Gloria

According to Arkansas State, they are accepting Sub-S Corporation returns via E-file. I updated the forms but I do not see the E-file forms. When I select E-file, only the Federal return is created. Has anyone had any luck creating an E-file for Sub-S corporations for Arkansas. The personal return works ok. Thanks in advance.

Student's parents paid $906 ($453 each quarter for two quarters) directly to a University to cover the tuition portion that Cal Grant did not cover. During the third quarter, the student takes a student loan in the amount of $1,800 and the University kept $412 to apply to the tuition (the portion that Cal Grant did not cover). So it seems that the parents should be able to take the educational credit in the amount of $1,318 ($906 + $412) plus $600 for books purchased for their dependent child.

Form 1098-T shows the following: Line 1-Payments Received (Blank---but payments were made to the University). Line 2-Amounts billed for qualified tuition: $6694. Line 5-Scholarships or Grants: $7,666 -- So it appears that the student received more grants than what was billed. But the student only received a Cal Grant that totalled $5,472 and that is why the parents and the student made the additional payments to the univeristy.

I want to calculate the credit but I do not want the parents to have to deal with audit issues in the future. I was going to contact the University to get clarification but on their web page it shows that they contract a 3rd party to complete the 1098-T so I may have problems making contact with the 3rd party.

What would yo do? Would you calculate the credit?

Thanks in advance for your help.

I updated - no major problems or improvements but a lot of the returns that were marked completed were unmarked.

Can AR Corporate returns be e-filed? If so what is the form that I need to use? Thanks.

Has anyone encountered the following error: CA-FTB-3885 Error due to R&TC Section? I cannot enter the R&TC section directly on the Corporation Depreciation & Amortization Form --Modifying is not allowed. All the information pulls from the Asset Entry form, but there is no section on the asset entry form for the R&TC Section. Last year I was able to input information directly on the form.

Thanks in advance for your response if you have encountered the problem and figured out how to fix it.

Sewer and water can be usage fees and not property taxes; if usage fees, not deductible on Schedule A.

I was pretty sure about the usage fees, but what about amounts charged for school bonds (in many areas where new schools are being build, taxpayers pay for a portion of the bond with the property taxes).

Are you only deducting the amounts on the property tax bill that have a percentage allocated to each Taxing Agency and not deducting the amounts that do not have a percentage (school bonds, garbage, sewer, land use, etc.)? Just want to make sure I am not short-changing my clients.

No, there is no code reference. The distribution would only take place if the person's position is eliminated and is laid off. The concern is that the person will be a few weeks short of turning 55 when the lay off's occurr. So if the person is not 55 when the layoffs occur, does that mean that the penalty will apply eventhough the person would be 55 when the distribution request is made?

For those of you that are experienced with early distributions, please help me with the following question:

Does the following mean that the person needs to work until the day the persons turns 55 or does it mean that the person needs to be 55 during the tax year?

From Publication 575 (Page 33): Additional exceptions for qualified retirement plans: The tax (early distribution tax) does not apply to distributions that are: From a qualified retirement plan after your separation from service in or after the year you reached age 55.

If a person's job is eliminated a week or two before reaching age 55, can the person take out distributions without the penalty or would the penalty apply?

Thanks for your response/s.

For a qualifying child she does not have to provide 50% of the support - see below:

Support — the person did not provide more than half of his or her own support during the year.

The new rules state that the qualifying child must not provide more than half of his or her own support. This is different from the old rules. Under the old rules, the taxpayer had to provide over half the support for the child. The change makes it easier for families relying on public assistance, charity, and gifts from family members to claim a dependent.

Are any of you members of NATP (National Association of Tax Professionals)?

I received an e-mail with the following offer: "For a limited time, if you join NATP at the member price of $147, we will give you our Registered Tax Preparer Review Course DVD ($65 value) and a RTRP Course Electronic Textbook ($80 value) at no cost. This offer expires December 31, 2011."

I am thinking about joining. I you are a member, please let me know what your experience has been with this organization.

Thanks.

Do you agree with the comment made in the article listed below regarding the deduction of clothing that contains the company logo? I could not find that information on Publication 529, Miscellaneous Deductions. I have a new client that has a Road Service Company and he wears Khaki pants and blue shirts (all his shirts have his company logo embroidered). I am trying to determine if I can treat the cost of the shirts as an expense. Thanks.

Are Business Clothes Tax Deductible?

By: Jacqueline Thomas

Are business clothes tax deductible? For those of us who are required to wear a specific uniform, the benefit to purchasing it is the possibility of getting that money back. It may be difficult to believe, but some employers require specific uniforms without providing any reimbursement when the employee purchases these items. For example, construction workers who must buy their own hard hats, protective glasses and special boots can benefit greatly from this tax deduction. In order to take advantage of this tax deduction, you should keep meticulous records and receipts.

What is and isn't covered?

If you're looking for possible tax deductions, keep in mind that most business clothes are not deductible. For example, a business suit is not tax deductible. Some people may argue that they wear business suits exclusively for work, but the IRS only allows for clothing that cannot be worn in any other setting than your work environment. It is possible to wear a business suit outside of a work environment, but it is far less likely that you will wear a firefighter's uniform when off duty. This deduction provides relief for nurses, postal workers and bus drivers, just to name a few. You may also claim a deduction for any article of clothing that contains a company logo.http://www.life123.com/career-money/taxes/tax-deductions/are-business-clothes-tax-deductible.shtml

What did you do? Did you enter a W-2 as if you had one in your hand in addition to form 4852?

I am affraid that the IRS will think you are talking about two W-2s if both forms are transmitted on the E-file.

