kcjenkins

Line 4b is from the worksheet, where line 1 is pulled from the K1. So look at he K1 and make sure that the box is checked for 'Passive Activity' there.

And 95% never question, the price is just the price. Of the 5% who do question, most accept a simple explanation, those that don't should probably be either hiked up or fired next year. The peace of mind you gain is priceless, and they can usually be replaced with some referral who will appreciate you.

While that would reduce theft through bogus W-2s, it would just divert the crooks into more bogus EIC claims, Ed credit, itemized deductions, etc. And Sch C crime, of course. Sending more crooked FILERS to jail, as well as the preparers, would do more. Most of the time, the FILERS are treated as innocent victims.

September 20, 2014 By Jeff Stimpson Time again to address the annual most important detail of your practice: How much should you raise your fees? According to a recent survey by the National Society of Accountants, more than three out of four practitioners raise fees annually or every other year. The average fee hike nationwide for last season averaged slightly more than 6%. This year, said preparers, will bring unusual billable work from recent gigantic financial concerns for some clients – such as Obamacare. Andrew J. Piernock Jr., of Piernock Accounting and Tax Services in Philadelphia, plans a 5% to 10% increase due to his spending more time on the ACA form, among other factors. “My year-end letter will include my fee increase, explaining the ACA form and any other tax reform that may or may not affect their return,” Piernock said. Obamacare requires a host of new forms (Accounting Today) and in some cases time-consuming analysis of clients’ insurance. Not to mention hand-holding. Key Largo, Fla.-based Enrolled Agent Jerry Gaddis of Tropical Tax Solutions has likewise warned clients that their bill will rise this year “because of the ACA,” he said. “If we have to reconcile insurance subsidies paid versus those earned, calculate the difference and include it on the return, that’s going to be a billable transaction. And that’s before trying to figure out if a client had government-approved health insurance or an approved waiver to avoid the individual shared responsibility payment. It’s going to be a lot of fun,” he added, “telling people they have to repay subsidies they never actually received.” Slicing and dicing Nationwide, fees last season (Accounting Today) were expected to average $261 for an itemized 1040 with Schedule A and a state tax return, the NSA survey found, compared with $246 reported the year before. The fee for non-itemized returns was also on the rise, to $152 for a Form 1040 and state return. Other average fees nationwide: $218 for a 1040 and Schedule C, $590 for a 1065, $806 for an 1120 and $761 for an 1120S, $497 for a 1041 and $667 for a Form 990. CFP Mary Langhorne at MGL Financial in Huntersville, N.C., charges by the form and plans to hike fees on about half the forms she handles. “My average non-senior citizen client will see an increase of 8% to 10%,” she said. “I’m grandfathering the fees for low-income senior citizens who are existing clients. They generally are only filing 1040A or EZ, and I’m maintaining a 20% discount for all senior citizens.” “This will be my first rate increase in four years,” she added. “Part of the reason for raising rates is the increase in cost of the professional software. I’m also incurring increased expenses due to CPE. I have my RTRP and will participate in the new voluntary program.” “I increased fees 35% last year so the only increases this year will be slight for the small number of clients whose fees I didn’t increase for one reason or another,” said Cheryl Morse, an EA at Emerging Business Partners, Wellesley, Mass. Allen Beatty, an EA at Apple Tax Services, in Jackson, Ohio, plans no fee increases but may tinker with other prices. “I’ve been giving discounts to [clients] for loyalty,” he explained. “I’ve noticed that now my prices on those are often much less than my competitors’. Thus this past year I reduced some of these discounts and I’ll continue to reduce more this year.” New services and new risks “I’m new so I can’t be picky, but I have priced a few clients out of my practice,” said Key Largo’s Gaddis. “And I no longer take new EIC clients. The potential preparer penalty of $500 per failure to meet EIC due diligence is too steep for my blood.” “I’m not considering an across-the-board increase in rates, but feel that it has become necessary to charge for extra services that I perform,” said John Stancil, a CPA in Lakeland Fla. “More and more clients now seek some measure of tax planning, and I have not charged sufficiently for that in the past. I anticipate an increase for those and any other extra services I perform.”

