Peggy Cobb

I had a client with 21 state W-2s. The way i got the federal to e-file was for a state (say Alabama) I posted the exact same amount in box 1 for federal wages as was reported under state wages. Once I have every state done, I then created a W-2 with the remaining federal wages and claimed it was for a state with no income taxes (like Texas, etc). The city portion was easier because I could add them to a state and there was only 5 city returns. Once I made sure the total wages matched the total of all the W-2s it e-filed without a problem. Good Luck, Peggy Cobb

I suspect that nothing is going to happen until the IRS opens their EFC on January 29th. If it is still saying rejected on the return tab then I would call support. I have a 2015 and 2016 1040 with the same issue.

Go ATX Support, then the e-file center. You need to re-hang the file. Give it a couple of minutes, then go to your program and request acknowledgement. Open up the file, correct it and re-send.

I'm wondering if I'm reading the child care credit rules wrong or if ATX has it coded wrong. I have had two cases where the single dad/head of household pays for child care, but doesn't claim the child as his dependent. Both returns were rejected because the dependent SS# was claimed on another return. Both fathers didn't claim the child as a dependent, but in both cases paid additional child care expenses and I had added the child care credit form. Once I removed the child care credit form the return was accepted. So my question again - am I reading the rules wrong or does ATX have a coding error. I sure would appreciate any insight.

I could sure use some help/suggestions. The return for a long-time client rejected tonight and the error is that the number of dependents in 6c does equal number claimed on 8812. Problem is that line 6c shows 2 dependents and 8812 shows 2 dependents. I have double checked with client about Social Security Numbers and spelling of the names. Everything matches and they have not been rejected in prior years. Any suggestions?

Thanks everyone for the answers. I have called the client and she is bringing by the HUD statements from when she purchased it and sold it, plus the prior year's tax returns that have a copy of the banks' 1098s' I think sometimes in the "craziness" of this season, you can over think some thing. Peggy Cobb Mount Vernon, WA

New client and I want to make sure I'm okay. I checked some of the archives and didn't find anything, so if I missed something please accept my over booked time schedule. This client lived in her previous home for 10 years and we have 1098 for the last 5 years. But the concern I have is the last year 6/1/08 to mid-April of 2009 she had it as a rental. She moved for work in 2008 to my area and purchased a new home in December 2009. The time periods and documentation requirements work for the Long-Time Homeowner Credit, but I'm concerned that because she rented her previous home the IRS will deny the $6,500 credit. I'm considering amending 2008 and reporting the rental income as "income from rental of personal property but not in the business of renting such property". I'm also concerned that this will send the IRS a red flag. She did use a local real estate company to manage the rental. I appreciate any help and so appreciate the knowledge and willingness to share it that his group has. Thanks, Peggy Cobb Mount Vernon, WA

You will need the Washington state master business license application to get a UBI number. It is the state identifying number for each person or business needing to file an excise or sales tax number. ATX has the form under the Washington state tab and it is BLS-700-028. The letter from the state may have a 9 digit number on it. My UBI number is 602 909 668 with this type of spacing and 99.9% start with a 6. If there isn't a number on the you might be able to file it on line or fax it in and get the number. Good luck, Peggy

What great news. It sure feels great when our kids out do us and they finally prove we were able to pass our best genes to them. Peggy Cobb Mount Vernon, WA

I am a resident of Washington state. Washington state collects sales taxes on the "end user". The subcontractor is not the end user, the firm that hired them is. If the firm that hired them is out of state they are paying taxes for the state they resided in. If they are a Washington business they are paying sales taxes based on what area of the state they sell to. Your client by definition is a wholesaler and does not pay state sales taxes. They are subject to state excise taxes. BUT, there is a deduction for no local activity. So you would report all of their income as Wholesale under the excise tax portion of the return and then deduct all sales because there is no local activity. To add to this you would need to apply using the state's master business licensing and get a UBI (Unified Business Identifier). The state also has a small business credit and reduces or eliminates the excise taxes. The excise taxes are .00484 of the gross receipts. ATX has much better instructions than the state publishes and they are easier to access. You would click on the Washington tab in the forms menu and open CETRA for the annual state form. From there you can click on any cell and then government instructions. Plus you can bunny hop to the deduction area and also click on instructions for this part of the form I strongly suspect that you will find you do not have to file a state excise tax form. Good luck, Peggy Cobb Mount Vernon, WA

