 1/4 and prepare returns on that basis. Will he owe state income tax? Of course! With credit on home state return. Thoughts? Thanks.

A new situation for me. Virginia resident owned residential real estate (not primary residence) in WV. RE sold in 2011. At settlement, client paid 2.5% of sale proceeds to WV as "income tax withheld." I assumed this would be used on non-resident WV return as "withholding" against tax on LTCG on sale of RE. I can find no way to enter withholding on WV return and nothing in WV instructions or web site to address this subject. Indeed, I can find no way to isolate LTCG on this RE sale as WV source income on the WV tax return. Anyone know - is this 'normal' income tax withholding' - similar to FIT withheld on W-2? Is a WV return even required to report sale, LTCG, and calculate tax on WV source income. OR - is this a stand-alone "tax" on non-resident sale of RE in WV? Thanks,

If the ATX program is backed up (green dot), then the database folder is backup, because the Database folder is part of, and contained within, the ATX program each year. If the dot is orange, the folder/file is not yet backed up. Check back later. OPening the Carbonite Info Center will tell you the current status of the back up.

I don't know what "search" you are doing. I have never had a problem with Carbonite not working without error. I have assumed the program will not back up any file that is open - that the crawler only finds closed files.

I do not doubt that payroll in GA is less than in Caribou. I guess I have never called on the weekend, so have not encountered "weekend" help.

In a Gear Up seminar, instructor suggested using 8879 for 1099 - just leave all of the dollar amounts zero. I have been doing that with just a "watermark" for "Form 1099" or "Form W-2" But....... someone, somewhere in the last several days advised a specific form number for 1099 efile authorization. I don't remember the form # and cannot find it in the program. (old age setting in?) Anyone help with this? Thanks,

I found customer service to be somewhat of a problem the very first year CCH took over. Now, I have no issues at all, quick response, experienced people. I am happy with it.

I assume you mean the data files (client files). They are contained WITHIN the program in a folder called "Database." (Same file folder name every year - a handy thought it you start moving "Database" folders around. Since every year is named the same, if you get the Database folder outside the program for any reason, there is no identifier in the folder name as to the year it belongs with, and if you change the folder name, the program will not recognize it when you put it back into the Program folder. If the program is included in Carbonite, the Database folder within the program should also be included. I have no idea why "all files" could not be backed up, unless a file or files, or the program itself, was open. I have never gotten such an error message and have been using Carbonite since 2009. My suggestion is to contact Carbonite support 877-665-4466 or www.carbonite.com. One other thought, if you are new to Carbonite, the very first backup will take time. Mine took about 3 days.

So the consenus here is that there is no correct answer - no definitive resolution to the question. The LLC is still enough of a "hybrid" to mean we can "send" or "not send;" that IRS has made no clear guidance. But, with the increased emphasis on the "send" in the regulations and the increased penalties for not sending, it would seem wise to "send" rather than "not send." Let me share my thoughts (conclusions) from both perspectives with regard to the LLC: (1) the business owner who is faced with whether to send or not send to the LLC vendor/contractor. Request a W-9 and send a 1099 to those who use an "S" or "P" as the clarifier of the LLC "tax classification" - no 1099 to the "C" classification - and if the form is returned incomplete (no descriptive letter on the blank line), or not returned at all, then "send" rather than "not send" - to err on the safe side. and... (2) the business owner who is faced with the decision to encourage "send" or "not send" when asked "Are you incorporated?" the appropriate answer ( my recommendation to the LLC who is my client) is to say simply, "IRS has not clarified their own regulations. So let me send you a W-9 and you can make your own decision." This lets the recipient of the W-9 make their own decision.

Margaret, But...one of the boxes on the new W-9 (I looked at current and prior W-9, revision dates back as far as December 2007)) is "Limited liability company. Enter the tax classification (C=C Corporation, S=S Corporation, P=Partnership. and fill in the blank."

I know Corporations are exempt from having to be sent a 1099-Misc in the course of business. My uncertainty is about LLCs. I assume a business that is a SMLLC, filing a schedule C, does not need to be sent a 1099. Correct? What about LLC filing as an S-Corp - which is my current situation? While we are on the subject, what about LLC, filing as a Partnership? 1099 instructions don't address this aspect and I could not find anyting in message archives, even though I suspect this subject has been beat to death in the past. Thanks,

jetaxes. I understand the entry in Box 14 is not REQUIRED, but a convenience for the employee. Correct?

