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JohnH

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Everything posted by JohnH

  1. Client: "Anything you can do about these penalties?" You: "Sure, I can show you how they're calculated."
  2. I'm puzzled a bit by the lack of discussion of this distinction in other accounting & tax publications. I've read several articles by law firms purporting to "explain in detail" how this all works, but every single one of them leaves the reader thinking Sep 30 is a "drop dead" date. (Perhaps they are trying to create a sense of urgency, which also might translate into premium billing for the work?) Yet, at the same time the Journal of Accountancy is certainly a reliable source so I have no reason to doubt their analysis. The only thing I can surmise is how averse many people are to "penalties" in the generic sense. For example, a FTP penalty is peanuts when compared to a FTF penalty, but I sometimes question whether a particular commentator understands the difference since they seem to treat all penalties as the same. Whatever the case, if a taxpayer owes $10K and can't make the Sep 30 deadline but could be ready by Oct 31, they pay a $500 FTF penalty vs $2,500. And so on, with the penalty increasing by $500 with each succeeding month until the 5th month. (I'm not taking into account the interest and the relatively tiny FTP penalty, since they remain the same under any scenario of filing and payment) As you said, Lion, this is huge. Especially at this late date.
  3. Here's the link to the article in the Journal of Accountancy on Sept 23, 2022. The 7th paragraph is quite clear. (I counted singe sentences standing alone as a paragraph). The source is certainly reliable, although nobody else I've read has mentioned this - most just imply that the return MUST be filed by Sept 30, 2022. I'd like to hear your thoughts, or any one else's, on whether there is any other way to interpret this. If reliable, it will significantly alter my work schedule this week (for the better). https://www.journalofaccountancy.com/news/2022/sep/penalty-relief-deadline-fast-approaches-2019-2020-tax-returns.html Here's the operative paragraph: "Although the time for the full penalty relief is running out for businesses and individuals that have not yet filed their 2019 or 2020 returns, those that miss the deadline but file during the first few months after the Sept. 30 cutoff will still qualify for partial penalty relief. For eligible returns filed after the cutoff date, penalties will start accruing on Oct. 1 instead of the return's original due date. The IRS noted in the news release that the late-filing penalty accrues based on each month or part of a month that a return is late, so filing sooner will limit any charges that apply."
  4. I read an article today that said IRS has no intention of extending penalty relief for 2019 and 2020 beyond Sept 30, 2022. (They had been asked to do so due to the short time frame from the announcement to the specified date. However, the article also stated that FTF penalties for these years will begin to run on Oct 1, 2022. The penalty clock is basically resetting as of that date for those two years So it isn't a matter of falling off a cliff if the client misses the Sept 30 deadline - they would simply incur a one-month penalty for each month they are late (up to the max 5 months).
  5. The 8919 is one of those approaches that could potentially cost the person their job if the IRS queries the employer after the return is filed. However, I've never heard of IRS following up with the employer on an 8919. Has anyone else? I have prepared returns reporting an employer-provided 1099 as Self-Employment income, then advising the client to request reimbursement of half the self-employment tax plus a little extra to cover the tax on the reimbursement. Sometimes the employer agreed, but other times they refused outright. But even there, if the employee continues working for the company, future bonuses were probably discounted by the employer to put the employer back to square one.
  6. And to add to the confusion, the decision regarding how to respond may well rest on whether or not he individual likes their job. If They handle it in such a way that it makes trouble for the employer, they may find themselves out of work altogether.
  7. I didn't initiate, encourage, or offer to help any client OBTAIN a PPP loan. I told them if they were interested, they needed to contact their bank or other lender, and I would then help them gather all the information they needed. Even passed along the names of a few lenders to clients whose bank couldn't get around to them. But I would not recommend that they get a PPP loan or be involved in initiating the process in any manner. There were a couple of them who could, and probably should, have obtained at least one PPP loan but they "didn't have time" to contact a lender. Not my problem. I even sat with a couple of them while they filled out their loan applications and/or forgiveness applications on their computer, but I never actually interacted with the lenders (other than for my own PPP loans). As Mediln stated, this was all new stuff, fraught with risk, and the goal posts kept getting moved. This was not a good place to assume risk - the downside was too great at the outset.
  8. You could have said, "After lunch this same day next month will be fine", just to keep it interesting.
  9. Thanks for the heads up, Eric. My regular phone is an iPhone 8, but I keep my old iPhone 6 as a backup (just in case my 8 goes missing, I can keep operating without any delay while I replace the 8). I tried an update on the 6 when the update was first discussed and I was updating the 8, but the 6 it said it was up to date. Sure enough, after reading this info from the last day or so, I ran a software update on the 6 this morning and it did download an update to version 12.5.6 (16H71).
  10. From an accounting perspective, this is simple. But I'm confused a bit about the 1120S instructions and recent developments. The client's S-Corp did not participate in PPP1, but obtained a $90k PPP2 loan in March 2021. They spent all the funds as appropriate within the required time in 2021, so fully forgivable. Full loan forgiveness was obtained in May 2022. Seems to me the $90K is simply a "Loan Payable" on the 2021 return with no other entries on the 1120S. Then the loan forgiveness, along with appropriate entries on the K, K-1, and M-1 will be reported on the 2022 Form 1120S. Am I right, or do I need to make any entries on the 2021 return other than the "Loan Payable" entry?
