Lion EA

OK, so NOT the owner? And, NOT his/her kids. But spouse is not mentioned in the above list. So, the spouse's wages DO qualify? The only family member who does qualify? Even if spouse owns 5% of the company, right?

What software are you using? You may have to contact your software support to see if there's a workaround, code, or other resolution to your error message. Or, if the program you are using has a limitation that comes into play on the returns you e-file, you might want to look at other programs before next tax season to see if there's one that better meets your needs.

National speakers disagree on this. Pick your side.

Years ago at Block, I had several families with three or four kids with investment income (usually from grandma/grandpa). I'd wait until everyone went home and open the parents' return on one computer and turn on enough computers for each of the kids' returns in that family. I'd complete each return up to Form 8615. Then I'd go around from office to office (I was in a premium office) inputting kid1's 8615 and adding kid1 info to kid2 and kid3, and start the circle again a couple more times until all four returns were complete. Yes, a real pain. When I went out on my own, software that could handle kiddie tax was a priority. The first time I prepared returns for one of those families with ProSystem fx, even though kiddie tax was one of the reasons I chose it, I couldn't believe how easy it was to point to the parents' return and the siblings returns and press a key and all the returns were complete! I actually woke up my husband at 2 am to tell him what happened (he was a school teacher on spring break, so I didn't feel guilty and had to tell someone how happy I was). Of course, he didn't understand anything I told him, except that my software had just paid for itself. Something that took me 45 minutes at Block took me no more than 4.5 seconds now! Remember when we'd have kids that would "age out" of kiddie tax and make us happy, but then the law changed and they were subject to kiddie tax until 24 if full-time students and we were sad again?! Most of my kid-clients are aging out, because most of my referrals are similarly aged families. I do have one set of kids but am hired by grandpa who is an investment banker and runs the kids accounts. However, the parents are in another state and DIY, so each year I tell them what information/what line #s I need from them. They're in an area that had tornadoes and other natural disasters along with the pandemic, so parents don't have their returns prepared yet. Make sure you charge enough for kiddie tax to cover your time and your talent/education.

But you were asking about ordinary losses on 1065 K-1 line 1, not capital losses down around line 8-9.

But, the penalty is 10% of the taxable distribution. There is no taxable distribution.

So, the house passed through the estate to the kids who sold it? Then, I agree, there's a step up/down in basis on that timeline.

Good memo you linked to. Only us old folks remember, but I use the old TV show Kate & Allie as an example that could've been two households under one roof if they kept good records. And, the master bedroom example for one household. After those broad generalities, it's facts and circumstances.

When there's a tie, explain the tie-breaker rules which the IRS will use if both parents claim the same benefits. Where would the child've been if not at camp? Who would the camp/grandma have called to pick up the child if sick/hurt/homesick? Was it a maternal or paternal grandparent? Facts and circumstances. Dependency can go back and forth easily with an 8832. But HOH with one child doesn't move as easily. I think Possi's parents live close together, so maybe child literally moves for half the year. Not as easy when one parent's in a different school district or works full time. Or kids' friends' parents don't want their daughters at a sleep-over at a single dad's home or son's friends love to visit at single dad's home... I tell my clients to keep that calendar, because if the IRS does apply a tiebreaker, they'll need that contemporaneous calendar and every scrap of documentation they can get. These situations are going to be challenging for the new Advanced Refundable Child Tax Credit and explaining why a client doesn't qualify this year or why they're paying it back at tax time!

You're saying maybe mom quit claimed a percentage to her kids and kept a percentage for herself and then mom and kids all together sold the house? But when mom dies, neither she nor the kids will own the house. Didn't they sell it as soon as it was quit-claimed to them. I guess I don't understand the timeline. And, Jeanne's taking a long weekend.

Decades ago when I worked at a Block Premium office, our training told us that if the adults share the master bedroom, it's one household !! Now one could still pay the bills for her kids and the other for his kids...

But there's no estate while mom's alive. The kids get it at mom's adjusted basis.

The week with grandma or at summer camp is a temporary absence that does not reduce the nights spent, still counts as nights at the parent's house that would've had the kid. And, the first year, one parent still had the kid for more nights. State divorce law does not trump federal tax law. Dependency goes to the one with the most nights. Dependency can qualify the parent for HOH. That parent can sign away dependency, but cannot sign away HOH. Will they get caught? Probably not. But we can't play audit roulette, per Cir 230. And, no client is important enough to risk my EA license.

