Slappy Tax

This is a "for what it's worth" response so it might not help alot. Still, I'll give it a try. If the return is a RAL return, then you have a problem until the EIC schedule and 8880 form are finalized. But it might not be as big a problem as you think. Please read on. The first weekend of every efiling season, the IRS intentionally slows the efiling pipeline down to QA things before opening the floodgates. This means that the first time you should expect the IRS to issue ACKs will be very late Sunday or more likely on Monday. The RAL bank won't approve a loan before it receives the IRS ACK. This means that even under perfect circumstances (i.e., no problems with the return or the efiling pipeline) the first time you should expect to print a RAL check would be Monday or possibly Tuesday. So, if the EIC and 8880 become finalized on 1/14 as projected, you can efile the return then and presumably have the RAL check approved for printing on Tuesday. So it's not really a 3 or 4 delay, more like a 1 or no day delay. If the return is not a RAL return, then the problem is essentially nonexistent. This is because the cutoff for the first efiling cycle is the morning of Thursday, 1/17. So long as the return is successfully efiled and acknowledged by the IRS on or before midday on 1/17, the return will fall into the first direct-deposit cycle (scheduled for 1/25). So, in summary, if it's a RAL return, you have a slight inconvenience. If it's anything other than a RAL return, there should be no delay with the refund whatsoever. I hope this helps.

http://www.irs.gov/taxpros/article/0,,id=174796,00.html

That brings up another question. I swear I used to know the answer to this, but sitting here, I'm just not sure. Will the FMS hotline let you know whether your refund will be offset for unpaid income taxes, or is it just for nontax liabilities (child support, delinquent student loans, etc.)? In other words, if the daughter phoned FMS, would the system let her know that her refund would be subject to offset for those unpaid taxes? Thanks, and I really did used to know this.

I can't say for sure that Kansas offers the registry and FEIN info online, but here's how it works in Florida. You go to the State of Florida Division of Corporation's website (www.sunbiz.org). You then search on the name of the company. If the company has been in business for more than a year, the online data that pops up will show the FEIN. Here's an example which I picked purely at random: http://www.sunbiz.org/scripts/cordet.exe?a...es_filing_type= It shows this LLC's FEIN along with the rest of the company's publicly available information. You'll need to find the equivalent official website for Kansas. It will probably be easy to find. If not, try going through taxsites.com. Good luck

I've had this come up and have actually called the IRS for guidance. I know that what the IRS reps tell you by phone isn't citable, binding, or even necessarily correct, but for better or worse, this is the way it was explained to me. If the funds used to pay a mortgage come from a joint account and both taxpayers have contributed to that account, as far as the IRS is concerned the taxpayers can allocate the mortgage interest deduction however they wish, including for either one of them to take the entire deduction. The IRS rep said that the IRS will not endeavor to segregate the payments and allocate the deduction between the two joint account holders. If this gets anyone in trouble, just cite Slappy Tax Post 20080102, ATX Forum (2008). I think there might be some precedents among Judge Judy's cases also.

I typically see 2 or 3 of these every year. This is the scenario: A new client calls and wants to know if I'll efile his return that someone else has prepared. I say, sure, I'll perform as ERO and use the Other Paid Preparer procedures (which basically means someone else prepared and signed the return for a fee, and I'm simply transcribing it and efiling it). The client shows up with a prepared return. Sometimes the return has been signed and the paid-preparer's information is on the 1040, and sometimes it's marked as self-prepared. I'll review the return, and the Schedule A numbers (usually including 2106 expenses) will jump off the page at me. I've seen people who work as custodians (janitors and housekeepers) with $18,000 in unreimbursed employee business expenses, not to mention $10,000 in cash charitable contributions. I'll ask the client about those numbers, and the response is always, what expenses and what contributions? I'll show them the Schedule A and ask if they provided those inputs to the person who prepared their returns. They're always genuinely dumbfounded (or very good actors). They have no idea where those numbers came from or what they mean. They focus only on the refund, and how the refund got so high is of no concern to them. Until I explain to them why those numbers most certainly are a concern to them. That's always the point at which they go their way, and I go mine. I never see 2 from the same preparer because the word gets out in a flash--don't go to this guy--he asks way too many questions. The point of this saga is that crooked preparers seem to think they're all geniuses by stashing fake deductions on a Schedule A, especially in the Job Expenses and Certain Miscellaneous Deductions section. I guess in their feeble minds, they figure that the IRS will have no independent corroboration of those figures so it's safe to lie there. This is one of the "techniques" that the JH franchisee (Sohail) was shut down for, but he had plenty of others too. Good for you, Eli, for ridding the profession of one louse.

