GraceNY

Just want to check my understanding. Taxpayer's daughter graduated in May of 2015 and got hired shortly thereafter. Taxpayer cannot claim the daughter as a dependent on 2015 return. 2015 1098-T issued showing $27,000 in Scholarship box. All other boxes blank. ( I know about the mismatches between billing and payments, that's not my question) Taxpayer paid the tuition. Since taxpayer is not claiming the daughter on the 2015 return, taxpayer is not eligible to claim any education-related credits nor deductions on the tuition paid.? Since the daughter did not pay the tuition, she is not eligible to claim any education-related credits nor deductions? Lastly, I will look at the College's financial office detail for 2015. If any part of the scholarship money could be considered taxable (considering the details of the scholarship and what it was used for), what about using that to allow the daughter to take an education credit and/or deduction? Just want to see if I am missing anything. Thanks. Grace

Every year the Trust tax documents come in later and later.....There was 1 Trust and 1 brokerage account. Last year there was still 1 Trust, but now there is 2 brokerage accounts. Trustee decides that it would be easier if they separate the assets of the 2 beneficiaries under the trust. Making the trust tax preparation more complex. This year, he emails me the tax statement for 1 brokerage account. Besides being unreadable, I ask where is the other brokerage account? Oh, I gave that to XXXX, one of the beneficiaries, she's old enough now to be able to prepare their own return. Really? What's the registration and tax id on that tax form? The Trust. Good luck. And, the next time he asks me how much I'll be charging this year, I'm going to say, "not enough."

When I read the online articles in regards to the Affordable Care Act, I always look at the comments people post just to get a sense of what other folks are experiencing all around the country. The best one so far, they quoted the famous Nancy Pelosi statement about passing it before we could find out what's in it. A Doctor commented and I quote: That's what I would call a stool sample." EXACTLY.

If she didn't have an IRS identity theft issue last year, she wouldn't get a PIN. If she didn't apply for one on her own, could be that someone got her SSN and applied for one online? According to IRS website, "taxpayer's who were impacted by this will be notified by mail."

Last year, both taxpayer and spouse experienced identity theft. This year both were issued IP PINs and in spite of filing as soon as possible, it happened again! I see the IRS had another cyber security incident they reported yesterday. This one was an attack on their Electronic Filing PIN application. If thief had the taxpayer's SSN they went into the IRS PIN application and garnered a new PIN. Now one would think that if a PIN was already issued, they wouldn't be able to get a new one? Unless, of course, you could request a new one if you "lost your IRS letter that provided the PIN?" IRS has some serious issues with all this identity theft and some of it is entirely their fault. They need to hire some competent IT's and upgrade their computer systems! And, if money for their budget is needed, send them some that is dedicated solely for this and have some accountability! Therefore, if any of you have taxpayer's that were given IP PINs, you might want to file them as soon as possible.

Taxpayer died on 02/28/2015. Fiscal Year begins on the date of death 02/28/2015? Which makes the longest fiscal year end date 01/31/2016? Thanks. Grace

NY Estate distributed monies from Civil Service pension and Thrift Savings Plan to a beneficiary who is a non-resident of NY. Is this considered NY "source" income for the non-resident of NY? I didn't think so, but maybe it's considered having been derived from services performed in NY?

You may have to start a fresh topic as your questions will probably get lost under the original topic. (1) Find out how many days the TP was in NY. If 183 days or more, then he'll have to file a NYS Resident return, IT-201, Married filing separately. If less than 183 days, then a NYS Part-Year return, IT-203, Married Filing Separately . You didn't give any details of the TP's work/earnings subsequent to the move to NJ so I can't speak to what is required in that case. (i.e. while residing in NJ, did he continue to work in NY, did he work only in NJ, or did he not work at all for the time he was in NJ). (2) Spouse files a NJ Resident Return and reports both NY and NJ earnings. Also, spouse files a NYS Non-Resident return, IT-203, Married Filing Separately, to account for the earnings in NY. There should be a tax credit on the NJ return for the taxes paid to NY on the NY income.

