Yardley CPA

Thanks...I normally do as well.

I'm wondering if anyone prepares a final return even if the deceased taxpayer had gross income below the filing requirement amount?

Baby Grace Period? Nope...no such thing. It's my understanding that the baby needs to be born from January 1 through Dceicember 31 in order to be taken as a dependant.. You should have pretended that you didn't hear your client when they said that.

I also send my best to KC and her husband. She will be sorely missed and hopefully finds time to visit us occasionally.

I am preparing 1099 Misc forms for one of my clients. In doing so, I noted there was no "To Be Filed With Your Federal Tax Return" copy. I was under the impression, if the 1099 Misc reflected Federal Withholdings, a copy of the form must be filed with the return. In investigating the topic, I was suprised to see 1099 Misc Forms should never be attached to a Federal 1040. I have efiled my clients returns for several years, so it has been a while since I've had to prepare a 1040 that needed to be mailed, but I was still under the impression that a 1099 Misc with Federal Withholdings had to be attached to the return...you live and learn.

I am curious as to what each of you give your clients after the returns are prepared and discussed? I supply my clients with a copy of both their Federal and State returns. Some of my larger clients also receive a copy of their information on a CD Rom. This year I may provide all of my clients with the CD Rom. In addition, I include the client letter (which provides instructions), a tax summary sheet and the 1040 Prior Year Comparison that compares current year to prior year. And of course, my invoice and a stamped envelope for them to return payment to me (if they prefer to have their information mailed to them instead of picking it up in person). All of this is placed in a two pocket folder and a Tyvek envelope. I also return any backup they provided me to prepare the return (I scan the backup for my records). Each year I also create an encrypted pdf version of each clients return and keep that on my computer in a file folder that I create for each client. I place the encrypted scanned backup information in each clients file folder as well. Both files are password protected. That may be a bit much but it has come in handy through the years when I need to refer to items that pop up.

Let's hope the season progresses smoothly for everyone! MichaelG it's nice to have you around. Appreciate your assistance.

Hello All...received an email from the AICPA inviting me to join their "Tax Section" for a special price of $100. I'm wondering if anyone is a member of this group and, if so, what their thoughts are? The email indicated that by joining you would receive the following benefits: Tax Practice Support – More than 400 pages of checklists, engagement letters and practice guides (a $160 value) The Tax Adviser - The authoritative voice for news, analysis and guidance on state and federal taxes (Save $55 off subscription) Regular Webcasts - Hot topics and practice guidance that matter to CPAs Bi-weekly E-Alerts - The latest news and featured products with member discounts Exclusive Discounts - Members save on tax related conferences and products such as $100 off the AICPA Conference on Tax Strategies for the High-Income Individual Advocacy - Representation in Washington on issues specific to CPA tax practitioners Section-only resources - such as client letters and analyses on important issues

Congratulations! May they bring you a lifetime of love and laughter!

I have a client, MFJ, who take their 14 year old daughter as a dependent on their return. The clients father (grandfater to the dependent) is investing on behalf of his granddaughter and the statements received by the grandfather come to him but have the granddaughter SSN listed as the taxpayer. This year, the stock transactions totaled nearly $3,400. Does this require the dependent to file a return? I know it's below the threshold of income that is required to file a return but did not know if the fact that it is reported on 1099-B would cause it to be required? Thank you.

Not the 2010 edition. However, my renewal for 2011 comes with unlimited efiling.

I spoke with my "personal representative" last night and renewed the 1040 Office Package. Price came out to a total of $835. I thought the 2010 package was relatively stable with no real issues. I haven't shopped around at all, but I can't imagine there are that many vendors that offer as robust a package as ATX for this type of price. I've been a happy user for many years and I hope that continues.

Here's an article that may help shed some light on your question. Looks like penalties can get pretty pricey depending on the situation. Good luck. http://www.ehow.com/about_5480896_penalties-filing-1099-misc-form.html

Thank you.

Client refinanced mortgage and paid points. I realize the points are not deductible in full on this years return and should be spread out over the life of the loand (which is 15 years). However, is there a spot on ATX's Schedule A to indicate that points were reflected on 1098 and for the program to calculate the amount that can be taken this year and then in subsequent years? I know that Line 12 has that functionality, but the points WERE reported on a 1098.

