TexTaxToo

8 minutes ago, grandmabee said:

any advanced child tax credit?  they are making up for missed July payments by adding them to the remaining monthly payments.

I wondered that too, but it would take a lot of kids to get a $3000 advanced payment!

Due to an error, ITIN holders were not sent July payments.  Their August payments were increased, as the plan was to split the missed July payment among the remaining months.  That plan got criticized, so the new plan is to issue the remainder of the July payment separately, and go back to the normal amounts for the remaining months.  Just so you know.

Anything's possible this year.  Any idea why it was held up?  Is it possible that ACTC was disallowed in the past and they are still banned or you did not file Form 8862?

15 hours ago, Yardley CPA said:

They received  one stimulus payment in early 2020 of $2,900. 

15 hours ago, Yardley CPA said:

For 2020, Is claiming $1,200 as the amount she received as stimulus the correct amount?

If stimulus payments are based on a joint return, the IRS considers each spouse to have received half the amount, so I think they would expect her to report receiving $1,450 on the RRC worksheet.  If she claims the incorrect amount of Recovery Rebate Credit as a result, they will consider it a math error and correct it, but this will delay the refund.

Some analysis of Notice 2021-49 is here:

https://www.currentfederaltaxdevelopments.com/blog/2021/8/4/irs-releases-additional-guidance-on-the-employee-retention-credit-and-its-not-good-news-for-majority-shareholders

I would be wary of scams where a deposit is made (which later turns out to be fake and is cancelled), and the person is called, told it was a mistake, and is asked to return the money via wire transfer or gift cards.

The scholarship is taxable (Line 1 with notation 'SCH') - your software should have a place to put it so that happens automatically.  You can first subtract out the cost of books and other required fees, equipment, if any.

The Kiddie Tax does come into play if the kid is required to file.  The taxable scholarship income is unearned for purposes of the kiddie tax.

SImplest would be if there is no filing requirement.  If kid has no other income and $300 book expense so gross income drops below $12,400 - there is no filing requirement (scholarship income is treated as earned for purposes of the filing requirement), and you can forget the whole thing.

What's your experience with efiling an amended return?  Does any refund get sent as quickly as for a regular 1040 - that is, does it appear they are handled automatically in most cases?

On 6/29/2021 at 8:47 PM, Sara EA said:

All this to opt out?  I would think it would be necessary if someone was updating info like bank account, address, child added to return, in case any of those changes are fraudulent, but you have to prove who you are to say you don't want the advance?  I have a client whom I advised to opt out because income will go way up this year, and she didn't complain of any problems.  Are they asking everyone to do this?

They can now use the opt out portal to change direct deposit information.  They'll be able to change address, children claimed, expected income later this year.

12 hours ago, JohnH said:

My Mac has a blue stripe at the top with the words " Browse  Activity   Leaderboard. Donate".  and then a search box at the far right.

In Windows, I normally see what JohnH and jklcpa describe, but when I reduce the width of the browser window below a certain point, the top area and blue stripe completely changes, and I see the hamburger as Lion EA describes.

It also changes based on your magnification level (when use use Ctrl+ and Ctrl- to change magnification).

The law already provides for a safe harbor of $2000 per child on payback of advanced CTC.  Low income taxpayers (AGI < $60000 MFJ/QW, $50000 HOH, $40000 other) will not need to pay back anything.  The safe harbor phases out for an AGI of double those amounts.

The IRS is calling it "repayment protection":
https://www.irs.gov/credits-deductions/2021-child-tax-credit-and-advance-child-tax-credit-payments-topic-h-reconciling-your-advance-child-tax-credit-payments-on-your-2021-tax-return#collapseCollapsible1624567062314

The IRS is now using an external vendor (ID.me) for identification verification.  It looks like it's just for the Advanced CTC payments now, but maybe it will work for other secure access (now or later).

https://help.id.me/hc/en-us/articles/4402754222615-IRS-CTC-What-does-ID-me-do-for-the-IRS-#!

I wonder if underpayment penalties will be assessed if you don't opt out and need to pay back the advanced payments.  I hope not, but I agree that would be a good reason.

22 hours ago, Lion EA said:

By the way, neither I nor my husband can set up secure accounts. "There is something in your file that prevents..."

Have you tried recently?  I got a similar message when I tried to create a personal account a couple years ago.  I tried again last week and was able to create an account online.  I didn't even have to lift my credit freezes - they did a "soft inquiry" only.

The "Update portal" which may be used to opt out of the payments is now available here:

https://www.irs.gov/credits-deductions/child-tax-credit-update-portal

I don't see much reason to opt out, but you can also use it to see what you'll get, and future enhancements will allow:

• changing bank account information
• changing mailing address
• changing family status and income (will this allow opting in?)

Yes, see this topic and post:  https://www.atxcommunity.com/topic/25543-3rd-stimulus-taxpayer-with-itin-dependents-with-ssn-are-they-eligible/?do=findComment&comment=179741

The IRS first said no, but now says yes.

