Lion EA

Good point, Judy. You always have to follow the flow. The fed MFS can be added and compared to MFJ as one check. But, the states have their own rules. Follow the flow on each state for reasonableness. NJ, for instance, adds back into income some Box 12 retirement contributions, so the income the two states are reporting will never add up to the federal income. NY and CA and ... allow itemizing even if standard on fed. You have to prepare the returns, but your software can do a lot of the math and save a lot of data entry for you as long as you get your T/S/J labels. I don't use ATX, but my software starts with a MFJ vs MFS grid that I can adjust like any spreadsheet. If the mortgage was joint and paid joint, in the grid I'll try something other than 50/50 to see what benefits the couple as a whole. So, I can make a lot of changes easily and change again before I actually split. See what your software will do to help you help your clients.

I have a H/W who each received under $800 and NO Form 1099-MISC for participating in a drug trial. The husband has early-onset Alzheimer's; the wife drove and accompanied her husband. Is this taxable income to the H/W each? They do not do this for a living, so no Schedule C, right? They did this in hopes of helping the husband. Other income? This is the first time I had clients in a drug trial.

I've had a few with one spouse with large medical. And, I've had a few where one spouse made little enough income and could take just enough of the deductions to bring tax to zero/or a lower bracket, saving all the rest of the deductions for the higher earner. I don't expect to see many now with the higher standard deduction.

Depending on your software, you can probably label everything T and S on the MFJ federal return with both states and have your software create the two MFS returns. Delete a state from each MFS return. You'll e-file the MFJ federal plus one MFS with AL only/no federal plus one MFS with PA only/no federal. Yes, three sets of returns. But, you're really only doing the work to create the first MFJ federal return with two states. Then your software is doing all the calculations to create the next two sets of returns. Follow the flow to see if you need to make any adjustments. Just make sure your lines all add up to the MFJ return, except the taxes, of course.

Sara, if one spouse itemizes while filing MFS, can the other really take the standard while MFS?

I had an AT&T retiree who received a W-2 each year for his free telecommunication services. Eventually, the tax on that income was more than some of the cheaper phone plans, so they stopped using AT&T and went with a family plan from another company. But, it had been a bargain for many, many years.

I think it has to do with inherited property, which is not your case. You probably want to enter Various and then Long Term, however you do that in your software. (In mine, I enter 99/99 for the software to enter Various, and I enter L for it to be treated as long term.)

