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Sara EA

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Everything posted by Sara EA

  1. In our business we spend so much time in front of a computer screen that I have no desire to read on one. We even get physical newspapers and enjoy our coffee and papers in the morning on our porch (even in the cold weather, just not for long.) I do subscribe to the NY Times and Washington Post online, although we buy the physical Post on Sunday and read it all week. I too love physical books. Nothing like flipping back to find what happened in an earlier event or to remember who this character is when he resurfaces. I get most of my books from friends and at the library book sales. I do love our local bookstores too, but I can't keep myself from going overboard when I visit. I don't keep many books. Almost all get passed on to friends, sometimes more than one, and a few donated. I'd rather have others enjoy them than collect dust on my bookshelves maybe to be read again someday. Share the wealth! Maybe that's another reason why i don't care for ebooks--you can't share them.
  2. The fatal problem with AI is that it doesn't know how to say, "I don't know" or "I'm not sure," or our favorite in the tax business, "It depends." That inability is what gets it into trouble when it hallucinates, makes things up, gives irrelevant or wrong answers. When I retire next year I'll just do the office's trusts and estates plus family returns. That's enough. Time to organize those old photos, revamp the gardens, read more books, explore more of the history and attractions of our new state, help out at the library that does so much in the community, just maybe volunteer for AARP or VITA, spend more time with friends and others I've met whom I'd like to know better. It will be a relief to be free from so many commitments and deadlines.
  3. Does it work with AMT? We haven't had much 'splaining to do since the TCJA, but it wasn't easy before then and won't be again if Congress lets the new exemption amounts expire in 2025.
  4. I plan to retire next year, and the only thing I will keep is trusts and estates! To each his or her own. Jasdim did not make a mistake. The client did, but blames the preparer of course.
  5. Jasdim, when this stuff happens I turn proactive and turn the tables by telling the client that I am here all year and why didn't s/he talk with me before taking such a huge distribution. If your client (ex-client?) is on Medicare, wait until he finds out his premiums go way up in a couple of years.
  6. So does it get an energy credit or not? I think not. Solar just opens and shuts the panel, like the highway signs with the little solar panels powering them. The Dept of Energy states these are eligible, "Solar PV panels or PV cells (including those used to power an attic fan, but not the fan itself)." So maybe the cell is eligible but not the skylight.
  7. If the state is classifying the money as stock proceeds, to me that means the state sold the stock. Now they are passing the proceeds to your client. He must report on Sch D. If he knows the cousin's date of death, just look up the value on that date for basis.
  8. ESA distributions can be used for room and board, books, computers, etc. Also, the 10% penalty is waived if the student got a scholarship that reduced tuition.
  9. I got the same error in Ultratax. It may be an IRS issue. That Sch B doesn't even have an input screen and is filled in by the software when required.
  10. The capital loss carryover of $3k has not been increased since 1978. According the Congressional Research Service, it would be about $13k if adjusted for inflation.
  11. They got a letter even with basis reported? Are you sure? That defeats the whole purpose of the reporting mandate.
  12. Organizers are just too long and most clients don't bother with them. Others start asking for them Jan 2 as it helps them figure out what they need to provide. We now use a 2-page questionnaire that addresses most of the issues we need to ask about, e.g., changes in bank accounts, dependents, foreign accounts, HSAs, insurance subsidies, gig economy jobs, use tax, etc. For most of the questions clients check a Yes or No box, and a few have lines for amounts or explanations. We insist that all clients fill it out, and most do without prompting. It's just easier than pages and pages of organizer and covers the same ground. We don't bother telling Sch C and E filers to give us their income and expenses; they already know that.
  13. Sara EA

    Tools

    While it seems a bummer that mechanics can't deduct the cost of their tools, don't forget that they own them and can take them home or to their next job or sell them. Many mechanics are fervent about their tools. My husband was never a professional mechanic but started working on cars when he was a boy. Today he has this tall chest of tools and can tell you when or how he acquired most of them, specific jobs this one or that one is good for, and tasks from way back when one or the other saved the day. When one of our sons neglected to put a screwdriver or whatever back where it belongs, he got in more trouble than if he was beating up his brother. So while tools are an expense, they can also become part of a person's identity.
  14. If he inherits the account, he inherits the interest too. He will report the interest income because he's the one who received it.
  15. Since the child did not live with Dad half the year, better use Form 8332,
  16. Sara EA

