artp

I finally got a 2021 IRS transcript for the daughter which showed filing status of single, 1 exemption and no income, just the $1400 refundable credit. As stated earlier she received the check and cashed it. Again both the mother and daughter insist that a tax return was NOT filed and she did NOT go to the IRS website and request the EIP3 rebate. However this happened, my concern is that if the IRS has the daughter claiming herself on their records and if we now file the parent's return and try to claim the daughter (which is correct since she qualifies as their dependent) and claim the $500 credit for other dependents the IRS will reject the return. Is this not a legitimate concern? If so, should we first file an amended return for the daughter showing her as being claimed by her parents and then file the parents return? Suggestions??

Terry D My concern is that the daughter must have done something to get the $1400 check. She insisted that she di NOT a tax return and did not go online to request the EIP. I have requested a transcript just to see what (if anything) is in her record and whether she claimed herself before I file the parent's return and claim her as a dependent to get the $500 tax credit.

Working on parent's 2021 return on extension and 18 year old daughter received $1400 check from IRS, but no 1444-C or any other documentation. Daughter did not file 2021 tax return, has always been claimed by her parents in prior years and will be claimed again in 2021. She had a summer job and got a W-2 for $425 and no taxes were withheld. Parents got total of EIP3 for $5600 for husband, wife and the 2 children. Do not know why the daughter got the $1400. Is the daughter required to return the money to IRS?

Thanks for all the replies and suggestions. I agree that this is a very weird situation. I have never run across this set of circumstances before. Client is taking additional steps as suggested by responders to this post. Client does not have a computer, does not use any online financial apps on her cell phone, but I was informed that their granddaughter works as a medial transcriptionist working from home and does have all of their personal information on her computer. Thus, a probable source for a data breech. I use MFA and have checked my computer for data security. The written notice she received appears legit with valid iRS phone numbers and address, but I am waiting for a reply to my request for a transcript to verify what the IRS has on file. The tax shown on the notice was calculated based on filing as single.

Taxpayer’s spouse received a notice from the IRS showing a balance due of $4796 on a 2021 tax return erroneously filed under her name. They have filed a joint return for the last 30 years. The 2021 return has NOT been filed. This was obviously a fraudulent filing. We have requested a transcript and copy of the fraudulent return. I have a power of attorney on file and have attempted to contact the IRS to get this straightened out, but of course cannot get through on the phone. Meanwhile, the clients are reporting the security breach and are applying for identity protection pins. I am in the process of preparing the 2021 return. When they get the protection pins, I will file the return. Are there any other steps that we should take to get this matter resolved?

Thanks for the suggestion. I will contact them with the question.

Client is wanting to become a qualified home inspector and has enrolled in an 120 hour live certification inspector training course with InspectionGO Academy out of Pennsylvania. Would this qualify as a "trade school" and allow the client to use 529 plan funds to pay for it without triggering tax?

Thanks for all the replies. Sorry I did not acknowledge them earlier, been down with the flu bug.

Grandmother has had guardianship of granddaughter since 2015 but has never claimed the exemption. In 2020 granddaughter claimed her own exemption and had W-2 earnings and claimed AOTC. Granddaughter now age 20 is full time college student with no wages and no income for 2021. Neither parent is claiming the exemption. She lives most of the time with her grandmother when not in school—over 50% excluding time at school. Grandmother has highest AGI vs parents. Parents support is minimal per grandmother but having difficulty getting documentation on how much everyone is contributing. My understanding is she still needs to meet the support test (tie breaker rules apply here?) in order to claim the granddaughter. Does guardianship vs custody have a bearing on this issue? If she gets the dependency exemption then she should also get AOTC?

The property is held in the trust so the trust received the 1099PATR. Sorry for the confustion.

DANRVAN Thanks for the quick reply, much appreciated. Just to clarify, client is reporting this activity thru a trust so there is no Form 4835 available and everything is reported on SCH E. The net crop sales per his listing is $9602.76. The difference of $411.94 is discounts and check off charges.

