ILLMAS

I was finally able to get a depreciation report (rental property, no SE) for 2015 to 2017 and the prior preparer did add an asset that doesn't exist, so I will be correcting it in 2018.

Former TP moved and was having their tax return by a preparer close to them, in 2015 somehow the new preparer put a $40K asset (7 yrs) retro to 2011. I prepared the clients returns from 2011 to 2014 and I don't have any record of that asset nor the client remembers making an improvement of that magnitude, so 2015 to 2017 each year has about $5,715 extra of depreciation and the TP took advantage of the deduction, I recommended for the client to have the prior preparer correct it (or prepare 3115) and made them aware they might charge them or that I can correct it for them and I would charge them XXX, TP thought about it and asked me if they can just include the excess (as income) depreciation in 2018, I was stumped with the question and I wanted to see if this is an option? I seen something like this before work for a TP that was treating himself as contractor, IRS auditor passed on converting the TP to an employee because the TP was reporting 100% of the earning without any expenses.

I am getting the following message and wanted to see if someone knows how I can resolve it without calling tech support: There was an issue connecting this workstation to the configured database. Please ensure that the server is running and that the service is started and try again. FYI is problem was not caused by the resent shenanigans, I received this message a while ago. Thanks

Just be patient in hearing back from someone, after filing Form 911, we received a call 4-5 months afterwards, I know some of you are lucky here and didn't experience the same issue as I did.

This was not a ponzi scheme and the U.S government that found these culprits guilty of fraud was the U.S Department of Justice. According to TP, the department will be checking for the next 20yrs to see if the culprits have any money to pay back the investors. TP in their heart know they will never get paid I believe I found my answer to question 1: Year of discovery with no reasonable prospect of recovery. Determining the correct year in which to take the theft loss deduction may be the most troublesome aspect of the deduction. A taxpayer with an allowable theft loss who takes the deduction in an inappropriate year can face not only the disallowance of the deduction, but also substantial penalties and interest. IRC section 165(e) states that any loss arising from theft shall be treated as sustained in the taxable year the taxpayer discovers the loss and is thus deductible in that year. The Treasury Regulations specifically note that the loss is not deductible in the year the theft actually occurs unless that is also the year in which the loss is discovered. The troublesome caveat, however, is found in Treasury Regulations section 1.165-8(a)(2); if in the year of discovery there exists a reasonable prospect of recovery or reimbursement, that portion of the loss may not be deducted until it can be determined that recovery or reimbursement will not occur. Furthermore, if it is “unknowable” if recovery will occur, the entire deduction must be postponed until it can be determined with reasonable certainty whether such reimbursement will be received. A reasonable prospect of recovery exists when the taxpayer has a bona fide claim for recovery or reimbursement and there is a substantial possibility that such claims will be decided in the taxpayer’s favor. The Tax Court has explained that a taxpayer does not have to be an “incorrigible optimist,” and claims for recovery whose potential for success are remote or nebulous will not cause a postponement of the deduction. Furthermore, the court does not look at facts whose existence was not reasonably foreseeable as of the end of the year in which the loss was discovered. In other words, the fact that the taxpayer subsequently succeeded in a legal action on the claim does not necessarily mean that no reasonable prospect of recovery existed in the year the deduction was taken [Ramsay Scarlett & Co. v. Comm’r, 521 F.2d 786 (4th Cir. 1974)]. This standard presents important considerations for taxpayers who are determining whether there is a reasonable prospect for recovery in a given year. If a taxpayer files suit against the perpetrator or joins in an existing suit, a prospect for recovery is usually deemed to exist. The lengthy process of lawsuits and receiverships can, however, delay the allowance of the claim. A similar delay in deductibility may occur when the taxpayer files bankruptcy claims against the perpetrator of the investment theft. In Bunch v. Comm’r (TC Memo 2014-177 2014), the Tax Court ruled that the taxpayers had a reasonable prospect of recovery at the end of the discovery year because they had filed a claim in connection with the perpetrator’s bankruptcy proceeding and it had not yet been proven that there would be no assets with which to pay the claims. Another consideration for taxpayers is the cost of litigation. Because “reasonable prospect of recovery” is a factual determination, it is usually not resolved by a motion for summary judgment. This means that a full trial may be needed to win against an IRS action. The cost is often prohibitive for many taxpayers. Source: https://www.cpajournal.com/2016/10/01/the-defrauded-investors-solace/

TP invested $$$ thinking it was a legitimate investment, turns out it wasn't and the U.S government prosecuted the culprits, and they are now required to pay back restitution when they get out of the slammer. This happened in 2016, but in early 2019 the U.S government closed the case. I have a couple of questions: 1. Can the TP go back to 2016 and start reporting the loss on the investment even though it was fraud? Or 2019 when the case was closed. 2. Just from the information I have, it doesn't seem it was a ponzi scheme, so would it be reported on Sch D or form 4864? I don't believe this falls under the new declared disaster area circumstances.

