Cathy

The above post is a good example of why we keep jainen around. The glass will always be half full rather than half empty as long as jainen is hanging with us. My comment above has got to be worth at least 2 brownie points! So please remember those points, jainen, when I post an idiotic answer to another's question. Thanx!

jj, Im so sorry to learn about your wifes illness. You both will be in my thoughts and prayers. My brother began his career with Social Security as a Disability Benefit Claims Determination Agent and had to retire on disability himself when he was diagnosed with MSA. At the time of his retirement, he was a Social Security Judge. My brother, John, always reminded me of what I needed to relay to my clients and/or friends who had filed for Social Security Disability benefits. John told me to tell them to NEVER EVER give up on their disability claim. If they were denied, take the next step. If denied again, then take the next step until the bitter end. He said unless the claimant was: 1. blind, 2. on kidney dialysis, or 3. had been diagnosed with a terminal illness with death expected within a certain time frame, then more than likely the initial claim would be denied. He also said it was easier to be awarded benefits if the claimant was 55 year old or older for some reason. I asked John WHY does the Soc. Sec. Administration put people through the hassle and struggle when they are usually approved if they take it to the bitter end. He replied that it is due to the rules and regulations they must follow. For instance, in reviewing a doctors record for a claimant......if the doctor made a notation in his file when the patient came for a visit something to the effect: "patient looked better today and said he/she is feeling better". Social Security has no way of knowing what the doctor really meant is: "The patient doesnt look like he/she will die tomorrow like he/she did last month but although the patient still looks horrible he/she looks better than last month". They must go on the doctors exact words. "The patient looks better and feels better".......then the patient must be on the way to recovery and is not suitable as a disability recipient......thus claim denied. Also, when a claimant gets to the point of hiring an attorney and the attorney doesn't file an appeal within the time frame allowed, the claimant still shouldn't give up. I recently had one of my clients in that situation. The attorney just dropped his case because he didn't think his client would win. I suggested he go to another attorney to see if there was any way that the appeal could be continued because it was not the fault of the claimant, but his attorney who missed the appeal deadline. Evidently it can be done, as my client came this year with huge 1099-SA's with back pay for 5 or 6 years. Also, don't worry about that guy in the first post of this thread.........He's about to find himself what "reversed back pay" means........he's going to be paying back Social Security! Take care, Cathy

Very wise secretary! Before I would even begin their return, I'd tell them straight that you researched the real estate law (to protect them), and coupled with the fact that you learned it's illegal for her husband to sell without a license, IRS could fine you and possibly lose your professional license if you show her profit under her husband's name to lower their overall self employment taxes. You just might be able to make honest people out of them. Doubt it, but maybe!

To compliment the email solution, there's a program out there that tracks the email and can give the sender the date the email was opened by the receiver. Good to have in case the receiver says he/she never got the email!

Rich, No wonder the client is behind on his tax returns. He knows he earned too much, other than for the first 9 months. See the link below. After the first 9 months, there is a limit on how much one can earn for those next three years: $1,010 a month!!! I bet he hasn't filed his 2011 or 2012 return yet, huh? Sounds like he hasn't reported to Social Security that he's working! IRS is probably hounding the guy for his 2010 return. http://ssa-custhelp.ssa.gov/app/answers/detail/a_id/317/~/working-and-receiving-social-security-disability-benefits

Has a succession or probate been opened? If so, who is the executor or administrator....and is the person an "independent executor" or simply "executor". Unless the wife is the independent executor, you might want to tell the wife to bring check to the attorney for the estate along with instructions from IRS. And as I probably am suffering from sleep deprivation, you might want to ignore my post all together. And forget what I said about "independent executor"....that might just be a Louisiana law, rather than applicable to all of the states. If you do tell the wife to bring the check to the attorney for the estate, have her stress the need for him/her to take care of asap as penalties and interest are steadily increasing!

Thanks!!! I forgot about the "thin mints" I hid from myself in my freezer......I'll be back in a few minutes! :)

