Pacun

These are the worksheets to see where the numbers come from and how to enter the info. CPAYARDLEYWorksheets.pdf

This is the way this worked out. If I added 100K in a W-2, then AMT kicks in but remember you will be using the 2018 ATX software package. When I clicked on form 8949, under options, I selected type of transaction 2, but please correct me if I am wrong. Then I clicked on “Sale Principal Residence” on the bottom choices. I entered “House” on the description of property. I entered 05/01/2000 as the purchased date and 08/31/2018 as the selling date. The software automatically calculates the total number of days you owned the property. Then you have to enter only the non-qualified days which are 1,399 days. Why will you pull out the calculator and add every month (46 months) when you could simply state that the non qualified days are the “date purchased” and the “date sold” AND then the computer will give you the exact number of days. Let me explain it a bit, not for you for the others (I know you are smart). Enter 01/01/2009 and 10/31/2012 and put the computer to work to give a total of days of 1,399, which are the non-qualified days. Once you took note of the non-qualified days, please enter the correct dates. The rest if just answering yes or no and entering $100K on the accumulated depreciation. A video is worth it 100 pictures but I don’t have a video…. So I have a picture… so I am attaching a pdf. Please don’t argue that a pdf is not a picture. CPAYARDLEYandATX.pdf

Nice instructions. Thank you!!!!!!!!

I think it is $2,000 per child under 17, of which $1,400 is refundable. For other dependents, parents or people older than 17 years old dependents you will get $500 of NON-refundable credit. If I am not mistaken, dependents with ITINs will have different credits than that of those with Social Security numbers. I believe they will be treated as "older than 17 year old" dependents but I am not sure.

The last two comments, while somewhat funny, they have a lot of truth. That's a business opportunity that we cannot take advantage of. So that's a big threat to us and believe it or not, it is around the corner. Millennials is not a market that we are going to be able to attract, but whey they come to your office, all you need is to have different type of charges and the password for your wireless. The spent all the time sitting in front of you on their phones and they don't ask you questions. When it is time to sign, I feel bad that I am going to interrupt their session but they sign, pay and leave. Catherine is a fast shooter... I meant the last two posts before Catherine's.

Good luck if you are thinking that the new regulations will not affect your pool. I also think the way you do and that's why in 2016, I made $6.53 millions less than William C Cobb and he didn't even prepare a tax return for a client. In the past, some people have posted here: "I got this [or a few of them] millennial who thought he was smart and filed his taxes for free on line and now I have to amend it" "These smart people increase my clientele". I have always answered with this type of comments: Do you know how many people are e-filing their own returns? You having to amend a few of them, is not match to the possible clients you lost to free efiling? I have added: If you don't believe me... see how many people are efiling themselves. I believe free filing is our real enemy and not the big companies. As some one said "I believed that then and I believe it now". Let go to the numbers with the new regulations: Let say I have a couple with a high school student, age 17 or 18, who worked and can be claimed as a dependent by his parents. This millennial filed his return for free or by paying $12.95 as someone mentioned. In the past, when the parents come to us with their $100K W-2s, we cried out and said "we have to amend your child's return". Guess what.. not anymore. The child will get $12K standard deduction and the parents will get $24K standard deductions for a family total of $36K. As you know it is hard to sell to a client this statement "your child made a mistake, I can correct it but you will have to pay me $100 and you will have to pay $300 to the IRS", which is not the case on my scenario. Also someone said that ACA was a job security... guess what, ACA is a joke. People who make a lot of money most of the time have insurance and the ones that make less, don't mind paying the penalty. Of course ACA penalty will be non-existent soon so our "job security" will be kissed good-bye. As we lose clients for our attitudes, for their age, illness, income and peer pressure, it will harder and harder to recruit new clients. Remember that the strength of businesses are the parent(s) with students on their first 4 years of college. That market is tiny and it becomes tinier when we have clients making more than $90K or $180K when MFJ. So, if you don't prepare business returns, it is time to start taking some classes and start diving into that market. That market seems to be solid and it will always be.

