Patrick Michael

I have hired someone to help out during crunch time. They will be working from home and we will be using Portal Safe to transfer files back and forth. What would be the best way to transfer the ATX files, export, backup or is there another way? He will be doing the data entry and I will be reviewing, printing and the e-file. Thanks. Pat

I believe the "may" involves the other criteria that must be meet such as a qualifying child, the camp is so both parent can work or look for work, and filing status.

Done. This is a great forum. I appreciate all the help and free education. As a one man shop it's nice to have a place where I bounce things off on.

Potential new client came in today. Former preparer has retired. Potential client and a friend bought a mini-storage facility together many years ago. There is no formal partnership agreement but they split everything 50/50. Property is listed in potential clients name and social. The former preparer did both "partners" personal returns and just split all the revenue and expenses 50/50 on a Schedule E. This does not seem right to me. Even if there is no formal agreement shouldn't a 1065 and K-1's be prepared? What would be the consequences if the IRS audited the returns and determined that the 1065 should have been done? Should past partnership be prepared and 1040's be amended? Thanks for any thoughts. Pat

Had a client the other day that insisted the 1099-R amount should not be included on her tax return because she already paid the tax on it and she would be paying the tax twice if I included it. After explaining it to her she still does not believe me and wants to talk to her financial adviser. Another one in the hold pile!

Last year preparer took the child tax credit for two relatives (niece and nephew) who the client supported and that lived in Mexico the whole year. Niece and nephew are not US citizens, US Naturals or resident aliens. From what I can find there are no exceptions to the citizenship rule. Last year's preparers is located in a border town and does a lot more of these type of returns than I do and I am wondering if they know something I don't? Thanks.

I don't have a problem with showing a loss. My concern is if the seminars he is attending to teach him how to run the business are qualifying him for a new trade or business (not deductible) or are maintaining or improving his skills (deductible). He is an engineer by trade and has no business experience. So where is the line between the two drawn? I am thinking of deducting only the seminars that he attended after his first sale.

My thoughts exactly. I searched on the "company" and there were several hits about this being a MLM and pyramid scam. They have him convinced he will be a millionaire if he just follows the plan. How does the IRS view these types of enterprises?

New client started a Sch C business as a "Life Coach" this year. He has signed up with a "company" to sell their books, video's, courses, etc. online. He has to pay the company a "membership" fee and is required to attend "seminars" at least 4 times a year to receive training on the "company's" products and to learn how to attract clients for their merchandise and services and to bring new people into the "company". His day job is in a completely different field. He had sales of about $600, for which the "company' sent a 1099. The company charges him to attend the seminars and he has travel out of town to attend. Total expenses for the seminars and travel are about $8K. What do you think about deducting the seminar fees and travel expenses? I'm not sure at what point these seminars change from qualifying him for a new trade or business to maintaining or his improving skills. And yes, he did try to talk me to attending a seminar.

Have you tried filing out part III on 8606 to report the basis of the Roth IRA?

The age restrictions only apply if there is no qualifying children. So if the disabled adult child meets the criteria to be a qualifying child client is eligible for EITC.

Ended up copying and pasting a 2013 amended return letter. I like to use the letter for the addresses where to mail. I give them pre-addressed envelopes but somehow they end up losing them. Thanks everyone.

I prepared an amended return but cannot get the client letter to change the language to reflect the amended return. It reads as if it is the original return. I have looked through the letter options and do not see anything relating to an amended return and tried deleting and adding the letter to no avail. Any suggestions?

Thanks for the help.

Client has a K-1 (Form 1041) for tax year beginning 4/1/13 and ending 3/31/14. I never had a K-1 that was not a calendar year and was wondering if I include it in 2014's 1040 or do I have to amend their 2013 return? I read through the instructions and don not see this in there. Thanks.

If it matters, the check was written out of the wife's account, not a joint account. Would the IRS consider that the whole gift from the wife so a return would have to be filed to show the gift was split between the two of them?

I am preparing my first gift tax form and want to make sure I am understanding the instructions correctly. Husband and wife gave a sister $15,000 cash and will split the gift. No other reportable gifts were made. If I understand it correctly both the husband and wife have to file a 709, but they are mailed in the same envelope. In part 1 - Gifts Subject Only to Gift Tax, the gift is reported in the top section but is it reported in the "Gifts made by spouse" section also? Thanks for the help.

I am trying to make another backup copy of all my 2013 clients but am having trouble. When I go to returns, backup only one clients name shows up in the dialog box. I have turned off the automatic backups in preferences and marked all my returns in the return manager. Can any one tell what I'm doing wrong? Thanks.

I agree with Jack. The more "fluff"you put in the letter, the more she has to object to and argue over.

I applied a couple of years ago and was told top pay was $18 an hour. And they wanted me to commit to 40 hours a week.

He said they have proof she under reported her income and she admitted that she did so to get more spousal and child support. His attorney's advice was to amend to MFS so he (or she) does not know much about taxes. The husband wants to avoid an audit because he is afraid that she may have under reported by more then they have found and that this may have been going on for years so I don't think he would want to go the whistle blower route. He said he wants to do the right thing and I'm sure sticking it her is also a motivator, as long as he doesn't get stuck with the extra tax, penalty and interest.

This is a new one for me and wondering if anyone has had to deal with this. Potential client and his wife are getting divorced and wife self prepared and filed a joint return for 2013. During the discovery process for the divorce the husband learned the wife (Sch C) had under reported her income. She refuses to sign an amended return to report the income. The husband wants to amend to file MFS, but I do not believe this is possible as the filing deadline has passed. They have not been living together for over a year and the husband has not had involvement in the wife's business and had no reason to believe she had understated her income. How should the husband go about reporting this to the IRS since the wife refuses to sign an amended return? Would this situation qualify for Innocent Spouse Relief? Should he file form 8857 now or wait for the IRS to assess additional tax? Thanks.

Hope everyone made it through with their sanity in tact. Efiled MFS return on the 15th and it was rejected because spouse's name/SSN does not match master file. Client is sure the name and SSN is right but it was rejected a second time. Looks like she will have to paper file. What does she have to do to show she filed before the deadline but it was rejected? Thanks.

Thanks in advance for all the help. First time I had to deal with a SEP plan. Sch C TP has a SEP plan with 25% maximum contribution. Using the worksheet I get a maximum deductible contribution of $5,167 (27,800-1,964 (1/2 of SE tax) times 20% (from rate table for Self employed). The plan administrator is telling the TP they can put in up to $6,950 ( 27,800 x 25%), $5,167 from the employer and $1,783 from the employee, and can deduct the whole $6,950. This does not make sense to me since the taxpayer is both the employer and employee (why have the worksheet if they can deduct the 25%). I can't find anywhere in Pub 560 where it says this. Am I missing something? I was thinking that maybe what the plan administrator means is that they can contribute the $6,950 but only $5,167 is deductible. Thanks again for the help.

Anyone know what the penalty is?