kcjenkins

It's a pain, for sure. If you don't deposit the cash you collect, you are leaving yourself vulnerable in an audit, but if you do, you can't send it to the bank with someone you trust, who's going there anyway. The ATM after hours has it's own dangers.

From Best of the Web: A Further Deflation In Friday's column we took a critical look at a proposal called KidSave, originally advanced in the 1990s and revived recently by National Journal's Norm Ornstein. In brief, the idea is for the government to give every baby born in America $1,000 in a savings account, to which $500 a year would be added for five years. "At 5 percent annual growth, an individual would have almost $700,000" at age 65, Ornstein claimed. As we noted, the actual figure would be a bit more than $75,000, so that Ornstein was off by an order of magnitude. But we too might have been off by an order of magnitude--which would mean not that Ornstein was right but that he was off by two orders of magnitude. The trouble is that Ornstein doesn't stipulate whether his hypothetical 5% rate of return is real (i.e., adjusted for inflation) or nominal. It makes a huge difference. According to the Bureau of Labor Statistics' inflation calculator, $75,000 in 2013 dollars was worth the equivalent of $7,758.94 in 1948 dollars. Thus if you had been promised in 1948 that 65 years later you'd receive a sum of that magnitude--$7,500 or $8,000--the payout would be roughly 90% less valuable if not adjusted for inflation. Of course the 1948-2013 period included the high-inflation 1970s and early '80s, and there's no way to know what inflation will do to the value of the dollar between now and 2079. And 5% long-term real rates of return are not unheard of--though they've required investment in stocks rather than lower-risk instruments like bonds or money-market accounts. Even so, what looked like a half-baked idea appears to be even rawer than we'd initially thought.

Filing the 6252 is the notification. And I'd go with "Sale of Business Name & Goodwill".

February 18, 2014 By Jim Buttonow and Mark Bowles As part of its efforts to upgrade electronic customer service, the IRS recently gave individual taxpayers online access to their IRS transcripts, which are computer-generated reports that show information on tax filings and IRS account activity. Transcripts can also provide information to help taxpayers resolve many tax notices and issues. Before the IRS provided this online tool, obtaining IRS transcripts was a manual process for taxpayers. They had to call the IRS, mail in a form, or use an online request for mailed transcripts that typically took at least seven days to arrive. Now, taxpayers can set up a personal account with the IRS to view the five types of transcripts right away. With this new tool, more taxpayers will be accessing their tax information online – and many of those taxpayers will be viewing their IRS transcripts for the first time. Because IRS transcripts are not made for easy interpretation, many taxpayers accessing their transcripts will have more questions than answers. Be prepared to help your clients understand the information available to them and translate the sometimes cryptic information contained in IRS transcripts. Here are some common questions your clients will have about IRS transcripts, and how you can answer them. Who can get transcripts online? The IRS Get Transcript tool is available only to individual taxpayers. Business taxpayers can call the IRS at (800) 829-4933, and tax professionals can call the Practitioner Priority Service at (866) 860-4259, option 4, to request IRS transcripts. What are the types of transcripts? There are five types of IRS transcripts, which taxpayers can now access online: 1. An account transcript provides an overview of your account. It shows filings, extensions, withholding, credits and any follow-up transactions on your account, including penalties, assessments, IRS inquiries and other account activity. Basically, if there have been any IRS actions on your account, they will appear on this transcript. 2. A return transcript shows most lines from the original tax return as it was processed. Changes made to the return after it was processed are not reflected, including any amended returns filed. If you need a copy of your tax return for any reason, such as a loan or financial aid application, this is the transcript to use. 3. A record of account transcript is simply a combination of the account and return transcripts. The IRS makes this available because it shows the big picture, from your original return filed to any changes made to the return after processing. 4. A wage and income transcript provides a listing of information statements (Forms W-2, 1099) that show income reported to the IRS under your Social Security number. You can use this transcript to help with your due diligence in filing an extended tax return, verify employment, or keep a personal record of income. 5. A verification of nonfiling letter is a transcript that is automatically produced when the IRS does not have your return on file or has not yet processed your filed return. What years are available for each type of transcript? The IRS generates separate transcripts for each tax year. In the IRS Get Transcript tool, each transcript is available as a separate link, listed by tax year. The following years are available for the five types of IRS transcripts: Account transcripts: Current tax year and three prior tax years. Older account transcripts can appear if there has been activity within the past three years on the account. Return transcripts: Current tax year and three prior tax years. If you don’t see a return transcript available for download, it likely means that no return was filed for that year, or that the IRS has not processed the return. Record of account transcripts: Current tax year and three prior tax years. Wage and income transcripts: Current tax year and nine prior tax years. In mid-May, wage and income transcripts become available for the previous tax year. For example, 2013 wage and income transcripts will be available in May 2014. Verification of nonfiling letter: Current tax year and three prior tax years. Why don’t my tax return transcript and account transcript reflect the return I have filed? Your filed return isn’t reflected on your transcripts yet because the IRS has not finished processing the return. Your return should post to your account transcript in about one week. The return transcript takes longer for the IRS to post to your account. What do the transaction codes mean on my account transcript? Transcript transaction codes represent actions on your IRS account and provide a literal description of the action. For routine filers with no post-filing compliance activity, account transcripts are typically easy to interpret. However, if you have post-filing compliance activity, such as tax notices and correspondence back and forth with the IRS, transcripts can be confusing. The IRS Transaction Codes Pocket Guide offers explanations for transaction codes, but tax practitioners and taxpayers who use the guide can still misinterpret codes and draw the wrong conclusions. Some transaction codes are particularly confusing to taxpayers and tax professionals because the IRS uses them to record many types of actions. The two most common examples are Transaction Codes 971 and 290: For 2009 returns, the IRS used TC 971 to represent changes made to the first-time homebuyer credit. However, because TC 971 is used for miscellaneous transactions, and the IRS explanation for this transaction code was not updated with tax law changes in 2010, the IRS description stated that there was a challenge to the Earned Income Tax Credit. TC 290, “Additional tax assessment,” often appears on transcripts with no additional tax assessment, confusing taxpayers and tax professionals about what is happening on the account. If you find a confusing transaction code, your tax professional should call the Practitioner Priority Service at (866) 860-4259 to find out what’s actually happening on the account. Can my account transcript tell me if I am selected for audit? Every year, the IRS selects millions of returns for examination, but audits only a fraction of those selected. If you see TC 420, “Examination of tax return,” on your account transcript, it doesn’t necessarily mean you’ll be audited. If you’re actually being audited, you'll receive a separate notice from the IRS. Generally, the IRS will initiate an examination within a year after the return is filed. With limited resources, the IRS can’t help all of the taxpayers who contact the agency with questions. To lighten its customer service burden and meet increasing taxpayer demand for online tools, the IRS will continue to develop and enhance online tools for taxpayers. And, as taxpayers have more access to their online IRS information, they will have more questions for their tax professionals. You can help your clients understand the information on their accounts and reaffirm your role as their trusted tax advisor. Jim Buttonow, CPA.CITP, is cofounder of Beyond415. He has more than 26 years of experience in IRS practice and procedure. Reach Jim at [email protected]. Mark Bowles is tax procedures editor at Beyond415 and specializes in tax authorizations and IRS account research. Reach Mark at [email protected].

