Christian

A client of mine in her 90's went to Florida in November 2018 to live with her son until spring. Ounce there her health deteriorated and she was unable to return home and so lived all of 2019 in Florida. Her home here has just recently been sold. I really see no reason to file a Virginia return for her but knowing those greedy souls at the Department of Taxation they likely would send her a where are you letter of some type. A cousin of mine ran into that problem when he moved there years ago but they finally just gave up and left him alone. What do y'all think ? Her bank in Florida is the same one she had here so her income directly deposited would seem to me to be Florida income.

I am certain he pays over half her support. My question involves not carrying her as a dependent and whether it can be done. Doing so as a dependent will interfere with her medicare benefits which I suppose is why the former preparer showed her as not a dependent. Even so I can see no way of leaving her on the return unless he would show her as his dependent as I suspect the former reporting is incorrect.

An Uncle who was an IRS field agent would simply add the SE form to the return and let them pay the tax. Of course, the amounts were not large. I read something recently which indicated amounts on form 1099-MISC up to $1,899 were exempted from SE tax and have found when lesser amounts were included the Other income line of the 1040 this proved no problem with the Service. I routinely use his method for amounts over $1,900 unless the client has identifiable expenses which can be deducted.

A new client came in bringing his return from his retiring former taxman. He is just over 80 yoa and has a daughter in her early 50's who draws Social Security disability who lives with him all year. On reading his 2018 return his daughter is indicated as not being his dependent but qualifies him for the HOH filing status. No one else claims her as a dependent and she files no tax returns. My reading of the HOH status indicates he must carry her as a dependent. Of course, this will mean removing her from his return and showing him as a single filer. Am I missing something here ?

In attempting to add this form to a client return I find ATX does not show this form. Do I simply note the form 1099-C Cancellation of Debt on line 8 Schedule 1 or what ? What if they qualify for an exception ?

Thanks to all. Likely I have simply lucked out as I have never been informed any of those who sold homes ever received any followup from the Service but then again I do not process many returns with home sales either.

A client sold her home last year. How is this reported on Schedule D or exactly how? Lawyers here rarely send clients the federal reporting form and I have not had to fill in this info in years.

OIC ATX has a handy dandy toggle to compare this. I have not dealt with this in ages as almost all of my clients never ever use it. It looks as if the wife can keep her itemized deductions but her husband will loose any deduction even the standard deduction and the the tax treatment of their social security and railroad tier retirement 1 benefits changes materially. Initially it looks like not a good idea.

An older couple got married last year. Oweing to large mortgage payments, contributions, etc she has been able to itemize even under the new rules. As he has an outstanding tax bill she wants to file mfs. Under former rules those itemized deductions would by law be split evenly between husband and wife. Is this still the law or did the new rules effected in Decmber 2018 change this?

I finally decided to do nothing. At her income level dad surely can no longer consider her as a dependent. If she wants to pursue it she can I do not feel comfortable handling it. The courses are all online no room and board . All costs are tuition and supplies. Last thing I need is a kickback from the Service over an iffy issue.

Let me clarify. Box 8 of her 1098-T indicates " Check if at least a half time student". Clearly a full time employee cannot be a full time student. I'll check into the reference you provided. I think I can locate it in Pub 970.

A single woman who was 23 yoa last year continues living at home with her parents. She earns some $30,000 or so working in law enforcement at a local town and continues her education by pursuing a masters degree. Her tuition expenses are covered by a payment from a 529 plan set up by her father years back. Due to her income I would be reluctant to have her file as a dependent of her dad even though living at home. She wants to know if she can file for the Lifetime Learning Credit even though her tuition is covered by the payment from the still existing 529 plan. She is shown on the 1098-T as a graduate student with the halftime box checked. I really do not see how she qualifies but it would not be the first time being wrong. Does she qualify?

A client died on May 3rd last year. Her final return will have prior to death info. Her post death inome will fall on her Form 1041. Her daughter bought a cd some time just prior to her passing on. The cds were redemed at cost in August of last year. The bank sent a check for interest showing her social security number instead of her estate ein basically stating the interest accrued prior to her death with the check coming in November of last year. On the reporting statement it indicates she is deceased. Having run ino this many years back I believe I showed the interest on her final Schedule B but somehow indicated it as being subtracted out stating it was reported on her Form 1041. Of course, I have since forgotten just how this was done. Can anyone provide any information on this?

