BulldogTom

I think this is hillarious. I now know how the president is going to balance the budget - by appointing the worst tax cheats to his cabinet. If he keeps this up, we will pay for the bailout in about 6 months. What they should be checking is the returns of all the republicans who are leaving DC right now. You know they are taking notes on how to avoid taxation from the democrats who are coming in. They are all punks in my opinion. I think to work in DC politics, you have to check your ethics at the beltway. Tom Lodi, CA

And note one other item on this, it is NOT REFUNDABLE. It can only lower your taxes to zero. I think there are very few middle income buyers that will get the full effect of the credit. It should help the upper income taxpayers. Be careful on advising your clients. If you tell them they are going to get $3,333 credit on their taxes in 09 10 & 11 and they don't get the big refund, you will be like Lucy Ricardo. "You got some splaining to do". Tom Lodi, CA

Do you have an agreement with the per diem firm about its clients? In other words - how much do you like working per diem for that firm. If you were working for me and then taking in a client of mine on the side, I would make an assumption that you are pulling my clients. May not be the right assumption, but that would be my first thought. You should either tell the new client no or go to the other firm and tell them what happened. my 2 cents Tom Lodi, CA

It sounds like your client has been getting advice from the three B's - the Barber, the Butcher, and the Bartender. There is some truth to what he is being told, but of course he is not going to get all the nuances like "reasonable compensation" and "corporate governance" and not treating the corp like a sole proprietorship. However, the LLC S-Corp is not a bad entity choice for a lot of situations. I would not discourage it, but you need to educate your client about how a corporation is different than a proprietorship. Tom Lodi, cA

JB - smart@$$ answer is - how much does the client have in the bank. Real answer - State NR's are normally more complicated, so I charge a lot for them. I am in CA and I can get away with more than you seem to be able to charge (that return would have cost about $110 the year before in my office and still about 50-75 less than HRB). The return you are working on would be about 350 if I did it with good bookkeeping records, more if I had to sort all that crap out. You are a good professional and are worth every penny to the client. Don't sell yourself short. Tom Lodi, CA

I am waiting also (see my post from yesterday). The IRS posted 1040X on their website on 2/21, so I would expect ATX to have it any day now. In the past (the good ol days) they were pretty fast at getting the forms out. Now that CCH and Taxwise get their forms first, it seems like we are waiting a little longer. Tom Lodi, CA

The new form has the changes to the first time homebuyers credit for 2009 purchases. Just in case you were waiting for that. Tom Lodi, CA

A new scam that is going around. Small businesses are getting a letter supposedly from the SBA. Says they need to get qualified for the Stimulus payment. Just give them your personal information including your bank account number for direct deposit into your account. Just an FYI. In case your clients get one. Tom Lodi, CA

There is a saying that goes something like this: What do you get when you don't get paid? Education. That is what I am getting for this tax return. Tom Lodi, CA

Well, I was wrong. Thanks RoyDaleOne. I learned something new. I will amend and appologize to the client. Tom Lodi, CA

It is coming from the County Retirement Plan. The taxpayer does have contributions, which we took into account when we calculated the taxable portion. It is definately not an insurance benefit paid for by the employee. Tom Lodi, CA

Amen to OldJack. The real trick is to make sure all the activities are qualified activities. I personally do this for my day job, and it is a pain in the @$$. The CPA firm actually prepares the return, but I do all the work to segregate the qualified activities and the non-qualified activities. Then I allocate all the overhead and payroll accordingly. The math is pretty simple, and I have developed a spreadsheet to do it for me. It is the analysis of the activities and breaking out the revenues, payroll, direct and overhead costs associated with the activities that is a pain. Tom Lodi, CA

They verbally told her that it would not be taxable. They gave her a letter with verbage right out of regulation 1.104-1(e) as to the manner in which the amount was determined. I think that is what made me quesiton if I treated it correctly. But a close reading of that regulation goes on to say that this exeption applies to members of the US military, the Geological survey, foreign service employees, etc. I don't see any authority for excluding the income based on her job as a county employee. Tom Lodi, CA

Thanks KC. The problem is the county told the taxpayer that because of the way they worded the letter and retirement award, it is not taxable. When I read regulation 1.104-1(e) I come up with that wording, but only if she was a member of the military or one of the listed federal government services in the regulation. When we prepared the return, we followed the general rule. The taxpayer then went to some CPA who told her I didn't know anything about taxes and the way they awarded the pension made it not taxable. So the taxpayer has the word of the county and the word of a CPA against me. I can see how she would think I am full of crap. I am going to meet with the client, and run through the entire research I have done. I will start with Pub 525, then the Master Tax Guide, then the Code, then the regulations. If she will not accept my tax treatment of this item on her return, I will refund her preparation fees and send her on her way. She can have someone else amend the return if she wishes, but I will not do it. Thanks for your confirmation KC. I just wanted to be sure I did not miss a code section or a regulation or a court case that would change the result from the general rules. Tom Lodi, CA