My appreciation also. Old age is headed our way also. It is wonderful to have a spouse to look forward to caring for and be cared for by. The days ahead may be strenuous and stressful, but Heaven is closer every day.

For tax year 2010, 2% Shareholder Health Insurance had to be added to taxable wages (for income tax) on W-2. For tax year 2011, did this change? I am not seeing references to this, but don't remember seeing anything about a change. Should Health ins be added to wages for 2011? Thanks,

I have a client with an Unemployment 1099-G with an incorrect amount. My suggestion was to call MD DLLR and ask for explanation and/or correction. Has anyone dealt with this? Thanks

The mistake is that the taxpayer used middle initial and the SS card shows full middle name - I have been inserting full middle name as part of first name in all of my payroll and tax work, so I have an exact match for SS card.

Taxpayer prepared their own W-2s for employees. We found a mistake and I am asked to prepare W-2c. One of mistakes was employee name spelling. Questions? SHOULD I correct the name on the W-2c or allow it to remain as taxpayer submitted on original? Am I liable for accuracy-related penalty for NOT correcting the name? Thanks,

Jainen, Very well put. Our middle son has finally gotten a smart phone after years of only, "I just want a phone for making phone calls." For him, 7 was about right.

ATX has 7 years for depreciable life of cell phone. I am thinking 2, maybe 3 for USEFUL life -- for business purposes anyway. What are you doing with depreciable life? Thanks,

Taxpayer is disabled because of auto accident. My question involves premature total distributions from employer sponsored retirement plans BECAUSE of the disability. Payments are not "disability" payments, but are distributions from normal, regular retirement plan, requested BECAUSE of the disability. Payer has coded 1099-R as Distribution code 1, no known exception. I think code should be 3, Disability. Am I mistaken? Code 1 generates 10% penalty. I think code should be 3, so as to NOT have 10% penalty (taxpayer is under 59 1/2 years old.) Resolution - what I am thinking is either: 1. Contact payer and ask that 1099s re reissued with code 3 instead of code 1, OR 2. Report on tax return as code 3 and include explanation and documentation to support disabled status. Thanks for thoughts and direction.

For years I have accepted that fines and penalties are "never" deductible, but also recongizing that (e.g.) if the penalty fee is calculated as a percentage of the payment (as on a mortgage or loan payment) it can be classified as, and included with other, "interest" rather than "penalty." With the economic instability we are seeing, I am seeing Non-Sufficient Funds appearing more frequently in come client's records and am wondering how all of you are handling this. I can see the rejecting, as deductible, a nominal amount for NSF (one payment or even a couple hundred dollars) in a year. But I am seeing higher amounts, some as much as several thousand dollars in a year. Sloppy recordkeeping I understand, sloppy tracking of checking account balance also, but am wondering if there has been any practical change in deducting these amounts. My first thought is that the amount of the "penalty" is irrelevant. It either is, or is not, a "penalty." And, HOW to decuct, if deducted at all - include it is "Bank Service Charges" with no comment? Comments? Thanks

Today I received in the mail a Summons (Subpoena for Records) from a law firm. Summons requires "My Complete File." This is related to a lawsuit brought as a result of an auto accident. The person involved in the accident is a client of mine. The specific person involved in the auto accident, and named in the lawsuit, is a 50% shareholder in an S Corp, which S Corp is also a client of mine - and it is the "complete file" of this S Corp, which is being subpoened. My questions: 1. Do I need a Disclosure Consent from client (the S Corp) in order to comply with the summons? Or does the summons override he Disclosure Consent authority? 2. A "complete file" involves not just profit and loss information and tax returns, but also payroll, which would include names, addresses and social security informaiton for all employees. Do I need a Disclosure Consent from each employee? 3. Should my response regarding the needed Disclosure Consent form(s) be directed to the law firm requesting this "complete file" or to the S Corp? 4. Do I even need to contact my client (either the S Corp or the Shareholder) before submitting required records?

Where are you?