Dave T

Not sure who is on the board this weekend so first of all Happy Mother's Day to all of you moms. A couple of questions for those of you who are out there: Picked up a new client this year and as it was just about time for him to leave for the Ukraine before the filing deadline we filed for an extension. Client is a pastor of a small church and has a full time job in sales ( I guess there's some irony in there when you think about it.) Church doesn't pay him a salary but does provide him a parsonage and reimburses him for ministerial expenses, mileage, etc. Here are the few questions I'm encountering: 1. Prior preparer never computed S/E tax on the fair rental value of the parsoange. I'ts in a fairly rural area and I know it's up to the pastor to tell me what that figure should be. When I spoke with him prior to leaving for his trip I know I really caught him off guard and as a result I know he's going to owe quite a bit as his other job dewsn't withhold enough to even over his salary there. 2. His monthly expense sheets are pretty straightforward with the exception that he's included his tithe to the church as a reimburseable expense. I think they are just shown on Sch. A and that's it. If so that would put his reimbusements greater than his expenses and the excess would go on line 21 as 'Other Income". Is that correct? 3. Finally, and this doesn't pertain to the clergy side but rather to the sales job, he receives a normal W-2 form the employer but in addition to that he gets a 1099-Misc from them that he says is for an automobile allowance. It's over $6K and I know it's income but I presume it should also be subject to S/E tax as well. Is taht corect? Thanks for your help with this. Dave T

Yes, you're correct. I should have said I made the correction to the 8606 and that cleared the distribution from being taxable as it was a qualified distribution. The 8606 was still created as you state. Thanks Dave T

Margaret Thank you for your response to my situation which was identical to yours. Your solution was right on. The distribution was qualified and therefore no 8606 required and not a problem to create the e-file. Thanks Again Dave T

I agree that it shouldn't be taxable but I'm wondering why ATX requires the 8606 and why it is computing part of it as taxable? Thanks Again Dave T

Tax payer is 64 years old, began contributing to a Roth from 1998 until 2002. Total contributions approx. $ 1,400. In 2010 she closes out the account and receives approx. $ 1,650 and of course a 1099R at year end showing the distribution and taxable amount not determined, and in Box 7 a distribution code T - Roth Distribtion exception applies. On checking the return it says an 8606 must be completed and when I complete Part IV it shows approx. $ 250.00 as taxable ( $ 1650 - 1400). This doesn't seem right and I'm wondering what I might be doing wrong. Any thoughts? Thanks Dave T

Couple qualifed for first time home buyer credit in 2008 and now have to begin paying back. Credit was for $6,200 and during 2010 both the husband and wife receive notification from the IRS showing that their credit was for $ 3,100. and that payback over 15 years is $ 206.66 per year. I was reading the instructions to 5405 and don't know if I missed it but do I need to include two copies of the 5405, one for each of them? Thanks - Dave T

Grace, I have a client that has been a long time volunteer firefighter in New York and has received this service award for many years. I have always put this on line 21. Interestingly, it used to come on a 1099-R and it has only been a few years in which it began to come on a 1099-Misc. If your client is a current firefighter, don't forget to give them the $ 200 credit that is allowed to volunteer firefighters and ambulance workers. I believe it goes on IT-249. Dave T

Have a client that qualifies for first time homebuyer credit and it is my understanding that a copy of the closing statement needs to be submitted. Can the file be efiled and the closing statement be sent with the 8453 or does the return need to be paper filed? Thanks - Dave T

Yes - he is 56 years old and that appears to be the answer. Thanks for the response. Dave T

Here's an oddity ( at least I find it so ), client receives a 1099-R from New York State which exempts pensions of Federal and State governments. Distribution code is 3 which is a disability pension and the amount flows to line 7 of the 1040 as wages. This allows client to receive $ 400.00 Making Work Pay credit and because this and SS is his only income qualifies him for Earned Income Credit In addition, since this is a pension it is not taxed by NYS. I know the tax code isn't always logical but this seems especially strange to me. Any thoughts? Dave T

I had a client that had donated a vehicle but had not gotten a 1098-C from the organization. IRS says that won't accept donation w/o a copy of that and if the return is e-filed copy B of the form needs to be sent in with the 8453. Dave T

JB, Ray, or other Ohio preparers a little help please. Client's son began attending college in Ohio in the fall, John Carroll University, and worked part time there ( at the school) as well. His W-2 has a small amount of Ohio state tax withheld as well as a bit more local tax and labeled UnivHgts as the locality. I presume he would be consdidered a part year resident but am wondering which form(s) I would need to file on his behalf both for the state and the locality. He only made approx. $ 600 so also presume he would be getting a refund but just want to be sure. Thanks for your assistance. Dave T