Just adding to my prior post. I think I'll use numbers to illustrate. The IRA was worth $100,000. In your first post you said Daughter was listed as 50% beneficiary and there was no designation as to the other 50%. You said the Daughter already got her 50% ($50,000 in this example) from the IRA custodian. That leaves us with the balance of $50,000. According to you, there was a Will that left the IRA 50/50 daughter and Son. That means Daughter is entitled to 50% of the proceeds that were paid to the estate. That would be $25,000. The other $25,000 would go to the Son's Estate. If the Son had a will, that monies would get paid out accordingly. If no Will, then it gets paid out according to the State's intestacy statutes.

O.K. Let's forget about the Daughter receiving her half as the 50% beneficiary designated on the IRA. That leaves us with the other 50%. Now, one cannot "assume" anything. You need to look at the IRA statement to determine on what date was the IRA proceeds paid. And, to whom. That said, let's say that your assumption is correct and it was paid to the Dad's estate. In your first post, you said there was a will leaving the IRA proceeds 50/50 to Daughter and Son. If none of this money was disbursed during the Estate's tax year, by the end of the Estate's tax year, or within 65 days of the end of the Estate's tax year, then it would be taxed to the Dad's Estate. Has a tax year been chosen yet? A tax year is chosen when the first 1041 is filed. Ideally, you would want to chose a tax year in order to minimize the Estate taxes. In other words, match the taxable income coming into the Estate to expenses and distributions going out. And, without knowing more details, I can't comment on what the tax year could/should be. With more details as to what taxable income came into the Estate and what expenses were paid out along with the dates for those respective items, one could offer some suggestions. Perhaps you could start a NEW post when you have more of the facts. Let me use a hypothetical to illustrate. Let's say we are working with the following fiscal year: 12/01/2013 - 11/30/2014 and the IRA monies were paid to the Dad's Estate during that fiscal year. If none of those monies were paid out on or before 11/30/2014. Then it's taxable to the Estate. If on the other hand, the "65 day election" were made then you would have had 65 days from the end of the Estates fiscal year, 11/30/2014 in this case, to make the distributions to the beneficiaries under the will and the beneficiaries would be taxed on the monies. Now the issues with this example are (1) The 65 day window has already passed (expired 2/3/15) and (2) the 1041 is due 3/15/2015, unless extended. This example also illustrates the importance of choosing Estates tax year carefully. Grace

Taxpayer gets a CP2000. Sends a response to IRS just under the 30 day deadline. Then gets referred to me. (Damn, I would have requested an extension). Has received the computer generated "Thank you for your letter..blah, blah, blah. Looks like it has been assigned to someone. I have a formal response prepared that addresses their proposed changes and includes all the relevant documentation along with a POA. My Questions: Should I just send it in to the address on the CP2000 OR should I send it with the "Thank you for your letter..." so they can reference who it might have been assigned to? My concerns are twofold: (1) I don't want this getting mixed up as things often do with multiple responses and (2) Although the taxpayer responded within the 30 day request, he disagreed with items that he should not have (i.e. unreported stock sales) and sent a half dozen extraneous papers that really don't account for anything. More specifically, stock options that vested with the sale of shares to cover taxes. And, of course taxpayer thinks all taxes were paid. I could use some wording. Don't want to come across as saying "sorry, but taxpayer did not address your proposed changes correctly nor send you adequate information." That won't reflect well. Thanks in advance for any input or suggestions. Grace

Follow-Up. And, my original comments still stand. However, didn't see that the father died in 2013 (vs. 2014). Unless I am missing something, or the custodian is unwilling to pay the 50% to daughter as the designated beneficiary until all the paperwork is in for a 100% distribution, then whoever is designated in the will as the executor, would get the proper documents from the surrogates court in order to apply for the balance of the IRA. I also see in your post "Where do I report the IRA income?" To whom was the IRA paid? (i.e.Daughter, Estate,..). That's where the IRA proceeds would get reported. If the monies were paid out, I don't know why the custodian didn't send a 1099R to whom ever received the money. Seems strange.