New client is farm landlord (not active in farming operations) who receives a share of the crop sales as rent for his farm land. He received a 1099-PATR from the cooperative showing $298.81 in box 1 (patronage dividends), $10,014.70 in box 3 (per unit retain allocations), $10,313.51 in box 7 (qualified payments Sec 199A) and $10,313.51 in box 8 ( Sec 199A items). In the past he only reported his share of the crop sales as income and the patronage dividends in box 1 on Form 4835 with the amounts shown on that form carrying over to Sch E. Since he is not active farmer does he have to report any of the amounts in boxes 3, 7,8 ? HIs net income on Form 4835 has either been very small or even a loss so he has never tried to claim QBI in profit years. I would appreciate help from those who have experience with farm rentals where client is getting a 1099-PATR like this,

Thanks for the quick reply..much appreciated

Has the relief provision for waiver of 10% penalty and 3 year spread on early retirement distributions been extended for distributions made in 2021? Client took advantage of this for 2020 and early in 2021 he had to withdraw the balance of the funds in his retirement account.

I need to clarify. The contribution was $7000 and there was a loss on the investment so the net amount withdrawn as $6683.24. The client is 65. I do not see where a entry would be required on either Form 5329 or 8606. When I made the entries from the 1099-R in Drake as outlined above, there is nothing taxable, which is correct yet I still have concerns with the coding in box 7 that may cause an issue with the IRS trying to access tax on this transaction.

Client made excess Roth contribution in April 2021 and pulled it back out including any earnings prior to Dec 2021. The 1009-R showed $6683.24 in box 1, $o in box 2, Codes B and J in box 7. My understanding is nothing should be taxable and there should not be any excise tax accessed. I am concerned that the box 7 coding may trigger IRS excise tax. Is my concern valid? How to report it in Drake to avoid IRS query?

Thanks for all the replies and the link from Terry D. I look forward to view the 1099R. I appreciate your help.

Taxpayer made a $7000 Roth contribution in early 2021 and now realizes that he will exceed the income limitation (AGI will be $240K on MFJ- he does not have any tax losses or deductible expenses to reduce AGI) and will need to pull that money out of his Roth account which can be easily done. It is my understanding that if there are any earnings on the $7000 they must also be pulled out and nothing will be taxed. But what happens ii there is a market decline on the $7000 and now it is only worth $6800? Does he need to pull out only $6800 or $7000. What to report (if anything) on his 2021 tax return?

I need to clarify that the taxpayer is married and an IL resident. If they decide to form an LLC (for limited liability purposes per the attorney) and to purchase and hold title to the property in the LLC should they (or can they) elect to be a single owner-husband and wife- (that is to be disregarded as a separate entity) or should they elect to be classified as a partnership? IL is not a community property state. If the plan is to later transfer ownership (control) to their children how would this effect your response? Needing guidance here as I do not have a lot of experience with real estate in an LLC. Thanks

IL taxpayer wants to purchase 30-acre wooded tract of hunting ground which includes a house for personal use for himself and family members. He is not looking to rent it out or develop the property. Purchase price is $325,00 with $70,00 cash down and loan for the balance. There will be no income from the property, just expenses for real estate taxes, mortgage payments and liability insurance and other personal expenses. Attorney is advising client to form an LLC owned by the taxpayer to purchase the property and hold title in the name of the corporation for liability purposes. If personal liability is major concern, alternative to corporate ownership? If the property is later sold would this not create corporate tax issue for client? Alternative suggestions?

Is there a way to fund LTC from an IRA account tax-free? Taxpayer has $150,000 in IRA and wants to purchase a whole life policy with LTC benefit. Plan would be to transfer the IRA to purchase 10-year annuity. Problem is taxpayer will get 1099-R each year from the annuity company showing $15,000 taxable. Anyone see a way to accomplish this without incurring income tax bite? Taxpayer is 62 so 10% penalty is not an issue.

Thanks..that is good news

Has anyone seen a post on this? Art

Thanks for your replies. After further consideration we will not be filing a MO return for $75 of wages.

I guess I am not making myself clear. Let me try again. Taxpayer is an IL resident who is itemizing on the Fed return and deducting $2700 of real estate tax on his IL home. He has $75 of wage income in MO. The MO-A is adding the real estate tax back to MO source income on line 5 of the MO-A and flows thru to line S on MO-NRI. I am attaching a redacted copy of the MO schedules.MO Tax Return.pdf