Sara EA

If your calculations for each state were correct, and showed the dates in and out of each state, it shouldn't make any difference. She could have moved back to MN (or to anywhere) in 2022 so has a MN address now.

Your only choice is to paper file. This was a systemic problem a few years ago when all deceased persons were being locked out by SSA. I went to our IRS liaison, he got through to the computer people in TX and got it fixed. Still, the returns that were attempted to efile before the fix had to be filed on paper. This taxpayer is now going to have two returns in the IRS paperjam.

Lion, you have way more patience than I do. One thing that is causing me angst right now is these piecemealed bits of returns. I can't remember 33 emails ago what you sent me. I have gotten so paranoid about missing things that now when I start I return, I sort my emails by sender just to be sure I have what they sent or told me. Please wait and send it all at once!!! And when you do send it, please mark the box to combine the files. I got one this week with 25 separate pages. I refused to open them and asked for a combined file or drop your stuff off. For those of you who use client portals, would that help? And Lion accepts phone pics. I do not. They are rarely readable and often impossible to print to paper or electronic file cabinet. Scan it, don't take a pic please. Maybe I'm just getting testy right now when I'm so buried with work that I don't want to deal with anything that unnecessarily makes my job harder. Lion is still being pleasant and putting up with annoyances. She has lucky clients, or maybe they're just spoiled.

How do people lose these things? The identity protection PINs are sent out in Dec, so it's not like they got it months ago and never thought to put it with their tax stuff. It's scary that people can be so cavalier with the very document that is supposed to protect them from tax ID theft, letting some crook who gets a hold of it do the very thing they were trying to prevent. The same goes for people who can't seem to find their prior year tax returns. What did they do with them? This year we finally instituted a fee for copies of returns that we've already provided to the client, as well as fees for tax docs like W2s from prior years (mortgage companies often want them). $25 per return and $10 per tax doc. Almost every single client we told what their fee would be was able to "find" their prior year tax folder(s) with their docs in it. Better that it was under the car seat than tossed out with the trash I guess.

Thanks for the link. The TIGTA report is a real eye opener. IRS did indeed destroy loads of paper filed information returns, betting that the risk of needing them in any eventual audit was minimal compared with the risks created by not doing all the other things employees had to do instead of processing this paperwork. As we all look at the piles of work towering over us right now, this report makes me feel like I have no right to complain. The overworked IRS employees are facing what we have times millions; it's a wonder they can even find their desks.

Pacun, I guess I didn't understand what you meant by IRS getting everything together in December. Sounded like they were predetermining everyone's income and withholding. Of course they issue refunds to fake returns, but that has been reduced a lot because now they don't issue refunds with refundable credits until later in Feb, when employers' filings are in the system and they can match with the tax return. We had an interesting fake W2 in our office last year--a handwritten W2 from a city. Now there are a lot of small cities in the state, but I don't think one of them has issued handwritten W2s for a couple of decades! Needless to say, that return didn't get filed, at least not by us.

mcbreck, I said if this was the estate's only asset and has been sold, the money should be distributed. You are bringing up other scenarios of other assets out there somewhere. The two year rule is the IRS's, not mine. It's easy to explain that it took that much time to fix up the house or empty it out or whatever. I don't know how one would explain that the proceeds just sat around in the estate when all it's other business was finished because the executor didn't get around to writing the checks.

I once texted my son that the family would meet at Peppy B's for dinner, and the auto corrected message he got said pepto bismol.

I wouldn't amend. All that happened is that the taxpayer didn't recover any of his basis and still has it. Enter that on Line 2 of the 8606. The software will do the math as to how much of the current year distribution is taxable.

I had one where IRS wanted all the clients' tax docs. All were the type already reported to IRS like 1099Rs, INT, DiV, etc. I didn't tell the client, but my suspicion was that another return had been filed for these people and IRS was trying to determine who was the real taxpayer. (The fraudster wouldn't have the original docs that exactly matched the real return.) I think grandmabee and Pacun's posts expose conspiracy theories that may be circulating. Hopefully this kind of information doesn't go viral. Our clients read that stuff.