September 21, 2014 By Dean Zerbe Over the last year, the House and Senate have both proposed bills to renew a number of popular tax breaks for businesses and individuals. These “extenders” include some important changes of which tax preparers and accountants — especially those dealing with the nation’s small and midsized businesses —need to be aware. Among the most beneficial of these tax extenders for businesses included in the Senate Finance Committee markup are the Research and Development Tax Credit, as well as Section 179D (expensing for small businesses) and bonus depreciation. An extender that isn’t as well known – but has a big bang for some architects, engineers and design-construction companies – is a tax benefit for energy-efficient buildings, Section 179D (179 cap “D” -- not to be confused with 179 little “d” – expensing. I have no idea why when we created 179D as part of the energy bill we didn’t just give it a separate number). Two Important Proposed Changes R&D Tax Credit: The R&D Tax Credit has been a regular fixture of the Tax Code for over three decades, has been extended 15 times since it was first passed in 1981, and is generally much more expansive – not to mention generous – than your average business realizes. Some business underutilization is due to a failure to understand what the credit covers (more on that below) but also that the law has, at times, not been particularly friendly to small and midsized companies – but change is in the air. The first change in the R&D Tax Credit has already happened – the Treasury Department changed its regulations in June of this year and allowed companies to take the Alternative Simplified R&D Tax Credit, ASC, on amended returns. Previously, Treasury regulations had only allowed businesses to take the ASC on original returns. The additional modifications to the R&D Tax Credit proposed by Congress are similar game-changers. For one, the Senate accepted an amendment that allows the R&D Tax Credit to be taken against the Alternative Minimum Tax. Another big change is an amendment that would allow start-up companies in their first five years to take the R&D Tax Credit against business/payroll taxes (capped at $250,000 per year). This proposal fills a policy void of the R&D Tax Credit – namely, that the credit currently is not available for start-ups, some of our most innovative firms and biggest job creators. If they become law, both this change and the AMT fix would be good starting Jan. 1, 2014. Note: All the Senate-passed extenders would be for two years. Finally, the House passed an R&D Tax Credit bill that expands R&D considerably (taking the ASC from 14% to 20%) and makes the R&D Tax Credit permanent – goodbye extenders! With all this good news regarding the R&D Tax Credit, especially for small and midsized businesses, accountants need to remind themselves and their clients of what qualifies for R&D. The answer is probably easier than you think. While laboratory research is certainly a candidate, the credit rewards businesses that are improving upon an existing product or process, opening the door for companies in industries as diverse as manufacturing, software and technology, architecture, engineering, contracting, construction, agriculture and much more to qualify for the credit. The bottom line: If a company is in the business of making a product or service quicker, cheaper, greener or simply more efficient, chances are they are a prime candidate for R&D credits. Energy Efficient Buildings Originally passed as part of the Energy Policy Act of 2005 (and extended by Congress in both 2006 and 2008), 179D provides a benefit for businesses when they design or renovate a building that is energy-efficient. Any business performing eligible services can receive a tax deduction of up to $1.80 per square foot, providing potentially valuable tax savings depending on the size and scope of a project. As a general rule of thumb, I would divide the people that can qualify for 179D into two separate groups: 1. The first group, commercial building owners, can qualify for energy-efficient improvements made to their building within the last six years and can take the deduction in the current year on the basis of the improvements. 