RitaB

27 minutes ago, Chris R said:

Client made a 2017 contribution in May of 2017 then took it back out before the year was up. Received a 1099r with $6804 in box 1 and $304 in 2a and coded 1 and 8.  As I understand it she should get the 6500 back tax free but should pay tax and possibly penalties on the earnings of $304. The software is making everything taxable and subject to penalty. How do I fix that? Is there some box I need to mark that I am not? Thank you 

Part III of Form 8606

3 hours ago, giogis245 said:

If I enter form 1098 with tuition paid and scholarship received, american opportunity credit is being given.  Is this correct?  I thought it was for tuition paid out of pocket?  Thank you for clarifying! 

Only qualified expenses paid with after tax funds can be used for education credit / tuition and fees deduction purposes.  That is correct.

I figure out what qualified expenses they paid with after tax dollars (yes, there are strategies) and enter that number in the input sheet in Box 1 "payments received" if it's tuition, or at the bottom for fee and books.  I am not doing what the worksheets want me to do, but I know what I'm trying to say on the tax return. 

This is a shot in the dark, but if you have dependent living with taxpayer less than seven months, that might be the problem.

Male client who just picked up said, "Love you, Sara."  I've been called worse.  Not a bad Wednesday so far.

15 hours ago, RitaB said:

No.

Don't listen to her.

16 hours ago, Gail in Virginia said:

I have a client, Virginia S-Corp, who did about $25,000 gross of construction in Tennessee this past year.  I would not worry about individual taxes but know nothing about TN corporate taxes.  Does he have a filing requirement for Tennessee?

I'm sorry, Gail, yes they do.  See page 8:  https://www.tn.gov/content/dam/tn/revenue/documents/taxguides/feguide.pdf

8 hours ago, Edsel said:

This is a minimal amount, and the crew was probably not in the state to create a requirement.  However, in a multi-state allocation, if the S-corp created a payroll in Tennessee, or accounts for destination sales in its allocation, there could be a requirement.  Additionally, Tennessee would not require a K-1 to non-residents since Tennessee does not recognize S corps.

Even if Tennessee were allocated some money, under no circumstance would any shareholder be required to file a Tennessee return, as there is no personal tax here.  However, the allocated amount would require a C Corp Tennessee return (it's called a Franchise and Excise Return), as this state does not recognize tax-free S Corporations.

S-Corps are not tax free in TN  See page 8:  https://www.tn.gov/content/dam/tn/revenue/documents/taxguides/feguide.pdf

And Sch J3  and Sch J4.    https://www.tn.gov/content/dam/tn/revenue/documents/forms/fae/fae170_2018.pdf

We do have an individual tax.  I pay it.  The earnings from construction would not create a filing requirement.    https://www.tn.gov/revenue/taxes/hall-income-tax.html

You got me on payroll.  They'd owe unemployment tax, but I figured the payroll tax issues were long since gone.

1 hour ago, Gail in Virginia said:

I have a client, Virginia S-Corp, who did about $25,000 gross of construction in Tennessee this past year.  I would not worry about individual taxes but know nothing about TN corporate taxes.  Does he have a filing requirement for Tennessee?

No.

I had one guy say, "Oh wow, what a coincidence.  The lady I've been emailing at Jr's school is named Bursar."

Can I interrupt this thread to say that education credits are the biggest time suck of my entire practice?  They NEVER remember the Bursar's Statement.  I have copies of a sample statement in my top drawer and pull one out as soon as I see the 1098-T.  It's as if I pulled a unicorn out of my, ahem,  left ear.

The second biggest time suck is:  "This is my W-2 (it's a 1099-R), this is my husband's W-2 (it's a 1099-R), this is my pension, this is my husband's annuity, this is this, and this is that, and here is my bank interest, I don't know it's enough to count (yeah, if you bring it to me it's going on the return),  BBFB.   (Blah, blah, freakin blah.)

10 minutes ago, Gail in Virginia said:

But it would not hurt for her to just politely tell him that he should not report alimony on a 1099, and that if he is concerned that former spouse will have records showing a different amount, he is welcome to send her a letter stating what his records show.  Then he will still do whatever he wants, and so will she.  That is, if they are being polite to one another and can speak without an arbitrator.

Exactly.  And if it happens again next year, and the issuer is a business, I might hand her a 3949-A.  Just kidding.  Maybe.

9 hours ago, Jack from Ohio said:

The payer is being an A _ _ H _ LE!!   The payer should be dragged back to court.

