Pacun

You need to use the FMV of either DOD or 6 months later.

Any takers? I will post my answer within 48 hours.

The cases that will not require many forms or lines go to the roockies and the price is below $400. If you bring a case like the warm up case I posted, it will not go to a roocky, it will go to an experienced preparer. That's the point that I try to make. Of course it will cost you much more than $400 to have difficult returns prepared. No one has challenged this: You can bring a person who doesn't know what a W-2 is, have him/her take the basic course, pass the exam and be an HRB preperer 4 months later. Trust me, the instructors are very experienced and knowledgeable but the company pays very little to preparers and that's why they have very inexperienced people working for them. With the salary HRB pays its preparers (and the non-compete agreement you sign), it is very hard to keep preparers after 2 years of experience. They teach their course every year everywhere because that's how they hire their employees.

H and R block will start charging more since their preparers will not come from the street in August, attend a class, and be preparing taxes by January 15. They are very reasonable with their pay though. Yes, I said that. They pay them little, but they don't have any experience. Do you now agree? I have taken a lot of classes from HRB and they are very good classes. I have had a chance to help my friends with their homework and no matter how good the classes are, taxes cannot be learned in 3 months. I always tell my friends, if you do not pay HRB more than $400 for your retun, you didn't get someone with experience behind the desk. Isn't that the case?

Everybody will be tested or required to attend classes after the initial exams. CPAs, Attorneys and Enrolled agents will be excused for the initial exam because they have already passed harder exams. Some one said that preparers will not sign. You are absolutely right. As a matter of fact, preparers that do not sign returns are the biggest headache for the IRS. "Public education???" you must be kidding, the public is the one driving that force. The public is the one that goes to those preparers who will NOT sign the return and pay them 200% more of what I charge. I love this community, I feel that no one should be allowed to prepare taxes without this community. During my first month of tax preparation, I will make a small donation in gratitude of all the help I get here. CPAs, EAs and Attorneys are not exempted from donating. We should start another thread since this one is becoming too big.

I love to drop some bombs from time to time and this is one of those times. In order to prepare taxes, you need to be able to pass a test and you need to be able to apply what you learn in school or courses. If you cannot do both, sorry, you shouldn't be in tax preparation business. This is no longer a profession for the semi-smart, semi-prepared person because too many changes happen every year. Honestly, are you ready for this coming tax season? Are you semi-ready? Are you relying on your experience? Don't you wish you took a course?

You are right they will have to pay taxes in 2011 and 2012. Which means that some people will pay on April 15, 2013.

The IRS doesn't have the resource to evaluate experience on a case by case basis for a million preparers. Exams are already in the computers and will not create any extra burden on the IRS. So, no matter how we look at it, we better start studying for the exams. About 5 years ago, I was able to pass all 4 exams for EA just by reading previous exams. Because I changed my name later on, I didn't get certified. I am going back to those exams again and see if I can pass them. Now you can take one at a time. CPAs are right, no way you will pass the CPA exams just by reading previous exams.

Partner A didn't gift anything to Partner B. Partner A's basis is whatever money he invested. Partner B's basis is zero. Partner A made a loan to LLC so when he collects that money back, no tax transaction happens; except for interest if any. Any money paid by LLC to partner B should be treated as money paid for services and subject to payroll taxes. Now, if you are saying that Partner B is personally liable for the loan, then he could have a basis on the LLC, but I don't believe that's the case.

How will they grandfather someone with 5 years of experience? Experience means a lot but sometimes means nothing. How about the tax preparer who only prepares 11 paid returns every year and has done it for 30 years? How about the preparer who works at a big office and only deals with some type of returns for 6 years? How about some one who prepares 300 diverse returns by himself or herself and has done it for 30 years? Who will testify on the experience of the 300 diverse returns person? I bet you the guy who only deals with limited returns at the big office will be the most qualified in the eyes of the IRS since a CPA might write a letter regarding that person's experience. So, in order to be fair, I think exams should be given to everyone who is not a CPA, EA or Attorney.

TP was a successful banker making a couple of millions up to halloween 2008. She was laid off and started collecting unemployment compensation. She didn't work Nov and Dec 2008 and start collecting unemployment compensation. Since she didn't make enough money, she continued collecting unemployment in January and February 2009.

"I received a letter today in regard to preparing tax returns without the form S2, W2G or 1099R in hand befoe filing." I received that letter also. Are we part of the 10,000 or this was sent out to every efile site?

Actually, TP was working while collecting unemployment as I explained before.

