Cathy

Catherine, Your friend sounds like the kind of friend I'd love to have. Her story reminded me of NASA's attempt to help their astronauts order the right size of condomn type devices for urination purposes when in outer space. NASA's original sizes were labeled as "small, medium and large". Yep, you guessed it....every astronaut chose a "large", however, the vast majority had problems with them falling off. NASA's answer to the problem was their new sizes: "Gigantic, Humungous, and Enormous"...problem solved! True story... My cousin was an astronaut and was appointed head of NASA after the Challenger disaster....can't wait til I see him to find out what size he was. Actually he is a small guy....most of them are so they can have more room to move around in their capsules. If I had to guess, I'd say he's a "Gigantic"!

Lynn, The amended statutes goes like this: R.S. 47:297 (D) (1) This part of the law allows the set credit per child in K through 12th grade "unless the deduction for the payment of tuition and fees for non-public elementary and secondary school tuition is taken for the child as provided for in R.S. 47:297.10." It goes on to say "NOTE: Paragraph (D) (2) EFF. UNTIL JUNE 30, 2018. (AND THAT PARAGRAPH READS:) "(2) Any taxpayer who so qualifies shall be entitled to a maximum tax credit of eighteen dollars per child for educational purposes" OK! It makes complete sense now that I've reviewed the actual laws......If the student qualifies for the 100% deduction of tuition for non-public tuition (capped at $5,000), then the taxpayer can't take the $18 credit also. And thus the reason I only had "1" student magically shown on Line 13 for the educaiton credit. On my test return, one child was in non-public school and the other in public school. This situation goes back to Sen. Rob Marionneaux's last term in office....he slipped the non-public school tuition at 100% (capped at $5,000) at the back of another bill on the last day of his last session. Although my kids and grandkids went/go to non-public schools, I still feel it wasn't right not to include public school costs at 100%. This problem solved! Now the issue at hand still remains the credit for taxes paid to another state. Thanks, Lynn! P.S. The DOR's instructions need clarification. ATX is correctly preparing the return according to the statutes.

IN THE FYI DEPARTMENT: Have to be careful of the new legislation and regulations regarding the tax credits we have been accustomed to. Rev. Info Bulletin No. 15-018 is clear as mud, as well as RS 47:33 (AMENDED IN 2015) points out at the bottom of the law that the provision for a Louisiana taxpayer to be able to claim a credit of the income taxes paid to another state for income derived from property owned in that other state EXPIRED 7-1-2000. Now here is the kicker: Evidently the legislators didn't realize the above as R.S. 33 (4) now states: The credit shall be allowed only if the other state provides a similar credit for Louisiana income taxes paid on income derived from property located in, or from services rendered in, or from business transacted in Louisiana. OK....let's get this straight. We can take a credit against Mississippi income tax (for instance) paid on services our clients renders (works) as long as Mississippi allows their residents not only to do the same about taxes on working in Louisiana, but , unlike Louisiana, Mississippi must also allow their residents to take a credit against Louisiana income taxes paid on income they earned from the property they own in Louisiana. Remember, we stopped the credit for taxes paid to another State based on income they earned from the property they own in the other state on our residents' returns on July 1, 2000. Thus, I suspect is the reason for the note at the bottom of R.S. 47:33 that is written in all caps which is very unusual. Of course, there is the issue of allowing no more of the out-of-state income taxes paid as a credit if the other state's tax rate is higher than Louisiana's tax rate. That's a no brainer as I have often wondered why Louisiana let that happen year after year. I will request a listing of the States that satisfy the new requirements of the tax credit for taxes paid to another state. I reviewed California's instructions and they had two listings. I feel we definitely need the confirmation that a particular state is ok inasfar as the credit is concerned as those out of state returns are a lot of work when we aren't sure whether the credit is gonna fly or not....I don't think Louisiana knows either, but someone needs to find out and I'd rather it be them than someone from another state giving us wrong information. I'LL UPDATE WHEN I GET ANY INFORMATION....IF ANYONE FINDS OUT FIRST, PLEASE LET US KNOW BY UPDATING THIS THREAD Thanks! CATHY

