Gail in Virginia

I plan to file the 1065 - I just questioned whether I would need to correct the mess they made by filing w2s on themselves first.

A couple of kids formed an LLC (all on their own, with no legal or tax advice except from their buddies) to do hardscaping in 2022. By the end of 2022 they had decided their wasn't enough profit in this to continue. I agreed to do the tax return for the partnership because they could not find anyone to do it. Once I got the information from them, i found out that they had issued themselves W2s, filed the payroll taxes and filed their own tax returns based on the w2 they got. I know this is wrong. if they had asked me before they did it, they would not have done it because they were the only employees and would not have needed to file withholding forms at all. But they did not ask, until well after the fact. Do I really need to do amended w2s to show 0 wages, do amended 941's to get the payroll taxes refunded and then correctly complete the K-1s or can I ignore it since the end result should be the same amount of taxes? I know they have to amend their personal returns once I get K1s prepared, but since this is the initial and final return I really don't want to get into any more amendments than I absolutely have to. Opinions please?

Christian, if I remember correctly being a half time student is not enough to claim dependency - the student must have been a full time student for at least some part of 5 months of the year. Not getting the degree would be irrelevant - you don't have to be a successful student, just a student.

If I remember correctly, IRS also uses the definition of tax home when determining whether you are temporarily in a location or permanently for purposes of determining if your living expenses are reportable as income if paid by the employer, or deductible if paid by the employee. Since employee business expenses are no longer deductible at all (at least until 2025, if then) then this is used very much but if i am not mistaken it is still a definition that applies to US citizens and might potentially have bearing on state residency for state income tax purposes.

Once a redhead, always a redhead. Hair color may fade, but the attitude remains!

You can file separately and then amend to joint, but you cannot file joint and then amend to separate. At least that is my memory of how this works.

ProSeries won't allow that either, so I am thinking this might be a requirement of the IRS' system.

Scanner, shredder, all this office equipment looks the same.

Congratulations, Catherine! And to mom and dad! I was on vacation and missed the picture, but i am sure it was beautiful!

It sounds like the account went dormant and has been transferred to the lost property division of the state. I think that she would need to make a claim through them rather than through the bank. The procedure for that might vary from state to state, and it will probably be complicated by the fact that she doesn't personally have any title to those funds. But it should be doable. I would google unclaimed property + the state the funds were held in.

The charity is the remainder beneficiary under the will, after a couple of small bequests to family. I am thinking that if you do it all in one year, which is the plan, then the K-1's would divide the income between the beneficiaries, including the church. However, a church is not required to file a tax return and therefore would owe no tax on their portion of the estate.. But not sure that I am thinking about this correctly.

Interesting deduction. I have an estate that will only be filing a fiduciary return. The bulk of the income is from an IRA distribution. The bulk of the estate will be distributed to a church. If the distribution is made before the end of the tax year for the estate, will that make the IRA distribution effectively non-taxable? It seems to me that it should, but it also seems like IRA's should be taxed on distribution.

I have not retired yet, although I hope to soon. I have always been active in my church, and retirement will give me the time to do more for the church, and hopefully do it better. I also like to sew and crochet and I have had very little time for that for the last twenty years. I love to read, and I want to spend more time journaling. I have also wondered if I could possibly write a novel. Plus I do like to watch television and movies. I used to be a lot more physically active, so I would love to get back into long walks and perhaps hiking. I guess once i do all of this, I might get bored but I think it might take a year or two. Besides, if I am home to help my husband take care of the house and yard, maybe he will have time to go fishing - and he might even let me tag along!

If mom gets audited by VEC, they will look at all 1099NEC payments and want an explanation of why they should not be considered an employee. I think with these facts they would reclass him as an employee and accordingly want tax, interest and possibly penalties. Not sure, however, since he acquired a truck - if he purchased the truck and it is in his name, that might help as far as being a contractor. Especially if he is trying to get other clients. Showing bills from him to her, or a contract, or business cards, might all help.

If you were going to report it on a 1099MISC, which box would you use? I think what it is closest to is an account reimbursable for an employee, although it is not exactly that since they are not an employee. But if you are reimbursing the exact amount of the expense or less, I would not think it would qualify as income and would therefore not be reportable on a 1099MISC. I would retain a copy of the bill or other calculation of interest and penalty with the payment information to explain why you did not report it as income. I could be wrong too - that has been known to happen.

I had never heard of this and had to google it to see exactly what a USB pet rock was. Now I know. What will they think of next?

Even on a couple who are still married, and still filing joint, I have had problems with this. If spouse makes the estimates using their IRS account, the estimates are credit to their social security number and may not be credited on the joint return. What a broken system!

I think it is the same year - they want to show that they made millions and yet they want to pay -0- in income tax. They are convinced that is what rich people do and if we were just "good" enough at our jobs to find them those same loopholes, they could make money without paying taxes.

15 months is all that he got? That seems light for such blatant, intentional fraud.

It sounds to me like the contractor's portion of the proceeds would include the liens that were paid off rather than treating them as an expense of the sale. So your client would report the sale proceeds that he received, and if the 1099S was issued solely in his/her name would report a nominee amount to the contractor of the proceeds that the contractor received either in the form of cash or as payment of liens against the contractor. Not sure I am stating that clearly.

For such a small potential filing requirement, and that far back, I agree.

I am thinking that their percentage went up because people have decided that it is a waste of time to try to contact them so they got fewer calls.

I know that at least in the past, Virginia was adamant that if you were a US citizen then you had to have a US domicile even if you were "permanently" living abroad. No amount of explanation would convince them. I don't know if that has changed, and I don't know if they apply the same rules to permanent residents or non-residents. My case was a young woman living in England and using her parent's address in Virginia for her federal return. She had no income from the US and filed a return in Great Britain, but because Virginia was where she last lived before moving overseas they considered this her domicile and insisted on a Virginia return.

I keep seeing headlines in the local papers about SRO issues in the county - referring to School Resource Officers but my brain immediately thinks standing room only, which makes some of the headlines incomprehensible.

I don't think you can supersede an extension, but the taxpayer can make a direct payment through the IRS website for last year so that the funds will count as paid for the extension.