2. The second group, designers – and by designers, I mean the architects, engineers, contractors and energy service providers that actually do the work to make the building energy-efficient – can benefit for qualifying improvements made to government-owned buildings at the federal, state and local levels. As government entities do not pay tax, 179D allows the government to “allocate” the tax deduction to the designer performing eligible work on the building. Qualifying designers can go back three years with their projects to claim the deduction. As far as eligibility goes, all sorts of buildings – basically any structure built for any level of government – can potentially qualify for 179D. The deduction covers energy-efficient improvements made to the interior lighting, HVAC systems, hot water systems or the building’s envelope. As long as the improvements surpass 2001 ASHRAE standards – standards that most state codes already surpass – then a business can qualify for 179D. For energy-efficient enhancements made to a number of public school buildings, one mechanical contractor received $706,964 in federal tax deductions – a nice return for typical, everyday contracting work. The change that the Senate proposed on energy-efficient buildings is to allow charities and Indian tribes to also allocate the tax benefits to the designer. The provision also updates the energy-efficient ASHRAE standards and would be good starting Jan. 1, 2014. Given the need to get allocation letters from the government (with the possible expansion to charities and Indian tribes) accountants should talk to their design clients now about the possibilities so they are prepared if the changes to the law come into place. The Road Ahead The general outlook on extenders is that nothing will happen before the elections. The smart money is that extenders will be addressed in the lame duck session (most likely as part of a bigger package) and that the deal being talked about in D.C. is that the House will basically accept all the Senate provisions/extenders – including 179d and bonus depreciation. I would expect the changes to R&D on the AMT will be accepted by the House (and possibly on start-ups as well – but with a harder road ahead). The changes to energy-efficient buildings for charities and Indian tribes coupled with the raising of ASHRAE standards should be acceptable to the House. I would anticipate that the Senate would accept an increase of ASC. However, the House will likely insist that a few extenders be made permanent (the candidates being the R&D Tax Credit, 179d and a charity provision or two – the charitable IRA rollover would seem to be the logical one). Expect there to be some teeth gnashing as to making some extenders permanent – but the Senate Democrat leadership will also have a few items (such as refundable credits) that they want to have made permanent (“everyone’s a winner”). In short, a deal on extenders is quite doable and could be wrapped up before Christmas. Well, maybe. Dean Zerbe is alliantgroup's national managing director based in the firm's Washington D.C. office. Prior to joining alliantgroup, he was senior counsel to the U.S. Senate Finance Committee. He is a frequent speaker and author on the outlook for short-term and long-term changes in tax policy, as well as ways tax professionals and accounting firms can help their clients lower their tax bill.

