Sara EA

The child tax credit is for children under the age of 17. The advance allows for children who turn 17 in 2021. Any other child, whether an 18-year-old student or 25-year disabled child does not qualify as a "child" for the credit. Your client's daughter does qualify her for the "qualifying relative" $500 deduction, but no child tax credits.

I just had a request for a first-time penalty abatement denied too, even though taxpayer has always been current. The reason given in the IRS letter was that he did not qualify for "reasonable cause," which is not what we asked for. Has artificial intelligence been answering these requests? If so, it's certainly not very intelligent.

I read today that IRS is ignoring the 30-day thing and allowing taxpayers to verify beyond that time limit. But the poor frightened people don't know that! I wonder why the online system is down. A few years ago the system to recover an IPPIN was disabled as was the sharing function for the FAFSA because the ID thieves had enough info on the taxpayers to answer the questions no problem. Did it happen again?

I have a retired client who has a similar notice and called IRS THIRTY times and never got through to anyone. Her notice said she could not verify online (she is capable of doing so). This is terrible customer service, and I told her to contact her US rep and senators to tell them to fund the IRS so it can actually serve taxpayers. What a horrible situation for all the recipients of these notices--they're scared that their ID has been compromised and then can't reach anyone to help, all under time pressure. Unacceptable.

Our firm has taken the position that we will not recommend that clients take the money or opt out (except in cases where 2021 income is certain to be above eligibility). We wrote a generic email to respond to client queries that explains that there is an enhanced CTC and that half of it will be paid in advance for taxpayers within certain income parameters. Receiving it may lower their 2021 refund, or if their income rises above the limits in the IRS letter, they will have to pay some or all of it back. If they think their income will rise or they like the idea of a big refund all at once, they might want to opt out. If they need the money now, they might choose not to opt out. (We are not calculating their amounts or making the decision for them!)

I've been dealing with crypto for years because I have a client who is a miner. I had to study it, was fascinated, and now I follow it (would never buy it). By now a few other clients are buying/selling various coins, so I'm able to handle them. I will back out if any one of them ever starts buying everyday items with crypto as the constantly changing price would be impossible to trace. Few actually use it as currency, and I don't know why any merchant would accept it. Say someone buys a Tesla for $80k, but by the time the transaction clears (up to 20 minutes for bitcoin), the value of the crypto could have gone down by $5k or more (or up). I read about a guy who ordered a pizza and by the time the transaction cleared it cost him $23 more. The exchanges are going to have to do the tracking (like Coinbase does) because otherwise the taxpayer and tax pro and IRS will never be able to figure it out. It would mean a five day audit for a $20 transaction.

We find that you can't beat ATX for price and ease of use for 1099s, W2s, etc. For our practice of maybe 1500+ returns, including lots of partnerships, S and C corps, trusts, estates, some nonprofits, and many complex but some simpler individual returns, ATX does not meet our needs. We use UltraTax, which is expensive but very powerful and does almost everything we need. It isn't perfect on states, but close. A weakness is the tax projection module, which doesn't consider increases or decreases in credits depending on projected income. Of course, they sell a separate projection piece, which I'm sure does a better job for a higher fee. That brings me to an issue we are all seeing more and more. Things that used to be included are now part of a separate package for a separate fee. Even Quickfinders, which used to tell us all we needed to know, now has frequent references to "see our XXX book," sold separately of course. You can't buy Adobe any way but subscription now (with constant reminders to upgrade to the next level). Heck, Mahjong and solitaire used to come with your initial software but no more. I used to get a printed offering from Comcast showing what stations were included in which packages. Now I can't even find it on the website, so I'm afraid to downgrade in the event we lose one of our few must-have stations. Businesses are just too clever.

The eastern panhandle of WV is beautiful and has a vibrant economy, certainly other areas of the state do too. There is much to praise about residents being independent. You won't find a million fast-food restaurants but lots of mom-and-pop places with great, affordable food. Not many big box stores, but you will get to shop at local hardware , appliance, and furniture stores and niche sporting good, auto, plant, you name it places. I once bought a bag of mulch at a local ACE hardware store (family owned), and it was bagged in nearby Virginia. No matter where you go in WV, you'll feel like you're in a neighborhood.

