Lion EA

https://www.irs.gov/taxtopics/tc557

Why is the S-corporation paying the shareholder's health insurance? Is it because he provided services to the corporation? If so, then he's an employee; the corporation should issue a W-2 with HI in box 1 However, the S-corp HI is pretty much a wash anyway. You add it to wages on W-2 and S-corp deducts, but shareholder/employee subtracts it above the line on the 1040 and doesn't have to use Sch A. (Was that law written when the % was less than 100% or something?) It always seems like going around in circles for no extra benefit to either!

I told my own son and daughter-in-law to have their partnership prepared by someone else for 2022, because they are divorcing. I think I could do a better job, and could make sure my son's interests are protected, but I don't think I'm getting the full business story from DIL. So, I don't want to sign my name on their 1065. For that reason and similar reasons, I'm encouraging my son to file MFS, but my DIL is pushing for MFJ. If my son chooses to file MFJ with his estranged wife, I'm not sure if I'll be their preparer.

IRS Pub. 4012 https://apps.irs.gov/app/vita/content/globalmedia/1099r_exclusion_worksheet_4012.pdf A taxpayer should not receive a Form 1099-R for a trustee-to-trustee transfer from one IRA to another, but should receive a Form 1099-R for a trustee-to-trustee direct rollover from an employer qualified plan to an IRA with code G.

It doesn't take long BEFORE retirement to get rusty! Thanx for lurking around, and much love to you.

See IRS Newswire IR-2023-23 of February 10, 2023.

It actually makes me less mad, because I'm still filing 2021 returns! My clients are dropping off 2022 tax information earlier than usual (usually a lot of investors waiting on brokerage statements), but I haven't gotten to any of the 2022 returns yet. A surprising statement by the IRS.

Issue Number: IR-2023-23 IRS issues guidance on state tax payments to help taxpayers WASHINGTON – The Internal Revenue Service provided details today clarifying the federal tax status involving special payments made by 21 states in 2022. The IRS has determined that in the interest of sound tax administration and other factors, taxpayers in many states will not need to report these payments on their 2022 tax returns. During a review, the IRS determined it will not challenge the taxability of payments related to general welfare and disaster relief. This means that people in the following states do not need to report these state payments on their 2022 tax return: California, Colorado, Connecticut, Delaware, Florida, Hawaii, Idaho, Illinois, Indiana, Maine, New Jersey, New Mexico, New York, Oregon, Pennsylvania and Rhode Island. Alaska is in this group as well, but please see below for more nuanced information. In addition, many people in Georgia, Massachusetts, South Carolina and Virginia also will not include state payments in income for federal tax purposes if they meet certain requirements. For these individuals, state payments will not be included for federal tax purposes if the payment is a refund of state taxes paid and either the recipient claimed the standard deduction or itemized their deductions but did not receive a tax benefit. The IRS appreciates the patience of taxpayers, tax professionals, software companies and state tax administrators as the IRS and Treasury worked to resolve this unique and complex situation. The IRS is aware of questions involving special tax refunds or payments made by certain states related to the pandemic and its associated consequences in 2022. A variety of state programs distributed these payments in 2022 and the rules surrounding their treatment for federal income tax purposes are complex. While in general payments made by states are includable in income for federal tax purposes, there are exceptions that would apply to many of the payments made by states in 2022. To assist taxpayers who have received these payments file their returns in a timely fashion, the IRS is providing the additional information below. Refund of state taxes paid If the payment is a refund of state taxes paid and either the recipient claimed the standard deduction or itemized their deductions but did not receive a tax benefit (for example, because the $10,000 tax deduction limit applied) the payment is not included in income for federal tax purposes. Payments from the following states in 2022 fall in this category and will be excluded from income for federal tax purposes unless the recipient received a tax benefit in the year the taxes were deducted. · Georgia · Massachusetts · South Carolina · Virginia General welfare and disaster relief payments If a payment is made for the promotion of the general welfare or as a disaster relief payment, for example related to the outgoing pandemic, it may be excludable from income for federal tax purposes under the General Welfare Doctrine or as a Qualified Disaster Relief Payment. Determining whether payments qualify for these exceptions is a complex fact intensive inquiry that depends on a number of considerations. The IRS has reviewed the types of payments made by various states in 2022 that may fall in these categories and given the complicated fact-specific nature of determining the treatment of these payments for federal tax purposes balanced against the need to provide certainty and clarity for individuals who are now attempting to file their federal income tax returns, the IRS has determined that in the best interest of sound tax administration and given the fact that the pandemic emergency declaration is ending in May, 2023 making this an issue only for the 2022 tax year, if a taxpayer does not include the amount of one of these payments in its 2022 income for federal income tax purposes, the IRS will not challenge the treatment of the 2022 payment as excludable for income on an original or amended return. Payments from the following states fall in this category and the IRS will not challenge the treatment of these payments as excludable for federal income tax purposes in 2022. · Alaska[1] · California · Colorado · Connecticut · Delaware · Florida · Hawaii · Idaho · Illinois[2] · Indiana · Maine · New Jersey · New Mexico · New York2 · Oregon · Pennsylvania · Rhode Island For a list of the specific payments to which this applies, please see this chart. Other payments Other payments that may have been made by states are generally includable in income for federal income tax purposes. This includes the annual payment of Alaska’s Permanent Fund Dividend and any payments from states provided as compensation to workers. [1] Only for the supplemental Energy Relief Payment received in addition to the annual Permanent Fund Dividend. [2] Illinois and New York issued multiple payments and in each case one of the payments was a refund of taxes, which should be treated as noted above, and one of the payments is in the category of disaster relief payment.

