TexTaxToo

For 2023, there is a new checkbox on Form 1116, line 10, indicating that you don't need to attach Schedule B.

A recent TAS blog post said:  https://www.taxpayeradvocate.irs.gov/news/tax-tips/employer-identification-numbers/2024/02/

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However, it will take up to two weeks before your EIN becomes part of the IRS’s permanent records. You must wait until this occurs before you can:

• File an electronic return
• Make an electronic payment
• Pass an IRS Taxpayer Identification Number (TIN) matching program

19 hours ago, GLGACCT said:

Try this website make sure you pick the right climate zone:

https://www.energystar.gov/most-efficient/me-certified-windows/results?is_most_efficient_filter=Most Efficient

The referenced website is for the 25C credit for Windows and Skylights.  Eligible windows and skylights must be labeled "Energy Star Most Efficient 2023".  However, the requirements for that label changed from Energy Star V6 to Energy Star V7 on October 23, 2023.  Anything manufactured after that date must meet the new requirements (detailed here).   The website only recently removed the old requirements, and it's not clear whether they still list products that meet the old requirements (though they would still qualify for the credit if manufactured before Oct. 23).
 
But this post is asking about the requirements for the 25D Residential Clean Energy credit.  All that is required is:

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an expenditure for property which uses solar energy to generate electricity for use in a dwelling unit located in the United States and used as a residence by the taxpayer.

It appears the manufacturer is saying that the skylight generates electricity which is used to open and close the skylight.

In any case, I don't think tax preparers are required to be experts in efficiency standards, etc.  The instructions for Form 5695 for both credits say that:

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Manufacturer’s certification. For purposes of taking the credit,
you can rely on the manufacturer’s certification, in writing, that a
product is qualifying property for the credit. Don't attach the
certification to your return. Keep it for your records.

So if the taxpayer has a written certification from a reputable manufacturer that the purchase qualifies for a particular credit, that would be enough for me.  The problem arises when a salesman tells them it could qualify for a credit, but they have no documentation.

People have also tried to keep possession of gold coins in a self-directed IRA.  Of course, the IRS frowns on this:

https://www.thetaxadviser.com/issues/2022/feb/taking-possession-coins-irs-taxable-distribution.html

https://www.journalofaccountancy.com/issues/2022/mar/gold-coins-taxpayer-home-taxable-ira-distributions.html

This case may have led other custodians to be more careful about similar arrangements, resulting in distributions such as this 1099-R.

4 minutes ago, BulldogTom said:

And it may come back as a letter to the parents on why they did not include the gross income as kiddie tax on the parents return.

Kiddie tax, if it applies (it would not in this case), would go on the child's return.  The parents may elect to include the child's taxable interest and dividends on their return, but not capital gains.

On the facts presented, there is no filing requirement, but Tom is right that filing could prevent a letter, especially if basis was not reported to the IRS for the stock sale.

17 minutes ago, BulldogTom said:

I would also only charge a very minimal fee for filing the return and add it to the parents invoice.   But that is just me.

I don't think DD is needed.  One way to enter it if all codes are needed is to reduce the Box 1 wages on the first W-2 by $1, and include the $1 on the second W-2.

16 hours ago, Hahn1040 said:

If he did not use the income for his support, but rather put it in savings, them it would not be part of his calculation.

That is true for the dependency calculation.  Not true for the refundable AOC calculation - for that, it doesn't matter who actually paid for the support, just that the earned income was more than half of the support costs.

Are you confusing 1095-A with 1095-C?  Form 1095-A is required to be mailed or electronically provided to individuals with a marketplace plan on or before January 31, 2024.  You don't need Form 1095-C unless you just want to ensure that the individual did not have employer coverage.

If they are "related", it looks like reg § 1.414(c)-1 would apply:

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For purposes ... relating to limitations on benefits and contributions under qualified plans ... employees of two or more trades or businesses under common control within the meaning of § 1.414(c)–2 for any period shall be treated as employed by a single employer.

I don't understand the question either, but the elective employee contributions are limited to $22,500 for 2023 (plus $7,500 catchup if age 50 or over).  That doesn't include employer matching contributions, which can be in addition to that.  The overall limit per participant was $66,000 for 2023.  I believe that applies to related employers but not necessarily unrelated employers.  Someone else can clarify.  There may be other limits for highly compensated employees or top-heavy plans.

14 hours ago, NECPA in NEBRASKA said:

They had no idea what a WISP plan is

Be careful when saying "WISP" to an IT person.  For them, it will generally mean a type of router that connects to a Wireless Internet Service Provider (WISP).

20 hours ago, BulldogTom said:

What is open office?

I use Excel, but you can't buy the office program anymore, you have to subscribe and I am looking for an alternative.

You can still buy the installed "permanent" version of Office rather than Office 365.  Just search for Microsoft Office Professional 2021. 

