Gail in Virginia

But ignoring that it was for education, if he was previously taxed on this $38,000 and has to repay it in 2013, then can't he either deduct it on Sch A or take it as credit under claim of right, as explained in Pub 525? Would that do him more good than going back for education credits when he did not pay for the education he just repaid his employer?

Offhand, I can't answer about the NC part-year. The "oddities" I can think of offhand for them, however, are on pension income, self-employment income, severance pay, and charitable contributions. Almost all pension/IRA accounts get a $2000 exclusion.for pirvate pensions, or $4000 for government pensions. Up to $35000 of severance wages received as a result of permanent involuntary termination through no fault of your own is excludable from NC income. Net Business Income that is not considered passive can be excluded up to $50,000. Depending on income, charitable contributions are sometimes (rarely) deductible without itemizing. If you took the tuition and fees deduction on the federal, that has to be added back for the state. No exclusion from income for discharge of qualified principal residence indebtedness, or IRA used for charitable contribution, nor can you deduct tuition and fees or DPAD on NC. And they do not recognize same-sex marriages. I hope someone from NC will also post - we do a few NR NC returns, and a few resident NC returns since we are near the border. But I am not an expert!

Karen, that has to be hard on you and not a good time to think through complicated tax issues. I am so sorry for your loss.

Do you have the instructions that came with the installation disk? I hate to belabor the obvious, but I always read and follow the instructions. Without going back and digging out old instructions, the only thing I remember that I am sure about is that you install the server first. I might be wrong, but I am sure,

But I do miss the tremendous form selection on ATX. Course, I also miss the days they were located in Maine and answered the phone....

For low income credit, income must be below federal poverty level which I think is just less than $12,000. Since they qualify for federal EIC, they get a credit based on that equal to 20% of the federal EIC. If federal EIC is $13, then 20% is $2.60 for Virginia. Lynn's advice is spot on.

Also, just like the numbers doubled if she is married and her spouse "gives" half the gift, if her dad is married she could give his spouse the same amount she gives her dad without triggering a gift tax filing requirement. Sometimes this is appropriate and works, and sometimes for all kinds of reasons this is not what the giver wants. But remember, that is all gifts during the year total $14,000. per person per giver. If she already gave her dad a $1000 birthday present in January, it would drop the available exclusion to $13,000 for this calendar year. Or if she plans to give Christmas presents, the amount she will spend on her dad would need to be taken into account. I am sure you realize that, but we need to be careful to spell that out for clients.

Has a sales price been agreed on that these extra payments are going towards? I would wonder if they should be installment sale payments, and then if the sale falls through you calculate the gain or loss on repossession. But it sounds like these extra payments may or may not go towards some distant agreement to sell that does not have a negotiated price yet. In which case they seem to be rent, and just have the added feature of lowering the sale price, whatever that turns out to be. Landlord would have more income now, but less upon sale of property. Doesn't really sound like a good deal for the tenant from the little information given.

Supposedly, Virginia reports them to the federal agencies, but I have yet to have IRS or DOL come in wanting money after a UI audit reclasses an employee. I expect them, but so far my clients have gotten by.

And if you all want to pay me $1 or $2, I will report the income, pay the taxes and not gripe (much). Promise.

When we have had Virginia UI audits, they basically want to see everything that deals with financial or payroll records. They are looking to see that employees are properly paid for the hours that they worked, and they look at every check to an individual in the financial records to see if that is someone that should have been treated as an employee instead of a vendor or subcontractor. They look at tax returns and the financials to make sure there are not obvious cash payments to under-the-table employees. I don't know about New York, but agree that this is not the piece of cake a WC audit is.

The only help I can offer from Virginia is prayers. I am very sorry for your losses.

I am not sure you could "technically" make that argument, as it is my understanding that the filing requirement is based on gross income, and not net. So unless his total sales (before reducing for costs) are less than the filing requirement, he would "technically" need to file even though he may have no adjusted gross or taxable income. At least, that is my understanding.

You might create two of the federal returns by beginning with a duplicated federal return, BUT you still have to create them, separate out the income and deductions and check that they are correct. Then you would need to create the PDF's to file with the state returns showing the Pro Forma federal income after separating. It might not be as bad as creating those two returns from scratch, but it is still 5 returns the way I count them.

Try putting the spouse's SSN on the second 2555. If it were a Sch C for the spouse, it would have the SSN of the spouse and not the taxpayer. Perhaps the only way to get two 2555's on the same return is to use the filer's SSN for one and the spouse's SSN for the other to show that they both have foreign source income. Just guessing - I have not had this situation.

This is one area I need to work on, but if we don't value our services enough to charge a decent price for them, why should our clients value them?

What I have in last year's payer manager is State of North Carolina, Department of Revenue, 56-1611838, PO Box 25000, Raleigh NC 27640.

I had not seen that Catherine. Thanks for sharing! I know my husband will get a kick out of that one too - if I ever see him again!

Can't help about the family, but you have friends on this board. And we ask each other for free advice all the time!

Speak for your self, Marilyn. Being crazy is sometimes my only defense!

He could even print the check register once a month and deliver that to you for your use in inputting his disbursement ledger.

You can file this on the parent's return using Form 8814 if I am not mistaken. That way the child does not have to file, but the IRS can match the 1099B to a return.

Have you considered the possibility of you printing checks for them? I don't know how close your office is to their business, but if you enter the checks directly into quickbooks, half of your work in posting the ledger is already done. Depending on how organized they are, if they could drop the bills off once a week or fax/email you a list of checks they need and you could print them for them and they could just stop by to pick them up, sign them, and mail them. They could still maintain a regular checkbook at their office if they need to quickly hand write a check, but you could keep the stock of computer checks. Of course, you would have to charge them more!

I would agree mostly with Pacun. Because the amount is in box 3, I would put it on line 21 rather than a schedule C. I think that even if you deduct the entire $1300 the 1099 and the deduction will go to the IRS computers if you are electronically filing, so I don't see any reason to leave the $1 in income to get the explanation on the front page of the return. Instead I would put the explanation in one of the spaces for other on line 21 with the negative amount. However, I have not had one of these settlements yet and have not done any research. If this amount is refund of fees charged erroneously or illegally, then whether or not it is taxable might depend on the treatment of the fees originally. If they were deducted from income because they were treated as points, or because this was rental property, they might be taxable now. If they were added to the basis of the original real estate and that has since been sold and income or loss reported on the sale, they might be taxable. If they have been added to basis but the property has not been sold, they would probably just reduce that basis. Without more information about whether this was the entire amount they received and whether all of the damages were punitive or some were compensatory, I don't have an opinion about taxation of the amounts.

What a stress-filled year you have had. My heart goes out to you, and I will try to help in any way that I can. I agree with those recommending extensions where feasible - just be cautious about clients that typically owe since filing after April 15 may cause them to blame you for any penalties the IRS assesses for late payment of the taxes. I will hold you and your family in my prayers.