MargaretMort

Thanks, Linda and Buddy! Solved my problem quickly. May your rest be restful and give you strength to carry on for the next 7 days. MM

Here I am again! Client received a 1099-R for total distribution of his 401-K. The distribution code is 1. He is 64 yrs old, why would he have to pay 10% penalty? If I am right, do I just change the code? I didn't find anything that indicated this was a premature distribution. This was a company plan and the company closed it. Thanks as always. MM

My thanks for your kind words. We will be pulling for you. One of the best things about this chat room , besides the great advice and discussions, is that we care about each other. MM

My sincere best wishes for a great outcome. You have my sympathy for what you have been going through. I, too, found taxes to be taxing this year as my husband passed away in early Dec. and I was diagnosed with breast cancer in Jan. I wasn't concerned for myself as I knew it was a minor distraction but I was very concerned for our children who really had been having a tough time after losing their father and didn't need anything to add to it. I have had surgery and am now cancer free so there is a light at the end of the tunnel. MM

My wayward client is coming in Friday so I won't be doing an extension after all. Good news for me. MM

I haven't done an extension in at least 20 yrs--small # of clientele, no big businesses--and I am not quite sure what to put on the 4868. The clients are talking to a lawyer about bankruptcy and doesn't want to take the time to gather up all the necessary paperwork so I can do the tax return. I told them that I would need W-2, 1099-R and rental property amounts so I would have a ball park figure for the 4868. They have always had a large refund in the past, would expect that to be the case this year. Can I use the tax liability from last year as the figure and say no taxes owed? Thanks, as always, MM

No, the client doesn't down the house. It is still available for rent or sale. The son and his spouse have taken the rent and expenses in the past, aren't this year for whatever reason, client is not taking the rent and expenses, just wants to take the loan interest that the client has paid out of pocket. This client has rental income and a large capital gain from income held for investment. I am becoming more confused as I read the various pubs and instructions. Lord, you would think I had never done this before and I must admit, this is a variation I have not run into before. Thanks again for any assistance. MM

That is the rub. The house is still available for rent or sale. The son received the rent and paid the bills during the time it was rented. The client began paying the interest only after the note modification agreement went into effect. The more I think about this situation, the less I can find a place to take the interest except, possibly, on the sch A subject to 2%. MM

That is a terrible heading but there it is. I brought this up earlier and am now trying to put the return together. Briefly, client is a realtor, has a son who builds houses. Client is guarantor on a loan for a house son built. House didn't sell, was rented, empty now. Client and son have a note modification agreement with the bank to pay only the interest on the loan for a set number of months. Client is paying the interest, naturally would like to take it as a deduction. The consensus on my earlier question about this arrangement was that if the client is expecting to make money when the house sells, the interest can be deducted. My problem is that I can't quite decide where to report the interest paid. Can I show it on the Sch C because the client is a realtor? I am at a loss and going round in circles. I sure would appreciate any help or suggestions. Thanks, as always, MM

Many thanks for the replies. I certainly am glad that I am not the only one who is second guessing themselves. It makes perfect sense to me to show the total and claim the expenses, I just talked myself into not doing that. As always, you all come through like the champs you are. Thank you once again. Margaretmort

The client has W-2 income but does consulting work on the side. The income goes on Sch. C, of course. He has expenses with these jobs, bills the client for the expenses, he is reimbursed 100%. I convinced myself that he truly has no expenses, lumped the reimbursements with the income and merrily went my way. Client came to pick up his return today and felt the reimbursements shouldn't be part of his SE income. On "mature" thought, I am inclined to agree with him but...... I need some guidance. He has two 1099s showing the reimbursements with the job costs so I would need to show the expenses to reduce the gross. I have no problem doing that, started out that way to begin with but talked myself out of it. This has been my year for too much 2nd thinking. BTW, the companies reimbursed him based on government standards. Hope I am clearer than mud. As always, many, many thanks for all advice and help. MM

That was my original thinking. Part of the problem is that this is such a new program that the VA, who is charged with paying the funds, and the colleges are playing catch-up. In this case, the university is reimbursing the parents, they just haven't received the money yet. I already have the return completed, claiming only the un-reimbursed portion, but I was more than willing to re-do if necessary. I will go with my original thought. Thanks for taking the time to respond. MM

