clarification of required to file Please

[WITAXLADY]

Taxpayer only has $21,000 AGI - MfJ over 70 both of them

but they cashed in stocks of $30,000 - slight gain - inlcuded in above AGI

I did a return for them and was just going to put it in their folder - or should I or am I required to file due to the 1099-B Sale price?

thank you, D WI

[Gail in Virginia]

I believe the requirement states Gross Income over $27,800 for them for a federal return.  I would consider that they are required to file.  However, if they did not, there would most likely be no consequences assuming basis was reported for all of the income from their stock sales. 

[Lion EA]

Filing does preserve the 3-year SOL and makes identity theft harder (or catches identity theft since the last time they filed, so they can act on it now). And, the state may be a lower requirement (isn't IL only $33 of income?! CT is a higher threshold than federal, but ANY amount of CT w/h requires a filing or a $50 penalty).

[jklcpa]

You didn't say what entirely makes up the $21K of AGI but will assume since you used "AGI" and have input the data, that the $21K includes only the taxable portion of their social security.

As far as the Sch D/8949 activity, the determination of gross income for the filing requirement includes capital gains but not capital losses, so your client may still have a filing requirement if they have losses offsetting the gains in your calculation AGI. You must use only the gains in the filing requirement calculation.

There is a whole list of items in Chart C of the 1040 instructions that lists other situations that would require filing. Probably the most common for older retired folks are if they had any distributions from an HSA, or Archer or Medicare MSA, even if those were used for qualified medical bills that has zero taxable effect.

Obviously this doesn't consider the state requirements either, so you'll have to check that also.

 

[RitaB]

I would absolutely prepare and charge for this tax return.  

[Yardley CPA]

4 hours ago, RitaB said:

I would absolutely prepare and charge for this tax return.  

Come on, Rita.  What's wrong with you.  A nice, elderly couple...fixed income...probably have a garden in their back yard that they tend to.  Let them be.  

[Lion EA]

Maybe they can pay Rita in tomatoes...

[mcb39]

Yes, you need to file.  I had a client with a 1099 B with an even trade; no gain and no loss.  They called him on it because they only had a record of the sale; no record of the basis.

And, we had filed a return because of other issues but they billed him for tax on the total sales price of the stock exchange that my assistant failed to report.

[RitaB]

18 hours ago, Lion EA said:

Maybe they can pay Rita in tomatoes...

One of my favorite clients brought in a German Pink tomato for me one year, cradling it like a baby.  I thought I might have to wrench it out of his hands.  

[TAXMAN]

Hey Rita german pinks are good and hard to grow. I like black cherry also.

In response I would file. Goodwill goes a long way here.

Edited June 29, 2022 by TAXMAN
added responce

[RitaB]

3 hours ago, TAXMAN said:

Hey Rita german pinks are good and hard to grow. I like black cherry also.

In response I would file. Goodwill goes a long way here.

I like the way you said that.  Filing is goodwill.  None of us are getting rich off this tax return.  Nobody is taking advantage.  Clients assume they should file. They are required to in this case, but even when not required, my clients want to file. 

Ok, ok, there's always that one who doesn't.  You know the one - she was mad at you because she missed EIP2:  "You told me I didn't have to file..."  

[RitaB]

22 hours ago, TAXMAN said:

Hey Rita german pinks are good and hard to grow. 

 

[WITAXLADY]

lol!! Thank  you - I did file but charged him little..

All is good

Happy 4th!!

D

[Catherine]

I love starting the SOL. I advise filing any time there is any question. Filing now not only starts the SOL but means it's done when information is relatively fresh in minds. Hate getting IRS letters demanding tax due that isn't actually due, just because proof of same was not filed in a return.

[mcb39]

How true; which only leads to more work due to a simple act of negligence.  I would much rather be safe than sorry!