Terry D EA

In Drake, to get the excess reported on form 1040 Line 4a, go to the income screen #3, put the excess amount on line 4a. Hope this helps.

I don't think anyone should take a chance and push the limit. I have filed a few of this last fall and there is really nothing to it. I totally agree with the folks that say just be proactive and do it. I'm referring to smaller business entities. I have been following all of this closely because I am the Treasurer of our HOA and the rest of the board members have been holding out. I've told them let's do it and get it over with.

I have a long time client who owns and operates an automotive transmission repair shop. The client is well known in his area as the one who can fix problems that no one else can. The client has made repairs for Chrysler with notable success that Chrysler would not do themselves. The has now purchased (3) different 10 speed transmissions to study, make modifications, and put in a vehicle to collect data. The main purpose of this project is to make improvements that are beneficial to his customers and to ensure the repair/modification is successful. The client has now also purchased a vehicle with a 10 speed in it for experimentation. This company is an S-Corp that averages 750K to 1M a year in revenue. All of this sounds like the criteria is met for research and development. He is just not a mega monster with billions of revenue. 1. Would any of this fall under "research and development" to claim any of the R&D credits? 2. At the very least, wouldn't the expenses involved in this project be deducted as a business expense? While I don't think it would be considered ordinary and necessary, the goal again is product improvement. This is also an investment to generate revenue. Opinions on this please.

What is the name of the Trust? I use 5227 every year for a CRUT "Charitable Remainder UniTrust". The answer to your question lies within the type of trust you are dealing with. Split interest trusts, charitable lead trusts are also required to file form 5227. BTW- Form 5227 is usually combined with form 1041. If you are using Drake they are both considered fiduciary returns. In my case, while certain information from the input screens flow to the form 1041 and associated forms, I don't file them and just ignore them. There is no way to delete them from the return. These things are not eligible for efile and get mailed anyway.

I think there is a trend here with outsourcing to India. Back when I bought the Gleim EA study course, Gleim setup discussion groups which was and wasn't helpful. At the time I had at least 20 years tax prep experience and passed everything the first time. My point is there were a number of folks from india and other countries in the group. Some admitted to never preparing a tax return but taking classes to be an EA. I guess because you have EA at the end of your name doesn't mean you know squat. Kinda scares me.

It's a shame this stuff happens and probably has happened to all of us at least once. I agree and my businesses do pay me monthly as well and tax return clients pay when the return is picked up. Any resolution work, if I take any, requires a retainer upfront.

Update - Client #2 has contacted me and set up an appointment for next Saturday to pay and finalize. We'll see if it actually happens.

Working with this owner, they have agreed to not take any tips at all. They just started this year and getting all the kinks ironed out, plus being overwhelmed by me. i have found out the owner has not taken any tips. They have been giving me the tips each employee has earned and the remainder they have not touched so I informed them that was great they have done that and the excess is revenue. Part of this confusion was the owner explaining what they were doing so I think we're all good now.

Sorry I guess I did say that. Maybe its time for a break. It is a partnership with one who works in the business and one who does not.

Sorry it is a partnership with one limited partner.

I have a couple of clients that I am questioning my responses. 1. Client number 1, whom I have prepared several years of returns for, decides the y will use HRB online software to prepare their own return. No problem except they are calling me asking how to fill out the 8863 for the AOTC. They also wanted to know how many previous years the AOTC had been taken. I told them I could answer none of their questions. I only took the AOTC in one year for the parent. But, the client is well over 21 and I cannot discuss the parent's return. Right or wrong response. 2. Client number 2. Retains my services to prepare 2022, 2023 and 2024 returns both fed and state. Client owes each year with a very small refund in 2024. I have informed the client of the status of the returns, what the results are, and what they owe me. Of course, you guessed it, they have gone dark on me. I have sent one reminder and asked for them to contact me and received no response. The amount owed to me is north of $300.00. My take is I still want paid regardless of whether they ever finalize the returns or not. I did what they asked and it is now on them. I have never had to try and client from any clients in the last 28 years. How would anyone here proceed?

Client called and sent me form W2-C. I filed the return and it has been accepted. I think the best thing to do is file the superseded return after the client receives their initial refund. The changes result in an increase in the refund from both Fed and NC. One other question, does anyone know if NC will accept a superseded return? In Drake there are no check boxes or indication anywhere the return is superseded.

This stuff is nauseating.

The second part is exactly what the owner claims they are doing which I know is the truth because I've been there several times and had to wait on the owner to finish with customers at the counter. The 6million dollar question is how do you prove it? This is also why I asked about setting the owner up on payroll for proper withholdings. My thoughts are to set up the POA system with employee numbers for the employee to enter when ringing up a sale. That way the tip would go to the right person and there lies the proof. Yes????

Thanks for all the responses. This company has just gotten started and I will strongly warn the owner against any involvement with any tips from any sources.

Coffee Shop is a single member LLC. There are two employees receiving direct tips so far no problem. The owner works the counter and has begin taking a portion of the direct tips. The direct tips are from the POS system. Is it correct that I put the owner on the payroll to tax the tips?

At the top of the 1099SSA screen there is a blue link "Lump Sum" By your post, not sure if this is what you are looking for or not. >>>>>>Anyone using Drake tell me how to get rid of the taxability of Social Security on my client's return?<<<<<<< is there any other income that is being used to determine the amount of SS to include in gross income? I don't believe the SS by itself is triggering a tax as it is not taxable. Box 4 is for SS benefits repaid to SS from overpayments which is why the Drake statement. The Drake rep is correct that if the repayment was for "sick pay" then that would be deductible on Sch A in the medical benefits section. I think this is what you may be asking.

Judy is spot on with the PA wages. Drake always populates the state wages from box 1 of the W-2. I almost got caught one year for not looking at the PA wages so be careful. While the software is designed to make our lives easier, it can definitely make it miserable if you don't double check yourself.

Thats good to know Judy. I seem to remember this happening last year or the year before but can't remember how Drake handled it. Hmmm

Yes, your would have rejected. Your client can take an extra step by going to his/her online IRS account and requesting an ID theft Pin. That would seem to stop anything in the future happening if the thieves would try again next year.

There may be more to this. HOA's that are incorporated either file form 1120 or 1120H. If the HOA meets the 60/90 rule then form 1120H would be used. If not, they must file 1120. If it were me, there would be a lengthy interview with the client to determine the correct form to file. And yes, this is the first year that fom 1120H can be electronically filed.

Thanks Everyone for the great responses.

I agree with Lee and the attorney. Fill out the 8857 for the last 6 years they filed married filing joint. Better to have it and not need it then to need it and not have it.

Client had withdrawn funds from an IRA that was based in CA. The 1099R form only shows CA as the state. No state identification number, no state distribution and no state withholding. Because of the CA on the form, Drake is generating CA 540NR as my client is not a resident of CA. Should I still file the CA540NR? I'm going to take time to research this but thought I could get a faster response here so thanks in advance.

I don't know that I would Ignore it. Depending on what software you use, you may be able to breakdown the income in a statement. Drake allows this. In the input box for the gross income/receipts, I click on the box and it opens a statement. There I indicate the 1099K with EIN and amount so it is included in the gross income. There really is no other way to input any information from a 1099K that I know of.