Lion EA

Too late to increase 2020 wages. Had to pay himself during 2020 for 2020 wages, 2020 W-2.

OP is Original Poster. That's you. He can leave it as a non-deductible Traditional IRA. You will keep track of it via Form 8606. Or, your client can do a backdoor Roth. Either way, the broker isn't keeping track, you are! Give your client all his options and let him make a decision.

Thank you. The property tax site worked great, but the MyIllinois.Tax.gov is a different animal. I will give it a try when I finally prepare our taxes. Although, if IL is accepting e-payments from NRs, then I'm also hopeful my software will facilitate a direct debit. I'll use MyIL for the ES payment I usually make in December, though. I did look-up the ILPINs for me and for hubby who's primary on our returns.

Can her client do one recharacterization and also one conversion in a year, or is she limited to only one of those or the other?

I live in CT but have part of an IL farm, acreage my grandfather bought in the 1880s or so. I've always had to mail a check into IL to pay my state taxes, because I file a NR return. Today we realized we hadn't paid the second property tax payment to Montgomery County, called them, and were shown a user-friendly website managed by Heartland. Our property tax bills were easy to find and to pay online. Is it possible IL is using a similar site by Heartland (or anyone else) to collect state income taxes from distant people like me who file NR returns? I went to MyTax.Illinois.gov and see that I can make payments for IL-1040, but as I've said, in the past I've been kicked out of online payment for the Schedule NR or whatever reason they gave, maybe the non-IL address triggered my expulsion. The same for direct debit with e-file. And, I'm not ready to actually file my return yet/don't know my balance due. Just hoping someone from an IL border state knows about their clients paying online, or not being able to pay online. Or, via direct debit or... Some years back I paid a generous amount in IL ES so I'd have a refund to apply to the next year. I've continued to pay ES when I'm not so rushed, so I have a refund to apply each year. Just want to get away from IL having my money in advance -- if I can direct debit or pay online.

How is conversion defined? I thought it was taking from a potentially taxable IRA, paying any taxes due, and putting it into a Roth. Her client went the other direction, from a Roth. Is that still a conversion? Just trying to find a way that she can have her client do what she wants him to do without waiting a year...

OP's client hasn't converted to a Roth -- yet. He contributed to a Roth; recharacterized to a TIRA. So, he can still convert to a Roth by 15 October, yes?

Can he make one recharacterization (Roth to TIRA when his income was too high to contribute to a Roth) plus one conversion (TIRA to Roth for a backdoor Roth) per year? Or only one of those? Can he make the second after 12 months? Or, after 31 December?

If summer or short term work for a foreign employer in a foreign country AND paying foreign tax to that country, your client will have a foreign tax credit on his federal return. If it's a high tax rate country, that can be a valuable credit.

With the shortage of truck drivers, it may be some time before they can move those semis to an open IRS Service Center! Won't the employees be happy to see the semis drive up!!

https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion

It might not make a difference between a non-deductible Traditional IRA and a Roth, if Congress passes the laws they're discussing! But you have to track (Form 8606) his non-deductible Traditional IRA contributions anyway. I'm all for him doing the conversion to a Roth now. However, if he has a lot in his TIRAs so that his non-taxable conversion amount would be small compared to the taxable amount per the ratio determined by all his TIRAs, it might not make sense to convert. He would make that decision. Not his broker! Tell him to ask for a supervisor. Or, if a large national brokerage, their tax department. Or, move his retirement accounts elsewhere, and then do the backdoor. (I'd do that last one, if it were my money.) Sorry, I didn't understand the timeline in your OP, so I wasn't addressing your issue.

Isn't the W-2 in US$? If his tax document is in AU$, then use the conversion value. Isn't the 2555 form for excluding foreign income? You said he doesn't qualify for substantial presence test. Did he pay Australian taxes? Can you use Form 1116 to take a foreign tax credit? Or, take an itemized deduction?

I think you mean recharacterize. If he made a Roth contribution but his income is too high to contribute to a Roth, have him recharacterize the contribution to a non-deductible Traditional IRA. Move the earnings, too. If it was for 2020 and he leaves it in his Roth, he'll pay extra 2020 taxes. He can contribute that much less in 2021, to even out in 2021. If not, he'll pay extra each year that the Roth keeps the excess contribution. By the way, a backdoor Roth is a Traditional IRA (hopefully a non-deductible Traditional IRA or the computation is more complex) that's converted to a Roth when income is too high to make a Roth contribution directly.

I saw that and conversion restrictions, too, and copied a client who wants to convert to a Roth over a few years. He may speed up his process! I hope the income threshold remains, because that will keep it open for some of my clients.

Telling clients to keep calling, or to be patient, depending on the urgency of their issue with the IRS. That I will work on it after 15 October. Very frustrated with the client calls/emails/texts during these last 3 or so months when I'm trying to prepare returns before 15 October. Very time-consuming at my busiest time of year! The IRS is broken. Why does the buck stop in my lap?!

If she's truly a resident of both states, there might not be "any way around it." I run into that with NY and CT from time to time. Follow the money AND follow the timeline.

If an S-Corp owns a C-Corp, the C-Corp would report dividends on a Form 1099-DIV that the C-Corp issues to the S-Corp. Then the S-Corp issues From K-1 to the shareholders. (This is a more complex transaction than my corporate clients have! I have only a few corporations.)

And, cbslee goes right to the heart of the matter! Perfect answer. So, your clients have legal questions but no tax questions at this time.

Did you read, including links, the responses you've already received? Have you discussed with your client their goals, short- and long-term? Have you discussed with their lawyer? An MMLLC defaults to a partnership in non-community-property states. If NOT an LLC, husband and wife can have a QJV and file on their joint Form 1040, but that doesn't give them the protection of a separate entity that you say they want/need. They can still get good insurance for any option. Are they expecting their children to inherit the LLC? Ask the lawyer how that works in IL. (Do they get a step-up in basis or not?) Or, do they want to gift it over time, maybe a % each year? Ask your clients what their goals are. Then discuss with the lawyer how to achieve those goals.

I don't know, but doesn't the S-corporation report on its 2020 1120 all the activity reported on the LLC's 2020 K-1 to its parent company?

I regret taking on new clients this season; have way too many to finish by 15 October. (Only one more partnership by 15 September, though.) I may send a couple of them elsewhere or offer them November preparation, maybe with a discount if they look like keepers after I dig into them. And, a couple of them have had two different preparers in the last two years and SE side gigs; those may get kicked to the curb if I find any funny stuff as I get into their details. As you say, shoppers!

What do you mean by reinvest? Take the former retirement distribution and invest in a fully-taxable account? Really no savings unless he can and wants to rollover into another retirement account. Anything else is a taxable distributions and then a new investment or purchase or savings or... Have him get you a copy of the plan so you can see what you're dealing with.

Were the businesses SMLLCs/disregarded entities? And, now the trusts want them to incorporate? What are they trying to accomplish?

If it was really a 401(k), then why can't he roll it over? Perhaps it was a nonqualified plan. If so, I don't think he can do a. B and c would depend on if he's affected by Covid and if that exception is renewed for 2021. He can pay the taxes on the disbursement. He can contribute more to his existing retirement plan(s), because he has the disbursement to live off of. He can buy a rental property or spend his disbursement any way he wants. Tell him what percentage to save to cover his federal and state taxes. Make sure you have the paperwork describing the government money in a 401(k)-type fund over the years for helping out through a special government program. Part of his compensation package? Seriously, where do you get clients with these complex financial situations?!