TexTaxToo

Announced today:  https://www.irs.gov/newsroom/irs-increases-mileage-rate-for-remainder-of-2022

The revised standard mileage rates are:
(1) Business 62.5 cents per mile
(2) Medical and moving 22 cents per mile
The revised rates apply to mileage on or after July 1, 2022.

Was the trustee notified that the distributions were a return of excess contributions?  The trustee should indicate that in Box 3 of the 1099-SA and determine if there were any earnings included in the distribution (reported in box 2).  These are taxable.

You may want to read Revenue Procedure 21-49 which describes "Emergency EIDL Grants" of up to $10,000 under the CARES act and "Supplemental Targeted EIDL Advances" of up to $5,000 additional under ARPA.

5 hours ago, Abby Normal said:

Once you have one, you will always have one.

When the IRS announced that anyone could now get an IP PIN, they said:

• The IRS plans to offer an opt out feature to the IP PIN program in 2022.

But I haven't seen any announcement of how to do that, yet.

IP PINs expire each year.  You must use the new IP PIN even if filing a prior year return.

7 hours ago, RitaB said:

when the income exceeds 400%

The rule that there is no PTC for incomes above 400% of FPL was removed for 2021 and 2022.

49 minutes ago, jklcpa said:

Tom, sorry I was wrong and guess I should stop trying to help anyone at this point. 

Judy, please don't.  I've learned a lot from your posts.  I assume (hope) you are joking.  I make more mistakes than I care to admit.  The great thing about this board is that there are always plenty of proofreaders.

19 hours ago, BulldogTom said:

If I could bug you one more time.   Does my math look right?   $6,171 for 2022 contribution limit?

If both spouses are over 55, they can each contribute $1,000 catchup to their own HSA.  If they split the family amount equally, the wife's limit would be $4,650 for the year - and the husband's 5/12 of that or $1,937.50 for a total of $6587.50 - they can of course split the $7,300 any way they want for the first 5 months - the catchup cannot be split.

If they didn't get APTC (column C blank), they are not required to file Form 8962.  However, the law changed for 2021 and higher-income people may now qualify for PTC (some with incomes well over $100,000).

You can obtain the values to put in column B (SLCSP amounts) at https://www.healthcare.gov/tax-tool/

Use those to see if they qualify for PTC.  (You will still put zeroes in column C in the software.)

Sure.  The only thing you cannot do is go from joint to separate after the due date.  I read somewhere that you cannot e-file to change filing status, but I'm not sure if that's correct.  In general, you can e-file three amendments - after that, they must be paper.

On 4/29/2022 at 2:59 PM, cbslee said:

A grace period allows participants to spend unused funds during the 2.5 month (75 day) period following the end of the plan year.

I agree that unused funds cannot be refunded, but the Consolidated Appropriations Act 2021 allows plans to extend the grace period to 12 months for plan years 2020 and 2021.  They can either extend the claims period or allow carry over of the unused funds. They can also allow the carried over funds to be used for dependents who are age 13 (normally only care for those under 13 or disabled would qualify). See Notice 2021-15 and Notice 2021-26

The plan must still be amended, so this probably won't help this TP, but they can check with the administrator.

11 hours ago, jklcpa said:

the loss is disallowed because it was sold to a related party.

But in this case, any loss on a personal residence would be disallowed regardless.

11 hours ago, jklcpa said:

In other words, the recipient would never get the benefit of the decline in value from the original donor's cost to its lower FMV at the time of the gift, but CAN take loss beyond that once in his or her ownership.

I think you mean that this would apply if the property is rented or used in a business or as an investment, not if the daughter continues to use it as a personal residence.

I am also curious about the basis, but perhaps Tracy is asking if the daughter will qualify for the maximum exclusion if she eventually sells the house after living there long enough to qualify.  If the basis is correct, I believe she will be able to use the donor's basis in figuring her gain, and can use the exclusion on top of that.

CTC for those residing outside the U.S. is non-refundable, so she would need to have a tax liability to benefit.

ACTC is available as a refundable credit, but requires earned income.

But why wouldn't you include the children to claim RRC for them?

Citizens residing outside the U.S. half the year can still get the full new amount ($3000 or $3600 per child) as a non-refundable credit (if below the AGI threshold).  If they don't have enough tax liability to make use of it, they get up to $1400 as a refundable credit as in previous years.

