Tax Prep by Deb

Yes, but I am waiting for some additional info. This lady's husband set her up good in case anything happened to him, and it did, he passed away and left her an investment account as well as his pension from IBM. I'm waiting to see what the value of his retirement account was as of the date of foreclosure, but my gut tells me she is not insolvent. Deb!

That's the point. The loan was never in his name, it was issued in her name only. It wasn't until 6 months after the purchase, when she tried to get the loan and everything switched to only his name (which the broker assured her would happen) that she found out she didn't co-signed she signed, bought, ect... the home. I think she was swindled by her son and also by the broker, and now she is left with cleaning up the mess! Sorry for any confusion, it sounds reasonable as your typing, but I can see why you would not be able to understand. Deb!

I almost fell for it, but just as I was thinking of e-mailing ERC I thought if it's something he can't discuss here, then why are there over 30 posts? So I scanned a couple and realized he was being verrrrrry, verrrrry, bad!!!!!!!! HaHa! Deb!

I agree with KC. Everyone of those notices I have seen has included the withholding. Where I run into the problem is with the state (CA) they don't automatically credit you with withholding, you have to have proof and request that it be applied. Deb!

Thats what I though, I just needed a second opinion. Thanks for your quick response, now I can finish this one up! Deb!

I have a new client, a friend of mine, who brought me her 2008 papers to file her tax return. In checking on the simulus amount she received online, I discovered she had not received anything, however based on what limited papers she brought me from 2007 she should have. The only papers from her 2007 tax return was the extension that her previous preparer filed for her. She paid what taxes it said she owed and she thought everything was fine! As it turns out the other preparer states that they had been trying to get a hold of her for some additional information so that they could file her 2007 return. It had never been filed. She brought me the papers that her previous preparer had and it has a 1099C in 2007 for a home she had purchased and sold via a short sale. The short sale was enough to satisfy the main loan, but the 1099C is for the second. It's about 119,000. Here's were I need some advise. My client is very honest and when I asked her if she lived in the home she said no, not ever. It was never a rental either. Here's where the story gets interesting. Her son asked her to co-sign for this home which he lived in and made the payments on till he got tired of it. Come to fine out, she never co-signed, his name was never on the deed nor mortgage. She can't claim the homeowners relief because she never lived in it, and it was never a rental so therefore any loss on the sale is not deductible. And although my client is not wealthy, she doesn't have any liabilities, so it's not likely that I can show insolvency. In your opinion is she stuck for the full $119,000 as income? Do you know of anyway around this? I sure would appreciate some advice. Deb!

I have a client who has a large NOL. Looking back over his last 5 years, (he also had a NOL last year and we carried it back two years and still have some left) it looks like our best option is going forward. When I did his 2007 return I prepared and sent the form 1045 and he received his refund. This year because we are going forward, do I need to prepare the 1045 or just fill in the NOL worksheet within the ATX program? I have already included the election statement in the return with the carry forward provision checked. I'm just not sure if I need to do anything with the 1045 or should I just delete it from the return? Any help will be greatly appreciated! Deb!

I do plan on trying, as he was the one that filed on his own. He was never sent a notice, nor was there a flag on his account when we filed the 2008 taxes. If he had known that he would have been hit this hard, he probably wouldn't have filed until forced to. I just know that I have had other clients who owed for more years and owed far more than he did and received less of a penalty based on the amount owed. It just seems out of proportion to me. Deb!

Ouch! Then that explains the amount he is being charged. It just seems very out of proportion to others I have seen. But then again, after I see the paper work I'll be more informed. Thanks for your reply Deb!

The client is going to bring the notice in tomarrow. My first thought was that they had not credited him the payment, but he said it looks like they did and that the rest was interest and penalty. I will know more tomarrow when I see the notice. I did a quick calc of the 5% penalty for not filing on time, but that amounts to less than $20 unless it's charged per month. I know there are penalties for not paying and these accrue per month but they should not be that high. His current bill is almost the same as his original bill. I've had clients who in the past filed and payed late, but never was their penalties this high in proportion to the amount owed. It just doesn't seem right to me. Deb!

I have a new client who did not file his 2007 taxes. When I prepared his 2008 he had a refund of over 900 for which he received, even though 07 taxes had not been filed. When I received his paperwork for his 2007 taxes I filed the return with a balance due of 132.00. He sent his payment in with his return. Today he received a letter that states he owes an additional 118.97. We realized that there was going to be penalties and interest but this seems very excessive. What do you all think? Deb!

