BulldogTom

Thanks KC. The problem is the county told the taxpayer that because of the way they worded the letter and retirement award, it is not taxable. When I read regulation 1.104-1(e) I come up with that wording, but only if she was a member of the military or one of the listed federal government services in the regulation. When we prepared the return, we followed the general rule. The taxpayer then went to some CPA who told her I didn't know anything about taxes and the way they awarded the pension made it not taxable. So the taxpayer has the word of the county and the word of a CPA against me. I can see how she would think I am full of crap. I am going to meet with the client, and run through the entire research I have done. I will start with Pub 525, then the Master Tax Guide, then the Code, then the regulations. If she will not accept my tax treatment of this item on her return, I will refund her preparation fees and send her on her way. She can have someone else amend the return if she wishes, but I will not do it. Thanks for your confirmation KC. I just wanted to be sure I did not miss a code section or a regulation or a court case that would change the result from the general rules. Tom Lodi, CA

Taxpayer works for the county and is hurt on the job. County gives the taxpayer a Disability Retirement. 1099R has nothing in box 2a and "Taxable Amount Not Determined" checked. There are employee contributions indicated in box 9b. The county retirement plan provided the taxpayer with a letter stating that the taxpayer retired on "service related disability". It further states that the disability amount was not calculated on her years of service nor her age at retirement. I have read pub 525 and §104 and the regs at 1.104(e). I am coming up with taxable, with the exception of the amount attributable to the employee contributions. The taxpayer insists that the amount is not taxable in full. Am I missing something? Tom Lodi, CA

Single female client comes in. Third year we are preparing her return. "Has anything changed since last year?" Client - "No. Everything is the same. I am still in school, same address. Everything is the same" Finished the return. Client leaves. One week later client calls back. Client "Can I make an appointment for my husband? We got married in December" Me - Huh? What did you mean when you said nothing changed. Tom Lodi, cA

While I generally agree with the above answers, I think the first question is - WHO IS GOING TO PAY YOU FOR YOUR WORK? I am not totally convinced that you cannot be of assistance to this taxpayer. You may be able to mitigate the damage from the audit and reduce the taxes and penalties. I do like the idea of making the auditor tell you how to proceed with the taxpayer incarcerated. Doctors need sick patients too. We are not lucky enough to have only clients that pay us for the convenience of not having to prepare their own returns. Sometimes we have to take on those clients that are in a world of hurt as well. But, if there is no way you are going to get paid, withdraw. Just my 2 cents.

OK - Duh. Had I read the red instructions at the top of the form, it clearly says to input on the W2 form. Called the IRS e-file helpline. You can e-file with a substitute W2. No mailing of 8453 either. Sweet. Tom Lodi, CA

How do you process the substitute W2? Do you fill it out and then fill out the W2 form in the software? I filled out the 4852 but it just does not flow to the 1040. Am I missing a check box or something that moves it over to the 1040? Can I efile the return with a substitute w2? I think in the past we had to do the 8453 and mail it in with the 4852 attached. Is that the rule? Thanks for your help (as I go searching for my Pub 1345). Tom Lodi, CA

Sweet. So we are just waiting for an IRS announcement on how to make the claim and an update on our software? Or do you think it is wise to override the amount on the current form and let it fly? Tom Lodi, CA

Just to clarify, the new credit is not available on 2008 returns? I heard it was going to be available. Don't remember where, but I was under the impression that this credit would be available to claim on 2008 returns. I have come to hate the word "stimulus". Tom Lodi, CA

Sorry cientax, I have not had that problem. Did about 6 of them this year with no problems. It was the best part of ATX this year. Worked perfectly. Is your printer grabing two sheets or is it pulling just one at a time and then a blank sheet? Tom Lodi, CA

In reading the news on the stimulus bill, there is one provision that might affect cash flow at your business clients. The COBRA rules have changed (this affects employers with 20 or more employees). Anyone who laid off or fired employees from Sept. 1, 2009 will have to offer another 60 day period for the employees to elect COBRA coverage, and the employee will only have to pay 35% of the cost. The remainder is picked up by the employer, but refunded in the form of a credit on the next tax return (at least that is how I am reading it in the news). The employer must keep it up for 9 months. If you are doing the bookkeeping for any businesses, you may want to read up on this provision. It can affect your client's cash flow at a time when cash might be tight. Tom Lodi, CA

Yep - social security recipients are supposed to get an extra check this year for 250 bucks. I think the SSA is handling this one instead of the IRS and I don't think filing a tax return has anything to do with it. The new working families tax credit is going to be accomplished by changes to the withholding tables so that at the end of the year you owe 400/800 less on your taxes and you had 400/800 less withheld. It is a refundable credit. Tom Lodi, CA

