Pacun

Thank you. I should use form 1040NR for 2010 because he was here only 168 days (I meant), the tax treaty and his ties were stronger to South America. I just modified my post a little to state that he was here ONLY 168 days and wife was not here at all in 2010. I like people with this type of visa because: They are well educated, want to pay their taxes and they don't want to risk their visas by taking a deduction if they don't have documentation. This could be my future market.

TP was here from July 16, 2010 but payroll was process by HQ in South America. In December, US branch issued 2 checks and withheld Federal and State Taxes. TP has an L-1 Visa and filed his 2010 taxes in South America using global income. Wife lived in South America the whole 2010 and HE was present for only 168 days. This is what the tax treaty reads and I need a little help understanding it (I believe he has to file just to claim withholding). ARTICLE 15 Dependent Personal Services 1. Salaries, wages, and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State. 2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if: a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any twelve month period beginning or ending in the taxable year concerned; the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State; and c) the remuneration is not borne by a permanent establishment or a fixed base that the employer has in the other State.

I am glad it helped you. I will bother you with some corporations Marco but I will wait until after April.

There is some activity going on with that post, so I should be next to this one. As a matter of fact, I will put them one after another.

Please read my post: Form 982 (more than a question, please read) Cancellation of debt

Bringing it to the top for ljwalters

File form 4506-T and request info for 2009 and 2010. When you receive that information, amend 2009 if already filed and report the sale. As I mentioned on another post, the bank can take its time and not write off this debt for several years. If the debt is forgiven (let's say) in 5 years, you will have to prepare the insolvency papers at that time.

Johnh, In your case, your client made a contribution to an IRA for 2009 by April 15, 2010 which is allowed. Then, the conversion happen minutes later but it was credited to the following year 2010. The way I understand the question is something like going to the bank tomorrow (April 2, 2011) and say... "I want to covert all my IRAs to roth IRAs and pay taxes in 2010 because I do not want to split the tax payment between 2011 and 2012"

Go to the asset entry and click on "dispositions", select sale/abandonment and enter the sale information. Add land to the cost and selling costs. Schedule D will be filled out. See page 2 of Sch D and line 19 will have your answer. Computer will devide the gain between regular long gain and ordinary income and it will calculate taxes on the background. Do not expect to see the recapture depreciation added to line 7. Remember that recapture will only appear if gain happened.

I don't see a problem with the "double dipping" since he will pay regular Fed taxes on the IRA. I would not include hotel and restaurant bills as part of the education expense (and maybe some others that you mention). Keep in mind that "little school" might not qualify for the AOC if not post secondary or doesn't participate in the financial aid program from the Department of Education.

No worries, that's why we have this forum. I have noticed something... it is easy to guide people towards the correct treatment of taxable events, but it is very hard to prepare that one return. Can you share your findings, such as what forms you file, what credits you get, etc? I have the feeling that I have a distant uncle in Germany and I will inherit millions in the near future and I want to be prepared. As you can see, we are different because you stated " I'm just pondering so that I know what to do when I win the big one" when referring to lotto winnings.

If you reduce that amount from the previous year, what's the net result? Let's say that your client spent 10K in eduction last year and you claimed the AOC. If that's the case, it will not make any difference and the most correct way of dealing with this 1098-T is to add this 4K to line 21 in 2010. If in 2009, the total university payments were only those 4K and you claim AOC, you should amend 2009. Netting is not an option since each year is independent but you need to verify that in fact the refund was for a previous year. Another factors you should consider is the date when the student graduate or stop going to school AND tax brackets for each year.

Check the tax treaty between US and Germany. Inheritance needs to be included in US taxes and a credit for foreign taxes paid should be taken. In any event, check the tax treaty.

Without all the information in hand, I will venture to state that both are taxable. He will not pay penalty but he needs to pay taxes at least on the IRA.

It seems that the IRS is relying on efile because it makes too many mistakes on mailed returns. Tax payer has an ITIN. I applied for his ITIN filing 2007. No problems that year and he paid what was owed. For 2008, he went somewhere else and used only 2 W-2s. Kudos for the IRS and using his fake SS#, they transferred his other 2 w-2s to his ITIN and send him a deficiency in mid 2009 charging him more than 3K. At that point he got scared but he had already filed his 2010 with even more mistakes. In February 2011, he brought me his 2008 and 2009 returns and wanted me to correct them and to file 2010 taxes correctly. I reviewed his 2009 filing and he used 2 W-2s which totalled about 17K. He filed using his invented SS# and claimed 2 dependents that don't exist. He claimed EIC, child tax credit and making work credit. The refund requested was more than 7K. Immediately the IRS said... you don't qualify for EIC but here you go and we are going to refund you additional child tax credit and all other goodies but no EIC. How can this return be accepted by the IRS with his correct name and fake SS#? I requested his W-2s from the IRS using his ITIN and for 2009 he made 17K plus 22K (again the IRS is doing the right thing and linking his fake SS# to his ITIN). I am sending that amended return and I feel happy that he will owe more than 12K at the end of the day. How should I amend 2009, using his ITIN or SS#? I have complained in the past about that preparer. He is killing the IRS and some states. For 2010, he will owe about 3K and I am doing it electronically. I feel happy to help the IRS collecting some money from this ______ (add your own word).

Not really... business as usual. Open Sch E and link an asset entry. Enter the FMV or basis (whichever is lower) at the time of conversion (minus land) and enter the date of placed in service as 10/1/2010 using 27.5 years for rental property. 3 months of property tax, 3 months of insurance, 3 months RE interest... is correct. Expenses and repairs should be 100% or 0% depending on what quarter of 2010 happened.

After checking Pub 521, it seems that as long as you have a job in the new city, you qualify regardless of the reasons for the move.

No. They shouldn't be deductible in 2010 because those are closing costs and not points.

I think it should be 2011 for a cash basis TP since no one notified him his money was available and he had no way of knowing. Neither he or his representative (non-existent) knew about the money. How about the guy who put his winning ticket on his pants and then took it to the laundry? He was in the news... I wonder if the IRS said, "you knew about your money and it was ready for you to pick up and you didn't... you now owes taxes on $200 millions".

I think the IRS will only provide for the last 7 years. No way to get 1990 returns unless he uses a FOIA if he submitted them to the Government on a legal case (immigration keeps records for life and you can request it for a fee with a FOIA request).

You can start here... http://www.irs.gov/pub/irs-pdf/i1041.pdf http://www.irs.gov/pub/irs-pdf/i706.pdf

I think the answer is simple... he is not reporting all his income.

Go to K-1 input and check Final K-1 on question A.

Am I correct stating that I don't know if splitting the payment is better than one 2010 payment?

That's the default setting. Make sure none of the Sch Cs are checked as "Spouse" on the data sheet. Please discard both SE schedules you have, save the return and close it. Open it again and double check if you are paying SE.