Lion EA

I was awake most of last night !!

As far as I can tell from the documentation the client's mother provided me from Yale, Yale recorded the tuition paid in 2020 but recorded the scholarship -- which probably paid tuition plus room & board plus fees -- in 2021. I agree that the tuition should've remained outstanding until covered by the scholarship. However, if that happened, then I need to amend the student's 2020 returns. Mother wants to take the draft to a friend who promised to find a lower tax liability. I'm all for everyone paying their lowest legal tax liability. But the former student is over 18 and in the military and very definitely an adult. Also, not easily reachable at his current station in CA. I think I need a signed consent statement from my client for me to provide his return draft to his mother or to his mother's friend, right? And, mother wants it emailed; that was a hard NO from me. But I do have both mother and son on my portal which I've been using for the son. Also, eSign. So the son has two copies of his return that he can forward to anyone he wants! I told the mother to get the bursar's statement from Yale. And, highlighted the instructions on Form 1098-T where Yale explains in great detail how to access 2021 transactions online. Mother has done neither, but sent an email to Yale asking them a question. And, talked to her friend who knows how to reduce taxes. A recessed light is blinking which can trigger a migraine, so I have my overhead lights off. I'm not climbing up a ladder to change a bulb until Hubby returns from NYC to hold the ladder. And, a dozen clients are emailing me about their unfinished returns. Spending an entire morning just on explanations for this client and his mother (both sets of returns were done and explained a day ago) was time I should've spent on tax preparation for other clients. Thank you, everyone, for my rant. I needed to vent. Off to contact another couple of clients to tell them -- sorry, but November.

Yes, for 2020 we had tuition to subtract and expenses, such as books and a computer. For 2021, he had only $600 for books and a printer. Tuition for spring semester 2021 was paid in December 2020. Then he graduated in May 2021. No tuition reported by Yale for 2021. Mom nor son has any record of checks written, because 2021 tuition was covered -- per Yale -- in 2020. Form 1098-T contained a lot of details, but none that helped us. Mom is calling Yale on Thursday. 2021 tuition (reported in December 2020) was covered by the scholarship that was reported in 2021, so we're hoping for a loophole here. Son is now in the army, so a bit busy right now. (I still think the son is lucky!)

Am I understanding this correctly? Client graduated Yale in May 2021. Form 1098-T shows 0 Tuition and $33,949 in Scholarships/Grants. He also paid $600 for books/paper/printer. The $33,949 - 600 gets reported as wage income, ordinary income, subject to kiddie tax (Mom's tax rate is just 10%, luckily). Mom is arguing that tuition is over $28,000/semester + off-campus rent + internet. Yale says Tuition was accrued December 2020. Living expenses don't net against Tuition anyway. I think he's a lucky kid to walk away with a Yale diploma for less than $4,600 in taxes. Mom thinks her kid should be getting a refund and is telephoning me multiple times at 11:30 pm at night. Next year, everyone's rates are going up 10%.

I haven't seen it yet. It's usually mid-November-ish.

cbslee makes some good points. I'm learning on this thread.

Do the employees use their Flexible Spending Accounts to pay their Health Insurance Premiums? What's a TPA?

Had one today. He's over 59.5, worked for a private company, $$ in Boxes 1 and 11, so can exclude $20K which is more than enough this year. So glad this thread was here. You all saved me some time proofreading this return!

I'm still not sure. And, I had a client call this week that inherited her mother's IRA and asked me. She'll have to wait until after 17 October. I really can't remember everything that's passed over the last three tax seasons, especially which IRS regs are final. And, so little published since Covid, just FAQs!

That is huge, John. Thank you.

Where did you read that? I have some late 2020s that I'd love to wait 'til after 10/17.

My "upper corner of CT" guy might know someone. He's on vacation in the Rockies right now, so not always in communication. I'll reach out to him, just in case...

Ma resident?

I don't know if your S-corp can change to a fiscal year. (Does it have to have the same year as its shareholders?) If it does change to a fiscal year, your individual client remains on a calendar year. The only difference is that his 1040 will include the K-1 that ENDS in the calendar year.

https://brasstax.com/ for free COD worksheets (practice aids) as well as reasonably priced self-study and webinars on your topic. Lisa Ihm and Brass Tax Presentations do a lot on cancellation of debt.

Inherited is Long-Term by definition. If everything is in your client's SSN, you could include everything and then a line to subtract those reported on the 1041 with an appropriate description, including the tax ID of the 1041. Your software probably has a preferred method, a best practice.

If it's not a Kardashian selling RE, then I don't think he's an SSTB. Brass Tax Presentations has good 199A Specified Service Business chart (pdf) at... https://brasstax.com/

Brass Tax Presentations has a great flowchart: https://brasstax.com/practice-aids-account

Thanks, Kate. As my commuters age, this will pop up for me any day now, so I appreciate your explanation.

Sorry!

My chronically-ill sister collects guardian angels, so I have to buy a couple from you! Maybe a whole angel choir.

But it's embarrassing to fall asleep in a live classroom! And, I have to shower and put on real clothes with shoes. And, pretend that I'm not crabby. And, it's always too hot or too cold. And, the highlighter I take runs out after two pages...

Wow. I've gotten so scared of someone suing me! I know that just the time plus a legal retainer would destroy my biz. I pay a bundle for E&O and Cyber insurance, have an umbrella policy via my homeowner's insurance re OIH, and am paying someone to beef up my security re the IRS's new WISP requirement over and above what I've been doing re biz security for years.

41-year-old son spent yesterday in bed (wife moved their daughters to her mother's) "in a dark place" which I find frightening, because he always, always paints a rosier-than-reality picture to me. I know some of you are in PA. All recommendations for divorce lawyers are gratefully accepted. Son is in a sparsely populated area in the Moosic mountains in the NE corner of PA where the closest town is across the border, Hancock, NY. He's about half-way between Scranton, PA, and Binghamton, NY. A PA family law attorney is needed quickly.

Thank you all for the advice and cites. I'm a bit shaken. Just saw happy, smiling vacation pictures on Facebook, but yesterday changed everything. I want to make sure that anything I do/don't do has solid backing. Now to calm down enough to read the cites!