Yes, that is what I did, per the instructions on top of the 4852 (Instructions in Red on the ATX program). Fortunately, I had the employer's information on the prior year's W-2---the employer ID numbers were not on the last paycheck. I checked the E-filed forms tab on the clients return but the 4852 is not listed on the tab as being included in the transmission.

Can I efile when I am using form 4852?

I e-filed one yesterday and it has been accepted.

Client is coming tomorrow and said that she bought a new personal car on Jan 4, 2010. She paid the taxes on Jan 04, 2010 also. I believe you have to buy the car in 2009 and pay taxes in 2010 in order to get a little break in 2010, correct?

According to the tax forms, the purchase of the vehicle needs to be between 2/16/09 and Before 1/1/2010.

Actually, I had a very long day yesterday and I did not read the letter thoroughly. I tried to call the IRS and ATX early this morning to find out how to handle the situation before going to my day job but they both kept me on hold too long so I hung up. This evening, when I got back from my day job, I pulled out the file and noticed the additional information that was on the right side of the letter and that is how I was able to figure out where to input the information. So sorry, I did not know how to handle the situation when I asked for help yesterday but now that I do I posted the information to help others that may get clients with these type of letters.

Have you heard if Turbo Tax has updated their program to allow for the six-digit number to be used? I cannot find a location on their software that allows for the use of the new theft identification number.

In the ATX program, it is in the Filer's information tab.

They can share the letter with their tax preparer. They will get a new pin number every year. I found where to enter the information on the ATX software. Enter the information in the Filer's Information Tab in the "IRS provided Identity Protecton Pin section," which is right above the Direct Deposit Information for paper filer's only. I started looking in the software program when I re-read the letter and it states that for a paper return, to enter the PIN in the gray box to the right of "Spouse's Occupation". After I entered the pin, the pin shows up in the gray box to the right of spouse's occupation.

Client received a letter from IRS assigning him a 6 digit Identity Protection Personal Identifican Number for 2010. The instructions on the letter are as follows: If filing electronically, your tax software or practitioner will direct when your assigned six-digit identity theft Pin should be entered?

The PIN to sign an electronically filed document can only be 5 digits. Have any of your clients received such a letter? if so, where was the information entered? Thanks.

Thank you both --- your answers will help set a fee.

What is a reasonable fee for preparing weekly payroll checks ranging from 3 to 6 checks a week. Thanks.

Our fee is very similar to yours: $25 for up to 5 employees, and $2.00 per employee for all over that. We do not charge for the W-3, but the 940 would be an additional $20, the 941 is $20 if we do the payrolls and $45 if we do not plus a separate, similar charge for the Virginia Employment Commission report. Form 943 is $75.00.

What is a reasonable fee to charge for preparing weekly pay checks?

John, thank you for your words of wisdom; I appreciate your comments. Regarding the State return, I checked it while I met with the taxpayer and fortunately the State refund did not change. I will go ahead and ask the taxpayer to bring me the check I gave her made out to the IRS and make one out to her.

I need some advice. I made an error on a 2008 return which resulted in the taxpayer having to pay back $1,891 plus interest of $112. The error had to do with the mortgage interest. The taxpayer is very upset (I do not blame her) and to top it off she is currently unemployed so it will be hard for her to pay the money. I volunteered to pay the $112 interest and the tax preparation fee that I received from her in 2008 as well as writing a letter to the IRS asking if they could possibly eliminate the interest. To the letter, I attached the taxpayers backup that I used that resulted in the error. I made out a check to the IRS for $112 plus the return preparation fee and I put the taxpayer's social security number on the check and attached it to the letter. In the letter I asked for them to apply the amount against the taxpayer's tax increase and if possible to eliminate the interest (wishful thinking--the letter was signed by me and the taxpayer). I wrote the letter for the taxpayer yesterday and today she called me to inform me that she talked to the IRS and they told her that they will not even read the letter and that they will not accept a check from me to be applied against her balance and she also mentioned that they will not accept a check issued to the IRS. I always make my checks out to the I.R.S. and they do not have a problem cashing them. Taxpayer also indicated that the IRS told her that she and I should settle the problem. I told her that I would call her back on Monday because I was also going to contact the IRS as I have not had problems like this before.

I am normally very careful checking & double checking what goes into the return. For those of you that have made errors that resulted in penalties and irrate clients, how have you handled the situation? Even if you have not made errors before, how would you handle the situation?

Thank you in advance for your comments.

I think first you need to find out for sure what happened to the property in the divorce. Did the bank use the full amounts on the 1099-A sent to each of them? If you're going to use half of those figures on your clients tax return, you want to make sure it's right.

You're on the right track for figuring the sale of the property, but you also need to find out about the canceled debt, from your numbers it's about $52K. Is the bank still trying to collect that, would they try to collect it from either of them or half from each? Or is the bank finished with it and not going to try to collect? Get all of the information first, file an extension for her if you have to.

Thanks Linda. In the divorce papers the property was allocated 50-50 as they were going to sell it; however, that did not happen. The X-husband lived in the house for about a year and a half before it foreclosed. They both received a 1099-A for the same amount (100%). Since it is a recourse loan I thought that the bank would try to collect first and if they cannot they would issue a 1099-C at a later time or attach a lien to her residence or who knows what else.

What is your experience on recourse loans? Do most banks take the individuals to court to try to recover the diffence owed? If the client calls the bank, will the bank tell her if they are thru and if the debt has been cancelled? They have not received any other correspondence from the bank. The foreclosure took place in June 2009. Thanks again.