Dave T

Good thought ! Due to no credit and large retirement withdrawal t/p owes over $6k. Always hate to have to tell clients bad news like that. You mentioned Lifetime learning but wouldn't AOTC still work? Thanks for your help with this. I've never had credit be disallowed before.

Perhaps a silly question but will ask anyway. New client, HOH, has two children in college and has $20K in education expenses. Unfortunately for her she had taken out a large amount from a retirement account which put her AGI above $90K and thus no education credits allowed. When running the error report it is looking for data from form 8867. I presume the form can be discarded due to no credit but thought it odd that it would be asking for info. despite the disallowance.

Thanks for all responses. We got it figured out by getting more info from the school. This board, as many will attest is an incredibly valuable resource. Thanks again

Yes, got the same message as well.

New client comes with daughter's 1098T from local college. She is t/p's dependent and completed her studies May 2021. Prior preparer had taken AOTC for 4 years so that any 2021 expenses would be on Lifetime learning credit. Here is the question though, her 1098T has nothing in box 1 but $13K in box 5 scholarships. Seems that there would be no credit obviously but would the $13K then be taxable income to the t/p? I've tried doing some research on this but seem to be getting conflicting answers. Thank you.

Lion - yes the charitable contribution is now below the line as you say but the NYS program still shows the amount as an adjustment and reduces NYS AGI accordingly which causes the two amounts to differ and therefore trigger an error. It is my understanding that ATX is aware of this and will be making the program change.

A couple of early observations about New York State: There is a new refundable credit entitled Property Tax Relief Credit which is computed on IT-229. This is in contrast to the Property Tax Credit on IT-214. The new credit is between $250 and $350 depending on income and assuming property taxes exceed 6% of AGI. The other item I noticed is that in 2020 you had to add back the charitable contributions on the 1040 assuming you didn't itemize. This decoupling occurred on IT-558 but when looking at the 2021 IT-558 that code is no longer there. NYS website does not address this change. Due to the above item, an error occurs saying Federal AGI does not equal NYS AGI. Any other NYS preparers notice this latter item? Thank you Dave T

Apparently this has become more popular in the music industry lately with such as Bob Dylan, Paul Simon and others selling their catalogs for very large sums. I wondered if indeed it is capital gain, how would basis be determined?

Not that I have a client in a similar situation, nor do I expect to, but I was just wondering about this. This morning I heard Bruce Springsteen sold his music catalog for $500 million and was thinking about what are the tax consequences of this?

Old computer has been giving some problems so before it becomes a bigger issue during tax season I went out and bought a new one. My question is, what is the best way to transfer program and data files from the old to the new? The last time I had to do this, my tech guy did it for me but unfortunately he has retired so I am looking for someone new but would also like to know how to do this. Thanks for any assistance. Dave T

Yes, checked that as well. Think I'll do as suggested and put total of the two on line for Business 1.

Yes, Business 1 is t/p's teaching business and Business 2 is wife's. Both have same amount of premiums but only t/p's is transferring to line 16 Sch. 1

Yes, they do. That was the first thing I thought of but yes.

T/P and wife are both self employed music teachers and both are over 65 and thus paying Med B premiums. When I attempt to put amounts on Sch. 1 line 16 it is only carrying over t/p's premium even though I put spouse's on separate line under Business 2. Am I doing something wrong? Thank you

She was under contract with a company called Sight and Sound in Branson, MO and was able to live with a family there. Made approx. $ 25K

Thanks Lynn and Lion. Not sure why I was having such a hard time with this one. She is definitely not a dependent as she moved out to pursue an acting career.

Yes, I understand that but am wondering if daughter was a dependent in 2019 but not in 2020 was she eligible for one or both? I hate to be obtuse on this and I have done several Rebate Credits for other reasons but for some reason I had a hard time with this one. If the payments were in effect an advance based on 2019 info and the dependent was no longer a dependent in 2020 they then would be eligible for both? Thanks very much

Just trying to get confirmation on something. EIP 1 and 2 were based on 2019 tax return, correct? T/p's daughter was 18 in 2019 and their dependent but in 2020 she turned 19 and was on her own. I know she is eligible for most recent check ( $1400) but I don't think she is eligible for EIP2 and thus the Recovery Rebate Credit on her 2020 tax return. Thanks very much

Just checked NYS Department of Taxation but no mention of the unemployment issue.

Rita, I recently lost my Dad at 99 and at his funeral eulogy I quoted from Billy Graham who once said " At some point you will hear that I have died, don't believe it, I have only changed addresses." May the Lord bless you and your family.

Just a bit of follow up to my original post on the early IRA withdrawal. Clients readily admit that distribution was not Covid related and had based their decision on assurance from financial advisor that there would be no penalty. There is a bit of irony in that if they had taken funds from the wife's IRA it wouldn't have been an issue as she is over 59 1/2. To their credit, they have kept emails from advisor of this assurance and to the advisor's credit they have said that if indeed this is not Covid related they will reimburse my clients for the $5K penalty incurred. This topic has stirred some very interesting and thought provoking discussion.

Yes I suggested putting $25K back into the 401k but as we've all experienced you can only suggest. I plan on calling him again tomorrow and suggest again.

T/P took out almost the max from his 401k in 2020 due to Covid ( $99K). I do the 8915-E comparing paying off the full amount vs. the 1/3 option. T/p and wife decide to pay off full amount in 2021 and be done with it. Fine that's their decision. The problem is now their income in 2020 exceeds $150k and thus no third stimulus unless IRS goes by 2019 income. Seems like in light of this the 1/3 would be the way to go. Am I missing something?

I had that issue yesterday. Tried to e=file a return and wouldn't transmit. I re-created the file in question and tried later and it went through.

So many questions surrounding this: Will states have to reissue 1099-G's? Will states comply with the exemption? If we have returns in hand with the 1099 should we hold off on filing?