Dave T

I’m probably not thinking clearly on this and wondering if someone might be able to shed some light on what I’m missing. Parents take a distribution from their 529 plan (QTP) to pay for college expense for son. Here is the breakdown on the 1099-Q Total Distribution $ 19,800. Earnings - $ 6,618 – Basis $ 13,182. Here are the expenses – Room & Board - $ 9,215, Tuition, fees and books net of scholarships - $ 7,166= total expenses of $ 16,381. I’ve calculated the tax free and taxable portions of the distribution as follows: $ 6,618 x 16,381/19,800 Tax Exempt $ 5,475 Taxable 1,143 Where I’m getting hung up is whether they can still take the American Opp. Credit. I’m trying to follow the example in Publication 970 and this is how I’m figuring it: Net Tuition, Fees and Books $ 7,166 less $ 4,000 allowable for computing credit = $ 3,166.. I believe I then need to again compute a taxable and non taxable portion as follows: 6,618 x 3,166/19,800 Tax Exempt – $ 1,059 Taxable 5,559 If my calculations are correct, and I’m not entirely sure at this point, they would probably be better off by not taking the credit. I apologize for throwing a lot of numbers out there and also for being obtuse about this but I’m trying the best I can for this new client and help mitigate what is already a rather large amount due. Thanks for your assistance.

Over the years that i've been with ATX I've particularly benefited from this board. There is a wealth of knowledge out there and I've appreciated the wisdom and willingness ot others to share it. That being said, there is one contributor we haven't heard from in a while and that is Jerome. For those of you who have been here awhile as well I'm sure you miss his sage tax advice as well as his perspective on life in gerneral. Any idea where he might be? Wondering if perhaps he went with one of the big firms. Dave T

I have a new client coming this evening who has informed me that she took money from her 529 plan to help pay for son's college tuition. I happened to mention this to my co-worker who also uses ATX and he said he'd had that situaiton this weekend but didn't see where there is an input screen for the 1099-Q. Should there be one? I know this withdrawal can't be used in calculating Education Credits and also know I have to do a calculation to see if any of the withdrawal might be taxable but I just wondered if there is an input screen or not? Thanks Dave T

Ooops - forgot to spellcheck before submitting. Meant to say I had to rely on her for the verification. Thanks

Pacun, No I didn't interview parents nor did I prepare the returns. I had the client check with her parents to verify. They (parents ) are in Montana and I'm in NY so I relied on her information. Thanks - Dave T

Don't know who is still reviewing the board but would like to get confirmation on an item if possible. Young couple came to me to get taxes done but had to put them on extension as all info. wasn't avaialble at the time. At any rate, the young woman is in graduate school and therefore has already completed her four year degree. While an undergrad her parents claimed as a dependent but for whatever reason did not take the AOC in all the four years they were entitled to. ( Again, not sure why ?) I believe that even though the credit wasn't used, the fact that because she has completed four years of school she would not be entitled to the AOC. Am I correct in this.? I feel bad for the couple as the husband is a part time youth pastor making very little money but is going to get hit with SE tax and I was hopng that the refundable portion of the AOC would mitigate that but it doesn't appear to be the case. I suppose the parents could amend their return to help them out but that's not my call. Thank you. Dave T

T/P has several 1099-DIV's with Foreigh Taxes paid totaling $ 966.00. Line 47 only shows $ 236 and when I try and figure where the number is coming from I can't find it. There is a 1116 and a 1116 AMT but don't see the number on either. I've noticed other times with Foreign tax from a 1099 that the amount flows directly to line 47 withour a 1116 at all. Any thoughts? Thanks - Dave T

Amounts appear in Box 7

T/P's house three foreign students. They receive 1099 Misc. from the three sponsoring agencies for almsot $ 8,000. Not sure where to show this, Line 21 Other Income, Sch. E as rental, or even possbibly Sch C as they do this on a regular basis although not necessarily with a business intent. T/P tracks mileage when taking them to appointments, etc.so I believe this would be an offset to the income but aagain not sure where to report. Thanks - Dave T

T/P is 56, unmarried, no children, receives 1099-R with distribution code '3' which is for disability. Amount received approx. $ 10,000. In addittion he receives approx. $ 16,000 in SS. What I find interesting is this - the pension, because it is disability, flows to line 7 - Wages, and thus he qualifies for $ 280.00 in EIC. Just looks unusual but thats the way it flows when doing the EIC. - Dave T

Coversation at lunch today began with discussing Joe Flacco's new contract and how much of a hit ( no pun intended ) he was taking in taxes. The question then arose whether pro athletes pay state income tax to each state they play it ? Then, presuming that to be the case, do you actually have to play in the game to get taxed? For example, a relief pitcher that comes in in the ninth inning to face one batter does he get taxed and someone who sits the bench the whole game not get taxed? Just curious. Anyone have any pro athlete clients? - Dave T

