Terry D EA

NC has many tax law changes this year. The one that I am questioning is the charitable contributions. In the past if you could not itemize deductions on the Federal 1040 you could take a percentage of charitable contributions on form NC D400. Correct me if I am wrong, this year it appears that if you take the NC standard deduction the option of claiming any Federal non-deductible charitable contributions is gone. The NC D400S has the line for the contributions, mortgage interest and RE taxes but an input isn't allowed. Input is allowed if you itemize on Sch A. Then and only then is an input of charitable contributions allowed. The instructions from the state don't make any reference to the change and the only time you have a choice between the standard deduction and itemizing is if the Federal Sch A is used or itemized deductions are forced. Am I correct? NC really beat folks up this year with all the changes and non-allowances that had been there for years.

I have heard the same as JB but I make sure my clients know they CANNOT hold me to anything about an anticipated refund date. None of us knows if the return will be pulled for review or whatever reason the IRS chooses.

I agree with Tom completely.

Amen to rfassett's comments. I too was proactive with learning as much as I could about the ACA before tax season and some of those classes had conflicting information. One of them even calculated the penalty one way in the material and a different way on the quiz. So, once I thought I felt comfortable with what I learned, I quickly found out that I still needed to learn more after I started preparing returns this season. As I said earlier, none of the courses that I took used the subsidy to figure the affordability as far as I can remember. Just learned that two days ago. All of this still makes me nervous and I take time over each return and am still apprehensive as to whether they are prepared right or not.

My question is why does the subsidy calculate into the 1040 tax exemption for code A at the time of filing the return? The only way to get the subsidy is through the market place which will in turn give the advanced premium tax credit that you cannot get at the end of the year. Am I missing something here? I will have to review my study materials as I don't clearly remember the subsidy coming into play for the 1040 filing. I guess it makes some sense that it should because the bottom line with the subsidy would be the actual out of pocket cost.

While determining the penalty amount, you should also look at the possibility of an affordability exemption if the amount of the insurance premium for the year would be more than 8% of the MAGI. You have to do this for your geographical area. In your original post you put the household income at 30,227 x 8% equals 2418.16. The lowest level bronze plan may exceed the 8% figure per year. Remember that determining the insurance cost is MAGI based as well. Also, if these folks would possibly qualify for a subsidy, you might want to advise them of that as well. There is an earlier post that has a link where you can input the information for your geographical area and it will calculate the premiums with subsidy for you. I have used it and it is accurate. Confusing I know, but another area to look at to help your client.

Someone correct me if I am wrong but I thought any supporting documents needed to be mailed to the IRS using form 8453.

I stand corrected on my earlier post and I totally see where others are coming from. In Judy's and KC's answers the "temporary absence" is well defined and does include military service. So, I have retract my earlier statment and agree that the only choices here are MFS/MFJ. I would have to file it this way to be 100% comfortable with the return. I know this isn't what you want to hear JB, but whether he was ever in the home or not doesn't come into play. The fact remains they were married on the last day of the tax year by your original post.

We are talking about the difference here between MFJ/MFS being married and "considered" unmarried. Under the post from Yardley CPA, it would appear your client is "considered unmarried" for HOH purposes. It does not make reference to temporary absences or the necessity for a spearation agreement or divorce decree. The facts state they must not have lived together for the last 6 months of the year. With that said, if he came home to get married and then left I would think you would have a good argument for HOH. They do appear to meet all of the other tests. His place of residence (mailing address; etc) didn't change and I am sure their is evidence from the military as to where he has been stationed and for what time period. i don't think a week or two of leave constitutes a change of residence.

Same here. Eli has been a very good friend to me and I will definitely keep him in my prayers.

I'm not using ATX but in my program there are dependency questions regarding the insurance in the dependency entry screens including the question as to whether the insurance they had was purchased in the market place. Now what bothers me is I have had two clients with dependents covered under Medicaid for which they had the proof and neither parent had been covered. No penalty because of affordability exemption but it appears the IRS will know by the input. I'm just assuming on this as there is no other evidence available that I can see. Maybe behind the scenes as to what I actually see and what gets filed.

You are getting some very good advice here. I do question the attorney's statement and would probably offer up another preparer if something doesn't pass the smell test.

I agree with Margaret as well.

I create mine in MS Publisher. It is easier to manipulate than word. If you MS Office it should be in there.

I have used the actual cost of the bronze level plan for our geographical area twice now. I don't like the fact that all you have to do is put code A on the 8965 without any documentation or calculation. With that said, it appears a safe assumption is that the IRS computers should be able to calculate the 8% based on the National average. Then again.....

You are correct. The exemption can be applied for through the Marketplace and if it was not, then it can be claimed on the tax return.

I don't use ATX but I would think the form 8965 would still be generated to choose the proper exemption code that has to be entered on the return. In your case code "C" would be the code to enter for the exemption.

I charge by the form as well. I have added amounts to each of the specific forms. For the simply check the box there isn't a charge. I find it hard to justify a feel for the due diligence because there isn't any specific guidance on this. I do charge a fee for due diligence for the EIC which is completing the 8867. This year is a learning year so my fees may go up accordingly. I work out of my home with very little overhead so it is easier for me to keep the fees down.

This would be code "C" which comes under the following directive. Also, you might want to take some time and review the instructions for form 8965 that specifically state what the exemptions are and what category you clients may fall under. Citizens living abroad and certain noncitizens - You are: •A U.S. citizen or resident who spent at least 330 full days outside of the U.S. during a 12-month period; •A U.S. citizen who was a bona fide resident of a foreign country or U.S. territory; •A resident alien who was a citizen of a foreign country with which the U.S. has an income tax treaty with a nondiscrimination clause, and you were a bona fide resident of a foreign country for the tax year; or •Not a U.S. citizen, not a U.S. national, and not an alien lawfully present in the U.S.

I am trying something different this year. I am running with two monitors. One I am using and then when the return is ready for review, and if my client is present, I turn on the monitor they can see. So far, everyone likes it. I usually work off of a laptop as I have a few elderly clients that I go to and some that come to me that can't climb stairs.

Naveen, Others have already offered good counsel and prayer and. There isn't anything that I can add that hasn't already been stated. You are in my prayers.

Naveen.. . adding you and your wife to our prayers. I pray for a speedy recovery for her and strengthening for you.

I agree with you Joan and do use another line but this is the first year when the property was placed and put in service. I guess maybe I wasn't clear on that in the original post. I know I do have to change some things. One example is a replacing a garage door because the other one had gone bad really doesn't increase the property value and in my opinion is a repair. Should it have a life of 27.5 years? Is a toilet by itself without any other bathroom renovations a capital improvement? I'm not kidding here there is depreciation for 27.5 years for a toilet. I would have just expensed that thing as a repair.

Hey Tom, I want to keep it simple as well and have tried to get this think narrowed down so as not to bore too much. I just feel I need something to cover my tail in the event I get asked which probably won't happen. But... being proactive thats all. I did this years ago, int the middle 90's I think, when due diligence first came about for EIC. Folks I worked for at the time said not to worry but look at where we are now with it. Each one of us will probably handle this differently.

There is a pinned post at the top of this forum with some very good links to get the bronze level premium amounts from virtually every State and city.