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@Catherine - Thanks for your timely post about the MA name issue. This helped me with my one MA client. Client changed name in 2011, so I changed in software. Then MA rejected for name / SSN mismatch. Thanks to your post I knew how to fix it. Otherwise, I would never have realized that I should use a different name on the state as for federal! This was especially useful since it took another day for fed to ack. But on the other hand, it's worth noting that the cumbersome fix is the same on other software (I'm using TRX's TaxWorks).

For 2nd year, client has not been able to get a K1 from his business partners. (Yes, he is in process to get out of the partnership.) Last year (using ATX) we filed a Form 8082 to explain why he entered an amount for net business income on Schedule E even though there is no K1. This year I am using TRX (Tax Works) and the only place it has the form is in a "form filler" where it is filled in manually and does not get submitted with the e-file. Can I e-file the rest of this return and then send in Form 8082 separately? It's not on the list for Form 8543, where the instructions state not to attach anything else beside what's on their list. Or, does they whole return have to be paper filed now? Thanks!

Box 7 says 4G. Yes, it was rolled to a Roth. Also got a 1099R for the RMD from the "inherited Roth." Yes, I have the notes from the conversations with the pension agents. If there's a matching problem, I have all documentation to show what happened. Thanks!

Turns out the guy decided to go back to doing the returns himself. After we discussed his federal (and found out what info he still needed), he decided he was comfortable with completing it. He already had most of it done in Turbo Tax anyway. Plus he's been doing on his own anyway. Hey, I gave him the head's up that he might need business returns. Thanks for help. At least I learned something even if I didn't get to apply it this time.

Thanks

That was why I was leaning to filing the 1040s. Just wanted confirmation. Now to go check on e-filing a $0 return. It seems I remember that not being allowed.

When client sent info for extension, he included income his 2 children got from their trusts. Since older child got her 1st K1 in 2009, it appeared the 2010 income was of the same nature. Now that we are wrapping up, he has no K1s for either child. The trust is handled by his brother-in-law and has never issued any other K1s. It was my client's understanding that the trust took care of all the taxable issues. Could this happen, where no K1s need to be distributed? I am not an expert on trusts. But if these were just distributions and not taxable to the kids, then no 1040 would be required. But if the extensions were filed showing several K in income, should I file $0 returns? I am still waiting for him to confirm with his B-I-L that the distributions were not taxable. (The 2009 K1 did trigger kiddie tax last year.) Thanks!

As a preparer in TX, I don't do very many state returns. I'm not too worried about his regular MI return, although I haven't read the instructions yet - that's on the list for this afternoon. But state or fed, I've never done any business entities other than sole proprietors. And, my clients know that. This guy has been filing his own taxes until this one (2007, BTW!). So he's been on his own for knowing the requirements previously. I sent him an e-mail last night letting him know the general state requirements y'all listed above. I also passed on the Secretary of State website suggestion.

I just got mine off Friday & it was accepted Saturday. Now I just have to wait for the last info from my last 12 on extension. But if they don't want to send me anything, I guess that's their problem -- not mine.

Thanks. Now I have a better sense of what questions to ask and / or what to let him know about.

Yes, per NATP newsletter: October 6, 2011 EITC Due Diligence Checklist Filing Required The IRS has issued proposed regulations that will require paid tax return preparers, beginning in 2012, to file Form 8867, Paid Preparer's Earned Income Credit Checklist with any federal return claiming the Earned Income Tax Credit (EITC). Form 8867 is the same due diligence checklist that is currently required to be completed and retained in a preparer’s records. Further details can be found in REG-140280-09. Comments on the proposed regulations are due by November 10, 2011, and a public hearing on the proposed regulations is scheduled for November 7, 2011.

New client has an LLC that was established in Michigan. He has been preparing his own taxes in Turbo Tax. I've never prepared a return for an LLC. He says he has been reporting his business income on Schedule C. I did see on the IRS website that a single member LLC can be disregarded and reported on the Sch. C. OK, fine, no problem. My question - Are there any other reporting requirements necessary due to the LLC status? Or, is everything the same a sole proprietor's return? Any special Michigan requirements? He has since moved from Michigan to Texas. Will the LLC income still be considered Michigan-sourced, even after he moved? Thanks

OK found it. I've looked right past it all year. in the Optional Sales Tax Calculation box (Schedule A, Line 5), the first line is for "other adjustments to total available income" I've not had to use that before. I've always just used the bottom portion to add city sales tax rate.