I am thinking it's a goof on the SSA side, I have a long time payroll client, same employees for many years and they received a letter, never before did they have an issue with information not matching.

How do you handle clients that do their own books, but you are using an old accounting software version?

Please swap the 1TB HDD to a SSD drive

I hate it when a client is always busy, but close to April 15 they call expecting you not to be busy and prepare their tax return WT#

I have, problem was solved by sending a copy of the RE bill only, try calling on behalf of your client

I agree, if a clients home internet goes up, oh well I need it anyway, if I increase my fees, guess who will be out of work?

I’m hoping for it to be a quite day for me, it seems people are more excited about game of thrones then complying with their tax obligations

^^^ See Specified premiums

Tax Map Search: Search Help Navigation Help Tax Map Index A B C D E F G H I J K L M N O P Q R S T U V W X Y Z # Tax Reform Tax Topic Index International Tax Topic Index Affordable Care Act Tax Topic Index Exempt Organization Tax Topic Index FAQs Forms Publications Tax Topics Worksheets Comments About Tax Map IRS.gov Website Publication 974 Previous Page | Table of Contents | Index | Next Page Self-Employed Health Insurance Deduction and PTC(p56) Self-employed Health Insurance Deduction This part provides special instructions for figuring the self-employed health insurance deduction and PTC if you or your spouse was self-employed, you or a member of your tax family was enrolled in a qualified health plan in 2018, and you may be eligible for the PTC. Because the amount of the self-employed health insurance deduction may affect the amount of the PTC, and the amount of the PTC may affect the amount of the deduction, a taxpayer who may be eligible for both may have difficulty determining the amounts of those items. A taxpayer who may be eligible for both may follow the instructions in this part to determine amounts of the self-employed health insurance deduction and PTC that are allowable under the law. Using the special instructions in this part is optional. If you are eligible for both a self-employed health insurance deduction and the PTC for the same premiums, you may use any computation method that results in reporting amounts that satisfy the rules for both the deduction and PTC, as long as the sum of the deduction claimed for the premiums and the PTC computed, taking the deduction into account, is less than or equal to the enrollment premiums. Before you complete any of the worksheets in this part, you should first do the following. Read the instructions for line 29 of Schedule 1 (Form 1040) or Form 1040NR to find out if you meet the requirements for claiming the self-employed health insurance deduction. Read the Instructions for Form 8962 to find out if you meet the requirements for claiming the PTC except for the requirement that your household income be at least 100% but not more than 400% of the federal poverty line for your family size for 2018. You will determine whether you meet the 100% but no more than 400% requirement in the process of completing these instructions. If you meet the requirements described above, do the following. If you are filing Schedule 1 (Form 1040), complete lines 30 (Penalty on early withdrawal of savings) and 31a (Alimony paid). Also, figure any write-in adjustments you will enter on the dotted line next to line 36, other than any amounts identified as "DPAD." If you are filing Form 1040NR, complete lines 30 (Penalty on early withdrawal of savings) and 31 (Scholarship and fellowship grants excluded). Also, figure any write-in adjustments you will enter on the dotted line next to line 34, other than any amounts identified as "DPAD." Complete line 32 of Schedule 1 (Form 1040), or Form 1040NR if you made contributions to a traditional IRA and you (and your spouse if filing a joint return) were notcovered by a retirement plan at work or through self-employment. If you elect to report your child’s interest and dividends on your tax return, complete Form 8814. If, during 2018, you were an eligible trade adjustment assistance (TAA) recipient, alternative TAA recipient, reemployment TAA recipient, or Pension Benefit Guaranty Corporation payee, read the Instructions for Form 8885 to find out if you meet the requirements for electing the health coverage tax credit (HCTC). If you elect the HCTC, complete Form 8885. Using this information, do the following. If you have health insurance premiums for which you cannot claim the PTC (see Nonspecified premiums, later), first complete Worksheet P, or if required, Worksheet 6-A in chapter 6 of Pub. 535 but only with respect to those premiums. Skip Worksheets W and X if either of the following applies. You completed Worksheet P and line 2 is less than or equal to line 1. You completed Worksheet 6-A in chapter 6 of Pub. 535 and line 13 is equal to or less than line 3. Then complete Worksheet W and Worksheet X. You have to complete Worksheet X only if APTC was paid to your insurer on your behalf for the months you were self-employed. If APTC was not paid to your insurer on your behalf for the months you were self-employed, skip Worksheet X. After completing Worksheets W and X, you may choose to use either the Simplified Calculation Method or theIterative Calculation Method to compute your self-employed health insurance deduction and PTC. The Simplified Calculation Method is shorter, but in some cases will not produce a result as favorable as the Iterative Calculation Method. Worksheet P. Self-Employed Health Insurance Deduction for Nonspecified Premiums Before you begin: ✓ If you file Form 8885, read the definition of nonspecified premiums to find out which amounts you cannotinclude on line 1 of this worksheet. ✓ Read Exceptions, later, to see if you can use this worksheet instead of Pub.535 to figure your deduction for nonspecified premiums. Also read the definitions of specified premiums andnonspecified premiums. 1. Enter the total amount of nonspecified premiums paid in 2018 for health insurance coverage established under your business (or the S corporation in which you were a more-than-2% shareholder) for 2018 for you, your spouse, and your dependents. Your insurance also can cover your child who was under age 27 at the end of 2018, even if the child was not your dependent. But do not include amounts for any month you were eligible to participate in an employer-sponsored health plan or amounts paid from retirement plan distributions that were nontaxable because you are a retired public safety officer 1. 