artp

Thanks for the confirmation. These situations always confuse me.

Single taxpayer is sole support for live in girl friend (not related) and her 13 year old son. Girl friend has no income. She and her son lived with the taxpayer all year. Father of the 13 year old is incarcerated. Can taxpayer claim $500 credit for both the girl friend and her son? Taxpayer also has an adopted daughter age 3 who he fully supports and lives with him all year. So HOH status?

Clarification: the parents have been appointed by the court as personal representatives.

Client's son (single) retired from the military in June 2023 and passed away in July 2023 suffering a fall while helping a friend do roof repair. The parents have power of attorney to handle the son's affairs. They have been unable to get the son's military W-2 as it is only available electronically and they do not have access. They have tried numerous military agencies, but no luck. They are now contacting their US Congressman for help. Can I get Power of Attorney to access the son's records with the IRS through them? Never run into this situation before. Any suggestions?

That was my thought as well but had not run into this before. Just wanted to get someone else's input to confirm. I was only concerned that in Drake that is not on their list, just had to use Other as relationship.

Client has been Foster parent for the same 2 children for the past 5 years. In 2023 the legal relationship has been changed to guardianship. My understanding is that this is a more permanent status than temporary care under fostering. Did not see this relationship specially listed in CTC rules. Client meets are of the other requirements so any issue with taking CTC for 2023?

TexTaxToo Thanks for the clarification. That makes sense.

Client received 2 1099-Q forms for the same college student from of 2 different 529 Bright Start accounts. One issued under the father's SSN and one under the son's SSN. The father is custodian on both accounts. FYI, the second account was originally created by his sister-in-law many years ago. After she was divorced the funds were transferred to account under his SSN. When calculating the AQEE and any earnings that are taxable and subject to 10% penalty do you use the full AQEE for each calculation or split between the two? Same question for the amount of AOC. Can you split the amount of AOC? or do you have to take the full amount of expense used for each calculation? I have never run into this situation before. Would appreciate feedback from others on the board.

Brother A had always paid his share of the taxes each year. The other brothers did not. As part of the escrow settlement their share of the taxes was credited back to A when the funds were dispersed. There were substantial legal fees as show on the spreadsheet.

i have attached my summary of these transactions to clarify. The results of the partition sale I think are correct but I am not sure about the presentation on the sale to the unrelated party in Nov. Please offer your thoughts. TAX CALCULATION Sale of Property 11102023.xlsx

After the tax settlement from his brothers his share was $34,731 less $6636 for attorney fees a net of $28,095.

Let me clarify. The total back taxes of $8398 was owed by brothers B and C. Brother A had paid his share each year. I ignored the tax payment adjustment between the brothers but reduced each brother's share of the escrow settlement by the attorney fees that were charged as part of the court order disbursement. Was this not the correct way to calculate each brother's loss?

Client has 2 children in college with 3 1099-Qs. Daughter's 1099-Q under her SSN has $19,149 in box 1 distribution code 1 Coverdell ESA with zero balance left in the account. Qualified education expenses $28,650 scholarship$16,239. So hers seems straight forward max AOC and nothing to be reported from the 1099-Q. The son has 1099-Q in his SSN also Coverdell ESA box 1 $12,624, box 2 7024 box 3 $5600. Father has 1099-Q under his SSN Box 1 $9892, box 2 $3192, box 3 $6700 also Coverdell ESA. Qualified education expenses $12,056 scholarship 8190. I think that son has $3866 of qualifying expenses for AOC. Based on the above I think we have earnings that have to be reported and 10% penalty apply. Question: How to calculate the amount of income to include? Can this all be reported on the parent's return or separate reporting for Dad and for son? From what I have read in Pub 970 you have to reduce the qualified education expenses for scholarship and the amount used to calculate AOC to get to AQEE, right? Would appreciate input on this. Thanks

Finally got the escrow settlement statement on the partition sale $ 79,00 for back taxes. There were legal fees on the settlement which I am deducting from the proceeds and showing the resulting disallowed losses for each of the brothers. When brother A subsequently sold the property to an unrelated buyer I added the disallowed basis to his purchase price at the partition sale and calculated a capital loss per the attached spreadsheet. Is this the correct reporting based on the previous discussion above? Want to get this right so I really would appreciate any feedback form more experienced tax preparers.TAX CALCULATION Sale of Property 11102023.xlsxTAX CALCULATION Sale of Property 11102023.xlsx

It turns out he had 2 Roth accounts with total contributions of $1950. He received 2 1099-Rs. The one for $1000 as originally stated and a 2nd 1099-R for $1766 marked total distribution. So for the 1st one nothing should be taxable, no penalty and for the 2nd $816 of income + penalty, right? For $1000 Form 8606 line 19 $1000 with Roth basis $1000; for $1766 Form 8606 $1766 line 19 with Roth basis $950. Software will take the $819 to 5329 and calculate 10% penalty.

Taxpayer received 1099-R with Box 1 $1000, box 2 blank, box 2b checked and box 7 code J penalty applies, no known exception. $1000 in just part of original investment-no earning included. Best way to input this in software to show this to try to avoid IRS inquiry when not includable in come and not subject to early withdrawl penalty?

I guess I am getting old..missed that. Thanks

Client (husband) passed away in Dec 2023. He received 2 SSA-1099s. One showed $1919 in box 4 (benefits repaid) and $23,087.80 in box 5.The 2nd one showed $25,006.80 nothing in box 4. I am assuming that the correct amount to report is the net amount as shown on the first one, $23,087.80. But I am concerned how the IRS is going to handled this. I do not see anywhere in my tax software (Drake) to enter the amount in box 4. Am I missing something here?

I may be "old school" but I find it difficult to assist clients with questions concerning how to fill out this form and more importantly how to know in advance how much tax will actually be withheld before they submit it. With the old W-2 form and exemption tables it was fairly straight-forward. Now, unless you have a payroll tax software in house that will accept the new W-4 tax form inputs you are guessing what the result will be. I find many company's payroll processing is not done in-house so it is difficult to run what-if options. For example, if a significant bonus is to be included in their next pay check how do you calculate the withholding and make adjustments before it is processed? I find most HR personnel are not very helpful and the IRS instructions are not much better. Anyone have practical suggestions?

My client is a pastor (dual status taxpayer) meaning his wages are reported on W-2 but he is treated an self-employed for SE tax. He contributed $7,000 pre-tax to 401-K. Box 1 Wages $45,000, nothing else on W-2 except box 12a code D for $14,000. Does he have to gross up his SE wages to include the $14,000? For a regular statuary employee his FICA wages would be grossed up and shown in boxes 3 and 4 , but I could not find anything definitely for a pastor. Various articles suggest than no gross up is requited. Looing for help on this. Thanks

As anyone used ENCYRO for sending/receiving secure emails to/from clients with tax sensitive personal data? Thanks Art

Thanks for all of your feedback. Decided to go with Tech 4 to get this done correctly.

Someone mentioned Tech 4 Accountants. Anyone used them? Reliable? Cost effective?

I took the sample plan outline from the IRS website and tried to tailor it for my small one man tax operation (no employees) but not comfortable with what I have. Does anyone have an IT support person who works with smaller clients who could set up the WISP for me? Thanks for any suggestions. Art

To clarify the medical insurance deduction is limited one line 17 is limited to the 25% not reimbursed by the former employee. Correct? It is my understanding that the 75% reimbursement is under Sec 105 plan of the former employer so it should not be reportable or taxable to the retired employee. Correct? If the employer would issue a 1099 for the 75% reimbursement, how should that be handled on taxpayer's return? What about the deductibility of LTC premiums?