TexTaxToo

One of the "rules" is that you can't be in "the trade or business of performing services as an employee" which some have taken to mean that you cannot switch from being an employee to being a contractor to take advantage of QBI.  The regs say there is a "presumption that former employees are still employees" for three years, but that it can be "rebutted" - see https://www.law.cornell.edu/cfr/text/26/1.199A-5#d_3

Generally for IRAs, the custodian will put the full amount as taxable in Box 2a, but will check the "Taxable amount not determined" box in 2b.  That's because the custodian does not usually know if there is any basis (and is not required to track basis).  It is up to the taxpayer (or you) to keep track of the basis using Form 8606, which is required each year there is a distribution.

You must use Part III of Form 2441. The W-2 box 10 amount should flow to line 12 and will reduce the credit to zero.

DIdn't edit it in time.  With an income of $300K and HOH, the entire CTC and RRC would be phased out.

The child qualifies for the $3000 CTC, but only as a non-refundable credit.  If not enough taxable income to take the full $3000, up to $1400 can be taken as refundable ACTC, as in previous years.

All the RRCs (stimulus) are available to anyone with an SSN valid for work, regardless of where they live.

This assumes they meet the income limits and other requirements.

On 3/1/2022 at 7:12 AM, Randall said:

I also printed it in pdf format and attached it to the return with the title ACA Explanation.  Apparently it worked.  The return was accepted by IRS. 

I would be interested to know if the return is processed quickly (and they get their refund), or if adding the explanation pushes it to some error queue which requires manual intervention (and likely a long delay).

If someone has an insignificant amount of carryover, do you think they can ignore it (never use it) and not file Schedule B?

I also wonder about the requirement to carry back one year.  If someone has never needed to file Form 1116, but must file it this year and have c/o, is it correct that they must first amend last year's return to add Form 1116 and use any c/o there?  If they choose not to amend, then they just lose the c/o?  They cannot take it next year?

Thanks!

ID.me was already doing virtual interviews for people who couldn't get the selfie upload to work.  It sounds like they are for now just allowing anyone to bypass that step and go straight to the interview (they can still try the selfie if they want).  One report indicated a 3-hour+ hold time for the interview.

Based on the pubs, I don't think that the IRS would agree with your interpretation.  Relevant quotes from Pubs 463 and 587:
 

Quote

Example 3.

You have no regular office, and you don’t have an office in your home. In this case, the location of your first business contact inside the metropolitan area is considered your office. Transportation expenses between your home and this first contact are nondeductible commuting expenses. Transportation expenses between your last business contact and your home are also nondeductible commuting expenses. While you can’t deduct the costs of these trips, you can deduct the costs of going from one client or customer to another.

...

You can’t deduct commuting expenses even if you work during the commuting trip.

Example.

You sometimes use your cell phone to make business calls while commuting to and from work. Sometimes business associates ride with you to and from work, and you have a business discussion in the car. These activities don’t change the trip from personal to business. You can’t deduct your commuting expenses.
...
If you have an office in your home that qualifies as a principal place of business, you can deduct your daily transportation costs between your home and another work location in the same trade or business.
...
Your home office will qualify as your principal place of business if you meet the following requirements.

• You use it exclusively and regularly for administrative or management activities of your trade or business.
• You have no other fixed location where you conduct substantial administrative or management activities of your trade or business.

If, after considering your business locations, your home cannot be identified as your principal place of business, you cannot deduct home office expenses.

Perhaps it has to do with when the income was recognized and when the tax accrued.

Form 1116 will limit the credit to the proportional amount of US tax on the foreign-sourced income.  If there is no foreign-source income and/or the credit is limited, they can carry over the unused credit to another year.  (But the cost of preparing the forms may be excessive for these small amounts.)

If this is an MFJ return and the total tax paid is less than $600, the limitations don't apply, so go ahead and claim it without using Form 1116.

