Catherine

I have a couple of clients currently who can afford the _employees_ just fine -- as long as they go without pay! There have been some very interesting gymnastics as they wait for late payments from their customers while trying to keep their own mortgage current.

Hi Bonnie -- I too work form my home. My "office" is a corner of the family room. My daughter's old desktop computer (re-purposed to a scanner station) is in the same room, still with the stuffed penguin on the tower. The coffee table is piled a foot deep in back issues of magazines, and the sofa has a pile of mending and several sewing projects in various stages out in plain sight. I use either my kitchen or dining room table as my meeting room/waiting room. I try really hard during tax season to keep extraneous junk off the tables - but it's still clear it's a house, not an office. I've had folks show up early, while I'm at the table with my sandwich and teacup. I've had folks show up _real_ early (during extension season), while I was out weeding and they walk up to me while I'm on my knees with my gardening hat and gloves on. The bathroom is always clean but I warn people about the teen girl "accessories" all over the counter. I use the front-door mail slot for a secure drop-box. A locking mailbox would work, too, if you don't have/don't want a slot in your front door. Yes, you can deduct your computers. I've never tried the office in home deduction, because while my area is _only_ for my business, it's only part of a room and family members put house-related stuff on my desk all the time (unsorted general mail, receipts, spare/dead batteries, and school permission slips in times past, as well). Not worth the bother to attempt that OIH! If you do good quality work, folks generally will NOT mind if your home looks like a home instead of an office. Catherine

I'll chime in with another reason that I like to see small companies with a separate payroll account. We've _all_ seen small businesses run afoul of the payroll tax payments - late payments, missed payments -- usually because they spent the money on another bill before the PR tax was due. If they get into the habit, early, of depositing every nickel needed for paychecks and PR taxes into that separate PR account, the money will not get spent on a new piece of equipment, or the rent, or to get the 2%/10 discount from Vendor XYZ.

Would that not relate to whether the home was habitable during the construction? If, for example, the power and water had to be shut down for the modifications to be safely & properly made, then I should think that lodging would be a completely reasonable position to take.

Thank you; I will make sure the executor knows. Catherine

Well, the paperwork from the IRA custodian was never sent, since no RMD was taken. They (executor/beneficiaries) knew _nothing_ about this account until I questioned where the 1099-R from that IRA was, and they only got a response earlier today. So there was no way to take the distribution in 2010.

Tried a new search on the "other" forum and someone named Kamman had posted an answer. Here it is in case someone here needs it in future: "Waiver of tax. The IRS can waive part or all of this tax if you can show that any shortfall in the amount of distributions was due to reasonable error and you are taking reasonable steps to remedy the shortfall. If you believe you qualify for this relief, attach a statement of explanation and file Form 5329 as follows. Complete lines 50 and 51 as instructed. Enter “RC” and the amount you want waived in parentheses on the dotted line next to line 52. Subtract this amount from the total shortfall you figured without regard to the waiver, and enter the result on line 52. Complete line 53 as instructed. You must pay any tax due that is reported on line 53. The IRS will review the information you provide and decide whether to grant your request for a waiver." Thanks, Kamman, whoever you are.

I have a final return to finish up. Just got confirmation that the one 1099-R I was missing was indeed missing because the taxpayer did NOT take his RMD in 2010. He had a long history of requesting that RMD in December -- but he died in November, before the request was made. I have the RMD for 2010 amount on Line 50 of Form 5329, and the "0" for actual distribution on Line 51. Line 53 is supposed to show the 50% penalty, and the instructions say to pay the penalty and attach the waiver explanation. I have the waiver explanation. But the Line 53 amount is zero, and I can't get it to show the 50% penalty amount without an over-ride. Anyone have an explanation or ideas for me? Should I over-ride Line 53 (estate gets a refund in either case)? Does the Line 53 penalty get ignored when the 1040 says "Taxpayer Deceased"? TIA & hope all are enjoying the summer, Catherine

Feel better soon, Joan! And am I opening another can of worms here - or is there a case for small exceptions? Such as, I buy a laser toner on sale at Staples for my office -- and have to use my personal card, because the business card wasn't in my wallet. Separate sales slip, not commingled with the school notebooks for my daughter, and I enter it in QuickBooks as a cash payment with a note in the memo field about circumstances. Catherine

I got the same one; thanks for posting. I didn't think of that.