Mike, I really wish you were right, but you're wrong. This exact same discussion but with different participants comes up every year this time. In fact, it always comes up several times each year. Wait about a week, and we'll go through it all over again, guaranteed. Anyway, you're correct that the 1099 instructions advise to use the official forms (obtainable for free from the IRS), or substitute forms that meet the specifications of Pub 1179. But, Paragraph 2.1.4 on page 10 of Pub 1179 mandates, "All print on Copy A of Forms 1098, 1099, 5498, and the print on Form 1096 above the statement, “Return this entire page to the Internal Revenue Service. Photocopies are not acceptable.” must be in Flint J–6983 red OCR dropout ink or an exact match." And there's the rub. Out of curiosity, I checked NP Systems Software's website, and you have to read between the lines (i.e., read what they left out of the software description, not what they put in), and it confirms this. It specifies that the software produces fileable W3s/W2s, but makes no such claim for 1096s/1099s. So we're right back where we started, which is right back where we are every year on this subject: red forms for 1096s/1099s for the IRS, or efile them. As I say, I really wish you were correct. It would spare us all this yearly nuisance, but, shucks, it just ain't so. If you're still not convinced, call IRS Enterprise Computing Center - Martinsburg toll-free at (866) 455-7438 between 8:30 a.m. and 4:30 p.m. Eastern Standard Time. If I've got it wrong, I and alot of other people would love to find out. Good luck to you, too.

I can't answer your Max questions specifically, but here are some links that will help: For W2s/W3s: http://www.socialsecurity.gov/employer/cpaFilers.htm http://www.socialsecurity.gov/employer/CPAsleaflet.pdf For 1099s/1096s: See IRS Form 4419. Since the SSA accepts plain-paper submissions of W2s/W3s, I have always just mailed those in. It's the silly red-forms for 1099s & 1096s that have driven me to efiling those. I'm just getting my feet wet in those. I'm sure others on here who have actually used the software and done it in the past can be more help. Something I learned in researching these procedures is that by efiling the 1099s/1096s, the deadline for efiling them with the IRS is the end of March instead of the end of February for paper filing. You still have to provide the 1099s to the recipients by the end of January, but that extra month for getting them to the IRS might come in handy. Maybe, maybe not, but it will be nice to have that extra month in my back pocket just in case.

Other responses have said pretty much the same thing--just stick with the 1040 and don't bother with the 1040A. That's not a bad technique, but the software I use takes the inputs and produces the simplest form allowed, 1040-EZ, 1040A, or 1040, unless I force it to default to the 1040. I'm like you, I don't charge extra for a 1040 over a 1040A if they both require the same preparation time. I just have always let the software do its thing. I might rethink that though, especially when it comes to 1040-EZs. They're more difficult to explain to a client when it comes to explaining the combination of the standard deduction and the personal exemptions. I'm still not sure why the 1040A Schedule 2 would be hindered by the AMT patch, whereas the 1040/2441 combination wouldn't.

I just find it curious that the 1040A with childcare credit is affected by the AMT patch, and the 1040 with childcare credit containing the same information isn't affected. I'm curious about it but not curious enough to go digging through resources to figure it out. Come to think of it, I'm not really that curious about it afterall. I guess kind of micro-curious.

So, if you have a client with daycare credit who would normally file a 1040A, you can get around the AMT delay by forcing the software produce a 1040 and 2441, right?

The IRS still requires the red forms for its copies of the 1099 and 1096. I've already ordered and received my stockpile from the IRS. This red-form issue so frustrating every year that I finally decided to consider paying for the 1099 software to allow me to efile the 1099s and 1096s. I've shopped around and found that these programs typically cost $200 for the first year, with a $100 annual renewal fee thereafter. It really irks me to have to pay that when the Soc Sec system allows the same thing for free for W2s/W3s. Plus the Soc Sec system allows submission of plain-paper W2s and W3s if you elect to file by mail. Anyway, I faxed off the Form 4419 to the IRS to register for efiling 1099s, and the next day (yesterday), an IRS rep from that office actually phoned me to acknowledge the fax. We got to talking, and I began complaining about the IRS red-forms requirement vs the Soc Sec's acceptance of plain-paper forms, plus the requirement that we purchase software to efile 1099s. The lady was gracious and even sympathetic, but I definitely got the idea that she listens to these same complaints all day every day, and that the IRS doesn't plan to do anything about it. I just don't understand why the Soc Sec Admin can be so levelheaded about something so simple, and why the IRS can be so stubborn about the silliest things.

Absent the landlord's cooperation on a W-9, I guess we'll never know, will we? But as I pointed out, such speculation is irrelevant to the solutions I proposed.

For me anyway, it's rather tortured leap of imagination to go from the scenario in the original post to "a landlord who obviously hides income from the IRS." All the landlord did is to balk at what he believed to be an unnecessary procedure, and we're ready to convict him of tax fraud. I know how folks love to cite the Internal Revenue Code, so here it is: Section 6041: (a) Payments of $600 or more All persons engaged in a trade or business and making payment in the course of such trade or business to another person, of rent... In the original post, the rent payments are to be made to an LLC, not a person. The lessee doesn't know whether the LLC is a disregarded entity and so should require a 1099. The vehicle for determining this is the new W-9 which allows the responder to specify the type of LLC. Unless it's an LLC being taxed as an individual, no 1099 would be required. (My guess is that a landlord in the business of renting for years is likely not a disregarded LLC and has elected S-Corp status for the LLC, but my speculation is irrelevant.) Here are the options that I see: (1) Pay the lease as agreed, forget about the 1099, and butt out of other people's taxes. (2) Mail the landlord a W-9 to provide him with the opportunity at least to indicate whether the LLC is a disregarded entity and hence should receive a 1099 from the lessee. The landlord will likely ignore the W-9, but the lessee then has a record of having tried. (3) Obtain the FEIN from the state's registry of corporations/LLCs/etc, and issue a 1099. Just don't expect to get any maintenance work done on your office. (4) Break the lease and move. Of course, a landlord's failure to provide a W-9 is not grounds to sever a lease, so you'll have to pay the penalties for breaking the lease. [Hint: The correct answer is Option (1).]