Just reviewed another return prepared by our local office of HR Block. I have come to the point of wanting to pull my hair out over gross errors on every return I review from our local office such as: l. One parent is disabled and she and two minor children receive social security checks. The amounts paid under the children's social security numbers were included on the parents' return. Taxpayers paid taxes based on 85% of the social security, including the amounts paid under the children's social security numbers which made the parents pay mega bucks unnecessarily. 2. The amount reported on a mortgage loan interest statement was included on a taxpayer's tax return as interest earned on Sch B rather than home loan interest paid on Sch A. The taxpayer went straight to HR and told them they needed to amend her return. They did as she requested and promptly handed her a bill for $90. They also handed her a stack of loose papers and told her she'd have to go through it to figure out which pages she needed to send to IRS. (Needless to say, the taxpayer refused to pay the $90 for the amended return.) 3. On Sch A, "mortgage insurance premiums" (PMI) had the total a taxpayer paid for her homeowner's insurance. 4. Form 2106 for a school bus owner/operator reported the mileage and HR used the standard mileage rate. The Standard Mileage Rate can not be used on a School Bus. Also included on the 2106 were thousands of dollars in repairs and maintenance, fuel, plus insurance paid on the school bus. Even IF the standard mileage rate could be used, certainly no repairs, maintenance, insurance, fuel, etc. Form 4136 also included with return which gave the taxpayer a $.238 per gallon credit for the number of gallons of diesel she used in her school bus. That would be a valid credit WITHOUT THE STANDARD MILEAGE RATE. The resulting credit would have to be subtracted from the fuel costs when computing actual expenses. So: standard mileage rate, 100 % of the fuel and fuel tax credit all used on the same return. 5. On the same Form 2106, "out of town travel" was listed at over $2,000. I traced those figures the taxpayers' gave to HR, and the cell phone which is a legitimate expense was used on that particular line, IN ADDITION to the cell phone, 100% of the taxpayers' home telephone charges for the entire year were expensed....taxpayers only have 1 home telephone line. 6. Home interest listed on Sch. A, Line 11 was the total of their JC Penney charge card, Dillard's charge card, and Sears' charge card. On a statement attached to the return, HR employee listed: "home interest paid to individual as follows: J.C. Penney" and the address on the J.C. Penney charge card was listed as well as the address. "ID number not available" also appeared on that statement. 7. An elderly client had royalty income, however, the 15% depletion allowance was omitted from Sch E which in turn inflated the taxable royalty income, which in turn also inflated the taxable social security. I sent the client back to HR to have them correct their error. The HR employee told my client that I was wrong. I called the employee back and in "teaching" her about the depletion on royalty payments, she responded that her program doesn't do the depletion computation, therefore, she wasn't going to change the return. I could go on and on and on listing the most blatant errors I am now sadly accustomed to seeing on each and every return brought in from our local office. The most pitiful thing in regard to all of this from HR's "employee" just happens to be the "Manager" of our local office. These kind of errors(?) have been going on for years now! I'm at the point of having to let someone know what's going on as their clients are slowly finding out the qualify (or lack of quality) of their returns prepared by our local HR office and are coming to me to amend their returns. I try to send each one back and have HR correct their own issues, but many say they rather pay me to do it for them. I would rather dig ditches first than to amend a return prepared by HR.

Another thing to consider....if student didn't earn over her personal exemption amount of $3,800 and parents paid more than 1/2 of her support, she qualifies as a dependent of the parents regardless of whether she attended school or not.

Hmmmmmmm......Just found the following on page 1 of the instructions for form 8863....might want to check out further.... Who Can Claim an Education Credit You may be able to claim an education credit if you, your spouse, or a dependent you claim on your tax return was a student enrolled at or attending an eligible educational institution. The credits are based on the amount of adjusted qualified education expenses paid for the student in 2012 for academic periods beginning in 2012 or beginning in the first 3 months of 2013. Brain too fuzzy at the moment....just consider it a "lead" and not an opinion.

JB, It sounds like she definitely is suffering from spousal abuse (mental abuse which sometimes is the worst kind). It's almost impossible not to care and be concerned especially when you see with your own eyes the abusive situation that exists even with a tax return. I positively agree with others that she is in need of counseling....desperately needs counseling as a matter of fact. I know you wish there was more you could do, JB, but no one knows what keeps abused spouses from getting out of a horrible situation. I don't see anything other than strongly suggesting she gets counseling. There are many "free" or "sliding scale" counselors available in some communities for people of little means. Again, strongly suggest that she seeks counseling as counselors are trained on how to get through to abused spouses (if it's possible at all with a particular individual). Counseling might not give her the courage and self esteem that she needs to change her life for the better, but it's her best chance at the moment! If she lives in a community property state, you have a completely different situation and steps that could be taken to rectify the problem. If memory serves me correctly, the state you (and she) live in isn't a community property state. Too bad.......... Take care, Cathy

P.S. After re-reading the first post again, I wouldn't touch the return with a ten foot pole....especially since the husband has "losses" that added to the profit from the real estate sales would reduce his social security taxes. Nope! Definitely a client for "Liberty" or "HR". Also, from the first post: "Not sure why he doesn't have his license." My guess is because he doesn't sell real estate to begin with. Also, "In this case, they are avoiding taxes." B I N G O

