Terry D EA

Thanks, I did take the expenses except the hair cuts and the gym. I'm still on the fence with the gym Physical fitness is a requirement of the job. I'm looking for a reference or something to support this. I did expense the mower as well and did as Abby said, divided it three ways. BTW- I am a teacher and yes, I do take the 250 deduction. Also, I spend quite a bit more than 250.00 per year providing for my students in one form or other. Some kids take field trips with me that have no funds to buy breakfast, lunch; etc. I fund those all of the time. I purchase technology items to use in the classroom. I teach automotive technology and have purchased many parts to help a kid out. Yes, I keep receipts. Yes, my heart goes out to law enforcement. They are seriously under paid for what they do. Teachers do not have cushy jobs. Most say we whine and get paid all summer to stay home. That is as far from the truth as it gets. I am a 10 month employee and am unemployed for two months each year. No, I cannot collect unemployment for those two months. While the summer is supposed to be leisure time, I spend a good amount of that time at training seminars and taking my kids to contests after school all without pay. Oh year those holidays, the majority of the time is spent working. Eight hour days??? Not hardly. Trust me, the $250.00 is an insult. I am considered a veteran teacher here in NC. With that status, I have not gotten any significant raise since 2007 when we had to give some of our salary back to the State. Younger teachers and teachers with less than 6 years experience have received the highest percentage of the increases given by the State. Veteran teachers have not receive any more than 1% and in some cases nothing at all. This is why most, if not all, teachers work two jobs. I have worked two jobs my entire career plus this tax business for the last 22 years. I am happily retiring from teaching in two years. My response is to not take anything away from law enforcement. They put their life on the line every day and I can't imagine going to work and wondering if I will be coming home at the end of the day. Yes, they have crappy hours too and deserve so much more.

Client is a police officer who also works as a school resource officer. As a resource officer, he is paid via 1099 Misc. A school resource officer is a sub-contractor and does not work for the school system. So, with that said, my client has listed several expenses with some that I am questioning. Cleaning of uniforms is a legitimate expense, and work boots specific for the job ( I am questioning this as well because they can be used for both places and of course no 2016 this year). Hair cuts?????? No correct? I don't know why I am even asking that one. Same client has rental property and bought a mower specified for his rental activities. I need a bit of help on how this is depreciated. He has three properties that it is used on. Thanks

Just an update. The client brought me returns back to 2007. This was very helpful. I did find the depreciable basis of one property and the calculation of the profit percentage for the installment sale. Assuming the depreciation was correct when the profit percentage was calculated, it is correct. The last purchased rental depreciation was calculated without subtracting the land value. I retrieved the figures from the county site. Now, the bad, no interest on the installment sale reported any where in any year. The installment sale originated in 2015. I scoured those returns for the interest. Why, I don't know other than looking for the possibility of the numbers being placed somewhere else and not on line 8a from the previous form 1040. Each year line 8a is blank except for 2016 has 37.00 on that line. So, 3115 it is and all the bad news to the client. The total interest NOT reported is approximately 8K. 2018 is 3900.00. Here is what I hate about this. First year this client comes to me and will have to pay dearly. I'm sure it makes him wonder if he should have came to me at all. I am going to ask the client what the previous preparer's background is. All return copies back to 2007 were not signed and has been completed using HRB online software. I have documented proof of my findings and printed the 6252 instructions to show him where the interest should have been reported. All I can do is advise him that he is responsible to file an accurate return and the 2015, 2016, & 2017 should amended to reflect the tax due. Yes, he will owe money for 2015. No, this is not my only client, there are at least 15 returns waiting and most of them are rental properties with one that may need a gift tax return completed. Working long hours but have my mind made up that anything after the 9th goes on extension. Anything that has been dropped off and not completed by the 10th goes on extension. I have a few that are on hold for additional information. Those may hit the extension block as well. Oh yeah Margaret, our favorite CRUT it due any day and you know that is definitely getting an extension.

Margaret, it appears I was unclear. The profit recognized on the 6252 is to be directed either to Sch D or 4797. I don't know where the 4562 came from. Also this client trusted the previous preparer and didn't even know about any worksheets or depreciation schedules. As I said, the interest earned from the installment payments wasn't even put on the return for 2017. Duiring our meeting he had a copy of 2016 but I don't know about anything any farther back. Worth asking though. Yes, I am aware the profit percentage stays the same each year. But with the way everything else is done, I question if this was calculated correctly as well.

Cbslee, I agree with you totally. I plan on checking with the county when I get a moment to do so. I don't think they have copies of the Hud1. But if they do, then I still don't have the other items that may add to the depreciation.

