Possi

I probed this morning, and she has not included it as income, so no deduction. You'd think the bookkeeper would have known that, wouldn't you.

My client has a new line on her P&L for her catering business. "Bad Debt Write Off" is $10,574.64. Can her self employment be reduced by bad debt? It would make sense, since the income was already realized as self employment. But, doesn't bad debt go on the Sch D?

I have had to file CA for very little income, because they were non-residents with ANY CA income. See if I read this right: https://www.ftb.ca.gov/individuals/fileRtn/index.shtml

This gal is only renting land. She is not providing any services. Sch E rental income.

Oh, it won't be cheap! Yes, someone else is doing the 990. One of the K1s appears to be a law firm and her name is on the title of the firm. My guess is that it is a family business. They are probably setting up all these K1s and they probably set up this "non-profit." Me thinks her 1099 for $7k means it's not really a non-profit at all. It's legalese. The farm rental income will go on Sch E out of my office. They are not performing any actions or services, so it's straight rental income. Since I'm not following another professional, just an "Attorney" DIYer, I'll do it right.

Thanks, I am considering that and you put it quite nicely. She was a personal referral, as they all are, and her boyfriend is a good client. I wouldn't want to lose him, so I'll stick my neck out and simplify this.

Uh Boy... I think I took a client that I don't want. The more I look at this, the less I want it. There are many things going on with the 2016 tax return I am reviewing. I'm NOT amending it unless she gets a love letter from the IRS. There are 5 Sch C's, one for each 1099 including a rental income from renting out farm land. Yes, she put it on Sch C. Wait, it gets better. She started a "non-profit" and she is the founder. She receives a "salary." No, it isn't a W2, it is a 1099, Box 3 "other income" for $7,000. Wait, it gets better. In 2016, her net income from all those Sch C's was $-2075.00. Yes, NEGATIVE $2075.00. There were zero wages, zero withholding, zero refund/balance due. Wait, it gets better. Her self-prepared return listed her occupation as "Attorney." But, you probably already knew that, right? All of that is really just annoying. Not earth-shattering by any means. Here's my question: She has a hiking business, sole owner LLC with an EIN tax ID number. She has income from that LLC which is not reported on a 1099, PLUS two 1099s issued to her personal SS number. I believe I can lump all that income into the LLC (on one Sch C) since it's all hiking work. Am I right? The 1099 from the "non-profit" must go on its own Sch C, I believe, because this is executive-type work. Am I right? It is Box 3 income, but it's subject to SE tax since it's her "salary" for working. Did I mention the THREE K1s? ohmygerd.

I use TaxWise, so there aren't any hidden files as far as I know. Sometimes, ignorance is bliss. I only have a few more years to work. Don't give me tooooo much information! LOL

I use Carbonite and it shows me what is being backed up with a little green dot. Even still, I have to check it often to be sure it's being done. So, I'm still a detective, just not a real good one. Off topic; @RitaBdidn't realize that PMS was first documented in the Bible. It says, "Mary rode Joseph's ass all the way to Bethlehem." Or something like that. I'm glad I could validate her. Maybe this can help others, too. You're welcome.

Unless of course, it was something he was dying to give...

No, the corrected amount is on the 1099, just not the repayment.

Thanks for the link. @BulldogTom, Since it was included as income on the IRS letter, and the SSA 1099 also stated it as payment with no repayments reported, I entered it on L20. Then I excluded the taxable portion as a negative on L21 with a detail statement. Since we are responding to a Letter, I will include the SSA statements that were sent as receipts to the client, as proof of repayment.

Unless he is right here in my office, and I'm setting it up, he won't have it. Not computer savvy at all, but I will ask. I doubt the corrected SSA 1099 is out there because the letter we are responding to has SS income listed that was not on his original return. Bulldog, I'll let you know how I deal with it. I have to recreate the wrong return and then fix it. Meanwhile, I'm dealing with another letter for another client. UGH I do hate August/Sept taxes.

The SSA-1099 does not reflect the repayments. I do have proof and documentation from SSA that he received in the mail, so I can prove it was paid if I have to prove it at any point.

