DANRVAN

1 hour ago, Abby Normal said:

without the dependent, then efile an amendment with the dependent, and was wondering if anyone here has tried that.

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?

3 hours ago, HV Ken said:

Not sure how to get past this. My thought was to put the NY withholding amount (+1) as wages and then back it out as a Schedule 1 adjustment. But this just seems like a hack approach to me.

Right there, first post!

5 minutes ago, HV Ken said:

Funny that you are quoting me - something I know I wrote - but I don't see what I wrote in the thread. 

7 minutes ago, HV Ken said:

Yes it's the only W2

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

3 hours ago, HV Ken said:

put the NY withholding amount (+1) as wages and then back it out as a Schedule 1 adjustment

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.

6 hours ago, cbslee said:

my state Partnerships and LLCs are required to have Operating Agreements

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

4 hours ago, Medlin Software said:

doubt many employees would want such an app on their personal phone.

If they want to work and get paid they will!

16 hours ago, taxit said:

Time Clock MTS | Great Employee Time Clock Software

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

2 hours ago, Lion EA said:

The three dots ... menu in the upper right corner of your post has a drop-down menu if you click on it. During that short five minutes after posting, that drop-down includes Edit.

Okay, I will try that.

And it works!  

29 minutes ago, jklcpa said:

Editing is still allowed for 5 minutes after a post is made.

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

27 minutes ago, jklcpa said:

Editing is still allowed for 5 minutes after a post is made

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

12 hours ago, Pacun said:

This is the way I understand it.

That sounds right Pacun.

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

Just now, DANRVAN said:

EICT

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

On 1/14/2021 at 8:54 PM, Lion EA said:

It's only the 2019 earned income that you can use in the 2020 formula for EITC and CTC/ACTC, if 2019 was higher. I think it's in the CAA of 2021

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...

20 hours ago, Max W said:

The IRS says "each month or part of a month" and nothing about the 15th of each month.  So, all of Jan is 5% and then after Jan 31 another 5%

That sounds right Max, thanks.

23 hours ago, Abby Normal said:

But what is the coverage like? Are these plans nonprofit to keep the overhead down?

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!

27 minutes ago, cbslee said:

What is "Medishare",

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.

13 hours ago, grandmabee said:

Has anyone seen this new law

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. 

On 1/8/2021 at 10:37 AM, schirallicpa said:

Do I still have to paper file a late 2019 return.

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%.

3 hours ago, mircpa said:

You don't have to include 10,000.00 in income, BUT allowed to take deduction of 10,000 so it is double DIP.

It is not double dipping, do the math!

21 hours ago, DANRVAN said:

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.

40,000 book income less 30,000 tax income = 10,000 reduction.

9 hours ago, mircpa said:

net effect of 20,000 of less taxable income.

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.

On 1/6/2021 at 12:39 PM, JackieB said:

congress has passed that expenses that were used from the PPP funds that were forgiven are still deductible and that the amount will increase their basis.

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.

20 hours ago, mircpa said:

This will be double dip

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.

7 hours ago, WITAXLADY said:

They then instead can get abut $56,000 thru paycheck retention - will pay off their 2019 and 2020 amount owed to the Fed for withholding, SS and Medicare

Is it worth taking the $76,000 loan to get a $56,000 credit?

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.