In the "For What It's Worth Department": In Louisiana and probably other states as well, one MUST be licensed in order to sell real estate. My husband had a salesman's license, and I found quickly I needed to get mine as well. The ONLY information I could legally give to a person calling about a listing (without my license) was to tell him/her when my husband would be available to tell them information in regard to the property they were interested in. Had I even told them whether or not the property was still available for sale, I could have risked my husband's license as well as the broker's license. Large real estate firms advertise for office employees who hold real estate licenses for certain positions, such as receptionists, etc.. If no such employee is available for a position such as answering the phone, then the licensed agents must come in on a rotating basis to answer the phone. If a competitor agent realizes that an unlicensed agent is selling insurance and reports such to the Real Estate Licensing Board, I feel sure that unlicensed person's tax returns could be subpoenaed.

Or worse yet, if the projectory is off even further and hits my state, Louisiana, there would no longer be Duck Dynasty or Swamp People! How would the rest of the nation survive without those 2 shows....especially Duck Dynasty!

jj, An employee can't participate in an HSA after turning 65. The balance, if any, becomes like a retirement account. Please verify, of course, as all of my HSA clients are still under 65. Sounds like a 4868 is in order.

The t-shirt is definitely something of value that needs to be subtracted from her total donation of $40. Did she donate the extra $5 to cover the cost of the t-shirt? $5 sounds about right for a bulk purchase of t-shirts. She can always contact the organization for the cost of her t-shirt. Sounds picky, however, we don't make the rules and regs...just report charitable contributions according to them.

....close your program, go get a bowl of ice cream, re-open your program and your client's prior year depreciable assets will reappear like magic! I chose Blue Bell's Butter Pecan ice cream. I don't know if it will work with a different flavor or brand...Blue Bell is the best! Take care, Cathy P.S. Couldn't find the original post, but whoever suggested closing and re-opening the program, thanks so much!

Ditto on what Jack said.....works like a charm! Thanks, Jack!

My program is set to automatically update each time I open the program. After creating a Federal and State e-file for a client, I closed the return and went to E-filing and clicked on "created". Only the State return was there. Opened the client's file again and re-created the Federal e-file. Still no Federal return listed as created for the client. I e-filed the State return and printed the acknowledgment. Only the State return was listed as transmitted. Called Customer Support and automated voice told me the wait time would be over an hour. I then duplicated the return and once again created the Federal e-file. This time it was listed as being created. Was then able to transmit the Federal e-file. Take care, Cathy

Positively no need to amend the return to add forms that were omitted in error, especially the 8889 which simply tells IRS that the HSA distribution for 2011 was not taxable as it was used for unreimbursed qualified medical expenses (assuming it was). I have sent approximately 5 Form 8889's in response to a CP2000 letter and it settles the problem. I have a checklist of questions before I prepare a return, and one of my questions is in regard to HSA's. The 5 times I have had to correct a client's return has been new clients who prepared their own return. We will all see this more frequently especially with new clients as more and more policies are moving toward high deductibles. I recently had a doozy of a return to correct as evidently, the IRS employee who reviewed a client's return wasn't familiar with a QTP distribution and the CP 2000 Notice changed everything from the taxable income, EIC, Child Tax Credit, etc.... The clients were late in bringing in the CP 2000 Notice and had gotten the certified letter from IRS regarding a Lien, etc... We called and got them to hold off on garnishing wages. The correspondence we sent had the complicated formula for computing the taxable portion of the QTP and all of the receipts necessary except one for $50 that the client couldn't find. I noted on the CP 2000 Notice that we didn't agree with all of the changes and sent a copy of the formula with receipts that proved the taxable income needed to be increased by $50 rather than the $10,000 IRS has said in the original CP 2000 letter. I plugged in the additional $50 into the original return and explained in the correspondence that the new calculated balance the taxpayers owed was $48 (due to changes in the EIC, etc.) The client forgot to send in the $48 with the correspondence before they mailed it. A couple of weeks later, they received a bill of $56 which included the $48 plus interest. Had we sent a 1040X, the client probably would have had his wages garnished as it takes several months to process. TaxWizard, You did make a good point! There definitely are times where a Certified Letter is required, however, when IRS is working with you after a deadline has passed, you want the correspondence to get there as soon as possible....thus my Priority Mail with tracking is still what I will do from now on, IN ADDITION to a Certified Letter. Thanks for the tip.... Oh, and the fax also...so now there are three viable methods! (4 with the initial phone call) Ms. Kats, The phone call is the first thing I do. As you know, a Certified, Return Receipt Requested letter does positively slow the correspondence from getting to the destination. However, I have found the Priority Mail with tracking is faster than regular mail...in my area it is anyway. JB, Insofar as the school wanting a "transcript" of the return in March is puzzling to me. Perhaps the student misunderstood? You can release a copy of the return to the Mom (after she pays you, of course), but I would wait at least a couple of weeks to see if client is going to provide the necessary records you'll need for getting the problems with the 2011 return solved before I e-file the return. I can't think of any school who would be working on the fall aid this soon. For them to request a transcript usually means that the FAFSA form has been received by the school for the 2013-2014 school year. For the FAFSA to have been completed or updated usually means that the student has updated the financial information from 2012 tax returns. I have also seen a school in our area overstep their boundary lines and try to lower aid to a student in a current school year when they have no right to do so. Also, if the Mom's 2012 refund would take care of her 2011 liability plus give her a refund now, I would let the Mom make the call on whether to e-file now or not. After the 2011 issue is resolved, any remaining refund due her from her 2012 return (if any) will be sent to her. Again, if that is the case, put the monkey on your client's back. Take care, Cathy

