Possi

I know. They've been doing it all along and never questioned. Of course, they have zero accountability like we have. The instructions, as we know, are: Box 5. Generally, this shows the employee’s investment in the contract (after-tax contributions), if any, recovered tax free this year; the portion that’s your basis in a designated Roth account; the part of premiums paid on commercial annuities or insurance contracts recovered tax free; the nontaxable part of a charitable gift annuity; or the investment in a life insurance contract reportable under section 6050Y. This box doesn’t show any IRA contributions. If the amount shown is your basis in a designated Roth account, the year you first made contributions to that account may be entered in box 11. So, to me the operative words are GENERALLY and IF ANY.... Her question, too is "why do they even put a number in that box if it's not non-taxable?" Good question. But, it also could be any of those other items. Maybe part of the annuity is actually a roth account and has nothing to do with anything?

My new clients are challenging me on their 1099R. Boxes 1 and 2 (gross and taxable) are both the same. Box 5 has an amount in it. They have reduced the taxable amount of their annuities every year by that amount in Box 5. They have been retired 34 and 36 years and, if they had used the General Simplified Rule, would have exhausted their box 9B contributions a long time ago. I have brought this up before, asking if I should reduce box 2 by the amount in box 5. The bottom line is "no" and I have never reduced the taxable portion based on Box 5. Some of the 1099Rs coming in have already reduced box 2 by box 5, but these older people's 1099s have not. I think that is because their basis is exhausted. I've looked for documentation to give them but can't find anything decisive. WWYD? By the way, they have always done the returns themselves and BY HAND.

I get parents who want to claim kids that last year when the kids really DID support themselves. I have dropped the hammer on those more than once. This one really is a toss up. If this kid lived with his parents, he very likely wisely saved some money. These are great clients, and money-wise. Not wealthy, but good standards. Since it's a toss up, and he joined the military so young, I'll follow Medlin's advise. It's sound.

Thanks, I wish VA allowed it, same reason. I need to look back at one I just completed.

Is there a list of states that we can use this? I have just completed several CA returns and didn't know this. They wouldn't benefit from it anyway, as they don't itemize, but I might have some in the future.

My client's son turned 18 in 2020. He graduated HS in June. He worked and earned about $8k. He joined the military in October. I don't know what his income was after that. I want to take him off his parents' tax return and have him file on his own. He may or may not have supported himself, as he lived with his parents until going off to college. This could swing either way. Just thinking out loud. WWYD? What would you do?

We would love it, too. When the COVID b/s is over, we will gather again, I'm sure. I'll keep you well informed about our antics! LOL

I tell my clients that my "on time" deadline is March 15th every year. They ALL know me, and know full well that after June, I'm on a boat fishin' or in TN visiting @RitaB !

Plus, I have my full time assistant for the normal season. She spoils me. When I have to do all this on my own, I won't be so happy about the extension. It would ease my stress for the moment, though. We are behind on returns coming in as well. I hope that next year I'm working for somebody else... somebody who buys my business....

Oh LAWD, let it be!

Agree, and DONE. As it was jointly held stock producing accounts and difficult to split, I filed a joint return. But, to address your question, I believe it doesn't really matter where the money landed when we are applying the matching rule. The income must be reported to the matching tax ID number, I'm pretty sure. That was the issue. His was first, but it is all jointly held. Leaving it alone was my best option. I'm glad we had this discussion, though. If not for that account, I probably would have filed them separately this year.

As far as I know, all unemployment benefits are taxable to the feds, normal and "additional."

Thanks, will do. That's my "final answer" after "polling the audience!"

We are not a community property state, but I'm swinging to your side on this. Thanks, y'all!

hmmmmm

As long as somebody is paying tax on it, it's right and ethical. Right? If I must do that, I'm not changing anything. I think that would just create a rat's nest.

I think you would.

Man, that's such a good point about the bump up basis. On that topic, my friend's wife died in 2019 and they held a ton of AMAZON stock which skyrocketed since she bought it. I'll be opening another discussion when I step up basis on half those stocks. But, that's another tax return. So, we still aren't sure if they would get a letter if I don't split the investment income on this return. Since his is the primary ID number, I'm thinking it would be ok, but I'll let this hang out there a while to see if anyone else chimes in.

My clients are married. Together, their income is too much to get stimulus. BUT, if I do MFS, the spouse qualifies for about $1000. I can easily break hers out and file separately but for joint investment income. If I leave all the investment income on the TP side of the return, will that fly? His is the primary SS number on the accounts, but they are in both his and spouse's names.

YAYYY! I'm a ROCK STAR for a moment!

Am I missing something? A deceased person can't get a check or a payment... but CAN get the recovery rebate credit? https://www.aarp.org/money/taxes/info-2020/stimulus-check-in-deceased-name.html#:~:text=Individuals who died in 2020,made out to the dead. Paragraph 4: "Individuals who died in 2020 may be eligible for a Recovery Rebate Credit on their 2020 taxes if they did not receive a second stimulus check." My client's husband died in 2020. She got the first full payment, but $600 on the second payment. I THINK she gets this $600 credit on the 2020 tax return.

Oh good grief. Can they do one thing right?

This from NATP:https://www.natptax.com/p/Pages/IRS-due-diligence-audit.aspx?utm_source=mkt&utm_medium=email&utm_content=021721dd&utm_campaign=ship

You are so right! I always tell my clients that my deadline is March 15th. They know I have zero intension of working all year. There has to be a dangling carrot for me, and that is the fact that the business is seasonal. This year, it's Gatlinburg. It doesn't take much to make me happy.

According to that article, they will not. The bottom line here is that, once again, we tax professionals are under the gun. The IRS imposes so much pressure on us with zero compensation, zero thought, zero zero zero. "We'll fine you if you don't do this, don't do that, don't dot your i's and cross your t's, and do it in a powder keg in split second time. Oh, and we won't compensate you for it." They shaved all this time off our prep time, and no extension. Can you tell I'm a little ticked off? I'll shaddup now. Sorry. Not sorry.