Sara EA

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.

I never heard of it either. It definitely doesn't work in all areas. Like taking a 529 plan or IRA distribution in Dec of one year to pay tuition in Jan does not alleviate the early distribution penalty.

Ultratax, which costs our firm $16k a year, also does not have approval on our company's state and who knows how many others. We can do the calculations but can't efile. In the past our state has always been available almost immediately after the federal approval, so this has never happened before. It seems the states are causing the lag (but it's all our fault).

No. An estate can have an NOL only if it is conducting a business and has business deductions in excess of business income. Your estate's expenses in excess of income will carry over until the final year of the estate, then pass through to the beneficiaries not as an NOL but as excess deductions on termination (which are now an above the line deduction instead of the old itemized deduction subject to 2%.)

Margaret, it sounds like you have what few do: Enough. You don't need to make the big bucks, or hustle for more and more clients, or earn 80% in the market each year. You have what you need and are comfortable with, which is enough. Good for you. This concept came from Warren Buffet before he was richer than God. He was at a party with many zillionaires and someone asked him if he wasn't a bit envious. He replied no, because he had what none of them would ever have, Enough.

The expanded EITC is for 2021 only. If congresspeople can stop making faces at one another long enough to get some work done, they may choose to extend it. Actually, now that full retirement age has been extended to 66-67 years for some cohorts, another thing that needs changing is the age for Medicare. Hey congress, people are still working at age 65 so why shouldn't they get EITC like 64 year olds? Many employers make employees go on Medicare at 65 and the work plan becomes secondary insurance, an unnecessary hassle because people have to write checks for their Medicare because they aren't yet collecting SS. Margaret, if you are a CPA making little enough to qualify for EITC, you really have to raise your prices!

Anyone know how the IRS is doing in this department: The second stimulus payment for 2020 was authorized so late that IRS didn't have the time/staffing to program its computers to verify the amount paid. The result was that all returns that claimed the rebate recovery credit had to be (and still are being) manually reviewed, resulting in long delays for refunds. The 2021 stimulus began in May, so hopefully that gave the agency lots of time to set up its computers to match the amount it paid taxpayers with the amount reported on their return. Are returns claiming the recovery credit going to be processed quicker this year, or are we still with manual review?

Good thoughts, Dan. I hadn't considered the benefits to the son if the parents couldn't benefit. Why we encounter so many rentals with no depreciation is a mystery to me. Or so many rentals being depreciated without land value broken out. These common errors prove that there is no substitute for tax knowledge instead of letting the computer do it. I give Illmas credit because that missing depreciation had to be calculated by hand, knowing which table to use. Tell that to TurboTax!

If basis follows the same rules as everything else, it is cost minus depreciation allowed or allowable. Donee will have a lower basis to begin depreciation anew. As for filing the 3115, it depends. Was the property profitable or showing losses? Were the losses even useful or disallowed because of AGI? If the donors' tax bracket is low, how much will the additional $9k depreciation net them, if anything? You can let them decide if it will be worth your fee. (To those who like to do everything "by the books," the IRS isn't going to complain if landlords didn't take a deduction to which they were entitled.)

You'll have to look at state law on this, but generally cap gains remain in the estate until the final year. The estate tax rate on $2k cap gains in zero percent, so the estate lucks out. The distribution over and above the interest income is considered to come from corpus. Put it on the return but there is no tax consequence to the beneficiaries. (They will owe tax on their share of the interest.) Did the estate have any expenses (attorney, accountant, probate fees)? This will reduce the interest distributed to them.

No, don't check the box if all they did was buy. It's confusing because the wording is "did you receive...." Well, if you bought of course you received crypto. It really means is "receive for services or goods."

Our office uses Shredit. They come once a month and shred on site. We scan everything and return all original docs to clients, but we still have paper (handwritten notes, our routing sheets for each client, calendars, anything with the client's name on it, etc). The free and gov't shred days usually exclude businesses.

Ha Ha! "Normal" these days consists of stimulus payments they don't remember, advance child tax credits they don't remember, cryptocurrency dabbling, NIIT, different phase out ranges for almost everything on the return that you have to explain, ability to use 2019 income in some cases, different rules for every type of retirement plan contribs and distribs, paying tax on 2021 retirement distribs over three years, should I go on? Normal for me will be if the tax laws don't change again before the end of filing season.

Posters here have nailed it! Very similar retirement plans have all different rules surrounding them. You can invest in guaranteed income funds in 401ks but not 403bs. Avoid early distribution penalties by taking money for education expenses from an IRA but not 401ks. "Hardship" distributions are a joke because people take money out for everything from casino trips to spending sprees. No excuse needed to withdraw from an IRA. Don't lament putting money into an IRA over the years. You saved taxes, likely federal and state, each year, and you paid no tax on the divs and gains. That meant you had a lot more money invested that enabled further divs and gains. If you had instead put the money in a taxable account, between fed, state, and tax on divs and cap gain distributions, you would have had 30-35% LESS money invested each year and thus less to grow. I converted my IRA to a Roth when they first came out. You were allowed to spread the conversion amount over four years to lessen the tax bite. After two years, however, taxes went up so I paid 25% the last two years. That's higher than my bracket now, but who knew. At least I'll never have to take an RMD from it and won't have to worry if I decide to go gambling or on a spending spree.

Good job, Terry! A lot of effort went into that feat. I am a member of NAEA. It's pricey. Their quarterly journal is very informative and their courses are good. Our state chapter offered Ethics at no cost this year, and if you're missing credits you can take exams from the journal for a modest fee. They email a weekly newsletter that keeps you informed of the latest tax developments. They have a lobbying arm in congress (always asking for contributions for it), and their coverage of it does let you know what legislators are thinking and doing. Try it at the discounted price and see if it's worth it to you.

When a taxpayer who hasn't had any changes for years receives an identity verification notice, it shows the system is working! Most likely another return was received for the same client but this one showed changes so IRS flagged it as suspicious. The agency has no idea who the real taxpayer is, so they query both of them. This is a much better process than just a few years ago when the first return filed got the refund and the real taxpayer had to file affidavits and wait forever for the money (and the thief is long gone with our tax dollars). I did have two clients who got odd requests from IRS this year to provide copies of all their tax docs. In both cases all the docs were ones the IRS would already have like W2s and 1099s. My hunch is that suspicious returns were filed and IRS was trying to identify the real taxpayer without calling it identity verification.