Diane

Last year I cleaned out the attic. I had 261 pounds of paper. This consisted of my copies of returns dating back, in some cases, to the 1980's. Since I store this stuff in my attic I tend to forget about it. I hauled those 261 pounds of paper to the nearest shredder. This year I will be checking the rest of the tax storage in the attic.

Diane

No, the union does not pay any part of their retiree's health care costs. I've been self employed for years, so I have had no employer plans. We pay for everything.

Diane

Thanks,

Diane

I am self employed and we pay an amount (each) to the local union who provides our health insurance. I and my husband are both retired and on Social Security. Can I deduct the amount that I am charged for this insurance on the 1040? and on the SE?

Diane

What I'm referring to is the definition of 'filing' and 'preparing'. What I'm saying is that just because I sign a return, to me that doesn't mean that I'm 'filing' the return. So, what IRS is saying about 'filing 100 returns' is the question. Hypothetical -- If I prepare over 100 paper returns, give them to the client to mail (they are actually filing the return), then how can I be 'filing' these returns. Tom is saying that just because I signed each return that IRS is saying that I've 'filed' the return. And I'm saying that what if the clients never mail the returns? Does IRS still consider them 'filed'?

Diane

If IRS considers a tax return 'filed' just because I signed it, then how would you explain non-filing penalties for clients who should have mailed their paper return, but did not. In your scenario the client technically 'filed' his return because it was signed by me.

Diane

I do efile the majority of my clients. The only ones I don't are the ones who prefer not to efile. I am just wondering how this language is being interpreted. I would like to know how IRS interprets 'file' as opposed to 'prepare'. File to me means mailing or efiling the return. Any return that I prepare as a paper return I don't consider that I have 'filed' it. The client files it when he mails it.

Diane

This is the IRS definition of 'filing' a return for the efile mandate:

If a client wants to file in paper form, the preparer must document that choice. The IRS posted sample language for the taxpayer’s signed statement on its web site. Under the proposed regulations, a return is considered filed if the preparer submits the return to the IRS on the taxpayer’s behalf, either electronically or on paper. If the preparer mails the client’s paper return, the IRS counts this as having "filed" the return.

Maybe I'm missing something here: If I prepare 125 returns, print out on paper, give it to the client, the client mails it -- the way I read it, there is no efile mandate here because I didn't 'file' the return, just prepared it.

What am I missing?

Diane

Thank You!

Diane

You add up the value of each IRA as of December 31, 2009. You calculate using the percentages given by IRS. You can take the total out of one, or any of the accounts, as long as the correct amount is withdrawn.

Diane

Thanks very much. You did help a lot. Trying to make sense of the different rules regarding interest, especially in this case, made my head hurt.

Again, Thank You

Diane

From a client:

I just refinanced my house which had a principle balance of 85,000. My new loan is for $270,000 at 4.5% for 30 years. The interest per month is about $1012 which will come to $12000 per year. I am not allowed to deduct all that interest? Of the 270,000 borrowed 85000 paid back the old loan, 57000 paid back a home equity line that was deductible, and 5000 went to closing costs. 123000 went into the bank and might be used for a real estate purchase or home improvement but I am not sure when. How much of my interest is deductible?

Also In two or three years if I move out of my primary residence and consider it a rental property all the mortgage interest then becomes deductible?

How much interest is deductible? Schedule A, then Schedule E if converted to a rental.

Diane

Client has a rental. She will be selling the rental as a short sale (no foreclosure). The rental will be sold at a loss. I see COD income on the debt issue and a 4797 transaction for the loss on the sale of the rental. Hopefully the loss will be close to the COD income so one can offset the other. Am I looking at this correctly? Schedule E showing COD income, 4797 showing the loss on the sale.

Diane

The shareholder debt of the corporation did NOT come about using her own credit cards to purchase inventory. The shareholder charged stuff on her credit card. She could do anything she wanted with that stuff. She then decided to sell that stuff to the corporation. The corporation could not currently pay for that stuff so the corporation gave her a note promising to pay her later. Her charging stuff on her credit card has nothing to do with the loan from the corporaion.

Thanks, I like the way you put that. It now makes more sense to me. I guess I just didn't look at it in the most logical way.

Diane

The shareholder debt of the corporation came about using her own credit cards. She bought inventory for the store on her personal credit card. Apparently with the bankruptcy, the credit card debt was taken care of. There was no mention of the corporation.

Diane

I'm thinking that the shareholder no longer has a basis.

Diane

I have a small retail store. They had 3 shareholders. Each shareholder used personal credit cards to pay for a lot of store expenses, mostly inventory. Each shareholder has a loan payable on the books. Last year one of the shareholders declared bankruptcy and their credit card debt was canceled. The store paid back some of the debt to the shareholder, but not all. Since the ex-shareholder did not pay cash for anything, only credit card purchases, and her debt was canceled she no longer owed any money. But, the balance of the debt is still on the store books. I'm not sure how to handle the Liability on the store books. The shareholder was never out of pocket for any of the debt because she used credit cards; the debit of which has been canceled. How do I book the Liability on the books? Since the debt was accrued in prior years as purchases and expenses for the store it affected the bottom line of the store. What is the journal entry that I have to make?

Diane

Is the ATX Community Board still working? Every time I click on 'ATX Community' (after I've logged in) it takes be right back to MyATX home page.

Diane

What phone number to call?

Diane

I have a senior citizen client who just called. Said he received a letter from IRS stating that he owed additional taxes. He has lost/misplaced the letter and doesn't remember the details. Do we just wait for the next letter? Or, is there a phone number I can call to find out the details?

Diane

What about small businesses (including some of us) who are going to have to get the ID numbers for these vendors. Is that going to be an easy task or a headache?

Diane

I was promised an answer today, but have heard nothing. Setting up a new MyAtx is what I am trying to avoid. I hope they come up with a solution to won't drive us all nuts.

Diane

Which is better for keeping the final copies of tax returns? The program backs up each return. Is it better to copy these backups to an external disc or to export the returns?

I usually use the export feature when going from the desktop computer to the laptop and back again. But, am not sure which one to use for permanent storage.

Diane

Diane, I received the 2009 software and a changed ID number too. I wondered about it, but I did not have time to be on hold to question it today. I will try tomorrow, but if others find out anything, please post it here.

Joann

I'm waiting for a call back. I'll let you know what they say.

Diane

I purchased ATX thru TRX last year. Just renewed thru ATX for 2010 the other day. With the 40% discount. Today, I get a package with the 2009 software, manual, and a request for my EFIN number. Also, with a different Client ID number. Had to call them to make sure that when I renewed that they actually renewed for 2010 and not thought I was purchasing for 2009. I was assured that I had purchased 2010, but she had no explanation for why I was sent the 2009 software. I explained that I've used ATX for years, they have my EFIN number and I wanted to know why my Client ID number had changed. Also, I did not want to have to redo the MyATX Page. Has anyone else who did the same thing received the 2009 software package? Griselda (the person I talked to) said she will double check and call me back.

Diane