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Sara EA

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Posts posted by Sara EA

  1. No offense taken.  I've always resented being included among "you guys," perhaps because after growing up in a household of three girls, my own family was all male (even the cat).  I did not want to be included with those creatures that eat over the sink, miss the toilet, and think armpit burps are hysterical.  I was just trying to inject a bit of fun into the decidedly unfun days we are all having right now.  EVERY return I started today had things missing.  Grrrrr

    • Like 4
  2. Ahem, I take offense at the title "You Guys."  Many posters here are not guys.  Did you only want the guys to answer?Now that I've moved to the South, I've taken a liking to the term y'all.  It's gender neutral, respectful to both old and young, and sounds friendly.  I used to think it was slang until I read some linguists' take on it and I'm now with them.

    • Like 3
    • Confused 1
  3. This was a grantor trust until the grantor died, so yes there was step-up basis in 2002.  The wording you quoted clearly shows that the father retained power of appointment (he could do whatever he wanted with the trust), so it was a grantor trust.  Not sure if it was a complex trust, which can change from year to year, but that doesn't affect your answer to this question.

    • Like 2
  4. 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.

    • Like 2
  5. 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.

    • Like 4
  6. 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.

    • Like 4
  7. 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.

  8. 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.

    • Like 2
  9. 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.

    • Like 1
  10. 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.

    • Like 3
    • Haha 1
  11. 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.

    • Like 1
  12. On 2/7/2024 at 7:23 AM, BulldogTom said:

    Box 2a should show the taxable amount, box 1 less basis (premiums).

    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.

  13. 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.

    • Thanks 1
  14. 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!

    • Like 6
  15. 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?

    • Like 4
  16. 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.

    • Like 5
  17. On 12/21/2023 at 9:24 AM, ILLMAS said:

    Wow it sounds like she has no compassion for tax preparers.

    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!

    • Like 1
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