My new client has a plethora of issues. One of many is that he signed up for SS, and right away his CFP told him to "stop it, stop it right now." The total paid/paid back was $3536.00. So, I have the records that he received January, then cancelled and paid it back, then received February and paid that back, too... all in 2016, the tax year where I am responding also to a booming Sch D that was totally left off the tax return. Yes, yes... DIYer. I can only find articles and IRS pages on repayments in a following year. What about SAME year? I have seen other returns come to my office where the re-paid SS was entered as an adjustment on line 21. Would that come back to me?

Congratulations on your retirement! Thank you for all the assistance over the years, too! I wish you the best, and hope you'll pipe in from time to time~

Every time there's a change in law or forms, I see it as job security. Of course, I'm of the mindset that the IRS should be funding US since we have become the official gatekeepers with all the due diligence rules and threats of fines.

Yes. Page 4 of the 3115, line 26 is where the cumulative adjustment would go, and flow to the tax return accordingly.

Thanks for this response, Rita. I have done this at least once before, so I was surprised when the new preparer said it could only be used if NO dep'n was taken. This client has had to move to a CA preparer, and I am going to send her some documentation to support this. She is telling me that I must amend and that the depreciation missed will be depreciation lost. Here is what I found, letting her know she can do this: https://taxmap.irs.gov/taxmap/pubs/p946-008.htm Specifically: Changes in depreciation that are not a change in method of accounting (and may only be made on an amended return) include the following. An adjustment in the useful life of a depreciable asset for which depreciation is determined under section 167. A change in use of an asset in the hands of the same taxpayer. Making a late depreciation election or revoking a timely valid depreciation election (including the election not to deduct the special depreciation allowance). If you elected not to claim any special depreciation allowance, a change from not claiming to claiming the special depreciation allowance is a revocation of the election and is not an accounting method change. Generally, you must get IRS approval to make a late depreciation election or revoke a depreciation election. You must submit a request for a letter ruling to make a late election or revoke an election. Any change in the placed in service date of a depreciable asset.

In 2005, I began depreciating a rental: He purchased it for 230,378. Land was 58,000. Depreciation should have been based on 172,378. I depreciated 172,378 MINUS 58,000, leaving only 154,378 basis for depreciation. Is the 3115 (adjustment for depreciation) only allowed if NO depreciation was taken? Or can I use it to adjust the depreciation that was allowed?

I learn something new every day. Every. Day.

Thanks, y'all. I won't even attempt it!

My great client got married in 2017 to a man who hasn't filed for 2010 forward. The great state of VA was going to levy his account for about $8k when he called me. That was for the 2014 tax year, so I started there. He is having to get a new security clearance for his job which requires he file a tax return for every year. I did '13, '14, '15 and '16. He owes a couple thousand each year. Now, I'm backing up the truck and doing 2010, 2011 and 2012. For 2010, he owes $1,757 in federal taxes for that year. I am thinking of overriding the 2210 so it won't address the penalty since it will only include the penalty that year ($38). It's not correct or helpful. Just curious, how much will the penalty and interest be? I used to have a program that someone recommended to me (from this site) but I didn't use it enough to justify the cost. Can anyone run that number for me? Or point me to a site?

It was so wonderful to meet y'all. I don't help much on the board, but I DO learn much! I hope I was able to teach y'all a few life lessons, like maybe stick a $50 bill in your coat pocket before partying, and read the signs before you mouth off to your neighbor across the water... Rita has been like a sister to me for many years, even long-distance, and her gift of hospitality is greater than most people I know. The kids helped with whole hearts. How refreshing is that?! I love the whole family. So wonderful to meet all y'all. When it's time for another gathering, count me in... as long as Rita's there!

I have wondered whether VA and other states will allow itemizing even if the standard deduction is taken on the federal. This woke me up, from the article, "H&R Block, like many tax practitioners, tends to charge larger fees for more complex returns. " I don't charge enough for more complex returns, so this is my gateway to step into reality.