2. Enter your net profit* and any other earned income** from the business under which the insurance plan is established, minus any deductions on lines 27 and 28 of Schedule 1 (Form 1040), or Form 1040NR. Do not include Conservation Reserve Program payments exempt from self-employment tax 2. 3. Self-employed health insurance deduction for nonspecified premiums.Enter the smaller of line 1 or line 2. Do notinclude this amount in figuring any medical expense deduction on Schedule A (Form 1040) 3. If line 2 is equal to or less than line 1, stop here. Do not read the rest of these special instructions. Enter this amount on line 29 of Schedule 1 (Form 1040) or Form 1040NR. Use Form 8962 to figure the premium tax credit for specified premiums. If line 2 is more than line 1, complete Worksheet W. Also complete Worksheet X if APTC was paid to your insurer on your behalf for the months you were self-employed. If APTC was not paid to your insurer on your behalf for the months you were self-employed, skip Worksheet X.   *If you used either optional method to figure your net earnings from self-employment, do not enter your net profit. Instead, enter the amount from Schedule SE, Section B, line 4b.   **Earned income includes net earnings and gains from the sale, transfer, or licensing of property you created. However, it does not include capital gain income. If you were a more-than-2% shareholder in the S corporation under which the insurance plan is established, earned income is your Medicare wages (box 5 of Form W-2) from that corporation. Instructions for Worksheet P(p57) Instructions for Worksheet P Use Worksheet P to figure the amount you can deduct for nonspecified premiums. Exceptions.(p57) Use Worksheet 6-A in chapter 6 of Pub. 535 instead of Worksheet P to figure your deduction for nonspecified premiums if any of the following applies. (Only include nonspecified premiums on line 1 or 2 of Worksheet 6-A.) You had more than one source of income subject to self-employment tax. You file Form 2555 or 2555-EZ. You are using amounts paid for qualified long-term care insurance to figure the deduction. After you complete Worksheet 6-A, follow the instructions below. If line 13 is equal to or less than line 3, stop here. Do not read the rest of these special instructions. Enter the amount from line 14 of Worksheet 6-A on line 29 of Schedule 1 (Form 1040) or Form 1040NR. Use Form 8962 to figure the premium tax credit for specified premiums. If line 13 is more than line 3, complete Worksheet W. Also complete Worksheet X if APTC was paid to your insurer on your behalf for the months you were self-employed. If APTC was not paid to your insurer on your behalf for the months you were self-employed, skipWorksheet X. Nonspecified Premiums(p57) Nonspecified Premiums A nonspecified premium is either of the following. A premium for health insurance coverage established under your business (or the S corporation in which you were a more-than-2% shareholder) but paid for coverage in a plan that is not a qualified health plan. The portion of the premium for coverage in a plan that is a qualified health plan established under your business (or the S corporation in which you were a more-than-2% shareholder) but that is attributable to individuals not in your coverage family. Calculate how much of these nonspecified premiums are fully deductible by entering this amount on line 1 of Worksheet P, or if required, on line 1 or 2 of Worksheet 6-A in chapter 6 of Pub. 535. Complete the remainder of the appropriate worksheet. The following are examples of nonspecified premiums. Premiums paid for a qualified health plan other than during a coverage month. Premiums paid to cover an individual other than you, your spouse, or your dependents. Premiums for qualified long-term care insurance. Dental insurance premiums. Medicare premiums you voluntarily paid to obtain insurance in your name that is similar to qualifying health insurance. Example.(p58) In 2018, you were self-employed and were enrolled in a qualified health plan through the Marketplace. You enrolled your dependent, 22-year-old daughter in individual market coverage not offered through the Marketplace. This coverage has an annual premium of $3,000. This $3,000 premium is a nonspecified premium because it is for coverage under a plan that is not a qualified health plan. Include this $3,000 premium on Worksheet P, line 1, or if required, on line 1 of Worksheet 6-A in chapter 6 of Pub. 535. Filers of Form 8885.(p58) If you are filing Form 8885, nonspecified premiums do notinclude any of the following amounts. Any amounts you included on Form 8885, line 4, or on Form 14095 (the Health Coverage Tax Credit Reimbursement Request form). Any qualified health insurance coverage premiums you paid for HCTC eligible coverage months for which you received the benefit of the HCTC advance monthly payment program. Any advance monthly payments of the HCTC your health plan administrator received from the IRS, as shown on Form 1099-H, Health Coverage Tax Credit (HCTC) Advance Payments. Specified Premiums(p58) Specified Premiums Specified premiums are the premiums for a specified qualified health plan or plans for which you may otherwise claim as a self-employed health insurance deduction on line 29 of Schedule 1 (Form 1040) or Form 1040NR. Generally, these are the premiums paid for the months you were self-employed. If you were self-employed for part of a month, the entire premium for that month is a specified premium. A specified qualified health plan is a qualified health plan that covers one or more members of your coverage family for a month for which your enrollment premium(s) has been paid by the due date prescribed under Enrollment premiums, discussed earlier. Qualified health plan, coverage family, and enrollment premiums are defined earlier under Terms You May Need To Know. Example.(p58) You were enrolled in a qualified health plan through the Marketplace for all of 2018 and you were self-employed from September 15 through December 31. Only the premiums for the last 4 months are specified premiums and only those premiums are entered on Worksheet W, line 1, and Worksheet X, line 27, if you are required to complete those worksheets. You are not allowed a self-employed health insurance deduction for the January through August premiums because you were not self-employed during those months. Those premiums are neither specified premiums nor nonspecified premiums. However, you may be allowed a PTC for your coverage for January through August.