Open Office and Libre Office are free open-source office suites. Open Office was first, then Libre Office broke off. They can be used with all Office files and most basic things are compatible, but if you use advanced features like pivot tables in Excel, they won't port very well, at least the last time I tried.

There is also WPS Office, free from Chinese company Kingsoft, which is even more compatible with Office, if you trust it. According to Wikipedia (which you can search for more info on any of these), it comes pre-installed on Amazon Fire tablets.

17 hours ago, DANRVAN said:

For 2022 he should have been able to deduct the following if each item not eligible for employer plan: LTC both him and wife; wife's medicare; and wifes supplemental.

I don't think this is correct.  In 2022, he was employed and eligible for a subsidized plan from his employer. Under 162(l)(2)(B), he cannot take the deduction for any health insurance ("Paragraph (1) shall not apply") - that would include the wife's medicare and supplemental.  LTC is considered separately, so LTC is deductible if there is no eligibility for LTC from his employer.

In 2023, he was not employed.  A former employer is not an "employer of the taxpayer".  Therefore all the unreimbursed health insurance and LTC would be deductible.

See:  https://www.fincen.gov/boi-faqs#F_3

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F. 3. What information will a reporting company have to report about its beneficial owners?

For each individual who is a beneficial owner, a reporting company will have to provide:

1. The individual’s name;
2. Date of birth;
3. Residential address; and
4. An identifying number from an acceptable identification document such as a passport or U.S. driver’s license, and the name of the issuing state or jurisdiction of identification document (for examples of acceptable identification, see Question F.5).

The reporting company will also have to report an image of the identification document used to obtain the identifying number in item 4.

FinCEN’s Small Entity Compliance Guide includes a checklist to help identify the information required to be reported (see Chapter 4.1, “What information should I collect about my company, its beneficial owners, and its company applicants?”).

22 minutes ago, BulldogTom said:

Do I have this right?

This has nothing to do with the requirements for issuing 1099-NEC, nor with the requirement that credit card processors report ALL credit/debit payments to merchants on a 1099-K.

This is only for third party payment processors (e.g., Paypal, CashApp, Uber, AirBnB, etc), where a third party accepts a payment on behalf of someone.  See the announcement here: https://www.irs.gov/newsroom/irs-announces-delay-in-form-1099-k-reporting-threshold-for-third-party-platform-payments-in-2023-plans-for-a-threshold-of-5000-for-2024-to-phase-in-implementation

SECURE 2.0 did add other exceptions to the penalty.  One if you are terminally ill (hope this doesn't apply).  Other additions to definition of Public Safety Employee.

COVID related distributions had to be taken in 2020.  The CAA21 provision was for other disasters occurring between 1/1/2020 and 1/26/2021.

The SECURE 2.0 act (part of CAA22) made permanent a waiver for disasters occurring after 1/26/2021, but only for up to $22,000 in distributions taken within 180 after the disaster.

Both of the latter are only for those who lived in a Presidentially declared disaster area and sustained an economic loss due to the disaster.

22 hours ago, Lion EA said:

What TexTaxToo says sounds about right. But, don't you use Sch 1 for SEHI, income allowing, with only the excess going to Sch A? And, can he use Sch F for premiums paid for an employee & her family? Yes, to the circular calculation if a PTC is in play.

Yes, sorry, I meant SEHI on Sch 1. 

Health insurance for employees is a legitimate business expense on Sch F, but I don't know the best way to set it up.  Would they need a QSEHRA or some other "plan"?  

SEHI on Sch A. is available for premiums paid for health insurance to cover the tp, spouse, dependents, and any child under 27.

Note that when Form 8962 is involved, a special calculation is needed because there is a possible circular recursion where the AGI affects the amount of PTC which in turn affects the SEHI deduction and the AGI.

Here are the regs (bolding is mine) from 26 CFR § 301.7502-1:

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(c)(2) Registered or certified mail. If the document or payment is sent by U.S. registered mail, the date of registration of the document or payment is treated as the postmark date. If the document or payment is sent by U.S. certified mail and the sender's receipt is postmarked by the postal employee to whom the document or payment is presented, the date of the U.S. postmark on the receipt is treated as the postmark date of the document or payment. Accordingly, the risk that the document or payment will not be postmarked on the day that it is deposited in the mail may be eliminated by the use of registered or certified mail.

But the above applies if the IRS received the document or payment and the date is in question.  This topic has to do with a payment that was not received (or so the IRS claims) - in that case, note that the exception does not apply to payments:

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(e) Delivery—(1) General rule. Except as provided in section 7502(f) and paragraphs (c)(3) and (d) of this section, section 7502 is not applicable unless the document or payment is delivered by U.S. mail to the agency, officer, or office with which the document is required to be filed or to which payment is required to be made.

