Burke

Because those deductions effectively reduced their share of the estate inheritance proceeds is my guess. Regardless of Congress' reasoning, it is in the tax code. Review IRC 642(h). Excess deductions only happen in the final year when they exceed the estate's gross taxable income. So there would not be any income to go to the K-1. I just re-read your post and you said "no deductions on the 1041." Why aren't the eligible ones shown there? (Just as sale of stock or assets by the estate may have produced net capital losses which the estate may not have been able to take, those would go on the K-1 too, then flow to bene's Sche D's. ) The excess deduction share goes on Sche A, subject to 2% exclusion, so they may not get a benefit if they don't/can't itemize, but you don't know that unless you also do all of their tax returns as well. PS: Don't forget to do the 1099MISC for the executor's fees.

Actually, this statement is incorrect. Originally, the bill started out this way. It was supposed to be an income tax "rebate." But it got modified. Persons who have at least $3,000 in SS, VA benefits, or net self-employment income as shown on Form SE, or wages on a W-2, etc. but do not owe any income tax WILL qualify.

I would not worry too much about the IRS coming back on you. I know its possible, but I have never had a situation where this scenario has happened, has anyone? Most of the time it is the child care provider who is threatening the client that if it is reported, they will stop caring for the child. I advise my clients who pay child care to take the deduction anyway. I do not believe they actively trace the deduction to the recipient's tax return like they do 1099's and now K-1's. At least, I have never been made aware of any case. Anyone ever experienced this? Perhaps on audit?

That is a good enough reason for me not to switch. Tks for helping me make up my mind. Could we interest Drake in modifying this approach? It would be nice if you had the choice to use either method.

The previous thread was getting way too long to add to it, so here is my related question. New client, did personal return. Other CPA did corp return and last quarter 941, where he added a large amt to salary based on distributions taken over the year. I am going to assume that these distributions did not include a reduction for the employee part of FICA (actually only Medicare since salary was over maximum for SS part). So that means the corp paid both parts of the tax when 941 was filed. The employee part should be treated as income for 2008, no? And it should probably have been reported on the 1st quarter 2008 941 as addl salary, no?

Send him a W-9 to cover yourself, pointing out to him the $50 fine for failure to provide.

You can do 4 K-1's for benes with "excess deductions on final termination of estate" only. Not everything will qualify. See instructions for 1041. Sophisticated software should take care of this for you. Goes on line 11, K-1.

You know you are going to have to put it on the 1040 so it will match. So, yes.

Well, I made a note to myself to change my password since it is after the 1st of the month before I get caught again, and now I can't figure out how to get to the screen to do it. Before, mine just expired and the screen came up. When I went on the knowledge base, it just gave me instructions on how to change it for tax returns. Help!

The law says you don't have to, but there is nothing stopping your TP from issuing a W-2, and paying the FICA. If she withheld the employee's half, she will have to file. If not and she is paying it all, file Sche H on her 1040.

Thanks for the info and cite. Would have sent you a PM but don't know how. I know it is somewhere but I can't find it.

I ran it by MM and she thinks its the first $600. Have a question into the state tax dept, but no one is there until Tues. Will let you know what I find out.

To Virginia Preparers: (gailtaxed, etc?) Read Subtraction #24 in Form 760 and tell me what it means. Do you get to exclude first $600 of all winnings? Sum of all winnings individually under $600, even if aggregate for year is over $600? Nada if one-time winnings of $1,000? I am confused. I understand if total winnings for year were UNDER $600, you can exclude.

Just received a form email from ATX on another matter, and it indicates support hours from 8:00 - 10:00 M-F and 9:00 - 5:00 on Sat. I believe there was some discussion about no Sat hours, and I know I called a couple of weekends ago, and that is what the voicemail said. I called the number provided and she verified that these hours are correct. Also the email has this: "Bonus: ATX TIP of the DAY:ATX TV is on the air! See episodes featuring ATX software." What is this? I didn't see it until later.

It's not quite that simple. If your state refund is MORE than your previous year's state and local income tax DEDUCTION on Schedual A less the sales tax ded you could have taken, then you adjust the reportable taxable refund. This would not apply to everyone who itemized and got a state tax refund.

Booger, you can also access the SE worksheet and put this info there. It will flow thru to SE, and avoid Sche C if you don't need it (no expenses). Bunny hop from line 2. You may also have to enter income on Line 21 of 1040.

Sue, do you realize you are "yelling" by typing in all caps?

In Virginia, if you itemize on federal, you must itemize on state. So yes, you should.

I think you were right the first time. If you take sales tax, nothing to report the next year. If you take state taxes, then excess of refund over the standard deduction amount is taxable. I never heard of "taking the difference" between the sales tax amount and the state income tax amount. If that were the case, then everybody's taxable refund would be different from the actual amount received.

I think you were right the first time. If you take sales tax, nothing to report the next year. If you take state taxes, then excess of refund over ID's is taxable. I never heard of "taking the difference."

I had to do this year before last? for LA client due to Katrina destroying SS office. Filed w/out child, then when we finally got number (almost a year later) we amended for addl refund & CTC.

Thanks for the info. I cannot believe I could not find this when I looked. It was not the client letter I wished to customize, but I am saving your info. I have never liked the client letter, but will try customizing it it using these instructions and see what happens.

Both buyer and seller are supposed to attach this form to their respective tax returns in the year of sale. They need to match. The seller wants to allocate a large portion to goodwill since that will be treated as long-term capital gains (Sche D) on his tax return. The buyer will treat it as a depreciable asset over 15 years. However, they should have had a written sale agreement of some kind (to cover both of them) which specifies this and the other allocations of the sale price, like values assigned to fixed assets, including any covenant not to compete, which is treated differently for tax purposes.

Is this feature gone from 2007 ATX? I cannot find it. How can we do it?

KC, you seem to have a contact at ATX. This message did not come to me. Can you advise them that a blanket email needs to go out IMMEDIATELY on the password situation.