New client came in with a few rental properties, normal W-2 and income stuff, and an installment sale of a property they were renting to the tenant. They also brought the previous return. I have found a few errors and don't know exactly what to do. So here goes 1. All rentals have been depreciated over a period of years. NO ^3@%^ depreciation schedules! The client has asked for them but hasn't gotten any good response. Only response so far is "the program calculates the depreciation and that is what is used every year" What, really? Based on the current depreciation figures, it looks as though the property acquisition cost including the land was the basis of the depreciation. This is a maybe and backing to the depreciation came relatively close. Yes, there are other possible depreciable improvements. My best guess is to use the figures from the 2017 return to back into the cost basis to continue the depreciation as is. This is for each property as well. 2. Installment sale. All gain from the profit percentage was put on form 4562. In my opinion and because it was rental property, the gain should have been reported on form 4797. Second problem, there is no worksheet showing the calculation for the profit percentage. I can't even begin to determine the basis at the time of the sale because again, no depreciation schedules. So, I have no choice but to use the profit percentage from 2017 correct? 3 Interest from the installment sale was not reported AT ALL on the 2017 return. This is like $3800.00. I did have the client sign an engagement letter that includes the language regarding not doing an independent review of their information with the return being prepared from the information they provided.; etc. Is this something that I should contact my E & O about? The previous preparer has gone out of business and is no longer preparing returns. My first response was to send them back to him/her. This return is good revenue but...…. Advice and insight please.

<<<<<whacky and no sense making reporting.>>>>>>> Don't you just love that grammar??? Yes, I am college educated even though it doesn't show.

Update, spoke with the daughter, she does indeed have POA for both parents. I asked for a copy of it to maintain in my files. Also, required the daughter to be present when we review the return. Daughter really didn't think this was any big deal and I reinforced that with this was the only way I would prepare the return, no other exceptions.

Well there is one more advantage to them coming to the office, they eat the candy my wife provides which helps keep my waistline under control. Yeah, I hate the one at a time form thing. I guess they think we have never seen these forms before. Also, I like the ones that here's the pile, you'll know which forms you need. That usually follows with is there anything you think I'm missing or that maybe I didn't receive? Once again, I consult my crystal ball for guidance.

Filing education credits and college statement analysis. As I said, these are people providing higher education but for some unknown reason can't see the importance of accuracy. Maybe the colleges should be fined by the IRS for whacky and no sense making reporting.

This must be an ATX thing. Drake doesn't have a question as such. However, the ID screen should suffice. If that person has shown you their ID then they are physically present and nothing else needs to be done. I am in NC and have a client in TX and other areas. I ask them to scan and fax, or via secure portal, to send me a copy of their picture ID. I mean what more can you do? Would I do this with a new client??? No, they would have to come to the office for signing, ID verification and pickup. I know one thing that is happening with my practice is that I am making it too easy for clients not to come to the office. There are pros and cons to this. Pro- I work from home and no-one uses the bathroom. Con - costing to much in postage to mail the returns and credit card fees over the phone are more. Okay this wasn't part of the OP and I am just rambling on.

The handling of these 1098-T with colleges is getting quite frustrating and at this time of the year, I don't have time to dig into each and every scenario. New client's daughter is attending college and present me with a print out of the expenses from the college. Good so far. The statement wasn't totaled in either column (Charges & Credits) and for the life of me I don't understand why the college wouldn't do this. Now on to the rant. The 1098-T has an amount received that according to the client is only half of the year. ARRGH!! Apparently they are correct, the charges column adds up quite a bit more than the 1098-T. The charges column greatly exceeds the scholarship in box 5. But, on the 1098-T, the amounts received are less than the scholarship funds so it looks as though there is an excess when there is not. Yes, I did subtract the R & B charges and there is still more paid then box 1 of the 1098-T shows. To add another twist, the client's payments for the spring semester paid in 2018 don't show on the statement from the school. Thankfully the client has receipts. Here is the rant, why in the hell can't these universities that are teaching higher education get their billing right??? I know I am being a bit paranoid here. Within the last two years I have had three clients questioned by the IRS regarding the education credits, especially the AOC. How do you defend this crap when the time comes. Does anyone trust a 1098-T? Geez!

Thank you for all of the great suggestions. I am planning on speaking with the daughter soon and hopefully make some head way. I agree that as long as no mention of anything financial is discussed or implied, then it should be okay to speak with the daughter about her mother's condition. Thanks again.

Thanks but I got that and have read that numerous times. I have a call in to the client to try to find out the terms of the scholarship. The part that throws me in this scenario is the scholarship does exceed the expenses according to the 1098-T, but if the student did not receive any of the remainder to be used on anything, then how is that taxable. I'm not trying to be thick headed here I just want to understand better. I have had clients who have received a pell grant that took the remaining funds and spent them on non-educational items so yes, those funds were taxable.

