Sara EA

If no tax is due, file when you get the time. No extension needed. Penalties and late filing charges are based on the amount due ($0 X $0 = $0) IRS uses the 709 just to keep track of lifetime gift amounts. I rarely do gift tax returns during tax season but put them off until summer. States may have different rules, so do check there.

I have never been this far behind. Most clients are understanding--I tell them to blame congress for the whole thing, changing the laws midstream as they did. Last year IRS gave us a three-month extension due to covid, but no laws had changed. This year we get one month while covid is still a factor and laws that affect many taxpayers have changed, meaning forms and software have to be updated, states legislators have to meet, tax pros have to learn about the changes and how to address them. Plus estimates, trusts and estates did not have an extended due date. What's up with that?

Next season how many will remember the 2021 EIP they received nearly a year ago? Those with children will start receiving some CTC as an advance sometime this summer. My understanding is that those payments will have to be repaid if income or the child's status change, so they will HAVE to know how much they got. If we think this season is unbearable.... Our two-page client questionnaire includes blanks for both 2020 EIPs. Some fill them in, a few even include the IRS letters, some ignore it, and some put in amounts you know are wrong. I either connect with them or put in the right amount. I've had very few who actually didn't receive anything, mostly clients where one spouse had died. Then there are those whose income went down and are entitled to the recovery credit but don't know how much they already received.... Why didn't the IRS website give amounts instead of the fact that a payment was made? And why did they take it down for 2020 before filing season was over? I hate this tax season!

As if congress didn't create enough extra work for us by changing the rules midstream, now we have to calculate estimates due now from returns due in a month. This week I filed extensions for people who likely won't need an extension just to make a payment that hopefully will cover their first ES. I prefer that route to making a 2021 estimate outright in the event they do owe some for 2020 the penalty will be lower.

When I started working at the CPA firm where I am now, I was assigned most of the mail-in clients (mostly people who used to live in the area but moved before I got there). I still do most of them and have never met a single one. Most have become friends by now; they call or email with tax issues and I respond, yet I wouldn't recognize any of them if they rang my doorbell. Those clients number a couple dozen probably, but I have met most of my other couple of hundred (and many of the thousand or so other clients I've chatted with in the waiting area or worked on pieces of their returns). It has always puzzled me why someone would move hundreds of miles away and stick with the same accounting firm. Are there no accountants in WI or TX or FL or AZ or MA or NY? I came to realize that once you trust someone with your financial files, that trust is lasting. Now I'm kind of enjoying not seeing clients in person because of covid, and not seeing photos/videos of their kids, grandkids, vacations etc. Of course the emails and phone calls probably take up just as much time. My entire morning today was spent with client contacts instead of with all the returns I hoped to finish up before lunch.

It is up to the CLIENT to keep track of purchase and sales prices. These change by the second, not by the day. Client is welcome to invest in software, or if s/he uses an exchange, that data may be provided to them. We tax pros cannot do this for them. It is possible. I have a client who mines crypto and actually keeps track of electric usage. This year he mined/bought/exchanged/sold so much he was ready to throw in the towel and just pay tax on the whole thing. When I reminded him that his income would soar by millions, he decided to invest the time.

According to Pub 334, this guy doesn't need an inventory: Inventories Generally, if you produce, purchase, or sell merchandise in your business, you must keep an inventory and use an accrual method for purchases and sales of merchandise. Exception for small business taxpayers. If you are a small business taxpayer, you can choose not to keep an inventory, but you must still use a method of accounting for inventory that clearly reflects income. If you choose not to keep an inventory, you won’t be treated as failing to clearly reflect income if your method of accounting for inventory treats inventory as non-incidental material or supplies, or conforms to your financial accounting treatment of inventories. If, however, you choose to keep an inventory, you must generally use an accrual method of accounting and value the inventory each year to determine your cost of goods sold in Part III of Schedule C. Small business taxpayer. You qualify as a small business taxpayer if you (a) have average annual gross receipts of $26 million or less for the 3 prior tax years, and (b) are not a tax shelter... Treating inventory as non-incidental material or supplies. If you account for inventories as materials and supplies that are not incidental, you deduct the amounts paid or incurred to acquire or produce the inventoriable items treated as non-incidental materials and supplies in the year in which they are first used or consumed in your operations. Inventory treated as non-incidental materials and supplies is used or consumed in your business in the year you provide the inventory to your customers. So, you could have gone with the numbers he first gave you. The offer to find more numbers, however, negated any possibility that you would want to work with him

But the IP PIN is for the taxpayer and spouse. Since when can a dependent get one, and where would you enter it? Your clients need to file a paper return claiming the child. The IRS will send both parties who claimed that child letters and will sort it out.

Even if the IRS automatically adjusts returns for UI, what about the states? Not all states will conform to federal. Even for those who will, after the IRS adjusts AGI are they going to notify states? Hardly likely. I think we will all be amending state returns this summer. We should send them all to congress and let them do the amendments. Maybe then they'll think twice about changing the rules in the middle of tax season. They could have made this change with the December stimulus bill but they were too busy making faces at one another.

If the mother continued to live in the house and paid all the bills, it is definitely an implied life estate. As such it is included in her estate so the daughter gets step-up.

There are too many possibilities and not enough concretes for us to get into this yet. The IRS commissioner said today he "thinks" the IRS can handle correcting returns that have unemployment. The software companies can't just update their systems without going through IRS system acceptance, so don't blame them. The states each have to decide how to handle these changes, and some of them will have to call special sessions if their legislatures aren't meeting at this time. Once the fed decides what to do we are not home yet because it may take awhile for the states. We just have to tell clients that nothing is settled yet and they have to wait. So don't even think about amendments yet. We too have a number of clients who haven't filed yet who are in a hold file while this gets sorted out. As much as we love our clients and want to help, there is nothing we can do right now but chill.