Well, he may just not know.  I mean, we do have the question here from a tax pro.  He may have been given bad advice from his attorney or barber.  For all we know, he paid an accountant to prepare the form.  Of course, you are most likely correct, but this can be handled with a Sch C or a letter in response to a CP2000.  Either would be more efficient and cost effective than going back to court.  And she can smile sweetly and wave at him knowing he looks like a fool and she doesn't.

3 hours ago, BulldogTom said:

Damn, Sara is on a roll....cussing on this site is now an event that can be sanctioned!   I need Judy to go back and change the title on my post about the iterative method of determining the SE HI deduction before I lose my license.

Tom
Modesto, CA

Oh, &^%% to the no, that's the only way I can find it when I need it.  One more year, $%^&*#.

Since I wouldn't know what option to check in part I of Form 982, I'd go to the line 21 worksheet, enter the amount there, and then subtract it on the same worksheet with an explanation.

2 minutes ago, Richcpaman said:

He told me that he had an offer that I couldn't refuse....

1 hour ago, ILLMAS said:

http://chicago.cbslocal.com/2018/02/23/napkin-dispenser-thief-walks-it-back/

"The crime had not been especially well thought-out, she said. Most of the group paid with credit cards, including the man who stole the napkin dispenser."

Crying.

1 hour ago, Richcpaman said:

Had Al Capone just put down something....

He told me to put down the same as last year.  But Rich didn't put anything, so there ya go.  Look at your returns, people! 

1 hour ago, JACKSORH said:

Daughter is in her 2nd year of college with income of only $160.00. She received a scholarship of $55,000 and her education cost box 2 is $46,397. Her parents is claiming her as a dependent  and claiming the AOTC.  The parents AGI is 73,173.  What do we do with the excess of 8,603.   Parents stated that daughter used it for room and board off campus.  So is the excess taxable to parent or child.

53 minutes ago, jasdlm said:

Are you adding the scholarship income back in to the parents' income so you can claim the AOTC?  I'm not sure I'm following your post.  

I'm wondering, too.   If the numbers on the 1098-T pan out (they probably will not, in my experience), and the excess is $8603, there would be no credit.

You are killing me with that sad face, @BulldogTom.  I can't wait to feed you some BBQ and give you a hug. 

27 minutes ago, Hunter L said:

The p

Double check... One of the filing requirements is  "At least one of the parents have to be alive at the end of 2017."

Also, Rita, distributions on a 1099-R count as "unearned" income for the Kiddie tax.

Ah, so Kiddie Tax return is not done in this case, and niece may NOT have investments.  Thank you.  Nice catches.

Aunt can claim niece if niece did not provide more than 1/2 her own support.  Aunt technically doesn't have to provide more than 1/2.  Donna, you mentioned Kiddie Tax.  Niece also has investments?  So, is aunt is socking away at least some of the $20,000 in investments owned by the niece? 

18 hours ago, RitaB said:

On $49,000 the cost of being self-employed is about $3,750.

Well, yes, thank you, Max,  it's much less than that. 

(49,000)(0.0765) = 3,749

(49,000)(0.9235)(0.153) = 6,923

6,923 - 3,749 = 3,174

Then you deduct (0.5)(6,923)= 3,462 for income tax purposes.  At 15%, that saves 519.  So now we're down to 3,174 - 519 = 2,655.

Of course the client only sees the $11,000 and thinks that's ALL due to the boss not wanting to pay payroll taxes.  When you boil it all down, if people would make estimated tax payments, they'd feel better. 

I agree with Rita L.  Let her decide.  Be sure and explain that the extra cost to her is 7.65% [of the net income, subtract expenses, if any], not the entire kit and kaboodle.

On $49,000 the cost of being self-employed is about $3,750.  It might be unwise to give up the job over that amount.  Just being real.

10 hours ago, Janitor Bob said:

Client's income was such that her required contribution was zero....Marketplace subsidy would have completely paid for her bronze plan.  She chose not to get the insurance.  Now paying $695 penalty.

 

What the hell is wrong with people?

A few don't want the taxpayers providing insurance for them.  I think very few.

Many have been under a rock since 2010 and don't know how to apply or that they should.  I think in general, people are pretty helpless about being their own advocate.  And I don't have time or the desire to sign them up for insurance.  Paid or otherwise.  Plus we all have that free counselor side gig.

Some of them have tax preparers who are entering the unaffordable exemption on 8965 and getting away with it.  Or using DIY software and entering unaffordable and getting away with it.  It seems very logical.  Health insurance IS unaffordable now.  Not for SRP purposes, though.  The SRP cannot go away fast enough for me.  I am losing business because I am preparing returns correctly.