Lion EA

Thank you, Judy. I was finding a lot about being a qualified dependent/QR, but very little about the parents then deducting unreimbursed medical expenses for that QR, especially if paid by that QR. The trust is not a SNT; grandparents started in years ago thinking about college needs, etc., but no restrictions other than mother is trustee. The young adult has mental health issues, so insurance reimburses only some of his expenses. And, he has premiums plus two providers that do NOT take insurance reimbursement. Dad's looking, but much of that ultimately was paid for by son's trust, maybe. (The paperwork looks like the charges on on dad's credit card.) So, we're still looking at if parents paid over half their son's support. (Two lawyers in Westport, CT, so living expenses, car, etc., add up fast in pricey Fairfield County, even if son covered his own medical.) This family is very nice, responsive, and hadn't been difficult to prepare (5 returns) -- until 2020. The above son has been moving around to ski areas and working, CT to UT to CT to CO to CT, so a lot of PY returns over the last decade. Brother was in law school but graduated, married, and moved in with parents for 2020, then Covid hit which slowed job hunting; for 2021 he's back in NYC, so I expect a NY issue with NY claiming his residency did not change to CT for 2020. (This brother's trust ended in 2019; an IRS letter showed up last year re a Fidelity account no one knew was now in brother's name.) And parents, who've been easy W-2 people even though very high income and a fair amount of investments, now have 4 K-1s and two "trust letters"/revocable trusts due to wife's mother passing and leaving very substantial investments. I've spent a whole week drafting these three returns (prepared son's trust in March) just to get to a point to ask questions, to explore dependency, to explore residency, etc. Price is going up this year! All that to say I might be back with more questions...

Unemployed adult lived with his parents all of 2020. Had huge medical expenses/mental health expenses, which were paid for from a trust set up by grandparents. (I think, confirming with client.) Because parents will claim him as QR, can parents deduct son's medical expenses? Does it matter if parents or son or trust paid? (It's looking like they were on father's credit card, but might've been reimbursed by trust.)

I had to reboot this afternoon, but I got back on this board just as in the past. Thanx, Eric!

Thank you, Eric. I was able to sign on as usual this Tuesday morning. I returned last Thursday after my computer was off for nearly a week during our trip. From Thursday through Monday I had the sign-in problems I posted.

I did discover, after my 3rd or so time logging in today, that I can click on something above the box, maybe "ATX Community" and I do get in. But anything is hard to find with everything mooshed to the left and stretched to 2 pages.

Every time today. Error code: 2S119/1

I keep getting a page of short lines in a skinny column on the left. When I find a log-in box among the gobbledy-gook and add my log-in info, it takes me to a page that tells me: SOMETHING WENT WRONG. CONTACT US.

I like your idea of new engagement letters for instance: 1. Personal tax returns for someone no longer with us 2. Gift tax return 3. Estate tax return 4. Representation & Consultation WITH A RETAINER REQUIRED FOR EACH.

Where'd all the money go? Follow the money. Did the "kids" take the money before paying all the bills? If they won't pay the IRS, do you really think they'll pay you? Huge retainer or disengage!

Lock the doors when all of Congress is in session, and do not allow anyone to leave until all of them have prepared their own tax returns by hand. And, maybe, wait until the IRS processes them, too!

Your suggested % goes down each year. I would think she should ask for a larger % each year. Although, I'd favor a salary based on her years of experience & credentials & skills. Maybe $60/hour with a guaranteed # of hours each year.

I know, it's more so she won't spend the money...

My guess is that it'll be reconciled on her 2021 income tax return in 2022, a lot like the RRC worksheet but NOT keeping the excess. Tell her to opt out. Or buy a nine-month CD to hold the funds until next spring.

Ask for a "collection hold" while the IRS processes your client's return/payment/response/whatever's sitting in their mail pile. Use the phone/fax number on your client's notice; although, phone numbers have mysteriously disappeared lately. So, call the Practitioner Priority Line to ask for the hold.