If this might clear up things, I had a client last (2017 tax return) year who applied and told the exchange he was going to make $55K and a family of 4 etc... In July his wife went back to the workforce and he called and canceled the insurance because they were going to be covered by the wife health insurance, total income was around 80K. Guess what, they had to back 100% of the credit because they exceeded the $55K. TP took the time to call the exchange and they confirmed it.

I am going to need hair exentsions after this tax season I while back I was speaking to another accountant and he said he no longer sends extension if he hasn’t been given the okay by the client, out maybe 20 I haven’t heard from, only about 4 have called me to send an extension.

My client already received a letter for 2018 W-2s from SSA informing them employees info does not match their records etc....

The additional tax is on the individual level, use form IL-1040 if full-time resident, if non resident but earned income in IL, you add form NR to the IL-1040, here is more detailed information on LLCs: https://www2.illinois.gov/rev/questionsandanswers/pages/604.aspx

There will be an additional tax if the shareholder is an IL resisdent or non-resident of IL. There is K-1 equivalent only for partnership returns, however ATX does require to in put % of shareholders and the an apportionment factor.

Hello, I need some help with this form, I have prepared a worksheet to carryback losses, I am having trouble releasing the not allowed losses. TP sold their building in a short sale taking a 147K loss, based on the TP income they were only allowed a 13K loss: 108,000 in wages -13,000 allowed losses -9,350 HOH 85,650 taxable income Happened in 2016 According to my information, TP has 134,000 losses available, however on form 1045, the available losses is capped at the $85,650. If I were to overide the loss, then I would arrive at the 134K, however things don’t work like that and I am trying to figure out if I am really limited to the 85,650? Any help would be greatly appreciated it.

No earned income, no SE income, I am trying to figure why did they made a contribution in the first place. How does a contribution to the account reduce the account balance ? Yes, for example, the couple contributed $1000, and their taxable IRA amount is $100,000, after I enter the $500+$500, their taxable IRA amount is $99,000. That's the part I am trying to figure out.

TP and spouse contributed a small amount into an IRA, ATX is picking it up as non-deductible, however it's also reducing their taxable IRA amount by the contribution amount, my question is, instead of being an above the line deduction (normally for people who earn income), is that how it accounted for? Reducing total taxable IRA less their 2018 contribution. Thanks

Is the client opened? If not, it won't show.

Open client and go to forms (top menu), scroll down and you'll see client letters