We had an incident when the person doing the efiling filed parents' return instead of son's (same first name as dad). We hadn't started the parents yet, so the filed return was blank. Imagine how many lines of "explanation for changes" that took. The culprit no longer works for us (not her only mistake).... I'm impressed that people are filing amendments already. We have so many on extension that it will be months before we get to amendments. Almost all of our state returns with unemployment that were filed before the law changed will have to be amended. We will have to triage here: Extensions where people will owe money first, then regular extensions if we have the info, then amendments for unemployment, and last amendments where people found another form or just thought up some deductions. I guess the principle is initial filings get priority, then amendments not the fault of the taxpayer, then amends for those who already had their chance to do it right the first time. I'm starting to worry about clients who had lowered income in 2020 but are back to work. That advance child tax credit is going to be sent automatically starting in July. Many will not be eligible based on their 2021 income and, unlike the stimulus payments, my understanding is that overpayments will have to be returned--making for a very unhappy 2021 tax season. Ideally we can warn these clients to opt out of the auto deposits, but I don't know how to begin to identify them. What are others doing?

No loss allowed if sold to a related party. I believe the unallowed loss is added to the new owner's basis provided she holds on to the house for a specified period of time. You can research that in your spare time since it won't affect anyone's taxes in 2021. (Spare time--what a concept!)

A little south of Winchester. I would love to connect with more tax pros here. I cannot imagine how you solo practitioners do it. I've always worked for a firm with other tax pros to bounce thing off of and help or get help when needed. I belong to both NAEA and NATP, and over the years in CT I got to know lots of people from attending seminars together. I am working remotely for the tax firm in CT where I've been for 18 years or so and interact with my colleagues there, but here in VA I don't know a single person in this crazy business.

I could be wrong, but I seem to remember from an update course that unlike the stimulus payments, the advance child tax credit will have to be paid back if 2021 income is not what the IRS calculated the credit on. This year I had a few clients who could not come up with how much stimulus they got, but when I looked at their 2020 income and realized they were not going to get any more anyway, I just plugged in the standard amounts or entered zeros. (Say they really got $1k instead of $1200, but their 2020 income was too high to get anything, it made no difference what I put in there because they were definitely not going to get a recovery credit.) We won't be able to do that with the advance child tax credit in 2021 and will have many clients moaning when we present their tax bill. Right now we don't know enough about it to warn them. The IRS may do that, but how many people won't read it because they are thrilled by the thought of getting extra income?

Get ready for the phone calls!

We have been in VA about a year a half and love it. The people are genuinely kind, real southern hospitality, and it is beautiful here in the Shenandoah Valley. Real estate taxes are less than a quarter of what we paid in CT, gas is cheaper, utilities and insurance are less, roads are in great condition, state budget is healthy. Housing is expensive though, and we aren't in the beltway. Our son lives 40 miles away in WV. It too is a beautiful state with low housing and property tax costs. You can get any environment you want there--mountains, plains, rivers and lakes. I don't know why it hasn't been discovered by the masses yet. What is neat about both states is they have history everywhere--castles, plantations, revolutionary and civil war battlefields, underground railroad sites, canals that existed before the rails dominated. Take some vacations this year to explore potential new home sites. Looking at the zillions of returns we have on extension, and all those state returns that will have to be amended after the late federal changes, it looks to me like another tax season that will never end. This one will hurt more because last year we couldn't go anywhere even if we had time; this year we sort of can....

I had to learn about VC several years ago when one of the boss's clients started mining. He's my client now and still mines. He has the magic software and this year gave me a 29-page 8949, all filled out. Put the totals on the return, attached the pdf, done! He did all the work (well, his software did), but I still charge him a lot because of my "specialized knowledge." As of now, VC is not subject to FINCEN reporting. Proposed rules may change that. If held in a foreign exchange and greater than $50k, it should be reported on Form 8938.

