artp

Thanks for the quick reply..much appreciated

Has the relief provision for waiver of 10% penalty and 3 year spread on early retirement distributions been extended for distributions made in 2021? Client took advantage of this for 2020 and early in 2021 he had to withdraw the balance of the funds in his retirement account.

I need to clarify. The contribution was $7000 and there was a loss on the investment so the net amount withdrawn as $6683.24. The client is 65. I do not see where a entry would be required on either Form 5329 or 8606. When I made the entries from the 1099-R in Drake as outlined above, there is nothing taxable, which is correct yet I still have concerns with the coding in box 7 that may cause an issue with the IRS trying to access tax on this transaction.

Client made excess Roth contribution in April 2021 and pulled it back out including any earnings prior to Dec 2021. The 1009-R showed $6683.24 in box 1, $o in box 2, Codes B and J in box 7. My understanding is nothing should be taxable and there should not be any excise tax accessed. I am concerned that the box 7 coding may trigger IRS excise tax. Is my concern valid? How to report it in Drake to avoid IRS query?

Thanks for all the replies and the link from Terry D. I look forward to view the 1099R. I appreciate your help.

Taxpayer made a $7000 Roth contribution in early 2021 and now realizes that he will exceed the income limitation (AGI will be $240K on MFJ- he does not have any tax losses or deductible expenses to reduce AGI) and will need to pull that money out of his Roth account which can be easily done. It is my understanding that if there are any earnings on the $7000 they must also be pulled out and nothing will be taxed. But what happens ii there is a market decline on the $7000 and now it is only worth $6800? Does he need to pull out only $6800 or $7000. What to report (if anything) on his 2021 tax return?

I need to clarify that the taxpayer is married and an IL resident. If they decide to form an LLC (for limited liability purposes per the attorney) and to purchase and hold title to the property in the LLC should they (or can they) elect to be a single owner-husband and wife- (that is to be disregarded as a separate entity) or should they elect to be classified as a partnership? IL is not a community property state. If the plan is to later transfer ownership (control) to their children how would this effect your response? Needing guidance here as I do not have a lot of experience with real estate in an LLC. Thanks

IL taxpayer wants to purchase 30-acre wooded tract of hunting ground which includes a house for personal use for himself and family members. He is not looking to rent it out or develop the property. Purchase price is $325,00 with $70,00 cash down and loan for the balance. There will be no income from the property, just expenses for real estate taxes, mortgage payments and liability insurance and other personal expenses. Attorney is advising client to form an LLC owned by the taxpayer to purchase the property and hold title in the name of the corporation for liability purposes. If personal liability is major concern, alternative to corporate ownership? If the property is later sold would this not create corporate tax issue for client? Alternative suggestions?

Is there a way to fund LTC from an IRA account tax-free? Taxpayer has $150,000 in IRA and wants to purchase a whole life policy with LTC benefit. Plan would be to transfer the IRA to purchase 10-year annuity. Problem is taxpayer will get 1099-R each year from the annuity company showing $15,000 taxable. Anyone see a way to accomplish this without incurring income tax bite? Taxpayer is 62 so 10% penalty is not an issue.

Thanks..that is good news

Has anyone seen a post on this? Art

Thanks for your replies. After further consideration we will not be filing a MO return for $75 of wages.

I guess I am not making myself clear. Let me try again. Taxpayer is an IL resident who is itemizing on the Fed return and deducting $2700 of real estate tax on his IL home. He has $75 of wage income in MO. The MO-A is adding the real estate tax back to MO source income on line 5 of the MO-A and flows thru to line S on MO-NRI. I am attaching a redacted copy of the MO schedules.MO Tax Return.pdf

He is an IL resident paying real estate taxes on his personal residence in IL.

No. It is on his personal residence.

Bart It is added back on line S (Missouri modifications) on the NRI and comes from line 5Y on MO-A. The effect is to add this to Missouri source income. Art

Taxpayer received $23,000 in SRECs from the Adjustable Block Program in Illinois (payments from IL Power Authority), but has not received any 1099 form. How does this get reported on the 1040? Anyone run across this yet? Art

Filing a non-resident MO 1040 with $75 of MO source W-2 income who itemizes on Fed return with $2700 of real estate tax. MO NRI form is adding back the real estate tax as MO source income with result that she is paying $97 of MO tax on $75 of MO source income. How is that correct? What am I missing? Art

Do small employers (under 250 W-2s) still get relief from reporting for 2019? There was an exception for 2018, but I did not see anything for this year.

I have already had 8 clients who have gotten notices that IL could not verify property tax for 2018 and they are requesting proof - copy of bill and payment. The parcel # is clearly shown on the return. Never had a problem in prior years. Anyone else getting a rash of these notices?

Thanks for all of the replies! I appreciate the feedback

Lion, Per my reading TTB p 12-6 yes you can used room & board for 529.

That was the $523 of other qualifying expenses. I was wondering if this could be added to bring the AQEE to $18,067.23 and then there would be no income to include on the return and they could still get the max AOC of $2500 based on $4000 of qualifying expenses?

$153.61 of the earnings need to be included on parent’s return as income. Client has son attending college (4th year for AOC) and received 1099Q for payments from QEP: Box 1 Gross Distributions $17,980.63 Box 2 Earnings $ 6,325.69 Box 4 Basis $11,654.94 Box 6 checked Amounts were not paid to designated beneficiary or college direct, but to Mom who sent payments to college Total Billings from college $ 28,000.00 Scholarships & Grants 6,456.00 Expenses to take AOC 4,000.00 AQEE 17,544.00 Payments reflected on bursar’s statements: Paid by ACH/Credit Cards 17,544.00 Other qualifying expenses for classes 523.23 Total amounts paid 18,067.23 Tax-free 17,544/17,980.63 x 6325.69 = 6172.08 Earnings 6325.69- tax free 6172.08 = 153.61

Client wants to e-file this with his return. If he is opting to have the payments come out of his bank account will they also take out the $31 filing fee or how do we pay this? Have not done this before.