Gail in Virginia

When we have had Virginia UI audits, they basically want to see everything that deals with financial or payroll records. They are looking to see that employees are properly paid for the hours that they worked, and they look at every check to an individual in the financial records to see if that is someone that should have been treated as an employee instead of a vendor or subcontractor. They look at tax returns and the financials to make sure there are not obvious cash payments to under-the-table employees. I don't know about New York, but agree that this is not the piece of cake a WC audit is.

The only help I can offer from Virginia is prayers. I am very sorry for your losses.

I am not sure you could "technically" make that argument, as it is my understanding that the filing requirement is based on gross income, and not net. So unless his total sales (before reducing for costs) are less than the filing requirement, he would "technically" need to file even though he may have no adjusted gross or taxable income. At least, that is my understanding.

You might create two of the federal returns by beginning with a duplicated federal return, BUT you still have to create them, separate out the income and deductions and check that they are correct. Then you would need to create the PDF's to file with the state returns showing the Pro Forma federal income after separating. It might not be as bad as creating those two returns from scratch, but it is still 5 returns the way I count them.

Try putting the spouse's SSN on the second 2555. If it were a Sch C for the spouse, it would have the SSN of the spouse and not the taxpayer. Perhaps the only way to get two 2555's on the same return is to use the filer's SSN for one and the spouse's SSN for the other to show that they both have foreign source income. Just guessing - I have not had this situation.

This is one area I need to work on, but if we don't value our services enough to charge a decent price for them, why should our clients value them?

What I have in last year's payer manager is State of North Carolina, Department of Revenue, 56-1611838, PO Box 25000, Raleigh NC 27640.

I had not seen that Catherine. Thanks for sharing! I know my husband will get a kick out of that one too - if I ever see him again!

Can't help about the family, but you have friends on this board. And we ask each other for free advice all the time!

Speak for your self, Marilyn. Being crazy is sometimes my only defense!

He could even print the check register once a month and deliver that to you for your use in inputting his disbursement ledger.

You can file this on the parent's return using Form 8814 if I am not mistaken. That way the child does not have to file, but the IRS can match the 1099B to a return.

Have you considered the possibility of you printing checks for them? I don't know how close your office is to their business, but if you enter the checks directly into quickbooks, half of your work in posting the ledger is already done. Depending on how organized they are, if they could drop the bills off once a week or fax/email you a list of checks they need and you could print them for them and they could just stop by to pick them up, sign them, and mail them. They could still maintain a regular checkbook at their office if they need to quickly hand write a check, but you could keep the stock of computer checks. Of course, you would have to charge them more!

I would agree mostly with Pacun. Because the amount is in box 3, I would put it on line 21 rather than a schedule C. I think that even if you deduct the entire $1300 the 1099 and the deduction will go to the IRS computers if you are electronically filing, so I don't see any reason to leave the $1 in income to get the explanation on the front page of the return. Instead I would put the explanation in one of the spaces for other on line 21 with the negative amount. However, I have not had one of these settlements yet and have not done any research. If this amount is refund of fees charged erroneously or illegally, then whether or not it is taxable might depend on the treatment of the fees originally. If they were deducted from income because they were treated as points, or because this was rental property, they might be taxable now. If they were added to the basis of the original real estate and that has since been sold and income or loss reported on the sale, they might be taxable. If they have been added to basis but the property has not been sold, they would probably just reduce that basis. Without more information about whether this was the entire amount they received and whether all of the damages were punitive or some were compensatory, I don't have an opinion about taxation of the amounts.

What a stress-filled year you have had. My heart goes out to you, and I will try to help in any way that I can. I agree with those recommending extensions where feasible - just be cautious about clients that typically owe since filing after April 15 may cause them to blame you for any penalties the IRS assesses for late payment of the taxes. I will hold you and your family in my prayers.

OFF TOPIC - KC I just noticed your new tagline quoting Thomas Edison and I love it!

As long as the child doesn't provide more than 50% of his/her own support, I think either parent can claim her even if one parent provided more support than the other. Normally, it comes down to which parent the child lives with but that does not seem to be an issue in this case.

Good Point! It doesn't always pay to strike back.

I don't have a Mac, but I have not had any problm using firefox for the wheres my refund site.

From what you said about the cost of the internet, this was not an accountable plan where she turned in the cost of the internet and the hospital reimbursed her. Instead, they compensated her at a rate they set for the use of the internet and equipment in her home. Therefore, including it in wages is the correct way to treat this amount. That said, does she have her paystub showing what she was actually paid so that you can compare that with the W2? This would be helpful in determining whether or not the money has been reported somewhere.

The term is "imputed" interest and not only the IRS but GAAP insist on it.

I think that federal holidays are the same day that the post offices are closed, so you should be good until Tuesday. I hope you feel better soon. It is hard enough to be miserable when you can just lay around the house in your jammies - when you have to go in to work because you just can't let your clients down this time of year, it is MISERABLE!

I have a bushel of golden delicious apples sitting in my office right now. Anybody want one, come on over.

According to the person I spoke with on livechat at the Virginia Department of Taxation, they do not accept prior year returns.

Might be hard to prove who said what if you are inclined to turn them in, BUT if they are negotiating refund checks for their clients they are in violation of Circular 230 and that should be easy enough for OPR to prove. I have never turned in another preparer although I know some preparers do report egregious violations like this. I don't think any of us want honest mistakes reported.