Mr. Pencil

The right to claim the children is determined by the tax code, not the divorce decree (at least, not a recent decree). If the kids live with the mother, she can claim them. Period. Even when the decree specifically requires mother to sign Form 8332, if she does not sign she can claim the children. Period. There is nothing the father can do about it except file for a rehearing in family court. He will still lose on the tax issue, but may get a change in support payments.

No we DON'T. Here's a link to the IRS due diligence requirements. http://www.eitc.irs.gov/Tax-Preparer-Toolkit/dd/lawandregs Note that we only have to comply with what is specifically in the actual regulations. Not what the auditor or even Karen Hawkins herself says. And note that the actual regulations only require us to ask certain questions and record the client's answers. There is NO requirement to document anything or even determine if the client is telling the truth. If I am wrong, please quote the requirement.

I'm surprised a San Francisco liberal has so much credibility! Karen Hawkins can certainly talk up a storm--she made several important arguments fighting the IRS before the Ninth Circuit. Now, can she conquer the bureaucracy? This site shows how the IRS sees her office. http://www.irs.gov/Tax-Professionals/Enrolled-Agents/The-Office-of-Professional-Responsibility-(OPR)-At-a-Glance-1 There are three goals, but only one involves enforcing Circular 230. The first one is just PR, and it sounds like she's got that one nailed! The other goal is "Build, train and motivate a cohesive OPR team." Which does give me a clue about how that department is being run. From there you can link to the Final Agency Decisions. There aren't very many, and they aren't very rigorous. For example, the only one so far this year is an EA who didn't file his own tax returns back in 09, 10 and 11. He got suspended, apparently after getting renewed. It would have been settled sooner (since the scofflaw didn't even contest it) but Ms. Hawkin's office screwed up the paperwork so the judge denied it. Which gives me another clue about how that department is being run.

Yes, but I make a lot of misteaks.

If there is no accountable plan the employer can only deduct reimbursement as taxable wages, so the employee should keep the receipt for Form 2106.

>>Have you read circular 230 where it says that the tax preparer will do as instructed by the IRS or the office of compliance?<< No, I have not read that part. Perhaps someone could point me to it. >>Circular 230 was prepared years ago<< Circular 230 was published in 2011. Taxxcpa said, "It looks like the IRS has succeeded in making a lot of tax preparers paranoid. You are guilty until proven innocent." The IRS bears the burden of proof for penalties, so the second part is false. But the first part is true.

Okay. I wondered, because as far as I know there isn't any per diem rate for the situation described. Per diem can only be used on Schedule C and Form 2106, or for reimbursement under an accountable plan..

Whatever. I stand by my previous post.

That's the ACRS rule, my ancient friend!. It only applied to the equipment and furnishings anyway. MACRS uses half-year or mid-quarter convention, and mid-month for real estate. You only ignore depreciation if the property is placed in service and removed in the same year. Stop depreciation mid-month on the office, but don't calculate gain or loss. When the house is sold or foreclosed you can ignore the reconverted room. Of course accumulated depreciation reduces overall basis, but it's straight line real estate so no recapture. On the other hand, now that his computer equipment is not in an office, he might have to recapture special depreciation or Section 179 on listed property. Then you'll have even a bigger headache!

I know if the IRS requires us to get and keep this information from our clients. The IRS does NOT require us to get and keep this information from our clients. Even for EIC and other due diligence rules, you have no legal or ethical requirement to routinely demand verification of anything. In fact, whenever you do receive a document your liability goes up, because you are then responsible for assessing its validity. Circular 230 specifically shields you from that requirement and that liability. It says, "A practitioner advising a client to take a position on a tax return, document, affidavit or other paper submitted to the Internal Revenue Service, or preparing or signing a tax return as a preparer, generally may rely in good faith without verification upon information furnished by the client. The practitioner may not, however, ignore the implications of information furnished to, or actually known by, the practitioner, and must make reasonable inquiries if the information as furnished appears to be incorrect, inconsistent with an important fact or another factual assumption, or incomplete."

Where did you get that rate from?

In the original post, there was no suggestion that the award miles derived from business flights.

Interesting fundraising appeal. I don't see any problem with deducting as a charitable contribution, assuming a qualified American charity issues a proper receipt in her own name. It doesn't sound like the "statement" meets the substantiation requirements.

If he wasn't working in Georgia, then travel to Washington was NOT deductible. I just mention it for future reference.

Sounds student-ish. Did he have a regular job in Georgia at the time he started the internship? Was the internship for a specific period of time?

Not exactly. Franchise Tax Board allows it, but it's up to the software company whether they want to provide that service.

Wanda Love was a tax preparer for HRB. She got her cousin to recruit 20 family & friends to claim self-employment in 2006 and 2007. All the returns were the same--they sold belts and purses with no inventory, they had no expenses at all but the exact income needed for maximum EIC. Wanda got a piece of the refund, which HRB insisted was not their policy. In 2008 the IRS announced the due diligence requirements, so she upped the income and deducted exactly the optimum expenses. [u.S. v. Love, Sentenced to 15 months prison on each of 60 counts (to serve concurrently) followed by probation,]

Well, they don't pay us very much. In my opinion, preparers who are upset about these clients might be more comfortable with different clients. Specialize in business returns or trusts or non-profits. Work for a big accounting firm that doesn't let anyone in the door for less than $500. Ahhh, never mind. They probably get just as many who scream, "How am I supposed to live on that?"

Sure, it should be just like a driver's license. Preparing taxes is not a right. It's a privilege!

I wouldn't immediately jump to that conclusion without more facts--starting with whether it even makes a difference in tax liability for either year. Assuming the exclusion was taken in good faith last year, there is no statutory requirement to amend it. But that's a big assumption. In my state all purchase loans for a principal residence are automatically non-recourse, so a 1099-C would suggest the loan had been refinanced. And that might not be eligible for exclusion as "qualified principal residence indebtedness." If that's your situation, you should amend and fix everything. Otherwise, file this year correctly with the 1099-C, and make sure you keep complete records to respond to any IRS letter that may show up.

CPAs and attorneys are regulated by individual states and strong professional associations, though of course that varies across the country. EAs are regulated by the IRS and professional associations. Every year millions of their clients are formally audited by state or federal agencies. Every year hundreds in each category are fined, disbarred, or jailed for malpractice in their tax work. ..

I don't understand the legalities here. I hope IRS appeals further. But even more I hope IRS turns to Congress, because it would make a lovely discussion. Everyone wants to strengthen the integrity of the tax system. And everyone wants to reduce government regulation.

Private disability (not provided by employer) is not usually taxable, but at least you don't have to get FICA refunded.. If for some reason the disability was included in prior year income, make a copy of the prior return and remove the amount that was later repaid. You can use the software's procedure for amending, or just manually compare the changed tax liability to determine the potential credit for current year. Then you will need a similar process on the original return, or maybe more than one prior return, to ADD Social Security benefits to see if the lump sum election is worthwhile.

I'm not going to tell you because you won't like me any more, so just go to page 34 of Pub 525.

Same could be said for any receipt or other documentation. But (again referring to michaelmar's insight) it isn't our job to determine if the contractor is a corporation that doesn't require a 1099. Or anything else--unless the information provided appears to be incomplete, incorrect, or inconsistent. (The one exception I make is for substantiation of charitable contributions, because the law requires specific wording prior to filing the return.)