Need a little help and advice. I have a client whom I have been serving for a number of years. The client's husband is terminal and has been moved out of the home to the daughter's home for her to care for him. The client (husband's wife) each year has retained me to prepare their taxes. Now, she seems mentally unstable. She is confused, doesn't know what she has done with the documents/tax forms (these folks are retired so 1099R, SSA and other similar forms) and now calls me four to five times a day upset cause she is not sure she has gotten everything to me. She constantly claims she doesn't know what to do but wants to be sure I will not file her late. I do not feel comfortable preparing this return. The daughter is my client as well and I thought she said she had POA for her mother (the client). If she doesn't understand items about her taxes my I question her competence with signing the return. What are our responsibilities here? Where am I bound by Circ 230 in a situation like this. Any advice is appreciated.

No the AOC is not in order. The scholarship received was more than the college received as payment so no education credit. I have read many articles and Pub 970 to see if the excess scholarship would cause a student to have a filing requirement and have not found anything that says so.

Looking at Pub 970, it makes reference to "fees" required by the university are tax free. I have asked the client to contact the school to get a breakdown of the charges. I did find that if there is no filing requirement, then this is a moot issue. It very well may be worth giving up a couple hundred bucks.

A student receives scholarship funds that are in excess of the amounts the college charged by a few hundred dollars. As a freshman, this university requires the student to live on campus. With that said, would the scholarship funds used for room and board be tax free? I have done some research and cannot find a definitive answer. In this scenario, the student is not required to file a return and the only reason we are attempting to file is to retrieve a refund. Thoughts please.

Margaret, the 529 earnings are only tax free if withdrawn for educational purposes. The remaining basis in a 529 plan should have come from post tax dollars and I can't see why those distributions would be taxable. Maybe because the Aussie schools aren't recognized by the IRS is the reason for the earnings to be taxable. That taxability of the earnings is pretty straight forward in the regs.

Just to add a different wrinkle, if this is a total distribution then all of the responses regarding the earnings as taxable and subject to the penalty due to the TP age are correct. I am assuming this was a total distribution. If not then the ordering rules apply. Just did one involving the ordering rules and what a PITA to get the broker, who was the third broker to handle this, to come up with what was contributions and what was earnings because my guy was under 59 1/2 and held this thing for 20 years.

To add to my response, is the child under 24 and still a student in school? If so, that would negate my response about supporting onself.

Margaret, I agree something is weird with ATX. Here is the rules from the IRS The additional standard deduction amount increases to $1,600 for unmarried taxpayers. For 2018, the standard deduction amount for an individual who may be claimed as a dependent by another taxpayer cannot exceed the greater of $1,050 or the sum of $350 and the individual's earned income.Mar 7, 2018 Is the child in the OP under 18? While it doesn't seem reasonable that a person could support themselves on 14K per year, it certainly can be questionable when asking if they have provided more than 1/2 of their own support.

I think you are getting confused as to who can claim the AOC. The student cannot claim any part of the AOC if they meet the conditions below. However, the parents can claim the credit for both non-refundable and the refundable portion. There are other conditions for students over 25 who are part-time that can claim the refundable portion of the AOC. All of this stems on the condition that the credit has not been claimed for four years. Yes, the parents can take the AOC if they are claiming their child as a dependent. Usually, income earned by the student doesn't come into play when they are under 24 and still attending college for dependency purposes. In your situation, you have to determine if the student is better off to claim themselves or the parents. If the student's income is below the filing requirement and there are withholdings then it is a no brainer. Student files a return to get the withholdings back and parents claim the dependency to get the education credits. Below is a blurb from the IRS instructions for the AOC. If you were under age 24 at the end of 2018 and the conditions listed below apply to you, you cannot claim any part of the American opportunity credit as a refundable credit on your tax return. Instead, you can claim your allowed credit, figured in Part II, only as a nonrefundable credit to reduce your tax. You don't qualify for a refundable American opportunity credit if 1 (a, b, or c), 2, and 3 below apply to you. 1. You were: a. Under age 18 at the end of 2018, or b. Age 18 at the end of 2018 and your earned income (defined later) was less than one-half of your support (defined later), or c. Over age 18 and under age 24 at the end of 2018 and a full-time student (defined later) and your earned income (defined later) was less than one-half of your support (defined later). 2. At least one of your parents was alive at the end of 2018. 3. You're not filing a joint return for 2018.

Also, and as SaraEA said, these expenses used to go on the Sch A.

The only reason I can see here is the 2106 unreimbursed employee expense has been eliminated. So, if he is indeed an employee and not a sub contractor, then I agree he cannot use the home office expense as the 2106 was used for such expenses.