Christian

A client recently widowed her husband died in January last year called me. He was a railroad retiree for twenty or so years. She had worked as a fast food manager for fifteen or so. He also held a part time job at the local army fort for twenty years and was employed there until he died at age ninety. Last year they received a W-2, a railroad Tier 1 and Tier 2 pension for him, railroad Tier 2 pension for her, a Norfolk Southern Pension for him (a company plan offered to employees many moons ago but no longer available), a union pension for her from her work in the garment industry locally, an IRA payment for her, and lastly Social Security for her based on her years as a fast food manager. Since he worked under Social Security at the army base she thought she would draw a separate Social Security benefit from that. Here's how it all shook out. Her railroad retirement benefits were raised to what his were for Tier 1 and Tier 2. Social Security would not pay any benefit for his twenty years work at the army base nor add in his work record there to his record on the railroad which would have greatly increased his widow's railroad benefit. Her Social Security benefit was discontinued totally even though she earned it herself. She still gets half his Norfolk Southern Pension benefit and her tiny union pension along with her small IRA benefit. Personally I am mystified as to how this was arrived at and place it here to possibly see if anyone has a direction she can take to obtain a better deal. The Railroad Retirement and Social Security reps basically threw up their hands out of ignorance as what was to be done. Some professional somewhere would likely effect a much better deal for her but I have no expertise with any of this. Anyone have any ideas.

Thanks so much Max. This information is great news for this lady as her husband has come down with rapid onset Alzheimers disease. She can use that $6,000 as well as that 20% state credit. I rarely have reason to compute one of these credits and basically scanned the credit until I had more time to look it over. I have printed out the needed material and will be able to help her out. I've got to send my annual donation to the website owner as this just illustrates how valuable a resource this site is.

A client called to inquire about a possible energy credit on solar panels installed on their roof last year. In connection with this they also installed a generator all to the tune of some $43,000 dollars ! In researching this I can find a possible credit for the solar panels but I do not see a generator qualifying. Most generators bought here are for back up power in case the electric power fails for a time. The contractor sold them a bill of goods advising them they would get a credit of $6,000. I told them I would need to see any paperwork related to such a claim. He further advised this would eliminate their electric bills. So much for gullible folks as no such savings have materialized. What do you think ?

Abby I rarely have need to provide an organizer as my clients are pretty well accustomed to what info they need. The one I pulled up has columns for the prior year info but the amounts did not populate. Oddly enough all other prior year amounts did which was the reason for my question. In any event I spoke with the client this AM and will simply forward the one I have as it will provide her with the forms she needs to provide. Her husband has developed cognitive problems and the organizer will assist in he collection of these.

Good afternoon and a Happy New Year to all. I have started early to shake off the rust in my preparation skills. A task which does not improve with age. I placed an organizer on a client return and am surprised that it populated all the client entries except the pension amounts although it shows all pensions and spousal pensions but no amounts shown for 2019. If anyone can advise a solution I would much appreciate knowing what the solution might be.

I find no federal deduction. As best I can determine they can contribute to a Virginia 529 plan. Each parent would need to establish an individual plan into which the max contribution is $2,000. This money plus accrued interest could then be withdrawn tax free to fund the child's private school tuition. How soon after setting up the plan the funds can be withdrawn I do not know and the parents will need to carefully review the plans with their fiduciary to iinsure no slippage in the rules.

A client called today stating he and his wife have taken their child out of the local public school system and are going to be paying some $6,000 per year for home schooling. He wanted to know if this is a deductible expnse. In so far as I know it is not a deductible expense on the federal or Virginia return. I plan on looking a bit closer but I do not think I will find any law change which permits it's deuction. He asks if it may qualify for the child care credit but had I to nix that idea as well. If any of you know that this reading of the law is incorrect please advise.

P.S. She finally made contact with the correct area of the Service and wallah! they provided her instructions needed to set up a new account. Chalk up another victory to the friendly forum members on here. I finally resolved the clergy issue as well.

Y'all have basically reenforced what I thought. She needs to have a chat with the folks who handle these accounts and get a new account set up. I've got as much as I can now take care of and I ain't gonna do it. And this wireless keyboard is causing more spelling errors than I can deal with !!!

I volunteer at a local tax exempt museum. It's a tiny local musuem celebrating the history of our small community and a has a tiny income. The member who handled the annual tax filing died last year. He filed an annual Form 990-N which is apparently efiled only. I do not prepare tax exempt returns but was called by his successor for the following problem. The museum has a laptop for it's use. Instead of using this the former member used his personal computer inputing the tax info on it and identifying his computer as the only one to be used for submission of the museum's tax account. His successor had his name and password but was rejected as the computer does not match the Service's info. I asked her why she simply did not contact the Service and inquire about establishing a new account explaining that the prior member filing the return was now deceased. If anyone here has any information as to how this can be resolved I would appreciate it. The 990-N looks to be a simple filing but the former guy did not print out a paper copy of his work. It would appear as not to hard to resolve but his sucessor can't seem to get it resolved.

I am always saving and stuffing the information I receive from this forum. You can be sure I too will always be extending in future although I think I will be able to get any penalty excused. I simply thought the couple would get a refund based on what I had and the size of the refund I was looking at. I should have known better. My bad.

