Kea

Thanks so much KC. I'm glad I wasn't missing something on EIC. I don't want to get any of the rules wrong - but EIC errors can be even worse. It's just not a situation I thought about for EIC.

I haven't bugged them about anything. I've just asking my standard questions - I never told them I was leaning towards listing the babysitting as a hobby. I'm just trying to figure out if I should ask them the EIC questions. Before I go there, I want to make sure I'm not missing something about not qualifying for net worth or other reasons related to their investments. Everything has been conducted by e-mail so far.

I didn't consider the % of total income. This is a new client this year and they presented the info as a businsess. When I started asking the questions, it sounded like more of a hobby to me. No, I wasn't try to avoid SE tax - just trying to determine which it was. Based on the trades they are making, it appears that they already have assets (although the statement does not show their balance). One of the short term trades was for over $200K. So I'm not sure they are particularly relying on the wife's babysitting income. This is not the kind of family I think of for EIC, but the income and other factors seem to fit. I don't remember seeing any limitation of EIC based on net worth, but perhaps I missed it. Granted, large net worth might typically generate interest and dividends high enough to disqualify EIC. But it appears that in this case everything is being traded and not sitting somewhere generating investment income. It is generating capital losses this year and there was the $15K carry over from 2010.

They are in their late 50s. Lots of short term stock(etc) sales, but no interest / dividends.

Client retired in early 2011. Earned approx $9000. Massive stock / futures / puts & calls losses of over $15K. Spouse had about $5000 in babysitting income (not run like a business -- just helping out neighbors). Is there some reason this would not qualify for EIC?

Congrats MAMalody!

Don't know, yet. Client didn't even know policy existed. Insurance company not saying anythig until claim forms, death certificate and letter of test submitted.

Thanks OldJack. I figured there was no 1041 requirement. However the insurance company is requesting an EIN. (This will require an amendment to the only 706 I've ever done. I was really hoping to never see that puppy again.)

Client just found out her late father had a life insurance policy. He passed away in 2009. Final 1041 was filed in 2010. Is the EIN still assigned to that estate or does it get cancelled after the final 1041? Beneficiary of policy is the estate. Can the EIN still be used or do they need to apply for a new one?

I had another problem with that refunable tax credit complaint. His only complaint is that it is "refundable" and mentions that people who owe no tax can get this check. So, is he really saying it's OK for high income people to fraudulently take this credit since it will simply reduce their taxes? Or, perhaps he is saying that only low income people would make a fraudulent claim? In my opinion, fraudulently claiming a credit is wrong regardless of if it is refundable or not no matter how much income you have. But that's just me.

In regards to the client with the reverse mortgage: I finally got her K-1s, so I'm now finalizing this return. I would like clarification. On 5/17/12, NATP addressed this question in their "You Make the Call" section. They said at in the case where the estate sells the house, the principal and interest of the reverse mortgage is reported on the estate tax return (Form 706) as a debt of the estate. However: "It is not deductible on the estate’s Form 1041, because it is not an administrative expense of the estate. If taxpayers who acquire property subject to a liability from a decedent pay off the interest on a reverse mortgage after the borrower dies, they can claim the interest in the year that they pay it, as a “deduction in respect of a decedent” under §691( . But there are still limitations, as the amount of interest claimed as a deduction cannot exceed the interest paid on $100,000 of debt (the limit on the amount that can be considered home equity debt, which is how the IRS views reverse mortgage loans)." Am I reading the NATP answer correctly that if the house is sold by the estate and reverse mortgage is paid off at that time, there is no deduction (estate valued at < $100,000)? Had the heirs transferred the title to their names prior to sale of house, they would have been able to deduct the interest subject to the limitations? When I took the Final 1040 Webinar, I asked about deducting the reverse mortgage and they said it goes on the 1041. Is there a contridiction here, or am I missing some qualifier? Thanks.

Congrats Deb!