Terry, Are you sure it actually was transmitted, or are you assuming that because it shows rejected that it was sent? As a built in safety, each time you open the return after the e-file has been created you have to re-create the e-file or it will show up as rejected. This is so to prevent you from changing the return but not recreating the e-file with the change. Sometimes it's a bother, but usually it is a life saver. Deb!

I have used this feature for several years and I have never had a return held transmit. The only thing I can think of is that you reopened the return at some point, recreated the e-file and did not hold it. Each time the return is opened and recreated you have to put a hold on it or is shows up as created and will transmit. Hope this helps some, Deb!

Likewise, I've had three clients come in and ask, and sure enought I missed it even though I thought I had checked on it. They are always happy when they get more money, it's when you find a mistake and inform client of it and advise that the repayment be made by April 15th to avoid penalties that they go crazy on you. Deb!

My clients have never received any payments whatsoever for taking care of this child. He was simply placed in their care by the courts in lieu of being placed with a family who didn't know him as is the case with most foster care situations. This child happened to be the child of a friend of theirs who either did not want him or wasn't taking good care of him. I agree that with typical foster care where the host family is given money to care for the child, there usually is not a dependancy issue, but this was not the case with my client. Deb!

I have a client who for the last 8 years was able to claim a child as a foster child on their tax return. This child was placed in their custody through the courts and they had complete guardianship of him. The first several years the boys father tried to claim him as well and as a result my clients always had to paper file, then when the letters came support their claim and they always won. As far as they are concerned this boy is their son. The question comes up now about dependancy because he is over 19 but is a full time student. Can they continue to claim him as a foster child? The reason this is important is because this is the first year he has worked. He earned a little over 4,000 which would no longer qualify him under the qualifying relative. I am hoping he can still be claimed as a qualifying child as my clients have supported him even paying for his tuition for college which was substantial. Any thoughts would be greatly appreciated! Deb!

Good Catch! In the situation that I dealt with a couple of years ago my client had no choice, the plan immediately sent him a check for the amount that didn't pass the test, the overage. So in my case that was never an issue, but it could possibly be in this case. It all depends on if or is he going to get the excess back. Deb!

As suggested, some figures would be helpful, however I have seen some pretty strange things happening with IRS this year, and I do in all honestly think they have a computer problem. Deb!

I did it as other income and used the explanation of excess distribution of retirement plan for 2008. I did this a couple of years ago and have not heard anything about it. Deb!

So you are saying that the taxpayer already included the excess and paid taxes on it on his 2007 tax return? If this is correct just enter the 1099R as a 1099R and make sure you put the code P as is on the 2008 1099R it will transmit as informational only. It should not show up anywhere on his 2008 tax return. If the amount was not included on his 2007 tax return you will need to ammend it and include it on the 2007. Deb!

DON'T BE TO QUICK TO ASSUME IT'S ON YOUR END! When you open up the return in ATX is the proper form there? The reason I ask this is because I had a client who waited and waited and waited for her refund check. Originally she though I did not change the address as she had moved. I had her verify her address, compared it with what I had on her return in the system, she checked her printed copy of the return and it too was correct. IRS mailed the refund to the wrong apartment number. Every thing on my end was as it should be, something happened I believe with IRS, and it's very possible that something similar is happening with you guys as well. Deb!

I believe it is the paperwork that is turned in to see if you can qualify for any grants, loans, ect. when going to college. Every year I get a flood of clients one day before they are due. Deb!

Thanks, I knew I had read that in that publication but I could not find it. I am getting so tired of thinking on these foreclosures! Deb!

I have a client who was given a 1099-A with an amount of $488,975.48 in box 2 (balance of principal outstanding) and box 4 (fmv of property) with box 5 checked that borrower was not personally liable for loan. Then they also received a 1099C which shows box 2 (amount of debt canceled) $291,735.05 and in box 3 (interest if included in box 2) $30,783.39, and in box 7 (fmv) $240,000.00). My question is basically dealing with box 3. What if anything do I need to do with this amount? How does this get figured into the equation? Thanks for any help, Deb!

Thanks, That's how I imputed it into the asset worksheet and it did show the 50% I just wanted to make sure! Deb!