TexTaxToo

14 hours ago, cbslee said:

Unemployment benefits are not earned income so the exclusion has no effect on earned income.

True, but EIC is limited by BOTH earned income and AGI, so if unemployment increased the AGI above the cutoff, they may now qualify for more EIC.

22 hours ago, jklcpa said:

 

American Opportunity Tax Credit - Exception for Under Age 24 Taxpayers

Self-supporting taxpayers claiming the AOC for themselves, will not qualify for the credit if they fall under Rule 1, or 2 or 3.

Rule 1:  Taxpayer is under age 18.

Rule 2:  Taxpayer is age 18 and earned income (employee or self-employed) is less than one- half of total support.

Rule 3:  Taxpayer is over age 18 and under age 24 AND is a full-time student AND earned income is less than 50% of total support AND has at least one living parent AND is using a filing status other than a joint return with a spouse.

Actually, the part of your Rule 3 I changed to red has to be added to Rule 1 and Rule 2 also.  Or to put it another way, taxpayers of any age qualify for the refundable credit if they have no living parents, or file a joint return.

4 hours ago, Burke said:

What are the provisions which require it to be added back?

I haven't looked them up myself, but another forum said these calculations require the add-back:

• Taxable amount of social security
• Exclusion for US savings bond interest used for higher education
• Exclusion for employer-provided adoption assistance
• Limit on deductible IRA contributions by plan participants
• Limit on student loan interest deduction
• Limit on deduction for tuition and fees
• Limit on rental real estate exception to passive activity loss rules

It might take a while for the software vendors to get all this right.

6 hours ago, Gail in Virginia said:

I have suggested waiting to a couple of people since they qualified based on 2019 income but not 2020.  However, does anyone know if the EIP3 is going to work like EIP1 and EIP2, and they will not have to pay it back if income exceeds limits next year?

In fact, you get three bites at the apple (if you haven't yet filed for 2020).

"As rapidly as possible," the IRS will send payments to those who qualify based on the 2019 return (if 2020 not yet filed).

Later this year, the IRS will send payments based on the 2020 return (if 2020 filed by then) - you will get the difference if you were paid in the first round and are now eligible for more.

Next year, you can claim RRC based on your 2021 income if eligible for more then.

So, wait to file if you qualify for more based on 2019 return.

2 minutes ago, cbslee said:

If it was reported on a 1099 Misc,it's not SE Income because  if it was it would have reported on a 1099 NEC ?

Not necessarily.  Royalties are reported on 1099-MISC, but if the taxpayer is self-employed as an author, song-writer, etc. they would file a Schedule C and include the income there, not on Schedule E.

College business associations have been vocal in protesting the 1098-T rules.  Not sure of the current status, but the IRS delayed enforcing them for a long time.

There is even an exception that the 1098-T does not need to be issued if the scholarships/grants pay the entire tuition.

And good luck trying to match up the 1098-T with the college financial statements - very frustrating.

Treasury has long advocated this technique:

https://www.treasury.gov/connect/blog/Pages/Helping-students-and-families-access-college-tax-benefits.aspx

I use it all the time.  You do have to insure the scholarship is unrestricted (Pell grants are always unrestricted).

And if the amount of the scholarship is more than the qualified expenses, it almost has to be unrestricted, doesn't it?

Don't know about ATX, but some software is not showing anything as taxable until you actually create/print the return.  Then the 1/3 gets added in as taxable.

The only way to end the community in Texas is by divorce, there is no legal separation.  Unfortunately, there are many abandoned spouses who for religious or other reasons do not want a divorce.  Practically speaking, I see no option but to report only their own income.  Legally, they remain liable for unpaid tax on their spouse's income, but they can claim innocent spouse relief if the IRS tries to collect.  What would you do?

As for the OP, I suspect as others have said, that as long as all income gets reported, it won't get flagged by the IRS.  However, if you comply, you are knowingly preparing an incorrect return.  Texas accepts prenups (and postnups - a signed spousal agreement) to reallocate community property - I would want them prepared by a lawyer.

And then there is the requirement that employers issue a W-2c when they do withhold the additional SS tax:

https://www.irs.gov/forms-pubs/form-w-2-reporting-of-employee-social-security-tax-deferred-under-notice-2020-65

Which can be ignored unless they held multiple jobs and this results in too much SS tax withheld, in which case, amended return!