Late in getting program up and running. Doing a test return with 2 children that I showed tuition for one in a private school and tuition for the other also in a public school. The program is handling that ok from what I can see....both types of schools now get a 50% tuition, etc.. reduction of gross income. The problem I see is that from what I'm reading from LDR, one can either take the $25 credit (reduced to $18 for 2015) or the tuition, etc... reduction of income. In prior years, there was a check off box on the line for each dependent to check whether the dependent was in K through 12th grade. Now, there is no box. On page 2 of the IT540, Line 13 magically states 1 student and the credit of $18 appears....... 2 problems: 1. You can't take both the $18 per dependent and the tuition reduction, and even if you could, why does the form lists only 1 student rather than 2? And yes, the $10,000 tuition reduction to income does appear on the return also. Has anyone else noticed this? Thanks, Cathy

Randall, I understand the rules to mean 2 years after you pay the additional taxes due when you file your return....OR......the LATER of the 3 years AFTER filing your return (with the exception of filing your return BEFORE the due date...in which case, the date would revert to three years after the actual due date of the return...(.or again, 2 Years after you pay the additional tax that is due after you file your return.....whichever is later.) Just keep in mind that if the rules were talking about the taxes withheld on W-2's, there would be no need to make the confusing rule to begin with as the 3 year rule would ALWAYS be later. Did I confuse you enough? Please someone correct me if needed!

From Publication 17: Time for filing a claim for refund. Generally, you must file your claim for a credit or refund within 3 years after the date you filed your original return or within 2 years after the date you paid the tax, whichever is later. Returns filed before the due date (without regard to extensions) are considered filed on the due date (even if the due date was a Saturday, Sunday, or legal holiday). These time periods are suspended while you are financially disabled, discussed later. If the last day for claiming a credit or refund is a Saturday, Sunday, or legal holiday, you can file the claim on the next business day. If you do not file a claim within this period, you may not be entitled to a credit or a refund. My reply: Tax advice including research = $95 Amended Return: $250-minimum Let her be the judge.

Jack, you are to be commended for the manner in which you handled the support of your children. Sadly, there's too many men/women who don't fulfill their responsibility to their children. Your support mirrored the support my father provided in a very similar situation as yours. Please keep in mind that the fact that you did your part, regardless of what the ex did, will always be in the minds and hearts of your children. Thus the pride that you (and your children) should and can have should far outweigh any doubts about how the ex spent the funds. She made her bed....let her sleep in it!

Rita, I understand what you are saying and agree with the extra fees, but I'd still charge the extra fees to review the court documents which I feel sure would show the payments the client is receiving is alimony...and my gut feeling is as Catherine suggested that the "alimony-child support" payments might run out after the children are of legal age, which still wouldn't make alimony taxable income to the client. However, I'd consider it part of my job I'm being paid to perform is to make sure NOW my client wouldn't get bit in a couple of years. Seems like someone has cooked up a scheme to deduct private school tuition on a Federal tax return by claiming "alimony".......one local attorney is rather insane with his tax advice to his clients. Again, this smells fishy and if we can all smell it, I wouldn't want IRS thinking I dismissed (without research) the possibility of taxable alimony payments as child support especially when my client is not the custodial parent. But either way, the extra fees are in order! :)

Max, Gail was correct...I misread your post. I did think your client was paying rather than receiving the support. So much for speed reading! If it was my client, I'd ask for the legal documents that state your client is receiving child support. The document might very well state he is to be paid alimony, but your client considers it child support as he turns around and pays the tuition, etc.. for the kids. I just can't see the custodial parent paying child support to the non-custodial parent. Stranger things have happened, I know, but I would want to verify that my client isn't receiving taxable income in this case.

