kathyc2

IRS has on demand video of webinar:  https://www.irsvideos.gov/Webinars/BeneficialOwnershipInformationpresentedbyFinancialCrimesEnforcementNetworkFinCEN

23 minutes ago, Lion EA said:

Thanks for the Guide. Just what I need: 57 pages! It's on my desktop to be handy. Hope someone does distill this for us.

I'm really leaning toward NO new tasks that don't improve my clients' tax situations. However, I need to know what to tell them or not tell them. Maybe a 2nd page in my engagement letter for those with Schedules C and entities.

By the way, do Schedules E & F count?

And, I've yet to contact my E&O carrier. Probably because I'm hoping they say NO.

It's pretty easy reading.  I got through it in around an hour. 

See chart on page 2. The form they file doesn't matter so much as if the C, E or F business is a LLC. 

Click on English in link to download pdf guide.  https://www.fincen.gov/boi/small-entity-compliance-guide

18 hours ago, Catherine said:

Have him pay the balance due now. Stops further penalties and interest from being added to the balance. 

Does full late payment stop late filing penalty? 

This is a few years old, so there may be some changes, but it does a good job of explaining preparer penalties.  https://www.thetaxadviser.com/issues/2017/feb/preparer-penalties-sec-6694-6695.html

When you prepare and sign a return you are stating that it is true and correct.  If there is reasonable doubt, I wouldn't sign. 

If client can not provide financial statements that make sense, I will tell them:

1.  Where I have issues for them to try to fix them or

2. That they need to hire a qualified bookkeeper or

3. They need to provide me with all documents to create accurate statements, or

4. Go somewhere else

If they don't take any compensation and come to me after year end, I may or may not prepare one return based on that with a clear understanding that they immediately start taking compensation.  If they appear to have a genuine interest in doing so, I'll likely prepare the return.  If they want to argue with me, I'll decline the engagement.  Same thing if they take what I believe is substantially lower than reasonable compensation.

Remember that clients talk with other business owners.  If they see that they can push you around to doing things the way they want rather than what you know to be an accurate return, they will tell others.  Do you want your business built on a client list like that?  

I've walked away from quite a bit of fees over the years if the potential clients didn't live up to my expectations.  I've also left jobs where I was the internal accountant and pressured by owners to provide misleading financials for bank or tax purposes.  One of the main reasons I started my own firm was so that I am the one making the decisions that effect my integrity.  

Been a while since I've had a C, but I think he has taxable income of 139,678, which is the 202,278 received less basis of 62,600.

Please tell me I'm not the only accountant geeky enough to plan out the meal prep timing on Excel!

Actually, my question was not if it is taxable or not. 

The question was what is the nature of the paperwork that preparers who have had this situation received from clients.

Client has been awarded a very large settlement for death of spouse in vehicle accident.  Of course I get a call asking if it's going to be taxable.  My response was it depends on how the settlement is worded, as to what payments were for.

I've never had this before and curious as to what paperwork client will receive.  Anything in addition to copy of court settlement?  Tax forms?  Statement from atty as to parts that are/may be taxable?

If I'm following this correctly, his basis at this point is 112K which is 33K from inherited and 79K from purchase.  You will want to make sure depreciation was not taken in the 11 years since he inherited.  That works out to a loss of 10K.

However, it sounds like he expects to be refunded part of the 79K? If so, that would reduce his basis. 

Unless there was tax withheld, I'd just take the 2021 amount times 1.059.  It might be a couple dollars off due to rounding.

2 hours ago, Catherine said:

The ones that know it's fraud will just be glad there is no preparer asking those inconvenient pesky questions they need to lie about.

I was comparing fraud to those that currently use TT type products rather than preparers.  I don't see any reason why it would be more subject to fraud than other software. 

I know of local preparers that play very loosely with rules.  I'm sure we all are aware of preparers like that.

