tax1111

TP became green card holder in later 2023. Her child studies in a local US high school for whole year and got green card with TP.
Can TP claim the child on her dual status return and potentially get child tax credit/other dependent credit?

I have not done this before. Can TP use form 9465 to pay extension payments? Thanks

Thanks. For a new business to make s election, the 25% test option is not available right? which means they can only elect calendar year, or 9/30-11/30 fiscal year end?

Thanks.  So, s corp can elect any fiscal year end? 

For s corp's fiscal year option, does the following understanding correct?

1. usually s corp needs to be of calender year

2. it can make sec 444 election but can only choose 9/30-11/30 as year end

3. it can make simplied election with auto approval and need to show business purpose (25%+ income). But under this simplified election, they can choose any month as fiscal year end?

4. what is considered a good business purpose?

Thank you!

In 2021 drake software, it produces refundable child tax credit even when a client files form 2555 so long as the main home is in US for more than half of the year.
Is this an error?
Does anyone meet the same issue?

A married couple sold their NJ rental property. Husband works overseas all these years. Wife did not earn any income in 2022.
Wife moved back to US and lived in NYS for about 4 months in 2022.
Is it a good strategy to file separate returns and treat the gain from rental property sale on wife's tax returns? Do they need to equally split the gain if they jointly owned the property? or They can split any way that is most beneficial taxwise?

Thanks for the help!

The 1099Q is in parent's ssn and they have high income and can not take any education credits. So, the best bet is to use the education expenses against 1099q distribution. 

Although the 1099q is issued to parents, it is FBO one child. The parents have two college kids and both have qualified education expenses. When I calculate the 1099Q taxable distribution, can I include the qualified education expenses of another child against 1099q amount? Or only the education expense of the child who is listed on the 1099Q?

Thanks!

TP has 2 college student children and each has qualified education expenses for 2022.
TP only received one 1099Q with one of the student as receipiant on the form.
When calculating the taxable portion of the 1099q distribution, should I use the total of the two students' qualified education expenses amount or just that of the student who is the recipient of the 1099q?
On the 1099Q recipient section, it shows sth like this
FBO “student name” SME
“Parent name” PART
Address

Client is US resident/citizen and used to work in UK and has a UK pension account.
Are the following questions what I should ask to decide what forms to file for him?
1. is it a employer pension or individual pension?
2. is the pension an employees’ trust (satisfy the following requirements)

Employee contributions must not exceed fifty percent
The individual is not a employee with high compensation and
The plan must not be discriminatory (as determined under Section 401(a)(26) or 410(b)).

If it is a employees' trust, then no need to file 3520, 3520A and 8621. But need to file 8938 and fbar.

Is such a conclusion correct?

Since the client already left UK, does it mean that he is not a highly compensated employee for determining if his pension is an employees' trust? even though his income used to be higher than the threshold? Or in other words, if a person left his UK employer, he is no longer a highly compensated employee no matter how high his salary with the UK employer?

Also, does US-UK treaty have any relief of filing requirement of 3520, 3520A, 8621 if the pension is not a employees' trust.

One requirement of safe harbor provided in Revenue Procedure 2019-38 is that
**For rental real estate enterprises that have been in existence less than four years, 250 or more hours of rental services are performed per year....

TP has several rental properties and he spent more than 250 qualified hours in 2021 on those properties. If he treat those properties as a real estate enterprise and meets all other safe harbor requirement, his rental business can qualify as QBI
Does he need to make an election to treat the properties as RE enterprise with the safe harbor statement ?
Is there any trap such as the suspended loss for one property in the RE enterprise can not be released when the property is sold until all the properties are sold, etc?

For form w8bene, if the foreign company who fills the form is a passive nffe and disclose the substantial US owner's info. required by the form, there is no FATCA 30% withholding, right?
Regardless of FATCA withholding, the company without treaty benefits will be withheld 30% chapter 3 withholding, right?

Another question is: what is the tax impact of the foreign company being a passive nffe vs active nffe on the US owner when he files relevant intl tax forms for the foreign company.

