BulldogTom

Clients just left, but they are typical of my client base. Dual income, middle class, sch. A filers. Income within $300 of last year. Itemized deductions within $500. Withholding 3K less. Refund, 1900 less. Client - I can't understand why when we made the same amount we are getting a smaller refund? My answer - you got it in your check during the year. Client - but we didn't change anything My answer - the government did Client - Why? My answer - I don't know. Client - and why do I have to pay the State? My answer - Because your children were worth $309 in exemptions last year and only $98 this year. That is a $422 tax increase from last year. And there was a tax rate increase as well. Client - then why didn't they take more withholding? My answer - I don't know Client - why do I have to pay a penalty to the state? My answer - because you need to pay enough from your withholding to cover your taxes. Client - but they do the withholding. I didn't change anything. Why do I have to pay a penalty? My answer - I don't know. This is the same conversation time after time this year. It is getting old, or maybe I am just getting old. Tom Lodi, CA

OK - called into the IRS office in Fresno. Looking to make sure the IRS has the information that I sent regarding a client. After finding out that my POA was not on file (sent to Ogden UT on 2/1/10), I faxed over my original. Tax examiner was very polite and we took about 10 minutes to establish that I had standing to talk to her. No problem so far. Then I ask if they have recieved my correspondence. Her response - our correspondence program has been down since the 4th and will not be back up until Thursday the 11th. She then went on to add that the administrative staff is still waiting to get caught up on December correspondence. OK - I knew the IRS was backed up. So they are really backed up. Then we start talking about my client and the information that I sent. After explaining what I sent over in my letter and the back up documentation that was with it, I swear this is what she said. "Sir, I have a disablity that makes it hard to understand what people are telling me. Could you repeat that please?" I couldn't make this one up. I had the phone on speaker in the office and my wife nearly lost it when she heard this. I don't mean to be insensitive to those with disablities, but there are jobs you should not be doing if you cannot understand what people are saying to you, and one of them is working as a tax examiner at the IRS taking taxpayer phone calls. Tom Lodi, CA

Deb, That is what I thought, but I am looking for something in an authoritative source to confirm. I did a return this weekend and I never gave it a second thought when the software excluded the first 2400. A couple hours later, I started second guessing it. Not finding anything in print other than the standard rule for unemployment. Tom Lodi, CA

I know that CA PFL is taxable. It comes on a 1099G and the amount is in box 1 - unemployment benefits. Is CA PFL treated the same as unemployment benefits and the first 2400 is exempt from tax? If not - how do we get it to show up on the return. The software treats it like unemployment because the 1099 shows it in box 1. Can any of you point me to a source for authority on this? I am kinda brain dead today (went skiing with my boys yesterday and can hardly walk this morning). tom Lodi, CA

Good work "DUDE". It is really unfortunate that all of the IRS is not as helpful as the TA office. They should be. We are all in this to get the returns right. I know - the examination division needs to be (well - I can't say that word on this site) sometimes, but in general, there is no reason the rest of the IRS can't be as helpful. Tom Lodi, CA

Don't you know you are not allowed to have birthdays during tax season. So unprofessional. Happy Birthday my Friend Tom Lodi, CA

Found it. Code section 7701((1)(A)(i) of the Internal Revenue Code provides that an alien who is a Lawful Permanent Resident of the United States at any time during a taxable year shall be considered to be a resident alien for the entire tax year. Sweet. Tom Lodi, CA

Client is married. Spouse is a Resident Alien. Spouse did not have green card until late in 2008. Purchased home in 2009 and ammended 2008 return to claim homebuyer credit. On the 2008 return, the spouse used his ITIN number. He received his SS number in 2009. IRS has disallowed credit on 2008 1040X claiming spouse is not qualified unless he can prove he is a resident alien. I am now representing the clients in their appeal. I am looking at the code and it does not address how long during the year the spouse must be a resident alien. He was definately a resident alien at the time of the purchase in 2009 and the home was purchased in both spouses names as joint tennants. There are two ways that I see to approach this, but the code is not clear as to the timing of determining resident alien status. The code says the credit is disallowed for an person who is a non-resident alien for the tax year. I don't know if that means at any point in the tax year, or if status is measured at the end of the tax year (like marital status). If it is measured at the end of the taxable year, then the fact that he has a green card at the end of the year should be all that is needed to prove status for the appeal. If the taxpayer has to have had his green card for the entire year, we can meet the substantial presence test for 2008, but is much more difficult to document. ANOTHER POSSIBILITY I don't see where the election to claim the credit is irrevocable. Is it possible to revoke the election to amend the 2008 return and claim the credit on the 2009 timely filed return? I am just going through possible scenarios as to how to represent this client and would like some of your feedback. There is very little guidance on this credit in my research materials. Thanks for your help. Tom Lodi, CA

I think there used to be a way to split a return automatically. Am I just losing it? I know there is the MFJ v MFS comparison sheet, but is there something that will automatically create two MFS returns? Thanks in advance. Tom

Please say it isn't so. I don't want to explain to these customers next week why the bank that won't give them a Ral also screwed them out of another $11. Have you called customer service? Did anyone else get fee collect disbursements this week? Tom Lodi, CA

I second what Terry said. Tom Lodi, CA

I was born in Fremont. But it is not the same place it was in 1965. Tom Lodi, CA

I have looked through some material and I cannot find anything that correlates the two items. They don't seem to refer to each other. The only issue would be if there was COD that was not excluded and pushed the MAGI over the threaholds. Anyone else have an idea? Don't know why this situation is not sitting well with me. For some reason it seems that this situation is not the intent of the laws, but maybe it is. Tom Lodi, CA