Great explanation. Where did you find that? I want to pass it on to my church, with a cite.

W-2 for the child or else he'll pay SE tax. And, he's not an independent contractor if his only work is for his parent's business using the exclusion from FICA for a child of the owner.

I've heard on other boards about a couple of cases where a child use the info of a parent to open an account (eBay, for instance) because he needed to be over 18. Any enterprising teens in the OP client's family?

Thank you!

I'm firing clients this year. If he can't answer questions to make me feel comfortable, I would NOT prepare his return.

If the employee is a NC resident, doesn't he report ALL wages on his NC resident income tax return? Then, can't he take a NC credit for any taxes paid on the same income to MA or any other jurisdiction? (I have only one NC client, so those are questions and NOT facts.) You said your client worked IN MA, also. KPMG NOTE: Beginning September 15, 2021, employees working remotely outside of Massachusetts should have wages reported and taxes withheld to the state where they are physically performing services. Employers will want to make sure they are registered for payroll in the states their employees are working remotely, and able to handle the complexity of compliance for a mobile workforce. From the 2022 MA NRPY instructions: What Is Massachusetts Source Income for Nonresidents? The term “Massachusetts source income” is used throughout this booklet to describe the types of income which are taxable to a nonresident. A nonresident is only subject to tax on items of income derived from or effectively connected with:◗ Any trade, business, or employment carried on in Massachusetts (see the following section);...◗ All wages, salaries, tips, bonuses, fees and other compensation which relate to activities carried on in Massachusetts, regardless of where or when the compensation is paid;... I've had decent luck calling the MA DOR.

A lot of east coast states use "convenience of the employer" to determine tax home, but I don't know about NC. MA has survived at least one court challenge to it's telecommuter tax rule: https://www.twrblog.com/2021/06/supreme-court-denies-new-hampshires-challenge-to-massachusetts-telecommuter-tax-rule-convenience-of-the-employer-lives-to-see-another-day/

Good to know. Thank you. This is also one of those cases where the wife is taxpayer and the husband is spouse. The wife does handle the finances, and she DID make the payments in her SSN as instructed by me. So hopefully all goes well with the ancient IRS computers. (Found out when working on their return in the fall that they hadn't made ES payments. But not a return you want to paper file with part-year overseas after 7 years overseas, part-year state, couple of college coeds, husband's mother passed away leaving IRA distributions and investments to husband, self-employment, other investments, state with different rules for part-year, etc. I'm not allowing some IRS/state data entry clerk to put this return in the computers after I've carefully proofread it, not risking something entered on wrong line changing the returns!)