Potential new client comes with last years return. I'm reviewing her 1099 Misc and notice that there are amounts in the non-employee compensation box and in the other income box. On the back of the 1099 is a breakdown of the other income items which represent awards for meeting various sales targets ( Pampered Chef ). These vary from mugs to Visa cash cards and also a trip among others. The prior year preparer put all these on line 21 as other income and entitled it prizes, and I'm wondering if some or all of this should go on her Sch. C and be subject to S/E tax. I saw a discussion of this recently on the board but don't remember the consensus as to how to report. In that particular case it was windows that were won in some type of contest. Someone, I believe it was KC, mentioned an acronym of SPFF (?) and wasn't sure what that meant but do recall it had to do with this topic and that indeed it might be subject to S/E. Thanks for any input. Dave T

I know ministers can reduce their S/E tax by any unreimbursed business (ministerial) expenses. The question I have is whether their tithe back to their church is considered a business expense? I have read Richard Hammer's book on the subject but in my mind there remains some uncertainty. Apparently if the tithe is mandatory as a condition of employment then the tax court ruled that it is an expense and not considered a charitable contribution on Sch. A and thus can be used as an offset to the S/E tax. (Assuming no reimbusement form the church) I guess the question is if it is understood that the pastor will tithe and/or strongly encouraged but not necessarily a condition of employment then how should it be classified? Mike M. I know you and others here do a lot more clergy returns than I do so I'm wondering what your thoughts are. Thanks for any input. Dave T

I too had one client that qualified in 2008. They were reluctant to take the credit then but I suggested they take the credit, invest it in a CD and begin to pay it back accordingly. When they came in last year for 2009 taxes I told them they didn't need to begin to pay back the credit until 2010 and they were fine with that but then wondered if they could pay the entire amout back all at once? They haven't come in yet this year and I haven't researched whether they can pay back more than the required $ 500.00 or not. Does anyone know if that is possible? Thanks Dave T

This may be a dumb question but I'm having difficulty getting an issue resolved with New York State and I'm trying to figure out what my optioons are. Filed a 2009 state return for a client that has a son in college. He met the criteria for a Tuition Credit and becxause of that he was due a refund. Return was electronically filed and accepted. A couple months ago NYS sends him a letter saying he owes close to $ 400.00 which includes interest and penalties beacuse the Tuition credit form was either missing or incomplete ( they don't differentiate ). I go back to the return and review it and everything looks fine so I write a letter to the state saying we disagree wtih the assessment and attach a hard copy of the Tuition Credit. Client gets another letter today saying essentially the same thing - form is either missing or incomplete and adding on addiional interest. My qusestion is, is there way to determine whether an attachment of a particular form was included in the original transmission? If I made an error I'm willing to pay for it but I'd rather not if I can somehow prove that the required information was provided. Thanks for your input. Dave T

I've been reading the posts regarding Medlin and was wondering if there are those of you who use the Medlin General Ledger module? I'd be interested in any comments on the program. I looked at their website and the price for G/L is incredibly low yet seems to offer a lot of features. I'd like to be able to adapt it for a non-profit entity if possible. Thanks for the input. Dave T

Taxlave, Have you been able to rollover your 2009 returns yet? I still haven't been able to and was wondering if you could? I believe you said you were going to contact ATX support and was wondering if so and whether it was helpful? To make matters worse, I'm not able to access the 2009 program on my old computer. I keep getting an error message that the database is being optimized, whatever that means, and won't open. Not sure what to do at this point and was looking for suggestions. Thanks Dave T

Just loaded 2009 but still can't get rollover to work Dave T

Interesting that this should post today. I just bought a new computer and am having the exact same problem. I too don't have the 2009 program on the new computer but do have the data files and can't rollover the '09 returns. I am going to install the 2009 program files and see if that is successful. Please post if you get it resolved. Thanks Dave T

Was there sveral years ago wtih my sister and family who live in Rockford, Ill. President Grant's home is there and we toured that and I recall several nice bookstores in the town. Enjoy. - Dave T

Clients only income is from SS and New York State pension, The 1099R from the state has code 3 in box 7 which is for disability, which in this case is correct. My question is this, since this is a disability pension the amount gets carried to line 7 of 1040 instead of line 16 and because there is an amount on line 7 Schedule M is automatically being calculated and I don't believe it should. Am I correct on this? Thanks Dave T

Client called and said he needed to drop off 'some additional tax papers' he got in the mail. He didn't really know anything about it other than the fact that he'd rolled over his 401K to another qualified retirement account. It was a k-1 from a partnership. As I'm inputing the various fields I notice in Part II - Information about the partnership line I - What type of entity is the partner? and it says IRA/SEP/Keough. I've not seem this before and am wondering if the fact that it is within an IRA if I need to do anything with it? Thanks - Dave T

Looking for opinions on this. Need to buy a new laptop and am wondering whether to purchase an extended warranty or not. Thoughts and opinions appreciated. I might note that this is not my main computer for taxes but often use it when going out to clients, church treasurer work, etc. Thanks Dave T

Client's son leased a vehicle in 2007 and the lease is coming due in January 2010. He has a buy-out option on the vehicle for approx. $15K. He is considering doing this and would do it in 2009 if there were a tax advantage to doing so. I do not believe that this would qualify for the additional above the line sales tax deduction as this is not a new vehicle but would be eligible for the Sch. A sales tax deduction if it were greater than his state (NY) income taxes. Am I correct in this? Thanks - Dave T