Tax Prep by Deb

Rarely have I had a couple fill the worksheet out and it come out correctly. I seem to remember a few years ago they overhauled the withholding tables and in doing so created a huge mess. I had clients who filled out the stupid worksheet and ended up owing taxes at then end of the year, who never owed in their life! I have a strange feeling that something like that will be happening again this year. I'm hoping I'm not asked for suggestions on how to fill them out. Deb!

Thanks again LindaB. You seem to have a good grasp on this subject. I have spent literally hours researching and following the steps to handle these and earlier you confirmed that my handling was correct. Not that I rely soley on others opinions, but it is nice to have someone who agrees with you. At least then you don't feel alone in thinking the way your do! Deb!

I tell everyone of my clients that the refund cycle this year is all messed up and that they should never spend the money until they actually see it in their accounts. Therefore I will not be made to feel guilty of any fees they may encounter to their writing checks against the funds they do not show up when expected. I emphasize the fact that it is just a suggested posting date and that under normal circumstances it should be there but at the same time I explain that I have a client from the last part of January or first part of February that still has not received hers. Deb!

That's the biggest problem. Nobody wants to fight HRB. I have gotten several of their unhappy clients. They come to me because HRB has them owing, yet it's pretty obvious just discussing their situation that HRB is wrong. I sent client back to retrieve her documents, HRB thru a fit and intimidated my client in paying them $75.00 just to get her w-2 and a 1099 back. I had a couple of other clients come to me and after discussing their situation I also sent them back to retrieve their documents. Fortunately these two individuals were not intimidated and went and demanded that their doc's be returned. I've done all of their taxes now for several years. Most people are intimidated by them. Especially our local office. The woman who runs it seems to think that the moment someone walks into her door she owns them. It's a real joke when their ad states that with HRB you've got people. In my experience when you have HRB you could end up with a headache. Deb!

I totally agree, and my constant suggestion to someone who even suggested doing this was to seek legal advice first. But they do not listen, and then I am expected to clean up their tax mess and have to go through all the explanations ect.... Thanks jainen for responding. I had hoped to hear something from you. Deb!

I have one that should have had her refund February 6th. IRS is finally showing Mar. 3. They claim a mistake was made on the return, but I have double checked and I don't see it. It did have the recovery rebate credit and EIC but I used the figure off of their website for the amount of the stimulus payment she received on 08. So I cannot seen the error. Deb!

Thanks for the confirmation. That was my feeling as well! Deb!

Thank you LindaB This is what I have researched, but it always help if someone else can confirm your findings. I have been looking at each one of these on an individual bases but like you said there is no one size fits all. At least one of these I will be going the route of insolvency because of the amount of equity used for other purposes that is owed. But this too leads to me one more question. I have a couple of clients who actually went out and purchased a second home knowing that they would be letting the other home go. They moved into the new home, stopped making payments on the old home, the hold home was foreclosed and the 1099's were issued. It is my thinking that because they already purchased and moved into another home that the exclusion for having to include the foregiven debt as income would not fly under the provision of foregivess of indebtedness of primary home. Am I correct in my understanding of this? I can easily show insolvency as both homes have lost a lot of value since they were purchased and on both of these homes there is more owed than they were worth at the time the debt was foregiven on the first home. Any thoughts! (as to the morality of what they did, I don't agree or approve of it, but that's really not my business. I am only concerned about the tax ramifications.) Deb!

I have several clients who have only been issued a 1099A and not a 1099C (yet). A couple of these are clearly marked as my client not being personally liable for the loan. One is marked that they are personally liable for the loan. With the ones that are marked not personally liable, will a 1099C follow when the home is resold by the lender? Do I handle the 1099A as a sale using the amount that was owed on the property as the sales price and then apply all the other info regarding a sale of personal residence? (most of my cases have been showing a profit as they owed more on the loan as reported on the 1099A than what they originally purchase the home for, however because it was their personal residence for at least 2 out of the last 5 years they qualify for the exclusion) Is that all I need to do for the 1099A's and what happens if in 2009 they receive a 1099C for these non-recourse loans? What about the 1099A that shows homeowner is personally liable for loan but no 1099C has been issued? Do I still report the sale (abandonment) on the Schedule D sales of personal residence? Then deal with the 1099C when and if it issued? Will I have to go back and ammend the 2008 when the 1099C shows up for tax year 2009? I have a slew of these as I live in a part of the state that is hardest hit with foreclosures and any suggestion would be greatly appreciated! Deb!

I totally agree! I have a client who's refund has been held up and I have gone over the return and over the return but cannot find any errors. My guess is that when they do finally send the refund it will be for the exact amount I figured it should be, but that doesn't ease my clients mind! Fortunately this client has been mine for many years and I am sure I will not lose her because of this but it still doesn't make me look too good! Deb!

I had the exact same situation and you will not be able to get it to clear so paper file seems to be the only option. Deb!

