kcjenkins

The timing is important on this one, but since he still has time, it can save him a lot of pain.

http://blogs.smartmoney.com/tax/2011/02/15/homebuyer-credit-tax-fraud-for-fun-and-profit/

Getting a little cranky in your old age??? LOL

If he really wants to, he can still re-characterize the rollover, in effect reversing the conversion. For all or for part of it. I'd suggest to him that he do that for half of the amount, so that his tax bite is reduced, while still gaining some of the benefits down the road. I'd also give him the applicable portion of Pub 590 to read, so that he has a clear understanding of what his choices are and what they mean.

I have not had any of those types of problems, [Knocking on wood here] so I think it would be the smart thing to do to talk to tech support Jack, much as I sympathize with you about that. You want to get it cleared up soon, before something more dreadful happens.

This is just the IRS's boneheaded way of slowing things down that they are not yet ready to deal with.

Try "backup returns online" and you will find it.

Yep, I have one too, Keep hoping they will change, but it's the State's choice, I guess.

From another list: Just got this in from the IRS on the deduction for Medicare Part B for sole proprietors. My question of IRS was: There is a conflict regarding the treatment of Medicare Part B premiums as self employed health insurance. I see that on page 29 of the IRS Form 1040 instructions it states that Medicare Part B premiums can be used in figuring the deduction, but there is a reference to Pub. 535. On page 18 Pub. 535, it states that Medicare Part B premiums are not considered to be medical insurance premiums for purposes of the Self Employed Health Insurance deduction. The IRS Response is: "Hi Jim, It turns out that the IRS revisited its position on this issue. Here is what I received back. Treasury clarified their position late last year. Medicare B premiums meet the definition and requirements for the SEHID (I believe the cite is RP 2008-1) if they are paid by or reimbursed by the company; for a schedule C, the company and the individual are one and the same, so Medicare B premiums would always qualify for a sole proprietor. The issue will be clarified when the 2010 Pub 535 is issued and I was told they may reference earlier years in that publication. My understanding is that the same guidance should have been in effect for prior years. Sorry it took so long to get the response. We've been hearing about this from various parts of the country." So to whoever brought this issue up to our group thank you and I guess this will be the final answer. Jim James C Counts II, CPA CTFA Hemet, CA

Here are several important changes that the IRS wants you to keep in mind when you file your 2010 federal income tax return in 2011. Health Insurance Deduction Reduces Self Employment Tax In 2010, eligible self-employed individuals can use the self-employed health insurance deduction to reduce their social security self-employment tax liability in addition to their income tax liability. As in the past, eligible taxpayers claim this deduction on Form 1040 Line 29. But in 2010, eligible taxpayers can also enter this amount on Schedule SE Line 3, thus reducing net earnings from self-employment subject to the 15.3 percent social security self-employment tax. Premiums paid for health insurance covering the taxpayer, spouse and dependents generally qualify for this deduction. Premiums paid for coverage of an adult child under age 27 at the end of the year, for the time period beginning on or after March 30, 2010, also qualify for this deduction, even if the child is not the taxpayer’s dependent. As before, the insurance plan must be set up under the taxpayer’s business, and the taxpayer cannot be eligible to participate in an employer-sponsored health plan. Details, including a worksheet, are in the instructions to Form 1040. First-time homebuyer credit You must meet the required deadlines to be eligible to claim the credit. You must have bought — or entered into a binding contract to buy — a principal residence on or before April 30, 2010. If you entered into a binding contract by April 30, 2010, you must have closed or gone to settlement on the home on or before Sept. 30, 2010. Because of the documentation requirements for claiming the credit, taxpayers who claim the credit on their 2010 tax return must file a paper — not electronic — return and attach Form 5405, First-Time Homebuyer Credit and Repayment of the Credit, and a properly executed copy of a settlement statement used to complete the purchase. Taxpayers who claimed the first-time homebuyer credit for a home bought in 2008 must generally begin repaying it on the 2010 return. In most cases, the credit must be repaid over a 15-year period. Many of those affected by this requirement received reminder letters from the IRS. A repayment requirement also applies to a taxpayer who claimed the credit on either their 2008 or 2009 return and then sold it or stopped using the home as their main home in 2010. Use Form 5405 to report the repayment. In addition, certain members of the armed forces and some other taxpayers still have time to buy a home and take the credit. See Form 5405 and its instructions for details. Standard Mileage Rates for 2010 The standard mileage rate for business use of a car, van, pick-up or panel truck is 50 cents for each mile driven. The rate for the cost of operating a vehicle for medical reasons or as part of a deductible move is 16.5 cents per mile. The rate for using a car to provide services to charitable organizations is set by law and remains at 14 cents a mile. Tax Breaks Extended Several tax breaks that expired at the end of 2009 were renewed and can be claimed on 2010 returns. They include: State and local general sales tax deduction, primarily benefiting people living in areas without state and local income taxes. Claim on Schedule A, Line 5. Higher education tuition and fees deduction benefiting parents and students. Claim on Form 8917. Educator expense deduction for kindergarten through grade 12 educators with out-of-pocket classroom expenses of up to $250, Claim on Form 1040, Line 23 or Form 1040A Line 16. District of Columbia first-time homebuyer credit. Claim on Form 8859

Yes, one of my two so far is a child that I first met when she was still in the infant carrier as I did her mother's return. I've seen her each year since then, as she grew into a lovely young girl. I've encouraged her to attempt excellence in high school, even buying her a special calculator when she decided to take an advanced math class. She has earned a full academic scholarship at Harding, a respected private collage here in AR. Then, at 17, she got pregnant by her nice but loser boyfriend. She had her baby just days before her 18th birthday. And, of course, she is keeping the baby, living at home with her hard-working mother and disabled and dying father, and still hoping to go to college. What a life that child is going to face!

