Cathy

The problem I see with your statement is IRS might see his tax preparer responsible for knowingly using the bimbo's records, or rather lack of records, in preparing the return which very possibly will cause IRS to want to look at the returns of your other clients to see if you are aiding taxpayers in submitting less than honest tax returns in your practice. You are putting your honest clients at risk for audit for allowing this taxpayer to cheat on his return. It's not worth it! I'd tell him it's complete and accurate records or the highway! Just my 2 cents.

Marilyn, My thoughts and prayers will also be with you and your husband. Having had a spouse with cancer, my best advice is to research as much as you can, don't be afraid to question the doctors on their choice of treatments, and lastly but most important is to get your GP to give you (and your husband) a prescription for anxiety medication. which will not only help you sleep, but will help you have a clearer mind to make important decisions that will need to be made. Take care, Cathy

Incredible! You can't risk the professional manner in which your other clients records have been maintained by using screenshots of a mobile app for a business with 1.1 million in gross sales for this client who pretends to have no clue about his records and who has a bookkeeper that is less than desirable.

I second or third the "Dome SImplified Monthy Bookkeeping Record" as it is called if I remember correctly. My "suggestion" would be either the bookkeeper complete the Dome record for the year or I will have to create a comprehensive accounting of income and expenses that will be used for the tax return. I would make the client understand that if the bookkeeper can't enter his information properly in the Dome record, then he should not waste his money or your time (and fee) to correct it. I have a feeling the owner of the business is pretty much in agreement with the manner in which the bookkeeper presents the year end figures to you. He/she is relying on you alone to put your head on the chopping block for figures used on the return...you have been given the bottom line and you need to make the figures jive on the return......NOT! Stop that dog from sucking eggs for 2014 and you'll have a completely different scenario for 2015.

Why, oh why didn't I take the time to read this thread last year?

Thanks, Judy. I've made up my mind that I'll be using Drake next year. I've had enough! If the taxpayer's MAGI is $20 due to $18,000 in wages and other type income combined with an unexpected rental loss of $17,980, Line 3 is $20. Lines 8a and 8b will be -0-. As the taxpayer was able to check "YES" on Line 6, he is eligible for the PTC...and it is going to be based on 100% of the monthly premium in column B (assuming column B is less than column A), like it or not! But wait......ATX has decided he is not worthy of the credit as the error check tells the taxpayer: "If Lines 8a and 8b are 0, taxpayer does not qualify for a credit. Discard any information entered on lines 11-23 in columns A through E." I pointed out the above scenario to ATX after their latest and then my last correspondence to them...anyway, I suggested that they need to seek legal counsel as their software is barring certain taxpayers from receiving the PTC. It really is bold of ATX to use that as an error, especially since NOTHING in the instructions says ""If Lines 8a and 8b are 0, taxpayer does not qualify for a credit."

MFS in community property states has special rules. Also, if clients lived together and had social security income and file MFS, they pay taxes on 100% of their SS...fringe benefit!

Just to update: I talked to a specialist with the PTC at IRS and he agreed with the calculations Form 8962 made and also agreed that the error check for E-File should not have stopped the return from processing the E-File. I asked him about overriding Line 8a after I told him I was concerned that if I would send in a paper return, the data entry personnel would not complete the form properly. He then stated that the most important thing was to get an accurate result, and if overriding Line 8a by $1.00 would give the accurate result, then do it. He also said he could understand my thoughts in sending in a paper return. This is probably the first time I've called IRS in years, but I thought I might be able to luck up and get a PTC specialist since this was so new. I had to wait about an hour and 30 minutes for the PTC line to talk to someone, but I'm glad I did. I will inform ATX of my conversation and tell them the ball is in their court now as to whether they are going to let their personal feelings about who should get a PTC interfere with their software functionality. I have the work around....but there are going to be other taxpayers who pay the credit back needlessly because of ATX's software. It's time I move on to another software company.

