ILLMAS

Sorry your loss Rita, my condolences to the entire family.

What are thoughts when a business owner uses business funds to pay for personal expenses like mortgage, groceries, personal health insurance etc....? Again these personal expenses are greater than owner payroll and the prior preparer just booked it as a distribution vs a due from shareholder.

I see your point, unfortunately they worked all year and their ideal salary for working for someone else would be $120-140K. They provide maintenance for industrial equipment and 15K doesn’t seem reasonable for how much they charge their customers per hour or job.

Reviewed new clients 2019 1120S and they had a very low pay compared to the distribution. 15,000 vs 75,000 I understand they already paid taxes on distribution, but do you see anything wrong with this ratio? There are probably worst ratios but this probably the worst I have seen and I did mention to the client thier salary is not reasonable for the type of work they do.

Payroll is in the work for 2021 for both.

Good question, first client was told by the mortgage banker their return was prepared incorrectly (you guessed it, no payroll) for 2019, the second was a referred by another new client. I do take the time and explain to them how things work, about two years ago another new client was paying themselves very low wages and I told them their salary doesn’t seem reasonable and you should increase it etc.. Last year when they went to get pre approved for a loan the banker told them their return was prepared incorrectly because their wages were too low, client actually defended my work and basically everything the banker had told her she already knew from me

This past week I took on two new 1120S clients, no payroll was prepared for 2019 but the prior preparer put down amounts for officer compensation. The same amount was used on Sch C and SE tax was paid. In all my years I have used that line for officer on the payroll, is okay to use that line when they just take out money?

Can someone verify this for me, ATX no longer prints Sch 1-3 (with zeros) like in prior years? I just noticed it. Thanks

I should add, when they don’t itemize, cannot take rental loses etc...

I feel embarrassed asking this question, but has someone saved/reduce (tax liability) their W-2 clients?

Well it seems people are taking it upon themselves to extend the filing season because they are coming in very slowly, and no I don’t want an extension.

Since everybody is talking about how they are making a killing on stocks and bitcoins, wouldn't it be nice if employers were able to take a cut of those lovely gains from day trader employees using company time and resources?

What happens if they are in a common law state, would you have to split the wages?

TP received a notice from the department of education, canceling their student loan, the notice can be used as a 1099-C, however the cancellation amount is zero, does this sound right? Or do I have to request the amount from the TP and use that amount?

Who is a qualifying child? An eligible individual may also receive up to an additional $500 per child, if the child meets the definition of a qualifying child of the individual for purposes of the child tax credit. To be a qualifying child of an individual for purposes of the payment, generally the individual must live with the child for more than half of the tax year, the child must not provide over half of his or her own support for the calendar year, and the child must not file a joint return for the tax year. The child also must be the individual’s child, stepchild, eligible foster child, sibling, grandchild, niece, or nephew. In addition, to be claimed as a qualifying child, the child must be a U.S. citizen, permanent resident or other qualifying resident alien. The child must be under the age of 17 at the end of the year for the tax return on which the IRS bases the payment. Also, a qualifying child must have an SSN valid for employment or an adoption taxpayer identification number (ATIN). A child who has an ITIN is not a qualifying child for this payment. TP dependent meets the above, however in ATX question 2 of the recovery rebate credit worksheet, I need to mark it as yes in order to arrive at $500 for the 1st payment and $600 for the 2nd payment, I am aware ITIN parent does not qualify.

HOH of didn't qualify for the 1st and 2nd stimulus payment because of an ITIN, however their dependent child (under 17) has a valid SSN, does the fact that the parent has an ITIN still disqualified them of receiving it for the child?

I am currently doing a training on PPP and if you think this is bad, many business did not need the PPP loan and they don't need to pay it back.

Separated TP child lived with him since 2019 and after the 2019/2020 end of the school the child went abroad to spent summer with mother in another country. Child was living in another country from June to November, child came back right before Thanksgiving and decided they wanted to stay with the father, child has been doing online school from ever since. Father is not the legal guardian of the abroad school so he cannot request any school records for HOH, however he could for the 1st half of the year, would this be sufficient for proof? TP has provided 100% support for the months child was living with him.

Ok, I figure it out, you need to input zero on line 16 and 19 on the recovery rebate worksheet if in 2019 they were a dependent, and not in 2020.

Just to confirm, any whipper snapper 17 and over (dependent on someone's tax return) in 2019 will not qualify for the $500 stimulus payment in 2020? Worst, they won't even qualify if there are no longer a dependent in 2020?

Has anybody reconciled their clients $1,000 per employee (up to $10,000)? I temporary have it on the balance sheet as a liability but I am not accounting for it on the tax return balance sheet and I am off by that amount. Wondering if someone reconciled the amount on the M-1 schedule and on what line was it put? Thanks MAS

Everybody hates bad news, but the only bad news here is all the tax law changes and delays, and if you feel Eric is doing a good job with the site don't forget to click on the "Donations" link, lets show our appreciation to him.

Fictional TP owes 15K, making an IRA contribution right now would save them around 2K, TP is buying a house after paying for the taxes they are barely going to have for the down payment. They would need to shell out 5-8K to get the tax savings, so would option B work? I looked at the rules and I see nothing on amending after the fact, just as long as the IRA payment is done before the deadline. I have never encountered a scenario like this before and wanted to get people thoughts. Fictional TP is having a hard time getting financed because they have been SE for a few years and bank loves W-2s customers

Let's say a TP would benefit from making an IRA contribution for 2020, however down the road, they don't know if they will have the money to make the contribution by the filing deadline. Would any of these two options work: A. File now including the IRA contribution and amend to remove the IRA contribution if they don't have the money by the deadline. B. File now without the IRA contribution, amend before deadline to now include an IRA contribution (they came up with the money). Thanks