It would be nice if certain clients had just a general idea of how the tax system works. I don't mean in regards to completing the forms and returns, but more so that there is no real magic involved in how a refund or amount due is determined. It all comes down to planning and withholdings. Simply put, you make a certain amount of income, there's a tax on that income and your withholdings will determine whether that translates into a refund or amount due and how much. I do receive the call a few times a year where the client says, "but all my friends are getting back x,xxx, why isn't my refund that much?" Every year we discuss their specific tax situation and every year I include a planner for the following year, estimating what their tax may be (all things remaining relatively equal) and what their refund situation may be and, if they want more of a refund they can change their withholdings. Even then, I don't think they grasp the situation or the reality of it. I guess their friends get the best of them and probably say something like, "My preparer is the best, he/she always gets me x,xxx refund."

KC...you are not insulting at all, nor was Pacun or SCL. I appreciate the responses from all three of you. I agree that it is mid-April and I'll raise my hand to being tired and stressed, but I must of checked the 1099G's a thousand times to make sure they both said 2010 and they do. The 2008 refund was received in June 2010, the 2009 refund was received in October 2010. The 2008 return was filed timely and the 2009 return was extended and filed in September 2010. I neglected to ask if the refund was received. I guess I thought, like you, that the client would at least call or email me when they did not receive a refund of that size within a reasonable amount of time. Like I said, I'm not skirting the blame here...I recognize I should have asked. At this point, I am filing the 2010 return with both refund amounts included. I will then amend 2009 and remove the refund from that return. Thanks again for chiming in.

Pacun...many thanks for your helpful response. I'm not looking to skirt the blame here, it is what it is.

So should the 2009 1040 return be amended, removing the 2008 state refund from income. Include the 2008 and 2009 state tax refunds on the 2010 1040 return? My intention was never to do anything unethical; I was simply trying to solicit input on what is the proper way to handle this situation. Considering I already included the 2008 refund on the 2009 return, I did not think it should also be included in 2010.

Going through tax info of MFJ couple. There are two 2010 1099G's included. One is for 2009 Pennsylvania Tax Refund of $15 and one is for 2008 Pennsylvania Tax Refund amounting to $4,900. Both these refunds were received in 2010. Not sure why the taxpayer received the 2008 refund in 2010. In any event, both 2008 and 2009 returns included Schedule A Itemized deductions in excess of $20,000. I assumed (and I know what happens when you assume) that the taxpayer received their 2008 state refund in 2009 and included the $4,900 on their 2009 1040. At this point, I am just thinking of waiting to see if the IRS will send some type of notice and then answer it, indicating that I included the refund on the 2009 return. I will only include the $15 refund on the 2010 return. Thoughts?

I prepare one 1065 each year. The partnership is made up of two active partners who send K1's to the partnership. This year, only one of the partners was active, the other was dormant and did not issue any K1. I have little experience with 1065's. I assume nothing needs to be done with the dormant K1 and the 1065 will reflect the active K1's income?