Pay close attention to instructions for Line 6 and the tab at the bottom of 8962...Pt1- HI FPL...If the taxpayer can answer "Yes" to one of the exceptions since his income is under the Federal Poverty Level, the PTC is available. Sorry my post above didn't cover that scenario!

That's right! And IRS approved ATX's "design flaw" before it released the form. (NOT)

If it wasn't so close to 4-15th, this may be amusing. ATX's Response after my email above: Good Afternoon, The amounts in columns A and B need to be removed just leave column F. The taxpayer has to paid back the advanced credit received because of negative income. I understand you check the box on line 6 that they qualify for the credit but they don't because there is no calculation made on lines 8a and 8b. The program is working as designed, once you removed the amounts on column A and B of form 8962 the error will dissapear. If you need further assistance, please feel free to contact our Customer Service Dept at 800-638-8291 or email [email protected] My Response to the above response: Have any of you read the instructions? Evidently not. I have throughly read the instructions to Form 8962 and Federal Register Vol. 77., No 100 which are the Final regulations from IRS dealing with the Health Insurance Premium Tax Credit. Once again, I encourage you to read the instructions for each line of Form 8962, paying special attention to Line 3, Line 6 which refers you to the exception when your income isn't at least 100% of the Poverty Level. If you check yes on Line 6, you are told to continue to Line 7. Line 7 gives you the applicable percentage from the tables in the instructions for income for income below the poverty level which is .0200. Lines 8a is -0- as per the instructions, Line 3 which is -0- multiplied by Line .0200 = 0. That means the client's annual contribution rate is -0-, and furthermore calculates to -0- then for his monthly contribution. There are clients who receive their health insurance free of charge from Healthcare.gov. Does the form say "Stop here, you cannot take the credit....you must pay back every penney you paid in? Of course not, as the most my client would have to pay back is $600 if he did not follow the instructions. Part 2, My client checks No, then instructions tells him to continue to Line 10. Line 10, my client checks No because he didn't have coverage for the entire year. The instructions then tells my client to Continue to lines 12-23. Compute your monthly PTC and Continue to Line 24. He then completes Lines 25 and 26 (The program completes 24, 25 and 26). Can ATX contact your contact with IRS to verify your and my position? I have had many, many other tax professionals whom agree with me and I would hate to see ATX be responsible for disallowing the PTC for my or many more other taxpayers who are in the same situation. I will override your form if necessary, I just think it would be a shame for other taxpayers not to be able to take the credit because of ATX. Please tell me in the instructions where it says my client is not eligible for a PTC. I know this is all new and has almost driven people over the edge, so I don't fault ATX for the program glitch. I just sincerely wish I could receive a response from ATX that could be backed up with 8962 instructions as I have done in trying to prove my point. Thanks! Cathy Dauthier

My reply to ATX: Yes, I do definitely believe that you are incorrect. Take a look at the instructions for Lines 2a and 2b. It even says if one or both of the figures are negative, add them and if you have a negative result, enter -0- on Line 3 of Form 8962 and continue with the form. If what you are asserting is correct, the form would state "if the total of Line 2a and 2b is a negative number, stop, you do not qualify for the credit. Also, from your reply, it appears as you are ignoring the instructions for Line 6. The tab it refers to '"Pt1 - HI FPL" is all about INCOME THAT IS BELOW 100% OF THE POVERTY LEVEL. Thanks so much and I would greatly appreciate your forwarding the issue to another team. In theory, I agree with your conclusion, however, I must complete the form per IRS rules and regulations and the Final Federal regulations dealing with the law itself. . I'm at my desk and will be for a long, long, long time today if someone wishes to call me. Sincerely, Cathy Dauthier

Just got another email from an ATX tech team telling me why my client doesn't qualify for a PTC...mainly because Line 3 is -0-. It did say to contact again if I still felt them to be incorrect and they would forward the issue to another team. I responded that I did still feel them to incorrect. After I sent the email, I followed with a telephone call as I saw on the email at the bottom to call them if additional assistance was needed. The person at ATX (not tech support, but the first line of customer service reps) I spoke with told me that I was correct and to enter a $1 in Box 8a and the return could then pass the E-File check system. I told her one of my "associates" had already advised me to do just that...thanks again, Judy! Nice of her (lady at ATX), however, I stressed the fact that I'm not the only tax professional who will have a client with a NOL and their E-File error check needs to be corrected! Will hang with it as long as time allows. This kind of concerns me...a lot!