I keep asking for my letter, but it never comes! I read that only 30% of taxpayers will be able to establish an account. I cannot; neither can my husband. Did you notice that there are no longer IRS telephone numbers in the upper right hand corner of IRS notices. Taxpayers have no choice but to go online. Lets make it harder and harder for taxpayers to pay, get information, or get help. Until we tax preparers are swamped with phone calls from our clients and nonclients who can't reach the IRS. What will the IRS do when we all retire?!

Thanx. I agree that I'm good enough to go for 2020. They did their own returns before me. They hired me to prepare their biz returns about 2009 (NOT the biz that sends this K-1). A few years later, they added their personal returns. No 6198 in prior personal returns; I always ask for three years. The husband who had been preparing their returns developed early-onset Alzheimer's. The K-1s without basis info come from wife's father's two businesses for which he prepares the tax returns, filing on paper to Ogden; father must be at least in his mid-80s. Thank you, everyone. I managed to get parents' return enough to lock down their tax rate and have their investments entered, and got sister's investments entered and return ready to proofread. So, I let software calculate brother's return with Kiddie Tax. He eSigned, and I e-filed. He flies off to Jordan on Tuesday to start his Fulbright program. Whew! Now to start reading up on Fulbright Scholarship taxation... Again, thank you, everyone who helped on my two frantic topics this week.

She didn't take anything out. Just a loss. Worried about the until-now missing starting capital account loss, also. (This family has four interconnected tax returns due to Kiddie Tax and a different biz issue that I understand, and I sent our daughters the wrong birthday cards -- so I'm not trusting anything I think today.) Non-deductible because of at-risk limitations? Suspended due to basis limitations? The full $47K? It's not income nor deduction on parents' returns (right?), so I'm going to plow forward with Kiddie Tax for the return of the kid that's leaving the country tomorrow.

Hey I sent my stepdaughter and DIL who have birthdays today the wrong e-cards after midnight last night. I sent the younger one a Happy 40th ecard !! I did catch it before sending the 40-year-old a plain card. So, the milestone birthday girl did receive her correct card. My younger DIL received the wrong one, an apology from me, and the right one. I can NOT multi-task as well as when I was younger! Oh, and I've gotten rid of all C-corps, and have only 2 partnerships, 2 S-corps, and 3 trusts left. Trying real hard to get to all 1040s, but don't want to lose families over the family businesses. And, no Crypto, yet. Have a gal who purchased in 2020; told her to use a tracking service if she wants me to continue. Her parents are big clients, so don't want to lose that family

Thank you, all. I am suspending the loss for now. I am also not filing that return, the parents of the Fulbright kid, until later when I have time to deal with a couple issues, proofread properly (4 K-1s, SS, Schedules A, B, C, D, E, lots of medical, pages and pages of stock transactions, IRA/SIMPLEs, 2 college students, AOC, 1099-Q,...). Just need to be in the right tax bracket and have all their investment totals to be able to calculate Kiddie Tax for that Fulbright kid. My main fear is that the full ending loss without basis could be income in 2020 since we never accounted for it before. This is the first time her dad had a beginning balance on one, only one, of the K-1s she received. This is a long-time biz return client. I've been preparing their personal returns for fewer years. Basis was not on my mind when she had a few hundred bucks income on each of the two K-1s from her dad's partnerships. I started asking her to ask her dad for information when she had like an $8 loss; then the IRS started (and postponed) requiring basis information for losses, etc. Nothing from dad until now. On only one of the two partnerships. Suddenly I find her 2020 beginning capital account is a loss (44,400ish). I never knew. And, I've had her personal returns for few enough years that those little losses, even with 2020's loss (2,800ish) don't add up to a (47,000ish) ending loss. Still don't have any response about her other K-1 from her dad's other partnership.