JB, I'd also hold on filing her 2012 return until 2011 is taken care of. I don't see what the problem would be to issue a copy of the 2012 return (after the Mom pays you, of course) for the daughter to update her FAFSA application as long as you know the figures on the 2012 return are correct. A school can request a copy of the tax return, however, that usually happens prior to the fall semester as the financial information from the 2012 tax return determines the aid for the 2013-2014 school year (beginning with the fall semester of 2013). Just re-read your post and see that the school is requesting a copy now...that is odd as the FAFSA application has to be updated first. There again, I see no reason why a copy of the return can't be shared with the school at this time. You mentioned your client is your friend. If it were me, I'd ask her Mom why the school needs a copy now....I have seen some uneducated financial aid people go up and beyond their line of duty to disqualify a student from aid. The aid for the current semester should already be written in stone. If there are some pell grant funds left over for the school year, they can be used for a summer semester if the school wants to do their job correctly. Hope I didn't confuse the issue. We've had some less than gracious student aid workers in a local junior college that will bend over backwards to make sure students don't get all of the aid granted to them. Cathy EDIT: Re-read your post again....just saw where you made reference to school is wanting a transcript of the return. I didn't realize that...I was thinking they were requesting a copy from the parent....not a transcript from IRS. Too early in the year for the school to be asking for a transcript now anyway and as someone stated, they aren't available until August of each year??? Maybe student misunderstood and all is needed is a copy of the return in the interim.

The fax really is the quickest way especially if you can butter up to one of the agents and get his/her personal fax number that goes directly to their computer. Actually, that DEFINITELY is your best bet!!!!

Almost forgot this too! Don't send your response Certified, Return Receipt Requested per the Collection Division as it slows up the response by almost a week! Do send you response Priority Mail though. A tracking label comes standard now with Priority Mail. They put one part of the tracking label on the outside of the envelope or folder (they are both free....folders & envelopes) and the post office will give the sender the other part of the label that you can use to track your response on the USPS web site. Cathy

Let me get this straight: An innocent spouse form was filed each year so not to penalize his wife for his student loan he has refused to pay for decades. The wife owed $32,000 on a credit card in her name and she makes $75,000 per year with her employment. Poor thing...no wonder she couldn't make monthly payments! Due to the bail out of the banks, they are turning out these 1099-c's left and right! The fact that she got one doesn't mean she couldn't afford to pay it any more than a MFJ client I have who gave their child a $30,000 wedding and then sought forgiveness of all of the credit cards used for the wedding. The fact that this same couple's income is about 200K a year didn't make the clients feel responsible for paying their bills. After they filled out their worksheet of Assets and Liabilities, I had to remind them to include their retirement accounts, the FMV of their real estate, etc. They were surprised when they discovered their assets far exceeded their liabilities (or at least they acted surprised). They weren't insolvent by any means but had heard of so many others getting their credit cards written off! Ms Kats, You are sooooo much better off without your ever having to prepare said PITA's return again! Don't worry about bad publicity from a guy like him...anyone who knows him will consider it a compliment to you if he ever bad mouths you! Every PITA you get rid of in a year just makes your next tax season sweeter! Take Care, Cathy

I've search until my eyes are crossed.... I have a client who in 2012 bought back years into her retirement plan to the tune of $50,000. Is this deductible in any way on her 2012 return? Since I haven't been able to find anything in my research, I'm thinking the $50,000 will be considered as the employees cost upon her retirement and will be taxed accordingly when she retires. Any takers? Thanks! Cathy