Come on, Jack, the IRS only released the Draft forms on August 28, 2014, and IR-2014-87, Sept. 8, 2014. Sure we've been reading and studying but until they finalize their forms, we will not really KNOW what they want where. Since THEY don't yet know for sure, [that's why they are DRAFT forms] we can't either.

This is the natural result of people assuming that every problem can be solved with another law. A really bad assumption.

I wonder why our "overburdened" IRS wasted taxpayer money on this case, when they pay without question so many much more questionable claims. This should have been settled at the appeals level, at least.

Washington, D.C. (September 16, 2014) By Roger Russell Sometimes a grandfather knows best, even when the disagreement involves the Internal Revenue Service. In a case decided earlier this month in Tax Court, a taxpayer, James Roberts, claimed dependency head of household filing status on his 2012 return, along with the Earned Income Tax Credit, the child tax credit and dependency exemptions based on his relationship to his three grandchildren. The IRS contested the filing status, the EITC, the child tax credit and the exemptions, and assessed an accuracy-related penalty. At trial, the IRS conceded the accuracy-related penalty. During January 2012, Roberts’ daughter and her two children became homeless. A third child was born that March. In order to help his daughter and her children, Roberts entered into an agreement with Tammy Moody whereby he and his three grandchildren would reside with Ms. Moody at her apartment. The agreement stated in part: “This is an agreement between Tammy Moody and [James Roberts]. [James Roberts] agrees to pay 75 percent rent and utilities and bear full cost of meals, etc.” Both Roberts and Ms. Moody signed and dated the agreement. Roberts and his two grandchildren moved into the apartment in January 2012, joined by the third grandchild in March. Roberts complied with the agreement to provide rent, utilities and meals. They lived in the apartment until October 2012. During the time they were there, Roberts’ daughter also lived in the apartment and provided nonmonetary care for the three children. Ms. Moody also provided care for the children when Roberts and his daughter were not at the apartment, with Roberts reimbursing Ms. Moody for any expenses she incurred in caring for the children. The Tax Court, in T.C. Summary Opinion 2014-88, found that Roberts qualified for the deductions, credits, and filing status. The IRS conceded that Roberts’ grandchildren met both the relationship test and the age requirement for the dependency exemption, but contested the “same principal place of abode as the taxpayer for more than one-half of such taxable year” requirement. Based on its findings of fact, the court found that Roberts established this requirement. Likewise, the court found that the grandchildren did not provide over one-half of their own support for the 2012 tax year, and therefore they constituted qualifying children for the year. Therefore, Roberts was entitled to the dependency exemptions for his three grandchildren for 2012. The same requirement under Section 152© of the Tax Code qualified the children for Roberts to take the EITC and child tax credit. To qualify for head of household, which provides a special tax rate, the taxpayer must have maintained as his or her home a household that was the principal place of abode for at least one dependent for more than one-half of the taxable year. The Tax Court found that Roberts satisfied this requirement because he maintained a household and the three grandchildren were his dependents for 2012. Thus, he was entitled to head of household filing status in calculating his tax liability for 2012.

Have you done a google search for the one you love?

Yep, just blackmail. Anyone can use programs like TaxAct, H&R, TurboTax, etc to do a return for someone else, you know. IRS is using the PTIN now as a control over preparers, but the crooks still get PTINs, so it does not really do anything but raise money for them.

I keep my laptop on most of the time, plugged in. I found a cheap and handy solution to overheating, that is supper easy to take with if traveling. https://www.thegrommet.com/the-prop-laptop-stand

Thanks

my keyboard is black, but it is backlit, so no problem. But if the backlit button is turned off, big problem.

Yes, and if you use your cable provider's email, then change cable companies, that email source is lost to you.

Excellent point, especially the keyboard. Backlit keys, for example, make a surprising difference to me. And difference in the 'feel' of some keyboards is a real factor to many.

Microsoft did an automatic update last night. Wonder if that could have some relevance? I ran a scan this morning when I restarted, and found it cleared up a number of issues that had not been there before.

It's not a bad idea to have a PTIN required, but charging you every year for that number makes no sense. But remember, it started out being for OUR convenience, so we did not have to use our SSN. They've been able to track preparers ever since they asked for that. I guess next the SSA will charge us an annual fee for our SSN?

This is what often happens with IRS rules. They just keep expanding requirements until enough voters raise enough ruckus with Congress that they get pulled back. Of course, you'll have to charge more, but if you explain it to your clients, perhaps they will be among those raising that ruckus.

OK, first, a Roth distribution can not be rolled into a 401K. So he's got to take it out of the 401K. A distribution that is not a qualified distribution will be partially included in gross income if there are earnings in the account. Only the earnings will be taxable. Within 60 days of receipt he can roll it into a Roth IRA. If he's past the 60 days, he's out of luck. The earnings portion will be taxable.

WHY IT'S QUIET?

Inflating an exclusion would lower taxable income, increasing a credit lowers the tax owed, so both mean either lower tax owed or higher refund.

