BulldogTom

agree with jasdlm. It is a property settlement and not reported. Tom Lodi, CA

Last night I saw on the news the State Controller say that all refunds should be caught up in about 2 to 3 weeks. That is good. I am waiting for my refund in that mess. So now I claim married 12 on my CA withholding. I am thinking about moving it to married 20 to see what happens. Tom Lodi, CA

Linda, You may want to rethink the split on this. You can save them some money because the income limit on SS is being hit by the business, but when you split it, you are paying on all of it. If she (or he, it does not matter) have enough quarters of credit for SS and Medicare purposes, and especially if she has another job, you may want to make her an employee and put all of it on his so you only pay SE tax up to the limit for one person. Pay her a small salary that she has to pay SS and he has to match, but keep a large chunk of it out of the 12.4% SE tax. You have probably already told them this, but if the marriage is as strong as you say, there are thousands of dollars of tax savings available to them. Tom Lodi, CA

Warning : Dumb Blonde Joke Follows. Do not read if offended. A blonde receptionist gets a phone call from someone she doesn't know. The lady on the other end of the line explains that she recieved a fax from the Blonde's company that was not intended for her. The fax went to the wrong number. The blonde responds "Sorry about that, would you please fax it back?" Tom Lodi, CA

At our company, each state the employee works in generates a W2. I don't know why the payroll service requires this. We have to set them up under a different ID when they work in a different state. Could this be what happened? Tom Lodi, CA

Still using QB 2003. I have a spreadsheet for my payroll. Don't plan on upgrading "Until I can see the back of my neck" as someone on this board used to say. Tom Lodi, CA

This may not be the "right way" to do it, but I would enter two separate 1099G's. The first one with the UI he was paid and the Federal withholding. The second one with just the repayment. It should all flow to the right places - netting out the UI on the front of the 1040 and adding the Fed W/H to the rest of his payments on the second page. Just my thought. Tom Lodi, CA

That sounds like standard practice, even before TARP. I would not worry about it. Most of us signed one of those when we got mortgages on our homes. I know I did. Tom Lodi, CA

Thanks John. Tom Lodi, CA

Form 8919. Tom Lodi, CA

Client has small trucking company. 3rd year in business. Always pays her taxes with the 941. Had one quarter where taxes exceeded 2,500. IRS sent a penalty notice for failure to make deposits. She called the IRS and they abated the penalty. Now she thinks she is going to exceed 2,500 for the first quarter of 09. She does not like the idea of becoming a monthly depositor. In looking at the rules, it seems to me that everyone is a monthly depositor unless they are required to deposit sooner. The 2,500 per quarter is an exception only. Am I reading this correctly? If she actually exceeds the 2,500 limit in Q1 of 09, even if she makes the deposit for Jan and Feb by March 16th, she will still get a penalty for failure to deposit on time? Correct? I don't prepare her payroll, just her 1040. Tom Lodi, CA

I think this is hillarious. I now know how the president is going to balance the budget - by appointing the worst tax cheats to his cabinet. If he keeps this up, we will pay for the bailout in about 6 months. What they should be checking is the returns of all the republicans who are leaving DC right now. You know they are taking notes on how to avoid taxation from the democrats who are coming in. They are all punks in my opinion. I think to work in DC politics, you have to check your ethics at the beltway. Tom Lodi, CA

And note one other item on this, it is NOT REFUNDABLE. It can only lower your taxes to zero. I think there are very few middle income buyers that will get the full effect of the credit. It should help the upper income taxpayers. Be careful on advising your clients. If you tell them they are going to get $3,333 credit on their taxes in 09 10 & 11 and they don't get the big refund, you will be like Lucy Ricardo. "You got some splaining to do". Tom Lodi, CA

Do you have an agreement with the per diem firm about its clients? In other words - how much do you like working per diem for that firm. If you were working for me and then taking in a client of mine on the side, I would make an assumption that you are pulling my clients. May not be the right assumption, but that would be my first thought. You should either tell the new client no or go to the other firm and tell them what happened. my 2 cents Tom Lodi, CA

It sounds like your client has been getting advice from the three B's - the Barber, the Butcher, and the Bartender. There is some truth to what he is being told, but of course he is not going to get all the nuances like "reasonable compensation" and "corporate governance" and not treating the corp like a sole proprietorship. However, the LLC S-Corp is not a bad entity choice for a lot of situations. I would not discourage it, but you need to educate your client about how a corporation is different than a proprietorship. Tom Lodi, cA

JB - smart@$$ answer is - how much does the client have in the bank. Real answer - State NR's are normally more complicated, so I charge a lot for them. I am in CA and I can get away with more than you seem to be able to charge (that return would have cost about $110 the year before in my office and still about 50-75 less than HRB). The return you are working on would be about 350 if I did it with good bookkeeping records, more if I had to sort all that crap out. You are a good professional and are worth every penny to the client. Don't sell yourself short. Tom Lodi, CA

I am waiting also (see my post from yesterday). The IRS posted 1040X on their website on 2/21, so I would expect ATX to have it any day now. In the past (the good ol days) they were pretty fast at getting the forms out. Now that CCH and Taxwise get their forms first, it seems like we are waiting a little longer. Tom Lodi, CA

The new form has the changes to the first time homebuyers credit for 2009 purchases. Just in case you were waiting for that. Tom Lodi, CA

A new scam that is going around. Small businesses are getting a letter supposedly from the SBA. Says they need to get qualified for the Stimulus payment. Just give them your personal information including your bank account number for direct deposit into your account. Just an FYI. In case your clients get one. Tom Lodi, CA

There is a saying that goes something like this: What do you get when you don't get paid? Education. That is what I am getting for this tax return. Tom Lodi, CA

Well, I was wrong. Thanks RoyDaleOne. I learned something new. I will amend and appologize to the client. Tom Lodi, CA

It is coming from the County Retirement Plan. The taxpayer does have contributions, which we took into account when we calculated the taxable portion. It is definately not an insurance benefit paid for by the employee. Tom Lodi, CA

Amen to OldJack. The real trick is to make sure all the activities are qualified activities. I personally do this for my day job, and it is a pain in the @$$. The CPA firm actually prepares the return, but I do all the work to segregate the qualified activities and the non-qualified activities. Then I allocate all the overhead and payroll accordingly. The math is pretty simple, and I have developed a spreadsheet to do it for me. It is the analysis of the activities and breaking out the revenues, payroll, direct and overhead costs associated with the activities that is a pain. Tom Lodi, CA

They verbally told her that it would not be taxable. They gave her a letter with verbage right out of regulation 1.104-1(e) as to the manner in which the amount was determined. I think that is what made me quesiton if I treated it correctly. But a close reading of that regulation goes on to say that this exeption applies to members of the US military, the Geological survey, foreign service employees, etc. I don't see any authority for excluding the income based on her job as a county employee. Tom Lodi, CA

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