For 2021 (the first year of the company), all the assets is composed of no interest bearing bank deposit and there is no income for the year, can it base on the active nffe criteria and categorize the foreign company as active nffe? For 2022 tax year, it began to have investment in other companies and passive nffe will be a more proper category. So, should it use active nffe on the w8bene form based on 2021 situations as instructed on the form instruction or base on 2022 situations which is more representative of its situations moving forward and use passive nffe?

Thanks.

On 4/27/2022 at 8:09 AM, jklcpa said:

Make sure to mention that in your convo with Drake's team.

Judy, 

Drake has fixed this error. Thank you for your help!

TP changed her job and forgot to submit reimbursement claims in time for previous employer's dependent care FSA so about $3000 in the plan was forfeited.
She said she heard that IRS has some remedy options that she can get compensated from tax perspective on the forfeited money.
Does anyone hear about this?
Thanks!

The subject nonprofit is a online coding teaching organization. More than 1/3 of its support is from the receipts of this exempt activities. It falls under the 509(a)(2) classification. 

Has anyone done this before?
How was it? Is it easy to get approved?
There is one option to convert private foundation to public charity by retroactively reclassify the foundation as a public charity. But I did not find the instruction on how to do it.
Can anyone illustrate?
Thanks!

Thank you, Judy! That is very helpful tip!

I used to use ATX and Taxact. So, I tested in ATX 2019 and Taxact 2018. Both allows negative amounts in column B and E although the relevant table in ATX 2019 is called Option 2 rather than Option 1. I can not find NJ 2210 2019 version so I am not sure what is the right name of the table. But basically the ATX Option 2 table does the same thing as Option 1 table in 2021 NJ 2210. 

Thank you Judy for confirming my understanding. I have called Drake about this and the response from Drake programmer is that the column E can not be negative, which obvious is wrong. I also have send the Drake NJ programmer team an email about this and waiting for their response. I will update here once I hear anything. 

Line 13 of column A 1st quarter is carried over to col b, line 7 and so forth. But in Option 1, the calculation of interest, those overpayments are not carried over. I think this is a bug of Drake 2021

I got lost in the Option 1 (calculating the interest) in NJ 2210 form.
TP paid estimated tax $18000 for 1st quarter and $4000 for second quarter.
Based on Option 1 form: the tax amount due for each quarter is 6000. My understanding is that TP should not be penalized for paying estimated tax early. But the Option 1 form shows that the overpayment for first quarter 12000 (18000-6000) is not carried over to the next quarter. So, TP is charged for interest for the third quarter on the underpayment of 8000 (2000 from second quarter 4000-6000, and 6000 from third quarter 0-6000), he is also charged for the 4th quarter on underpayment of 14000 (the 2000 from second quarter, 6000 from third and fourth quarter). The calculation is unreasonable to me.
If TP paid the estimated tax evenly with 5500 for each quarter (18000+4000)/4, he is charged much lower interest than the current case.
Can anyone comment on NJ 2210? Is this an error on NJ side?
Thanks.

Thank you!

I just efiled an extension 4868 but later realized that I need to attach MTM 475 election with the extension.
How can I fix this?
Can I let client paper mail another extension with the election statement today?
Thank you!

3 minutes ago, Abby Normal said:

No, what cbslee said is what I meant. I worded my comment clumsily.

An inactive limited partner could have some expenses for promoting the business, schmoozing customers, but not actively participating in the management or operations of the business.

Thanks for the clarification. 

If the limited partner incurred some reasonable expenses and partnership agreement allows the reimbursement but has not reimbursed those expenses, are those expenses deductible even the losses on his k1 are not allowed on his personal return?

Thanks for the help!

Do you mean if partnership agreement does NOT allow reimbursement of out of pocket expenses, then the limited partner can deduct on his personal returns, right?

TP is a limited partner of an real estate partnership and incurred some out of pocket business expenses. He want to deduct them on his personal return. Can he do that as an passive investor?