No cites, but I would suggest that if the money shows as a credit on their account which they are free to cash out at any time, then they have constructively received it and must account for it this year - any amount not used for qualified expenses is taxable income.  If it is merely a promise of future aid which is contingent on them enrolling in a future semester, then it hasn't been received.

This sounds like a Pell grant.  These are often awarded in amounts in excess of the tuition at community colleges.  The excess would be credited to the account and often is issued as a debit card which they call a "refund".  Again, if not used for books or other qualified expenses, the excess is taxable.  Unfortunately, there is a "loophole" such that if the grant is greater than the tuition and fees, the college is not required to issue a 1098-T. 

Checking the appropriate box should print "QCD" on line 4b.  That's supposed to keep the IRS happy, but they may send a letter anyway, so make sure the documentation is retained.

Sick leave is max of $511/day for 10 days.

Family leave is max of $200/day for 60 days.

You can use either (but not both) for each day missed due to vaccination (or COVID illness).  Obviously better to use up sick leave days first, then family leave for additional days.

29 minutes ago, Slippery Pencil said:

There's an exception for 1st time home buyer up to 10K.

You're right.  The first 10K applies to regular tax as well as the penalty.

There's a separate 5-year period for each conversion. 

There's one 5-year period for direct contributions.  The clock starts with the first.

The home buyer exception is only for the penalty (10% additional tax) which doesn't apply anyway if over 59 1/2.

The "basis" is not taxable, and unlike regular non-deductible IRAs, with Roth IRAs the basis is treated as being withdrawn first.  So they can withdraw $36,000 with no tax due.  And since they are over 59 1/2, there is no penalty.

18 hours ago, Dave T said:

Another great point. I need to call her this evening.  She had originally said used for household expenses but will ask if that includes college .

Money is fungible.  It doesn't matter what she actually used the distribution for.  If she had qualified higher education expenses in the same year as the distribution, the penalty is waived for the amount of the distribution up to the amount of the expenses.

For the non-refundable portion, see https://www.irs.gov/publications/p970#en_US_2021_publink1000204381

For the refundable portion, there are additional requirements - see https://www.irs.gov/publications/p970#en_US_2021_publink1000211799

23 hours ago, cbslee said:

You should check but don't think a dependent under the age of 24 can take AOTC.

Someone claimed as a dependent cannot get AOTC.  Someone who qualifies as a dependent but is not claimed CAN get AOTC.  They always get the non-refundable portion, but would have to have taxable income to benefit (the same as for Lifetime Learning).

They probably do not qualify for the refundable portion, but the rules are NOT exactly the same as the dependency rules.  For example, a student with no living parents would qualify, as would a 19-23 year old who is only a half-time student.

Unforseeable event:  "The value of the house jumped 30% and we could make a killing!"

See Pub. 523 page 6 for the actual allowed "unforseeable events" - having twins is one!!

Interesting.  In prior years, the 8962 instructions said to enter 401 for any value above 400 (even fractionally).  This year, they say enter 401 for any value above 401.  Values between 400 and 401 get rounded down.  It appears that ATX is doing it correctly (according to the new instructions), but perhaps the IRS has not updated the e-file rules to match the new instructions?

If there is a refund, you can e-file with zero AGI.  If no refund and no income, you cannot e-file.  (See Rev. Proc. rp-22-12 Section 4 for the IRS approved method of adding $1 interest.)

A scholarship received by a child who is a student isn't taken into account in determining whether the child provided more than half of his or her own support.  (See Pub. 501 or code section 152(f)(5))

However, watch out for the kiddie tax.  The $13,000 is considered unearned income for purposes of the kiddie tax, so child's return would need Form 8615 if it is all taxable.

And today, 26 pages:

https://www.irs.gov/pub/newsroom/fs-2022-07.pdf

Last year, I received such a letter saying they needed another 60 days.  I got it about 4 months after my initial response.  They did respond and resolve the issue after another 4 months.  Patience.