Yes, the amount of time explaining that I'll never get paid for. As Catherine, I spend more time explaining than preparing. Maybe because I'm still remote, so trying to explain before they even download their return to review/sign (frantic phone call), explain at a distance (go to page X line Y that's included in total Z that's transferred to Sch...), then explain it again to the spouse, etc. I don't think it'd be much different face-to-face, except that I could highlight and point and see when their eyes glaze over. "But it wasn't that way last year." "But my co-worker got free unemployment." "Why can't my high school kid get her own stimulus; all her friends do?" "Why is my NY tax higher this year?" [Note: it wasn't; you didn't have any withholding from your unemployment so your balance due is higher, not your total tax liability -- as if the spouse that's calling for her hubby will be able to explain that to him.]

He can claim HOH with his kid only if the kid lives with him more than half the year. He can claim the kid as a dependent on years his ex releases the dependency to him. His ex, if kid lives with her more nights, is always HOH, but sounds like she signs away the dependency every other year. By the way, it's only 50/50 during leap years, unless they wake up the kid halfway through the night to go to the other house!

I am always behind, because basically ALL my clients drop off the same February week each year, giving me a huge backlog through 15 October. (I was thinking it was always around 22 February, but hubby says it's MLK weekend and following week; or, it might be dumping it all in my lap before they go on spring break to warm, sunny, fun places with their families, leaving me jealous and overworked.) That means that by the time I could file any 12 February, it was almost time to switch to preparing partnerships and S-corporations. Then switch to Trusts and calculating ES. Finally, tomorrow I will switch to preparing almost ALL (except for less than a dozen in February) my personal returns. That 12 February date really ruined my flow this year, prevented me from getting to know my software by preparing a whole bunch of the easier returns that come in early, feeling somewhat productive before slowing down to slog through biz returns. With the late date and many forms not ready, states not ready, constantly changing tax laws and "clarifications" of laws, I'm more behind, or at least feel more behind, than ever. I usually do my kids' returns (freebies) early, again it helps me learn and pick up speed and feel productive; but this year with forms running late, my kids all will be on extension (one kid's partnership is already on extension). Clients keep "checking in" with me, so I'm spending time on replying. Even on gal who always files late called me yesterday. My stack is growing instead of shrinking. I'm not sleeping well and have knots in my stomach. I spent hours last Friday rescheduling all the doctor appointments I'd made for after today to after 17 May. Which just postpones when I can visit grandkids, which makes me even sadder. And, I'm getting really cranky, which is more of an October thing for me. Rant over.

Are you sure it's a fully-taxable pension? Could it be a Roth 401(k) to a Roth IRA direct rollover?

Their "lending" is very businesslike and at low interest rates. Now, CT has high rates, a flat fee, and paperwork that borders on tell us what you own, sell it, and give us all your cash.

Schedule C with Form 8919 plus Form SS-8 to save her half of the SE tax. Or do you use Form 4852 instead of Schedule C?

I don't use ATX, so this will depend on how your software works. When I don't have a client in my system or don't have both spouses in my system, here's how I prepare an amendment. In your scenario, I'd roll over my continuing client. Then I'd move her to Spouse and add the Taxpayer's identifying info, because he's the one that already filed, so he's the one we're amending. (Alternatively, you can leave her as Taxpayer IF neither had filed yet or she's the one that filed.) Then I prepare the return as if it's an original joint return. When I have it the way I want it for an original joint return, I save it and call up an amendment (however your software requires). However, when it asks me if I want to move the current information to column A, I answer NO. I want my prepared return to be the AMENDED version, column C. Then, I just type in his information in column A, noting any refunds already received or balances paid.

My limited understanding is if she was alive after 12/31/2020, as long as she didn't die before 01/01/2021, then she qualifies for EIP3.

IRS themselves muddied the waters with their social media posts (I think I saw them on Twitter, over more than one day) telling people they had to 15 April to reduce their taxes by contributing to an IRA. Yes, this was after the 1040 deadline already had been moved to 17 May. I don't know how the IRS expects us to keep everything straight if they cannot.

I clicked on your picture and then clicked Message. Thank you very much for sharing your Questionnaire. I like having a one-pager to have clients sign.

Amen!

OMG