JohnH

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.

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

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.

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?

I'm shameless about this eyesight business. I alternate between taking my glasses off to look at someone sitting across the desk, putting them on to look at the computer screen or read a document, and grabbing one of several magnifying glasses lying around when the text on a document is too small. I'm thinking about mounting a magnifier on a swing arm on my desk so I can keep both hands free.

If the payments cleared before the due date of the return, there will not be any Federal penalty or interest. Not sure about how your state operates. However, if the return is ever audited and an assessment is made, a FTF penalty would be added to the assessment.

Obituaries?

Maybe the best thing will be that he doesn't pay you and is so embarrassed that he is ashamed to contact you again. I've had a couple of situations like that over the years, and decided that never hearing from them any more was worth the value of the unpaid bill.

Some people like to learn from other peoples' mistakes. Others learn from their own mistakes. I seem to be different. I often learn from my own mistakes... by repeating them.

Is the exact amount really important? As long as the client receives more than the refund claimed on the return, and the excess is reasonably close to the amount expected when interest is added, I tell them to deposit the check. I don't understand why some checks will show the interest in a small notation on the lower-left while other checks don't, but it isn't worth the trouble to inquire.

Don’t you know you’ve won the China Lottery and you’re a multi-millionaire? All you need to do is send them $495 and your bank account info. It’s all legit - they just need to validate who you are.

Client: "Anything you can do about these penalties?" You: "Sure, I can show you how they're calculated."

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.

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."

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).

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.

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.

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.

You could have said, "After lunch this same day next month will be fine", just to keep it interesting.

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).

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?