I use CCH's eSign. It does the ID verification. I think it was the first to meet the IRS's requirements. And, easy, peasy from right within ProSystem fx, but probably also ATX.

Late filing 2021 client owed a lot but wanted to wait to e-file, so paid about $35,000 to IRS and $4,000 to state using IRS DirectPay and state equivalent after Thanksgiving sometime but is e-filing today, probably. Where do I, or do I, enter those amounts on the 2021 return? They're obviously neither an extension payment nor an estimated payment for 2021. Do I leave their balance due showing those amounts and leave it to the IRS/state computers to match their balance due with their December-ish payments? Or, do I enter them someplace and leave it to the computers to match their payments?

I launched into my "get an estate lawyer" speech, but they've already done that and he's filed whatever CT courts need to appoint the co-administrators and alerted them to the wait for the court to act. It sounds like the deceased did have a will plus beneficiaries listed on her retirement accounts and credit union.

I think they're still in shock over the sudden death of a healthy, active woman. (Not a recent vaccination!!) But if they can gain some help from my general comments, then I've helped some of my husband's coworkers' family.

When I can talk to the admin, I'll be able to tell her, based on my annual conversations with her sister-in-law, that her sister's largest income is from the school district where she taught, and that all her income and deductions are associated with that income by retirement contributions, donations, (in appropriate years unreimbursed employee expenses), credit union interest, HSA, etc., and direct her to the right office/best employee in the district office. But that step needs to be done by the admin in person, and they need to get back to their home/work in FL next weekend. (Probably can't do that step until they have court papers, but my old client's lawyer was hopeful that they'd be able to collect some of the tax documents this week. Maybe he was talking about paperwork that's at the house.) SIL/brother are just trying to get the refunds to help their mom. The deceased lived with and cared for their mom (dad passed away years ago), so without that income stream and volunteer help from her daughter, mom is stressed. (Brother with wife, college kids, mortgage, etc., has had less to send mom each month than his deceased sister had.)

Ask for ChatGBT's cites. You probably want to find out where that error sits, so you can attempt to refute it. Not nice being associated with FTX.

No. She was a client from 2007 or earlier through 2015. (She was a school teacher at the same school where my husband taught.) I had not charged her for extensions from 2016 through 2021. I don't have any of her documents, because I return all original documents and was not scanning everything back in 2015. So, the only thing I have of hers is her electronic copy of her 2015 educator expenses spreadsheet that I hadn't purged yet, probably wanting to keep it for comparison purposes when she would finally bring in her 2016 tax information. (Probably time to purge this year!) Her sister-in-law called me about filing the unfiled tax returns through 2022 (and perhaps 2023 if it's needed), but won't have her court appointment for at least 30 days. Will my client now be the administrator or the taxpayer on the income tax returns? No matter which, what do I need from the administrator to give a copy of my former client's 2015 tax return to the admin/SIL? Or, to the lawyer? And, what is my due diligence in identifying that the person asking for the return is who she says she is? Do I need something at the ID.me level where she holds up her DL next to her face on Zoom or a cell call? Is the DD the same for a lawyer identifying himself to me? Would the answers be any different if the taxpayer had never been my client, but someone called to ask about filing her dead sister's 2022 income tax returns? No spouse. What do I need to release a copy of a prior year return or give out information on the phone about what she should look for in the way of tax documents arriving? What do I need to do my due diligence on who this person is that's on the phone?

There are tax people online showing how to use prompts to create elaborate situations, maybe a response to a tax question that then formats itself for something else, such as searching your client base, and then emailing per a specific rubric. Formulae. Complex. So, I can definitely see this saving scammers time! I did go to the ChatGBT and asked it to write a letter saying I'm increasing tax preparation prices 10%. In seconds it gave me an amazing letter. I asked it to refine it to say 10% over 2021 returns for same items; and it explained there'd be additional fees for new issues due to clients' changing situations or new tax laws. Then I had it be more non-negotiable, which it did. The only thing I added myself was for clients leaving to remember to give their new preparer their prior year tax returns. I then asked it for a short, sweet letter to fire clients. (I was having trouble keeping it short.) The two-sentence statement it created is exactly what I wanted. I don't think I'd pay for it, but while it's free I might use it again.