That's very interesting. As you know HRB is in a position to due a market study and if they are doing this, it is because they know the market will shrink as a result of the new regulations. What we see as an opportunity, the experts might see it as a threat, but with all the millennials in the workforce, no new customers coming into the market, I agree with them. For my hispanic market, ITIN filers are shrinking too but my regular market might be stabled.

Eric, Is that per second, per month or per life?

Thank you for the link and good to know that it is 35 years.

It sounds interesting that two of the three cases were attorneys. If attorneys' behinds were kicked by the IRS, we have to raise our white flag as soon as the audit starts. But as Abby mentions, the IRS will do it on case by case basis. I always play conservatively and I have always included residual income on line 14 of the K1. I have two cases where I could have not include income on line 14. One case, my client has $120K of guaranteed payments, so adding the extra $20K is not a big deal. On the other case, my client has $40K as guarantee payments, so adding the extra $15k will help him when he retires and he collect SS benefits. Keep in mind that SS benefits are considered on 30 years so each case is different.

Let round off some numbers. So they took depreciation for $100K and their house cost in 2000, $270K. Let me assume the house is sold in August 2018 for $450K. So the gain is $280K. Since they have owned and lived in the house for 2 years in the last 5 years, we can take up to $500K, PROVIDED They have not use the exclusion in the past 24 months. Since the gain will be $280, the credit will take care of it. Now we have to talk about depreciation and non-qualified time. Non-qualified time is January 2009 until October 2012. So from May 2000 until August 2018, we have 219 months of which 46 (Jan 2009 through Oct 2012) were non-qualified months. So the gain will have to be reduced and now the $280 will become: $280/219*(219-46)=$221,187. We have $58,813 that the house gained while it was rented and is NOT allowed to be "killed" by the exclusion. Since your clients will pay taxes at 25% on the depreciation allowed or allowable, they will pay roughly $25K and I am not sure if that will take care of the non-qualified time the house was for rent. I am not sure if by paying taxes on those $100 of depreciation allowed, they don't have to worry about other taxes since they will use the exclusion. Also, adding improvements and deduction casualty loss (for example) will change these numbers.

I have included Server 2016 OS, 4 hard drives, two power cords for redundancy, 32 Gigs of RAM. Just the hard drives cost more than the computer I am using. how about yours? PowerEdge T330 Tower Server tarting at Price $6,215.00 Total Savings $2,315.54 Standard Delivery Free Dell Price $3,899.46 480GB Solid State Drive SATA Read Intensive 6Gbps 512e 2.5in Hot-plug Drive,3.5 HYB CARR, S4500 $382.10 /ea.

I have being using HP printers and they seem to be OK. Please make sure you read the reviews because I bought a printer for my friend and she didn't use it this tax season because it was slow. Luckily, in March, HP released a firmware update and it made it faster.

So, I guess they are not tangible and hence the name soft drive, correct?

Well, just in case you have forgotten... SSD is a hard drive or do you think it is a soft drive???

I normally buy a server with 3 hot swappable hard drives and I create a hardware RAID. Just because Tax season is crazy, I would have an extra hot swappable hard drive on line so I would buy 4 drives. The server should have 32 Gigs of RAM and 3 or 5 years of onsite support. As mentioned above, you can have 10 years of taxes on the server but you will be opening only 1 year or 2. If you work from NOVA (not the college), we can meet at Starbucks (make sure we buy a coffee because I am always sleepy) and we can share knowledge or lack of it.

90% of the time, it is easier to recreate the old 1040 with all the mistakes, tax reported, credit reported and the whole enchilada. Then you save it. After that you invoke the amend return command and a copy of that return will be kept intact and a new amended file will be created. On the new file, form 1040 will stay and 1040X will be added. Work on the 1040 and prepare it correctly as it should have been done in the first place. After you review the 1040 and you feel satisfied with it, go to 1040X and enter the explanation of what happened. The calculations should be OK but take a look at the 1040X just to make sure. The other entries are easy to be answered with a check mark or entering a 1 on the correct column. Going to your question, since 1040Xs are mailed and take a long time to process and some times we amend a year o two later, you will be better off if you roll over the old, incorrect 1040 file. The only time I think I will roll over the "amended" file will be if depreciation is involved. For example if they didn't include rental income for the 3 months (Oct, Nov, Dec) and I entered the cost and life of the house. Keep in mind that any required, extra form or schedule needed on the corrected 1040 needs to be attached to the 1040X. Also any schedule or form that change figures, needs to be included. For example, additional child tax credit form that had an entry of $250 and now has been bumped up to $760. I said that 90% of the time it is a good idea to recreate the old, messed up return because: Most 1040Xs report an extra W-2, 1099 series form, deductions not taken, dependents not claimed, credits not claimed, income not reported and errors by tax preparers. All these type of omissions are beautifully handled by the software if you follow what I said above.

