Patrick Michael

One situation I can think of where there were

On 4/15/2022 at 9:46 PM, jklcpa said:

I am curious how parents have basis in the home for $520K, have lived there for 17 years, and now it has a decline in value when prices have done nothing but go up significantly, especially in the last couple of years. Is the property in such disrepair that there was no increase in value in those 17 years?

One way this could happen comes to mind.  If there were substantial capital improvement(s) that did not add market value to the home.  We had a home owner in our area that added a new addition to their home for an indoor pool.  I doubt they could ever re-coup the cost of the addition and pool as this is middle class area of the city..  

Received one yesterday from a "new client" that said "You will be grateful (sic) for preparing my tax".  

it is all too easy us to forget make sure we take time for ourselves, family, and friends this time of year.  Two close friends of mine passed away from cancer a couple of weeks ago, reminding me that time away from family and friends can never be recovered.

Off to my granddaughter's Easter chorus recital in a couple of minutes.  The rest can wait.

Thanks Judy.  I missed putting it on 14B (guess that what happens when you're reading IRS instructions at 11 PM after working all day!).  The 6% penalty is still calculating on Form 5329.  Is this correct? And do I have to add the$1,253 back into their income on Sch 1 since it was not included in Box 1 of the W-2?

First time I have run into this and the more read the instructions the more confused I get. Client changed jobs in 2021 and had $1,253 in excess HSA contributions between the two jobs, reported as "W" on the W-2's. This amount is showing up on Line 47 of Form 5329, with the additional tax calculated. He withdrew the excess plus earnings as soon as I notified him. My questions:

Is the excess still subject to the 6% tax?
Where and how do report the withdrawal of the excess?

Thanks

10 hours ago, Sara EA said:

Does this mean that if you jointly received EIP3 for a dependent, each spouse is considered to have received half.  The one who doesn't claim the child got $700 too much and doesn't have to pay any back.  The one claiming the child gets an additional $700.  Unreal.

This from the Feb 10 IRS FAQ:

Q E11. Joint Economic Impact Payments: What if my spouse and I received a joint third Economic Impact Payment and
we are not filing a joint 2021 tax return? (added January 13, 2022)
A11. When third Economic Impact Payments were jointly issued to two spouses, each spouse must claim half the
payment when calculating the 2021 Recovery Rebate Credit if they are not filing their 2021 tax return jointly. Each
spouse must enter half the payment in the tax preparation software or on the 2021 Recovery Rebate Credit Worksheet.
If filing a joint return, you will include the total amount of the third payment issued to you and your spouse.

Q E15. Dependents: Can my 2021 Recovery Rebate Credit include an amount for a qualifying dependent if the
dependent received the third Economic Impact Payment or someone else received the third Economic Impact
Payment for the dependent? (added January 13, 2022)
A15. Yes, if you meet the eligibility requirements to claim the 2021 Recovery Rebate Credit. The amount of your credit
may include up to $1,400 for a qualifying dependent you are claiming on your 2021 return.

That's how I am reading too.  I have a family with 6 kids under the age of 17 who will be getting over $10,000 more filing separately.    

Just found this FAQ.  https://www.irs.gov/pub/newsroom/fs-2022-09.pdf?fbclid=IwAR36PKI8b58-pXS2L4B4asxNGUTLvbqM1-Tt6RFbzDodkxsWT7oYOm2m3aQ

Q E15.  Dependents: Can my  2021  Recovery  Rebate  Credit  include  an amount  for  a  qualifying  dependent  if  the dependent  received the  third Economic  Impact  Payment  or  someone  else  received the  third Economic  Impact Payment  for  the  dependent?   (added January  13,  2022)

A15.  Yes,  if  you  meet the eligibility  requirements  to  claim  the 2021  Recovery  Rebate Credit.  The  amount  of  your  credit may include  up  to  $1,400  for  a  qualifying dependent  you  are  claiming on  your  2021  return.   

I am struggling with this too.  Not so much the ACTC because that seems pretty cut and dried.  But I can't find anything saying you can/can't double dip on EIP3.  I've been telling clients, and putting it in the engagement letter, that this is a gray area and they may not receive it, and if they do, they may have to repay it in the future.

Just another example of rushing legislation through without digging into the details and looking for unintended consequences. 

I have run into a similar situation with unmarried couples who have children in common.  In these situations, not only do they "double dip" on the CTC, but also the third stimulus payments.  I can not find any information saying this is permissible or that it is not.  I hope (maybe more a wish) that the IRS would come out on some guidance on this.  

This falls into the "seems to good to be true" category and I need a sanity check.

Unmarried couple, 2 biological children.  All 4 lived together the whole year.  Mom claimed both kids last year.  She received $4,200 in stimulus money and $3,300 in ACTC in 2021.

This year father claims both kids, he gets $2,800 in RRC for the children, and $6,600 CTC.  Mom does not have to pay back the ACTC because her income is below $40,000.

There is no tie breaker issues as the parents agree on who gets to claim the children.

