DANRVAN

I just had a similar situation with a different twist. New client filed w/o dependent in 2019 but actually was entitled to claim since lived in house hold over 1/2 year. E-filed 1040x yesterday and was rejected because dependent already claimed. So off with a paper 1040x we go.

Here is what I would do, as Abby mentioned no need to input the W-2. Instead report on Schedule 1 as 1099 misc with the federal and state withholding and the minimum amount of income needed to cover withholdings. Then make an separate schedule 1 entry to back out the income. Bottom line: -zero wages reported -zero schedule 1 income -federal and state withholdings correctly reported. I am overlooking anything here?

Right there, first post!

Any 1099's to report that you can bump up the withholding as ABBY N suggested.

Might be the quickest and easiest way to get it done. HR should have made the correction and paid the amount withheld back to him.

In Oregon? I don't think so, although a good idea to have one.

If they want to work and get paid they will!

Thank you for the reply. To be more specific, he is looking for an app employee's can put on their cell phones.

Client is looking for a time card application. Has one fulltime and a couple part time employees. Is anyone here familiar with an app that they would recommend. Dan

Okay, I will try that. And it works!

I still do not see the edit button Judy. Where did it go to?

I haven't seen that option lately. I agree that a time limit should be in place.

That sounds right Pacun. In the situations you described it appears to benefit the client by using the 2019 earned income which is higher.

meant to say EITC. How come we are no longer able to edit?

Correct. Section 211(a) of Division EE. on page 1,885. The provision allows you to substitute your 2019 earned income (if higher) in place of your 2020 earned income, although it does not specifically mention EICT or CTC...

That sounds right Max, thanks.

The first year I broke my ankle with an ER visit. My out of pocket for the year was around $500. Health share plans are not for every one, but for those who pledge to live a healthy lifestyle. The plan promotes wellness and prevention. So if you are a chain-smoking, pro motocross racer that eats three times a day at McDonalds; you need not apply!

She is referring to "health share plans"; Medishare is one of many. I joined one called "Solidarity" a couple years ago. My wife and I were paying over $24,000 a year in premiums for two healthy individuals in their 50's. Now we pay less than $5,000 per year.

Proposed Reg 1-213-1 gives health share membership payments the same status as health insurance premiums. Therefore, health share qualifies for both Schedule A and the SEHI deduction. The proposed reg was in response to Executive Order 13877 back in 2019 which was directed to give health shares equal footing with health care premiums.

Is there a potential to minimize penalties for taxes owed? For example, if an extension was filed, then I believe late filing penalties would jump from 15% to 20% after January 15th. If an extension was not filed and tax owed, then probably already maxed out at 25%.

It is not double dipping, do the math! 40,000 book income less 30,000 tax income = 10,000 reduction.

It does not work that way. When you exclude the 10,000 it reduces taxable income by 10,000. If you also disallow expenses by 10,000, taxable income is increased by 10,000. So it becomes a wash, taxable income = book income. That was the law prior to CAA 21.

Something to watch for in an S-Corp is increase in OAA, which might limit amount of distribution treated as tax-free return of basis in stock.

Actually it is not double dipping. Consider this example: Client had Sales of 90,000 and expenses of 60,000. Received PPP OF 10,000 with forgiveness applied to 10,000 of expenses. His book income would be 100,000 less 60,000 = 40,000. Prior to CAA 21, his taxable income would exclude the 10,000 of PPP and reduce deductible expenses by 10,000. Therefore net taxable income would be 90,000 less 50,000 = 40,000. The net effect of the CARES was to include PPP in taxable income by reducing expenses. In that situation taxable income = book income. Now under CAA 21, taxable income is 90,000 less full deductions of 60,000 = 30,000. This results in taxable income that is 10,000 less than book income. There is no double dipping; 10,000 received and excluded. Hope this helps, this is how I explained it to a client.

Darlene, from your post it appears you might not be aware that there is a provision in the Consolidated Appropriations Act of 2021 that allows an employer to take both the PPP (with forgiveness) and the ERC in the same year. However, you can not use the same payroll expense for both in order to prevent double dipping. You can amend prior 941 for unclaimed credits.