And yet another way. Go to your primary computer or the computer that has the copy you want to keep. Open the client, make a minor change, save it and close the program. Go to your database and copy the folder that was just modified to a jump drive, you should also copy the client from the backup folder. Then go to your second computer and paste the files from the jump drive to the correct folders. It will ask you if you want to replace it and click yes. AGAIN back up the second computer before playing with it. I think ATX has a better way but I am using computing logic and so far it works for me. I have changed computers every year for the last 3 years for one or another reason and I jus copy the database and backup directories with no problem. Sometimes, when I open the ATX program asks me to enter a user name (I don't use password) but that's the extent of the problem.

You could delete the specific files by opening them and then make a minor change and save it. Close the ATX program and go to your local hard drive C:\program files\ATX200X\database and look for the folder that was just modified and delete. You should also go to your backup folder and look for the client you want to delete (backup folder uses friendlier names). AGAIN. Back up both database and backup folders before playing with them.

Yes, you can rollover directly to a Roth IRA and pay taxes in 2010 and 2011 or pay taxes in full in 2010 tax return. You have two choices: You can roll over to a rollover IRA or to a Roth IRA. You can ask your client to open a Roth IRA and then ask the Plan administrator to send 401K money to that Roth IRA.

How about deleting the database and backup folders on the secondary computer and copy both from the primary computer? You should back up both folders from both computers before the deletion.

You are right and since I know the rules, I am just making up answers to fit our excercise so that we have a nice end product with a little of understanding of some of the new and old rules. Maybe if you question a regular TP, which you are required to do so when inconsistencies are apparent, you might get a different answer and take out some credits. This is not an ordinary case and to complete a 1040 will require the most experienced preparer to recheck the rules. This is not a case that you will finish in 1 hour as H and R block tries to do. Please do not question "how was she a sucessful banker making millions without a bachelor degree", again this is for practice and hopefully we will get at least 5 different answers and we will discuss them. I have tried to cover a lot entries on the 1040 so that we test the software and our abilities too.

You can collect unemployment benefits even if employed. To satisfy your question, let me say that TP was a successful banker making a couple of millions up to halloween 2008. She was laid off and started collecting unemployment compensation. She didn't work Nov and Dec 2008 and start collecting unemployment compensation. Since she didn't make enough money, she continued collecting unemployment in January and February 2009. Trust me, if someone comes to my office to have their taxes prepared with a W-2 and a 1099-G(unemployment compensation), I do not CARE how and when they collected unemployment compensation. Neither will I ask them if they collected unemployment correctly. I will limit my practice to prepare their taxes with forms they brought me. This will be the extent of my conversation regarding unemployment: "I see you got a W-2G form, did you collect unemployment?" If the answer is yes. I will add that income to the return, period.

Almost everybody will come with different answers as Johnh pointed out that tax preparation is not pure math. It is the understanding of the rules and exceptions. I wish my clients would give me as much information as the scenario provides. I am going to readjust the original posting to include: TP went full time to a local qualified university. When she was employed doesn't matter, but let's say she was employed from January to April 2009 (she could even have a part time job, it doesn't matter). For clarification, TP was employed Jan to April, then TP work at daycare and went full time to school. When TP bought the house, she got one loan and that's why she is paying mortgage interest Remember the house was purchased a while ago and was rented out. Tenant moved out on December 31, 2008. After TP welcomed the new year and still with the Champaign glass raised, TP decided to open a daycare center. Starting cost were costs paid to the lawyers and to the government so that TP could have a license for the child care center. Child care center opened on May 1, 2009. Remember this a scenario so the tax preparation fee is part of that scenario which needs to be taken as an expense. Also, TP paid her own daily expenses and paid for TP's child. If you think this TP didn't make enough money this year, please see how much interest income this person had.

lol, I should have rephrased my statement. The idea is that we do the research before we are faced with a client. Remember she is a tenant. I should have said, provided that other conditions are met, the windows physically and by design qualify for the new energy credit.

Yes, it is in addition to the to the house modification cost. To make it more interesting and see how the new education credit plays, I added: Tax payer is 41 years old and high school graduate. Besides working on the day care she is trying to get her bachelors degree and paid $1,500 on tuition and related course materials. This is her first year at the local qualified university.

