Roberts

Can she? technically yes. Mostly likely though is that the bank will reject the deposit and a check will be mailed anyway and it will take forever. Fraud deduction has really been ramped up lately.

Yep, that's one of those situations where in 3 years when someone asks - you'll never remember how you came up with that number without scrambling. An easy statement in the return that takes 2 minutes to produce and you are good.

Sorry, wasn't accusing. Honestly, doing the Schedule L doesn't mean you didn't miss something. Unless they are running EVERYTHING through a Quickbooks type program and keeping funds 100% separate (which is rare for 1 property x 1 owner), you are fighting an uphill battle.

You nailed it. He sent me another list of questions and demanded I answer all the previous and I was taking too long. Told him he needed to go elsewhere. I have a really bad feeling that I'm going to get accused of something by someone on this one. His last list of questions he wanted to depreciate the houses over 10 years and he wanted to change the value every year to reflect the market price. I have a really bad feeling in my gut about this one.

If line 6 on schedule B is YES - whatever you produce will not be submitted to the IRS via e-file and is for your client's informational purposes only. In my opinion, don't do it unless the client wants it done and knows they are paying to have it done. It's good to know how to do these things but if it's not required - don't do it wrong. The IRS has that #6 question because they simply don't want the information if it's not worth their time to process it. Why charge the clients for work that doesn't need to be done? Do you charge them to produce a bunch of other worksheets that aren't required?

Any clue if the IRS ever really comes after people who file under an inappropriate classification? How would the IRS go about deciding who to go after? I have clients who I'm pretty sure are married - they have forever claimed as single. I have a friend of a friend who lives with his ex-wife and they file as single. (it is all correct as they aren't married and don't get along) IRS never questions it. I have clients who I know haven't been married for 30+ years, still file as married. She's my neighbor, he lives about 20 miles away. I only know they aren't officially married because the grown son told me they divorced when he was in high school but I've seen their tax returns. Have an investment client who does the MFS and they use different preparers to get around the standard deduction / itemization. They really could just be filing as single. (I'm not even sure why MFS is a category anymore honestly). In today's world, MFS seems completely outdated and a bizarre category. Off the soap box.

It is convoluted. I've done it - honestly will likely never do it again. I don't really know how many I've submitted and am not interested in looking it up. I've also put into the queue multiple returns that aren't being included in the numbers.

Yeah, I can't imagine a tax software that doesn't do a review which would catch these things. I've used Drake, ProSeries, ATX, TaxWise, Intellitax, TaxAct and OLTPRO - all do a review which catches basic errors. Unless he's overriding the software and sometimes software allows you to override and it isn't an error - it's marked as an override which is a redflag to verify yourself. Is your payment from him already set and locked into place or is your fee based upon retaining clients? It's bizarre that he's asking for such basic tax prep help. I could see asking for client information and why things were done previously but not this.

I believe he is finally done with questions! Last one was why I didn't deduct the entire loan payment instead of just the interest. he is DEFINITELY gone next season. I hate firing clients and am a big proponent of just boosting the fee significantly but 10x the fee isn't worth this guy.

I'd still breakdown the rent versus expenses on the return like you've done previous. Just my own personal preference to show it every year and it helps make sure everything is on there and comparable year after year. I'd wonder if the $4,000 repair isn't actually an item that should be depreciated? On management statements like that, sometimes they don't show those things very well but I'm sure it's in your questions. (I actually really love doing rental property returns - weird)

Sorry, I was assuming these were all trustee-to-trustee transfers. I've always been under the impression you could do as many as you wanted in 12 months but the same money could only go through 1 of those. Honestly, I don't know anyone that does a physical rollover. Gets the money physically in their name and deposits it within 60 days to another IRA. I've never actually seen one of those in real life.

Same client as above - sent me an email with 12 questions. 9 of them were "why isn't this on my Schedule E" or "why isn't this on my Schedule A"? Almost every one of them it was the opposite of where he expected it. Now he wants to deduct some utilities that he never told me about - $200. He also says he has a personal loan and wants to deduct the interest but not report the SSN of who he paid the interest.

The penalty is about rolling the same money more than once during the 12 months - not more than 1 rollover. Routinely people will roll multiple IRAs into 1 during a single period and no penalty earned. Don't roll the same IRA multiple times. I believe you should receive a 1099R.

Holy crap I know a David Ristau CPA. Oddly - different David Ristau. Sort of shocked me to see the name!

Have a client who just can't comprehend how his tax went up. Got a $3k raise (adjusted his W4 so he withheld less) and lost a $9k loss on his tax return and he's been emailing me for over a week needing further explanation. His biggest problems are that he has 400 miles of driving to deduct and his ex-wife claimed their new child and his ex-wife has a new house with a mortgage deduction so why would his tax go up with those new deductions - on his ex-wife's return? It takes everything I've got to not ask if he's had a head trauma lately. Already put a note in my calendar to send him a letter next December explaining why I won't be available next year. Usually I would just charge him more but he's not worth any amount.