Thank you!

That's what I thought; thanks for the confirmation.

Thanks, Margaret!

Working on a decedent's estate (Form 1041), and it is late (the client didn't get me any documents until mid-tax-season). Date of death is late March 2009. Using a fiscal year (March 2009 - Feb 2010) we can finish off in ONE filing. Should I use the 2010 form or the 2009 form? TIA, Catherine

I haven't heard a word, Tom - but then I've been knee-deep in work here and lots could have gotten past me. Anyone else know? For that matter, anyone know when the post-tax-season slowdown gets here? It's _real_ late this year and last year never arrived at all. Catherine

Even if the 16th Amendment was rescinded TODAY we'd be busy for years dealing with non-filers and old issues. Then we'd be even busier dealing with state issues and doing accounting for all the people who suddenly had money to put into their own new or existing businesses!

I'm a bit of a hike from you - in Lexington, Massachusetts. Your profile says you are in Missouri. We finally (just today, in fact) got some sunshine, and the temperature is in the low 70's after being in the 50's during the day for the week or ten days. The weeds are still waiting for me. I'll think about you when I get out there to pull them! Catherine

Due date for 2008 return was 4/15/2009 -- so three years is 4/15/2012. IF he also filed an extension for 2007 you would have until October for any refund for that year. Sounds like that's not the case, however. I spent about an hour today trying to weed my vegetable garden, but it was still too wet from the rain we've had. I got good and soaked, the weeds I did pull have tons of soil stuck to the roots like glue, and I barely made a dent! Catherine

What I've found is that, if you DON'T include the "AOF" copy -- the first response you get back from the IRS is "whaddidya originally file?" letter. When I send in an amendment, I want them to have NO excuses to delay, misunderstand, or overlook something. Just my two cents' worth. YMMV. Catherine

Thank you for letting us know, KC. I'll keep her and her family in my prayers. Catherine

That's for sure! One of my corporate clients had a (US citizen) repair guy who flat-out refused to give his SSN - but the office admin there kept cutting him checks without withholding 28%. I finally changed the "Pay to" line in QuickBooks to print "No more checks until SSN has been received!" and that finally worked (the admin didn't know what I'd changed, tee hee). That guy still does work for them - and every nickel is tracked.

Definitely read the treaty - but also read (if available) the trust document. Perhaps it works, essentially, like a grantor trust that is ignored for all intents and purposes since its' function is to make a transaction possible. You could also post this on other fora - taxproexchange, TaxProfessionals, and others. Catherine

#1. Happy Memorial Day (Decoration Day) -- thank a veteran -- specifically THANK YOU to all on this board who have served!!, and read the Gettysburg Address. "...It is for us the living, rather, to be dedicated here to the unfinished work which they who fought here have thus far so nobly advanced." #2. Under the heading of "these new regulations will fundamentally alter the way we get around them", Massachusetts now requires its Schedule C contract workers to incorporate (so they they don't run afoul of MA's own very strict who's-an-employee standards). So I have a couple of clients who have worked for MA for years as independent contractors on Schedule C, taking office in home deductions. Mid-2010 both incorporated, and still work out of their home offices. And I need to split the office in home deductions between self-employed working at home and employed working at home for their sole-owner corporations. I can't figure out how, in ATX, to a ) STOP the 8829 from calculating whole-year depreciation for the Schedule C (since some of it goes to the Sch A worksheet) and b ) get the deductible mortgage interest/RE taxes to be correct without an override - so should the override preferentially be on the worksheet or the form itself, or does it not matter? Also, on the Sch A home office worksheet line 33, I need to use the date the home office was first used (before 2010) or the deprecation number is way off (as is the applied percentage). Anyone have a clue as to what's going on there? This is one spot where doing it by hand on paper would be easier. TIA, Catherine

Wonderful!

Oh, yum - I'm mildly jealous!! Have another piece for me!