jklcpa

Deb, it actually might be an issue with the CA calculations. As I said, the income would have had to be much, much smaller for them to arrive at the monthly subsidy they received starting in July, or perhaps there's some problem with the CA exchange where it is only picking up the one person's income if only one person in the household is applying for coverage like this family did for May and June. That may be where this particular family's problem started, and then they went back to the exchange and added the wife for July through year-end. We can see how the premium and the SLCSP both increased in those later months. I'd still like to see that application. Obviously, if the income is the same with similar persons covered and premium amounts, this couple should reduce the monthly subsidy somewhat for 2015. If they don't do that and this pattern continues on for the remainder of the year, this couple will have to repay more next year, capped at $1,500. One big thing to watch for with these 8962s and 1095-As is that the 1095-A SLCSP amounts can be wrong IF the "tax family" or "coverage family" changes and the taxpayer does NOT notify the exchange. If that is the case, we have to enter a different amount for the SLCSP on the 8962 than is shown on the 1095-A. The definitions for "tax family" and "coverage family" are on page 2 of the instructions for the 8962. It appears that Deb's client's 1095-A is correct since the wife was added starting in July and the amount doubled.

I come up with the same $1132 payback that you did. According to the calcs this family was able to contribute $331 per month to their insurance coverage. Then in part 2 of the form 8962 in the months of May and June, the cost of their plan and the SLCSP were both lower than their $331. That is why they shouldn't have had a subsidy for that month yet they received $68 in each of those months. Then for July - Dec the premium for their plan and the SLCSP were the same at $573. After their contribution of $331 they should have received $242 in subsidy yet they got $408 in help each month, so each month this family received $166 to much from July - Dec plus the $68 for the 2 earlier months. What the above is concluding is that if the $408 of subsidy was accurate and based on the SLCSP of $573, this couple's monthly contribution would have had to be only $165 per month (the SLCSP - subsidy, $573 - $408), and in order to get to that low a number, the income would have had to be something like 1/2 of the actual household income. I can see why you are asking for input from other CA preparers. In this case, I'd be very curious to see how the application was filled out and what income was used on the application. Is it possible that when the application was done that only that of the primary applicant was included or considered?

From the facts you provided, this client is not eligible for the PTC in either year, and if she did receive any subsidy, she will have to pay it back for any months that employer coverage was offered and was "afforable" as long as that employer plan meets the requirements of minimum essential coverage. You can't automatically assume that the 1095-A is correct because the applicant can fill out a false insurance application on the exchange and receive the subsidy, just like this person did. Because you have knowledge of this, you must prepare the return that is complete and accurate, and keep appropriate documents and answers received from the client in your files to support your preparation. What I want to know is how the exchange would ever determine if a person is a smoker or not.

Friends, I need some ideas for a thank you gift basket. Due to a few people being sick including me, I'm submitting my peer review documents closer to the deadline than I'd like, and it will be an inconvenience to this other CPA and his firm to work on this for me now during the busy season. Of course, I'm paying his firm for the work, but I'm also thinking of sending something else for the inconvenience but I don't know what would be nice or where to order. Fruit seems too messy, and since we all sit at our desks too long and breaks seem nonexistent, I was thinking something more like higher end snacks or goodies that aren't messy, are quick and easy, and not something they'd have in a breakroom. Have any of you received something that you thought was nice and that would be appropriate, or have you sent something that the recipient really enjoyed? A client sent me a 6 lb box of Honey Bells from Harry and David that were heavenly, and I could send those, but they are incredibly juicy and messy. I don't know this CPA personally, and he is not local to me. Anyone have any ideas?

Do we even know if Terry's client was smoking at the time? I've had drinker/smoker clients that reeked and brought a lingering cloud in with them on their person and clothing, and my office had a strong odor of stale bar and grease, sweat, and smoke even though the person didn't not smoke while here. I also have one business client whose wife has similar heavy bad habits and smokes those skinny black cigar-ettes. They have a stronger and more stinky odor, the biz papers themselves reek of it and make the whole room stink while they are in my possession, and the smell gets on my hands while working on the records. When I have to visit their site, I freshen up in the morning and shower when I get back so that I don't have to smell like that all day, and I always leave my jackets or coats in the car. *gag*

Where is NC 8453 The NC 8453 is no longer a requirement. The taxpayer will not have to complete or sign a NC 8453 and the form will not have to be retained by the tax professional. The tax professional will continue to retain NC 8453s from previous tax year in compliance with the three-year rule. NC also does not require/support an EF signature form such as the 8879.