Client has opted to file FBAR himself (YAY!!). But he did have one question I wasn't 100% sure of. His account in 2011 was in his name only. He added his wife's name to the account in May 2012. I'm ASSUMING (as dangerous as that is - especially regarding FBAR) that since it was a separate account for all of 2011, that it should be reported as separate. Is there any reason it should be reported as held jointly on a 2011 filing if not joint until 2012? Which also opens up the question for next year. Will he report it as both separate (first part of year) and joint (last part of year) on the 2012 form? Thanks

Congrats!

Congrats!!

Thanks for the class links KC. I'll look through them. That is a good point about the liability, but I already agreed to prepare the FBAR. I will make sure to have to client sign off that I prepared the document per their data. He is fully aware that I have never prepared this form before. In this case, I'm pretty sure he's not hiding anything. He sent the wire transfer info with the rest of the tax info in February -- before I asked any questions about foreign accounts or assets. I did buy the online class from CPECredit . com. I guess it was OK. Good examples of 2555 and FBAR. However there was only a very general discussion of 3520 & 3520A, including when to use & the forms, but not instructions (like they included with the other forms). It did helpfully tell me that Form 3520 is difficult and not included in most software. Oh well.

I looked up several questions (some I didn't know, some I just wanted to verify). I found most of the answers relatively quickly, but there were about 2 or 3 I didn't find before time ran out. Since I had the time, I used it to check and re-check everything.

I've read that it can count for up to 10 hours. But that was just on a CPE website, not anything official from IRS. It wasn't an issue in my case since I took the test in 2011 and didn't get the results until 2012. So this is the first year I have to meet the CPE requirements.

I would think that should be sufficient time for study. I took NATP's RTRP class in early December and took (and passed) the test in late December. I really didn't try to tackle the huge book I got in class, but spent my time going over the sample tests they (NATP) had on-line. Most of the questions that I couldn't answer off the top of my head I could find in the provided Pub 17 and instructions. The exception being the Circ. 230 questions. Since they don't give you an online version to look up answers, I probably should have spend more time studying the Circ. 230.

I'm about to prepare my first FBAR this month. I would like to take some kind of class / training in the next week or so that covers FBAR, 3520, 3520A and 8938. Do any of the online classes offer a chance to ask questions? Checking the internet, I see an online programs from CPE Credit and Client Whys. I've never taken an online class or webinar (although I do plan to take the NATP webinar next week on 1041 and final returns). Anybody know if either of these classes is any good? Or, if there is a better choice? Thanks

Congrats!!

I finally started on my summer project of learning how to import 1099B info into TRX. I used the RedGear Knowledgebase link that was posted earlier. When I searched for "Import 1099B," I found the link I wanted (Importt from Excel into grids). But I also found instructions for importing K1s (when you prepared the entity return also) and Kiddie tax info (from the parents to the child). I never knew these were available in this software! Granted, I haven't tried these out, yet so not sure if these are features that are only available in the package directly from Red Gear. I'll be playing with the 1099 Import tomorrow (I've already seen someone report that that one works). Anyway, here is link to the search results I got. Lots of fun options! http://support.redgeartech.com/index.php?s=import+1099B&cat=5

The power of the comma is amazing. For example: Woman without her man is nothing. It seems where you put the comma(s) may be related to whether you are a man or a woman.

When I renewed on 4/30 (yep, last minute), Jay also said that I would continue to receive Tax Works unless I chose to switch to Tax Exact. Maybe they just don't have any info at this time to believe the partnership with Red Gear won't continue? No idea.

I have nothing good to say about PTPs. There are a bunch of codes that seem to apply to only a few people / situations. And you have to look up each one of the blasted things only to find out it doesn't apply. Also watch for state taxes generated. These are usually small amounts and there are a few states that requires ANY income to be reported. On the plus side, most states end up with negative income. But it's just more stuff to look up (and time to bill for). (One of my extensions has 3 of these nasty creatures. I guess I'd better get to work on it one of these days. NOT looking forward to it.)