JJStephens

City tax in Ohio is a plate of spaghetti. Here's the skinny: Withholding is based on workplace city. Even if the taxpayer lives elsewhere, the employer is required to withhold tax for wherever they work...and the workplace city gets to keep the money. If someone has Sch C/E/F income, that income is also taxed by the city where the income is earned. That may require preparing a city return for that city (even if it's not the taxpayer's city of residence). Sche C/E/F losses can be used to offset other C/E/F income but it cannot be used to offset wage income. If their residence city has an income tax, taxpayers typically have to file a tax return for that city (a very few cities do not require filing if the taxpayer also worked in the same city and city tax was fully withheld on their income). Most taxing cities have a tax rate of 1.0 -2.5% though a few are as high as 3% rate...and several of them give no credit for taxes withheld elsewhere. That means if a taxpayer lives in a 3% city and works in a different 3% city, they might end up paying 6% in city taxes. Whee! Each city gets to decide if they want to give credit for taxes withheld in other cities. Some give full credit (up to the local tax rate), some give partial credit (typically half the local tax rate) and some give no credit. Bedrooms communities typically give little or no credit for city taxes withheld elsewhere. Ohio has more cities with an income tax than the rest of the country combined. However, there are some cities that do not have a city tax and most people in rural areas don't have to file a city return. Some income is exempt from city tax including retirement, social security, interest, dividends, cap gains and income earned prior the taxpayer's 18th birthday. In the great state of Ohio, school districts are also permitted to enact an income tax...and a substantial number of them do. School district withholding is always based on the taxpayer's residence. That makes it a bit easier. I moved here 35 years ago from Florida (no state tax). I was shocked to learn that in additional to federal tax, I now got to pay state, school district and city income taxes as well. It's great to be a Buckeye (not so much during tax season but fer sure during football season!).

Alas, a Columbus return is required. Gambling winnings are taxable in Cbus as 'other compensation,' and gambling losses cannot be used to offset winnings. File Form IR-25 or the Ohio generic municipal tax return.

Does anyone know if the instructions page included with Form 1040-V (payment voucher) can be modified? I'm not real happy with the line that reads: "To pay using your bank account (at no extra cost to you)..." It might sound dumb, but I'm afraid some of my clients will see that and think it's a painless way to 'pay'. I'd like to modify it to say, "You can pay your balance due directly from your bank account (with no additional processing fee) at irs.gov/payment or by credit/debit card (processing fees apply) at 1040paytax.com." Can that be done? I've looked everywhere I can think but haven't found a way to do it.

Thanks. I called Drake after my earlier post. They weren't sure but they got me pointed in the right direction. After a few minutes of fiddling around, I found it. I wonder how many hours I spent over the past 8 years doing what could have been done automatically. Maybe God will give me back those hours if I ask nicely.

I've been preparing taxes since 1987. Last month I got a call from our friends at the IRS saying I had been selected at random for a compliance audit. She spent an hour asking questions and then another hour reviewing all my YTD 8879s. Lucky me. I passed the audit just fine, but now I'm slightly paranoid. I switched from ATX to Drake back in '14. I haven't found a way to have the software supply the signature. I need to check into that.

What I love about phone camera pics is that on about half of them the right quarter of the page (the side with all the numbers) is cut off. And then, the icing on the cake: "I sent you a picture. Can't you just enlarge it?" Somehow, they just don't get that enlarging the pic doesn't magically add the stuff off to the side. Eye roll.

Like I said, I cannot find anything to back up what I thought I heard many years ago. You're probably okay and I've probably just been doing it the hard way for no good reason. Deep sigh.

Somewhere in the deep dark past I vaguely recall seeing something that the ERO cannot sign/date Form 8879 until the client signs (i.e., the ERO date has to be on or after the client date). Twice I've tried to find something to confirm that requirement--can't find anything. Pub 1345 says the 8879 has to been signed by the client and ERO prior to e-filing and kept for three years but I couldn't find anything about the timing of the ERO signature. Was I mistaken in my earlier thinking? I'd really prefer to sign them immediately, if I'm not endangering the space-time continuum in some way. That way, my client does not mistakenly sign the wrong place and I don't have the hassle of after-the-fact signing for 8879s that come back via mail or portal.

I prepped a return a week or so ago. After it was done I ran the MFS comparison routine. It came back saying MFS was better by about $600 so I split the return. I wasn't paying close enough attention. The spouse's return came out exactly as expected. The taxpayer's did not. When I prepared the original return Drake defaulted to taking bonus depreciation on some new farm equipment. TP did not want the bonus depreciation so we overrode it with SL depreciation. When I ran Drake the MFS comparison, the software again used the bonus depreciation to determine MFS was the better option. However, when it printed the returns, it reverted to taking the SL depreciation I had entered. That changed everything. It made MFS significantly worse. Neither I nor the client noticed it until moments after the return was e-filed. Now I have to go back and amend the return to restore MFJ. Just a quick heads up that when Drake does the MFS comparison, it does not take into account any overrides you make on the original return.

Loved it! But it also brought a momentary horrific flashback to freshman English when I had recite the original soliloquy in front of the class. Even all these years later... I shuddered!

