gfizer

I just received the following response from Kentucky DOR to an email I sent yesterday: RE: Income Taxes DOR WEB Response Individual Income Tax <[email protected]> 9:40 AM (8 minutes ago) to me Kentucky has not adopted legislation at this time for the $10,200 of unemployment not being taxed. If that legislation is passed, it will be posted on our website. As of now the income will need to be added to your Kentucky return as taxable on the SCH M. Thank you. Section Supervisor Department of Revenue, Office of Income Taxation

Client has decided to sell her principal residence to her church to be used as a parsonage. She has agreed to transfer the property to them for her basis in the home. The home has appreciated in value and is worth (she believes) $15-$20K more than her basis. I'm thinking this is a bargain sale and that she can obtain an appraisal from a qualified appraiser to substantiate the current fair market value, thereby giving rise to a charitable donation for the difference between the bargain sale amount and the FMV. Thoughts? Opinions? Am I missing something? Thanks in advance. You guys rock!

Ditto. I can't believe KY will exempt it. Just patiently (NOT!) waiting to see what happens here.

Thank you!

Thanks for the offer, Catherine. They only have wage income and no rent. They are going to file separately so only his income will be included on the MA return. I think I show their combined Federal income and AGI on page 1 though, correct?

Looking for a little direction. New clients. He is a resident of MA who is in the Army and stationed in Texas. He has a MA driver's license. She was a KY resident until the time they married in March of 2020 and still has a KY driver's license. The day after their wedding in KY she moved to Texas where he was stationed. He has a w2 from the military with MA state withholding. She has a w2 from a job in KY prior to getting married with KY state withholding and a w2 from a job in TX with no state withholding. I am thinking that I need a part year Kentucky return, nothing for Texas of course, and a Massachusetts return. Problem is he was considered a full year resident of MA and she has never lived in MA. Any idea what the proper way to handle this is? My brain is fried.

She is a performance academy student meaning that all of her course work is online and can be completed at her convenience. She doesn't have to be in school during the day.

I'm anxious to see what everyone thinks about this. I have an 18 year old senior in high school who drew $16k (yes, $16,000) in unemployment in 2020. ATX gives me the warning "Return is for a child of age 18 and investment income exceeds $2200. Form 8615 may be required if earned income is not more than half their support." Obviously, the unemployment is unearned income but it is certainly not investment income.

ATX allows the entry of bank account information but I don't believe it would be transmitted with an electronically filed return where there is no refund or balance due.

Actually they are using the old account number within the same bank, apparently. The bank has been transferring it into the correct account as a courtesy but now says they won't do it in the future. Since he hasn't filed a tax return since 2017, I still think the problem lies with SSA and that he should make sure his account information is updated with them. Yeah that's what I found too and when he did they told him to file the 1040-SR.

We live in a VERY small town. This letter is obviously legit and it doesn't ask for any information, only tells him to update his info with the IRS and doesn't tell him how to go about doing that so I'm pretty sure it's not a scam

I did not physically see the letter but I asked him to verify the amounts he received for stimulus and he said he received $1200 on the first one and $600 on the second one. He read the letter to me and the bank acknowledges that they had automatically transferred the payments from the old account to the new one but that any future payments to the old account will be rejected.

Former client called saying he received a letter from his bank saying that he needed to update his direct deposit account information with the IRS to receive future stimulus. He retired a few years ago and draws only social security benefits and accordingly, has not had to file a return since 2017. I told him I would assume that the direct deposit information the IRS has been using for stimulus payments was coming from SSA and that he should check with SSA to verify that they had the correct information (he changed banks in 2018 and remembers going online on SSA to change the info at that time but has since changed account numbers within the same bank and can't remember if he updated it again at that time). He then called back to tell me that he called the IRS and they told him to file Form 1040-SR which I can do but I still don't understand how that will update his bank account info since there will not be a refund or balance due on the return. I would assume that the bank account info would not be transmitted with the efile if there was no refund or balance due. I can paper file it with the new account info written in but I still don't think there is any guarantee it would be processed. Thoughts or ideas?

She only has a choice if she filed the election to be treated as an s-corporation. If she hasn't made the election then she would file on schedule C. Not sure about IL but KY does require an additional form (and fee - LLET Tax) to filed for the LLC.

The worksheet is the only thing I'm aware of as well. Maybe she is confused and talking about the letter(s) from the IRS that notified people of how much stimulus they were receiving an how it was being paid ???

Partnerships are not required to be registered with the secretary of state in Kentucky. But no, they did not. Basically they changed the name and adopted LLC status for liability protection and continued on business as usual. No separate books or anything of that nature. They executed everything required to form the LLC but did not do anything to dissolve the partnership.

They changed the name and ein number on all bank accounts and loans and deeded the real estate to the LLC.

I have a client who has for many years been a general partnership with two partners filing a Form 1065 for rental real estate activity. This year, without consulting me, they decided to form a limited liability company and filed all the appropriate paperwork with the Kentucky Secretary of State. The entity is still be taxed as a partnership so technically nothing changed from a tax perspective except the name which went from "BW Associates" to "B&W, LLC." As I understand it, I would simply have needed to check the "name change" box on the 2020 return and continue on my merry way. Problem is, however, that they applied for and received a new Federal ID number for the LLC. Because of this, do I need to file a part year return for BW Associates and a part year return for B&W LLC, or can I continue using the old EIN and try to explain to the IRS should they ever question why a return was never filed under the new number issued to the LLC? To further complicate matters, they never completed the registration process with the state of Kentucky and as a result have no ID number for filing the state return for the LLC. Why do people do things without asking questions first?!? Ugh.

Sorry for your loss. Prayers for your family.

I had someone call yesterday saying he owned three rental properties and he really wanted to do his own returns but wanted to know how much I would charge to teach him how to do the depreciation. Say what? I was less than kind in my response which is unlike me but it finally hit me at 4:30 p.m. that the reason I was so grumpy was because I forgot to drink my morning coffee.

Per the FAQ section on the IRS website they will not use the bank account info if payment of 2018 or 2019 tax was made via direct debit. Those clients will have to use the IRS Get My Payment tool to input their bank info

I currently have this situation with a 2018 return. How do you change the DCN number?

Well, that is good to know. Thanks for the update.

It should be noted that according to the Kentucky Department of Revenue website that income tax payments received after April 15th will not be subject to penalty but WILL be subject to interest since Kentucky law prohibits the waiver of interest.

I've not used it personally but there is another preparer in my area who uses is without issue for our local city occupational tax.