Gail in Virginia

VA does not require the 1099s be filed with them unless there was income tax withheld. Therefore, they will not question why they did not get a tax return from this man unless they audit the VA company he worked for. And even then, they will question the company first and it may never get kicked up the line to him.

They get away with it because somewhere in the paperwork they give them is a disclaimer that actually tells the participant to "consult his or her tax adviser." But do they ever do that? Once in a very long while.... My brother-in-law complained yesterday because I told him how to set up his withholding FIVE years ago, and two jobs ago, and did not tell him that he should change it until this year he owes on federal. Not that he ever consulted me when he changed jobs and completed new W4s; I should have just told him every year... My back hurts.

My favorite was the woman who donated a skirt to the local Goodwill, then a week later needed a skirt for an event we were going to and couldn't find one she liked, so she went back to Goodwill and bought her skirt back. I told her it would have been less trouble to just send Goodwill a check.

The only concern I can think of, Joan, is that while there won't be any tax based on the amount in these accounts, would there be a tax issue when added to other accounts the kids may have? And do the grand-kids, or their parents, know about the accounts? Maybe she doesn't want one of her children to pressure her to let the kids have the money now for some purpose. She might want the accounts to stay intact even while the grand-kids are in college (or until college, or whatever.) I think that they are considered a completed transfer, although in VA the registration is usually shown as UGMVA and could be slightly different.

Do the son and his friend qualify for Medicaid? To avoid this conversation next year, can they get Medicaid for March forward so they have a less than 3 month coverage lapse in 2015? And if they don't qualify, is that because your state did not expand Medicaid?

Virginia did not expand Medicaid, but if the unemployed child would have qualified for Medicaid in a state that expanded Medicaid, that IS an exception. However, that is probably based on household income as well - so when you put this "child" on the parents' tax return, and look at the income for the entire household, would the uninsured person have qualified for medicaid? I use ProSeries, and it automatically fills in that exception if the income is low enough to qualify. I don't know if ATX does.

I've had some bad times, been through some mad times, I'm hoping the dirt it won't spill.....

I think that as long as he working on his first 4year degree, has no drug convictions, and otherwise qualifies, he can take AOC. If he previously had a bachelor's degree, then he would not even if he did not use up his four years of AOC. As far as taking it over 4 years, as long a he is considered at least a half-time student, should work. IMO.

My preference would be that the law would mandate that everyone use forms with the same layout as the IRS forms, even if they are going to print them on plain paper. I don't care about the perforations, but I could sure be more efficient if I could look in the same place every time to enter the EIN for the employer, the wages or the taxable income, etc. Instead it sometimes seems as though every company has a different format for their W2s and 1099s.

And you also have to be careful about how the funds are given to the ex-wife. If she has to pay taxes on all of the money that she gets from the retirement plan because it is reported on a 1099R, then I don't think I would consider it a repayment for tax purposes and I think that she should be able to go ahead and deduct the loss. This one sounds like it is a little sticky with alimony, property settlement and repayment of losses all tied to the same marital asset. So i am with Catherine: somebody has to wade through all the financial information relating to the property settlement and figure out what goes where for how much and why and ..... You get the picture.

Thanks, everyone, for the help. I just could not wrap my head around this last night, and you all were wonderful to help!

I have a "new" client this year who has a basis in the IRA's that he and his wife are drawing from. They are traditional IRAs that had non-deductible contributions made in the past. I say new client advisedly because we used to do his return; the last year we did was 2000. Since he bought a computer and decided he could do it himself, no 8606 has been filed for either he or his wife. However, he does still have a copy of the last one that we filed showing the basis he had at that time. Can we pick up where we left off with the basis? Would we need to amend every year between 2000 and now? File a 3115 to change accounting method? Tell him sorry, it has been too long you just lose the basis you had left? This is a new one on me; any suggestions or source material would be appreciated.