Hey all, I used databazaar again this year for my toner supplies. I ordered 5 toner cartridges. The 3rd one was defective. This is the first time I ever had a problem with their products. So I sent them an e-mail. What a crock. "We will be happy to refund the price, but you have to pay for the shipping." Needless to say, that does not fly with me. If you send me a defective product, you should pay the shipping to get the piece of crap back. I have terminated my relationship with this vendor. If any of you are using databazaar.com for your toner cartridges, be aware that they don't stand behind them for more than 30 days. So, I guess they are saying that you should not stock up, and you should put the toner cartridge into the printer upon reciept so that you can be sure it works or they will not stand behind the product. This crap just really pisses me off. Sorry to vent on your holiday. I think I need a nap. Tom Lodi, CA

I have a neice who bought a house and closed Dec 17th. Sucks to be her. My other neice (her sister) is trying to close this month. Great for her. Tom Lodi, CA

Just a heads up for you Comm Prop State practitioners. When you try to create the e-file it will bomb out and tell you that you need to fill out the Comm Property Worksheet in the 1040 Efile tab. When you enter the income on the lines, it still bombs out. Logan at ATX gave me the solution. You must also fill in line 9 on that worksheet. It will not total down to that amount. You need to enter it. Then your e-file will create. Crap like this just drives me nuts. Tom Lodi, CA

Are those Honey Buns stuck to the side of her head? And did we really dress like that in the 70's? Check out some of those "daisy dukes" on both the guys and the girls. ROFLMAO. Tom Lodi, CA

Danrvan has the equipment part down pat. I think what we are all confused about is the amount that the buyer paid for (in cash, not notes) for the goodwill. I think Jenmo is trying to bring that back on the books because it was "returned" and she showed it on the sale. But I am not clear if any of the sale of the goodwill was ever recognized for tax purposes. I may be off base, but I think that is what she is asking about. I don't know the answer for sure, but I am guessing that since there was probably no recognized gain on the sale of the goodwill, there is nothing to pay taxes on again. Tom Lodi, CA

This quote from MSNBC News. It is a small tidbit from the details of the compromise bill. Notice the dates of purchase. You hit it right on the head, JohnH. "Homebuyer credit $3.7 billion to repeal a requirement that a $8,000 first-time home buyer tax credit be paid back over time for homes purchased from Jan. 1 to August 31, unless the home is sold within three years." Tom Lodi, CA

Your post is a little confusing. The purpose of an installment sale (tax purpose) is to delay the taxation of the transaction until the money is recieved. If this was treated for tax purposes as an installment sale, there would have been very little or no tax paid on the return because it appears your client recieved no cash at the point of sale. Therefore, when the property was returned, the deferred tax would become due. I assume that is why you are coming up with 10K. But again, the post is not very clear to me, so I might be off base on this. Tom Lodi, CA

That is an interesting development. I heard the 15K credit was scrapped, but I did not read about the change to this credit. It is always so dangerous to advise a client based on what "might" actually become law. I have another client that we decided to amend the return after the stimulus package is finalized to see what comes out of it. Thanks for the heads up. I will be looking for confirmation on that credit when the bill finally goes to the President. Tom Lodi, CA

That would be my guess also. Look at the stub, and if it is in fact a 2008 paycheck, then use the normal proceedure to file a substitute W2. Tom Lodi, CA

Kyle, You may want to download pub 17 to your desktop. It is the main publication for Individual tax returns. If you save it in PDF format, there is a handy menu that takes you to all the areas of taxation on the 1040, and hyperlinks to them so you don't have to scroll trough all the pages. Most situations can be found in that pub. It is the new stuff and the weird stuff that may require looking beyond pub 17 for "normal" (whatever that is) tax returns. Tom Lodi, CA

It is not the worked date, but the paid date that matters. I would guess that is what the manager meant. Even though she worked in 2008, she did not begin working before the "cut off date" for a 2008 paycheck. In many companies (especially if they pay bi-weekly) it would not be unusual to start work and not get a check for 3 weeks. I would put a note in the file for 2009 that she should be looking for the W2 from that restaurant, or you might be amending the 2009 return when it comes in. Hope this helps. Tom Lodi, CA

I am just going to tell him there is no provision for a "have it your way" loan from the government. You take it on their terms or don't take it. And it IS an interest free loan. Tom Lodi, CA

I thought of that too, but I think that would still stretch out the repayment 15 years. What the client wants is to take a smaller amount (say 2500) and pay it back at 500/year for 5 years. This damn credit is screwy. Tom Lodi, cA

Client is asking and I can't find an answer. The instructions are not real helpful (or I am just missing it). Tom Lodi, CA