JohnH

I’ll bet the app is named GRRaze.

I've been telling my estimated tax filers to just file as usual (Apr 15, Jun 15, Sep 15, Jan 15), using something close to last year's figures unless there's a known reason to increase or decrease. We can make adjustments (if any) whenever the 2019 return is completed. Not much else to do given the current situation.

Yes, it's clear that the previous tax preparer didn't understand the proper treatment of clergy taxes. They seemed to have a rough idea of the end result, but they took an improper route to get there. As Margaret has pointed out, they probably got fairly close to the correct final numbers. So no harm, no foul. By taking the time to learn how to report clergy income and H&U allowance properly, you're doing the best job you can for your client. You're minimizing their chances of an audit and maximizing their chances of a "no change" result in the unlikely event one occurs. They're fortunate to have you handling their return going forward.

I think the bookkeeper should have no role in the calculation of the H&U allowance request, especially with respect to determining the FRV. The pastor should submit a H&U allowance request to the church based on his/her own calculations of actual vs FRV. After all, it's the minster (not the bookkeeper), who is ultimately responsible for what is reported on the tax return. My personal opinion & general rule is that if the minister is not pulling some portion of the H&U allowance back into taxable income, then the H&U allowance is set too low and tax savings are being left on the table. Bookkepeers often pride themselves in getting things correct to the penny, but that isn't the objective with respect to this clergy benefit. There are lots of suggested H&U allowance forms available online. One important point about the H&U allowance request - it should contain wording to the effect that it remains in effect until another request is submitted. That way, if a year slips by and everyone forgets to renew it, the old amount is still in effect.

That was an assumption I had made at the outset. But each of my clients who received a PPP reported the advance EIDL to the lender but it was not deducted from the PPP. They each received exactly 2.5 times one week's average 2019 qualifying payroll + benefits expenses. (one bank ADDED the advance EIDL to the PPP amount). Each of these banks collected the payroll info from the client, along with the advance EIDL info, and the bank calculated the PPP amount. I told each one that their loan forgiveness would not apply to the advance EIDL, so each would end up with a repayment amount (either a lump sum or a cheap loan). I've been quizzed about this advice, and perhaps the questions are due to clients speaking with people whose advance EIDL was deducted from the PPP. Is it the experience of others on this forum than the advance EIDL was deducted from the PPP before the funds were disbursed?

It's my understanding that the amount of the PPP available for loan forgiveness is automatically reduced by the Advance EIDL For example, an incorporated small business with 6 employees receives a $6,000 Advance EIDL through the original simplified SBA process. They subsequently receive a $50,000 PPP through their bank. The maximum amount subject to loan forgiveness is $44,000 (provided the percentage critera and all other loan forgiveness conditions are met). Is that correct?

This may not be in issue for your client, but for future reference remember that most real estate agent estimates only provide the FRV for the residence as it sits. There needs to be an upward evaluation to allow for what would be charged to a renter with the home being fully furnished and with all utilities & maintenance expenses paid. That can be a useful calculation in some situations.

I've seen several references her and in other places to "choosing the 8-week period OR the 24-week period." Just curious if anyone has a good explanation about why a PPP recipient woud elect to use the 8-week period. I can't think of a reason other than to "just get it over with".

Margaret and Lion provided excellent additional detail on the subject. I'll just add that your nephew's then CPA you referenced was handling it incorrectly. He likely achieved the same result, so there was no negative tax consequence. But he must have been doing some sort of override of the software (unless the return was prepared by hand...).

You shouldn't use Schedule C to report a H&U allowance. I don't use ATX, but I'll bet it has a worksheet for properly reporting the H&U allowance. The worksheet should require you to calculate the lower of 1) Actual amount designated, 2) Amount actually paid, or 3) FRV of house (fully furnished & all utilities paid). The amount designated is then taken directly to Schedule SE, and the amount taxable (if any) is added to W-2 wages & salaries with a notation of "Excess H&U Allowance). Drake has an excellent, intuitive worksheet for this. I assume the ATX worksheet is similar in layout & function to the one Drake uses. Calculating the H&U correctly is a simple process, but not necessarily easy the first time you use it. After the first couple of run-throughs it makes perfect sense.

If you have trouble texting, you can always set up an inexpensive bluetooth keyboard & connect to your phone to use when typing a lengthy text. But that's a little cumbersome when you're on the go. There are probably more exotic ways to print texts, but I just take a screen shot & email it to myself. Or just print the screenshot directly to a printer connected to the phone via wifi. I don't feel the need to keep a written record of every text. It all depends upon the seriousness of the conversation. Some of my texts lately looked a lot like like this: ->: "Do you know when my stimulus payment's going to be here?" A-> "I don't know. Here's the link to IRS ........"