Can we warm up with this scenario? Please post your refund or tax due answer without explaining. Later we will see how we came to the answer. Participation is voluntarily and without remuneration or incentive. You can use 2008 or 2009 software or BOTH years but please specify which one on your answer(s) but don’t forget to adjust the scenario and change 2008 to 2007 where appropriated. TP owns a house its cost is $300,000 which includes land. 1/3 of cost was assigned to land. Up to December 2008, the house was rented and $26,000 of residential depreciation had been taken. Tax payer is a tenant in an apartment building. In January 2009, TP decided to start a new day care center using the house. The FMV of the house in December was $220,000 including land. House FMV on May 1, 2009 (after repairs and windows change) was $180,000 which included land. Starting cost for the business $15,000. Wall modification costs on the house to accommodate day care was $10,000 (paid in March 2009) for which TP issued a 1099misc to the contractor. She also issued a 1099misc to another contractor for $6,000 to have the windows replaced. The new windows qualify for the new energy credit and were installed in April 2009. Day care was ready to open its doors on May 1, 2009. Because TP will make much more money starting next year, regular depreciation should be used whenever possible. 10 children paid a total of $25,000 and expenses on food and entertainment for the children were $4,000 and utilities cost from June to December was $,3179.00 1098 shows that TP paid $6,000 in interest (only 1 loan) and Real Estate taxes $2,400. Tax preparation will cost $1,200 of which $200 is for personal return. Tax payer worked for a company and her W-2 showed $18,500 income with $800 withheld for Fed and $400 for state. For her daycare business, tax payer paid $1,000 in estimated taxes for federal and $500 for state. Tax payer is single and has 10 year old child who is her qualified child and not the qualified child of anyone else. She paid $2,500 in day care expenses for his child who lived with her the whole year. Both TP and child are US citizens. Tax payer deposited $4,000 in an IRA on April 16th 2009. Personal donation to church $500. (She went to church 25 times and gave $20 each time). Medical expenses $2,000 for her and child. She made 3 trips to the casinos. The first one she lost $4,000. On the second trip she got a W-2G showing $8,000.00 in gains with $450.00 withheld for federal. Documented losses on this trip were $1,400. On the third trip she lost $3000.00 Her bank paid her $2,514 in interest and she collected $3,500 unemployment compensation. She had $350 withheld for federal and $175 for state from her unemployment. Tax payer is 41 years old and high school graduate. Besides working on the day care she is trying to get her bachelors degree and paid $1,500 on tuition and related course materials. This is her first year at the local qualified university. She got $5,000 from the government when she changed her car during the Cash for Clunkers program. CLARIFICATION: TP went full time to a local qualified university. When she was employed doesn't matter, but let's say she was employed from January to April 2009 (she could even have a part time job, it doesn't matter). For clarification, TP was employed Jan to April, then TP worked at daycare and went full time to school. When TP bought the house, she got one loan and that's why she is paying mortgage interest Remember the house was purchased a while ago and was rented out. Tenant moved out on December 31, 2008. After TP welcomed the new year and still with the Champaign glass raised, TP decided to open a daycare center. Starting cost were costs paid to the lawyers and to the government so that TP could have a license for the child care center. Child care center opened on May 1, 2009. Remember this a scenario so the tax preparation fee is part of that scenario which needs to be taken as an expense. Also, TP paid her own daily expenses and paid for TP's child. If you think this TP didn't make enough money this year, please see how much interest income this person had. How much will you charge for a return like this?

Do we know when efile tax season begins?

I try to efile every single return but sometimes I must paper file. Last year, I called ATX because I had someone with ITIN who was using a fake social security number. (IRS doesn't care and that's exactly why ITINs were created). This person was able to efile with no problems. I had another one who had an ITIN and was not using a fake social security number at work. This person had the W-2 under his correct ITIN while the previous one was using a fake social security. The person using fake social security number at work (on W-2) was able to efile his 1040 with ITIN and the other who was using his own ITIN at work, could not efile using his ITIN on 1040. I called ATX and they could not answer the question on the spot. I called the IRS and explained the situation to the officer. Without knowing the rules, the person told me that I was about to commit fraud and that I should stop immediately. I didn't have the regulations in front of me so I could point her to the IRS efiling regulations. IRS officer asked to talk to my partner who is the one registered (authorized by the IRS) to efile. Officer threatened my partner to cancel her ability to efile because I was about to commit fraud. My partner apologized and told IRS officer not to worry. Based on what KC says, I was about to be unplugged and that was at the very beginning of tax season. Next day a VP from ATX (the one in charge of efiling) called me and said that I was not doing anything wrong. VP said, the tax payer who uses ITIN on the W-2 and on the 1040 will have to paper file. VP also said that the one who has a social security number on the W-2 and uses an ITIN on the 1040 could efile with no problems, which I knew. My logic was if someone who has a fake social security on W-2, can efile, why not the one with his own ITIN on the W-2.