Here's the FAQs revision notice with a link to the PDF:

https://www.irs.gov/newsroom/irs-revises-frequently-asked-questions-on-2020-unemployment-compensation-exclusion

Here's a state by state list of who to contact:

https://www.dol.gov/agencies/eta/UIIDtheft

If they repay any of the distribution now, I think you will need to amend 2020 to get a refund of the tax paid on that amount.  They cannot reduce their 2021 income by the repayment amount unless they had spread the income over 3 years and so have income in 2021 from the distribution.  In your case, they have to go back and reduce 2020 income.

For your case (repayment when all tax was paid in 2020), the instructions say you must also file 8915-F in 2021 and fill out lines 14 and/or 25 (only).  It's not really clear why, since it will not affect the 2021 return.  Apparently, just for documentation.

I thought perhaps Judy was referring to this TIGTA report from last year:

https://www.treasury.gov/tigta/auditreports/2021reports/202146064fr.pdf

Quote

During our walkthrough of the Ogden Tax Processing Center, we learned that the IRS destroyed paper-filed information return documents. Management subsequently stated they estimated that approximately 30 million documents were destroyed on or around March 19, 2021.

IRS management noted that once the tax year concludes, the information returns, e.g., Forms 1099, can no longer be processed through the Service Center Recognition Imaging Processing System. ... Although IRS management considered maintaining the documents in paper form, they decided against this because retrieval of the documents would be difficult.

Quotes from yesterday's Taxpayer Advocate blog:

Quote

As of March 18, 2022, the paper return backlog stood at nearly 15 million.

... the IRS still has not implemented technology to machine read them, so each digit on every paper return must be manually keystroked into IRS systems by an employee.

Last year, IRS employees made transcription errors on about 22 percent of paper returns.

https://www.taxpayeradvocate.irs.gov/news/nta-blog-getting-rid-of-the-kryptonite-the-irs-should-quickly-implement-scanning-technology-to-process-paper-tax-returns/

If they received APTC, they must file, regardless of income.  (Unless someone claims them as a dependent, in which case the 1095-A would be reconciled on that person's return.)

Presumably, when they applied they had income or expected to have income, and the Marketplace determined that they qualified.  In that case, they should have reported to the Marketplace when it became clear they would not have income, and should have switched to Medicaid. But usually they won't be penalized for that, and can still claim PTC (assuming they got APTC).

However, if they lied ("with intentional or reckless disregard for the facts, provided incorrect information to a Marketplace"), they do not qualify for PTC and will have to pay back any APTC.

16 hours ago, Christian said:

A client's daughter who completed her first year of college in 2020 entered  for her second year in fall 2020. She dropped out  in late December.

It's not clear from your first post which year's return you are preparing.  Maybe I'm reading it wrong, but if the daughter dropped out in Dec. 2020, then there would be no expenses in 2021 - and no credit or 1098-T for TY2021.

They would qualify for TY2020 for expenses paid in 2020 for the 2020 fall semester (if not refunded).  They could qualify again in 2022 for the fall semester if she re-enrolls.

I'm not sure what contributions during the last 3 years has to do with it.  (They could affect taxability of QCDs.)

When you print Form 8606, do you see the basis ($18,000 assuming no previous withdrawals) on line 2, the FMV as of 12/31 on line 6?  Then there should be a percentage on line 10, and the nontaxable portion on line 13.

1 hour ago, Pacun said:

If it is a Roth IRA, nothing is taxable and it makes no difference if they invested their money in a first home and spent it at the local casino.

 

Not so fast!  Code J is an early distribution.  Assuming that is correct and they are under 59 1/2, it is not a qualified distribution.  The basis can be withdrawn tax and penalty free, but the earnings are taxable and subject to the 10% penalty.  (The five-year holding period is not relevant.)

Except that the $10,000 for first home IS a qualified distribution, so no tax and no penalty for that portion of the earnings.

And of course ask about other possible exceptions to the penalty (e.g., education expenses, birth of a child, adoption, unemployment/health insurance, disability, or a large amount of medical expenses).

The simplest thing would be for them to increase their withholding enough so they don't need to pay any estimated. Then it doesn't matter when they pay it.  They could even wait until later in the year and increase their withholding a lot.  As long as there is less than $1000 due after withholding, they won't need to file Form 2210. 

If they pay estimated and would have owed $1000 but for the estimated (and don't meet the prior year safe harbor), Form 2210 is usually needed and can be complicated - and the penalty for each period comes into play.

1 hour ago, Terry D EA said:

So, this would apply to a statutory employee as well correct?

Not necessarily.  See https://www.journalofaccountancy.com/issues/2019/jan/qbi-deduction-for-statutory-employees.html