You have my sympathy. It is especially disheartening when you either lose a good worker or have one get distracted and no longer performing well. It was my least favorite part of the tax business. I found it paid to spend money on better equipment to reduce the need for help, because it's so hard to find good workers.

Sorry. Tom. Just teasing. You know I love you.

But we talked about it a lot on this board back then!!!

From Pub 526 Expenses Paid for Student Living With You You may be able to deduct some expenses of having a student live with you. You can deduct qualifying expenses for a foreign or American student who: 1. Lives in your home under a written agree­ment between you and a qualified organi­zation (defined later) as part of a program of the organization to provide educational opportunities for the student, 2. Is not your relative (defined later) or de­pendent (also defined later), and 3. Is a full­time student in the twelfth or any lower grade at a school in the United States. You can deduct up to $50 a month for each full calendar month the student lives with you. Any month when condi­tions (1) through (3) above are met for 15 or more days counts as a full month. Qualifying expenses. You may be able to de­duct the cost of books, tuition, food, clothing, transportation, medical and dental care, enter­tainment, and other amounts you actually spend for the well­being of the student. Expenses that do not qualify. You cannot deduct depreciation on your home, the fair market value of lodging, and similar items not considered amounts actually spent by you. Nor can you deduct general household expenses, such as taxes, insurance, and repairs. Reimbursed expenses. In most cases, you cannot claim a charitable contribution deduction if you are compensated or reimbursed for any part of the costs of having a student live with you. However, you may be able to claim a charitable contribution deduction for the unreim­bursed portion of your expenses if you are reim­bursed only for an extraordinary or one­time item, such as a hospital bill or vacation trip, you paid in advance at the request of the student's parents or the sponsoring organization. Based on that I'd think you could not take a deduction on Sch A, but should be able to offset some of the 1099 income by any expenses that would have been deductible if not reimbursed. I've never researched it tho, so would like to hear other thoughts on this.

The property was not 'held for sale' by the heirs, they inherited it and promptly sold it.

