Pacun

I agree with Possi. Let's wait for the update to be properly added to the software.

You are right. We, tax preparers, keep complaining that we are doing the IRS' job and that we are the enforcers and we hate it. But I have noticed that we are excellent enforcers. Not only that, we are applying common sense and logic to COVID relief, which by itself doesn't make sense in many many cases.

I don't have a cite but I read the regulations and they say that the amount lost due to covid 19 didn't have to match the amount distributed. So, on other posts, I used an example that I got a call from someone who wanted me to prepare a W7. I charge $60 for W7, but DC government had shut down none-essential businesses. So the client went to MD where tax preparers were essential and I lost that income. That event would have allowed me to take out $100K from my 401k and not pay penalty. "adverse financial consequences" to you, your spouse, dependent or household member.

the regulations read that if you were medically or economically affected by Covid 19, no penalty and you can pay taxes in 2020, 2021, and/or 2022.

Quickly seems a word of the past. I think you best bet will be to paper file. All other avenues might take a couple of years which could be twice as long as paper filing.

Meaning that it is eliminated or is added back?

Yes, but the IRS doesn't not add sch EIC to the return if the client didn't have it to begging with. Let say my my W2 income was 32,000 for 2020 and my unemployment was $10K. I filed in February as single with my daughter. At that point, I was out of the EIC bracket. As a result, I didn't include Sch EIC... I doubt the IRS will add Sch EIC (first, they don't know if my daughter lived with me) since I didn't answer the EIC questions. Even with the EIC schedule attached, for the IRS to do the calculation, I need to check the box.

Correct. Separation of service is the requirement. It could be that you got fired, laid off, or simply that you quit. Make sure you have the date of birth correctly. You don't pay penalty if you become 55 in the year you take out the money. So if you are going to be 55 on December 31, 2021, you can take out the money now and qualify.

In this case it is not the intent of the distribution that matters. What matters is if he, his spouse, his dependent or a household member was affected physically or economically by Covid-19. If he qualifies for auto certifying that he, his spouse, dependent or household member was affected by covid, he can pay tax 1/3 each year. If he is was 55 last year, then he doesn't have to pay penalty because he separated from service.

But if it lowers your income, it will make qualify for EIC either with the earned income you have for 2020 or with what EI you had in 2019.

If unemployment reduces the salary and now some people will qualify for EIC, I doubt the IRS will do anything and we will have to amend.

For matching proposes, you should get the W-2Gs from your client. Not everything on the casino report has a W-2G. So it is on the best interest of the tax payer to list them. By the way, start a new topic vs hijacking someone else's post with different topics.

Can we efile today? I am glad the deduction is $10,200 for each spouse.

Enter the 1099-R the way it is written, then scroll down and select Corona... on another post I entered the correct line...that will invoke form 8915-E. The form will be showing the amount from form 1099-R and all you have to do is to enter the date to the left of the amount. That will do 1/3 for 3 years. If the client wants to put back some money to the 401k before filing, you enter that amount on the correct line. See other posting by searching for 8915-E

"The IRS strongly urges taxpayers not to file amended returns related to the new legislative provisions or take other unnecessary steps at this time. The IRS will provide taxpayers with additional guidance on those provisions that could affect their 2020 tax return, including the retroactive provision that makes the first $10,200 of 2020 unemployment benefits nontaxable. For those who haven't filed yet, the IRS will provide a worksheet for paper filers and work with software industry to update current tax software so that taxpayers can determine how to report their unemployment income on their 2020 tax return. For those who received unemployment benefits last year and have already filed their 2020 tax return, the IRS emphasizes they should not file an amended return at this time, until the IRS issues additional guidance." …

It could be per return since most places mention "the first $10,200 of 2020 unemployment benefits nontaxable." It would be nice if they would say $10,200 per tax payer for a max of $20,400 for MFJ or they could say $10,200 per tax return.

If the client had about 25K to pay taxes on 99K... I would have suggested to divide it in 3 years and to send back those $25K to their 401k plan. That way they would only pay taxes on 8K this year. With a bit of effort, they could fork out the 33K and pay 0 taxes on the distribution this year.

Don't report any payment and if all the dependents got the stimulus, who cares who received it. That's a money issue they have to deal in court if needed but don't bring it to the tax return. The only time, I would include the amount received is when a new child was born in 2020. In that case, I prepare the return without the child, then I go to line 30 and I enter the amount I should have received based on 2020 information. That will make my line 30 blank or with a 0. Then I would add the child and the amount on line 30 will become $1100. For example, if she is filing single with a child for whom the stimulus were paid to them by the IRS, I would file without touching line 30. If a new child was born in 2020 (making the total of children 2), I would invoke line 30 and enter 1700 and 1200.

Support is key in this one. AS long as support is more than 50% from the student and is over 18, he/she qualifies.

Let me think about my answer

It Is interesting that now EIC is from age 19 to 116 years old without children. Students start at 24 to 116 years. I guess those retires who make $3K a year and we have been telling them that they don't have to file, they should because of the EIC.

I agree with jklcpa. HELOC must be used on the same house and I was confused. Now I remember clearly.. the teacher a couple of years ago gave this scenario as an example: You buy a second house for you, refi qualifies for Sch A deduction. You refinance and take out money to help your son to get a house for him and his kids, no Sch A deduction.

I have seen numerous W-2 with these entries: box 1 = 15,380.02 DC box 16 =15,380.02 withheld $300 MD box 16 =15,380.02 withheld $ 600 If the person lives in DC, I ask MD for $600 if the Person lives in MD, I ask DC for $300 I have never sent back the taxpayer to the employer if I know that the states don't grab box 16 as a starting point. How about when the client tells you, "well I told my employer to withheld for this state and they didn't do it". Do you send them back to the employer or you just tell them that this year they owe money to that state?

Was the withholding my mistake or the person actually worked from Illinois? You can change the number on box 16 to accommodate the proration. If not, I would enter box 16 and 17 with the withholding amount and create the Illinois efile file to see if refund changes.

Maybe the form is not ready. The same way it is not ready to reduce the Unemployment benefits individuals received.