  11. I like the Ellis Island thought. I'm with you on the "freeing" aspect of being able to use the phone. I don't like to return from a vacation or any kind of trip with a stack of snakes & alligators on my desk - often little menial items that distract from the important things that REALLY need attention. Being able to handle simple tasks while traveling has always been a more relaxing way for me to be away. When using the phone to access the computer, have you ever connected it to a tv to get a larger display?
  12. Another quick question about Splashtop, since I've bought it and am already deploying it in ways I hadn't imagined. Are the default security settings adequate, or are there selections I should make to enhance its security? Keep in mind I'm using it to access a client's offsite computer to look at Quickbooks files and some Excel files. I've also discovered how easy it is to access my own office computers from my Mac (and even from my cell phone, which I wouldn't have even thought to try if you hadn't mentioned that). All in all, Splashtop has become one of the most interesting & useful things I've run into in a very long time.
  13. Thank you for that reply. I was hoping you were familiar with it. And knowing you use it is probably the best recommendation I could imagine. I appreciate the background as well.
  14. A client and I want to set up remote access for me to access their computer from time-to-time (not continuously). Their computer and mine are stand-alone devices (not networked, etc). Neither of us knows how to make a good decision, although we are looking at Splashtop Business Access at the moment. Is anyone familiar with this provider, or are there other providers we should consider? (I like to save money, but at the same time I don't want to sacrifice security, features, or convenience for price. So part of my hesitation is that this service only costs $100/year).
  15. Wouldn't your Certified Mail/Return Receipt number be helpful in replying to the rejection notices?
  16. Reminds me of the story about when the textile mills used to pay everyone weekly, in cash. One week John opened his envelope, then turned to the paymaster and complained his envelope was $2 short. The paymaster responded, "Yes, last week I overpaid you by $2, so I just deducted it this week." John nodded and walked away. The paymaster then called John back and said, "I could tell by your reaction you knew about the $2 overpayment. Why didn't you mention it last week?" John replied, "Well, I'm a reasonable man. I'm inclined to let it pass if a fellow makes a mistake. But when he messes up two times in a row, it needs to be called to somebody's attention."
  17. Many years ago I had a few clients who owned multiple rental properties. Most were constantly complaining they weren't getting enough tax deductions and at the same time complaining they had to pay too much for the services they obtained from their vendors. Eventually the conversation came around to the fact that I was one of their vendors and maybe I could help out by reducing my fees. Their sense of entitlement was boring and took up a lot of my time in unproductive conversation about tax-avoidance schemes. Eventually I got rid of most of them and stopped taking landlords as clients. I found most of them too cheap to keep.
  18. Around here we call it “Hillbilly Estate Planning”. Why pay a lawyer $1,000 to do it right when all you need to do is follow the recommendations of some random stranger on the internet? (But then, from time-to-time we’ve also seen lawyers some up with some pretty quirky arrangements as well, often involving trusts)
  19. Hi Katherine: Just to be clear on what you are saying. I assume you are pointing out that the ONLY exceptions to the 10% penalty for a taxpayer who is under 59 would be either 1) disability as defined; or 2) a qualifying SEPP. Any other use would be subject to the 10% penalty. Right?
  20. This thread brings back fond memories of a client from the early 1980's. He was partially disabled, but a very proud, independent type. He owned a large truck from his working days and to earn a little extra money he would haul livestock to market for local farmers. Never earned very much profit but he wanted to "pay his fair share" because he was receiving a small disability payment. I admired his integrity. Each year he brought me his records - a calendar kept in his truck for writing down his mileage and hauling fees. Needless to say, after a year of being carried in the cab as he loaded, hauled, and unloaded animals, the calendar was something that needed to be handled "with care". Especially since it might have occasionally fallen on the floor. (Don't ask me how I know that)
  21. Thanks to both of you for the replies. Guess I'm just trying to "torture the text" to get a desired outcome.. This helps me to go ahead and wrap this one up. I appreciate the confirmation.
  22. Still researching this, but I'm unable to find anything that definitely says "yes", therefore I'm leaning toward "no" as I have been since the outset. I had the client pay the full amount of the penalty tax with their extension, explaining that we could claim a refund of the education-related portion of the penalty if we found that it was excludable. But looks like I'm not going to be able to deliver good news on this.
  23. Client is under 59-1/2 and cashed in a whole life policy. Insurer said it's a Modified Endowment Contract and issued a 1099-R with Code 1. Early withdrawal penalty tax applies. Taxpayer also paid education expenses for their dependent child. The penalty exception would apply for the amount of education expense paid if this were an IRA, but I'm uncertain whether this exception works with the MEC withdrawal. Can anyone offer any guidance on this?
  24. I tell clients to drop off their info or mail it to me and I'll get back to them if I need anything else. But years ago when I would have a sit-down with them to go over everything in my office, I always enjoyed stuffing the boilerplate and the mailing envelopes into the shredder as we were talking. Sometimes, while that thing was grinding away, the expression on their faces would be priceless.
  25. I found the 2802C to be the most humorous. After all, how can they know there's a withholding problem if they haven't processed a return? Seems to me the only time this notice would go out is after a return has been processed and the under withholding is known, so why suspend it?
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