Yes I know your 401K is now a 4.(point)01K, but losses are not deductibe. The gain or loss needs to be realized before it is reported. Peggy Cobb Mount Vernon, WA

Thank You, Thank You, Thank You. It worked great. I knew it had to be somewhere and that I had done it before. Peggy

I have a client who is receiving regular distributions from an IRA due to disability. He withdrew an additional $80,000 from the IRA and redeposited $69,000 within 60 days all in 2008. How to I get ATX to recognize on $11,000 is taxable? I looked at the 5329, but there is no early withdraw penalty since he is receive payments due to disability anyway. Is my thinking wrong on this? Thanks, Peggy Cobb Mount Vernon, WA

I hope I got the picture of my dog attached. This is my summer addiction and right now spring is calling.

I have client who sold several publically traded partnerships. While entering all of the K-1 activity and the gains and losses on these sales I noticed instruction/data on the paperwork from the partnership about entering information on the 4797. All of the K-1 activity has flowed correctly in ATX to line 2 of the 4797 as a net and the other various schedules/forms. But the instructions/attachment from the partnership talk about reporting certain items on Part II, Line 10 fo 4797. They have a column of several units disposed and the total they seem to be saying goes as ordinary income on the 4797. Do I need to enter this data on the 4797? Or is it information on all units sold not just my client's? I did some quick adding and they don't add up to what has been reported. Any help or direction would be greatly appreciated. Thanks, Peggy Cobb Mount Vernon, WA

I'm adding her to my prayer list. Please let us know how she is dontinuing to do. Peggy Cobb Mount Vernon, WA

I emailed support at ATX yesterday and I have posted their reply - "I apologize for the delay. Once the IRS releases and approved the final copy of the 1040X, our developers will get it implemented into the program. Unfortunately I do not have a date at this time as to when it will be ready. As soon as we have the date, we will post this information on the myatx website. If I could assist you further, please reply back to this email and I will be happy to assist you further." I think KC has the right idea the IRS wants us to wait until further into filing season. I have several clients that filed at their normal time, but had late arriving 1099s from banks and brokage houses because the IRS gave the the banks an extension to February 15th. My plan is to use the 2007 program if the 2008 form 1040X is not approved by the 15th of March. Good luck, Peggy Cobb Mount Vernon, WA

I would use the substitute form for the difference and report both the W-2 from XYZ and the substitute W-2 for ABC. The IRS will compare your client's total wages with what they have on file and issue refund or expect a check based on your client's information. The IRS will then need to purse getting ABC to file W-2s and they will assess failure to file penalties on ABC. You will need to snail mail the return because of the substitute W-2 (form 4852) and I would also attach a copy of the last paystub with a note that the paystub is for the whole year and you substracted the W-2 from XYZ to get the W-2 information on form 4852. Plus I would give them a short description of the ownership change. In the cases I have seen like this, the IRS may not be able to get the information from ABC. You want your client to be timely filed. Good luck, Peggy Cobb Mount Vernon, WA

I have a long time Alaska resident and this year in addition to ther normal Permanent Fund Dividend they received a stimulus payment from Alaska. I suspect this additional stimulus is taxable but I also wanted to run this by the group. Thanks, Peggy Cobb Mount Vernon, WA

Thank you for the great suggestions. I appreciate the help Mount Vernon has about 20,000 to 22,000 people. Great small town, lots to do even if it is raining. We are an hour north of Seattle. Peggy Cobb Mount Vernon, WA