Maybe your experience is different than mine, but I know for a fact I would lose some clients if I didn't text with them. Since I'm more or less on a retirement glide path, that isn't terribly important to me, but if I had 10-20 years ahead of me before retirement that would be a concern for me. Those millennials will eventually go somewhere else if you can't/won't communicate with them in the way they're accustomed. As it is, I'd probably get rid of certain of my clients if they didn't text (or at least email). So in my case there's a bit of a reversal of priorities on this issue.

I've run few scenarios, and it appears that all my clients will be fine with a stretch to 12 weeks or longer, even if the 75% rule doesn't change. (and provided they don't alter other aspects of the forgiveness requirements). That makes sense, since the original calculation was based on 2-1/2 weeks of 2019 payroll. It still seems to me that everyone who received the Advance EIDL and then a PPP will wind up with the Advance-EIDL dollar amount of their PPP unforgiven, if I'm understanding the rules correctly. That isn't a complaint - just a reality. It also makes sense if you follow the logic. But if Congress changes that, I wouldn't complain.

I agree completely with the strategy in your final paragraph. Once your clients know your voice mail response is slowest while email and text response is fastest, most will quickly shift to email and/or text. I always tell them I generally respond to email & text rapidly, but phone messages sometimes take a day or two. (Often the initial response is "I've seen your message and I'll get back to you ASAP", but that seems to satisfy them as they have the comfort of knowing I'm thinking about their question. And if their question truly is time-sensitive, I can get to it appropriately) With a couple of exceptions, even my oldest clients have become habitual email/text communicators. Many of my older clients have developed hearing problems (as I have), so I believe this is one reason they've jumped on the email/text bandwagon. More and more of these seniors tend to text, and these days you almost can't communicate with anyone under 45 unless you text. Since texting is fairly easy to preserve, I'm just as fine with it as I am with email. In any event, email/text questions tend to be more focused since they must spend a little time thinking about they're typing. (Same goes for my reply). Voice conversations frequently tend to be mind-dumps, useless background, or a rehash of what their brother-in-law told them about tax law. And when the email/text we don't waste a lot of time talking about the weather, COVID, riots, grandkids, our latest doctor visit, and all the other interesting diversions we're all subject to be drawn into. If anything, written communications can sometimes be too sparse, but that's pretty easy to rectify with a well-crafted response.

Thanks Bart. I think this link needs to be pinned as a resource at the top of this COVID-19 forum.

Sorry, I had a typo in my reply, but you got the point nevertheless. I meant to say "stating they have two employees when in fact they have none"

Oh no! Judy, I was convinced my Facebook arguments were so persuasive they were winning people over to my political opinions and religious views on a regular basis. I'm crushed.

Do you think maybe they filled out the Advance EIDL application incorrectly, stating they have 2 shareholders when in fact they have none?

In my state WC is not a state or local tax and it isn't an employee benefit. It is an insurance plan which simply follows special state guidelines. Not that much different than auto insurance or General Liability insurance. So as much as I'd like to see it included in the forgiveness category, I don't see how based on the info we have now.

I did have one humorous conversation with a friend (not a client). We were discussing an issue of his which is similar to an issue of mine. I finally said something to this effect: "I'm telling you what I'm doing, but I'm not telling you that you should be doing what I'm doing. I may suddenly change what I'm doing if I get different info from the SBA. And I can't promise I'll remember to tell you I changed what I'm doing because I may not even remember this conversation a week or more from now. So take this conversation for what it's worth." He responded "I get it and I appreciate your honesty" (I'm sure in the back of his head he was thinking "I need to keep asking John what he's doing about this.")

Great points Tom. I just started a separate thread on the subject of a special PPP disclaimer, if you (or Lion or cbslee or anyone else) might care to comment. I'm getting concerned about the risks here.

I've become very circumspect about giving advice or opinions about PPP loan forgiveness compliance. I even accidentally posted a rumor on another site in the midst of warning about internet advice based on rumors. Anyhow, I'm beginning to think it might be a good idea to come up with a special disclaimer when discussing PPP with clients. I don't want someone's PPP loan forgiveness to fail in part or in total because they acted on something I said (or something they thought I said). There's just too much at stake with this PPP loan forgiveness. Does anyone here share those concerns and do you have any thoughts on what a special disclaimer may look like?

These problems are a result of the IRS trying to comply with the impetus to push stimulus payments out as quickly as possible in order to achieve an economic goal. They've basically turned an aircraft carrier around in the middle of a battle. The goal of getting the payments out is being achieved in an exceptional manner, but naturally it's messy given the conditions and time frames. I'm not one to compliment the IRS very much, but I think under these circumstances they're doing a fantastic job.

Good result! Be thankful the parents didn't ask you to advance him until he gets it.

Print money? Is that how they do it? I thought the government just went out and got a second job to pay the extra bills when it spends more than it takes in. Wow, was I wrong or what?