Ditto....almost to the exact dollar amount. You would think some attorneys are working for the ex!! Problem is this: if your client doesn't meet his child support payments, he can be arrested. If he makes every payment, then he isn't struggling in his business and is hiding income the ex's attorney will say! It's a no win situation for your client. Willing to bet no Form 8332 was signed (or similar document to have the same elements of the 8332) giving your client the right to claim the children! Your client needs a new attorney....one who realizes even temporary alimony is better than $4500 in child support.

P.S. The banker is now an attorney....crooked one at that! And I remember a 1099 Misc paid to a law enforcement officer who worked wrecks. He referred victims to a particular attorney. Was upset that he had to pay SE tax, but when I suggested attaching an explanation to the return, he said he'd pay the SE tax. And, yep, he is now an attorney..go figure! Years ago, I was the office manager of a manufacturing plant that had received training funds. To get the funds renewed, boss was to put $10k in small bills (yes, at that time, $10k was a LOT of money). He quickly agreed until he conferred with his accountant who verified what I told him.....he would have to pay tax on the money he was withdrawing from his business! He then declined and another business left our state!

Tom, Was the payment listed as non-employee comp on the 1099? Years ago, my late husband and I had a house "offered" to us by a banker who was going to use the short-sale as a way to make money for himself also. Did you see the "short sell" document? Is the selling price too good to be true? If it is, we all know about such things. Is it possible that $18,800 was slipped under the table and split with your client and the banker? A payment ($9,400) under $10,000 can be questionable. Before you ask, no, we didn't buy the home because of the "scheme" that really sickened us more than anything. And, just maybe your client's situation is legit, however, don't know if it's the lingering smell of our deal or the smell of your's client's deal....but I definitely smell something fishy! Take care, Paranoid Cathy

Patrick, Thanks for your post. I will now look further into the issue before I sign up with them. I've been with ATX for years but this past filing season I had a couple of issues with the software that ATX chose to ignore. I found a work-around on one and sent in a paper return on the other and IRS agreed with my interpretation of a health insurance credit which could have cost my client $5,000 had I let the "team" tell me my client wasn't eligible for the credit. Many years ago, I had signed up with Drake first during the year I signed up with ATX. The reason I sent the software back to Drake was over depreciation issues back then. They gave me a full refund. Your post rang a bell that I didn't want to hear. Hopefully, Drake will be o'kay as I refuse to use ATX another year. But, I will look further if they still have depreciation problems....or if depreciation problems have once again raised it's ugly head! Thanks! Cathy

Medlin, Does your company have any plans in the future for tax software (hopefully)?

You're right! I had a message on my recorder just yesterday that unless I called the IRS agent back I would be arrested.....I laughed but it's not funny especially for the elderly as I have had to personally take one of my elderly client's checkbook and keep it for a couple of weeks to prevent him from sending in a $19,000 check that he didn't owe....and it was a legitimate letter from IRS, but they had just made an error. Because of the circumstances, I was able to get a no liability letter printed out pretty quickly to prove to him that he didn't owe the bill. That incident happened before the "let's aggravate the public so they will tell their Congressmen to restore our funds game" they are presently playing!

Personally, I wouldn't respond. He is supposedly giving you a referral, but yet in the same letter is asking you for referrals! We don't need to feed fourth party organizations.

Louisiana is continuing to take bold steps in fighting tax fraud by making a good many of my clients receiving refunds of $25 to $50 pass an identity test (No Joke)! Another preparer recently told me her client received a refund check in the mail for over $5,000. The only problem was that her client had not yet filed his tax return. It was a fraudulent return and the refund was rejected as a direct deposit by the bank as the name on the account did not match the taxpayers name. Rather than running an identity check as they do with $25 refunds, a paper check was issued. Good thing the taxpayer was honest as he would have been able to keep the refund without any questions as Louisiana doesn't match W-2 withholding information. As IRS has repeatedly (for years) stated in our seminars the biggest fraud problem lies in the earned income credit, it's not surprising that still no action is being taken on those returns on either the Federal or State level. Government waste......

