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Cat in OH

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  1. My thought is that the contractor income is Sch. C with whatever regular expenses he had deducted there. The medical for that time frame is deducted on Sch. SE to reduce the amount on which he pays social security tax. The same amount is also deducted on the lower front of the 1040 to reduce his AGI.
  2. Has anyone else had this situation? It is unlikely that the TP will have to over-withdraw and cut into the less than 5 year conversions, but he really wants to be sure that he won't be penalized if he does. Thanks, Cathy
  3. TP is age 68 and started his Roth IRA 7 years ago. Additionally, he converted from his traditional IRA to the Roth in 2008, 2009 and 2010. He wants to be sure that there is no penalty if he has to withdraw so much in 2011 that, by the ordering rules, he withdraws converted amounts before their 5-year period has been reached Reading Pub 590, I think he's okay, but want to be sure I'm following it correctly. Here's what I'm looking at: "Additional Tax on Early Distributions...If, within the 5-year period (for a converted amount)...you take a distribution from a Roth IRA, you may have to pay the additional tax on early distributions." It then goes on to explain the separate 5-yr period for each conversion or rollover. Two paragraphs later it says "Unless one of the exceptions listed later applies, you must pay the additional tax on the portion of the distribution attributable to the part of the conversion...that you had to include in income because of the conversion..." The first exception is "You have reached age 59 1/2." I read that to mean that once TP is over 59 1/2, the separate 5-year rule for conversions is irrelevant? Thanks so much for any help.
  4. Squeak is a rescued cat too...she showed up at the plant we were working at in the middle of winter about 6 years ago. My husband, who is allergic to cats, was worried that she'd freeze so she somehow got herself in a box the back seat of the car and came home with him.
  5. Thank you. That the first article that specifically says "...included in 2011 tax filing and 50 percent in the 2012 tax filing...". That was what I needed to verify. That's different from my client's understanding that he could claim half of the conversion in 2011 on his 2010 return and half in 2012 on his 2011 return. Cathy
  6. Hi again. How did you get a picture of my cat, Annie.?

  7. I'm confused on one issue about the two-year tax payment allowed on IRA conversions to Roth accts made in 2010. I see references to claiming half in 2011 and half in 2012. Does that mean claiming half on the return prepared in 2011 for tax year 2010 and half on return prepared in 2012 for TY 2011. Or does that mean on the returns for TY 2011 and TY 2012? If it means the second, can any of the conversion be claimed for TY 2010 or is it an all or none thing? I apologize if this is something I should know, but I have such a small practice that it's only an issue for one client and I have not been able to find an answer anyplace online. Thanks, Cathy
  8. Tuition for a master's degree should qualify for the lifetime learning credit.
  9. I'm wondering if anyone knows of any online personal financial planning tools or spreadsheets that I might be able to use. I'm an accountant and tax preparer (very small practice). I don't do any financial planning professionally, but my husband and I have reached a point where we need to figure out the best retirement income scenario, especially tax-wise. I can do some of the calculations using ATX and spreadsheets, but I'd rather not re-invent the wheel if there's something already available. Briefly, we're trying to figure out several things, especially considering likely changes to tax rates over the next few years: 1) How much of our traditional IRA's should we convert to our Roths? 2) Are we better off in the end if we draw out of our regular (non-tax-deferred) investment accounts before drawing from the IRA's? Thanks for any suggestions! Cathy
  10. Thank you all! I had a great birthday, busy and fun. Phone calls from kids, grandkids and my mom and emails from my sisters. Treated like royalty by my hubby. Cathy
  11. Just want to be certain that 3rd party sick pay reported on a W-2 is earned income for Roth or Traditional IRA purposes. Client is on permanent disability and receives disability income from previous employer until old enough for pension. Thanks.
  12. I'm not sure the Sched C is actually correct. I think the only reason they used it last year was that they didn't know what else to do with it. I'm not even sure that the 1099 is correct...I would think it should have been "Other Income", not "Non-employee compensation". They were not being compensated for anything they did for the workshop.
  13. Am I misunderstanding the 1099-Misc instructions? "Trade or business reporting only. Report on Form 1099-MISC only when payments are made in the course of your trade or business. Personal payments are not reportable." The taxpayer has no business of any kind. Thanks.
  14. I just want to be sure I'm right on this: 84 yr. old widow has a 60 yr. old special needs son still at home. Son attends a sheltered workshop Mon-Fri year round. They are also eligible for respite care through a state program. The money for the care is paid to the workshop by the state. The workshop then issues a check to the mother each time care is given (usually 2 or 3 days at a time). The mother never cashes the check, but endorses it over to a caregiver. The mother received a 1099-Misc for $5600 non-employee compensation, the amount paid for the respite care, most of it to one person. My understanding is that the mother is not required to issue a 1099 to the caregiver because she was not paying the caregiver as a cost of any kind of business. Am I correct? Also, in 2008, the 1099 was for $2700 so the taxpayer put it on a C-EZ with an offsetting total of $2700 in expenses. Because it is more than $5000, that would mean filing a regular schedule C, but again, putting the expense as a single amount. Is this the best way to handle this? This is a new client and I want to be sure not to cause her any problems. Thanks, Cathy
  15. Belated thanks to all of you! It was a nice birthday. I started it early with a dinner with my daughter and 4 of her kids on Sunday. Then my husband took me for breakfast at Panera's on Tues. followed by lunch at a favorite Mexican restaurant. Won't go into details of the results of the margaritas. We finished the week with a visit to my parents who recently celebrated their 60th wedding anniversary. With all of that, today's the first chance I've had to check out the board in almost 2 weeks. Hope you've all recovered from tax season and able to enjoy the early summer weather. Cathy
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