IMO tax fraud is part of our declining values in society.  I'm always amazed at how acquaintances and people on social platforms openly talk about how they work for cash.  It used to be there was shame attached to cheating and people would hide it rather than flaunting.

19 hours ago, BulldogTom said:

their track record on putting up websites that work is not great

Healthcare.gov was a disaster the first year.  Since then it runs very smoothly.  

It looks like IRS learned from that and is limiting use to work out the bugs.  

Why do people think this will be more prone to fraud than the plethora of online software already available??

The official release from IRS gives a lot more detail:  https://www.irs.gov/newsroom/irs-advances-innovative-direct-file-project-for-2024-tax-season-free-irs-run-pilot-option-projected-to-be-available-for-eligible-taxpayers-in-13-states

Very limited for first year. I don't see why determining EIC would be any different than Turbo Tax type software determining eligibility. 

I do wonder how they will handle items on W2 that instigate additional forms such as HSA and dependent care benefits. I'm guessing people with these items on W2 will be told they aren't eligible after starting filing.

2 hours ago, Abby Normal said:

So they are all chained, it's just a matter of frequency.

It's also a matter of degree how they substitute.  If chained were used, 2022 COLA would have been 4.9% instead of 5.9%.  2023 would have been 8% rather than 8.7%.  2024 can't be calculated as the chained numbers are not final until a year later.

No matter what gauge is used, people will complain. I'm guessing there are some that do so, but I've never personally seen a true pension that increases year after year. Which is better?  A 3.2% increase or no increase?

3 hours ago, BulldogTom said:

What do you do with a client like this? 

Explain that there are 2 separate penalties, 1 for late filing and 1 for late payment.  

1 hour ago, Terry D EA said:

I'm assuming Medicare costs will go up this year.

Base went up $9.80 from 164.90 to 174.70.

52 minutes ago, Abby Normal said:

Both main CPI calculations (W & U) are "chained" which results in a lower percentage increase. So when consumers switch to cheaper products because they can no longer afford what they used to buy, this becomes part of the calculation by swapping in cheaper goods for what we used to be able to buy. It's a death spiral of poverty, brought to you by the millionaires in congress and their wealthy owners.

There has been talk of moving COLA to chained cpi, but it hasn't passed.  SS COLA is change of CPI-W (wage and clerical workers) from 3rd quarter prior year to 3rd quarter current year.  The main difference between CPI-U and CPI-W is the weighted importance given to each category.  For example W weighs food and energy higher than U and services (including medical) less than U.

Sounds like he had a great life and brought joy to many.  Blessings. 

3 hours ago, Terry D EA said:

My suggestion is to file 2022 as the final year and dissolve the S-Corp. File 2023 as a Sole-Proprietor.

I don't see how you can retroactively dissolve the S when presumably payments for services in 2023 when to corporate bank account. 

1 hour ago, Gail in Virginia said:

I plan to file the 1065 - I just questioned whether I would need to correct the mess they made by filing w2s on themselves first. 

As long as you have verified that no difference in tax, I wouldn't.

I haven't kept up with the late S election criteria, but since they were treating the business as a S, I wonder if that may be a possibility?

6 hours ago, BrewOne said:

Folks who aren't well-positioned for retirement don't tend to listen to advice...they've already made up their mind to sign up ASAP.

Unfortunately, that is quite often true. 

I've also had the flip side.  I've had people that are miserable in their job.  I tell them let's look at the numbers to see how far away you are from replacing your current income.  Sometimes we find that they would be fine to retire.  Others are maybe a year or 2 away with a few tweaks. Just knowing the numbers about when and how much they will have can make a huge difference in their outlook. 

5 minutes ago, Lion EA said:

Well, it has to be IRS-approved CE

Well, I learned something new today! 

2 minutes ago, Lion EA said:

or CPE only and not CE

So CE is what it's called for enrolled agents?  If something qualifies for CPE is doesn't automatically count for EA's?