If the house is mortgaged, the bank has the title so your client can't gift something she doesn't own.

Does ATX have a more powerful (expensive) version that will do the 8615? In UT, you simply mark one return as the parents. Then you go to the utility, choose the parents and each sibling, and run it. Done! Last year it even told if it was better for the child to use the trust or parent tax rates. I too used to set up each family member on different computers and run back and forth. It was work and doubtless less accurate. Can you save or print each child's return before the kiddie tax calcs and the parent's return to somewhere and work from there (hopefully you use two monitors)?

CT just announced that returns with unemployment filed before the software updates will have to be amended even if the IRS auto-corrects the federal. CT starts with federal AGI and does not have a separate line for unemployment benefits, so there is no way for the state to know what went into that AGI number. If MD and other states do the same, there's a whole lot of amending going to be happening. And we thought that this year we might actually get some time off before extension season hits! Our software also will update the minute we open the return, so the "originally reported" numbers will all have to be entered by hand (and double checked of course). We are planning to charge $75-100 per amendment. If federal amendments have to be done because the client is now eligible for a credit or deduction that wasn't there before, we'll charge for those too.

Just finished a client who worked in the UK all year and all earned income was excluded on 2555. (He did have a few k US investment income.) He got the first but not the second EIP, and the program was calculating a recovery for the second. Based on his foreign income, he made too much to get either. I looked it up and believe it or not, his reduced US income made him eligible. My point is that every credit has its own quirks, and in our job we learn something new every day (or hour).

Fifteen returns in a day! You are superhuman! The only times I can do that is when they were all done and checked and finally that last bit of missing info came in. Even then, I don't think I'd make 15. Missing info is the worst. Email a client with three questions, and you get two answered. Heck, tonight I emailed a client with two questions and got an answer to one. Really? Most of my returns are fairly complex--even the "easy" ones turn into hours of work when they leave a note that they sold some land or hunting cabin they've had for years and the stock their grandfather gave them when they were born. Tonight I picked up a normally straightforward return and found that she had her daughter's and boyfriend's in there too. Will it ever end???

Same thing is happening in Ultratax. The IRS is telling people not to amend, that they will automatically correct and issue refunds starting in May or so. The exception is when a taxpayer was not eligible for a credit or tax break so never filed the relevant form. If excluding unemployment now lowers their income enough to make them eligible, amendments will be needed. I have a hunch most state returns will need to be amended. I admire you for getting to amendments now. I have so many original returns to do I'm a month behind. Those amends are going to have to wait.

Lion, CT doesn't require a driver license. If you have one in there that expired, you do get a diagnostic in UltraTax and can't efile unless you update it or put "none provided." School info rolls over in our program. Why would anyone have to verify ID every year if they already have it? It's the same person, no? Just making work for us. I had friends who were adopting a child and the process took so long their blood tests expired. Did their blood types change in six months? Another friend was albino and legally blind but kept having to be recertified. Like her genes changed? I think a lot of this constant verification is because the regulators either don't think or do it just because they can.

If the child's 1040X was paper filed, you should wait until it shows up on the "where's my amended return" link at irs.gov. That can take months. I'm glad to hear that efiled amendments are going through quickly and allowing parents to efile sooner. We must have a dozen of these scenarios every year in our office.

That reasoning always makes me laugh. If they are getting a refund or a stimulus check, they are more than willing to let the IRS "know" their bank info. Do they really think the IRS can't get their bank info any time they want? (The easiest way is with Form 1099-INT, which the agency gets every year.) If the IRS wants to seize your bank account, they will seize your bank account whether or not you gave them the specifics. The majority of my clients pay balance dues and ES with direct debit, and it has always worked smoothly. Last year when the IRS was partially closed I was getting calls from clients frantic because their paper checks had not been cashed, although eventually they were.

Before the court appointment, the daughter can act as a personal representative and sign the 8879. It's trickier when there is a refund, but with a balance due I agree that the IRS will gladly take the money from anyone. She should write "personal representative" after her signature.