If the daughter was on the IRA as a 50% beneficiary, the daughter applies to IRA custodian for her monies. [beneficiary designations trump will] If there was no other designation on the IRA besides the daughter being a 50% beneficiary, the other 50% of the IRA goes to Dad's estate. [some custodians won't release any money until they have all the paperwork.] Now the will kicks in. If the will says "50% to Daughter and 50% to Son," then Daughter get's 50% and Son would have gotten 50%, but since he is deceased, I think it would go to the son's estate. Then you would have to find out if the son had a will. If not, your state estate laws come into play. In NY, if you die without a will, first it would go to a spouse, if no spouse, it goes to child(ren), if no child(ren), then it goes to parent's, if no parents, it goes to siblings (including 1/2 siblings), if no siblings/1/2 siblings, it just keeps going until you find next of kin. A couple of thoughts. You may want to have the daughter look through all of the father's paperwork pertaining this IRA. It could be that he submitted paperwork that shows a 50/50 beneficiary designation, but the insurance company made a clerical error in processing the request and only put one child on the form. Alternatively, you can tell the IRA folks to pull all relevant paperwork relative to this IRA. Perhaps the father filled out original paperwork designating Daughter and Son as 50/50 beneficiaries but there was a clerical error at that time. Or, if he changed the beneficiary later on, the IRA custodian should have some paperwork on file for that as well. [Note RE: Beneficiary designations. You have to verify what you have on file all the time. I have seen so many instances of problems. Banks merge and paperwork gets lost. The account is old and the custodian no longer has any of the original paperwork. Etc, etc. etc. It's a real pain in the butt]. I am not a lawyer, it's based on my experience. Hope this helps. Grace

I have not seen this addressed specifically. H and W divorced for several years now. They have joint custody. H gets dependent child © in odd years and W gets dependent in even years. I am doing W's 2014 return. She is claiming C. I have the Form 8332, signed by H releasing claim of exemption. W did not have insurance where she worked so she purchased a plan on the NYS Marketplace Exchange. Coverage is only for her. She got a subsidy (Advanced Premium Tax Credit) H has insurance through his employer and he covers the dependent child on his plan. First, I did the tax return without the dependent, C. Filled out the 8962 and it resulted in an Excess Advance Premium Tax Credit REPAYMENT of $99. Then, I put the dependent, C, on the return and it resulted in $345 Net Premium Tax CREDIT.. I reviewed my input thoroughly and then compared the 2 8962's( side-by-side ). When Line 1 (Family Size) went from 1 to 2 it changed the Federal Poverty Level (FPL), and the Household Income as a Percentage of FPL and thus the rest of the calculations. All of which I understand. I can follow the calculations. What I was wrestling with was the fact that W getting a better outcome on the return that includes the dependent child, C, when the child did not live with W. She is the non-custodial parent. And, it all came down to definitions. "Family Size" on line 1 is defined as the number of exemptions from F-1040, line 6d. You can't change the number, it is what it is. Now, this would have been a completely different outcome if the custodial parent, H, had also purchased a plan through the Marketplace for himself and the dependent child, C. Then Part 4 (Shared Policy Allocation) of the Form 8962 would have been completed in order to allocate the Premium Tax Credit between parents. Am I missing anything? You know the old adage, "if it sounds too good to be true, it probably is." Also, in my research, I came across IRS PUB 5187 which specifically deals with ACA and is written mainly for taxpayers, but I found that it's also a good reference for tax preparers. Page 11 deals with the tax credit. And, according to what I read there it doesn't sound like the taxpayer, the Wife in my case, should be getting the this extra premium tax credit I calculated. It reads "A taxpayer is allowed a premium tax credit only for the months that a member of the taxpayer's tax family is (1) enrolled in a qualified health plan offered through the Marketplace and (2) not eligible for minimum essential health coverage (other than individual market coverage). The taxpayer's tax family consists of the taxpayer, the taxpayer's spouse if filing jointly, and all other individuals for whom the taxpayer claims a personal exemption deduction." The dependent child is NOT enrolled in a qualified health plan offered through the Marketplace. He is covered under H's plan at work. So why is W getting the extra credit? Only because line 1 of Form 8962 is based on the number of exemptions from F-1040, line 6d. And, remember, you can't override that entry. Other thoughts on ACA households, dependents, exemptions, etc. and some pitfalls: If W had been the custodial parent (with insurance through market place which included the dependent child) released the exemption via F-8832 to the non-custodial parent, H, who did not have a policy on the marketplace but rather through his employer. Employer coverage is not eligible for Premium Tax Credit so he couldn't allocate the credit back to her via Part 4 of Form 8962. She would have to pay back some of the subsidy/APTC. If she plans on enrolling in Marketplace for 2016, she has to know that if she answers household information based on 2014 tax return, she could have to pay back money. I have also read some conflicting info on who would be responsible for the Shared Responsibility Payment (Penalty) if the child did not have coverage. Some say it is the taxpayer who claims the child as a dependent on the return, others say it is the parent who "qualifies" to claim the dependent, whether or not they actually claim the dependent on the tax return. I'll have to look at the ACA section that addresses that or the relevant regs. What about estranged spouses who will not cooperate with providing the necessary documentation to each other to prove coverage? Lastly, heads up ATX users: When I forget to check the box on line 61 when I have someone with full year coverage, I get a warning. However, I did not get that warning for this return and am not sure why. Did it have something to do with F-8962 being filled out?

