Corduroy Frog

You will find entry fields for exempt dividends on your software. As a general rule, funds for municipals are exempt for Federal, and include issues from state and local governments. Where the difficulty comes is dividends from federal agencies. Depending on the state, such dividends can be exempt. Maybe Margaret's link can provide an exhaustive list of exempt dividend issuers.

Also bad: Clients think they can take a picture with their cell phone. Always blurry, crooked, dark, and impossible to read. Forbid they should attach a .pdf file.

Time for my tax season gripe. It starts with the issuers of information returns (W-2s, 1099s, 1098s etc) send this message to taxpayers: "We have wonderful news!!!! You can now access your information ONLINE!!!" I think the only "wonderful news" is for the issuers. They no longer have to send things in the mail, pay postage, or even print anything. So when we ask for these things from our clients. "OK, I've got the information right here on my phone! Let me show it to you. {scroll, scroll, scroll, . . . scroll} for a W-2, then again {scroll, scroll, ad infinitum} for a 1099. "Can you print these out for me?" "Oh no sir, I don't have a printer that works anymore" For what it's worth, I insist on hard copies for any document that has tax withheld. so we are protected if ever questioned. Thanks for reading this rant...

The Illinois Tax Seminar was originally for farmers, and was adapted by all the "land-grant" schools in every state. For Alabama, this means Auburn U, and I have been going down to Birmingham three years to attend this thing. For Texas, this probably means A&M is sponsoring the seminar. The textbook is pretty good, but doesn't have much about farming any more. If you stand to read IRS material, Pub 225 is pretty good and is strictly for farmers.

Thank you - and you are correct.

Yes, but it was a "net" because of her loss, and it was a joint return for 2023. Does not appear Drake tracks the QBI loss separately going forward to 2024, although there were in fact separate Sch C's.

Andy and Becky have been filing joint returns for years. They both have Sch C business. Becky's business has had losses, and she has accumulated losses for purposes of taking the s. 199A deduction. Andy's business has been profitable, and he has no such accumulated losses. If they file separate returns, will Andy's s.199A deduction be free of Becky's accumulated losses?

Judy, worked like a charm. Don't know why no one at Drake could answer this. They should pay you for their own Customer service.

Thank you Judy - Drake has not figured out how to populate Schedule 3, Part II, Line 13(b). Don't know what's up with them.

Wrap your arms around a list of depreciable assets. Farm equipment is expensive and depreciable. Also breeding cattle are depreciable if they were paid for. A bull is nearly always paid for because a calf raised to be a bull will have cross-breeding problems and can sire out very sickly calves. Farmers have some advantages with respect to treatment as a "hobby" that other businesses don't have. To begin with, IRS will be deliriously delighted when farmland is ultimately sold. as the gains can easily eclipse the total of all previous losses. Also a landowner must do something productive on his land or else it will grow up in ruins and barns will dilapidate. (Timer would be an exception). And there is also the profit motive. A "farm" with 8 acres and one cow is a hobby. Make sure all income is reported. Payments of $7000 for feed and only $1500 in calves sold is a warning sign, unless the calves are being held over the winter for sale in the spring. This practice is not very common since it is horribly uneconomic to keep livestock in winter months. I do around 25 farms in Tennessee every year. Most of them do have losses that i feel are legitimate, and some have profit. Some of them have small losses and occasional profits. Many of them move from losses to profits when their expensive equipment becomes depreciated.

Thanks to Terry and Judy. The choice of a credit was not explained, and that will result in a better situation. In Tennessee where there is no income tax, it is somewhat rare that people can take the standard deduction. Even though they may itemize $29,301, they only get the benefit of a $1 deduction.

Client became disabled and received $35K in a lump sum payment from Social Security. He received a form SSASM-1099 (not a SSA-1099). After he received the money, he had to pay this back to his insurance company, who was paying him sick pay. Bos 4 (repayments) shows zero. Drake input screen has no allowance to enter anything for Box 4, but it has a comment (inaccessible) which states that a repayment will cause the benefits to not affect the tax return. Drake representative told me the repayment should be shown on Schedule A as a "miscellaneous" deduction. That does little good as the client would not be able to itemize. Anyone using Drake tell me how to get rid of the taxability of Social Security on my client's return? I appreciate any help. Don't believe this is a tax issue, but a software issue. Messy situation. Thank you in advance.