I used Drake's e-signature option the last couple years--wasn't real thrilled with it. Lots of incomplete signatures that I still got charged for. This year I started using Tax Dome to manage my entire practice. TD is a tax on the expensive side but it also replaces several other softwares I previously had to pay for so the cost became affordable. The learning curve is a bit steep but I love its automations, built in organizer and e-signatures. E-signatures that don't require KBA are free. E-signatures that required KBA (e.g., 8879) are $1/person/return. So far, it has worked as advertised.

OP here. I had one last month. IRS rep called me on Mar 2 and said I had been selected at random for a compliance audit. Said she'd be here on Mar 16. Great timing--right in the thick of tax season. She spent about half the time she was here checking 8879 signature dates vs e-filing dates. We passed with flying colors, but that's why I'm now a bit paranoid!

In my book, that still counts as super smart!

Having been raised in the hills of southwest Indiana and now living in rural Ohio, I had to look up pied-a-terre. I've always been impressed with Catherine's smarts...now even more so!

ERO is supposed to e-file within three days of the 8879 being signed. I just had a situation where the wife e-signed on 3/26 and the husband on 4/4. Am I still good to file or do I need to have the wife re-sign?

I expect to retire in the next 3 or 4 years. Hopefully, it will take them that long to make it happen.

Wowzers! I do a Cali return once in a blue moon and occasionally do a brief biz consult. Should I say, I used to do them. Not no mo!

Thanks for the reminder. I've been AWOL the last couple years due to some health stuff. Now that I'm back in the game, I need to help pay the freight.

Holy canoli...I'm apparently waaaay undercharging! I've actually had several clients tell me that. You'd think I'd get a clue! I think because I deal mostly with clergy and/or elderly folk, my fee structure is partly based on altruistic impulses. In fact, I generally do about 20% for free. It's too late to change this year but next year I think I'm gonna raise my fees more than the $2 or $3 dollars I 'jacked' 'em up this year

I spent considerable time on the phone with Drake support. Turns out the credit does carry forward, regardless of the adoptee's dependent status. However, if the adoptee was born prior to 2005, the return must be paper filed. That little tidbit was not in the IRS instructions or in anything published by Drake for public consumption. She found it in some internal Drake documentation. I doubt I'll ever need to know that again...but if it do, now I know!

Yup. That part I was aware of--though I do appreciate the reminder! The credit was initially taken in 2017 so 2022 is the fifth (and final) year for the carry forward. The credit exceeded TP's tax liability each of the previous four years, hence the carry forward to 2022. There will be about $12k of unused credit that will be lost due to the five year limit on the carry forward. I just spoke with support. After 40 minutes of mumbo jumbo the guy tells me I should check the disabled child box (he said that cleared the error for him!). I told him the children are not disabled and checking it would be inconsistent with prior filings and would also constitute fraud. He replied, "Oh yeah. I see your point." Then he suggested I call the IRS to see if they have a suggestion what I should try next. I told him it's a software issue, not a tax law issue. Again, "I see your point. But it's worth a try." Side note--tech support just aint what it used to be. Finding the right combination of entries on the adoption credit has always been a riddle wrapped in a mystery inside an enigma for me. The carry forward just complicates it a bit more. My original question was whether the child(ren) on whom the credit was originally taken must still be a dependent for the carry forward to be valid. That still seems to be at the heart of the problem.

It took many years but a client was finally able to adopt two kids from Haiti several years ago. By then, the girls were 15 and 16 years old. Each year we've carried forward the unused portion of the allowable credit on Form 8839. The girls have completed their schooling so no longer qualify as dependents. Can the credit carry forward even though they're no longer dependents? I can't find anything in the 8839 instructions. Any guidance will be deeply appreciated!

Follow up to my earlier post. When I spoke with a Drake tech support old-timer she recommended that if I call in to press 2 on the phone tree. It says it's for business support but it's really just a more experienced support person. If you press 1, you're more likely to get a newbie. I've done that a couple times and had much better success getting the help I needed.

I used ATX for 15 years or so and then bounced to Drake after the 2012 ATX debacle. I reluctantly made the decision a couple weeks ago to leave Drake. Since the buy out, the software has been buggy and they implemented numerous changes without telling anyone (you have to pay to get attend a new features webinar). I've had numerous instances of check boxes being mysteriously checked, often on forms that I never even opened--and those cause issues that make the return un-e-filable. Perhaps worst of all, their formerly world class tech support has been horrible. I had to call in more this year than the previous 7 combined. At least half the time the tech person didn't have a clue and had to go find and answer and call me back. I even had one, after admitting she couldn't figure out a solution, suggest I file the incorrect return and then call the IRS to ask them to fix it on their end! I could not believe it! I mentioned that to another support person who has been there for a long time. I could hear the eye roll in her voice. She said she wasn't surprised, that nothing is the same as before and lots of long timers were gone or leaving. She said the commitment to support isn't the same as before. When I told her I was in process of transitioning to another platform she said she's hearing that from dozens of preparers. Sad. I really REALLY liked Drake...right up until I didn't/couldn't anymore.

TP started a single member LLC in 2007. In 2017 he allowed a friend to acquire a 25% interest. In 2020 the bigger outfit bought out the LLC for $10k The only fixed assets (a few desktop computers) the LLC had were fully depreciated long ago. Basically, the new outfit acquired a client list, a business concept and some goodwill. I've twisted my brain into a pretzel shape trying to determine how to report this sale. Anyone have any suggestions?