The person may have exercised their options and paid for them. Therefore, if they didn't sell them there will be no 1099B. This W-2 should be kept with their option and purchase paperwork. It could be needed to establish basis if they sell them later. On the other hand, if it was a "cashless" exercise, then some shares were sold to cover the Fed, SS, Med., and if applicable, state taxes. It is likely they received a 1099B for this transaction. I have client give me "everything" they have with respect to the options in order to see what actually took place. Hope this helps. Grace

NYS resident age 22 did an internship in OH from the middle of May to the middle of August (approximately 75 days) in 2013. She lived in a dorm-like setting provided by the company she interned for. Being claimed on parents 2013 return as a dependent which they are entitled to as she was a fulltime student in 2013. W-2 shows just over $5,000 of wages along with $100 of withholding for OH. Also, local wages of the same $5,000 with local income tax withholding of $125. Box 20 locality name says 01-Columbus. She got a permanent job with this company in January of 2014 and has moved there. Therefore, the OH address will be shown on her filed return. I am preparing the 2013 income tax return and am not sure of the following: (1) Non-Resident vs. Part-Year in 2013; (2) Locality tax?? If Non-Resident, what about "Affidavit of Non-Ohio Residency" versus "Ohio Income Tax Notice (IT-10)." Should one of these be filed. I know states are really cracking down on residency status as all of them vie for tax money and I want to be cautious as to how the return is handled. Thanks in advance for your assistance. Grace

I'm in upstate NY and I always have trouble with these.. Taxpayer took a job in NYC and moved into an apt in Astoria Queens in 9/2012. Prior to that he lived upstate. W-2 shows only state wages (no local wages). When I input into ATX IT-201, it makes him a NYC resident for part of the year, pulls up the IT-360.1 and computes city tax. Is that correct? And, if so, any idea why employer isn't reporting and withholding local wages and taxes? Thanks in advance for your help. Grace

Taxpayer opened and closed sole proprietorship in 2012. Expenses included the purchase of a computer and printer. Since business closed, she has has been trying to sell these assets. Presuming this failed venture was a real business and not a hobby, how should these asset expenses be handled on the 2012 return? Usually you recover costs for a particular asset through depreciation. Can a depreciation expense be taken? Or is this considered "property placed in service and disposed of in a same year" and, thus, not eligible for depreciation? But was it really "disposed" of or was it just "taken out of service" when the business closed. My understanding is that a disposition occurs when property is permanently withdrawn from use in a business because of a sale, exchange, retirement, abandonment, involuntary conversion, repossession or destruction. None of these took place. If the business had never started, then the costs of assets acquired during her unsuccessful attempt to go into business are part of her basis in the assets and no deduction can be taken for these costs. The cost of these assets would be recovered when asset is sold. In other words, she needs to sell the asset in order to recognize the loss. This, however, is not the' case. The business did start. How about, depreciation expense (MACRS, not 179) on 2012 Sch C. When business closed, assets were converted to personal use. Sale will result in reportable gain or non-deductible personal loss?