Am I missing something here? 

I may be wrong, but don't you have to be a  person eligible to practice before the IRS to use form 2848?  I am not a CPA, EA, or attorney.  Is there any way for me to pull transcripts?

From NATP:

IR-2022-18 notes that people whose tax returns from 2020 have not yet been processed can still file their 2021 tax returns. When e-filing, taxpayers need their AGI from their most recent tax return. For those waiting on their 2020 tax return to be processed, IR-2022-18 also states to enter $0 (zero dollars) for last year’s AGI on the 2021 tax return. If the taxpayer used the non-filers tool in 2021 to register for an advance child tax credit payment or third economic impact payment in 2021, enter $1 as the prior year AGI.

Maybe I'm missing something.  When I  go to the new IRS revamped site (https://www.childtaxcredit.gov/), I don't see anywhere where the client can get the amount of ACTC's.  Just two options, one to file and one to see if you're eligible.

On 1/26/2022 at 10:16 AM, DANRVAN said:

Unfortunately, it sounds like he did not seek tax advice until after the fact; and the incentive money he received has all been spent?

LOL.  They never call before hand and then it's your fault they have to write the check!

 Some additional info I probably should have included.   There is no requirement that any renovations have to be done, just sign off on a new C of O changing to single family residence.  He is planning on rehabbing it back to a true single family but can't start until the other tenant's lease is up in October 2022, so no expense to wash out the "income" this year.  And, even if he did the renovations in 2021, he will have to capitalize the improvements, writing off the expense off over 27 1/2 years. The additional income in 2021 is going to push him into 22% bracket, with most of it in that bucket.  Maybe I'm grasping at straws her trying to help him out.  He already has cash flow issues and this certainly will not help.  

Taxpayer owns several two family rental properties.  The village where they are located wanted to reduce the number of two family homes so they paid an "Incentive" to property owner's who converted two family homes back to single family homes. Taxpayer received a 1099 MISC from the village for the amount of the incentives in box 3, which is significant.  I do not believe this is income and the 1099 should not have been issued.  I believe this should be a reduction in basis.  However, my research has failed to find anything to back up either position.

Has anyone else run into this or similar situation?

I also use IDrive to back up the cloud daily.  I'm not super savvy and found it was very easy to set up.  It has saved my butt several times when I accidentally deleted a file.

They also allow you to set it up on up to 5 computers, so I also use it to move whole folders and files back and forth between my laptop and desktop computers. 

If all the three lived together for the entire year then he can claim the child.  Per IRS (https://www.irs.gov/faqs/filing-requirements-status-dependents/dependents/dependents-3) Generally, the child is the qualifying child of the custodial parent. The custodial parent is the parent with whom the child lived for the longer period of time during the year.  No 8332 required since she is not giving up claiming the child.  If they both claim the child it will come down to the tie breaker rules.

Also new this year for NY  you must post the following items—prominently and conspicuously—at every location where you provide tax preparation or facilitation services to clients:  

a copy of your current Certificate of Registration, issued by the Tax Department

a current price list in at least fourteen-point type that includes, but is not limited to:

     a list of all your tax return preparation and facilitation services

     your minimum charge for each service, including each type of federal or New York State tax return you prepare or provide facilitation services for

     a list of the factors—and their associated fees—that may increase your stated charge

the Tax Department’s Publication 135.1, Consumer Bill of Rights Regarding Tax Preparers

On 1/12/2022 at 3:21 PM, grandmabee said:

Doesn't it seem slow to you?  I log in for a client and reclass where they put things in expenses and it is so slow going from one screen to the next and how many steps to get it done.  Desktop is so much faster for me.  I have a fast computer so it is not that.

One trick I have found is it's running slow or doing weird things is to empty the cache and restart the browser.  Sometimes it works, sometimes it doesn't.

I have the same issue with EITC.  Unmarried clients, living together with 3 children in common.  One earns over 400K a year, the other about 20K.  One files HOH (claims one child), the other single (claims two of the children).   Since they agree on the claiming of the children, the higher AGI tie breaker rule does not kick in, and the single filer is able to claim EITC and the CTC.  Nothing illegal, but is that really what EITC and the CTC was intended for?

I use QuickBooks Online.  When you get the Accountant version you get the subscription and payroll for free.  I know some people do not like the online version.  It took awhile to get used to and the figure out a couple of work arounds, but it works fine now.

21 hours ago, DANRVAN said:

I am curious as to where you saw that phrase.

https://engagecpas.com/blog/why-real-estate-shouldnt-be-held-in-an-s-corporation/

I have been reading up on why it is usually a bad idea for an S Corp to own real estate.  Most makes sense but there is one phrase that I'm not understanding.  When it is said that "Contributions of appreciated property into an S-Corporation are subject to tax when the shareholder owns less than 80% of the corporation’s majority vote, and value after the transfer occurs", what does "value after the transfer occurs" mean?

Thanks and Merry Christmas to all.