TexTaxToo

3 hours ago, Pacun said:

There is no way to super cede a return using efile

Last year, the IRS started allowing efiling of superceding returns: https://www.irs.gov/newsroom/irs-taxpayers-now-have-more-options-to-correct-amend-returns-electronically

But not all software supports it.

Thanks for reporting that this is fixed!

You can find some issues like this in the first xml file at https://www.irs.gov/e-file-providers/known-issues-and-solutions, but it doesn't get updated very often - the last was Feb 1.  Your issue is on row 76.

On 2/11/2023 at 8:18 AM, BulldogTom said:

Fair point, except the TAX LAW does not support the IRS position.  Any educated analysis of the tax law will show that there is no basis in tax law for the IRS to exempt these payments from taxation. 

The statement is very careful to say that they have NOT determined whether the payments are taxable under the law.  They don't want to set a precedent.  They are just saying they won't challenge the taxability.  Seems similar to "prosecutorial discretion".

And make sure you consider the "Alternative calculation for year of marriage" in Pub 974.

On 2/2/2023 at 9:17 AM, mcb39 said:

MFJ puts them over the 400%

The provision Max refers to is for TY2021 thru TY2025 - there is not a 400% "cliff" for those years.  They may still qualify for PTC.

(Originally, it was for TY2021-22 only as part of COVID relief, but was extended it to 2025.)

See the instructions for Form 8962.  You add the amounts in columns A and C.  For column B, it depends.  If the policies were from different states, the amounts are added.  If from the same state, the amounts on each form should be the same, and that is used.  If not (or you want to verify the amount), you need to determine the correct amount for column B at https://www.healthcare.gov/tax-tool/

You probably know that if they have a deductible loss, it can be taken in the prior year (so losses in 2023 can be claimed on the 2022 return).

The CAA2023 passed in late December makes permanent the usual retirement plan provisions for disaster distributions, and applies to all disasters after 1/26/2021.  That is, someone living in a major disaster area who has an economic loss due to the disaster can treat a retirement distribution as a disaster distribution, not subject to early distribution penalty, and spread the income recognition over 3 years, with the ability to repay within three years.

I believe that IRA trustees have pushed back against any requirement that they determine whether the contribution is to a qualified charity - and they have no way of knowing if the beneficiary received anything of value in return for the donation.

Of course currencies are useful - as a medium of exchange.  The problem with cryptocurrencies is that they are being touted as an "investment".  But as someone said, there's no there there. The only way to make a profit is on the greater fool theory.  Too many people who can't afford to speculate are being lured into buying, and scams abound.

And the IRS has delayed the implementation of the reporting requirement for cryptocurrency transactions:

https://www.irs.gov/newsroom/treasury-irs-provide-transitional-guidance-for-broker-reporting-on-digital-assets

I think you are going to get opinions mostly.  Of course, you must determine whether the mining activity rises to the level of a business (do they have a separate meter to track the electricity usage?)

Regardless, I don't think you have enough information for #1.  From Notice 2014-21:

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when a taxpayer successfully “mines” virtual currency, the fair market value of the virtual currency as of the date of receipt is includible in gross income.

The IRS now explicitly agrees that personal gains are reported on Form 8949 and personal losses from Form 1099-K are reported and backed out on Schedule 1. See https://www.irs.gov/businesses/understanding-your-form-1099-k (the section on personal income).  The same applies to an incorrect Form 1099-K.

The Form 1040 instructions have also been updated.  See the instructions for Schedule 1, lines 8z and 24z.  Briefly:

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If you received a Form 1099-K for a personal item that you sold at a gain, don’t report this amount on line 8z, instead report it as you would report any other capital gain on Form 8949 and Schedule D.

If you sold a personal item at a loss, enter the amount of the sale proceeds from Form 1099-K on line 8z. In the entry space next to line 8z write “Form 1099-K Personal Item Sold at a Loss” and also enter the amount of the sale proceeds.

If you sold a personal item at a loss, enter the amount of the sale proceeds from Form 1099-K on line 24z that you reported on line 8z.  In the entry space next to line 24z write “Form 1099-K Personal Item Sold at a Loss” and also enter the amount of the sale proceeds.

3 hours ago, mcbreck said:

IRS website says if you received a 1099-k and it is not taxable, you should report it on Schedule 1 line 8z and then back it out on 24z as non taxable.

Where did you see this on the IRS website?  I don't see it in the FAQs:

https://www.irs.gov/payments/form-1099-k-frequently-asked-questions-individuals

And CallENQ has this posted on their home page:

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Status: (3 days ago) EnQ is temporarily suspending services to: Correspondence Examination Individual/Business, and Automated Underreporter due to changes on the IRS call center. Please direct your calls to other departments while we work on a solution.

Colleges used to be able to report tuition in the year billed, but must now report it in the year paid.  Was the tuition actually paid in 2020?  How did that happen if the scholarship wasn't received until 2021?

Was any of the "scholarships/grants" actually emergency aid due to COVID? If so, it is not taxable and should not have been reported on the 1098-T, though that wasn't clear at the time.

https://www.irs.gov/newsroom/emergency-aid-granted-to-students-due-to-covid-is-not-taxable

Yes.  The repayment forgiveness was for 2020 only.  But there is not a cliff at 400% of FPL where everything has to be repaid.  Those over 400% continue to qualify for PTC thru 2025 so only excess has to be repaid.

12 hours ago, Pacun said:

Debt forgives from that law will not be taxable nor reportable.

To be specific, the American Rescue Plan Act of 2021 modified the tax code Section 108(f)(5) to exclude from income most education loans forgiven in 2021 through 2025, and the IRS issued Notice 2022-01 indicating that lenders should not file Form 1099-C for them.