Client rolled over traditional IRA to Roth IRA and split income over 2 years. Sales tax deduction seemed high. Looking at the worksheet (in review mode), it takes the AGI and modifies by various tax-exempt and non-taxable items. The total amount of the rollover is included on line (e) - Non-taxable part of IRAs, pensions, ... distributions NOT including rollovers. While this rollover will be taxed over the next 2 years, this really isn't income and wouldn't increase your estimated sales tax. So, am I reading the worksheet wrong? Or, if not, is there a way to overwrite it in TRX? Perhaps just do a manual calculation and then "force actual sales tax"? Does the sales tax worksheet vs actual even get e-filed to IRS? Thanks.

Money was rolled over from a "death benefit" to a Roth IRA. 1099R box 7 shows 4G and $0 in box 2. It was a rollover, but since it was directly to a Roth it should be taxable. But the distributor is now saying that the box to roll over to a traditional IRA was checked. They are also claiming that box 2 is $0 because no withholding on the "Roth IRA rollover" was requested. I tried to explain the difference between tax on the distribution vs tax withholding, but didn't make any progress. Software will let me enter the 1099R as issued; then on 8606 enter amount as taxable rollover from qualified plan to Roth. (on the 1099R worksheet it does allow me to mark "rollover to Roth IRA). Is that OK? Or does the 1099 need to be corrected - fixing the taxable amount (and possibly code)? Will this avoid a "matching" issue if the 1099R matches (even if the 8606 will show a different taxable amount)? At this point, no one there seems interested in correcting the 1099R "after the fact." Thanks so much!

Thanks for all y'all's input. I used a sample letter from the AICPA website. I haven't heard anything. I agree. I don't want to take on any legal responsibility for any of it!

I did ask my client what would have happened if she prepared her own return. She guessed that they may have denied the loan. I really did want to help her and I would think she should qualify. But that's under the purview of the lender -- not me!

Thanks for the link. Good suggestion on the liability insurance.

Thanks. I've read through some of the old posts on this topic. I'll look for the "comfort letter" format. I'm a numbers geek, not a writer skilled at avoiding legal problems!

I know this has been discussed previously, so when my client called me, I started hearing the alarm bells in my head! Client (schedule C) had already tried to tell the lender that the information they were requesting was irrelevant and not really something I could answer. And that was before she discussed it with me! Anyway, they modified the request a bit and sent me this e-mail (she had already authorized me to disclose info to them): ----------- We need you to send a letter (email is OK) giving your opinion regarding the affect of using funds from the business account for her new property purchase. 1.) what is your experience with her business (i.e. you've prepared tax returns for her for ? # of years) 2.) do you believe this fund withdrawal will adversely affect the business operation? 3.) in her business tax structure, is it acceptable to move funds in and out of business / personal accounts i.e. could her personal funds be considered as business reserves and vice versa? --------------- 1) - I don't have a problem answering 2) - just go with a "wiggle" answer like those suggested in prior posts? 3) - generic answer that a sole proprietor is the business & the business is her? I don't really like the sound of the last part of the last question. Any suggestions? What disclaimers (if any) should I include to make sure they don't hold me liable for the loan? Thanks!

Joan, I couldn't find the webinar info, either. I did find one of his blog posts, where he also acknowledges the ambiguity of this law. Nevertheless, better safe than sorry. http://hodgen.com/faq-17-faq-18-deadline-is-august-31-2011/ Thanks for the link. I'll try to contact him next week to see if I completed the forms correctly.

Thanks Joan. I want to file them to play it safe. The 3520A was sent without any direct answer to the Line 7 question in my OP. The 3520 is done but has not yet been mailed. Would this tax attorney mind if I asked some questions to make sure I file these correctly? I also want to make sure I am completing all necessary documents. I'm only using the 3520A & 3520, and not the 1041 or FBAR.

Client bought a house in Mexico through a Fideicomiso (Spanish for "Trust"). From my research, this seems to be a "grey area" in the law as to filing requirements, but I want to play it safe. (I wanted to bail on it completely but client couldn't find any other preparers with expertise in this area. And she's family ... ) I'm having trouble with Line 7 on Page 3 (Foreign Grantor Trust Owner Statement) -- Attach an explanation of the facts and law (including the section of the Internal Revenue Code) that establishes that the foreign trust (or portion of the foreign trust) is treated for US tax principles as owned by the US person. -- I'm already attaching the Fideicomiso per Part I Line 2b. The document will specify the owner. Do I need to include anything else? I'm not familiar with what section of the IRS code says something like "hey, the document says you own it & since you are a US citizen, the trust is owned by a US person." But I'm probably reading this wrong! Thanks!

It is an in-house product being developed by TRX. I was not familiar with it being an old product being re-introduced. There has been a little discussion of it on the TRX portion of this forum including in this post: TRX Tax Exact

I just put it in the Social Security worksheet. But if the client is a non-resident, it goes on a 1040NR.