Correct me if I'm wrong, but I don't think the EIN from the 1099-NEC is actually sent as part of the e-file.  The IRS just compares the total amount reported on Schedule C to the total on the Forms 1099-NEC the IRS knows about.

1 hour ago, Abby Normal said:

Are you saying that you can't amend to switch to mileage in the first year? Because I would think that you can. It's not like a formal election that needs to made by the due date.

Maybe it is - from Pub 463:  https://www.irs.gov/publications/p463#en_US_2020_publink100033937

Quote

You must make the choice to use the standard mileage rate by the due date (including extensions) of your return. You can’t revoke the choice.

22 hours ago, Terry D said:

They have never been married so only options are single, HOH.

The only "option" is that they can agree on who should claim the children.  If they are treated as one household, only the one that paid more than half of the household costs can be HOH.  If they are treated as two households sharing living quarters, only the one with the higher AGI can be HOH.  They cannot split the kids and each claim HOH.

22 hours ago, Terry D said:

There are years where only one worked. That may be a little more expensive year.

In those years, the one who worked may be able to claim the other as a dependent.

And this "shifting" is only allowed if the terms of the scholarship or grant allow it.  Scholarships that are restricted to paying only tuition and other qualified expenses cannot be shifted to income.  (Pell grants are unrestricted - many scholarships are not).

Even though the income goes on line 1, it is considered unearned for most purposes and could result in the student being subject to the kiddie tax.  But for purposes of the filing requirement, the scholarship is considered earned income, and if the student's income is less that the filing requirement, you needn't report it at all.

22 minutes ago, Possi said:

Sooooo in my case, where an unmarried couple have ONE child TOGETHER, only one can claim HOH.

There is no question about that.  There must be a different qualifying child for each HOH.

24 minutes ago, Possi said:

She is single. No HOH.

That is the case under the proposed rules.  As far as I know, they have not yet been finalized.  That means you can rely on them if they support what you want to do, but do not have to rely on them if there is support for what you want to do under the current regulations.

So you have plenty of support for the father claiming HOH.

For the mother last year, not so much.

Under proposed rules, the tie-breaker rules will make a difference in who can claim head of household:

https://www.federalregister.gov/d/2017-01056/p-110

Quote

(5) Shared residence—(i) In general. If two or more taxpayers not filing a joint return reside in the same living quarters, each taxpayer may be treated as maintaining a separate household if each provides more than one-half of the cost of maintaining the separate household. For this purpose, two households in the same living quarters are not considered separate households if any individual in one household is the spouse of any individual in the other household, or if any individual in one household may claim, or would have priority under the tiebreaker rules in section 152(c)(4) to claim, any individual in the other household as a dependent.

....

Example 2.

A and B, an unmarried couple, have two children together (C1 and C2) and all four individuals live in the same living quarters for the entire tax year. Both A and B contribute to paying the expenses of the couple and the two children. A has higher adjusted gross income than B. Each parent files a tax return. Under the tiebreaker rules in section 152(c)(4), the parent with the higher adjusted gross income (in this case, A) would have priority to claim each child as a qualifying child if both claimed the child. As a result, B may not be treated as maintaining a separate household with either child or both children. Therefore, if B may be claimed as A's dependent, then all four individuals are members of the same household. However, if B may not be claimed as A's dependent, B may be treated as maintaining a separate household consisting solely of B, even if B claims one of the children as a dependent on B's return.

On 3/30/2021 at 12:45 PM, Patrick Michael said:

Is there anything that can be done proactively to return the money?

There are instructions for returning the payment:

https://www.irs.gov/newsroom/questions-and-answers-about-the-third-economic-impact-payment-topic-i-returning-the-third-economic-impact-payment

However, they do not say why or when you should do so.  I guess if someone just doesn't want the money, they can return it.

For EIP3 (unlike EIP1 and EIP2), the law says that the IRS should try to prevent multiple payments for the same person "to the maximum extent administratively practicable".  I assume they will use SSN to track payments and not allow RRC for anyone for whom EIP3 was paid, even if they are now a dependent on a different return.

I don't see a similar provision for CTC and advanced CTC, so it will be interesting to see what the IRS does.

The way I read it, there is forgiveness of up to $2000 per "ghost" child for MAGI < $40,000 ($50k HOH, $60k MFJ).  There is no forgiveness for MAGI > $80,000 ($100k HOH, $120k MFJ), and forgiveness phases out in-between. 

(I'm calling a child for whom advanced payments are received but who is not claimed on the 2021 return a "ghost" child.)

Since the advanced payments should be $1500 per child ($1800 if under age 6), that would forgive everything for low-income parents.  I've heard that the IRS wants to prevent divorced parents who alternately claim a child from getting paid twice, but I'm not sure how they will.
 

4 hours ago, Abby Normal said:

I'm still waiting for the form revision because those over 400% might well be entitled to additional credit, especially if they didn't take the full advanced credit they were entitled to.

Are you talking about the change to allow more PTC, and PTC for those over 400%?  Those changes only apply to tax years 2021 and 2022.  The change to allow PTC for anyone getting unemployment applies only to tax year 2021.  I doubt there will be a form revision for 2020.