mcbreck

Last Friday a client called and started reading to me the instructions for filling out the w-4 form. When he started with the "exempt" I said "You are not exempt", he paused and continued reading. I shouted "you are not exempt" and it confused him. I'm not taking responsibility for their W-4 form in April.

It will depend upon the rest of their assets, their current income tax rate versus what they expect it to be in retirement and what happens to the markets. ROTH IRAs are great if you think you'll never run out of money while healthy.

Expenses aren't deductible if you can't prove their validity.

The IRS has the form already, why on earth would they want it sent to them again? I do what jasdlm does... I remember years ago when people used to mail the IRS a copy of their trades and at a CE conference the rep commented the IRS threw those in a locker and literally never looked at them. He said if you got audited they'd ask you for it again because it was lost.

The IRS has a database of the "short names" that get submitted along with the Tax IDs and they do a matchup. I've had problems this year also and my tax software insists it isn't on their end. Here was my solution: Trust name for the last 20 years is "J L Smith Irrevocable Trust". For always the software used a short name of JLSM but this year the IRS required me to change the name to Smith J L Irrevocable Trust" to generate the correct short name of SMIT. If you are using Drake I think you can do a short name override? Don't know about the rest. My software provider said they'd never heard of such a problem. They could see that I'd filed it that way with their software for over 5 years and couldn't imagine the problem.

Had an attorney a few years ago for whom I did returns. The tax software he had me using produced what he felt was the largest number of sheets. His opinion was that if you want to charge a large fee, you should deliver a large product. The larger the product in their hand, the more complicated they think the return and the less likely they are to have questions (overwhelmed).

When we had our signing meeting, they both signed the 8879 and paid me, then the meltdown happened. I handed him back the 8879 saying he needed to give it to me when he was confident in the return. He handed it back at the final meltdown meeting and told me it was fine. The husband is a great guy and never once questioned me or the return. The stupidity of their questions and the fact they couldn't read or comprehend the 1099 was actually rather shocking to me. Their confidence in their knowledge on top of it was astounding. Met with an 87 year old client today and we were talking about her church. She said "I take some, I leave what I don't like". I told her how important it is in life to be happy and remove the negative and she said "oh, I'm happy".

I always think of our work as pretty simple, just follow the rules and use some common sense. Had a client who owed a bunch this year because of massive capital gains. The wife threw a fit, questioned my ability to do basic things on the return and brought in their children to investigate the return. I was given an email of questions / assumptions which included 6 very direct declarations that I was wrong and had prepared the return incorrectly. 1. I didn't understand that I should have not included qualified dividends in the return because they are tax free. After my explanation they'd determined I doubled their dividends by including qualified dividends in the income. 2. I had failed to include their cost basis on the sale of assets which resulted in the unusually high profits. (they were almost all distributions from managed products - actually about 99%) Then it got shifted that I should have lowered their cost basis by the capital gains distributions because they were reinvested. 3. They found a year end statement saying taxable income and tax exempt income for the year and felt I had failed to lower taxable income by the amount of tax exempt income. 4. I had failed to provide a complete breakdown of all sales with only the totals on the 1099. (all sales are on the 1099 obviously). Failing to follow their instructions. 5. I had failed to provide them with a breakdown of all the capital gain distributions (they are listed on the 1099). Again I had failed to follow their instructions. 6. I had included W2 income improperly because that's a non-profit. 7. I had failed to include all of their SALT taxes on the Schedule A. One of the spouses of the "kids" did understand why this wasn't my fault. 8. I had failed to determine their correct estimated taxes the year before because I should have anticipated these capital gains which they had previously said were wrong determined. Two of the three children are Ivy League educated adults and one has an Ivy League masters degree in business (runs a company with 1k employees supposedly). When I told the father that he would need to find a new tax person next year he said he didn't blame me at all. He expected the tax bill, was completely fine with my job and apologized for his wife and children. With the demands and accusations, no kid apologized and his wife still thinks the return is wrong.