The reality is that most of the corrections on the 1099 for us are because the firms are bringing in information from 1000+ different sources and there are either simple errors or complex errors. Our most common error is a mutual fund / trustee coding a distribution a wrong thing and it takes a long time to catch it. A principal re-payment on a bond gets labeled interest and all of a sudden 200k 1099's need to be corrected.

I also prefer doing the 1065. It is FAR easier if they sell / gift a portion of their ownership to another person or bring in another partner. Makes it look cleaner. I've had condo associations require a copy of the tax return be filed when you submit a copy of your leases to show you are meeting the requirements. FAR FAR easier with the 1065. Also, what if they decide to move somewhere down the road to another state that has a different requirement?

Even if the person is a foreigner, I don't think it would be taxable in the US. If anything, it's a gift and falls below the gift threshold. In the US, gift rules are part of the estate tax rules. If there was going to be tax - it would be taxed back at the home country at her estate level - not at the recipients level. JMO

Was her mother a US citizen living abroad with foreign assets? Which foreign country are we talking about? Was her mother a Nigerian Queen? (If there is a tax treaty with the US, almost certainly such a small amount would be passed through tax free. If it was going to be taxed, the amount would be subject more likely to foreign tax jurisdiction prior to being distributed to a US citizen. JMO)

I don't use ATX but I do change the default location of backups on my computer to a folder I prefer. Doesn't really matter either way except for ease. I use Bittorrent Sync which automatically backs up any folder I want onto another computer also running Bittorrent sync. My work laptop automatically gets a backup onto an old, slightly broken case - laptop at home I use for media storage (Plex). Quickbooks, tax returns, working documents and spreadsheets, client documents I've scanned - everything is stored within the same over arching folder (sub folders within it) and everything gets backed up. If either computer dies or is destroyed in a fire - I immediately have a copy of everything easily accessible and it's 100% free and nobody else can access the data. I also keep a backup on an encrypted travel / zip drive but I only do backups for that every Friday. On weekends I routinely take my laptop home so I wanted a copy stored at work.

When you say NAP 52 do you mean NAPS2? I use Advanced Scan to PDF free. It's really small and will save the pdf to your desktop. Only problem is you have to change the name manually and then move it to the correct folder. I keep everything in the same folder for easy saving. What I like is how lite it is and doesn't bog down my laptop at all. I can have 4 different tax software programs running plus my scanner software and Adobe reader - no problem. I use Drake and OLTPRO plus I always have this year plus last years copy running on different monitors so I can continually see last years return. Scansoft would always bog down my computer. Want something REALLY cool and likely free? Bittorrent Sync. You load it on your computer and then on another computer (mine is at home for safety). It's running in the background and will save everything in a particular set of folders automatically onto the other computer. Instant backup without using a cloud service. Plus I can use the copy at home if needed.

States desperate for income will also send out letters demanding a state tax return be filed for income earned within their state. Sometimes they are rude. Our company has received such letters from Colorado, Washington 2x and either Oregon or California - don't remember which. We have no presence in those states and no clients. No clue how they decided to send us letters. Washington state's letters were very insistent that we violated the law in not filing a return and repercussions were coming unless we filed immediately. For individuals - seems very difficult to monitor such activity. Did they change their permanent residence to that state when they worked there?

JMO but I think if there is debt - a K-1 is required because the pro-rated income is taxable on that debt share. If there is no debt and there is no non-IRA asset invested and nothing was physically distributed - I don't think a K-1 is required because it's a non-taxable event.

I don't believe the IRS will negotiate a cost basis because you are required to have documentation proving your cost basis or your basis is $0. That's what I was taught in my EA training Did you take a total distribution? Did you take a distribution on one of those early transfers? It could have been that you distributed your entire original cost basis and it was all gains rolling forward from there on out. Annuities purchased in 1982 and before have different tax rules that would have been realized upon the first rollover or a distribution. If you took a distribution on one of those early annuities - it's very possible you used up the initial cost basis to avoid paying tax and have forgotten you did this. Things are different today than they were back in 1982.

I didn't know you could merge taxable money with tax exempt money like that. You can buy real estate within an IRA / using an administrator but it's complicated and if he had taxable money (you write "from the client") involved there has to be a K1 for that portion at minimum. If it's all within the IRA - don't think a K1 would be required but I've never done this. Seems there is no taxable event until they withdraw funds - no? Just as if you borrowed money within the IRA plan - the borrowed / leveraged portion is taxable. you'd have to break down the profit / loss between invested capital versus debt capital. If you are adding borrowed funds a portion is taxable to the client.