Sara EA

Umm, I thought the purpose of all this was to eliminate waste. Isn't paying people not to work somewhat wasteful? Just a short time ago we were elated that IRS finally got funding to increase staff so phone wait and processing times would decrease and audits would increase in areas we knew needed auditing. TAS was the place we went to when all else failed. Taxpayers are really going to feel this. They won't be able to get questions answered or problems solved, all the while knowing that others are cheating and getting away with it.

Was that still Joe McCarthy? He was indeed great, very helpful and so funny that no one fell asleep during his portion of a seminar. He once told those "who have never been in an IRS return processing" campus, they really do take all the staples out and have papers scattered over the floor, which is why they request the same docs three or four times. His wife was an IRS agent. If she still was, maybe she's been downsized too. Tough to have both breadwinners in a family unemployed. And it's the IRS's and our loss to have so much expertise dismissed.

If the investment account was joint and originally funded jointly, half of the carryover losses belong to the surviving spouse and can be used on his or her future returns. The deceased spouse's half is lost forever after the final return. Many of us still have clients who lost a fortune in the 2008 market crash, pulled out of the market altogether, and will have to live to be 200 to use up the losses at $3k per year. That $3k limit has been around since 1978 and never adjusted for inflation.

UltraTax also doesn't allow payments to be scheduled after the filing date after April 15, so it must be an IRS thing. You can schedule a payment date on DirectPay. Note that you can only schedule a payment no more than 365 days in advance and for no more than $10 million!

These PTPs are notorious for showing losses year after year yet making nice distributions so investors think they are making money. It's return of capital, lowering basis and adding to the surprise gains when they eventually sell. At least they can take those suspended losses at the end, mitigating the tax bite a bit. Always check that the K-1 is in the taxpayer's Soc Sec number and not in an IRA, in which case you don't have to do anything except alert the client that the custodian may have some UBI reporting.

The 6% penalty applies each year the excess contribution remains in the account. The excess and associated earnings must be distributed before the penalty disappears.

Things like direct deposits of refunds, direct debits of balances due, application of overpayments to estimated taxes, are computerized functions that should and used to work almost seamlessly. And if they still are, the computers that spit out letters are getting the wrong information. The DOGE kids had gotten into the IRS systems at one point. Could they have somehow messed up the coding? I can't imagine why electronic transactions and/or automated responses have become unreliable. I have seen a number of know-it-alls mess up their computers by rapidly clicking away without reading what is on the screen. If the kids inadvertently broke something, they surely know enough to fix it so hopefully these odd letters will cease soon.

Proposals are pretty consistent that a share of some costs will be passed to the states, e.g., Medicaid, education, disaster response. This means that even if federal taxes go down, state taxes will have to increase. This kind of negates the argument that an increase in SALT deductions benefits blue states. Residents of red and blue states alike will find themselves bumping into the cap. Many of the proposals also add a lot more complexity to the tax code. Tip income is exempt at certain income levels and certain occupations. Interest on loans for certain cars will be deductible--how do you calculate that without a lot of paperwork? It goes on. If they are going to pass this thing, let's hope they do it soon because our CE providers need time to put together courses and we need time to take them and digest it all .

Oftentimes the child is a student somewhere who has income in three states! Our fee for dependent returns is $50, like Patrick trying to avoid them claiming themselves and leaving us with a mess to clean up. More if the child has investments, plays with cryptocurrency, or has income in another state.

This might not be as bad as it sounds. The income threshold to file a return for OR nonresidents is about $2,700 single and $5.500 MFJ. That one OR client who pays you $500 is not going to trigger your filing in OR. Or is there some other rule governing tax preparers? EAs don't have to worry about it at all since those who reside in other states can't prepare OR returns anyway. So if you're a CPA preparing an OR return, be sure to keep your price at $5,495.

Same goes for other types of heavy equipment. I had a client who sold a dump truck that was over 30 years old for something over $30k. I actually called him to verify. The truck had been overhauled over the years and had a relatively new bed. But even if the rebuilds had been added to basis instead of bonused or expensed, basis is usually low on these older pieces and depreciation recapture yields high cap gains.