Pacun, I believe you meant "medicaid" and no, my clients don't qualify for medicaid as their self employment income and other assets are way beyond medicaid's requirements.

Thanks, Judy! I was able to create the E-File after I overrode Line 8a and entered $1. It didn't change the additional PTC so it worked like a charm! Also, thanks for the confirmation to what I believed was correct. Digging further, even the instructions on 8962 for Line 3 said to continue even if 2a and/or 2b were negative numbers. If the total of the two is a negative number, the instructions said to enter a 0 on Line 3 and continue with the form. Thanks again! Cathy

I submitted the following to ATX: When creating an E-File for my client, I received the following error that will not let me create an e-file: If Lines 8a and 8b are 0, taxpayer does not qualify for a credit. Discard any information entered on lines 11-23 in columns A through E. I informed ATX that on Line 6, in blue it refers client to a tab at the bottom of the form. Client was able to check yes, therefore, I feel he is eligible for the PTC. The NOL carryover is from the tax year of 2012. The Reply from ATX: "The amounts in columns A and B need to be removed. The taxpayer has to paid back the advanced credit received because of negative income. The taxpayer should not have been eligible for health insurance through the marketplace because income was not at least 100% of the federal poverty level." The above statement from ATX ignored the instructions on the tab all together! Comments, please!

I think I found the answer to the back payments in the Federal Register Vol. 77, No 100 which is listed as the Final regulations of the Health Insurance Premium Tax Credit. It is as follows: 2) Modified adjusted gross income. Modified adjusted gross income means adjusted gross income (within the meaning of section 62) increased by— (i) Amounts excluded from gross income under section 911; (ii) Tax-exempt interest the taxpayer receives or accrues during the taxable year; and (iii) Social security benefits (within the meaning of section 86(d)) not included in gross income under section 86. Section 86(d) of the Tax Code is as follows: (d) Social security benefit (1) In general For purposes of this section, the term “social security benefit” means any amount received by the taxpayer by reason of entitlement to— (A) a monthly benefit under title II of the Social Security Act, or (B ) a tier 1 railroad retirement benefit. (2) Adjustment for repayments during year (A) In general For purposes of this section, the amount of social security benefits received during any taxable year shall be reduced by any repayment made by the taxpayer during the taxable year of a social security benefit previously received by the taxpayer (whether or not such benefit was received during the taxable year). (B ) Denial of deduction If (but for this subparagraph) any portion of the repayments referred to in subparagraph (A) would have been allowable as a deduction for the taxable year under section 165, such portion shall be allowable as a deduction only to the extent it exceeds the social security benefits received by the taxpayer during the taxable year (and not repaid during such taxable year). (3) Workmen’s compensation benefits substituted for social security benefits For purposes of this section, if, by reason of section 224 of the Social Security Act (or by reason of section 3(a)(1) of the Railroad Retirement Act of 1974), any social security benefit is reduced by reason of the receipt of a benefit under a workmen’s compensation act, the term “social security benefit” includes that portion of such benefit received under the workmen’s compensation act which equals such reduction. (4) Tier 1 railroad retirement benefit For purposes of paragraph (1), the term “tier 1 railroad retirement benefit” means— (A) the amount of the annuity under the Railroad Retirement Act of 1974 equal to the amount of the benefit to which the taxpayer would have been entitled under the Social Security Act if all of the service after December 31, 1936, of the employee (on whose employment record the annuity is being paid) had been included in the term “employment” as defined in the Social Security Act, and (B ) a monthly annuity amount under section 3(f)(3) of the Railroad Retirement Act of 1974. (5) Effect of early delivery of benefit checks For purposes of subsection (a), in any case where section 708 of the Social Security Act causes social security benefit checks to be delivered before the end of the calendar month for which they are issued, the benefits involved shall be deemed to have been received in the succeeding calendar month. At first, I thought I didn't have to include in the MAGI the December, 2013 SSD check my client received in January of 2014. Now, after reading it again, even though Section 86 specifically talks about such payments can be excluded from MAGI, the Federal Register seems to say otherwise. Any Comments, PLEASE!!!!

