jainen

>>both employers were giving you 400 extra each and your spouse 400 extra each from her two jobs you got 1600 but only should have gotten 800<< Suppose it was a couple of pensions each, totalling $1600 when the actual credit is zero? We have to learn to use Form 2210 in a new way to avoid a penalty for underpayment of estimated tax. It means calculating what part of the penalty is attributed to the change in withholding tables, and requesting a waiver. Some sort of ratio, I suppose--the IRS didn't issue instructions on how to do that. Oh well, at least in 2009 there was only one rate the whole year!

>>Is there any reason to also mail the notarized POA?<< Probably not. I doubt the IRS will reject the filing, since you say you have "POA for tax returns," and I'm sure you could fix it pretty easily anyway. So don't take my next remark too seriously, because I really think everything's fine. But in my opinion you must follow the instructions for filling in Line 5 of Form 2848. Otherwise you would be violating your client's rights by e-filing the return without obtaining an authorized signature on Form 8879. Even if he did specifically authorize his wife, that authorization would not be valid unless and until he were out of the country within 60 days of April 15. In January, there is still plenty of time to get his own signature by simply mailing, faxing, or emailing the form.

>>hh bonds with deferred interest<< Series HH bonds do not themselves defer interest, but they were only issued in exchange for E and EE bonds. Assuming it was not reported annually, accrued interest from the original E and EE bonds continues to be deferred until the HH bonds mature. I presume (but don't know for sure) that you still have the option to report that interest on the decedent's final return, subject to the percentage of ownership. Since that treatment is inconsistent with the 1099, I recommend you disclose your position on Form 8275 or a similar statement. In my opinion, if you treated it instead as income in respect of a decedent the recipient could avoid double taxation by claiming a deduction to the extent it increased the estate tax.

>>a power of attorney attached to Form 8453 that specifically authorizes the agent to sign the return<< In my opinion, Form 2848 as printed rather pointedly does NOT specifically authorize the agent to sign the return. READ THE INSTRUCTIONS to Line 5 at http://www.irs.gov/pub/irs-pdf/i2848.pdf.

>>that was to close the loophole that allowed a working sibling or live-in grandparent to claim a child when parents were too high income<< That is correct; I was wrong on the point. On the other point too--starting in 2009, the tiebreaker rules are not optional. They used to only apply if more than one taxpayer actually claimed the child. Now it's if more than one taxpayer CAN claim the child. Of course, now I like the chart even less!

>>"woman makes zero income" and "TP provides 100% support" - does that combination not communicate "which parent pays the housing costs" ?<< No, not at all. First of all, to my mind zero income says nothing about expenses. She could be using savings. And I wouldn't be surprised if "makes" zero income might not include unearned income, capital gains, an inherited IRA, or other elements of "taxable income," especially when the information comes directly from the client who is not familiar with technical jargon of the tax business. Furthermore, support NEVER includes housing costs such as mortgage, insurance, taxes, and utilities. It only includes rental value. For example, if the father owned the house, he would be providing that support even if someone else were making the payments. And who better to share such expenses than the housemate? On the other hand, Head of Household counts ACTUAL costs, so in such a scenario the housemate might well pay more than half. Why would they do that? Maybe the young family has cash flow problems beyond the father's earnings. Maybe he can't put the mother on his employer's group insurance, or it's cheaper to cover the child on her own private plan. Maybe he has income that he doesn't care to tell his ex-wife about, so he wants to match his expenses to his W-2. Maybe she plans to apply for a grant or some kind of assistance that looks at housing costs. Maybe they just think it's fair. Who knows? There could even be a tax advantage. For example, if he is preparing for an offer in compromise, the father might need to stay within standard amounts. Maybe the CHILD has unearned income and they are avoiding kiddie tax based on the unmarried father not being the legal parent (e.g., the mother was previously married to someone else). Who knows?

>>It certainly doesn't look like this on the FTB website.<< Does ATX have a final version approved for filing yet? What you describe was the draft version. Interesting point, though -- the California 540 is now longer than the federal 1040, and that doesn't even include two more pages of Form CA which adjusts for state/federal differences!