I had a new client come to my office today who has a situation that I have not had happen. He worked for the first 1/2 of 2008 for a company I will identify as ABC. ABC was a LLC and apperantly some of the parties that formed the LLC got ticked off and separated from the company. The man who my client worked for changed the company named to XYZ for the last half of 2008. It is possible he bought out the other person, not really clear on that, but herein lies the problem: My client has a W-2 that was issued from company XYZ and only represents 1/2 of 2008 income. Company ABC has never issued a W-2 and when he asked his boss, who was a party in both companies, the boss says he doesn't know anything about company ABC that it is tied up in the courts. My client, knowing he made more than what was on the W-2 that he was issued asked for a copy of his last pay stub for 2008. This paystub shows the full amount from both companies, ABC and XYZ. How do I file this? If I use the form for a substitute W-2 and ignore the W-2 that has been issued, at some point I know IRS will ask about the un-reported income. Is it possible for me to take the figures from the W-2 he has received and then create a substitute for the difference? Any thoughts! Thanks, Deb!

Thanks, I appreciate your help! Deb!

Does anyone know what the class life for depreciation is for a mobile home (manufactured home). It seems like I saw somewhere that it is not the same as a residential (27 1/2) Any help would be greatly appreciated! Deb!

I had a client who took a hardship distribution and it was just that. It wasn't a loan, but according to the plan documents if he took a hardship distribution he was not allowed to participate in the plan for two years. So it's the plan's rules, not necessarily IRS rules. There are few exceptions to the distribution penalty from IRS standpoint. Deb!

I've heard it both ways. Originally what Tom heard was that it would be a onetime addional 250.00 for those on Social Security, however the link that TAXbilly gave said a check based on tax return filing. I hope someone lets us know soon as I will have a list of clients to call in to do their returns. Deb!

Form 982 will now allow us to create an e-file so I am assuming it is good to go! Deb!

Under normal circumstances I would agree with you KC. The problem I'm running into this year is that many business folded in 2008. Especially small sole proprietors and when they did so they apperantly didn't see the need to send W-2's or they quit their payroll service before the W-2's were processed. I have at least two clients coming in this year who only have their last paystub from a job that is no longer in business and they are not able to locate the owner to even check on the W-2. Deb!

I don't know why the MaryKay consultant didn't already know that. I started selling MaryKay about three years ago, mainly to receive the discount on my own purchases. I went to their training course and everything was spelled out clearly as well as the information they gave us was very clear and to the point. I have dealt with several party plan sales type businesses, but I have to say MaryKay has it together as far as trying to help their consultants stay within the scope of the law. I knew from the beginning that I would be paying sales tax on the full amount, not my discounted price. And yes there maybe times when you will eat some of the sales tax but if that means keeping a client it's worth what little difference it might be. Just my two cents worth! Deb!

Thanks as always, KC. It seems you found the answer that even IRS is not willing to give. I have a client who has had her refund held up. IRS said when she called them that an error had been made and that they were manually looking at it. I went over that return with a fine tooth comb and still could not find were I had made an error. She does qualify for EIC and has done so for the past 5 years since I've been doing her taxes. Nothing changed, she did earned a slightly higher income this year which did qualify her for the extra rebate credit. I really thought maybe I had made a mistake with that, but I rechecked my figures and they are correct. I took the amount she received last year right off the web site. So this does help to understand why perhaps her refund is being held. Deb!

Same here! Once it was established that the disability was total and permanent I was able to handle the coding problems with the 5329. I likewise have had no correspondence to indicate this was incorrect. Deb!

I have about five clients whose homes have been foreclosed upon. The first one was only given a 1099C, so I filled out the fom 982 and as this was a qualifying residence I took that exclusion. My question with this has to do with the reduction of tax attributes. She does not have her home any longer and the only real asset she has is her car which she probably owes more on than it's worth. Do I need to fill out anything for the reduction of tax attributes, or do I just leave this blank? Client #2 only received the 1099A so am I understanding this right that I only need to report the sale on schedule D? He does satisfy the section 121 exclusion, has he had lived there 2 out of the past 5 years. He barely met the exclusion as he moved in December of 2006, kept both places for 2007 but lost the first one in April of 2008. He says he has not received a 1099C, so am I correct in only doing the schedule D. What if the 1099C comes in 2009? Like I said I am so confused. I have read and read and read up on this, and the more I read the more confused I get. And yes both of these clients apperantly have non-recourse loans as the box is marked that they are not personally liable for the loan. Any help would be greatly appreciated! Deb!

I e-mailed support and received a reply in less than 24 hours that simply stated that it was in progress but that they had no time frame as to when it will be approved! Deb!

Does anyone know if and when the 982 will be available for e-file? Deb!

Does anyone know how to tell by looking at loan doc's whether a mortgage loan is recourse or nonrecourse? I have looked and either I am missing it or just not looking for the right words. Deb!