I just fixed that title. As for the question, it's fairly common to see them done that way. It's taxable unless you KNOW that there were non-taxable contributions. But I think Jasdim has it right on the nose, when the trustee is a successor trustee, they often do not have any information other than how much was rolled in. So they play it safe and leave box 2 empty and check the box for 'not determined'.

I've had two so far this year. I feel so sad for these girls, and even more so for their babies. It's terrible, IMHO, that our society today seems to encourage these children to keep and try to raise their babies, since it is the babies who end up with the short side of the stick. As an adopted child myself, I just wish I could advise them that if they really do love their babies, they give them the wonderful gift of an intact family made up of mature and solvent adult parents. OK, I will get off the soapbox now. If you don't agree, please just pass on and don't try to start an argument over this.

Ranger, that Pub does not cite a Code section for one good reason, there is no such section to cite. Here is a good discussion of the subject, which I found very interesting. The author takes the position that the Code does not prohibit it for any property. And since the only reference found was to the "40% rule" and Real Estate is specifically exempted from the "40% rule", that tends to support my position, IMHO. http://tinyurl.com/4ueh5rn Years ago, I searched Tax Court rulings on this subject, and found something indicating that the court had allowed deprciation on real estate bought and sold in the same year, but I don't remember where I found it, and don't have the time to look for it again. I do, however, know that most professional tax software does not calculate it for personal property, but does for real estate, which I presume rests on the same basis as what I found years ago.

It did seem to work, though, everything went smoothly, and all the acks are flowing smoothly, it seems.

We all benefit from that, I agree. No matter how much you know about taxes, there are so many twists and turns in the code that it never hurts to talk it over. We all make mistakes from time to time, just because we get in a hurry or we over-think something or overlook a small detail that changes things.

That is how it should look.

Caller: Can you tell me how much you charge for a tax return? Me: What sort of income do you have? Caller: I just want a general estimate...... Me: I can't give you that unless I know more about what you need. Is all your income from W-2s? Caller: No, I am self-employed. Me: What sort of business? And do you have your records on computer, Quickbooks or such? Caller: Why do you need to know that, I just want a general estimate...... Me: Sorry, I can not help you. Goodbye.

All mine were Acxed today, as well. No problems at all, went as fast as normal.

Jackson Hewitt’s key bank has reportedly cut off most of the money it used for tax refund loans. Regulators ordered Santa Barbara Bank & Trust to stop providing the loan money, which covered about 75 percent of Jackson Hewitt’s financial products program, according to a regulatory filing by Jackson Hewitt reported by Bloomberg. Shares of the company, the No. 2 tax preparer behind H&R Block, dropped $1.34 to $4.50 on Thursday. The Office of the Comptroller of the Currency told Santa Barbara Bank & Trust on Dec. 18 that the lender would not receive regulatory approval to originate the refund anticipation loans in 2010, according to a statement from the bank’s parent, the Pacific Capital Bancorp. A bank spokesman, Tony Rossi, said that “the tax refund loan business is a sort of niche business that falls outside of what would be considered core banking operations.” The bank signed a nonbinding letter of intent with a private equity firm to sell the tax business, the statement said. Tax preparers are locked in a battle for customers, with Jackson Hewitt vowing this month to regain market share from H&R Block. Firms can attract clients with refund anticipation loans, in which customers who need cash immediately can get a short-term loan, typically lasting a few weeks, that is based on the expected amount of their tax refund. Jackson Hewitt, with 6,600 outlets and almost 3 million clients, has been losing customers to H&R Block and Intuit, which makes TurboTax software. It suspended its dividend in March and has hired Goldman Sachs to explore “strategic alternatives,” language that typically means a company may be sold.

Deb, he certainly can claim that mileage, that is just the sort of thing that rule was set up for. It's not much, but it's a proper deduction for such mileage.

It is normal for the trustee institution to notify them, but let's face it, lots of clients either ignore them or think they are junk mail, or for some other reason they don't do what they should do about them. Some institutions automatically distribute the amount that would be required by the amount in that IRA, but not all do this, since some people choose to have it all distributed out of one of their several different accounts. If they have only one account, a simple call or letter to the institution should be all it takes to be sure that it's going to be done. But advise your client clearly that it is their responsibility to be sure that each year they take out at least the RMD. Tell them also that YOU can not do this, only the owner of the IRA can authorize the withdrawal. That lets you out of that trap.

That letter from the institution may not create a legal obligation, but should be good for a 'reasonable cause' argument for a waiver. However, it's the taxpayer's responsibility, when they do not get the 1099R, to follow up and question the lack, so the longer the time between the mistake and the making of the withdrawal, the harder the chance of winning the waiver. However, they do often grant it.

OH YEAH, LIKE THAT IS EVER GOING TO HAPPEN.......!!!!!! I'm afraid the days when the tax code was only changed every few years are long behind us. These days, they change it almost monthly. I'm sure they will make numerous changes, most small but several large, before the end of the year.

Leaving the job, whether by retiring or by getting laid off, may qualify for the exception of the PENALTY but it will still be taxable. As suggested by Lion, read the rules before you tell the client one way or the other.