HV Ken

Has anyone ever received a CP2000 for 1099-Q? 17 years, I have never seen one.

We have seen some. They come when the amount of the gross distribution on the 1099-Q exceeds the tuition minus scholarships on the 1098-T and there are earnings on the 1099-Q - the default IRS assumption is that the earnings are taxable. We have to send in a detailed letter along with receipts showing the additional qualified education expenses to be factored into the equation for determining whether the earnings are indeed taxable. From the simple computer matching game, the IRS default assumption makes sense as they don't have the other information to factor in.

See Publication 970.

One of the things I have heard is that the average accounting relationship is 7 years. Clients come and go for many reasons, most of which have nothing to do with the service you provide them.

I'm curious, has anyone actually used the "Insert Picture" feature in the Edit menu? Where would you? Sure seems an unusual feature in a tax program.

I did, to insert our logo on the letter. If you had a nice head shot, that is another possibility, as well as a captured signature.

It defaults to "let atx determine" and always assumes paper filing. How can I make it go to electronic without having to alter each and every return?

Sadly, I have gotten used to altering each and every return. Personally, I am not a fan of creating the e-file (as jshtax suggests) as I do not like to have any returns show up in my e-file manager that are not ready to be e-filed.

Does anyone have any experience with a NY S-Corp that has some of its income coming from CT? If you would be able to lend me a quick hand, please message me your contact info. Thanks!

It is important to spend time with our clients, as we offer other services in addition to tax prep - bookkeeping, QuickBooks setup and training, insurance and investments, payroll, credit card processing. Spending that time is part of the relationship building, leads to referrals as KC points out, and leads to greater engagements with our clients. Many have become friends and that little 30 minutes is something we all look forward to. For us, this business is about relationships; we are not merely processing transactions. That's our approach anyway!

Thanks for the tip PaulH - I will give that a try! (Now why didn't I think of that?)

Does anyone else experience this? Every so often while in a return, the Start Link icon greys out and cannot be used. I have to exit the return and re-enter to get it back and functional. Is anyone else experiencing this phenomenon?

She still has time to get a Traditional IRA if she has the funds. Just throwing that out there.

Yes - we have that on the agenda for the discussion with her. One of the nice parts of doing this with your spouse, is that if there is a need for a man-to-man or woman-to-woman or couple-to-couple discussion, we are all set up to handle it. My wife will be taking this one!

Thanks Rita. I think we are all exhausted. This has been a very "hard" season to date, not like last year where it was based on the software, but this year where the economy is really draining on people. I know my patience is being tested!

I guess the point of my original post was that it seems ironic that the IRS states very clearly that alimony is not earned income, and yet they use the amount of alimony to factor in to determine the earned income credit?!!?

As for the some of the other editorial comments, I would propose being careful not to pass judgment without knowing the back story. I think some of the comments offered would not have been made in that case....

I ask my clients to get an CSV version from their broker for me, and then import it from the CSV into ATX. Works great! Takes only a couple of minutes and produces a very impressive tax return!!

Uh - water bottles!!! We can meet for a meal on City Island. Fantastic seafood restaurant there.

Ken, the program is right, there are TWO elements to EITC, 'earned' income is one, AGI is the other. And whether she got cheated or not is debatable. First, I'm sure her lawyer advised her on it. Second, she may be better off with alimony, which goes on much longer, unless she remarries, than does child support that ends when the child reaches maturity.

I wish she came to see us during the year when the alimony amount was known. Now she has $40k AGI with minimal taxes withheld and owes over $3k. This is going to be a fun conversation. They don't pay us enough for this job! I wonder what this appointment would look like at a box store....

Michael, so if the UI audit determines that a sub should have been an employee and zings them for the UI on the first $8,500, do they then report that to the Federal government so they will then go after the FICA and Medicare? Or does it really end with the UI audit?

No EIC for this client.

That's my conclusion too. Her conclusion is going to be "OUCH". I don't know how he managed to get all this classified as alimony rather than child support. Looks like he nailed her yet again.

Michael - you and I should have a conversation after 4/15 to continue this discussion!!!

Can use another set of eyes.

HOH Client with one dependent has W2 for $9,285 and received Alimony for $30,960.

This makes her AGI $40,245.

EIC instructions say that Alimony is not earned income and is not used in the calculation for EIC.

However, the first EIC question is based on AGI, and her AGI limit is $37,870.

This is causing client to not qualify for EIC.

but then you have see them again after you do the return and deal with all their questions. I mail out the returns with a bill, I only got burnt 3 times or so in over 24 years but they were one shot deals when I had a store front. Only one long time client burnt me but he had so much other stuff going on in his life I actually did him 3 years without getting pay till I cut him off.

Yes, this is our model. We close out all tax returns with our clients. When they sign the return, it says:

Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct, and complete.

I personally would not sign that without going over the contents with the person who prepared it, so this is our approach with our clients. Yes it takes longer, but we believe it is the right thing to do. I also recognize we are in the vast minority of tax professionals by adopting this practice.

WITAXLADY - I would think they still need to make the election on the 2553. The IRS is not going to recognize them as an S-Corp without this. It certainly will not e-file.

Michael - we have seen many clients start small as LLC and then elect to S-Corp as their business grows. I think this can be a smart path and don't understand how this defeats the purpose of getting the LLC initially. Care to elaborate?

One reason I take credit cards!

I should amend my previous post - Fee Collect if client has a refund, and credit cards if client owes.

We also do not file a return without first having payment.

Thanks michaelmars and Naveen Mohan from New York.

Naveen - what part of NY are you in? I am in Dutchess County - Poughkeepsie.

Sorry this is for IL workmen comp, Not NY

These audits are a piece of cake, just have handy the quarterly returns and 1099's for the period they are requesting. Just remember the policy period is not going to match their calender or fiscal year, for example my last client was being audited for 02/20/13 to 02/20/14, I provided 2013 quarterly returns and printed out a payroll summary for the period, they'll tie it out. If you are busy, ask to see if you can fax them the information, saves them the visit.

MAS

My question is for UI = Unemployment Insurance, not Workers Comp. Thanks for taking the time to post, though!

True KC, but I think they're too busy worrying about whether tax preparers dotted every "i" and crossed every "t" on a return claiming EIC (and fining them when they don't) rather than busying themselves with this sort of stuff. I'll bet if someone sent this in to IRS, it would wind up in the trash can.

I sent a complaint in last year when the same day I read that article I posted I received a client's W2 that had a HRB coupon attached. Bet you can guess the response I got....

Just got a call from a client today - they do their own books, we only do their tax return. They have been selected for an Unemployment Insurance audit (we are in NY) and were asking for us to come along for the ride. For payroll, they were doing their own in QuickBooks and switched to ADP about 1.5 years ago.

I have never been involved in a UI audit - does anyone have any recommendations on "best practices" for handling this? For example - Should the auditor be allowed to go to their work site, or is it better to meet in my office?

Thanks for any advice on this!