>>he will file as Head of House and will claim child as his son or daughter and mother as dependent using other as the relationship<< In my opinion, the facts presented do not fully support this conclusion. First of all, the original post does not address filing status at all. We just don't know which parent pays the housing costs. We also don't know if the mother will claim the child as a dependent herself, perhaps for a non-tax purpose such as insurance or financial assistance. We can begin with the assumption that no other relative lives in the home or that "Woman makes zero income" means she does not have any unearned income either, but in my opinion it is best to recognize that those are simply unsupported assumptions which still need to be resolved.

>>I love flowcharts<< Other than the format, do you have any comment on its accuracy? Here's another example, the story of Monica and Doris. The author states that "If [mother] Monica does not claim Doris as a qualifying child and [aunt] Sissy or [uncle] Brad have higher adjusted gross incomes than Monica, then whichever of the two has the highest adjusted gross income can claim Doris as a qualifying child." In my opinion, this is wrong--EITHER Sissy or Brad could claim Doris as a qualifying child. AGI would only be a factor if they BOTH claimed her, but in any case it wouldn't have to be more than Monica's AGI.

>>Kelly Erb hits the nail on the head<< I'm still not sure if it's a nail or a screw. The author seems a bit ambivalent too. She concludes that "there's nothing to see here," but before that she predicts a possible "disaster." And what does she mean by, "there is the potential that the withholding from one job could run up the bracket, resulting in too much credit withheld"? In my opinion, withholding brackets are based on income, not withholding itself. And how could she be more irresponsibly wrong than saying, "Retirees and the disabled are not affected by the credit." The new withholding tables are in Pub 15-T, which makes it very clear that, "For the calculation of income tax withholding on pensions, the new withholding tables also apply." In my opinion, underwithholding would count as an effect.

>>includes the 2009 changes<< I confess I find flow charts like this too cumbersome to be useful, so that personal preference probably colors my opinion. But it does not look to me as if this flowchart has been updated with the most recent information. For example, it still defines custodial parent as "the parent having custody for the greater portion of the calendar year." Custody is generally ordered by Family Court, which is irrelevant in terms of a tax dependent. Even considering "physical custody," the test is no longer the greater portion of the year, but the number of nights.

>>cost of living not crazy where they live<< Dependency is not determined by general economic conditions. Who owns the house?

>>There was a thread on that recently, or maybe it was in the NATP weekly.<< I'll be sure to note that in my audit file, under "substantial authority."

>>If he continues to harrass you, I would call the police. << I'm sympathetic, but this is NOT a police matter (unless the "nasty fax" contained a credible threat). The police will say you have a commercial dispute, and they are already weeks behind in criminal complaints. You may find some variations, but your three basic choices are to give nothing more and hope that satisfies him, give him everything you have and hope that satisfies him, or give everything you have plus a couple hundred dollars to an attorney and hope that satisfies him. I don't see small claims as worthwhile since you still won't be able to collect and he will get you a reputation for suing your clients. Make your decision on strictly business terms.

>>she looked at me yesterday and said "Do you the money I earned last weekend".<< Before responding, I would be interested in knowing which words you couldn't bring yourself to type, right before "the money."

. >>Common sense would seem to dictate that you don't retire a form without having its replacement available for filing. << I don't think of common sense in terms of dictating anything, but I do think of the tax code that way. The code changed late in the year. The IRS doesn't have a lot of extra resources available to prepare advance alternatives for everything that might happen, so it has to wait until Congress acts. But it's a bit much for a tax professional to pretend surprise that the IRS is moving very cautiously on this credit. We've covered that topic extensively in this forum, and it's also been all over the news because reporters love to rant about tax cheats. Even you Rick in Cal admitted you were reading about "the new package going through Congress." Chowdahead, who started this thread, has numerous times referred to IRS and other commentary on this credit, once even quoting CNN Money. Now he is using his research to point out an interesting loophole, but he's not rushing to amend the old return.