Client asked me this question about her son and I don't have a good answer. Son walked away from home (principle residence). In the same year went and bought another home (what banker let him do that - but that is not the question). Assuming all the rules for cancellation of debt on a qualified residence, and assuming all the rules are met for long term home buyers credit, can the taxpayer get tax relief on the COD and get the $6500 homebuyer credit? On the same return? Tom Lodi, CA

nctx - you need to learn what jainen is all about. He always has a point, but it is sometimes phrased in a way that makes people a little defensive. I would look at what he is trying to get to. You will find that jainen has an excellent tax mind and shares a great deal of wisdom on this board. But he is a little hard to take at times. Don't be offended, it is just jainen being jainen. Tom Lodi, CA

Along the same lines - when documenting a long time homebuyer credit, what do you send in. My M-I-L (86 years old) sold her home of 60 years last year. She has purchased a smaller home. She never had a mortgage and did not carry insurance on the home. When she moved out of the home, all her documents were put into storage, so she does not have the property tax bills. I was thinking of sending in copies of her last 5 tax returns, but that is not a listed document on the IRS website. Is going to the county for copies of the last 8 property tax bills her only option? Tom Lodi, CA

The code section for spiliting community income in in the 50's I think (maybe §55 - but I would have to look it up). The rules are that the spouses must exchange information before the due date of the return. In practice, this will generally never happen. I did one of these (divorced after marriage, not common law) and I split the income from the date the community ended in CA. I had my client give this to his attorney to give to his spouse. I listed the relevant code section in the letter with all the supporting documentation of the split. My client's attorney would not deliver to the spouse's attorney because it would have complicated the divorce. Divorce attorneys seem to not like to have to deal with tax laws. The IRS does not like splits either. They know what the code says, but it screws up their matching when the W2's, 1099's etc don't come out on the return as they think they should. I had an IRS agent tell me that if they get a split, it will increase the chance of an audit, but if each spouse claims their own, they will generally let it slide because they don't like to audit divorcing couples who are fighting. This was not an official communication from the agent, just a casual conversation at a tax seminar. Tom Lodi, CA

I really wanted my 1000th post to be brilliant or a snappy comeback to one of Jainen's posts. But this is it. I made it without Eric or KC kicking me off the board. This is a major accomplishment for me. I am next level Whhhaaaaahooooooooooo!!!!!!!!!!!!! Tom Lodi, CA

The meal at the San Ramon seminar was so bad I did not finish it (and I don't leave scraps on my plate when I eat). I could not even eat the desert it was so disgusting. On the other hand, the seminar was very good as always. Tom Lodi, CA

I did. San Ramon. I was not suprised to see it. But it is funky looking. Looks like it is approved for paper filing now as well. Tom Lodi, CA

I think there is a casualty loss. The condition of the property only matters as to FMV (as jainen pointed out). What has not been mentioned is the allocation between the land and home. The land is not damaged, and there is no loss there. The home has been destroyed by fire, which is one of the definitions of a casualty. There is more in the code about unforseeable and sudden in nature, but ASSUMING that those conditions are met, the lower of the FMV or adjusted basis of the home is the starting point for the calculation. If the home had a FMV of zero, then there is no loss, even though there is a casualty. ASSUMING the original purchase price of the home and land was 20K, and 10K was allocated to land, then the adjusted basis of the home is 10K (ASSUMING no other improvements, periods of depreciable use, etc). ASSUMING the FMV of the home just before the fire is 10K, and the FMV after the fire is 0, then the casualty loss is 10K. Then you take the haircut (is it still $100?), the 10% of agi haircut, and what is left is the deductible casualty loss. The 6K to clean up the LAND after the casualty would be added to the basis of the land, in my opinion. Tom Lodi,CA

Taxbilly, His sister is 20 years older than him. Sounds like the taxpayer was an "oops". ;o) Having children 20 years apart will make you "elderly" in a hurry. Tom Lodi, CA

Congratulations JB. Let us know if you need help on the rules for Education Credits. You will be seeing those on your return next year. Tom Lodi, CA

Yes, it says I am enrolled. However, it also says I am enrolled for Bank Products at SBBT. They think that may be the problem. They don't know but bank product support is swamped and customer (non) support is not able to do anything without them. Tom Lodi, CA

OK - in the wake of the SBBT debacle, I contacted CCH Customer(non)support and asked if I could move to Fee Collect. They said it was no problem, just sign up from the website. Nothing to do to unenroll from SBBT. So I did the enrollment in Fee Collect on line on Monday. Tuesday we get the enrollment e-mail. Try to add fee collect to a return. Red Errors. Call customer (non) support and they say it was taken care of in an update but they don't know why it did not work for us. Should be fixed any time. It is now Saturday. Three returns are being held up for fee collect. Can't use SBBT either. On the phone for hours. They lost our incident number. Gave us a new incident number. On the phone for hours. They promise to send an e-mail by the end of the day. No e-mails. On the phone for hours. On hold right now for customer (non) support. This is the 5th day with this problem. On hold for hours and hours hours no help they don't know why they don't know anything they can't tell me who does know They can't escalate to a manager they can't tell me when they will get to it They don't know I hate CCH....I hate bank products....I hate Customer (non) Support hold music. Tom Lodi, CA