Tuition and fees worked best. MM

Client's son received the 1098T for the 2009 tax year. A new GI Bill gives parents the right to assign some of their Education assistance to dependents. Father immediately applied for this assistance and the university received payment. This money applies to the Fall 2009 semester and the Spring 2010 semester both of which the parents have paid for. The university has not reimbursed the parents as of this writing. Now, my question is: The 1098T shows the payments for the 2009 tax year. I found out the amount of the reimbursement they haven't received and deducted it from the amount shown on the 1098T. In the wee small hours of the morning I am having second thoughts. I have just about decided to use the full amount of the 1098T as a deduction against the 2009 income-the entire amount is not fully deductible-and see what the school issues for the 2010 year. Have I over thought myself, as usual? My thanks for helping clear up my mind. MM

Now that brings a smile on a gloomy day. MM

Sorry about the heading, I don't know any other way to put it. Client has a son who has been a contractor, client helping to stake him. Client is the Guarantor for a loan between bank, son and his wife. The house was built, not sold, rented. Renter moved out, no new renter. Bank agreed to a modified note and mortgage in which only the interest is paid for a period of time. Client is paying the interest. Everything is reported to son and spouse, of course. I am assuming the client should be able to take the interest payments on the Sch A? I think I am hesitant because there will be no paper showing the interest in the client's name. Thanks for your help, as always. MM

The heirs don't live here nor near here. Glad to know the sale of the house won't create a tax problem. What about efiling? MM

A quick question--well, okay, two questions! Client passed away last fall, friend named to handle everything. First of all, I understand the friend can file the 1040 and sign as personal representative. I have the return done and am ready to move on. Then I think-first big mistake-can it be e-filed? I would guess that if it can be, I would need to have the friend sign a Form 8453? The other question is, the client's house is up for sale. Now, as I understand the situation, the available money has been disbursed to the heirs, there was no need for probate, this friend has just been handling all the wrap-up stuff. What happens when and if the house sells--the local RE market tanked 2 years ago so it could take awhile. I have never handled a situation like this before, usually there is a surviving spouse. I don't believe I need to file a 1041 from my research but I am questioning all my decisions this year and need your expert helps. Many thanks. MM

Client is active duty AF. Son is in college. They received a 1098-T for payments received of qualified and related expenses. She says they "got reimbursed for 1/2 the amount on the 1098-T from the Veterans Affairs tuition program". If I understood her correctly, they have yet to receive the reimbursement. In my little pea brain, I remember reading that military dependents can receive financial assistance through the new GI Bill. I can't find anything about this and I truly don't know if it makes any difference. I think I will show the tuition paid and not worry about the "repayment". If I do that I would have to show the 1/2 re-paid--if it ever is--as income for 2010, I assume. Am I clear as mud? I am frustrated that I have been unable to find the answers to my questions on line so I have come to you, again, for clear minded thinking. As always, many, many thanks. MM

I believe there is a provision in a bill in Congress for that. It hasn't been passed yet, I think. MM

Ah!!! Success at last. Many thanks. Yes, I would like a drop down box to clear up some problems but, as you say, Margaret, they don't seem to come for everything. MM

I am back to swearing again! I have a client who receives a 1099 Int in his name but, of course, it is for his brother. I don't remember having a problem in the past showing nominee interest and having it deducted from the total interest shown. Can't figure out how to do it this year. Help! As always, thanks. MargaretMort

Yes, he does qualify to be HOH. I didn't think of it when preparing the return. The ATX check pointed out that he "MIGHT" qualify so I checked it out and was just double checking so that I didn't make a mistake. He provided more than half the cost of maintaining the home, he claimed the son as a dependent, divorce and multiple support don't have anything to do with the situation. Thanks for all help and suggestions. MM

Thanks! I can always question my answers to multiple choice questions. MM

ATX suggests that the client could be HOH instead of single, something I never considered. So I read the relevant parts of Pub 501 but I want to make sure I am doing this correctly. Client has 59 yr. old son living with him during the entire year of 2009. He has less than $2000 income. As I read all the pertinent info I can put my eyes on, this qualifies Dad as HOH. Correct? Many thanks for assistance. MM