I stay out too, but sometimes you just have to say something. I was called in by one of our CPAs whose clients were setting up a trust to explain to them the tax effects. Talking with them, it was obvious they had no idea why they were doing this. They had limited assets, not much to protect, and had gone to one of those free dinners. I ended up telling them to write down a list of questions and go back to the advisor, warning them not to sign anything until they got answers. Another time a client came in with a dozen 1099Rs. His advisors were buying him annuities and cashing them out for new annuities every single month, costing him enormous fees. That one we just had to call the state insurance commissioner on.

Our dentist's office is a sole proprietorship--not part of some national chain. There are two people working in the office. Yet when I call them there is a menu, "press 1 for appointments, press 2 for billing, press 3 for...." It's not like they have 16 different departments to route my call to. Grrrrrrr. Some of our clients have expressed surprise that when they call us a real person answers the phone. Sad.

NY and CT have long battled over who gets to tax the mega incomes of big shots who live in one state and work in the other. For remote workers, NY has a "for the convenience of the employer" test, meaning if you work for a NY firm from your home in another state, you can only avoid NY tax if your employer requires that you work from home. After this passed, CT instituted the same rule for residents of NY (but no other state). I have a client who works for a NY firm from his CT home for her convenience, so she's taxed in NY except paid time off, which is taxed in CT. No kidding.

You can always ask for more time to complete your response. IRS really does want to work with you, and I've never had them deny such a request. Of course that was when they still had employees....

To clarify Lee's post: "An eligible educational institution is a school offering higher education beyond high school. It is any college, university, trade school, or other post-secondary educational institution eligible to participate in a student aid program run by the U.S. Department of Education." IRS Pub 970 No gray area here.

How can this be tuition? For education credits, money must be paid to an accredited educational institution eligible to participate in gov't student loan programs. One can no longer deduct education expenses on Sch A and even if you could, they can't be for education leading to a new profession.

Hey, please don't beat up on engineers! We have two engineers in our immediate family. Both are very smart, work hard, are kind and caring and friendly. Sure they like some things exactly so, but they can give a little. I think that where the clash with taxes comes from is that in their wildly complicated math computations, there is only one right answer. Both of my relatives are civil engineers, and if that answer isn't right millions of dollars could be wasted or even worse, people could die. In the tax world, our most common answer is "it depends," which drives engineers off the wall. So be charitable, recognize where your engineers are coming from, and praise them for being smart enough to come to you.

Did your clients sell that first home in the intervening years? The credit owed is settled up at the sale. If sold for a loss, it's erased.

Trusts have to report on a calendar year. Are you talking about the Section 645 election to be treated as part of an estate?

One way of getting rid of such clients is to significantly raise their fees so they leave on their own. Beware, though, they may just pay it, but at least you'll be compensated for the aggravation. I had one jerk whose fees I raised by $500 each year for a couple of years. He started out at $800 and went to $1,800. He was on schedule for $2,300 when another accountant in the office took him over.

Definitely don't claim any loss without evidence. We had a client with a multi-million dollar loss that was used against gains on some of his other endeavors over the years. Boy was he upset when he had a huge gain and a huge tax bill. He still had that big loss in his mind and assumed he'd never have to pay taxes again.

As I understand it, water is not an allowable expense for a home office. (It is for home day cares and home-based hair salons.) The repair is not relevant to the business, just like having the pool cleaned is not.

I tell clients who owned original AT&T stock and now own 28 companies that themselves have had mergers and splits to never sell. Just let their kids inherit the stock to save us all a lot of trouble!

Immigrant tax reporting aside, this agreement violates the sanctity of the privacy bond between taxpayers and the IRS. We voluntarily give them our most private data and that of our household members and they lock it up so tightly that most of their own employees can't access it. In my Master's course I learned that IRS can share your data with NO ONE, the only exceptions being suspected terrorism and money laundering. We used to joke that you could list your occupation as Hit Man or Bank Robber and the IRS would keep it a secret. Breaking that bond can further dent the agency's tarnished image. ICE is demanding this disclosure to get immigrants' addresses. I think the tax return is not a good place to look. People move, have PO boxes, use someone else's address to get their mail because their own box is insecure, still use Mom's address because they're away at school or she always handles everything. I'm sure all of us have had a client or two who suddenly notices that the address we've been using for five years has the wrong street number of spelling.