Maybe it's because the states don't have as elaborate detection systems as the IRS does, at least that is what one article I read was saying. http://www.reuters.com/article/2015/02/11/column-weston-taxfraud-idUSL1N0VL2SG20150211

Catherine, what's it like living inside a snow globe that someone keeps shaking up?

^ agree with Lion. I ran out of "likes" earlier.

Right on, John. I wasn't suggesting that Terry actually do that, only that the discussion had turned into a more general one on the mechanics of determining support

If I hit that 500m lottery, I sure as heck won't be worrying about clients, the ACA, or repair regs and the 3115 ever again. Maybe I'd even hire someone else to prepare my returns.

Terry, you'd have to use the worksheets. It uses the amount the student spent on himself during the year for support, not how much he earned. He could have saved every penny except for the rent that he paid to mom. You didn't say how much the rent was. I know you've already looked at it, but by the time you add up the fair rental of the house, utilites, food and divide that by the # of people, that in itself can be a substantial number. Anyway, it sounds like you don't prepare the mother's return.

Terry, I agree with most of that, but the regs do apply to that roof and the toilet. If the taxpayer elects the de minimis rules and we remember to include the election annually, then expense the repairs under $500 and supplies under $200. For repairs over that limit, we have to consider whether they meet the new definitions for betterments, adaptations, or restorations. If it's truly a repair to replace on leaking faucet with another, then it still would be a repair. If that new faucet is a betterment with a sensor that makes it hands-free that controls the flow of water, then that would have to be capitalized if over $500. Interesting that you brought up a toilet. The new regs also detail out what it defines are the 9 areas of building components: HVAC, plumbing, electrical, escalators, elevators, fire-protection and alarm systems, security systems, gas distrib, and then other structural components. Those all include the related piping, ducts, switches, etc that are integral to the systems. Plumbing includes pipes, drains, values, sinks, bathtubs, toilets, water and sanitary sewer collection equip, site utility equip used to distribute water and waste to and from property line to building and other permanent structions. It looks like that toilet is considered "building" not personal property eligible for shorter life. So for a semi-rant: We should hope the toilet is less than $500. One set of materials suggested that taxpayers have installers break out the delivery and installation costs into other invoices separate from the item itself so that each invoice is less than $500. Seriously, who has time for that, and what business owner will remember that 2 minutes after we have that stupid conversation? Second rant, seriously, why didn't the IRS make the de minimim thresholds part of the law without us having to make an election each year. Stupid time-wasters.

The one refund I checked on was filed in 2/1 and took about 6-7 days to show as approved. Refund was deposited on 2/10. Doesn't the site say to not contact IRS unless it's more than 3 weeks since filing?

No Jack, did you even read what easytax wrote that I responded to? Easytax asked about whether a 2106 was proper reporting, and it is isn't if there were no reimbursements. Those job expenses are considered for entry directly on sch A line 21. That would include small tools, not something costing thousands and has a useful life of more than a year like a toolbox. Maybe my answer was not worded clearly enough for you to see why I said that about the reimbursements. Look at the flowchart in the instructions for form 2106 to see who must file that form and why easytax asked the question in the first place.

Easytax, you are correct that unless he mechanic receives reimbursements not included on the W-2, the tools deduction or the depreciation would be entered directly on the Sch A as a miscellaneous deduction subject to the 2% limitation. If the tools are expensive and have a life of more than one year, the taxpayer would enter that as a depreciable asset and could elect to expense it using the sec 179 as long as he is otherwise eligible to use that.

I only wear it to take the dogs out when it's super cold and never drive in it. I like to drive with lighter clothing on anyway, and I can feel the seat heater on my back better. Definitely a first world problem. lol

It was cold and windy here last night. Lows tonight and the next few are to be 11, 4, 0, and 6. High wind advisory in effect until Sun 2pm with winds 25-35, gusting up to 60 mph and that may cause power outages. I'm getting out the big poofy coat that makes me look like the michelin man, or the little brother Randy in the movie "The Christmas Story" that fell down in his snowsuit and wasn't bendable enough to get back up. Yep, that will be me.