>>Do the regs spell out minimum # of properties to qualify for R/E prof.?<< No, of course not. When you put it that way, I see how unreasonable I was. Silly me.

>>the IRS is stalling their refund with no basis for doing so<< Come on folks--we are all taxpayers with a desire for efficient government operations. In my opinion it is reasonable for the IRS to expect us to use up-date-forms, and it is not reasonable for us to expect them to roll out a major revision in less than a few weeks. There is also a new 1040-X in the pipeline, so give it some time. You may have noticed that it always takes at least several months to amend for a prior year refund anyway.

>>her boyfriend clearly provides over 50 percent of expense<< It may be clear to you, but in my opinion you have not looked closely enough. First of all, although Pub 501 says welfare is considered support not paid by the dependent, Head of Household uses different definitions. For example, support uses fair rental value while HoH uses actual costs, which might well be half covered by $7000 in a favorable arrangement. You give no details at all about the boyfriend's contribution, but as long as we are making assumptions let's guess that she documented a LACK of support when she filed for that welfare.

>>making his loss for 2010 fully deductible<< Since he is presumably working full time until he retires, he will already have logged more than 850 hours there so he would have to put in 40 hours per week for the rest of the year to meet the 50% test. And even next year, how would he convince anyone that he averages 15 hours per week managing only two properties? Anyway, no. In my opinion, if he treats his rental real estate as a non-passive activity he still can't deduct suspended passive losses until he generates passive income or disposes of the property.

>>Do we inform TP and let him decide<< Always a tough question. The answer is in Circular 230. A practitioner should have a reasonable basis for taking a tax position, which means at least a one in three chance of winning an audit. Within that standard of reasonableness, you can let the taxpayer decide how conservative he wants to be. If he kept contemporaneous notes such as receipts or credit card statements, and is willing to disclose the W-2G discrepancy, go for it. If he demands you take his bare word (while his wife is kicking him under the table) that it was all a business meeting with a new client, go for something else.

>>he issues a 1099misc to the other subcontractor (NOT employee)<< I understand that a lot of people read those financial newsletter columnists who say just put it on a 1099 and that releases you from all responsibility. But I never understood why people who actually work in taxation and related fields parrot such nonsense. Drywall happens to be a dangerous line of work with potential property damage as well as personal injury. When something goes wrong, the contractor is responsible because he brought in the subs, right? And when people start pointing fingers, well, after Enron us paperpushers can't hide anymore. And it's really helpful for us to show we did what we were supposed to do. That regardless of the tax treatment we maintained the Limited LIABILITY Company in proper form. So file the Maryland personal property tax form with the annual LLC report already. And stop saying nonsense like "most preparers don't file LLC forms for MD." Of course they do. They HAVE to, it's the law. If you don't believe me, at least follow your OWN research that proved the same thing.

>>the LLC will be treated as a disregarded entity for Maryland income tax purposes<< I don't think anyone on this thread questions that fact. The discussion concerns an entirely separate matter.

>>Who in the right mind, will suggest to this person to register an LLC and pay $300 yearly!<< I don't know what you consider "the right mind" -- does it only refer to professionals who will work for clients who don't even attempt to comply with basic rules? In my opinion, registration is not for "nothing," but establishes the validity of the limited liability he wants for his operation. Basically I think the guy is a fool to let someone else work construction under his name with such a goofy setup. But he's already in collections, so if he doesn't have any money who else is likely to get sued when there's an injury with no Workers Comp? The financial advisor who endorsed the arrangement, that's who. Anyway, it seems to me an odd thing to try to hide since presumably Maryland already knows about the LLC. Are you saying your state doesn't bother about most LLCs blowing off the filing requirements? All in all, I think this is a pretty weird discussion.

>>I put them outside for the birds and squirrels and now they wont even eat them. The salt has lost its flavor<< It is not reasonable to expect God's creatures to do the work allotted to us. Matthew 5:13 says (American Standard Version) "if the salt have lost its savor, wherewith shall it be salted? it is thenceforth good for nothing, but to be cast out and trodden under foot of men" I think that means you are supposed to scatter the pretzels around in your garage, and stomp on them.