Slippery Pencil

No efile here: "Unknown error - An error has occurred and is preventing the connectivity test from proceeding"

Turbotax software costs that much and they'd have to spend the time entering the data. Why charge less than what it would cost them to do it themselves?

I've always wondered the opposite. I can't believe how low the average is in those surveys.

I don't think this is new. For years, spam calls have registered on my caller id as numerous local business names, AT&T, names of numerous clients' employers just like when they called from their office phones (General Motors, Toyota, Lear, Siemens, etc.), individual names, Citizens Bank (where my business account is located), CSC Southfield (Southfield being the city neighboring the one I live in), various city & states, non-local business names, Americenters, and two local hospitals.

No. The education exception is for IRAs. §72(t)(2)(E) (t) 10-percent additional tax on early distributions from qualified retirement plans (1) Imposition of additional tax If any taxpayer receives any amount from a qualified retirement plan (as defined in section 4974(c)), the taxpayer's tax under this chapter for the taxable year in which such amount is received shall be increased by an amount equal to 10 percent of the portion of such amount which is includible in gross income. (2) Subsection not to apply to certain distributions Except as provided in paragraphs (3) and (4), paragraph (1) shall not apply to any of the following distributions:(A) In general Distributions which are - (i) made on or after the date on which the employee attains age 59 1/2 , (ii) made to a beneficiary (or to the estate of the employee) on or after the death of the employee, (iii) attributable to the employee's being disabled within the meaning of subsection (m)(7), (iv) part of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the employee or the joint lives (or joint life expectancies) of such employee and his designated beneficiary, (v) made to an employee after separation from service after attainment of age 55, (vi) dividends paid with respect to stock of a corporation which are described in section 404(k), or (vii) made on account of a levy under section 6331 on the qualified retirement plan. (B) Medical expenses Distributions made to the employee (other than distributions described in subparagraph (A), (C), or (D)) to the extent such distributions do not exceed the amount allowable as a deduction under section 213 to the employee for amounts paid during the taxable year for medical care (determined without regard to whether the employee itemizes deductions for such taxable year). (C) Payments to alternate payees pursuant to qualified domestic relations orders Any distribution to an alternate payee pursuant to a qualified domestic relations order (within the meaning of section 414(p)(1)). (D) Distributions to unemployed individuals for health insurance premiums(i) In general Distributions from an individual retirement plan to an individual after separation from employment - (I) if such individual has received unemployment compensation for 12 consecutive weeks under any Federal or State unemployment compensation law by reason of such separation, (II) if such distributions are made during any taxable year during which such unemployment compensation is paid or the succeeding taxable year, and (III) to the extent such distributions do not exceed the amount paid during the taxable year for insurance described in section 213(d)(1)(D) with respect to the individual and the individual's spouse and dependents (as defined in section 152). (ii) Distributions after reemployment Clause (i) shall not apply to any distribution made after the individual has been employed for at least 60 days after the separation from employment to which clause (i) applies. (iii) Self-employed individuals To the extent provided in regulations, a self-employed individual shall be treated as meeting the requirements of clause (i)(I) if, under Federal or State law, the individual would have received unemployment compensation but for the fact the individual was self-employed. (E) Distributions from individual retirement plans for higher education expenses Distributions to an individual from an individual retirement plan to the extent such distributions do not exceed the qualified higher education expenses (as defined in paragraph (7)) of the taxpayer for the taxable year. Distributions shall not be taken into account under the preceding sentence if such distributions are described in subparagraph (A), (C), or (D) or to the extent paragraph (1) does not apply to such distributions by reason of subparagraph (B). (F) Distributions from certain plans for first home purchases Distributions to an individual from an individual retirement plan which are qualified first-time homebuyer distributions (as defined in paragraph (8)). Distributions shall not be taken into account under the preceding sentence if such distributions are described in subparagraph (A), (C), (D), or (E) or to the extent paragraph (1) does not apply to such distributions by reason of subparagraph (B).

In the 80s, the city of Detroit would recalculate the computer printed, rounded to the nearest dollar tax returns to include the cents and reduce the refund. So if the return showed an $8 refund, the client would receive a check for something like $7.48. Detroit actually paid people to rework the return by hand. It was only a one page return and only a few lines had to be recalculated, but I can't imagine how they thought they were making money doing this.

I believe the discount on ATX in December is just as good as the one in April. Last year I bought MAX on 12/1/21 for $1929 less a 20% discount plus a $95 fee to be their client for a total of $1,638.20. $77.75 sales tax was added for a grand total of $1715.95.

Has this actually happened?

FMV is FMV, it's not a variety of numbers from which we choose. How do they know they could have sold it for more? Did they have numerous offers from unrelated buyers at a higher price? If so, then they didn't sell it at FMV. If they didn't have offers but believe they could have sold it higher due to a real estate sales person's market analysis, real estate agents will say anything to a prospective client to get the listing. Most market analyses from the typical real estate agent aren't a reliable source for FMV. That aside, the housing market peaked around 2005, approximately 17 years ago. The current market isn't that much higher than it was in 2005. It's not that hard to believe someone buying at the top of the market can sell for a loss 17 years later.

The irs has. Returns filed between 4/1 & 4/15 have a higher audit rate than extended returns and returns filed earlier in the year.

I do that numerous times a week. Doesn't everyone do that?

If the proceeds are reported, I doubt it. A client sends me their granddaughter's brokerage statement mixed in with their stuff. In 2020 she had $200 in dividends and $2700 in proceeds w/ a $6 loss. In 2019 she had $150 in dividends and $3600 in proceeds w/ a $32 loss. I didn't prepare a return for her either year and they haven't heard from the irs about it. I'm assuming the irs computer would have spit out a letter by now.

Should be included in box 1. On the W2 input, you need to enter the amount in box 7. I think you need to override box 3, but I don't recall. Box 4 will calculate based on the total of box 3 & 7.

You can't until you find out what he did with it.

It says "IRA" and it has the IRA's TIN. Do not include it on the return. If past years are substantial, inform client how much he'd save by amending.

I always tell the client since the income isn't above the filing threshold, no return is required. I've never had a client decide to file a return in that case. None of them have ever heard from the irs about it.

If the client's attorney is stating it needs to be filed, a resolution to liquidate may have been done. There are certainly legal reasons to file it. Ask the attorney why it needs to be filed. Ask the attorney why he didn't file it as part of the liquidation.

Neither was my friend, and the amount of his IRAs at the time was a lot less than $350K. Your client may not have handled the conversion wisely, but it could work out hugely in his favor.

The biggest financial regret a 75 year old multi-millionaire friend of mine has is not converting his IRAs to ROTHs a few decades ago when the opportunity was presented to him. He thought $20K in tax was a huge hit so he didn't do it. Now he's in a higher tax bracket, the IRAs have increased 10 fold, and he's required to withdraw money he doesn't want to not only increasing his taxes, but substantially increasing his medicare premiums.

No, not correct. Yes to add back if he received the money.

Of course, just like the 8949 instructions say to do. The 8949 has been out for a decade so this isn't new and I summarized Sch D entries for 15 years prior to that.

Pub 537 has instructions on how to figure the gain https://www.irs.gov/pub/irs-pdf/p537.pdf#en_US_2021_publink1000221736

What type of property? Sales usually go on 8949 for personal property. Does it qualify for a reduction of basis and not a sale?

Of course you can do a summary. Even though the instructions say to attach, no one at the irs ever looks at those attachments so you don't even have to bother attaching anything.

Suggesting to efile on 1/24 is definitely not a suggestion to efile a complete return.