(2) Exceptions to actual delivery—(i) Registered and certified mail. In the case of a document (but not a payment) sent by registered or certified mail, proof that the document was properly registered or that a postmarked certified mail sender's receipt was properly issued and that the envelope was properly addressed to the agency, officer, or office constitutes prima facie evidence that the document was delivered to the agency, officer, or office. Other than direct proof of actual delivery, proof of proper use of registered or certified mail, and proof of proper use of a duly designated PDS as provided for by paragraph (e)(2)(ii) of this section, are the exclusive means to establish prima facie evidence of delivery of a document to the agency, officer, or office with which the document is required to be filed. No other evidence of a postmark or of mailing will be prima facie evidence of delivery or raise a presumption that the document was delivered.

The exceptions (c)(3) and (d) have to do with private delivery services (PDS) and electronic filing.

13 hours ago, Sara EA said:

TexTaxToo, antiques, artwork, and rare coins and stamps are examples of items that may not be in good condition but may be very valuable.  ....

Please give us a cite that says clothing/furniture over $500 must be appraised.  Did the law change?

Again, it is only clothing and household items that are NOT in good used condition that must be appraised.   I did give a cite:

On 9/21/2023 at 1:24 PM, TexTaxToo said:

See tax code section 170(f)(16)(C). 

And antiques, artwork, jewelry, collectibles are specifically excluded.  Here's all of the relevant paragraph for those who don't follow links.

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(16)Contributions of clothing and household items

(A)In general

In the case of an individual, partnership, or corporation, no deduction shall be allowed under subsection (a) for any contribution of clothing or a household item unless such clothing or household item is in good used condition or better.

(B)Items of minimal value

Notwithstanding subparagraph (A), the Secretary may by regulation deny a deduction under subsection (a) for any contribution of clothing or a household item which has minimal monetary value.

(C)Exception for certain property

Subparagraphs (A) and (B) shall not apply to any contribution of a single item of clothing or a household item for which a deduction of more than $500 is claimed if the taxpayer includes with the taxpayer’s return a qualified appraisal with respect to the property.

(D)Household items  For purposes of this paragraph—

  (i) In general

    The term “household items” includes furniture, furnishings, electronics, appliances, linens, and other similar items.

  (ii) Excluded items -  Such term does not include—

   (I) food,

   (II) paintings, antiques, and other objects of art,

   (III) jewelry and gems, and

   (IV)collections.

Interesting case.  In the original correspondence audit, the IRS only challenged Schedule C, where the taxpayer reported no income and a large loss.  The audit determined a deficiency and penalty of about $7500.  When the taxpayer went to court, the IRS responded by challenging the Schedule A charitable deductions as well.  Since they were not in the original audit, the IRS had the burden of proof for those, but mostly prevailed, substantially increasing the deficiency (the court ruled they could not increase the penalty).

A footnote in the findings (problems adding as well???):

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Petitioner reported noncash charitable gifts totaling $30,686 and carryover charitable gifts of $22,204, despite reporting gifts to charity totaling $18,899. The record is silent as to this discrepancy.

16 hours ago, Max W said:

I looked up this case and could only find the results of an appeal.  The appeal said that the the Tax Court had found in part for Bass and in part for the IRS.

The appeal was denied as everything had been covered in the original case.  My guess that the 'in part' to Bass was $5K.

The clothing donated throughout the year totaled more than $5000, was not appraised and the deduction was denied.  Other items donated (furniture, toys, etc), when aggregated by like type, did not total more than $5000 each, so those deductions were allowed.

16 hours ago, Sara EA said:

Over $500 requires Form 8283. Over $5,000 requires an appraisal.  The $5k applies to like-kind items, so if you donate clothes all year long and the total FMV is over $5k you have to get the whole lot appraised.  Same with furniture.

cbslee refers to a very specific exception where over $500 requires an appraisal if an item of clothing/furniture is NOT in "good used condition" or better.  See tax code section 170(f)(16)(C).   Without an appraisal value over $500, you cannot deduct such clothing/furniture at all.  It's hard to imagine one item in poor condition being worth more than $500, but anything's possible, and you can deduct such items with an appraisal.

On 9/8/2023 at 6:41 PM, Lloyd Hudson said:

I am not going to search for it, but I remembered from some years ago that the IRS said "tax home was where you earned the majority of your income. "

"Tax home" as used by the IRS is one factor in determining whether someone is a resident or non-resident alien.  It doesn't apply to U.S. citizens, and is not really relevant for this topic, which is state residency, but here is the definition (Pub 519):

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Your tax home is the general area of your main place of business, employment, or post of duty, regardless of where you maintain your family home. Your tax home is the place where you permanently or indefinitely work as an employee or a self-employed individual. If you do not have a regular or main place of business because of the nature of your work, then your tax home is the place where you regularly live. If you do not fit either of these categories, you are considered an itinerant and your tax home is wherever you work.