A client of mine moved from Washington State to Idaho the first part of this year, got married, then had it annulled because she used his SS#, took all of his cash, changed his address to hers, took out credit cards and cellphones with his SS#, and drained his 401(K) of $15,000 and then took off. She has had a warrent served and he is working with the prosecuting attorney. The main question - what of this 401(K) distribution is taxable? I reviewed the exceptions and the only one that comes close (and it would be a major stretch that I am not comfortable with) is distribution to a nonparticipant under a qualified domestic relations order. I advised him to see if he could locate her SS#. Any other suggestions? Thanks Peggy Cobb Mount Vernon, WA

Ministers pay income taxes on the amount in box 1 and they pay Self-employment taxes on the amount in box 1 plus the housing allowance. If you are using ATX, you enter box 1 and if there is anything in box 2 as you would normally. You need to unclick the automatic calcualtion of box 3 through 6. ATX also has a worksheet that puts the Self-employment tax in the correct place. It is called 1040 Clergy, if you type Clergy in the search part of the forms menu it will bring it up. You will also need to know how much she paid for housing expenses. This would be the apartment rent, utilities and any upkeep or maintenance on the apartment. If the housing expenses are less than the housing allowance this additional amount is added to the amount in box 1. But the 1040 Clergy addresses this. She does not pay additional self-employment taxes on the under reported housing expenses. A minister's compensation package is divided between salary (box 1) and housing allowance. They need to report to the governing body of the church by December 31 what they estimate their housing allowance to be in the next year. What they declare for housing allowance is then deducted from the compensation package and the remainer is their salary. You might check her housing expenses and help her get a better number for 2009, so she doesn't have additional salary. She wants to estimate as close as possible to the actual amount. You can deduct from housing and salary any unreimbursed work expenses. These are deducted portionally and the percentage related to housing also reduces the Self-employment taxes. Again this new worksheet 1040 Clergy does the calculation. She will need to make estimated payments unless the church will withhold taxes for her. Small churches usually do not withhold taxes especially if the only employee is the pastor. You will generally only have to make estimated taxes on the Self-employment taxes and occassionally a small amount of the income taxes Ministers are consider self-employed for Social Security and Medicare, but an employee for Federal Income Taxes. She can complete the application to be excluded from Social Security, but if she does she will not receive any Medicare coverage unless she has other non-church income. Most pastors stay in Social Security so they can receive Medicare when they retire. What I have found is that a married pastor with the wife working part-time and they are buying a house can pay almost nothing in income taxes and all they pay is the self-employment taxes. Count your lucky stars that the church prepared the W-2 right. I know of a major payroll service that has managed to get 4 different churches W-2s wrong. It took 6 months to get them to correct the W-2s.

I have used the work around before for partnerhsips, but my concern is that it is an S-Corp. Thanks,

I just had a new client walk in. Their previous preparer did an S-Corp return and their personal. The S-corp had pass through income of $28,000, but the tax preparer shows an additional K-1 on the Schedule E for unreimbursed partner expenses of ($27,000). The T/P is a 50% owner and the S-Corp has closed down business effective 2/1/08. Do I need to amend the 1120-S and the 1040, or is this acceptable? The T/P is questioning the return and is asking for a second opinion. Thanks,

PayCycle for over a year and really like it. I had my W-2s this year finished by January 10th. For 1 to 5 clients I charge $80 to $90 per month. I make myself one of the contractors and pay myself via direct deposit. I tell the client upfront and they have all be great with this arrangement. If you have one employee or contractor on direct deposit, the 941, 940, and some state taxes can be paid electroncially. Plus your W-2s, 941s, 940s and some state returns are filed electroncially. They charge $15 for each client that you file the 1099s with them electronically. I have had some frustration with the first direct deposit, because they require a pre-funding. You have to give them the amount of the net checks. So I make myself or the owner that is on salary the first direct deposit and manually write the other checks. After this it works great. You can have the program email the employees their pay stubs, or one employer was me send all the pay stubs to her and she either forwards them or prints and attaches them to the pay checks. I have had 4 churches that used ADP and ADP got the pastor's salary and housing wrong. It took one church 6 months to get ADP to correct the W-2, 941 and refund the excess amount the church paid for Social Security and Medicare on the pastor's wages. Paycycle has handled this church correctly without a hitch.