I haven't checked recently, but I believe that in Virginia, you used to be able to take the first $1,000 of estate assets to pay for the funeral. I don't think you can get much funeral for that, but that is the amount that used to be allowed for a "bankrupt" estate. After that, everything went to the debts of the decedent. But I don't think it is automatic that someone is appointed to handle things - I think that someone must petition the court to appoint an administrator.

The lease is fully deductible. Just not necessarily in the current year. I am so glad that our customers have so many people to advise them on the proper tax treatment of everything, and all they need us for is to fill in the numbers and get them their refund.

My first question was "who is the beneficiary of the life insurance?" I am wondering if this is similar to "key man" insurance. However, I did not answer because I don't know and this is just not a good time for extra research. I would say that cbslee is probably right.

Did he by any chance terminate his employment with the company that the retirement plan was with? Generally, if the participant is no longer employed, the loan is treated as a distribution.

From the shareholder's instructions for Schedule K-1, on the IRS website: The line numbers in the summarized reporting information on page 2 of Schedule K-1 are references to forms in use for calendar year 2014. If you file your tax return on a calendar year basis, but the corporation files a return for a fiscal year, report the amounts on your tax return for the year in which the corporation's fiscal year ends. For example, if the corporation's tax year ends in February 2015, report the amounts on your 2015 tax return. Does this answer your question?

I am not trying to be political about this. I agree that getting huge refunds when you have paid NOTHING in is a mis-use of the tax system. I am just curious as to how much effect that has actually had versus the changing income structure in this country, and a longer trend line would show that. I am also curious as to how the actual income distribution over the same period of time has changed. I think that the negative refunds are not the ONLY cause of those trend lines.

According to the VA Dept of Taxation website, the answer is "it depends." Actually, that is my answer to every tax question but that is beside the point. If he did not file the return by the extended due date, the due date reverts back to May 1 and therefore the statute reverts back to May 1. From the website for VA DOT: Is there a statute of limitations for a refund if no return has been filed? Yes. Virginia law allows a period of three years from the due date for filing a return, including valid extensions, for filing a claim for refund. An extension is not valid unless the taxpayer files return by the extended due date. Therefore, in the case of a nonfiler, the statute of limitations for refund would expire three years from the original due date for filing the return. For example, the 2007 return was due to be filed by May 1, 2008, and the statute of limitations will expire on May 1, 2011. A taxpayer who is due a refund for 2007 and has not filed a return must file no later than May 1, 2011 to claim the refund. A return filed after that date will be processed to clear the delinquent account, but no refund can be issued.

Interesting chart, KC. I would love to see it also compare incomes by the top 1 percent of wage earners to the incomes of the lower 90 percent, and stretch those numbers back to the 1950s or 1960s. It would be interesting to see how they compare over longer periods of time.

And I agree with both of you: I just am not willing to tell them that it makes sense for them not to have insurance. I prefer to point out the facts on both sides of the argument IF ASKED and let them decide what if anything they should do. i am not going to tell them it makes economic sense to forgo insurance when I have not got a working crystal ball.

By your reasoning, Pacun, it makes sense for anyone to pay the penalty rather than purchase health insurance as long as the penalty is less than the cost of the health insurance. Nobody, no matter how healthy, can be sure they won't get sick or be in an accident and need medical care. That is why we have insurance. And when people without insurance get sick or injured and need care they can't afford, many times hospitals and medical practices wind up providing that care without getting paid. And that drives up medical costs for all of us.

I think they are in alphabetical order for the first 5 or 10 miles, after that I am assuming that it starts adding distance in as a factor. Fun to play with; not sure anyone other than other professionals uses it.

If they each gave the sister $7,500 as a gift, neither of them reached the limit to require reporting the gift unless there are other gifts during the year that you did not mention. i don't think a 709 would be required under these circumstances.

Sorry, Taxman, but I don't use ATX anymore. Do you run diagnostics on all your returns? I seem to remember forms like this and EIC among others populating when diagnostics are run.