Slippery Pencil

In the 80s, the city of Detroit would recalculate the computer printed, rounded to the nearest dollar tax returns to include the cents and reduce the refund.  So if the return showed an $8 refund, the client would receive a check for something like $7.48.  Detroit actually paid people to rework the return by hand.  It was only a one page return and only a few lines had to be recalculated, but I can't imagine how they thought they were making money doing this.

I believe the discount on ATX in December is just as good as the one in April.  Last year I bought MAX on 12/1/21 for $1929 less a 20% discount plus a $95 fee to be their client for a total of $1,638.20.  $77.75 sales tax was added for a grand total of $1715.95. 

On 4/19/2022 at 2:48 AM, Edauditor said:

IRS will request parent to return the 1400 after correspondence been sent to new taxpayer to confirm the claim.

Has this actually happened?

On 4/16/2022 at 12:25 PM, Tracy Lee said:

They said they could have sold it higher but chose the lowest FMV because it was for their daughter. 

FMV is FMV, it's not a variety of numbers from which we choose. 

How do they know they could have sold it for more?  Did they have numerous offers from unrelated buyers at a higher price?  If so, then they didn't sell it at FMV.  If they didn't have offers but believe they could have sold it higher due to a real estate sales person's market analysis, real estate agents will say anything to a prospective client to get the listing.  Most market analyses from the typical real estate agent aren't a reliable source for FMV.

That aside, the housing market peaked around 2005, approximately 17 years ago.  The current market isn't that much higher than it was in 2005.  It's not that hard to believe someone buying at the top of the market can sell for a loss 17 years later. 

10 hours ago, GLJEANNE said:

have they never thought about the fact that by April we're overworked, over-stressed, sleepless and in a fog?

The irs has.  Returns filed between 4/1 & 4/15 have a higher audit rate than extended returns and returns filed earlier in the year.

3 hours ago, Christian said:

I have just awakened from a two hour nap while sitting in front of my computer doing taxes having dozed off it seems.

I do that numerous times a week.  Doesn't everyone do that? 

If the proceeds are reported, I doubt it.  A client sends me their granddaughter's brokerage statement mixed in with their stuff.  In 2020 she had $200 in dividends and $2700 in proceeds w/ a $6 loss.  In 2019 she had $150 in dividends and $3600 in proceeds w/ a $32 loss.  I didn't prepare a return for her either year and they haven't heard from the irs about it.  I'm assuming the irs computer would have spit out a letter by now. 

Should be included in box 1.

On the W2 input, you need to enter the amount in box 7.  I think you need to override box 3, but I don't recall.  Box 4 will calculate based on the total of box 3 & 7.

You can't until you find out what he did with it.

It says "IRA" and it has the IRA's TIN.  Do not include it on the return.  If past years are substantial, inform client how much he'd save by amending. 

I always tell the client since the income isn't above the filing threshold, no return is required.  I've never had a client decide to file a return in that case.  None of them have ever heard from the irs about it.

If the client's attorney is stating it needs to be filed, a resolution to liquidate may have been done.  There are certainly legal reasons to file it.  Ask the attorney why it needs to be filed.  Ask the attorney why he didn't file it as part of the liquidation.

12 hours ago, mcb39 said:

My client is NOT a multi millionaire; nor do I know one.

Neither was my friend, and the amount of his IRAs at the time was a lot less than $350K.  Your client may not have handled the conversion wisely, but it could work out hugely in his favor.

The biggest financial regret a 75 year old multi-millionaire friend of mine has is not converting his IRAs to ROTHs a few decades ago when the opportunity was presented to him.  He thought $20K in tax was a huge hit so he didn't do it.  Now he's in a higher tax bracket, the IRAs have increased 10 fold, and he's required to withdraw money he doesn't want to not only increasing his taxes, but substantially increasing his medicare premiums.

No, not correct.

Yes to add back if he received the money.

46 minutes ago, KimR said:

You just summarized it and did t list each transaction?

Of course, just like the 8949 instructions say to do.  The 8949 has been out for a decade so this isn't new and I summarized Sch D entries for 15 years prior to that. 

Pub 537 has instructions on how to figure the gain

https://www.irs.gov/pub/irs-pdf/p537.pdf#en_US_2021_publink1000221736

What type of property?  Sales usually go on 8949 for personal property.

Does it qualify for a reduction of basis and not a sale?

Of course you can do a summary.  Even though the instructions say to attach, no one at the irs ever looks at those attachments so you don't even have to bother attaching anything. 

On 3/26/2022 at 3:18 PM, Pacun said:

You should have efiled on January 24th so that the next return is rejected.

Suggesting to efile on 1/24 is definitely not a suggestion to efile a complete return. 

48 minutes ago, Max W said:

 The fastest way to find out is to file the return electronically. 

That won't tell what the irs has on file, it just confirms that a return was filed.  If the return isn't completed, it's idiotic to efile a fake or incomplete return just to see if one has already been filed. 

3 hours ago, artp said:

their granddaughter works as a medial transcriptionist working from home and does have all of their personal information on her computer.

Every computer and every paper file is a possible source, placing unfounded blame on the graddaughter seems premature if not ridiculous.  Two friends have had the ID stolen.  Both were from a breach at a large medical facility.  Last week I had fraudulent charges on a credit card.  The only activity on that card for the past year has been ATT's monthly phone bill and Consumers Energy's monthly gas bill. 

1 hour ago, Max W said:

Why would someone file a fraudulent return showing a balance due?

As others have stated, it's probably a scam and not a fraudulent return. 

Obviously the tax forms.  The previous year comparison and the tax summary page. 

Few if any of the thousands of worthless worksheets and statements ATX will print if you let it.  There's no reason to print all those input worksheets and option pages ATX wants to print or idiotic statements like the dependents statement.  The dependents are listed on the front of the 1040, there's no reason to print a statement listing the same info.  Or the capital loss carryover is easily determined looking at the Sch D, thus I'm not going to print out the carryover summary.  I do print worksheets like the student loan interest calculation so that I can look at the return and see that I didn't forget about it but the client is over the income threshold.  Also print anything a future preparer would want to see like a depreciation schedule.  I like to be stingy with the paper and toner but print enough that if I die, the next preparer can look at the printout and have a good idea what took place.

On your new client w/ 1 W2 & 1 1099, I wouldn't print anything other than the tax forms.  I'm guessing it'd be about 10 pages if I included the prior year comparison and the Sch B.

I have a Canon Imageclass.  Stopped working after a 1000 pages or so.  Won't buy another Canon again.