Taxpayer works for the county and is hurt on the job. County gives the taxpayer a Disability Retirement. 1099R has nothing in box 2a and "Taxable Amount Not Determined" checked. There are employee contributions indicated in box 9b. The county retirement plan provided the taxpayer with a letter stating that the taxpayer retired on "service related disability". It further states that the disability amount was not calculated on her years of service nor her age at retirement. I have read pub 525 and §104 and the regs at 1.104(e). I am coming up with taxable, with the exception of the amount attributable to the employee contributions. The taxpayer insists that the amount is not taxable in full. Am I missing something? Tom Lodi, CA

Single female client comes in. Third year we are preparing her return. "Has anything changed since last year?" Client - "No. Everything is the same. I am still in school, same address. Everything is the same" Finished the return. Client leaves. One week later client calls back. Client "Can I make an appointment for my husband? We got married in December" Me - Huh? What did you mean when you said nothing changed. Tom Lodi, cA

While I generally agree with the above answers, I think the first question is - WHO IS GOING TO PAY YOU FOR YOUR WORK? I am not totally convinced that you cannot be of assistance to this taxpayer. You may be able to mitigate the damage from the audit and reduce the taxes and penalties. I do like the idea of making the auditor tell you how to proceed with the taxpayer incarcerated. Doctors need sick patients too. We are not lucky enough to have only clients that pay us for the convenience of not having to prepare their own returns. Sometimes we have to take on those clients that are in a world of hurt as well. But, if there is no way you are going to get paid, withdraw. Just my 2 cents.

OK - Duh. Had I read the red instructions at the top of the form, it clearly says to input on the W2 form. Called the IRS e-file helpline. You can e-file with a substitute W2. No mailing of 8453 either. Sweet. Tom Lodi, CA

How do you process the substitute W2? Do you fill it out and then fill out the W2 form in the software? I filled out the 4852 but it just does not flow to the 1040. Am I missing a check box or something that moves it over to the 1040? Can I efile the return with a substitute w2? I think in the past we had to do the 8453 and mail it in with the 4852 attached. Is that the rule? Thanks for your help (as I go searching for my Pub 1345). Tom Lodi, CA

Sweet. So we are just waiting for an IRS announcement on how to make the claim and an update on our software? Or do you think it is wise to override the amount on the current form and let it fly? Tom Lodi, CA

Just to clarify, the new credit is not available on 2008 returns? I heard it was going to be available. Don't remember where, but I was under the impression that this credit would be available to claim on 2008 returns. I have come to hate the word "stimulus". Tom Lodi, CA

Sorry cientax, I have not had that problem. Did about 6 of them this year with no problems. It was the best part of ATX this year. Worked perfectly. Is your printer grabing two sheets or is it pulling just one at a time and then a blank sheet? Tom Lodi, CA

In reading the news on the stimulus bill, there is one provision that might affect cash flow at your business clients. The COBRA rules have changed (this affects employers with 20 or more employees). Anyone who laid off or fired employees from Sept. 1, 2009 will have to offer another 60 day period for the employees to elect COBRA coverage, and the employee will only have to pay 35% of the cost. The remainder is picked up by the employer, but refunded in the form of a credit on the next tax return (at least that is how I am reading it in the news). The employer must keep it up for 9 months. If you are doing the bookkeeping for any businesses, you may want to read up on this provision. It can affect your client's cash flow at a time when cash might be tight. Tom Lodi, CA

Yep - social security recipients are supposed to get an extra check this year for 250 bucks. I think the SSA is handling this one instead of the IRS and I don't think filing a tax return has anything to do with it. The new working families tax credit is going to be accomplished by changes to the withholding tables so that at the end of the year you owe 400/800 less on your taxes and you had 400/800 less withheld. It is a refundable credit. Tom Lodi, CA

Hey all, I used databazaar again this year for my toner supplies. I ordered 5 toner cartridges. The 3rd one was defective. This is the first time I ever had a problem with their products. So I sent them an e-mail. What a crock. "We will be happy to refund the price, but you have to pay for the shipping." Needless to say, that does not fly with me. If you send me a defective product, you should pay the shipping to get the piece of crap back. I have terminated my relationship with this vendor. If any of you are using databazaar.com for your toner cartridges, be aware that they don't stand behind them for more than 30 days. So, I guess they are saying that you should not stock up, and you should put the toner cartridge into the printer upon reciept so that you can be sure it works or they will not stand behind the product. This crap just really pisses me off. Sorry to vent on your holiday. I think I need a nap. Tom Lodi, CA