A Tax Man Takes Account of His Life Even though it's tax season, accountant Doug Stives skied at Snowbasin in Utah last month. CPA lives better, works less thanks to the art of deduction. In the thick of tax season, most certified public accountants are chained to their desks grinding out returns. Doug Stives, a CPA from Red Bank, N.J., went skiing in Utah. "I always dreamed of coming here for peak conditions," he said in mid-March between runs at Snowbasin Resort. The trip is among the many perks that have accrued from his decision, in 2006, to become, in effect, The Most Tax-Efficient Man in America. The experiment has led to a new career, frequent travel and obsessive documentation of expenses, such as a $6 hot dog he recently bought in the Philadelphia airport. The "aha" moment came to him, he says, after a college approached him about a teaching gig and he realized he could put into practice many of the tax strategies he had learned over the decades. Step 1 was to change jobs. Mr. Stives had been a partner for 36 years at The Curchin Group, an accounting firm. By accepting an offer to teach tax and accounting courses full-time at the Leon Hess Business School of Monmouth University in New Jersey, he was able to tap into a broad array of tax-free employee benefits not available to him at the firm. Step 2 was the formation of Doug Stives LLC, the separate consulting business to which he attributes an impressive array of expenses. In general, people who are employees and have side businesses are often in the best position to maximize the tax code's benefits, say experts. Mr. Stives calls this "the best of all worlds." The result, says Mr. Stives, is that while he earns less than 75% of his earlier pay, he takes home almost 90% as much. And he says he reaps another $40,000 a year in tax-free benefits from his college gig. Among other things, the school adds to his 401(k) contribution and provides tax-free, discounted health plans for Mr. Stives and his wife, plus disability insurance. As a partner in the accounting firm, he had to fund such expenses himself. Not that all is perfect now. One peeve: dealing with what he calls "airline nonsense" -- long lines, rising fees and canceled flights. But overall, he says, "my quality of life is so much higher." His wife of 40 years, Elizabeth Stives, agrees. "We travel so much now for his business," she says. "Next is Lake Tahoe." Mr. Stives, 64 years old, says he's too miserly to focus solely on maximizing deductions -- a practice he calls a "rookie's mistake." In 2010, for example, he spotted a bonanza in "bonus depreciation" for large SUVs used in a business, but didn't need another car. "Sometimes my cheapness overcomes my love of tax savings," he says. "My wife will tell you I got her on sale." Instead, he says, he uses the tax code's many quirks as the means through which he can live a fuller life. The Schedule C form, used to report profit or loss from a business, is key to his strategy. On this form goes all of his income and expenses from his consulting work -- advising clients, preparing returns, helping write textbooks and conducting continuing-education seminars that CPAs need to maintain their licenses. Mr. Stives chooses the locations for his seminars, most of which are sponsored by accounting groups. Often he opts for vacation destinations like Hawaii or Yellowstone Park. "People learn better when they are relaxed," he says. Tax rules allow him to work for only three days of a 11-day trip and write off the airfare and a majority of other costs, he says. "To deduct the airfare, you have to spend more than half your working days on business, but travel days don't count, and neither do weekend days you wouldn't work anyway," says Mr. Stives. "So I can leave on a Friday, teach for three days midweek, and return the following Monday." His wife usually flies free using his frequent-flier miles, which are tax free. Having his own business also allows Mr. Stives to bolster his retirement fund. As the older owner of a one-person defined-benefit pension plan, he can put in almost 100% of his pretax self-employment income a year on top of his Monmouth 401(k). For the 2010 tax year he will probably put in 80%, he says. Mr. Stives hired his wife for office support in part to qualify for an IRS-allowed Health Reimbursement Arrangement that covers out-of-pocket medical expenses with pretax dollars. He deducts her pay -- $300 per month for part-time work -- and half her payroll taxes on his Schedule C as well. Then there are the flurry of tiny deductions that add up. He writes off allowable mileage and food expenses on business trips. He claims a home office, cellphone, his computer (a percentage), professional dues and subscriptions to publications. Mr. Stives says he is careful to observe IRS rules. He has a contract for each speaking gig, and keeps one for his wife's arrangement, too. He uses one credit card for business expenses, making sure it provides a year-end summary by category. Most zealously, he hews to the IRS's gold standard of "contemporaneous record-keeping" by noting expenses on his Outlook calendar soon after they occur. He saves all receipts, putting them in a milk crate in chronological order in case the IRS comes calling, although he says his personal return has never been audited. Mr. Stives says he discovered his enthusiasm for accounting while a student at Lehigh University in the 1960s. The son of a New Jersey Bell executive and a homemaker, he arrived at college, "sick of literature and history. I didn't want to hear another word about the Civil War. But then I took an accounting class and thought, 'I can do this!'" At Monmouth, Mr. Stives was voted the Hess School's Most Outstanding Professor in 2009, and now directs the M.B.A. program there. "The most important lesson I teach my students," he says, "is that just because something is deductible, that doesn't make it free." Students say they especially enjoy his creative-deduction exercises. His latest challenge: "Say you have a friend who is a client and you charge him about $500 a year. You'd like to spend $2,000 on a big night in New York for two couples -- limo, dinner, Carnegie Hall concert. What would allow you to take a deduction?" The answer: "The client has a rich father who just died and you may get estate work."