Ok I finally found it although I've not used it in quite a while.

I went to the solutions center before and still see no reference to the community board.

I believe this info provides the answer. A beneficiary succeeding to the property of a trust or estate is allowed any Unused Capital Loss Carryover(s), that remain upon termination of a trust or estate. The amount of the capital loss carryover that can be reported to beneficiaries is still subject to the trust or estate's reporting on the Final Return (Form 1041) of any amount of the current year's capital loss (or capital loss carryover) that is permitted in that tax year. If the trust or estate's capital losses including any carryover capital losses exceed their capital gains on the final tax return, the excess capital loss up to the annual limit of $3000 is deducted on the Final Tax Return (Form 1041). As 2020 is the final year for the trust the loss can be passed on. Some time back I had the same scenario with a client mother's final filing in which the loss incurred was allocated between the two heirs and is used $3000 per year by each until used up. I suspect I can use either her dod or the date the trust acquired the shares.

They have a loss. Can the losses be reported on their individual K-1 forms for use on their 2020 individual tax returns and if they can use the losses which date is used for basis the date the shares were placed into the trust or the grantor's date of death 12/17/2018 ?

That clarifies that. The trust will be disolved this year. All that was left for the year 2020 was the sale of two issues of stocks amounting to about $4,000. Is the basis for these securities the date of the mother's death or the date they were taken into the trust. Either way there will be a loss on both sales. Lastly is this loss allocable to each heir for reporting on their indiviodual returns for 2020 or is it simply lost in which case there would be no need to file a trust return for 2020 as there would be no income received in excess of $600 or more ?

After a bit more reading I came upon this "Grantor trusts automatically convert to non-grantor trusts upon the death of the grantor because the grantor is no longer alive to file a tax return. Any distributions made by the trust at that time would be taxable to the beneficiaries who receive them". I rather think this is the answer I am searching for and I check the Simple Trust box and wrap this up. What do you think?

I thought I had this trust matter concluded but on filling in the Form 1041 I am left unsure which box to check for the trust description. We used the decedent's social security number and filed trust income on her personal return through the year of death. Now that she is gone the trust will need to report income for two years 2020 and 2021 and will be disolved thereafter. The income after deductions is distributed to her two children each year. All of this is no problem my concern is that this looks to be a simple trust whereas a grantor trust has a more complicated filing structure which I simply am not going to tackle.

Thanks to two Belles for your responces.

Thanks Gail. I'm going with the lower amount. If the Department of Taxation has a problem with the reporting I am certain they will holler :).

I was deterred by this from the Form 1041 instructions. Ownership costs. Ownership costs are costs that are chargeable to or incurred by an owner of property simply by reason of being the owner of the property. These costs are commonly or customarily incurred by a hypothetical individual owner of such property and are not deductible by an estate or non-grantor trust. Under section 67(b), they include, but are not limited to, condominium fees, insurance premiums, maintenance and lawn services, automobile registration and insurance costs, and partnership costs deemed to be passed through to and reportable by a partner. Other expenses incurred merely by reason of the ownership of property may be fully deductible under other provisions of the Code. Since this is a grantor trust it seems to me they are as noted in your reply fully deductible.

A client has brought me a W-2 showing $46,959 in Box 1 and $52,650 in the Social Security and Medicare tax boxes. I plan to ask her but I think this is for health insurance carried through her employer likely through a Cafe 125 arrangement. However, her Virginia wages are shown as $52,650. The ATX program shows her federal and Virginia wages as $46,959 but I am concerned that I should report her Virginia wages as $52,650. What do you think?

I now with the assistance from youall have this matter in hand with one exception. The trust holds a residence on a lake which is not rented (the parent's owned tthe property). With disolution of the trust this year it will pass to her two children. Are there any costs connected to this property other than real estate taxes which are deductible on the Form 1041 such as a recent fee payed to the local association for maintanence and such? I suspect repairs would not be but it never hurts to ask relavent questions.