Thanks for the tips. I know I need to do something about this, but I never seem to get around to it. As I say, I have run some crude calculations and concluded that I'd be about in the same spot if I paid monthly fees and per transaction charges. I obviously need to do more research and rethink this. I don't have a card scanner--I just enter everything though the authorize.net website. I think entering transactions via computer also increases the percentage I pay since I believe that transactions via a card scanner are charged a lower rate. I'm going to move this project up on my priority list, but I've said that before. Thanks again for the recommendations.

The instructions for 1099-MISC specify to issue a 1099-MISC for each person to whom you have paid at least $600 in rents. So long as the rent payments are being made to a company, I don't see the requirement to issue a 1099-MISC for office space rent. On a slightly different but related note, the new W-9 (Rev Oct 2007) includes LLC and has a spot for the LLC to indicate its tax classification. This means the landlord could show his LLC tax classification as a corporation and eliminate the need for a 1099. Given the landlord's initial response, I doubt he would go for that. Another option would be to check the LLC's status on your state's online registry of companies. Here in Florida, each company is listed along with its FEIN, address, etc.

Here's a lively little link on Taxalmanac on this topic. http://www.taxalmanac.org/index.php/Discus...2%28d%29%281%29 It seems that black-and-white ain't so black-and-white after all once the IRS muddles around with it. Or is it, can somebody tell me? At least with pornography, like the Supreme Court justice said, I can't define it but I know it when I see it. When it comes to a taxpayer, not only can no one seem to define it--I'm no longer sure I know one when I see one.

I accept credit-cards and have for 5 years or so. It's definitely a 2-edged sword, however, having lots of pro's and at least one big con. First, I've found that most clients these days just assume every business can take credit-cards. More and more don't ask--they just pull out the credit-card or debit card. Like it or not, most people just don't write checks anymore--their debit-cards have replaced their checkbooks. This saves me from having to process checks, go to the bank to make deposits, and deal with the occasional bad check. BUT, it also means that I have to cough up a percentage of my fee (in my case, it's 3.75%) for those conveniences. It allows me to accept payments by phone from clients I haven't seen in years whose returns we do by mail, fax, and email. Overall, I'd say accepting credit and debit cards has become a necessary evil in today's business world. It helps me, but it does come with that price tag. I've heard of others whose merchant fees are less than 3.75%, but those types of accounts seem always to come with monthly fees and per transaction fees. I've run some numbers cursorily and concluded that, in my case at least, it's six of one, half dozen of the other, whether I should opt for a lower percentage rate with monthly fees and per transaction fees, or just keep paying the 3.75% of the charge.

Hi, Eli. I remember you too from the old original ATX Board. You always were the nicest guy there. Never a cheap shot, never a chip on your shoulder, never any pedantry for the sake of being pedantic. Just always a class act. I assumed the Schedule A, especially any 2106 expenses, would be the culprits in that client's 2005 return. I notice the former preparer wasn't even subtle about it: claiming both mileage and vehicle "repairment." Then, on top of that, the software miscalculated the refund. So not only does the client owe $421 due to the software miscomputation, he'll also owe an additional $1,133 if the IRS keys on his miscellaneous deductions and disallows them. It seems Form 2106 is a favorite place for shoddy preparers to try to stash concocted writeoffs, and of course that makes it a favorite place for the IRS to look for them. Good luck with this one and all the ones yet to come, Eli!

I played with several scenarios using ProSeries, and I couldn't duplicate the Taxwise results either. And I couldn't even find an EIC of $1,158 in the TY05 EIC table. On another note, these clients seem to have serious money management problems, at least according to their 2005 tax return figures. A family of 4 with $34,122 in W2 income really shouldn't have allowed FITW of $5,375 to be deducted from the breadwinner's check to begin with. Secondly, what is a household of 4 with $34,122 in income doing with $23,751 in Schedule A deductions? Either the previous preparer cooked the Schedule A, or these folks need some serious financial counseling. What are they living off of? I realize these points are totally irrelevant to the tax return figures you reviewed for them, but the numbers just jump off the page. Maybe they are especially frugal or independently wealthy or have an inheritance or something. I'm not being facetious here--I'm just trying to figure out how they get by. There seems to be a piece missing from the 2005 puzzle. Plus now it appears they're going to have to repay $421 for TY05.

Pub 527, pg 3: "Repairs: A repair keeps your property in good operating condition. It does not materially add to the value of your property or substantially prolong its life. Repainting your property inside or out, fixing gutters or floors, fixing leaks, plastering, and replacing broken windows are examples of repairs." [The same page shows a table with examples of improvements.]