BulldogTom

Most taxpayers hear that they can get their money out of a plan under the "hardship rules" and think that applies to the tax law as well. I don't know how we got to the place where people don't know the difference between advice given by a 401K plan administrator about a plan and tax advice. It costs them so much money for the things they do under the advice of the wrong expert. Tom Hollister, CA

PETA will not like you for that one, but I love it. Must try it with my neighbor's cat. Tom Hollister, CA

About time. You have been on this board as long as most of us. Took you long enough. Slacker! Just kidding. You are one of my regular "reads" on this board as we both have to deal with the quirks of CA. Congrats. Tom Hollister, CA

Got up early this morning and dropped a 15lb brisket on the grill. Supper is served at 1:30 today. Thanks to the weatherman for giving me a break in the much needed rain to get my grillin' on. Last night I made a 4 layer German Chocolate cake for my wife and son, who celebrate birthdays this week. Today is a good day. Tom Hollister, CA

Not to stray too far from the original post, but with all the exempt companies (those with less than 50 employees) out there, there is no way, as Obamacare is currently written, that the DD code can be used for a source document for any tax law. It is just not required to be calculated by all employers at this time. And it does not break out the level of plan that the employee has selected, so it cannot be used for determining whether the plan is "affordable". Also, it is an option to include dental coverage in the DD number. You don't have to, but you can. For example, I can select any of 12 plans at my day job. Only 1 of those plans is considered "affordable" for every employee in the company. It meets the minimum requirements under the law and is priced "affordably" according to our insurance broker who did the analysis. Almost no one in our company selected that policy. We also include dental insurance in the DD number calculation on the W2. Our company does not contribute to the dental plan, the employees pick up 100% of that cost under a salary reduction agreement. If you don't know this as the preparer for anyone in our company, how can you work with the number? What I am saying is that the DD code does not, will not, and can not give us any information that will be useful in calculating the penalty tax next year. Maybe they will tweek the law, but not in time for next tax season, as payroll is already going out for next year's returns. That DD number cannot be made useful for any year before 2015 tax returns, but most likely, not until 2017, to give all employers time to comply. Tom Hollister, CA

I am with Jack on this one. The church may not know the rules as a lot of the bookkeepers and treasurers are volunteers. The receipt must have the wording if the donation is in excess of $250. You said donations, indicating multiple giving events. If none of the amounts were in excess of $250, and the taxpayer has the cancelled checks, they will be all right. But if there are amounts over $250, the taxpayer must have a receipt in their possession at the time of the filing of the return. If they don't have a proper receipt, no deduction. Tom Hollister, CA

Not so fast Rich. That is the total amount of the cost of the policy, both the employer and employee portions. Whether it is pre tax or post tax will take some digging, but the amount in box 12 is not exclusively the employer paid portion. In general, most employers will have a salary reduction arraignment in place and the employee portion is pre-tax, but not always. A copy of the check stub and working your way back through the math on the SS taxes wilthheld can usually find the answer for you. Tom Hollister, CA

Did not know any of this. I learned something new today. Thanks. Tom Hollister, CA

I am not doing anything different with the auto backup. I let that go to default. I do a second backup to flash drives. I just click on the button on the backup screen and point to my flash drive for the off site storage backup. The first time I did it, the process took about 20 minutes, but I think that is because it was backing up all the payers, form rates, etc. Hope this helps. Tom Hollister, CA

I will take all the clients that want 5PM to 9PM appointments that you want to give me. Tom Hollister, CA

I would think you are right. Which would be a circular 230 violation for a CPA/JD. The invoice is proof that the preparer was paid, and if they did not fill out the bottom of the 1040 as the paid preparer, they are subject to sanctions for failure to sign the return. In addition, if the return was e-filed, the PTIN could be revoked. Why do preparers do this. The penalties are so harsh if you get caught. And for a few bucks. I don't understand it. Tom Hollister, CA

What is on the bottom of page 2 of the 1040. I am dying to know if they put the firm name and PTIN number on the return? I don't want to know the name, just if the preparer actually filled out the information. Thanks Tom Hollister, CA

Dear Client, Yes, I filed your tax return. I guess I did not make myself very clear when I said that if you don't hear from me, everything is fine. Please refer to your client letter, as it will tell you how to find out from www.irs.gov when the money will arrive in your account. As to your 3rd and 4th texts about the projected 21 days that the IRS is stating they will take to get your refund to you, all I can say is call your congressman and ask him to get the IRS off their collective butts and process your refund. FYI - due to the number of texts we have been exchanging today, I will be a little late from work tonight sweetheart, so please put my dinner in the microwave. Your husband and tax preparer, Tom Hollister, CA