Same family I'm rushing through one kid who's off to someplace remote for his Fulbright. Mom has a couple small K-1s from investment partnerships of her dad who gifted her shares years ago. (Not PTPs) I think he prepares his own two partnership tax returns, but getting information from him on the other side of the country, and older than I am, has been difficult. We've been trying to get basis information on her for the last few years. Small loss this year (2,800ish), no basis, but capital account reported for the first time ever: Beginning (44,400), 2020 loss, so Ending (47,000+). As this K-1 hits her 1040, is her 2,800 loss suspended due to her probable lack of basis? Or, is it income to her? Ignoring prior years that I may need to revisit and being your usual understanding group while I'm sleep-deprived and stressed (I know, we all are) with my largest backlog ever trying to help out a long-time client as I sit here with my TTB open and a text on partnerships from a class I took long ago and not understanding what I'm reading. Prepared this couple's biz return for years, but am more recent to their personal returns. She used to have a few hundred dollars income on each of these two K-1s, so no worries. Now it's losses, and we're supposed to show basis, and her dad's been unresponsive. Now that I have capital account info for one of the two K-1s, I'd like to report this right for the right tax bracket for Kiddie Tax for the kid leaving the country tomorrow. My husband wants me to retire!

If it's a complex trust, then maybe the trustee has some discretion re distributions of capital gains, corpus, whatever. If the trust document doesn't specify, then look to state law. Have your client contact the lawyer who set up the trust or their current family/trust lawyer.

Mom thinks she did pay during 2020, so is checking... Good suggestion re books; hope he didn't buy his books until January 2020. Kid graduated and was to leave for his Fulbright in the fall so started tutoring a neighbor family. When the pandemic didn't let up by the fall, he kept tutoring the same kids and has SE income of nearly $11,000. Definitely has a filing requirement. I have the scholarship on Line 1 with SCH for now. Hope mom finds they paid in 2020 (it's an electronic system used by Colgate) so I can wipe that out. If not, then I'll make sure Kiddie Tax is there. Just finished sister's return with interest and dividends and am working on parents' to get it complete enough that the tax rate is correct and investments are entered. Thanx so much, Tex.

All the things you said in your first paragraph are true EXCEPT that student did NOT assign his award to a government or nonprofit. Schedule 1 Line 8? Parents/student paid tuition in December 2019 for January 2020 semester and graduated in May 2020. The Colgate statement for 2020 shows NO transactions. I wrote to student and his parents earlier today to ask if they made any payments to Colgate in 2020, maybe a loan... Form 1040 Line 1? Thanks for the lead to Pub. 970. My CCH AnswerConnect referred to it, but I'm going to download a .pdf now. Mother had me do a pro forma about the first of the year before we had all documents, but she gave me a detailed list that included every penny and date EXCEPT NO MENTION OF A SCHOLARSHIP sans tuition! Long-time clients with a partnership (I prepared that on time, bumping some clients in my queue, so I don't feel bad about not getting to the family's personal returns until now), two working students, and the parents (father has early-onset Alzheimer's so the mother now runs their business alone while the two college kids moved back home during the pandemic). The student I'm rushing was supposed to leave for his Fulbright in 2020, but that got postponed indefinitely due to the pandemic. Now, it's suddenly back on! (Next year I'll be researching Fulbright Scholarships.) Thanx, Margaret.

PS Same student received a $200 award from Colgate (his university) for graduating Summa Cum Laude. His mother says it was presented as a gift/award. Taxable? This kid is leaving the country in two days, so mother wants me to accelerate his return. Two states, SE income, Kiddie Tax requires sister's and parents' information (high school sister just has a bunch of W-2s, but parents have 4 K-1s, 2 investment accounts, SS, lots of medical, etc., and a stack of paperwork I haven't sorted yet). I appreciate any help.

First time I've had a graduating college student on scholarships, so not sure where to look. Student graduated May 2020. Form 1098-T reports a $12,499 scholarship and zero tuition. Is the full $12,499 income? Other Income? Wages? And, even worse, is it all subject to Kiddie Tax?