Depends on your state and your software. Drake (for example) allows you to enter a different taxable amount for Federal and State. Dividends which are tax exempt for Federal purposes are not always honored as tax exempt for states. Your state is Missouri, so I don't know.

Thanks to all who responded. Good to know there are other old fossils besides me.

I suppose I am sorta giving away my age when I ask: Is there a FONT that produces a very noticeable distinction between a "6" and an "8"?

Thank you. Putting numbers into this scenario. SEP $13,800 apiece for husband/wife partners, Total SEP $27600 if they choose, and doing so means they can't have a Roth. But their total (modified) AGI is $228,000 which is under the $230,000 which by its own merit would allow a $7000 Roth if no SEP,. But if no SEP, their AGI rises to $245,600 ($228,000 + $27600) and the absolute phaseout for allowing a ROTH is $240,000. So either decision they choose results in no Roth.

Thank you. Client is an LLC, disregarded entity choosing to file as a partnership. And yes, Drake is forcing an entry on line 16 of Schedule 1. Research from IRS Pub 590-A states specifically "IRA" and does not include SEP in the language. Apparently the pervasive feeling is that the language implies SEP should be included, and Drake has decided that as well. The language would be less confusing if all manner of deferred retirement plans were stated, but that is not the case. Even the IRS has not so stated. Thanks again Judy. Others who have viewed the question have not opted with an opinion and I don't blame them.

Struggling with a client who wants to contribute to a ROTH, and borderline to possible phaseout. The phaseout worksheet, so long as the $230,000 threshhold (MFJ) is not exceeded, allows $7000. However, from the $7000 the taxpayer must subtract amounts for "other IRAs" There is no contribution for an IRA, but there is for a self-employed SEP. When the instructions refer to "other IRAs" does this mean strictly IRAs, or do they really mean IRAs to include SEPs? They have no IRAs, but Drake is subtracting SEPs. Is this correct? Thank you in advance.

I think the critical factor on deducting losses is the intent of making a profit, if not currently, an intent to stay in business long enough to make a profit. I believe this factor is so overwhelming that little else matters. The 3 in 5 is an IRS guideline (and a guideline they would be very happy to apply). Of course, the client will always claim the profit motive is there, but the practitioner must use judgement. One good sign is if losses are declining over time, or losses can happen in economic situations (such as pandemic). Example: I had a building contractor suffer losses in 2021 when the price of lumber went up exponentially on fixed price contracts. Farmers have a longer leash, and an ultimate sale of farmland will usually overwhelm years of farm losses. And not working farmland productively will ultimately ruin the value of the land, unless timber is grown. Some claims of profit are ridiculous, such as horse breeding. I have lost some clients because they have insisted on claiming large and ridiculous losses.

Hobby is a bad deal. Even though you can't take a loss, you still must claim gross income as "other income" without deducting any expense. And yes, it is taxable.

Talked to Drake again this morning. Their response was "You must have a smart phone to obtain the authentication feature. We don't have an alternative and we're not going to have one." Very bad....

Judy, I went to the topic but all the various posts simply tied my brain in knots. I called Drake today and told them I would not use that crazy rectangle thing and they haven't called me back. If I am a poor tax man, I'm an even worse IT man. When Drake has a solution I'll post here. Thanks to all

Thank you Judy. I'm one of those people who don't use a smart phone so I can't snap that crazy-looking rectangle. I'll call Drake tomorrow. But thanks for your very detailed step-by-step instructions.

Just e-filed my first return last night and received the ack back today. Smooth as silk. Nothing requiring authentication. I was expecting to receive a six-digit (or more) thing to enter for authentication, but did not. Is Drake handling the authentication at their transmission level??

You've got to wonder whether these upgrades are really to "serve you better" or whether they're really for Microsoft.