Sole Proprietor needs a new vehicle for her business (100% Business Use). Rather than obtaining a vehicle loan through a bank, could she borrow the money from herself and deduct the interest on that loan on her Schedule C? A properly drafted Promissory Note that included a repayment schedule, maturity date, default provisions etc would be executed. Grace

Hurrican Irene August 2011 Taxpayer purchased property that he was fixing up. Didn't know if he would keep or sell once he was done. Not sure how to classify (not his personal residence 'cuz he was renting and living in an apt.) Investment property? Also, taxpayer was unable to get FEMA help due to the fact that it wasn't his primary residence. And, no insurance on the property so no claim. The town is in the process of trying to get assistance for the town itself. Supposedly the town will be giving out some of this to those who lost property and did not have any assistance. This is still up in the air. Town does not know if, when and/or what they'll get. My understanding is that loss can be taken on 2010 or 2011 tax return since it was a federally declared disaster area. However, one or the other would need to be filed by 4-17-2012. No extensions, right? How to handle "potential" assistance from town. Deduct loss and then pick-up reimbursement, if there is any, in later year? Thanks in advance for any assistance Grace

NY source income does not include ...loss from the sale of intangible personal property, unless they are part of the income you received from carrying ona business , trade, profession, or occupation in NYS. Don't know what happened to attachment. TB-IT-615 is available on NYS Tax website: wwww.tax.ny.gov and the instrcutions for IT-203, page 20 will support the above referenced info.

It depends on what created the loss and whether or not the capital loss came from "New York State sources." See attached Tax Bulletin (TB-IT-615) which defines New York source income of Nonresidents.

Medical student received 1099-MISC reporting $2,000 in Box 3 (Other Income). According to taxpayer, he was paid this for "doing research for the University". My research has generarted a lot of conflicting information. My main concern is whetehr or not it is subject to self-employment tax. Anyone with experience in handling this income tax issue. It's my first time seeing one of these. Thanks in advance for any input. Grace

I don't see it listed amongst the items to include, but what say others?

I know the 1098-T's are a useless information document and that it is best to consult the student's account transcript, Having said that, however, I am curious how others would handle the following when you have both: 2011 1098-T: [school Year Fall 2011 to Spring 2012] Box 2 (Amounts Billed): $ 40,000 Box 6 (Scholarships or Grants): $ 46,000 Box 8 (X) Account Transcript: [Calendar Year January 2011 - December 2011] Freshman Spring Semester January 2011: Qualified Tuition and Expenses: $ 0.00 [NOTE: The Spring Semester was billed in 12/2010] Scholarships and Grants: [NOTE: Applied after 1st of year] Pell Grant: $ 2500.00 XYZ Award: $ 500.00 ------------- $ 3000.00 Sophomore Fall Semester September 2011: Qualified Tuition and Expenses: $ 20,000.00 Scholarships and Grants: College's Scholarship: $ 19,800.00 Pell Grant: $ 2,500.00 XYZ Award: $ 500.00 ABC Award $ 300.00 --------------- $ 23,100.00 Sophomore Spring Semester January 2012: Qualified Tuition and Expenses: $ 20,000.00 Scholarships and Grants: College's Scholarship: $ 19,900.00 As you can see, everything neatly matches up with the amounts reported in the boxes on the 1098-T, but the amounts billed for tuition and expenses are done on a "school year" basis, but the scholarships and grants are applied on a "calendar year" basis which causes a mis-match. Do you go with the amounts reported on the 1098-T? And that means that the student has a potentially taxable scholarship income of $ 6,000 ($40,000 qualified expenses - $46,000 scholarships and grants). If it's done this way then the Spring Semester of their Senior year 1098-T document would show no qualified expenses, but yet scholarships that would produce taxable income. OR Do you match up the qualified expenses and the scholarships with their corresponding semester? That means I would have to review their 2010 tax return and account transcript as well as the Janaury 2012 account transcript to properly match it up. For puposes of simplicity, this whole post ignores the cost of books and required qualified expenses that appear outside the account transcript which I know can reduce the scholarship income.