Dave T

Rita, I recently lost my Dad at 99 and at his funeral eulogy I quoted from Billy Graham who once said " At some point you will hear that I have died, don't believe it, I have only changed addresses." May the Lord bless you and your family.

Just a bit of follow up to my original post on the early IRA withdrawal. Clients readily admit that distribution was not Covid related and had based their decision on assurance from financial advisor that there would be no penalty. There is a bit of irony in that if they had taken funds from the wife's IRA it wouldn't have been an issue as she is over 59 1/2. To their credit, they have kept emails from advisor of this assurance and to the advisor's credit they have said that if indeed this is not Covid related they will reimburse my clients for the $5K penalty incurred. This topic has stirred some very interesting and thought provoking discussion.

Yes I suggested putting $25K back into the 401k but as we've all experienced you can only suggest. I plan on calling him again tomorrow and suggest again.

T/P took out almost the max from his 401k in 2020 due to Covid ( $99K). I do the 8915-E comparing paying off the full amount vs. the 1/3 option. T/p and wife decide to pay off full amount in 2021 and be done with it. Fine that's their decision. The problem is now their income in 2020 exceeds $150k and thus no third stimulus unless IRS goes by 2019 income. Seems like in light of this the 1/3 would be the way to go. Am I missing something?

I had that issue yesterday. Tried to e=file a return and wouldn't transmit. I re-created the file in question and tried later and it went through.

So many questions surrounding this: Will states have to reissue 1099-G's? Will states comply with the exemption? If we have returns in hand with the 1099 should we hold off on filing?

Yes, they paid me.

I had a somewhat similar situation last year. I had prepared a return and clients went somewhere else. I gave them them their documents back as well as a bill. To my surprise, they came back to me this year.

Also, there was no job offer rescinded nor was there any quarantine.

No, the 2020 IRA distributions were sporadic and not equal throughout the year. Interesting second question. In 2019 I prepared their taxes but before I e-filed the return I was told to hold off until I heard from them. They had already paid the financial services company a flat fee to consolidate all investments and the co. also included tax prep in their fee so they went with them. I assumed I wouldn't be doing their taxes this year but to my surprise they came back to me. I don't man to be obtuse about this but it's the timing of the layoff prior to Covid that makes me wonder if the penalty can be abated.?

I should have been more specific on one item. The retirement rollovers occurred in 2020 not 2019. It still may be Covid related as you say but the IRA distributions weren't part of funds rolled over.

Good question. Do mean like travel restrictions or any other type of deterrent?

T/P is 59 years old,. He received his termination notice in December 2019 but was technically still on the books until March 2020. He rolls his retirement accounts without tax ( Code G on 1099R). During the year he takes 4 distributions from an IRA totaling $50K ( taxable ) and at year end gets a 1099R with Code 1, early withdrawal no exception and thus $5K penalty. I call client to tell them of this and they say financial advisor had told them there would be no penalty due job loss. I don't see this as Covid related and they don't meet another Covid requirement so I think the penalty stands unless I am missing something. Any thoughts? Thank you.

T/p is 61 years old. Code W ( contributions to an HSA ) on his W-2 is $7,,705 Line 3 of the 8889 shows $7,100 Shouldn't this be $8,100 since he is over 55 years old? Thank you Dave T

This board provides such a valuable service. Over the years I have learned so much and so many folks are so very generous with their time to answer questions and give counsel. Eric, thank you especially for helping make this forum so worthwhile. I wholeheartedly agree with the encouragement to support with a donation.

Thank you

So I would leave boxes 5 and 8 unchecked in order for the full amount of $1,800. Thanks very much

Sorry to be obtuse about this but this is the first credit I am doing and am a bit confused. 22 year old student was claimed by his parents in 2019 but not in 2020. He did not get either stimulus payment. ( I don't believe he would be eligible for the first ) I believe he would be entitled for the second one but when I go through the worksheet it shows him getting $1,800 in Recovery Credit. Am I correct that his credit should be $600.00? Thanks very much

Yes, tax payer felt preparer was too aggressive in his approach to this. That an inquiry from NYS questioning the item didn't help.

Perhaps i am overthinking this or maybe underthinking it or maybe not thinking at all. Financial advisor tells me he is going to refer a new client to me and gives me a bit of a heads up on their prior year return. Tax payer bought a pickup truck in 2019 for a side business and prior preparer took section 179 for entire amount. Assuming he is still using the truck for business and he provides me with mileage, how do I report this? Of the .$.56 per mile rate, $. 27 is related to deprecation. Do I take the difference or does he have to calculate actual expenses? Thanks very much.

If she is a single member LLC it is considered a disregarded entity and she will continue to report income and expense on Schedule C.

Thank you and sorry for the misspelling on my part s/b Federal and not Feral :}

Lion, Yes, I entered the $300 from 10b on Federal into the IT-558 for same amount but still get the error message. On the IT-201 the amount on 19a (Recomputed AGI) agrees with Federal AGI but I believe the error check is comparing line 19( Feral AGI) instead of the recomputed amount. Thank you

Just doing a proforma return and encountered an error. Line 10b for above the line charitable contributions I entered $300.00 but when doing and error check it said the AGI on Federal return does not equal AGI on New York State return by the $300.00 I know it's early and probably not doing actual returns yet but just wondering if anyone might have encountered this with NYS or any other state? Thank you Dave T

Max - just wondering, did you submit them to the IRS or just retained for client's future reference? IRS says they can assess penalty for not filing form when necessary. Thanks Dave T