You can't deduct on A anymore. Only time I've seen it where it was deductible was when a client paid a special fee to trade a stock on a foreign exchange - we included it in their cost basis. Otherwise I think it's very likely a lost expense. For example, wiring funds will show up often times as an expense and you can't deduct that. Look through the 1099 and see if it gives a reason for the expense and whether it should be included somewhere.

Do those "client from hell" types intentionally walk into every situation with that as their goal or is it just a quirk of their personality and they can't help it?

Some tax software is still that way. What Drake calls their "forms entry" is worthless to me.

Client has a K-1 and the K2 and K3 totaled 20 pages (with explanations). The entire downloaded K-1 package is 41 pages long.

Where did you clarify if it was the only assets? And it's still completely false because even if it is the only asset, it still can pay the tax.

The question from the OP was whether it could be done, not whether it generates the lowest tax bill. Two people said it couldn't be done which is false.

You never answered why the estate couldn't pay the capital gains tax in the final year and the process of the administrator isn't relevant as we don't know all the details. I don't see a reason to disparage their job since there are very logical reasons not to close out an estate. What if one of the minor children was living in the house until they reached a specified age? What if they were waiting for the settlement of a lawsuit or insurance settlement?

Why would they be prohibited from paying the tax in the final year of an estate? The 1041 shows the required minimum income distribution, it doesn't declare that all other assets have been distributed. Estates have 65 days after the due date to make their income distribution payment anyway. If an estate pays the tax, the required minimum income distribution is $0. Lots of estates and trusts pay the capital gains tax because they don't want disabled beneficiaries showing income on their personal tax return.

I wonder when the last time was that they increased that $300 threshold. That figure should be more like $1,500 per person on dividends and interest reported on a 1099. At least most 1099's are now breaking out foreign dividends paid so I don't have to spend 20 minutes searching for them and adding them up.

Isn't that our job? It's a completely appropriate maneuver if done correctly. If the receiving firm coded it correctly, the IRS already knows what happened.

Personally, I'd use 5329 and exception 12 (other). This is one of the rare instances where I'd upload a pdf proving the contribution is within 60 days. The 1099r has the date of distribution so you can upload a copy of their statement showing the deposit. There is no need to move it from a 401k to a traditional IRA and then a Roth IRA.

I know last year you could spread your taxation of an early IRA withdrawal over 3 years - that's not available for 2021 withdrawal correct? I'm not seeing it anywhere if it was extended.

I've been told in continuing education seminars and by outside auditors that it is reasonable to smooth out income and expenses if they are meant to be received or paid but are delayed slightly. For example you receive the January rent check which was due Dec 31st on January 2nd, it is okay to include it for tax purposes as having been received Dec 31st. That way each year gets 12 rent checks. Same as if a payment was supposed to be made Dec 31st but the bank didn't actually submit payment until Jan 2nd you can include it as having been paid Dec 31st so that you have 12 months of payments. It's reasonable and expected to smooth out the payments for short time period differences. And no I don't think you'll find that in the IRS Code. If you are in a regulated industry it is very likely your regulator will not accept this timeline change.

The web version doesn't come with any business return capability.

The CPA in the office next to mine (a world class jerk so keep that in mind) requires all clients to sign a POA every other year and charges everyone $125 for that "service". Sometime over the summer he has his grand daughter come in and scan each and fax them to the IRS. If it's this year, he does the POA for tax year 2021 and 2022. In 2024 he does it for tax year 2023 and 2024.

When I've submitted an 8821 request (via the secure access site) it still takes a long while to get the transcripts delivered. I don't understand when people claim they are delivered instantly.

JMO but the security of the cloud isn't my major concern, it's Drake going out of business (for the cloud issue). Even there I believe Drake would be sold - they've received a significant outside investment already so just going poof is very unlikely. My question really is if the product is fast / slow and if it's significantly different from the desktop version. I'll process their demo after the tax season. My major cloud issue previously was that occasionally I go work at client's homes / offices and I couldn't count on internet access but that's not so much an issue anymore. The web version of my current software (I don't use it) is horrifically slow. The ability to never have to worry about updates, my computer dying and ease of working from home without taking my laptop with me would be nice. My laptop dying is a major business risk. That's probably 2 days of work gone. Loading all the old software is a pain.