A lady brought me her tax info at the very end of the season. Her husband had always prepared their taxes but like no few others has now become unable to do so. She knew almost nothing about the taxes. After getting together most of the info it looked to me they would receive a refund so I saw no need to file an extension but was lacking one item which took some time to get. I thought it would not change their getting a refund. Lo and behold after working the new info in they owe tax. I'll get this back to them on Monday and as they have a good record I am wondering if I could get them a one time waiver of the late filing penalty. I cannot recall the last time I applied for this waiver and would appreciate any info on the needed form I will need to file. In fact I am uncertain whether a waiver is granted for a late filed return.

The paraagraph below sorta sinks the ship so to speak. The loss in question generated by the wife's business is effectively lost. Their standard deduction was greater than their agi so no income to apply it against. Well worth a try. NOL.pdf

My reading is that since the business was disposed of in 2019 the client's wife having died in May and the business simply closed (no sale) the loss cannot be carried forward. But it never hurts to check yourself.

A new client has come in whose wife passed on in 2019. She was a beautician and operated a small business. For 2019 the business shows a loss and , of course, was closed. The standard deduction eliminates any federal income tax for 2019. As the loss is not deductible can it be carried forward or is it simply dropped. If memory serves this matter has come up in here and the loss is simply lost.

I will photocopy the exact words from the Taxbook on the HA.What is crystal clear is the salary is fully subject to SE tax and not placed on Schedule C. Fees, baptismals, funeral services are the items placed on Schedule C and are of course allowed deductions on that. The HA not exposed to regular income tax is indicated to be fully exposed to SE tax but I will photocopy it and place it into my next submission.

P. S. I now have had time to look over what the client's former taxperson did in respect to her salary and HA. In prior years returns I noted Form 2106 showing mileage expense and a few other miscellaneous expenses incidental to being a minister such as uniform maintenance, telephone calls, etc. These expenses subject to the 2% limitation normally appear on Schdule A. A recapitilation sheet I found showed the following. An addition of the salary and HA into a single figure. The total reduced by unreimbursed employee expenses which ccomprised most of the amounts reported on Form 2106. This greatly reduced the HA exposed to SE tax although the salary remained fully taxed. In reading material in the large Taxbook I received with my ATX renewal it states that the entire HA is taxed for SE purposes and allows no deductions period. In asking how long her former taxperson had been preparing her taxes I was told twenty years. Unless I am greatly mistaken this was an egegious error but would like to hear what y'all think.

Welcome Newbie I am the chief stumbler here as some of my fellow members will attest. Abby I am glad you mentioned turning off the form and program updates something I used to do from the first and simply forgot this year.

In response to John. The church bookeeper evidently reviews the clients yearly expenses and comes up annually with a close approximation of what the church should pay. Any shortfall can be adjusted or so it would appear as the HA matches the FRV of the client's home for years. This has evidently been ok as it has not been questioned in prior years. I worked through the worksheets and now have a new client. Thanks to all for your assistance. This is a good example of the value of this forum.

I too have been considering retiring. The business is slowly downsizing due to clients passing on and the fact I rarely take morning calls anymore. Basically I have shifted all appointments to the afternoon and this is well accepted. I likely will try to go on for five more years unless bad health intervenes. To that end I am getting back into exercising more. Around here taxpreparers just quit. I don't recall anyone selling out although I probably could.

I ran the figures and her expenses were more than her allowance at least for 2019. Local real estate agent gave me a figure for the rent on her home.

I want to thank each and everyone of you who responded to my sos call. The client brought me three years prior tax returns. My confusion stemmed from the Lacerte software her taxperson used. It like ATX has a worksheet although more abrieviated than the ATX one which is a carbon copy of the one in Pub 517. It referenced unreimbursed employee expenses from Form 2106. The 2018 copy I got had no Form 2106 to reference. I realized that Form 2106 had been changed in the last tax reform legislation. The earlier returns had the Form 2106 and the expenses referenced were mostly mileage at the standard rate and minor other pastorial expenses like dry cleaning etc. In looking at the ATX worksheets mileage is denoted on the second worksheet. On each prior return the FRV is simply the full amount of the HA. So now what it comes down to is precisely what John pointed out aways back namely fill out the worksheets and I feel sure I can handle that. Although the client did in fact provide actual bills for her home expenses I saw no evidence her taxperson added any of them up. She simply reported the full HA as the home's expense so needless to say I am going that route. And now dear forum buddies the sun has come out , the Wrens in my backyard box are going crazy over their soon to be gone brood, and I thank the Lord I am just about done with the 2020 tax season. Lion I very muchh appreciate the University of Illinois Tax School info. I looked for an IRS webinar on the HA but found nothing satifactory although their written material was helpful.

I see exactly what you mean. I may simply pass on this one. I don't read that there are any expenses which reduce the full HA from SE tax. I think the former taxperson made significant errors in this regard. She somehow deducted unreimbursed employee expenses from the HA whereas these would apply only to income such as fees and other incidental income reportable on Schedule C. She is showing a leftover NOL from the income taxed on the SE with no Schedule C attached to the return. I am going to get the client to bring me her 2015 and 2016 returns to see if I can make sense of what she did but regretably I doubt I will succeed.

Here is the operativve question involved here. What are the expenses on line 4f which can be used as deductible items against the HA ? This is what I should have ask early on. Suffice it to say it's been a long and trying tax season and is still not closed out. IMG_20200615_0001.pdf

My confusion with regard to this stems in large degree from the info received from the client's former taxperson who did not provide all the info I needed and the fact she is ill with some form of cancer and really bad off. The client had no prior tax records which clearly indicated exactly how she handled this. I plan to use the Clergy 1040 form provided by ATX and go from there. I need time to look it over but it shows deductions allowabe against the HA which look to me will reduce the amount exposed to SE tax.