Yes, sorry we did not address that. If it was 'his' farm, when he died and she inherited his assets, she gets stepped up basis in not only the land but also the livestock and equipment.

Judy is right, but I'd add one qualifier. IF they filed as a "Qualified Joint Venture" for their farm, then she'd be entitled to half of the remaining NOL. An unincorporated business jointly owned by a married couple is generally classified as a partnership for Federal tax purposes. For tax years beginning after December 31, 2006, the Small Business and Work Opportunity Tax Act of 2007 (Public Law 110-28) provides that a “qualified joint venture,” whose only members are a husband and a wife filing a joint return, can elect not to be treated as a partnership for Federal tax purposes. http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Election-for-Husband-and-Wife-Unincorporated-Businesses

TOM, that feature has been in the program for years now! How in the world have you missed it? It's such a wonderful thing that we were all over the moon about it back when they first added it.

I love it, too. Great start you both are giving him, no matter what things he ends up doing in his life. And clearly a good sense of humour too.

A little cynical? That is actually a rather common way to pay for a 'retirement home'. And not all clients want to change preparers in order to cheat on their taxes.

The basis was stepped up at her death, so her basis is not relevant. Sold right away means zero gain or loss. Sch D 'inherited' property.

DO NOT SKIP BECAUSE OF THE FIRST PARAGRAPH, THIS IS GOOD ADVICE FOR MANY MIDDLE-INCOME CLIENTS Take a close look at your retirement account. Do you have Mitt Romney Syndrome? This is an affliction that strikes successful people. They fatten their IRAs and 401(k)s only to discover that compulsory withdrawals, which begin at age 70, hoist them into unexpectedly high tax brackets. While details of the ex-governor’s IRA are not public, it appears that his tax-deferred savings are well into eight-figure territory. When this fact came out in the presidential campaign, a wave of sympathy was felt in tax-planning offices across the country. What a shame that all that money was going to come out at high ordinary income rates. You don’t have to be Romney-rich to confront unpleasantness with your tax rates. In fact, many of the surprises in the code leave the wealthy unscathed while doing a lot of damage to families with incomes between $200,000 and $500,000. There are antidotes. They constitute what Robert S. Keebler, a CPA in Green Bay, Wis., calls “bracket management.” Consider a Keebler client we will call Harry. Harry is a midwestern engineer in his 60s. His retirement assets will, assuming a conservative growth rate, tote to $7.8 million by the time Harry turns 70. At that point he has to start withdrawing the money so the IRS can get a piece of it. The withdrawals would start at $291,000 a year and follow an upward curve, peaking at $642,000. That’s a ticket to high tax brackets, on top of which Harry will have other income, like Social Security payments. Keebler’s solution: prepay some of the tax. Harry will do that with a Roth conversion, turning a portion of pretax 401(k) and IRA money into aftertax Roth money. There’s a tax hit up front, but once savings are Rothified they compound scot-free, with no withdrawal mandate as long as Harry or his wife is alive. Yes, prepaying tax can make you wealthier. So long as you pay the tax bill with cash now outside the account, the maneuver is a clear winner if your tax bracket in retirement is destined to be the same as it is now. Some lucky people can get an even better deal, paying Roth tax at a low rate now and reducing future income that would otherwise be taxed at a higher rate. You might be in this category if you are retired but not yet collecting Social Security. For many people between 55 and 70 a Roth conversion is a wise move–but a tough sell. Tara Thompson Popernik is a wealth planner at AllianceBernstein in New York City. She goes into client meetings armed with stacks of colored charts and Monte Carlo simulations. She might be able to show a couple that converting $1 million of IRAs should ultimately make them $500,000 better off. Still they hesitate. “It’s a hard decision to make and a big check to write,” she says. Bracket management means knowing just how much more income you can take in before you get kicked into a higher bracket. Perhaps you thought there are just two brackets for you–say, 15% for dividends and long-term gains and 35% for everything else. In fact, you may be subject to any of four bracket boosters. First, the health care tax. It adds 3.8 percentage points to your tax rate on investment income. It applies only to the extent this income vaults your AGI above a $250,000 threshold (on a joint return). If you have $240,000 of salaries and $35,000 of dividends and capital gains, then your adjusted gross income is $275,000 and the 3.8% surtax hits the last $25,000 of it. “Investment income” here is what you’re getting off unsheltered assets–say, the dividends on the Chevron shares parked in your taxable brokerage account. The 3.8% tax doesn’t apply to earnings inside a 401(k) or IRA. Nor does it apply to withdrawals from a retirement account. Now look at some interesting tax interactions. A withdrawal from a Roth doesn’t even affect the health tax, since Roth withdrawals aren’t considered income. But a withdrawal from a pretax account (or a conversion) does go into AGI. In other words, mandatory withdrawals from an IRA loft otherwise unaffected dividends into place to be swatted by the tax. This is why it might make sense for you to swallow a large tax bite today in order to get your taxable income down in retirement. Today you do a Roth conversion (creating taxable income) and suffer the 3.8% damage on a single year’s worth of dividends. That may spare you, down the road, from 20 years of surtaxes on your dividends. The other three bracket add-ons are hidden in statutory verbiage that disguises their effect. Nicknames will make it easier to follow the tax code’s twisting trails. The first we’ll call Clawback. This bracket booster, added a year ago, has the IRS clawing away a portion of itemized deductions. That’s how the law is written. Yet for most people the amount of their deductions is irrelevant to the calculation. Clawback turns out to be just a roundabout way to jack up tax brackets by roughly a percentage point. It affects joint returns with incomes above $305,000. Next is Kidnap. Exemptions for you, your spouse and your kids get gradually erased in a certain income range. The effect is to boost the marginal tax rate for a family of four by four points, but only if their income is between $305,000 and $428,000. This affects the Roth strategy for families with incomes just below the Kidnap range. They should probably convert only thin slices of their 401(k)s until the kids are out of college and can no longer be snatched. Last on our list is Grannyheist. Medicare premiums go up with income. In effect, the tax bracket for a retired couple in the $170,000-to-$428,000 income range is kicked up (with a two-year lag) by two percentage points. Defense: If you are 62 convert now, not when you’re 65. Clawback, Kidnap and Grannyheist turn a graph of tax rates into a psychedelic up-and-down zigzag. The result is both opportunities and pitfalls. Should you take stock profits this year and losses next? Or the reverse? It all depends on when you do your Roth and where you land on that zigzag. Spend some time with your accountant before doing anything to your portfolio. Five things to contemplate as you design an exit route for your 401(k): Charity. You can reduce the tax bill in the year of conversion by being philanthropic. Compress several years of giving into one tax deduction with a “donor advised fund,” one of those charitable prepayment plans offered by affiliates of investment firms, including Fidelity, Schwab and Vanguard. Geography. No sense Rothifying just before you move to a low-tax state. Alternative minimum tax. If you’re affected, the odds that you should be doing some Rothifying go up. AMT victims tend to have incomes in the $200,000-to-$500,000 range and live in high-tax states. Your legacy. Unrothified retirement accounts make for mangled bequests, since heirs will owe both estate and income tax on the money. A law permits heirs to deduct the former in calculating the latter. But this provision goes only halfway to protecting your family from double taxation, says Keebler. That’s because the deduction is for a dollar amount rather than a percentage of the account and because it doesn’t help with state inheritance taxes. So Rothifying should be part of any estate plan. Congressional whim. Should you worry that you’ll pay tax going into a Roth now only to lose the tax exemption on the way out? Probably not. Legislators have recently made Roth conversions easier for 401(k) money. Clearly they are desperate for immediate revenue, and the conversion tax spigot would dry up with the least hint of plans to double-cross taxpayers. A bigger political risk, Popernik says, is rising tax rates. That risk makes the case for Rothifying all the more compelling.