I have never seen an estate that has a required income distribution, only some trusts. I don't understand why the estate is hanging on to the money instead of distributing it. If this is the only remaining asset, there is no reason to do so. Sometimes estates distribute everything but a reasonable sum to pay accounting and attorney fees, etc. The estate then closes for tax purposes even though a bank account remains open. (Yes, an estate can close for tax purposes even though not formally closed by the situs state.) Sounds to me like the executor is not doing his/her fiduciary duty. If all the beneficiaries are in the same tax bracket and will pay the same NIIT as the estate, I guess it makes no difference which one pays the tax.

You really seem to want the estate to pay tax on the gain, although posters here are unanimous that this choice will be expensive. The estate will pay 20% on its gain, plus net investment income tax. Are any of the beneficiaries in that high a bracket? The way around this may be to file a fiscal year for the estate. Say the person died in July 2018. The fiscal year runs from DOD to June 30 2019, the second from July 2019 to June 2020, the third from July 2020 to June 2021. If no activity, no 1041s. If the home was sold and the proceeds distributed between July 2021 and June 30, 2022, you can file a single initial and final return. All the proceeds and expenses will pass to the beneficiaries, who will likely pay much less in taxes. Whatever you do, you will have to attach an explanation to the return as to why the estate was open for more than two years.

This proves why DIY software can be dangerous. It takes a tax professional to know what the return is supposed to look like and catch these data entry errors. To me, the most important part of tax prep is looking at the return when it's completed to be sure everything makes sense and is where it's supposed to be. Believe me, I am not looking for new business and rarely take new clients, and I would be beyond bored if all I did was easy 1040s. (At this time of year, is there such a thing?) Lots of folks could easily do their own returns with no problems, but EIP and ACTC and premium tax credits and on and on make that less likely for many. As I've said before, at least half of the returns I do have something missing, and if software doesn't alert the DIY folks who knows what they're missing out on. Like attempting your own electrical work or plumbing, it's important to know what you don't know and turn to a pro.

I'm confused. Was the house sold by the estate (and a 1099S issued in the estate's EIN)? In that case it goes on the estate return because that's where the IRS computers will look for it. In your last post you said the beneficiaries sold it. If so, they should each have a 1099S to report on their individual returns, no estate return required. If the estate sold the home and distributed the proceeds in the same fiscal year, it cannot pay the taxes because it distributed all its taxable income and has none. If the proceeds haven't been distributed, do the beneficiaries really want to keep it open another fiscal year just so it can pay taxes (and tax prep for another 1041)? I agree with Lion that estate tax rates are way higher than most individuals pay so the beneficiaries will get less money than if they each paid tax on their share at their individual tax rates. Plus, the estate can deduct tax prep fees where the individuals can't.

Dave T, did you ever say what kind of retirement account? If a 401k, no penalty waiver for education. With an IRA, the amount used for education (including room and board) will be penalty free. The rest faces the penalty. If the parent doesn't claim the students, they can't claim themselves but can get up to $1k AOC credit or $2k Lifetime Learning. They would have to have tax liabilities to reduce by these amounts (neither is refundable) to make it beneficial.

On second thought, one place where 8949s should be attached is crypto. As of now, crypto trading platforms report nothing to IRS (this may change). One of my clients has the software for his wallets and every year prints out pages of 8494s (28 pages last season). I just enter the totals with "see attached" and send a PDF with the return. Clients who don't have that software are being warned to get it. One guy this year had over a dozen transactions (after I grouped them by crypto type), and we added $500 to his bill. That will encourage the software purchase!

Like TexTax says, you can take money from an IRA or 529 and if there were qualified education expenses the penalty is waived even if you used the cash for a new roof.

I did the same thing with a PA return and still feel guilty. If ATX has a two-year comparison, that might help you notice the discrepancy before it's too late. I view the two-year in UT for every return I do. NJ, MA, and others also tax some items federal does not. I guess all of us should learn to look at all the state entries when we enter the W2, especially when working with a "foreign" state, because the auto-populated ones can be wrong. And I disagree that PA is not complicated! With the local tax and school tax and all those reciprocal agreements, PA is hardly straight forward.