Until the "tax-tool" is updated for 2022, you do need to look at the list of plans to find the 2nd lowest.  You should be able to filter on silver plans and sort by cost.

All other information you need is available but can be difficult to find and calculate.  The poverty level tables are at HHS.  For TY2022, use the 2021 table (not the 2022 table) from HHS or the federal register reference on this page:

https://aspe.hhs.gov/topics/poverty-economic-mobility/poverty-guidelines/prior-hhs-poverty-guidelines-federal-register-references

The "applicable figure" table normally adjusts for inflation, but they were changed and fixed for TY2021 and TY2022, so last year's table should work (and the IRA extended that change thru 2025).  The repayment limit tables do adjust for inflation.  The changes for TY2022 were published in RP-2021-45.

11 hours ago, Sara EA said:

... it looks like the energy credits for EVs will be applied at the dealership--leaving tax pros and the IRS out of it. 

Also, they will only be able to provide the return from the prior year, and I don't know if the bill will determine eligibility for the credits on the prior or current year AGI. 

Not quite! They have to meet the MAGI limit for both the prior and current year.  And they just added a claw-back provision so that if a TP gets the dealer rebate, but don't meet the MAGI limit in the current year, they must pay back the rebate as an additional tax.  Of course, everything could still change, and the rebate provision doesn't start until 2024.

13 hours ago, cbslee said:

She said that they had stopped taking referrals from congressional offices because of a large backlog of taxpayer cases they were were working on

I understand they started taking congressional referrals again in June.

https://www.taxnotes.com/research/federal/other-documents/other-irs-documents/taxpayer-advocate-service-updates-case-acceptance-criteria/7dm2j

The efile was rejected because the Marketplace reported to the IRS that his SSN (or the SSN of someone he is claiming as a dependent) was included on a Marketplace policy and received APTC.  It doesn't matter who purchased or paid for the policy - he must reconcile it on his return.

If your taxpayer does not believe any such policy exists, you can include a statement of explanation.  Your software may allow you to e-file with a canned explanation.

See https://www.irs.gov/newsroom/how-to-correct-an-electronically-filed-return-rejected-for-a-missing-form-8962

The 2017 regs also clarify that government payments to an individual used for support of that individual is support provided by a third party, not support by that individual.  (The exception to this is Social Security benefits which are treated as support by the beneficiary.)

Also, government payments used by the recipient to support another individual is support by the recipient, not support by a third party.  

In other words, government payments to the child are support by a third party, and government payments to the foster parent, if used to support the child, are support by the foster parent.  The support requirement for a qualifying child is simply that the child not provide more than half of their own support - it is unlikely that they do unless the child is receiving Social Security survivor or disability benefits.

See https://www.federalregister.gov/d/2017-01056/p-338

A slight correction.  The portion of the proposed regs I quoted have to do with qualification for head of household.  The section dealing with qualification for dependency is later in section 1.152-4(d)(2):

https://www.federalregister.gov/d/2017-01056/p-365

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(2) Adopted child or foster child. If, during a taxpayer's taxable year, the taxpayer adopts a child, a child is lawfully placed with a taxpayer for legal adoption by that taxpayer, or an eligible foster child is placed with a taxpayer, the residency test for a qualifying child and the residency requirement under § 1.152-1(a)(2)(iii) for a child who is not a citizen or national of the United States are treated as met if the taxpayer and the child have the same principal place of abode for more than one-half of the portion of the taxable year as required for a qualifying child, or for the entire taxable year as required for a noncitizen, following the placement of the child with the taxpayer.

There is no requirement that the foster child live with them 6 months if they were placed later in the year.  From Pub 501 https://www.irs.gov/publications/p501#en_US_2021_publink100091910

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This child is considered to have lived with you for more than half of 2021 if your main home was this child's main home for more than half the time since he or she was adopted or placed with you in 2021.

This was clarified in the 2017 proposed regulations on dependency section 1.2-2(c)(4)

https://www.federalregister.gov/documents/2017/01/19/2017-01056/definition-of-dependent

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(4) Birth, death, adoption, or placement. If an individual is a member of a household for less than a taxable year as a result of the individual’s birth, death, adoption, or placement with a taxpayer for adoption or in foster care during that year, the requirement that the individual be a member of the
household for more than one-half of the taxable year is satisfied if the individual is a member of the household for more than one-half of the period after the individual’s birth, adoption, or
placement for adoption or in foster care or before the individual’s death.

22 hours ago, taxn00b said:

Would they be able to claim the 121 exclusion on both sales?  TIA

Interesting question for a tax lawyer.  If you think they qualify, would they be able to take the entire $500K exclusion on each sale? Or should they get only a combined $500K exclusion on the two sales?

Both may run into the problem that the exclusion is not allowed for any sale if the exclusion was taken on a sale within the previous two years.  Of course, they could have made a single sale to a third party, who then sold the two units separately.  Since they didn't, I don't know the answer.

See Pub. 463.  You can switch back and forth between the standard mileage rate and actual expenses any year, as long as you used standard mileage the first year the vehicle was in service.

If you are asking about depreciation, part of the standard mileage rate is depreciation which must be used to reduce basis. Again, see the table in Pub. 463. Once you have used the standard mileage rate the first year, only straight line depreciation is available in the years you use actual expenses:

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If you used the standard mileage rate in the first year of business use and change to the actual expenses method in a later year, you can’t depreciate your car under the MACRS rules. You must use straight line depreciation over the estimated remaining useful life of the car.

To figure depreciation under the straight line method, you must reduce your basis in the car (but not below zero) by a set rate per mile for all miles for which you used the standard mileage rate. The rate per mile varies depending on the year(s) you used the standard mileage rate.