JohnH

Even if you don’t get the green card back, the tracking can be downloaded from USPS. (Although recently I had one that the tracking did not reflect delivery but I got the green card back). Belt and suspenders - Maybe one or the other will work. 

I always deferred most SocSec questions by recommending that the client go straight to SSA for answers. 
 

After I began drawing SocSec 7 years ago and navigated my own situation, I changed my policy. I now defer ALL SocSec questions by recommending that the client  go straight to SSA.  

My father-in-law always said the only thing he’d like to know is where he’s going to die.  Then he would just be sure to never visit there. 

I’ve used 1099Express for several years, filing 250-300 1099s annually  Excellent product, simple Interface, great support, and reasonable pricing.  Well worth checking them out.  

https://1099express.com

I'd run. Having compassion for their plight, nevertheless I'd still run).  Even if it is possible to form an LLC in Mexico, there will likely be legal complications and reporting.  In the end, when it blows up, all fingers will point back to you since you provided the advice (even if you didn't, you'll probably still be blamed).  

Congratulations!  Grandkids change everything. 

I’d be inclined to deduct $203 as a cash deduction to Goodwill and $170 as a non-cash deduction to Goodwill. The $203 is simply a cash contribution towards the  charity’s operations.
 

But I’d let the client know the issues is unclear and let them make the final decision on the $203. 

Just wrapped this one up after placing it on extension back in Apr.  Had a couple of telephone conversations with the MA DOR. Nice folks - very helpful and patient as was predicted on this forum. 
 

It was pretty easy in the end using their PY/NR schedule.  Had to allocate working days in MA divided by net working days everywhere.  A little quirk in the MA rules required us to divide MA working days by 365 minus weekends, holidays, and even PTO days. This produced a smaller divisor (less than 260) and therefore a slightly higher MA tax liability.  But the tax liability wasn’t too bad and the taxpayer got a full credit on their home state return for the MA tax paid.   So it was a wash to the taxpayer, except for my extra prep time. 

Also had to do a little extra analysis on the work days vs travel days in MA. You don’t have to count travel days if you fly in late in the day and/or out early in the AM. Those are just travel days. But a morning arrival in MA and/or and afternoon/evening departure from MA  counts as a MA work day. 

Thanks for all the good advice and suggestions on this thread   It helped me focus on the important things  

Did the Corp ever apply for any loans during its existence?  The application would have included representations regarding stock ownership. 

Same for any personal financial statements submitted for personal loans, either jointly or individually. (Home mortgage, cars, boats, etc)  Somebody (or both) had to claim ownership of the stock  

Also did the company ever do any government contracting or even just apply for the same? There’s always paperwork asking about percent veteran status (if either is a veteran), as well as percent woman owned.

I think the lender is just trying to make them go away without turning them down flat.  So the lender makes a request they know is outrageous, knowing no accountant in their right mind would write a comfort letter like this.  That way the lender gets to blame you as the one blocking the loan rather than accept responsibility for their actions. 

Another possibility might be that they are making more than they're reporting and you have a tax cheat for a client. 

I'd be inclined to tell them if they have to lie to get the loan, then that's proof they can't afford the purchase.   Either they will get mad and leave you or you'll begin to cement a strong relationship based on honesty and trust in the advice you offer.

A client this stupid is never going to change. Just be glad you advised them of the penalty and they made the choice to pay less.   May as well cut your losses at the outset. 

I had a somewhat similar situation with a freight broker client for many years. In Quickbooks and on their financial statements, we would show gross billings and then use a contra-account to reduce gross revenue by the amount of the payments made to the carriers.  The contra-account showed up as a negative revenue entry.  We did this in order to have a better handle on the "true" net revenue in evaluating operations.  From an accounting standpoint, this was essentially the same as having a cost of goods sold entry. 

But on the tax return, I would simply move the amount of the contra-account into "other expenses" for tax reporting.  Operational net income was the same by either method, so the tax return agreed with the books.  But I'm sure it would have required some explaining if an  audit had ever come our way.  

6 hours ago, Slippery Pencil said:

That was a terrible decision.  You make it sound like you persuaded him to do this.  If so, that makes the decision even worse.  You should have persuaded him to file an extension and wait.  Live and learn.  File extensions, they're your friend.

I agree.  The ONLY thing to do in this situation was to file an extension. If the client refuses, I’d tell them to find another preparer.  
 

But that horse has left the barn. now you’re stuck with unraveling the mess, which could easily take months or more.  Likely to be lots or unbillable (or  unnecessary) time wasted on this.  
 