Well, maybe. I think we still need to consider the facts and circumstances for 2014 and possibly ask what's happened in the business so far in this year, or if that client has major repair costs that are anticipated even for this 2015 year, before jumping to the automatic assumption that applying this prospectively is always the best course. For example, if the client has a substantial repair in 2014 (or anticipates making one) that should be capitalized under the new rules because it is a betterment (roof is always a good example) and the depreciation schedule previously only showed "building", the preparer might want to consider going back to break down that building into the components so that when the new roof is capitalized, the client gets the advantage of writing off the old roof component in that same year. At least at this moment I think that is what I think.

From Pub 529 - Miscellaneous Deductions Tools Used in Your Work Generally, you can deduct amounts you spend for tools used in your work if the tools wear out and are thrown away within 1 year from the date of purchase. You can depreciate the cost of tools that have a useful life substantially beyond the tax year. For more information about depreciation, see Publication 946 Pub 535 under business expenses implies the same thing - Under Capital vs Deductible: Tools. Unless the uniform capitalization rules apply, amounts spent for tools used in your business are deductible expenses if the tools have a life expectancy of less than 1 year or their cost is minor. Jack, I know you don't want to believe me, but the general rules for business expenses apply to all the schedules whether it is on Sch C, 2106, or on the Sch A itself, or is incurred by an entity other than an individual. In addition to meeting the general criteria that all business expenses must meet (incurred in trade or business, or for production of income, ordinary & necessary, and economic performance test met, profit motive), the other rules regarding expense vs capital can't be ignored simply because you say it is on the 2106. An expensive toolbox, rolling work carts with drawers, scanners, air guns, multi-tools such as testers: those will all last beyond one year and should be capitalized unless the cost is minor.

Hmm, there's some little nasty component to this simplification in sec .08 that says if you don't apply the law retro to periods prior to 1/1/14, there's no audit protection as described in sec 8 of rev proc 2015-13.

Ok, I'm a little groggy today, so forgive the repeat question about mechanics. If we apply the new rules prospectively starting with 1/1/14 that means there is no scrubbing of the fixed asset schedule and no 481(a) adjustment claimed for any of that on the return. Start to apply the rules in 2014 and file the returns with the usual forms, right? If we want to scrub and have a 481(a) adjustment for that or other things because we are applying the law retro, we still need to file the 3115, right? I love the part about "administrative convenience". Truly if ever there was a statement that proved how the lawmakers are not in touch with reality, that is it! Ain't nobody got time for that.

Not true. We don't know this ^ unless we ask what is included in that $6000 of tools. What if that mechanic purchased a new Snap On tool tool box included in that $6000 figure. Just the bottom portion of those boxes start around $2800 and go up from there? Middle quality around $5-6,000. Top end is more. There are tops for those too. There's a reason why companies like Snap On and other offer financing. Mechanics getting into the trade can easily spend $10K or more just to get rolling with the job. ETA - I was typing when JMovichEA responded. I agree with him. I was responding to MaxW. I know all about mechanics tools because my husband was in the trade for 42 years.

I agree with that ^, sort of. He can only consider those purchases made in 2014 as current year acquisitions. For the tools of prior years, if there are any, he possibly should have capitalized and depreciated those. He may have some deduction of unrecovered cost if they weren't already fully expensed or depreciated in prior years. Allowed or allowable. I disagree with this ^. This type of tangible property that is used for the production of income is considered business equipment, and if it has a useful life of more than one year its cost should be recovered through depreciation. If it is a small tool that has a useful life of less than one year it could be expensed. Again, I'd look at the invoices to decide what needs to be capitalized, report it as an asset on 4562, use the bonus or 179 deductions if you are able and want to, and have it flow either directly to Sch A subj to the 2% limitation or to the 2106 and then onto Sch A from there.

You'll have to first apply the new repair/capitalization rules first. If an individual item or invoice is under $500 you can deduct it as "supplies". If it is over $500 for an item, capitalize.