JohnH

My eyes aren't all that good, but the notice appeared to apply to a Form 941. I'm guessing there was 4 cents due on the Form 941 itself (difference between actual liability and actual payments) , plus a FTD penalty and/or a FTP/FTF penalty of some sort. I agree that there's no way the penalty & interest alone on 4 cents would add up to the amount stated.

I have no idea what it might be, but I'm absolutely convinced there's more to this story. We've been discussing this off and on on the TMI board as well. Two IRS agents for a matter this small? (They can read too, you know). A mysterious previous letter stating that all taxes have been paid? (Anybody on this forum ever see one of those?)

I took a peek at YouSendIt.com and it looks good, but I'm puzzled by something. If I'm reading correctly, the free version charges $3.99 each time to password protect a file. So given that pdf Factory costs a one-time charges of about $50, it still seems like the better bargain. What am I missing here?

I think it was 2004. But keep in mind it's been upgraded several times, and I don't believe the free version in ATX allowed you to password protect files.

"Well, officer my wife & I had dinner at the club and we were heading down the freeway while she looked in the phone book for a place to get our taxes done. I preferred HRB, but she was leaning toward JH. Finally I suggested we compromise on the company that has the sharp looking babe on the corner wearing the raincoat and pointy-spiked hat, waving at me when I drive by every day. That's when my wife started yelling about suddenly realizing what I'd been up to and where the green threads stuck in my zipper came from. Next thing I knew she pulled the gun out of her purse and..."

I'd put in on Line 21 and not do a Schedule SE. Include an explanatory note on the line "Military Recruitment Bonus - per IRC Sec. 183". (Thanks to Taxbilly in a previous post for that last part of the entry) He might get questioned about it and you'd maybe have to write a letter, but I have a feeling IRS is seeing lots of these. If there's a W-2 from the military they should be able to add up the facts.

One tip regarding estimated tax payments, especially for elderly clients. If the money's in the bank, just have them pay the whole year's estimate in April. Then there's nothing to remember until next year. Several of mine do that, even when there are several thousand dollars of tax involved. If interest rates were very high this might not be so smart, but given the current interest levels and the little bit of earnings foregone, it sure keeps their stress level down. (Plus youi;re not getting those panicky "what do I do now" calls in late June, Sep, and Jan)

Tax basis of sweat equity is worth a bucket of warm sweat. He can add the cost of the bucket to his basis, but not the sweat.

I'd say that was 53 minutes well spent.

A lesson in haggling: A young optometrist goes to work for an old pratitioner. The old practitioner is training the young guy on how to talk to the customer about eyeglasses. He says: "Sit down with the patient directly across from you, look him straight in the eyes and say, 'Mr ___, you need glasses.' He will say, 'OK, how much?' Keep looking him in the eyes and you say 'Fifty dollars.' If he doesn't blink, you say "For the lens.' If he still doesn't blink, you say 'Each.' " It works every time, but you've gotta be looking them in the eyes.

Inventory! That hadn't crossed my mind, jainen. Thanks for the chuckle...

Ditto. File the extension & give yourself time to breathe. Some of my biggest blunders have been hasty decisions under deadline pressure. With an "S" corp, all the extension does is take Mar 15 off the table. A side benefit of filing the extension involves the decision to set up a SEP. Filing on Mar 15 slams the window shut on that option, whereas filing the extension allows you and the client 6 months to decide whether the SEP might be a smart move. Why close out any options when you don't even know if they might be wise tax planning?

He can deduct the loss if he included the $100 in gross income in the first place. On the other hand, if he reports income only as it is received, then the $100 would be excluded from gross income and there's no further deduction.

Good point. The fact that this is used as an example in the Pub would go along way toward supporting the deduction. Doesn't make it a slam dunk, but certainly a strong argument in the client's favor. But as you say, documenting everything is the key element. What was his dominant motive? Here's an article that might be of help. In this situation the employee was also a shareholder, but the key element focused on the fact that the indidivudal was an employee trying to keep their job rather than an investor in the business. http://www.aicpa.org/pubs/taxadv/online/sep2004/trends1.htm The deduction might be subject to the 2% haircut, but that's still better than no deduction at all. The uncashed payroll checks might be a separate matter altogether, to be treated differently than the loans. As jainen pointed out, this might be a good reason to carefully scrutinize the W-2 for accuracy

I've paper filed them well after the due date and never heard a thing back. Although there's supposed to be a penalty for a late-filed 1099/1096, I've never seen it imposed. Not saying they might not start imposing the penalty in the future, but that's been my experience. Besides, in most cases the $50 penalty is small change compared to the value of the deduction to the payer. I don't buy the idea that some tax preparers propose about failure to issue a 1099 invalidating the deduction, but it's probably worth $50 per form just to prevent it becoming an issue if an audit hapened to occur. Since you have until Mar 31 to efile it, you're still OK. But I wouldn't hesitate to file them even after the due date if the client just can't seem to get their act together. I'd just be sure to document the reasons - maybe even have the client sign an acknowledgement that they were the reason for the late filing, just in case a penalty ever popped up.

