BulldogTom

@kathyc2This is a known problem with the CA FTB. They don't get the 592Bs electronically, so they can't match the withholding to the return and it kicks it out with a balance due notice. A lot of times, the taxpayer is from out of state and challenging the FTB will cost more than the amount of the tax bill, so they just pay the bill. If you want to get the money back, you have to mail a letter to the FTB with all the documentation and wait for them to read the letter, respond to the letter, and then issue the refund. Takes time. Every morning when I wake up, I thank God that I did not wake up in California. Tom Longview, TX

The accountant in me rebels at that statement. I have always lived by the motto "keep track of the pennies and the dollars will follow". I think it shows professionalism that your reconciliations tie out, to the penny. When I see recons that are close, but not exact, I question whether the accounting person is competent. Just like spelling and grammar errors on a resume, it says something. However, I do know when to throw in the towel and just write it off to Misc Expense when the amount in question is small and I can't identify the reason for the variance. Tom Longview, TX

I have one client that is already asking when the K-1s are going to be available from the trust. To be fair, we have been gathering all the documents during the year for the final year of the trust and I have everything but the forms in ATX. The tax return is mostly done, but I have no CA trust forms and of course efile is not open yet. The Trustee is sick and tired of her half brother making demands on her during the entire process. It is a thankless job to be the trustee of a decedent trust. And so it begins...tax season 2024 arrives in 2023. Tom Longview, TX

@artp this is the post @Catherine put out a while back. PM her. Tom Longview, TX

@Catherine has been raving about her guy. You should send her a PM and look up the post she started a few weeks back. Tom Longview, TX

What is open office? I use Excel, but you can't buy the office program anymore, you have to subscribe and I am looking for an alternative. At my day job they use Google Sheets and I hate it. I download every one of them into excel because I can't seem to navigate Sheets. Maybe I am just too set in my ways. Tom Longview, TX

Sorta on topic, I think the "reduced penalty" amounts are actually a way to start applying the penalty. I have never had the penalty apply because when you find out they missed, you have them get caught up and you send a penalty waiver request with reasonable cause as "the client is old" and the penalty is always abated. The new rules do not have a reasonable cause exception, or they did not when I looked at them a few months ago. I think this a a slick way for the IRS to say they are reducing an overly punitive penalty while actually increasing revenue because there is no way to abate anymore. Tom Longview, TX

I always amazes me how red tape gets cut fast when the person writing the letter is a lawyer. All the BS corporate requirements seem to fade away when the actual law is cited to someone enforcing corporate policy. Tom Longview, TX

@Terry D EA Thanks for this conversation. @DANRVAN I do enjoy reading your analysis of an issue. It reminds me of something I know but sometimes don't follow - Always start with the code, then move to the regs and then to lesser authority. I really enjoyed reading this as it unfolded. Tom Longview, TX

Overwhelming demand for knowledge and compliance guidance.... Tom Longview, TX

I took a different approach. I am not including it in my engagement letter. I sent the BOI instructions to each of my affected clients and told them in the email that I could not prepare it and I was letting them know about their requirement as a courtesy. Not being argumentative, just asking. By putting it in your engagement letter, are you in a backhanded way telling your clients this is a tax issue? I did the above because I don't feel it is a tax issue and it is not my responsibility to even notify them of their requirement to comply. In the same way I don't tell my clients it is their responsibility to file their annual SOS report or their county property tax returns. Tom Longview, TX

I think you are reading that incorrectly @Lee B. I think they were testing to see if the system worked properly for taxpayers filing for Tax Exempt status and they got an 80% success rate. I don't think they were trying to see if the IRS would catch 5 obviously bogus claims. If that was the case and 80% of the bogus claims for tax exempt status were being approved I would whole-heartedly agree with you. Tom Longview, TX

I think you have a good grasp on this. They need to do a couple things: #1 DON'T MESS UP THE CURRENT PAYMENT AGREEMENT. Stay on schedule at all costs. #2 manage the withholding so that he pays more and she pays little or none. Then you don't have to worry about innocent spouse #3 make sure the property that has a lien on it stays out of the marital property. Those liens can be vague and apply to "all bank accounts" so a joint account might bring her assets in a joint account under the lien. Make sure you client knows what the lien covers. Tom Longview, TX

Did they collapse the LLC because there was no longer a partnership? What form did the company use to report its tax obligations? If you file the 568 returns and show it was still a partnership but do not have a federal 1065 to back it up, you have a federal problem as well because CA will share the information with the IRS and the IRS will come looking for 1065s for all those years (penalties for not providing partners K-1s?) I would do some digging to find out what happened and when with the entity. Take it slow and make sure you have all the facts before you start filing the old 568 returns. Tom Longview, TX

If they are not legally separated, why is he paying alimony? Tom Longview, TX

If she files single, the whole discussion is moot. There is no community income if there is no "community". Tom Longview, TX

CA taxes worldwide income of residents. It taxes income of non-residents earned in the state of CA. SS is exempt from tax in CA, so that is not an issue for either one of them. The schedule CA removes SS income for residents and non-residents alike. Pensions received by a CA resident are taxable income regardless of the state earned in or paid from. If you are a resident of CA, your pension is taxable to CA. Pension income is community income, therefore, your NR OH taxpayer has CA source pension income (50% of what your CA taxpayer received). Tom Longview, TX

Your CA resident and OH resident will file MFS in CA (you file the same for CA as you do for Fed in most cases - I don't see that they qualify for any exception). CA resident will file a 540, claiming all worldwide income less the 50% of community income. OH Resident will file a 540NR, show all worldwide income, and pay tax on the 50% community income. Adjustments to taxable income will be done on Schedule CA 540 NR. Tom Longview, TX

Thanks Tom Longview, TX

So help me understand this. If I pay a vendor for a business expense with a credit card, and it is over $600 but less than $10,000, I have no reporting requirements (because it was paid by CC) and the CC company will not report (because it is under their threshold). Next year, the same scenario but as long as the transactions total less than $5,000 the transactions don't get reported to the IRS. Conversely, if a business client pays me on a credit card more than $600 but less than $10,000 in 2023, I will not get a 1099NEC from the client, nor will I get a 1099K from my CC processor. In 2024 same but under $5,000 fee. Do I have this right? You think anyone is going to set their fee at $4,999 in 2024? (not like anyone would game the system to avoid income being reported). Tom Longview, TX

I have a new favorite emoji. I found it on my phone but I don't see it here. It is an angry face like JohnH posted, but it explodes into about 20 little heads. I wish I knew how to get it from my phone to here. Best emoji ever. Tom Longview, TX

I have been working with our banks at my day job to create some new accounts. I was surprised to see the BOI form on their new account application. Looks like the banks are collecting so the FinCen folks can cross reference to the reporting by the company. Interesting twist. Tom Longview, TX

I don't think I will be doing tax returns in 2923.... Tom Longview, TX

@Lee B Does that include Cyber coverage? How is the customer service? Can you talk to a live person? Tom Longview, TX

Is the gain substantial and have you calculated the tax on the gain? Is it worth it to do the exchange and take on the risk of trying to fit the transaction into the like-kind shoe? What is the economic reality of the situation going sale vs exchange? Tom Longview, TX