And this: CONFIDENTIALITY AGREEMENT This Confidentiality Agreement (this "Agreement") is made effective as of _____________, between NAME/ADDRESS, and NAME/ADDRESS. In this Agreement, the party who owns the Confidential Information will be referred to as "NAME1", and the party to whom the Confidential Information will be disclosed will be referred to as "NAME2". NAME1 is engaged in the business of Financial Advising, Accounting, and the Practice of Law. NAME2 is engaged in a contractual service relationship with NAME1. Information will be disclosed to the Recipient during the time he is providing service, either directly or contractually, with NAME1, in order to facilitate his work with said company. NAME1 has requested that NAME2 will protect the confidential material and information which may be disclosed by NAME1. Therefore, the parties agree as follows: I. CONFIDENTIAL INFORMATION. The term "Confidential Information" means any information or material which is proprietary to NAME1, whether or not owned or developed by NAME1, which is not generally known other than by NAME1, and which NAME2 may obtain through any direct or indirect contact with NAME1. A. Confidential Information includes without limitation: - business records and plans - financial statements - customer lists and records, including customer identification numbers and financial information - trade secrets - technical information - client financial plans; client legal documents - pricing structure for fees - computer programs and listings - copyrights and other intellectual property - any information pertaining to the operation or clientele of NAME1, or other proprietary information. II. PROTECTION OF CONFIDENTIAL INFORMATION. NAME2 understands and acknowledges that the Confidential Information has been developed or obtained by NAME1 by the investment of significant time, effort and expense, and that the Confidential Information is a valuable, special and unique asset of NAME1 which provides NAME1 with a significant competitive advantage, and needs to be protected from improper disclosure. NAME2 further understands that in the ordinary course of business, NAME1 comes into possession of client information of a personal and sensitive nature, and that disclosure of this information could negatively affect both NAME1 and the clients of NAME1. NAME2 understands that it is his legal and ethical responsibility to protect the privacy, confidentiality, and security of all customer information, including business, financial, personal, and tax information relation to clients of NAME1. In consideration for the disclosure of the Confidential Information, NAME2 agrees to hold in confidence and to not disclose the Confidential Information to any person or entity without the prior written consent of NAME1. NAME2 further understands that any disclosure of confidential information related to clients violates both securities law and the ethical code developed by the American Bar Association. In addition, NAME2 agrees that: i. No Copying/Modifying. NAME2 will not copy or modify any Confidential Information without the prior written consent of NAME1. ii. Unauthorized Disclosure of Information. If it appears that NAME2 has disclosed (or has threatened to disclose) Confidential Information in violation of this Agreement, NAME1 shall be entitled to an injunction to restrain NAME2 from disclosing, in whole or in part, the Confidential Information. NAME1 shall not be prohibited by this provision from pursuing other remedies, including a claim for losses and damages. III. RETURN OF CONFIDENTIAL INFORMATION. Upon the written request of NAME1, NAME2 shall return to NAME1 all written materials containing the Confidential Information. NAME2 shall also deliver to NAME1 written statements signed by NAME2 certifying that all materials have been returned within five (5) days of receipt of the request. Upon request, NAME2 shall also deliver to NAME1 written certification that all electronic files of any type retained by NAME2 and containing information provided by or related to NAME1 has been destroyed. IV. RELATIONSHIP OF PARTIES. Neither party has an obligation under this Agreement to continue any type of relationship, employment or contractual, with the other party, or commercially offer any products using or incorporating the Confidential Information. This Agreement does not create any agency, partnership, or joint venture. VI. LIMITED LICENSE TO USE. NAME2 shall not acquire any intellectual property rights under this Agreement except the limited right to use set out above. NAME2 acknowledges that, as between NAME1 and NAME2, the Confidential Information and all related copyrights and other intellectual property rights, are (and at all times will be) the property of NAME1, even if suggestions, comments, and/or ideas made by NAME2 are incorporated into the Confidential Information or related materials during the period of this Agreement. VII. GENERAL PROVISIONS. This Agreement sets forth the entire understanding of the parties regarding confidentiality. Any amendments must be in writing and signed by both parties. This Agreement shall be construed under the laws of the State of ________. This Agreement shall not be assignable by either party, and neither party may delegate its duties under this Agreement, without the prior written consent of the other party. The confidentiality provisions of this Agreement shall remain in full force and effect after the effective date of this Agreement. Information Owner: NAME1 By: _______________________________ NAME1 Recipient: NAME2 By: _______________________________ NAME2

I received the following from someone or some company or maybe even my E&O: COMPUTER REPAIR NONDISCLOSURE AGREEMENT Agreement made this _____day of ____________, between _____________________(the “Repair Person”) and _____________________________________ WHEREAS, ____________________________(the Company) stores and maintains records and data of a highly sensitive and confidential nature, the disclosure of which to unauthorized persons or entities is prohibited by law (the “Confidential Information”); and WHEREAS, the Repair Person will be performing repair and maintenance services on or in connection of the computer or computer system owned by the Company, and in connection therewith could have the ability and opportunity to view and obtain access to Confidential Information. NOW, THEREFORE, it is agreed as follows: 1. The Repair Person shall not directly or indirectly copy, reproduce, remove, alter, delete, modify, edit, transfer, transmit, divulge, or disclose Confidential Information in whole or in part. 2. The Repair Person shall treat all of the Company’s records, data, and information, including but not limited to Confidential Information, which it has the opportunity to view or access, in a strictly confidential manner. 3. The Repair Person shall indemnify, defend, and hold the Company harmless from and against any claim or action related to or arising out of any unauthorized access to or disclosure of Confidential Information by or on behalf of the Repair Person. 4. The parties have executed this Agreement as of the day and year first above written. THE REPAIR PERSON The Company By: By: Title: Title: Owner/Accountant

I have a lot of states, but not DE. I enter the data on the federal Schedule A. I let the software populate any state schedules. I could enter directly on state forms. But so many of my clients have two or even more states; I don't want to risk missing a deduction, so I let my software populate the states from the federal. For most states, my software sends to the states whatever the states require. But, I do not know what it would or would not send to DE. And, of course, it chooses the most advantageous at both the federal and state(s) levels re itemizing vs. standard.