The clients never read the letter anyways. I highlight www.irs.gov and tell them to go there when they don't get their refund. That is the only part of the client letter that they read anyway. Tom Hollister, CA

MAS is correct. The penalty waiver is only for IRA's, not 401K's. Your client did the wrong thing. He should have taken a loan from the 401K rather than a distribution. Alternatively, he could have done a trustee to trustee transfer from the 401K (if the plan allowed early roll overs) to an IRA and then taken the distribution. I have seen this before and it really is a shock when the client learns they did it wrong and have to pay the tax and penalty. A lot of times, they don't even realize that even though the penalty is waived, the distribution is still taxable. Tom Hollister, CA

My father in law had a saying "You gotta make hay when the sun is shining". In our industry, the sun shines Jan 15th through April 15th. We try to accommodate all of our customers to the best of our ability. I would stay and do the return if that was the only time that the client had and we could not get them to e-mail their information. Tom Hollister, CA

I am good. The update seems to make the program better, and I can now backup to offsite media as well. I suggest you do it. Tom Hollister, CA

Nice plain english interpretation of the rules. Thanks for posting it. Tom Hollister, CA

Again, I am mostly on board with Mr. Pencil. But I am a little more aggressive on the "out of area" exception. This is a very grey area in the tax law. You can deduct your travel out of the area that you normally work. What that means is not exactly clear in the code or rulings. It is a facts and circumstances. In the example above, I would say that any travel that requires an overnight stay is pretty safe to take (remember, this is the tax law according to Tom, not uncle sam, we are talking facts and circumstances). Then you get into the 400 range. I would think that is outside of the normal work area. 75 miles seems to be an hour and a half drive, not so much a safe bet. The distances in between, who knows, it is facts and circumstances as to whether the client is working out of his normal work area. Other factors would have to be taken into consideration. Tom Hollister, CA

What does square do about the PCI fees? How do they calc them? No one mentioned them earlier. Tom Hollister, CA

Just did my first backup with the new program. It takes up 753 mb on my flash drive. I have 40 returns on the program this year. Last years backup of 211 returns took up 253 mb. Time to backup was approx. 20 minutes. Seems to be good to go. Just a little time consuming. I assume as I backup to the device now, I won't have as many returns, payers, and rates to backup for the first time, so it will go faster. Tom Hollister, CA

JB, I like you a lot, so don't take this as a slam or a knock at your abilities. You are dead wrong. Schedule C is for self EMPLOYED persons. They employ themselves. And it is commuting if he does not have an office in the home. This is why we have to document the OIH "regular and exclusive use" so closely for our clients, because the thing the auditor is normally trying to get rid of is the mileage, not the little bit of mortgage interest, depreciation and utilities that the SE taxpayer is getting on his office. It is the mileage that is the big ticket on that form. Establishing an office in the home opens up the mileage deduction. Tom Hollister, CA

I am with Mr. Pencil on this, mostly. If the taxpayer does not have an office in the home, he cannot deduct the mileage. However, if he has an office in the home, used regularly and exclusively for the ref activity, then he could be eligible for mileage from his office to the customer job site and then back to his office. He could, if this is how it played out, actually deduct some of the mileage without an office in the home if he is going from his first job (the bank) to his second job (the ref activity). In that case, he would not get his first leg of the trip (home to bank) or the last leg of the trip (ref activity to home) as those would be commuting miles. But without an office in the home, his mileage from home to ref activity and back home is not deductible on the sch. C. It is commuting mileage. He is a "turtle" in the eyes of the code. There is a tax court case on this that I read a long time ago for a logger who never worked in the same place for more that a few days at a time. He did not have a regular tax home, so the court said that where ever he was working, that was his tax home, and therefore he could not deduct mileage. Tom Hollister, CA

You (and my wife) convinced me to plunge in. Sent out 18 returns last night at about 8:30PM. Had all the federal acks by 9:45PM. Wholly cow. Is it possible that the IRS actually got it right this year? Maybe we should not start e-filing for another 2 weeks every year. Still waiting for CA acks, but they will probably not get to them until Monday. Tom Hollister, CA

That seems to be a very dangerous attitude to me. "Take aggressive positions on the tax return and buy insurance just in case you get audited." I think the policy will have some limitations on what it will pay out. Now, I never read the policy because I don't trust any product that CCH is associated with, but if they are offering an "audit insurance" policy, I am pretty sure they are not going to pay out on unsupported positions. Just my two cents. Tom Hollister, CA