Eli

Sorry, Jack ! I just saw the last part of your response. Thanks so much!

Eli

Thanks Jack, but do I just leave the amount off of the tax return completely? Or is the 982 supposed to show that the transaction is non-taxable & zero out the tax?

Client received a 1099-C for a foreclosed home. The amount of the cancelled debt is $33217. I am using form 982 & checked off the box in Line 1E & put the amount of the debt in Line 2. Should this change the amount of tax owed? Without including the cancelled debt the taxpayers would receive a $2800+ refund. If I include the cancelled debt they owe $2700+ in additional tax. I have included the 982 & it still shows tax due of $2700+

Am I missing something somewhere?

Thanks!

Eli

Client received a 1099-C for a foreclosed home. The amount of the cancelled debt is $33217. I am using form 982 & checked off the box in Line 1E & put the amount of the debt in Line 2. Should this change the amount of tax owed? Without including the cancelled debt the taxpayers would receive a $2800+ refund. If I include the cancelled debt they owe $2700+ in additional tax. I have included the 982 & it still shows tax due of $2700+

Am I missing something somewhere?

Thanks!

Eli

If this is a systemic problem for all FTHB with repayments, you might be able to get the Taxpayer Advocates office to look into it. Systemic problems are supposed to be part of their mandate.

Not sure how widespread it is.

Eli

Ah, if the house was bought jointly, you have to do two. One for each spouse at $250 each. That's so if they divorce, the payback can be traced to each SSN.

Is that something new? I didn't do that in the previous 2 years.

Thanks!

Eli

The IRS tool for checking this is for each spouse. I noticed the software printed 2 5405s. One joint with the $500, and then one for the spouse, but just a blank form. Is IRS adding another 250 for a spouse to the 500 on the joint 5405?

Only 1 form was printed on these particular returns.

Eli

The catch is that you should not fill out the Form 5405. If you submit the Form 5405, the IRS assumes you sold the house. There is a worksheet to complete for all those who have not sold their house.

But Part II on the 5405 is having to do with the repayment of the credit. Nothing in Part I or Part III is filled in.

Eli

Good luck Eli, I had the same problem last year with a client, it's an IRS mistake and they want for you to write a letter explaining it's the IRS mistake etc...... PM if you wish I have a sample letter already.

Marco

Thanks, Marco! I Appreciate this gesture & I will definitely do that.

Eli

I tried again early this morning & was disconnected due to the high volume of calls I guess I'll have to be persistent.

Eli

Eli, Although I haven't heard from my client whether or not he received a letter explaining why his refund was for $250 less also, I figured it had something to do with the loan repayment for the "loan" received for the homebuyers that year.

My client's return also included the $500 repayment for 2012! Please let us know what you find out and I will also get on my client's situation the first thing in the morning and will post what I'm told as well! The taxpayers who must pay the "loan" back have been treated like "red headed stepchildren"! The first payback year, all of their refunds were delayed as IRS had not set up their systems to receive the payments...now this!

Thanks!!!

Cathy

Cathy I waited on hold for 2 1/2 hours & finally gave up. I am going to try again early in the morning. Hopefully the wait wont be as long. I will definitely post the result.

Eli

I think the only thing you can do is keep on trying to get to a level where someone who understands is able to help you clear this up. The first level workers basically just answer the phones and give automated responses off a computer screen.

Anyone else getting these yet?

Thanks, KC! 1 hr & 45 mins & counting. I'm hoping they will answer tonight lol

A few days ago a client called me to tell me their refund was about $250 less than what I had told them it would be. They received a letter (544C) from the IRS telling them that the difference was due to the repayment of the FTHB. I went over the return & found that the $500 repayment was already included & calculated properly.

I called the IRS & the lady I spoke to said that the $250 was additional tax due to the $500 payment. That sure didn't make sense to me. I went over the return line by line with her & she still said that their computers were adding the additional $250 tax.

Well I couldn't get a good answer from her & I asked to speak to someone who could explain it. She transferred me to the Tax Law Dept, but we got disconnected. I didn't call back due to having a client waiting.

Today I get a call from another client who stated that he & his wife received $250 less on their refund than what I had told them. They also had the FTHB credit repayment form & the $500 was showing & calculated on their return.