Before I switched to a lawn service, I used an electric mower. Once you figure out how to lay out the extension cord in a certian pattern, it's easy to do the mowing with very little effort to keep the cord in the right place. Aside from no exhaust fumes or keeping up with gasoline & oil, you never have to worry about the thing failing to start. Electrics are also very light, so they're much easier to push. Initial purchase cost is also very reasonable.

Another great feature is the ability to "Export" the client list to an Excel file. This allows you to manipulate the info in virtually any way you want, expecially if you know how to work with the Lookup function.

Mail slot in the door is a MUST. I also enclose a couple of labels when I send them the January client letter and encourage them to mail their info to me when they get it ready. I mail completed returns back to the clients as well, in order to avoid the "pick-up & pay" discussions that can soak up so much time. I NEVER prepare a return while someone is sitting there, even if it's their kid's return for summer work. I encourage them to use email rather than call me. I'll return calls the same day or next day, but generally respond to emails within an hour or less, if only to say I'll look something up & get back to them. Email can be a real time saver if you continually promote it. Many clients are as busy as we are (or busier), and they appreciate the streamlining of the relationship. That also frees up some time for the few clients who really do need some hand holding. For me, the essential element is to do everything possible to keep your clients out of your office so you can get some work done.

Glad I found this discussion. I just had a client email me with this very question which their financial planner posed to them. Seems to me it would work because non-deductible IRA's are eligible for Roth conversions - you just have to break out the taxable earnings and pay tax on that portion. So an immediate conversion would not generate any tax liablity since the earnings would be virtually nothing. This taxpayer expects to be near the contribution limit in 2010 as well, and the planner also suggested going ahead and doing the non-deductible IRA for 2010 and then doing an immediate conversion of that amount as well. This relieves them of the necessity of adjusting the contribution by Apr 2011, which is what they would have to remember to do if they simply put it directly into a Roth in 2010.

Could go either way, but if it's considered meals then he gets to keep deducting 1/2 even when the amount exceeds $50 per customer (if it does).

"It's unwise to run out of altitude and ideas at the same time" - USAF "If your sergeant can see you, so can the enemy" - US Army "The only thing more accurate than enemy fire is friendly fire" - US Army "Friendly fire... isn't". - US Army "If your attack is going too well, you have walked into an ambush" - Infantry Journal "Incoming fire always has the right of way" - US Army Cluster bombing from B-52s is very, very accurate. The bombs always hit the ground. - US Air Force And my personal favorite, which I actually heard a drill instructor shout in basic training when a fellow recruit got homesick & weepy - "SON, IF YOU NEEDED A GIRLFRIEND THE AIR FORCE WOULD HAVE ISSUED YOU ONE!"

Reminds me of an experience I had several years ago in reverse. A friend at our table asked for extra cheese on his nachos AND offered to pay for it. The waitress took them back to the kitchen, but returned a few minutes later & told him the kitchen said they can't do it, even though she told them he's willing to pay more. She seemed embarrassed by the whole thing. As we were leaving, the cashier asked the obligatory question about whether everything was OK, and he told her about the cheese conversation. As the cashier was apologizing, the manager who happened to be standing nearby leaned over her shoulder and interrupted saying, "I'm the one who said we won't put extra cheese on the nachos. It doesn't matter if you wanted to pay extra. We're just too busy and pretty soon everyone will be asking for more cheese!" To which my friend replied, "No problem. You won't ever hear me ask anything again." And he turned & walked out. I don't think any of our group ever went back there again.

Interesting perspective. But if I belong to an organization of crooks wouldn't that automatically classify me as a crook by definition, even if the rest of the crooks turned against me from some reason?

Good points and no real disagreement here, although I'm not persuaded by the "frivolous return" argument. I doubt verbal information from a single IRS rep on the phone would amount to much in the total scheme of things. I don't pay too much attention to what they tell me on the phone when the answer isn't what I want to hear. Sometimes I just make another phone call & see what a different agent says to me. Amazing how often the responses are vastly different. I was assuming the issues of spousal liability had already been explained and that the spouse was OK with that, otherwise the issue wouldn't already be under discussion. Delay in getting the payment agreement is no big deal, PROVIDED acclerated collection action can be avoided. (The interest is a non-issue because the taxpayer obviously can't pay the balance in full, so what's another month or so of delay going to matter, if it can be achieved?) As for whether it might slide through, let me just say I've seen stranger things happen...

Just brainstorming here, but what would it hurt to try filing a 1040X and see what happens? After all, this isn't a case of two separate MFS returns being combined to change to a MFJ. Rather it's a case of a MFS return being amended and additional income being reported, along with a change to MFJ. Might be just enough of a gray area for it to slide through. There's no clear prohibition against filing that way, and it seems that the worst thing IRS would do is send it back with instructions to file the second return MFS, which basically puts you back to square one. What's the harm in trying?