Trenton, N.J. (September 4, 2014) By Michael Cohn A tax preparer who specializes in helping immigrants has pleaded guilty to willfully preparing false tax returns for clients. Sharif Mahfouz, 49, the owner of Expat Focus Consulting in Brick, N.J., pleaded guilty Thursday to a one-count information charging him with aiding and assisting in the preparation of false tax returns. Mahfouz entered his plea in federal court before U.S. District Judge Joel A. Pisano. “While most return preparers provide excellent service to their clients, a few dishonest tax preparers file false and fraudulent returns to defraud the government, the taxpaying public and their own clients,” said Jonathan D. Larsen, acting special agent in charge of IRS-Criminal Investigation’s Newark Field Office, in a statement. “IRS-Criminal Investigation will continue to identify, investigate and recommend prosecution against abusive return preparers in order to protect the integrity of our nation’s tax system.” Mahfouz was the sole owner and operator of Expat Focus Consulting, a tax prep business that he operated out of his own residence. His clients were primarily expatriated individuals who provided him with their financial information so he could prepare their individual income tax returns. Mahfouz admitted that he prepared false tax returns for some of his clients for tax years 2007 through 2012, by reporting either fabricated or inflated foreign earned income exclusion amounts and foreign tax credits. He did not tell his clients these refunds were being generated and kept the money for his own personal use, according to prosecutors. In order to carry out the refund fraud, when Mahfouz prepared and submitted false tax returns claiming refunds on behalf of clients to the IRS, he provided an EFC Bank of America bank account and a mailing address for EFC in Nanuet, N.Y. When the IRS issued refunds based on these false tax returns, the refunds were either directly deposited into the EFC bank account or a refund check was mailed directly to the EFC address in Nanuet, N.Y. Mahfouz had the mail forwarded from the Nanuet address to his residence in Brick, N.J. For the refunds issued by check, Mahfouz forged his clients’ signatures and deposited the checks into the EFC bank account. Mahfouz would then transfer the money from the EFC bank account to his personal bank account. In some instances, Mahfouz also prepared accurate versions of his clients’ tax returns to show his clients, who reviewed and approved them, according to prosecutors. If the return showed a refund due, Mahfouz advised the client to apply the refund as a credit to the following year’s income taxes. If the return showed a tax due, Mahfouz instructed the client to write a check payable to EFC, which he was supposed to use to pay the IRS on behalf of the client. Instead, Mahfouz used the money for his own personal use. In total, Mahfouz prepared and submitted to the IRS approximately 26 fraudulent tax returns on behalf of his clients, resulting in a tax loss to the IRS estimated at approximately $1,152,253. Sentencing is scheduled for January. Mahfouz faces up to three years in prison on each charge and a statutory maximum fine equal to the greatest of either $250,000, twice the gross amount of any gain derived from the offense, or twice the gross amount of any pecuniary loss sustained by any victims of the offense. “He pled guilty,” said one of Mahfouz’s defense attorneys, Richard Sapinski, vice chair of the Tax Litigation Practice Group at the law firm Sills Cummis & Gross P.C., in Newark, N.J. “He acknowledged that he did something wrong and he needs to make the best of a bad situation and move on with his life. There’s no defense and that’s why he pled guilty. It’s not that he walked away from it. He said, ‘I did it, I have to cooperate with the government,’ which is what he did. This is a part of the process, and then there’s the sentencing. We hope that the judge will take into account his situation in the sentencing. He’s 49 years old. It’s an error in his judgment, to say the least, and he needs to move on from here. He has the rest of his life ahead of him.” The investigation was conducted by IRS-Criminal Investigation’s Newark Field Office, under the direction of acting special agent in charge Jonathan D. Larsen and the U.S. Attorney’s Office, under the direction of U.S. Attorney Paul J. Fishman. The government was represented by Assistant U.S. Attorney Sarah Wolfe.

Well, all those things are true, as far as they go. but as long as they have money for Star Trek videos, etc, and lying to Congress, I find it hard to buy their sob stories. IRS spent $50 million on conferences between 2010 and 2012, the IRS was criticized by the Treasury inspector general for tax administration for a single $4.1 million training conference featuring luxury rooms and free drinks, in violation of agency procedures. In a time when on-line video conferencing is easily and cheaply available, there are surely better uses for that 50 million?