To Jack from Ohio Thanks so much for the tip on the Submission ID rejection. It worked just as you suggested and I'm grateful to you for the insight. Thanks Again !! - Dave T

Not sure if this should be submited on this forum or the other so I apologize in advance if it is the other. Been very frustrated with a state return (NY) that I've submitted several times only to be rejected with the same error code and not getting much help from the ATX rejection report as to how to resolve. The error code is 901 and says " The IRS submission ID referenced in the State submission manifest must be present in the e-file database." The return was accepted promptly by the Feds so I'm in a quandry. Any help would be much appreciated. - Dave T

Thanks KC and Lion for the response. This board continues be a great help and I appreciate all who participate. - Dave T

Client is a student in Mass but resident of New York State and dependent of his parents in NY. I believe he would be considered a Non-Resident in Mass and would file a return there for the money he made while in school. W-2 shows state as MA of course. The problem I seem to be having is that his earnigs from Mass. are also transferring to his New York State return. Can he claim a credit on his Mass return for taxes paid to New York and if so where does it appear on the MA return? Thanks very much. - Dave T

Yes - normally the tithe would be a Sch. A deduction but in this situation as it is a requirement for his credentials so I think it is a business expense to offset Sch. C income. The other portion of his tithe to his local church is a Sch. A deduciton.

T/P is a retired school district employee and also holds credentials as a minister. His denomination requires that a percentage of his tithe be submiited to the denomination ( not just his local church ) in order to retain his credentials. This tithe is not just on his ministerial income but from all sources of income. In 2012 he only had a few local speaking engagements so income form this was nominal but his tithe to the denomination was greater than this amount. I believe that this tithe is an ordinary and necessary expense and would be shown on his Sch. C but it just seems odd to me that this should generate a loss. Any thoughts? Thank you - Dave T

I know the AOC is for the first four years of post secondary education but came across something that had me second guessing myself. Student starts her Freshman year in 2008 and pays tiuition for first semester. In 2009 pays second semester Freshman and first semester Sophmore year etc. This patterrn continues through 2011 when she pays second semester Junior year and first semester Senior year. Then in 2012 pays second semester Senior year. Thus, even though it is for four year undergraduate degree there have been five payments if you will and therefore no credit for 2012 since she has already taken the credit in the four previous years. Am I correct in this or am I msiing something? Thank you - Dave T

Aside from praying for wisdom ( and patience ), not sure what changed, but the return I submitted with two Ed. Credits that rejected twice, posted this morning. I hadn't made any changes to the return and there was no program update when I logged in this morning so I'm just thankful that it finally accepted. Hopefully this will continue as I have another retrun with two AOC credits to submit. Thanks for the responses.

Yes - I'm wondering if this is part of the issue. If there is more than one credit on the return an error message occurs. I've submitted a return with only one individual on it and it went through fine. Anyone else experienced this? Thanks - Dave T

Correction on previous post amount on line 1 is 4443 not 4453 as I mistakenly typed Thanks

Is anyone having difficulty with e-file rejects on returns with the 8863 Fducation Credits attached? I Updated to 12.8 lst night and then submitted a return with the credit attached only to have it rejected. Here is the scenario: -Two undergrad students, he with 7400 in expenses and she with 1943. - Total on line 30 of each $ 2500 and 1943 resepectively. - Total on line 1 of the 8863 then is $ 4453 Reject error says total on line 1 can't exceed total(s) on line 30, yet is doesn't, it's the same amount. This is frustrating Thanks for any insights. - Dave T

Beginning to get the hang of the client letter with one exception. I can get the Federal and State letters to combine as requested and have the paragraphs desired and in the right place but the problem is with the state component. Even though the retrun will be e-filed it still says " enclosed you will find two copies of the return ... mail to, etc." I have tried checking and un-checcking the box " Let ATX decide" but still comes up with the same verbage. I'm sure I'm doing something incorrectly so any help would be appreciaated. Thank you - Dave T

I know that with the problems people are having with rollovers and the slowness of the program this seems like a rather trivial matter but I have a question that someone might be able to respond to. I rolled over over my first clients return and entered the preparer information. In other years I would then unprotect the worksheet and change the font so that the preparer's signature actually looked like script. I can't find where the unprotect function is located or if it even still exists. Thanks for any assistance. - Dave T

Client who lives out of the area contacted me recently about foster children. She and husband took in a special needs child ( 6 years old ) in July of 2012. Her questions concerned dependency and CTC. In reviewing Pub. 501 I've detemined that the child is a qualifying relative and not qualifying child due to not being in the home for over six monts. ( Miised by a week.) A few other facts: they are not in the foster care businsess and would like to adopt the child. The State agency provides them $40.00/ day for the care of the chlld. My question, in looking at the support worksheet in Pub 501 I can't figure out if this payment from the State is used to calculate the over one half support test? Thanks for any assistance that can be provided. Dave T