A quick Google search didn't turn up a company entitled "21st Century Tax Professionals". The closest name match showed a similar named site stationed in Dayton, NV. No info on the NV State website though. Just remember the old saying about if something sounds too good to be true, it probably is. The idea is a good one, however, I would ask what firms others are with in our community before I would waste valuable time with a company that seems shaky/too good to be true. Good luck with whatever decision you make! ????

Pacun, Your client would be able to use his HSA in either case for his child's qualified medical expenses whether or not the child was claimed as his dependent. See Pub 969 and pay attention to the "TIP" under the explanation of Qualified Medical Expenses.

Humming right along doesn't mean the speed at which it humms can't be greatly improved. I too have a fairly new computer and am so disappointed in the speed at which the program opens and operates in general...snail's pace! I'm tired of being told I need to upgrade my computer almost yearly for a tax program that could be programmed more efficiently than it is. After this past tax year, especially, I have come to the conclusion that I will no longer tolerate the second rate tax program ATX offers. The effort I have to put out in the conversion from ATX to Drake will more than pay the dividends for the tax year of 2015 I have been loyal to ATX for too many years....while paying retail each year at that! I can't believe I put up with paying retail each year because I didn't jump ship when it would have been so easy to do so.

I was on the road earlier in my posts above so now I can give you a clear answer. I had a similar client who for years we would have to wait on the amount of the excess deferral and earnings the excess earned to be able to include them on the return IN THE YEAR OF THE EXCESS DEFERRALS. In other words, the reason the employer gave those figures to the employee now is so they can be included on the 2014 return. The 2015 1099-R will be coded P and the instructions for Code P on the 2015 1099-R will state "Excess contributions plus earnings/excess deferrals (and/or earnings) taxable in 2014. This is a common situation, thank goodness not the "normal situation"......as long as the employer corrects the situation so the figures can be included on the tax return for the year when the excess deferrals were made, there won't be any excise taxes due...no 50% penalty, etc... From what I understand, you might have this situation among highly paid employees and the excess is determined by the computations that must be made at the end of the year in comparing lower wages paid to other employees, etc....anyway, it is a complicated calculation, therefore, you usually don't have the figures until right before the filing deadline. Get ready...it's probably going to be a yearly occurance with your client.

P—Excess contributions plus earnings/excess deferrals (and/or earnings) taxable in 2014. The above are included in the instructions for an excess contribution such as the one in this post.

It needs to be handled on the 2014 return. The Code P will indicate that the figures are for 2014! Handle it NOW or with an amended 2014 return.

It really amazes me how probably the single thing that can most affect a taxpayer's future livelihood, ESPECIALLY WHEN SELF-EMPLOYED, his tax return, is thought of in such terms as being so insignificant that finding a cheap preparation fee is the best choice, is unbelievable. Which brings up another strategy that some people use: winning through intimidation...there's even a book written on the subject. The more I charge, the more respect I receive. There are some, however, that will not be happy unless they beat someone out of charging what their services are worth. (That's where "winning through intimidation" comes into play.) I agree with others that your client received a good deal....too good of a deal as he/she still bitched! (Sorry, for my French, but I'm at the end of my rope!) You don't need cheapskates for clients. Let them go somewhere else and beat someone else up. You don't have time for their games. Note: My top fee based clients send the most referrals along with glowing recommendations that I wonder who the hell in my firm of one are they talking about!

Terry, Even if the earnings were enough to pay for all of the educational expenses, taxpayer can choose to have some of the earnings reported as income and then use the expenses qualifying for the AOC as an education credit. The AOC is at 100% of the first $2k, etc.. while the income that is taxed is taxed at either 0, 15, 25%, etc... The thing to remember is that the taxpayer cannot do both: exclude as income the earnings on the QTP that paid for expenses that qualified for the AOC and then use those same excluded earnings for the AOC.