    W-4 issues

    The current W4 essentially asks the taxpayer to complete next year's tax return this year and is a disaster. Does it even account for the additional Medicare tax when one spouse is over the threshold and having the extra taken out but the other isn't? When there is glaring underwithholding, I tell clients to put Single, zero exemptions on the W4 and leave the other lines blank. (Not many want their employer to know what their spouse earns or their other sources of income.) Then we'll look at it at the end of the year and adjust accordingly.
  17. The premiums paid are not the cost basis. The policy holder is paying for insurance, don't forget, plus some administrative costs. In other words, he bought something with a portion of those annual payments.
  18. He is still a qualifying child if he does not provide more than half of his own support. Dependents cannot claim education credits. Filing his own return (not claiming himself) might work if he has paid student loan interest.
  19. Usually when incomes are roughly the same, MFS costs way more than MFJ because the tax rates are so much higher and deductions/credits limited. The SALT deduction for MFS, for example, is limited to $5k each. It can work if medical expenses aren't 7.5% of joint income but exceed that using one income. A lot of people ask about MFS when they learn they can't itemize. They think they are losing out on claiming their mortgages, charities, etc. Actually, if your standard deduction is $27,700 and your itemized deds are $25k, you are winning!
  20. My son, who works in IT security, once told me, "Mom, if you knew what I know about the internet, you'd never use it." Scary that he's probably right. Never, ever respond to those emails from people supposedly looking for a new tax pro. Of the tens of thousands of tax preparers in this nation, they just randomly picked you?
  21. I just read a piece on IRS's new Direct File pilot, where taxpayers from certain states can efile their returns for free on the IRS website. I originally thought this was a great development, getting those simple returns off our desks and saving folks money. Now I'm not so sure. The program handles common items like W2s, EITC and CTC, etc. It doesn't handle Sch B, child care expenses, ACA forms, and the saver's credit. I think a lot of filers don't know enough about these things and may overlook them. I've seen a number of self-prepared returns where people pay for child care with flexible spending accounts and forget to reconcile that on their tax returns thinking they aren't claiming any expenses, only to have the IRS add the amount to their income. Many who enroll in the ACA ignore those forms, and most have no idea what the Saver's Credit is and are surprised when I tell them they got some.extra money. The IRS program handles student loan interest, but I've seen many parents claim it when they are not on the loan. Direct File would be a great program if the tax code were simpler, but as it stands I'm not convinced it's a good option for anyone with more than W2 income.
  22. Worse than that. She went on and on about how she KNOWS we all make up basis figures to benefit our clients. I think at that point every practitioner in the room went through their mental notes of how many hours they had spent trying to come up with a reasonable basis for multiple clients. No Karen, we don't make this stuff up. We had a client with a basis issue, and he put an attorney relative on speaker phone to tell us that it was legal to use 90% of selling price as basis. "WHAT?", we all said, and demanded the code section. The call ended with us insisting the client go through records and give us the real basis. He produced it quickly--exactly 90% of the selling price for every single stock. Let Karen Hawkins blame us for that one!
  23. Just don't forget your annual Ethics, Terry. It does get old. My best Ethics course was taught by an IRS agent who started the meeting with "I know I'm preaching to the choir." Second best didn't use a text but scenarios used for class participation. Worst was one presented by Karen Hawkins, then head of OPR, who literally spent the two hours reading us Circular 230 and making it clear that all tax professionals are dishonest and will be penalized.
  24. This website offers Excel for free, but I haven't read the fine print: https://www.microsoft.com/en-us/microsoft-365/excel Excel is included in Microsoft 365 (formerly Microsoft Office). It includes word, Excel, powerpoint, OneNote, etc. I can't imagine working without it, both in the office and personally. I think it costs about $100 a year now, and lifetime licenses are available too. I hate that everything is going to subscriptions now. I really want to upgrade Adobe but the extra features aren't worth the cost to me. Don't get me started with Quickbooks. The online version is awful, but that's all you can get now.
  25. There was a case presented in my Ethics course this week that I'm still laughing about. A CPA paid an IRS agent $1,250 in a bribe. Not bad enough? He told the clients he was representing that the IRS agent wanted $2k, which the clients paid him and he pocketed the difference (and needless to say didn't report on his own tax return). I didn't really need an ethics course to instruct me not to try either maneuver.
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