Exactly right! If it was jointly owned, there is half step up basis. If the improvements were made prior to his death, his half of those is included in the step-up, but her half should be added to her basis. If you're really lucky, it was just in his name so you get full step-up and don't have to mess with any of this.

The IRS message makes me think (hope) that they are examining their systems to see if they can fix these returns automatically and avoid the need for amendments. Will they do the same thing for the premium advance payments that now don't have to be repaid?

How do you know the scholarships were not restricted? I have never been able to find enough info on any particular scholarship to determine if it was restricted or not. Usually grants are the ones that are not restricted. I would have loved to do what you are proposing but could never find info on the particular award to be sure ("presidential scholarship," anyone?).

Does anyone in congress have any idea of what they just did to tax pros and taxpayers alike? Many, many people have already filed, and a lot of them owe because they had no withholding from their UI. The states each have to decide what they will do about adopting the federal and issuing refunds. A lot of tax pros are either going call it a day tonight or quit tomorrow morning. Yes, the law helps some people but caused untold amounts of havoc. My hope is that IRS can do this without the need for amendments by reprogramming their systems. After all, there is a dedicated line on the tax return for UI, and IRS certainly doesn't want to deal with a billion amendments. Clients who owe and don't plan to pay until April 15 may need us to do some calcs for them so they have to come up with less cash. We can't do that until we find out what IRS and the states are going to do. And we won't have time because Monday morning the phones will start ringing with questions about will I get $1400 and when? ARRRRRRRRRRRGGGGGGGGHHHHHHH!!!!!!!!!!

The EA journal this quarter actually had an article on navigating tax groups on social media--they must have seen a need. It went into how some respondents are nasty, belittle those who asked a question or disagree with an answer, try to show off their smarts, etc. It also talked about people who ask basic questions because they are too lazy to look up the answer. It made me think about why this forum is so great. Everyone truly tries to be helpful so no one is afraid to ask a question. If others disagree with a response, their remarks are always respectful. What a great group!

No excuse for those small fonts. Many places issue beautiful W2s or 1099s, with nice big clear numbers. Others use the exact same 8 1/2 X 11 size paper and teeny fonts that are a strain to read. Why? As for phone photos, we actually put on our client questionnaire this year "NO PHONE PICTURES." We have all wasted too much time trying to decipher them. Yes, it makes a difference if that is a 3 or a 6 or an 8.

You don't want to waste the AOC, which is only good for four years. If your student plans to keep attending school and only went for one semester in 2020, you might want to claim the Lifetime cr and save the AOC for years when she will have double those expenses. About those book receipts, students today do everything electronically, look at you funny when you ask for records like 1098Ts or bursar account printouts, and buy books online and never think about a paper trail. I warm all parents of new students to demand that they get/keep book receipts. They do come in handy at tax time.

Back in the day when I worked at H&RB and efile was new and not many were doing it yet, we did electronically file self-prepared returns. I don't know if they still do so. It is definitely not cost-effective. You have to enter the entire return but don't get paid for tax prep. Often there were errors that wouldn't allow efile, so many of those clients converted to tax prep clients. Maybe that was the point. On the opposite end of the spectrum, at the CPA firm where I work now we have a few clients who only want us to prepare their Sch C. We do that and charge for the work involved.

Don't forget that in 2020, employers could opt to not withhold employee portion of FICA. They are supposed to make it up over 12 months in 2021, when your client is no longer working. Don't know what the consequence is in that case. It was somewhere in the IRS materials. Maybe someone knows.

I know IRS letters came with the first round, but has anyone seen one from the second? I sure didn't get one.

No I wouldn't. Extra bandwidth and software maybe if they're not in the school building. Possi's excerpt states the items/services must be used "in the classroom." If they're teaching from home, I guess that's the classroom. For one of my business clients an auditor wanted to see the whole year of cell phone bills. There were four on there, but she allowed only the one for his two businesses, no percentage of the others. Internet was taken as a ratio for OIH expenses and that was okay. He was a Sch C though, not an A. I only mention this to show that auditors do pay attention to these items that have fuzzy personal/business lines. Has anyone actually seen a audit include educator expenses? My hunch is that the tax on $250 isn't worth an auditor's time, but still....

I don't know how you would separate their school internet and phone use from their personal use, so I wouldn't do it. I could see teachers spending less this year because with virtual learning they probably aren't buying special books, kleenix, toys, etc. Most of my teacher clients usually spend way more than the $250. Some work in districts that reimburse everything, but others even have to buy their own printer paper once they use up their meager allotment.

The Get my payment link would be more helpful if it gave the amount, but I don't think it's a waste. I too had a client whose spouse died. He got the first payment and not the second. The site showed that the second has not been issued, so at least we know to claim the recovery rebate. Another client lives overseas and only got the first. The site showed the second was mailed, so he'll just have to wait for it. At least the information provided was helpful in both cases.

We are holding off on the 1065s and 1120s, possibly for a couple of weeks. These forms seem to get updated all season long, but the big issues usually get corrected earlier than the later updates (where some insignificant entry doesn't carry to where it's supposed to and only affects one in a million entities). With all the changes to the changes that occurred this year, I doubt the IRS caught everything so we'll give them time. We probably won't efile individuals and 1041s until Monday or Tuesday, just so the ACKs will come back quickly, which probably won't happen with the onslaught on opening day.