Usually there is no need to attach 1099Bs because everything is listed on the 8949s or directly on the D. The only time I ever attach the 1099s is when there are loads of pages of noncovered transactions, wash sales, etc., that would take forever to type in individually. Actually, lately I've just entered the totals for each type on the 8949s if there are pages and pages of transactions. Bottom line is the same.

Part of the problem is that a lot of taxpayers got debit cards, which don't show up on bank statements. I have one client who got the three stimulus payments all three ways--check, dir deposit, dr card. Like posters here, most good tax pros prod clients and make them go hunting for those payments they claim they didn't get. I wonder how much of the backlog of returns IRS is hand reviewing came from self-prepareds? Our clients tell us they didn't get anything and we send them searching. Tell Turbo Tax you got zero and move on to the next screen. This gets me thinking about how accurate those DIY returns can be. I estimate close to half of the returns I get are missing some doc or another. A stray dividend, pension, IRA, HSA, 529 contribution, child care, you know. Maybe the software prods for this info so users go find it. I'm not trying to create more business; in fact, I don't like to waste my time doing one W-2 and maybe some interest returns. I tell clients with not much going on that they are eligible for free VITA or AARP tax prep. It's no wonder the IRS is calling tax pros partners again--we keep their number of notices and subsequent phone calls down.

We charge at least $50 for PTP K-1s, $150 when they sell the d*** thing. As for states, usually the amount per state is minuscule. I never file state returns for these and have never gotten a complaint from any state. The exception may be when there is some taxable income in the taxpayer's state of residence, in which case you add it to their state return.

Different states have different thresholds. There are reasons why the court might appoint a representative regardless of estate size (minors as beneficiaries perhaps, or out-of-state real estate). Only mark the box that no personal rep has been or will be appointed if that is truly the case. The person who signs the 1310 is promising that the refund will be distributed according to the will or state law. If that doesn't happen, or if some long-lost relative files a claim, you don't want to be in the middle of it.

When you go to a lot of financial sites, a pop-up shows you agree to receive everything electronically. You have to uncheck it, but first you have to notice it. I don't think all these places require clients to print their own, but defaults them to that place. And then there are the banks that charge you for a paper statement (the same ones paying .0000001 percent on savings).

Don't be embarrassed Terry. Uber forms are new to most of us, and we've all learned something from this thread so we'll be better prepared. And you of course are well-prepared for the next one. You should only be embarrassed when you believe a client who says "my return is really simple, or "I'm head of household" (single, no dependents), or "they already took the tax out" (just the 10% early distrib, not the income tax). Or the latest: "I didn't get any stimulus payment."

Does this mean that if you jointly received EIP3 for a dependent, each spouse is considered to have received half. The one who doesn't claim the child got $700 too much and doesn't have to pay any back. The one claiming the child gets an additional $700. Unreal. This from the Feb 10 IRS FAQ: Q E11. Joint Economic Impact Payments: What if my spouse and I received a joint third Economic Impact Payment and we are not filing a joint 2021 tax return? (added January 13, 2022) A11. When third Economic Impact Payments were jointly issued to two spouses, each spouse must claim half the payment when calculating the 2021 Recovery Rebate Credit if they are not filing their 2021 tax return jointly. Each spouse must enter half the payment in the tax preparation software or on the 2021 Recovery Rebate Credit Worksheet. If filing a joint return, you will include the total amount of the third payment issued to you and your spouse. Q E15. Dependents: Can my 2021 Recovery Rebate Credit include an amount for a qualifying dependent if the dependent received the third Economic Impact Payment or someone else received the third Economic Impact Payment for the dependent? (added January 13, 2022) A15. Yes, if you meet the eligibility requirements to claim the 2021 Recovery Rebate Credit. The amount of your credit may include up to $1,400 for a qualifying dependent you are claiming on your 2021 return.