Marie Posted March 19, 2009 Report Share Posted March 19, 2009 I'm getting some new clients from the mennonite community, and most of them are 4029 exempt. ATX software has a 4029 box to mark and after that no EIC or Add'l Child tax credit is figured. I think this is correct. A competitor in the next town is giving these exempt people the add'l child tax credit. I'm getting calls wondering if she is correct and if not they want me to amend their tax (and say they will be back next year). My question - am I right? is the ATX software right? how come her software isn't doing the same? Last year she used TaxSlayer, I'm not sure about this year. I have some of her last year's and she gave add'l CTC then, too. Does anyone else have some experience with this? I think I'm right, but when someone else is doing it different, I start doubting myself. I know this is getting long, but, as long as I amend and they pay back by April 15, there shouldn't be any interest or penalty, right? Quote Link to comment Share on other sites More sharing options...
kcjenkins Posted March 20, 2009 Report Share Posted March 20, 2009 The §24 wording on who is eligible for the Child Tax Credit says: "No credit shall be allowed under this section to a taxpayer with respect to any qualifying child unless the taxpayer includes the name and taxpayer identification number of such qualifying child on the return of tax for the taxable year. " Does the child have an identifying number? Quote Link to comment Share on other sites More sharing options...
MAMalody Posted March 20, 2009 Report Share Posted March 20, 2009 I have not dealt with this before, however, if memory serves me correctly, per IRC 32 and 1402, earned income for EIC and Add CTC does not allow income that is exempted from social security (ex. housing allowance) to be included in the definition of earned income for credit computation purposes. So I think that you would only be allowed to consider income reported on line 7 of 1040 to be looked at when income is exempt from SS/MC. Does your situation fit this case? Quote Link to comment Share on other sites More sharing options...
Ray in Ohio Posted March 20, 2009 Report Share Posted March 20, 2009 I am in the middle of Ohio's amish country and I do lots and lots of returns for 4029 Exempt clients. SE income that is exempt from SE tax is NOT qualifying income for EIC and Additional CTC. ATX does calculate the credits correctly when you check the box that TP is 4029 exempt. That was one big reason why I went with ATX in the first place. Now, with all that said. There are preparers in this area that also give these clients both credits and for the most part the IRS processes them and sends them the refunds. It seems the computers at the IRS do not do the calculations and catch that the income is not qualifying income. Try explaining the above to a client when he says "my brother filed somewhere else and he got the big refunds". I usually tell them that the IRS can and probably will be asking for this portion of the refund back with penalty and interest. Hope this makes sense, but Jen, I think you are correct in the way you're thinking. Please let me know if I can help in anyway. Quote Link to comment Share on other sites More sharing options...
Marie Posted March 20, 2009 Author Report Share Posted March 20, 2009 Ray, thank you for your imput. I thought I was right, but needed confirmation. I worked thru the worksheets and it's pretty specific about exempt income from SE not qualifying. Now I'm dealing with a preparer who is giving the Amish the add'l ctc, they are getting refunds, and worried they will have to pay back and coming to me to amend. I just wanted to be sure I was right. If I need you, I will specifically ask for you, thanks Quote Link to comment Share on other sites More sharing options...
Ray in Ohio Posted March 20, 2009 Report Share Posted March 20, 2009 Now I'm dealing with a preparer who is giving the Amish the add'l ctc, they are getting refunds, That is whats bad about the situation. The IRS actually sends out the refunds as if they would qualify for it. Some clients question why they send the refunds if they dont qualify for it. So, I try to explain it to them, but I know some of them still question if I know what I am talking about it. At least I know I am doing it right. Quote Link to comment Share on other sites More sharing options...
David1980 Posted March 20, 2009 Report Share Posted March 20, 2009 Yes, the primary "is it allowed or not" indicator from a taxpayer's perspective is "did I get a refund or not". Short-term views, and it makes it hard to get a certain kind of clients if you have a tax preparer who is preparing incorrect returns because they either don't know any better or don't care. My first year there was a local "fire fighter specialist" who would give the per diem for those people, needless to say I didn't see very many fire fighters that year. Quote Link to comment Share on other sites More sharing options...
RitaB Posted March 20, 2009 Report Share Posted March 20, 2009 Yes, the primary "is it allowed or not" indicator from a taxpayer's perspective is "did I get a refund or not". Short-term views, and it makes it hard to get a certain kind of clients if you have a tax preparer who is preparing incorrect returns because they either don't know any better or don't care. My first year there was a local "fire fighter specialist" who would give the per diem for those people, needless to say I didn't see very many fire fighters that year. Yeah, another primary indicator of how good the preparer is did I get away with it. Just got a new client, got audited last year, lost, and blamed it all on preparer who deducted a bunch of commuting miles that he didn't know about. OK... Guess what he wanted to deduct this year? Farm tractor. Are you producing a commodity for sale? No, we're raisin' some dogs though. What are you doing with the tractor? Bushhogging and plowing the garden. Selling anything out of the garden? No. They had their stimulus letter, though. Wha-hoo! Quote Link to comment Share on other sites More sharing options...
Recommended Posts
Join the conversation
You can post now and register later. If you have an account, sign in now to post with your account.