Anyone else have this happen?

Eli

They can call me or email me at:

Steven LaForest

LaForest Tax Service

313.274.5096

[email protected]

Thank you! I will forward your info to them.

Eli

Have a client who got married last year & moved with her husband to Canton, Michigan. They are looking for a preparer to take care of their tax return.

Any preparers out there??

Eli

Here is a direct link to the manual update of .Net Framework 4.5

http://www.microsoft...s.aspx?id=30653

Thank you, KC

Eli

I installed 4.5 last evening and there is a considerable difference in speed. "I'm luvin it"

I don't see where the option to install 4.5 is at. Where do I look? I updated today & it still says Net Framework 4.

Thanks!

Eli

I did this morning and it seems to be working faster.

On a stand alone system?

Awesome news, KC!! Will keep you in my prayers

Initially there were some problems with what was being sent in the efiles as well, but I know other companies, like Intuit (who actually kept their customers much better informed and updated) and Drake have issues as well. It boiled down to the residency questions 26 - both parts and 27.

That's on page 4, right?

Eli

It wasn't just an ATX issue. It was Intuit who posted the above update. It seems like there was miscommunication between the software companies & the IRS as to what pages of the 8867 should have been sent. It seems like the IRS was not receiving page 4 of the 8867 & they deemed the form incomplete. These were for returns filed between January 30-February 7.

Eli

This is the latest update from another Tax software company to their clients:

Update - February 21, 2013, 6:00 PM CST:

Hi everyone,

I know that the last few days have been very challenging, to say the least, and I apologize for the stress and anxiety that this issue is causing you.

I want you to know that we at Intuit are doing everything possible to partner closely with the IRS and ensure that your clients get timely refunds, on those returns filed from January 30 – February 7th that have lines 22 and/or 23 unanswered on Form 8867. You have been clear on how important this is to you and your customers, and it is our highest priority.

Just minutes ago, we received approval to share updates on a few of your key questions. The IRS is also working on posting similar updates on their Website shortly. I hope that this information helps to alleviate some confusion.

When will refunds be issued? We’ve been advised that the IRS is making great progress processing returns with the Form 8867 this week, and the majority of affected returns have already cleared the Error Resolution stage.
According to the IRS: “Assuming there are no other issues with the return, once the return clears Error Resolution refunds should be issued within 1 to 2 weeks assuming they utilized direct deposit and there are no other processing conditions related to their return that may require further review.”

What should taxpayers who received a notice about Form 8867 do? IRS: “Taxpayers should not discard the letter. They should respond and provide the information being requested. The tax professional should retain a copy of the response for their files.”

When should taxpayers who received a notice about Form 8867 expect to receive their refund?
IRS: “Although we still need the taxpayer to respond to the letter, we are processing these returns prior to receiving the taxpayer’s reply and are issuing refunds. Taxpayers should expect their refunds within 1 - 2 weeks assuming they utilized direct deposit and there are no other processing conditions related to their return that may require further review.”
We continue to work with the IRS senior leadership and are communicating with them daily to share the challenges you’re facing, determining solutions, and finding answers to your most pressing questions. We know the IRS takes this seriously as well, and is working hard to complete their processing of the affected returns.

I know your reputations mean everything to you, and I know that you look to us, and our products, to help you. Please continue talking with us and to each other on our community site and through our support channels. Many of you have told us that you appreciate the scheduled updates. We’ll continue to do that, with the next one slated for tomorrow at 12:00 p.m. ET.

Sincerely,

Jill Ward

GM, Accounting Professionals Division

Actually I live in Texas & we have no state return so I like that even better

Thank you both for your input

Eli

For Pennsylvania preparers:

This is the first time I prepare a PA State return. The taxpayer only works there. His home is maintained in Texas. Is there anything out of the ordinary to look out for on the return?

Thanks!

Eli

Thanks, Jani! Well I checked & sure enough it is efiled even though its not needed. I efiled a return for a client & her return has been delayed due to the Form 8867 fiasco. She called the IRS & they told her it was due to the 6251 being in the return. I'm just curious if anyone else has had this issue.

Thanks!

Eli