Company has an accountable plan. Company gives employees $100 per month for parking. Parking costs $280 per month of which about $155 is deducted pretax and about $25 is after tax and reported on W-2 (I think). Toll to get to DC on Route 66 is about $20 in and $20 out daily. Can the company reimburse the tolls as long as they report it on W-2s? What's the benefit to the company if reimbursing tolls? By the way employee has worked in that building for two years and that his main and only work site.

I prepared the mother's old return and then I amended. That gave me child tax credit for 593 on 1040X. It gave me the amount for EIC for $3,200ish and the additional child tax credit for $1407. I printed out that 1040X and deleted that 1040X while leaving the mother on top on the 1040 that was not deleted. I added husband on the second line and I added his W-2. Then I clicked "amend return" one more time and I made sure that the correct amount (column C) was $2,000 for child tax credit, and 0 for EIC and 0 for additional child tax credit. While copying Column A from the 1040X printed before. I also added on 1040X on column $18K for standard deduction (he itemized) and that the correct amount was $12600, and the software entered automatically $5,400 on column B: The last thing was to adjust the refund and the payments made. On page two, on column A, said that only one exception was claimed on filers and I entered 2 on column C. The software automatically entered 1 on column B, which indicated that I was adding 1 more exemption (should I have put 2 on column A?) I also stated that I was changing HOH status. If I amended the husbands, I would have to enter the children info on form 1040X and more entries would be required. So for the amended return the wife is on top which might cause me some issues with DC but se la vie. By the way, he called me at 10AM and his appointment was for 9, so I told him next week... meaning I still have more time to correct anything else.

So, what would you select when answering "status originally filed"? Husband Single, wife HH. The more I read, the more I realized that that doesn't matter since the IRS only cares for the end product and the fact that they are filing a joint return. It is my understanding that 1040X returns are read by a person and that person has access to all other returns filed for that year. Tomorrow is the day. I already started the return and I will see what happens.

What years will the $27,000 be received? If I am not mistaken form 6252 is only for installment sales.

I have a better idea. Since I have the old return, I will roll it over. This will bring all SS# date of births bank accounts etc. I will take out the wife and start as HH. I will enter the wife's W-2 and this will give me all the credits they took. Then I will amend it. On the amended return, I will enter the wife's name and husbands W-2s. After I enter his W-2 all EIC will become 0 and it will calculate everything correctly. Husband didn't pay what he owed so there is nothing to consider on his side. Remember, I am sending this on paper and attaching all W-2s and the program only cares about the numbers not who took the credits. The only issue I see on this approach is that the husband will be listed first and I will be changing from HH to MFJ.... but filed as single. I don't want to recreated him because they itemized deductions for him, the EIC will not be accurate. The other solution will be to file her on top and put him as the spouse but I will have issues with DC because they will create a new, third profile for them and new profiles have caused me to make many trips to the DC government.

My client left last year and he is married and filed and single. Wife filed as HH with two children and got $$$ from EIC. I can roll over my client but I think it is better to recreate the wife's return and then add him to the 1040X. If I roll over my client, no EIC credit will be enter and I will have manually enter it. Keep in mind that if I do on his return, by the time I enter the wife's income the EIC will disappear and I will have to manually enter it on 1040X. If I recreate the wife, I will have to start from 0. I told them to come back next Saturday so I have a whole week to think about this one.

JohnN that's a good idea. I do have a field with an * for people who started doing their taxes the second year I was in business. I could easily use that same field since only a few clients have an * on that field and for the rest it is empty.

ILLMAS, that's the idea. It will be nice to search for social security numbers and then call your people in November so you can make extra dinero AND avoid reduced refunds and letters from the IRS.