For the record: To clarify my above post, if the MAGI is less than 100% of the poverty level, pay particular attention to Line 6 and the instructions. There is a tab at the bottom of the form on the screen "Pt 1 - HI below FPL". If taxpayer can check either Box A or Box B under the tab, he/she is eligible for the PTC. If the taxpayer can't check either box, then the payback is capped at a much lower payback.

Good to see you post, "non-tax" or not. Your post above is in itself why your posts have always been valuable to the community. You make us think outside the box. Cathy

Margaret, Two of my clients whom I tipped off to the coverage because the primary taxpayer's parkinson disease had progressed to the point he no longer could work, had a total withdrawal of $200K from a 401(k). Did they bother to mention to me when they decided on the withdrawal? Of course not! And, as your client, mine had to pay back 100% of the PTC as their final income was over 800% of the poverty level. Just another reason why it would be better to use the prior year's income in calculating the PTC. As the $200k was withdrawn toward the end of 2014, it would make more sense for the taxpayers to not receive a subsidy in 2015 as they have enough funds NOW to pay 100% of their 2015 total premium. It all goes back to the tip my dil (a 20 year employee with BCBS) gave me anyway! "You're not licensed to sell insurance. Tell your client(s) to contact an insurance agent from one of the companies on the marketplace if they are not able to obtain a policy online themselves." All I can do is to continue to tell each client to let me know BEFORE they make a financial decision on withdrawals, etc. so I can tell them the tax consequence BEFORE they decide. And, now, in addition to income taxes, I tell them to contact their insurance agent also to see what ramifications the withdrawal will have on their subsidized insurance. I can suggest the withdrawal might cause them to pay back part or all of their subsidy, but strongly suggest that they contact their insurance agent/company to report the change and find out exactly what the effect the withdrawal will have. We have to walk a fine line and COA at the same time. The clients blame their agent (and not me, thanks to my dil's advice) for not telling them to report changes in income during the year...which I find hard to believe, but am grateful the monkey isn't on my back! Just a little editorial but it may be helpful for others to read later. Take care, Cathy

Margaret. Also you do have to enter the column that gives the amount of the monthly PTC.

Margaret, You didn't say why your client wasn't qualified for the credit. Too much income (over 400% of poverty level) and entire credit has to be repaid. Under 100% of poverty level and the payback is capped at a much lower payback. Pay close attention to the form.

PS...to my post above. If their income is OVER 400% of the poverty level, then my client would have had to pay back 100% of his PTC. Didn't check on the "legal aluen's" situation because I was already too sick from finding about his credit in my above post.

Karen, I had identical situation today. Under poverty level and had received PTC all year. Not at my desk, but maybe a box to check...his maximum payback was topped at $600. For the kicker, had he been a legal alien and had the same income, he would not only NOT have to pay back a dime, he would have gotten an ADDITIONAL $1600+ credit refunded!

Sign on "bonus" listed on 1099 as "non-employee" compensation as you said it was in Box 7. Bonuses to employees should be paid through payroll where taxes are deducted, etc. It was more than likely paid after the "employee" worked for a certain amount of time. You might want to have client check with office manager as it appears this bonus was improperly paid....contract worker versus employee. Doctors normally pay big bucks to send their managers for training. I don't think the doctor(s) had enough knowledge themselves to decide how the check was to be issued. At least the client might get reimbursed for any FICA or Medicare taxes the employer should have matched.