I always change the input boxes, but like the zoom idea as a double warning. As for those people who want to hand me each piece, I just say, in a firm tone, "give them all to me, please, unless you want your fee to double." Works every time!!!

Margaret, Jack was referring to the ATX tech people offering the BS to users, not you of any of us.

http://www.ssa.gov/kc/SSAFactSheet--IssuingSSNs.pdf

That is a GREAT tip, Jack. Thanks for sharing that. I have two 'sticky' keys on my laptop, and I have been trying to figure out how to fix that. Will try that as soon as I get a can of Duster.

Worst 'kid event' happened to me years ago, when I was adding up a long list of receipts and a kid crawled under my desk and unplugged my computer! Grrrrrrrrrrrrr !!! Many client's kids were welcome, but there were a few clients who were not welcome to bring their kids, because they did not even try to restrain their totally out-of-control kids. And a few who got double-charged because of their kids.

share it with us?

http://www.amazon.com/s/ref=nb_sb_ss_c_0_12?url=search-alias%3Dlawngarden&field-keywords=flamethrower&sprefix=flamethrower%2Cgarden%2C368

Not true, the one who has the child living with them gets the dependant, but it will take time for that to be settled.

Start getting together all the documents you can to support that the kids actually live with him, school records, doctor's records, etc, since the IRS has usually demonstrated an anti-father bias. And advise the client he will just have to wait for the wheels to grind. There is nothing you can directly do. Although he could file a motion with the court that issued the divorce decree, since she has violated that court order, unless she has resources to go after there's not much point.