I work in CT without state itemized deductions. But, I have clients that work in NY, CA, and other states WITH itemized deductions. Plus, why add up potential itemized deductions when my software will do it for me?! So, I almost always enter itemized deductions on the federal return. About half my clients end up with the standard deduction for federal. But, for states like NY and CA, all flows through to the state returns. I don't have to get used to the itemization form for six different states.

Could there be a second business that's not qualified and needs a check added or removed?

I have my name printed by my software as a safety net, in case I forget. I sign the appropriate places on the client's copy and, of course, for anything paper filed. I give the client a complete copy. A few of my clients accept a .pdf electronically, but most still want a paper copy.

Did you already use AOC for four years? Do you have the bursar's statement? I might chance it on the bursar's statement showing a 2019 payment plus the 2018 with 2019 expenses billed. But, make sure you didn't use 2019 check on 2018 return. In fact, without the 1098-T, I'd review all the way back to freshman year to make sure you took paid and not billed and didn't use the AOC on four returns and...really do your DD and keep copies of 2019/2018 info. Explain to client the risk of receiving an IRS letter and to keep all documentation and returns from freshman year forward, and let them make decision, if you are willing.

Nevermind !!

I want details and pictures!

Is he for hire?

If you have a state tax return, especially one that starts with federal AGI, then do check the T&F which lowers AGI to see if it gives a better result for your client than AOTC which lowers federal tax only and not state tax.

...because donor must obtain a receipt from the charity for donations of $250 or more.

If I get a new client when I have a minute (November or December?), I enter them in my program. I learn about them, have any carryovers in place, will get a better year-to-year comparison, and might find something to ask about/amend. At the least, I'll have a better feel for 2018 vs. 2019, for instance. Otherwise, I review three years' of returns (ideal, but will settle for one or two), enter comparison data in current year program, and scour for carryovers, suspensions, you know the stuff. It's sometimes faster to enter last year's return than to find all the places to enter carryovers in this year's!

I usually make my own spreadsheet first. Then I use it to proofread the states to make sure all the amounts are where they belong.

You are not so much backing out the non resident income as you are identifying the CA only income and deductions. There are three pages of columns in Part II and Part III for Federal, Subtractions, Additions, Total using CA Law, and CA Amounts. You start with Federal and end up with just CA for everything from Wages all the way through Itemized Deductions. Then in Part IV you end of with CA Taxable Income on line 5 that transfers to Long Form 540NR line 35. There's a CA Schedule D, also, that goes by the dates residing in CA. Your software should do much of the heavy lifting, if you identified things as IN or CA and by date and entered the date CA residency began back in Part I line 3. Review the data entry on the CA screens to see if you need to enter anything manually. Then review the state returns as "government forms" to see if the "grids" divided income and deductions into the appropriate states. Does your software have a Help key? Also, read the CA part-year resident instructions.

Jim Oh Bkkr makes an outstanding point. I always look at that. Because the OP scholarship was more than tuition, it already is being used for more than just tuition, so I didn't bring it up. But, it is still possible that it must cover all tuition before the excess is allowed to be used for non-tuition. That would still leave $2,200 taxable to the daughter and give dad that same amount toward AOC, T&F, or LLC. When all else fails, read the instructions -- in this case, the terms of the scholarship.

For 2018, it was Form CA (540NR) California Adjustments - Nonresidents or Part-Year Residents, which took the bottom line on Side 4 Part IV line 5 California Taxable Income to Long Form 540NR, line 35. By the way, I had one in 2016, when the CA (540NR) was only two pages; 2018 was four pages.

Federal hasn't asked for it, yet. They use the ID PINs. But, more and more states are asking. NY has required it for some time now. CT is optional.