Hopefully you’ve learned a valuable from this mistake.  Experiences like this are how one sharpens their skills. 

11 hours ago, Abby Normal said:

I keep my explanations brief. You listed a bunch of things the IRS already knows just by the nature of the 1040X.

Here's how I'd edit your explanation:

CORRECTED FORM 1099-NEC ($10,000).

CORRECTED 1099-MISC: $10,000
----------------------------------------------

It seems to me that line 1 net change would be zero, and the other lines only change due to form calculations, so there's no need to explain this to the IRS.

And you could combine the two lines above into one line for convenience of copying and pasting.

Brevity, above all else.

I agree. “Brevity, paramount.”

Or worse, install the toilet paper on the roller with the edge facing the wrong way…

39 minutes ago, RitaB said:

Also hate doing the books for people who think running it thru the bank account converts a personal expense to a business expense.  

Everybody should know by now that running it through the bank account isn’t right.  The only proper way to convert a personal expense to a business expense is to charge it to a company credit card.  

An extension can easily be structured as a de facto installment payment plan for 6 months with no setup fee.  The simplest way I know to do this is to file an accurate extension (with or without payment-makes no difference), and then set up a personal EFTPS account and make payments through that account, applying them to the year under extension. You have a nice, neat, accessible record of your payments to date when you file the return. 

Of course, interest and FTP penalty on any unpaid balance will run during the extension period, but that would happen anyhow even if a formal installment agreement were possible  

How this for a response?
 

“Glad to hear this good news. You’ve learned a lot about QBO, which may help you get your info together in a timely manner next year.  Meanwhile, attached is your extension, because I don’t plan to stay up until 3am working on the revisions. “ 

Sounds like the son knows more about taxes than you do.  I'd give the info back to him with a suggestion that he employ his expertise and prepare the return himself. 

But you still provided a service.  They learned what to say and what not to reveal to the next accountant they interview.

4 minutes ago, Medlin Software, Dennis said:

In this specific case, since the employer is in MA, probable more delicate than difficult.  I suspect an oversight, maybe belief the pandemic rules were still in place, maybe new payroll person.  Normally, I would pass.  But this case, I would share the options with the potential client and let them adult.  If they want to do it right, I would take it on.

I think you nailed it. Thanks to everyone for the insights, especially at this time of year. 

11 hours ago, cbslee said:

How do you file a NC return with less wages than shown on the W 2?

So are you going to have your client ask his employer to amend his W 2?

 

That's the easy part.  No need for an amended W2.  The taxpayer reports the entire income on the NC return since that's their state of residence.  Then they claim a credit on the NC return for taxes paid to MA on the MA income.  (The credit is limited to the lesser of the amount actually paid to the other state OR the amount of NC tax attributable to the income reported to the other state, calculated at the NC rate.)  NC provides a schedule designed specifically for this calculation.  

The more difficult part relates to what happens if the employer isn't pleased that the taxpayer opened this can of worms, as Medlin pointed out.  That's probably my greatest concern in this entire matter.  I'm thinking of declining the work based on that consideration alone.  

Thanks for the cites, Lion.  That's very helpful, and I will probably call MA if I decide to do the work.  

1 hour ago, cbslee said:

If it was my client I would follow the W 2. I don't know if NC does W 2 matching but my state does.

I'm inclined to follow the W2, but there is a potential glitch.  The taxpayer is ultimately responsible for filing a correct return even if the employer makes a withholding mistake.   If MA does have a filing requirement for non-residents, the SOL never begins to run for an unfilled return.  If MA discovered the filing requirement in the future, they could compel a return to be filed, which would likely include penalties & interest for a late-filed return.   If at that time the NC SOL had expired, then the taxpayer would have no opportunity to amend the NC return and claim a tax credit on the NC return for all or part of the tax paid to MA.  Chances are that would never happen,  but if it did, it could be costly. 

I'm still researching, and while the situation with remote workers isn't all that unusual, I haven't yet found any definite guidance. (MA did have some interim rules during COVID, and the taxpayer met an exception of sorts, but those rules have expired. I think that is the exception Medlin referred to in the previous post) 

All wages and w/h are allocated to NC. 

Taxpayer is a resident of NC,, working remote for a company with its HQ in Massachusetts.  The employee occasionally travels to the MA office for meetings, etc.  Total number of days in MA were about 26 in 2023.  Many trips included overnight stays in MA, if that matters.  Employer only withheld NC income tax per the W-2.

I haven't yet found clear guidance on this, but can anyone tell me if MA is going to want to tax the MA portion of earnings as a Non-resident?