Lowest I've found outside Trenton, NJ is $3.53 for regular unleaded.

Found this article and thought I would share it. I imaagine this will cause more "whistleblowers" to step forward. http://news.yahoo.com/s/ap/20110408/ap_on_re_us/us_irs_whistleblower_collects APNewsBreak: IRS awards $4.5M to whistleblower By MARYCLAIRE DALE, Associated Press Maryclaire Dale, Associated Press – Fri Apr 8, 12:07 pm ET PHILADELPHIA – An accountant who tipped off the IRS that his employer was skimping on taxes has received $4.5 million in the first IRS whistleblower award. The accountant's tip netted the IRS $20 million in taxes and interest from the errant financial-services firm. The award represents a 22 percent cut of the taxes recovered. The program, designed to encourage tips in large-scale cases, mandates awards of 15 to 30 percent of the amount recouped. "It ought to encourage a lot of other people to squeal," Sen. Charles Grassley told The Associated Press. The Iowa Republican helped get the IRS Whistleblower Office authorized in 2006. The IRS mailed the accountant's lawyer a $3.24 million check that arrived in suburban Philadelphia by first-class mail Thursday. The sum represents the award minus a 28 percent tax hit. The lawyer, Eric L. Young of Blue Bell, won't release the name of his client or the firm because his client remains a small-town accountant, and hopes to continue to work in his field. "It's a win-win for both the government and taxpayers. These are dollars that are being returned to the Treasury that otherwise wouldn't be," Young said. "It's very difficult to be a whistleblower," said Young, who has represented more than a dozen such tipsters, including one in a $2 billion Pfizer case involving off-label drug marketing. "Most people would be inclined to turn a blind eye to it. The process can be time-consuming, arduous and stressful, from both a personal and professional standpoint," he said. The accountant filed a complaint with the IRS in 2007, just as the IRS Whistleblower Office opened, but heard nothing for two years. Frustrated, he hired Young to help push the issue. "We were able to help him get it back on track," Young said. In the accountant's case, the IRS did not deem the issues he raised complex. But the agency said the information he shared pointed out new questions for a routine IRS audit that was already under way. The Whistleblower Office received nearly 1,000 tips involving more than 3,000 taxpayers in fiscal years 2008 and 2009, according to its annual reports to Congress. Hundreds of them alleged tax underpayments of more than $10 million, and dozens more underpayments of $100 million or more. The accountant's case is the first in the program to reach fruition. "Quite frankly, I'm shocked that they finally got around to using it," said Grassley. He has been discouraged by the program's slow start, which some blame on ambivalence about whether tipsters should receive potentially huge windfalls. The IRS may also fear embarrassment, the senator said. "When you got a whistleblower that's saying somebody didn't pay $20 million in taxes, that that's an embarrassment to the full-time employees of the IRS," he said. Neither Stephen Whitlock, director of the Whistleblower Office, nor the agency's public affairs office returned messages about the program late Thursday. However, the annual reports note a new policy of waiting to pay awards until the two-year window for taxpayers to appeal their payments has expired. Young's case might therefore be the first in a series of awards that are ripe for payment. The office has about 17 employees, who refer complaints to IRS agents and investigators around the country to pursue. Before 2006, the IRS could choose to reward tipsters, but were under no obligation to pay them a share of the taxes recovered. Many of the tips involved mom-and-pop operations or ex-spouses. The whistleblower program only promises awards for returns of $2 million or more. "This law is not designed to snag the guppies, but to harpoon the whales," said Patrick Burns, a spokesman for Taxpayers Against Fraud, a Washington, D.C.-based nonprofit whose members include many lawyers for whistleblowers. "Whistleblower programs have been incredibly successful in the arena of health care and defense spending, and now they are being tried as a weapon against tax cheats and Wall Street scoundrels," Burns said.

MFJ couple converted traditional IRA's to Roths during 2010 and deferring tax to 2011 and 2012. Extending Federal return to determine if value of converted Roth's decrease in value prior to 10/15. New Jersey State return has $2,000+ refund. Can I efile the New Jersey State Return alone? Taxpayer prefers to have refund than apply toward next year.