Three New Credits

[joanmcq]

How many people that get SSI have to file returns???

[erchess]

Recovery Rebate Credit

The IRS and Drake Software made the Recovery Rebate Credit a non issue this year for me. I wouldn't agree to do the return unless I was either shown the letter stating how much they were going to get or allowed to look it up on the web. Even with dial-up that took only a couple minutes and then Drake Software calculated what they were due. I loved that a lot. I think everyone in the Government learned from the mess in TY 2000 that all the relevant facts must be easy to learn on the web. I think we professionals learned that these calculations must be done before we tell clients their bottom lines because we lose credibility if we have to tell them "oh wait things are worse than what I just told you because of that money you got last summer."

[Black Bart]

Thank you Black Bart. But since SSI is NOT taxable and does not appear on the social security annual statement, we preparers will not know about it. It triggers the allowance of the $250 Economic Benefit payment, just as does VA benefits. It gets worse and worse.

I agree -- that's the sticking point and I hope, as Burke says...

...Upon further review of the eligibility requirements for this payment, I don't see how SSA/RRB can NOT show it on the 1099 form somewhere...

that they will put it on SSA-1099. But it's probably a long shot -- I don't think SSA will change their long-standing method just for this ripple in the water.

...we lose credibility if we have to tell them "oh wait things are worse than what I just told you because of that money you got last summer."

This is the problem. Last year, the only thing that happened if we omitted the stimulus credit was that IRS sent them a letter and a check. Not good for your image, but not really damaging since nobody cares deeply if they're coming out ahead of the game. This time, as I understand it, our software's going to be auto-calculating the $400-$800-whatever and, unless we subtract off the correct prior payment amount, then they'll get either an immediate notice of error or a later IRS bill for the overpayment.

[Uncle Sam]

Three New Credits

The way I see it - the SSA-1099 form SHOULD show the $ 250 in a separate box not calculated into the total gross benefits, even though it's not taxable.

You guys are right - it's going to be one more nightmare. And clients will STILL complain if we raise our fees.

And yes - our software companies will need to find a place to store the $ 250 so the system will calculate the proper amount of the $ 400 credit to be used.

[S T]

SSI and SSA

Normally a SSI recipient is not required to file a Federal or State Income Tax return, and SSA recipient's are only required to file a Federal or State Income Tax Return, if there is other income, that places them within the filing requirements. And from what I know if an SSI client receives very much other income other than SSA - they will be eliminated from the SSI program and benefits denied.

The taxpayers that I filed for the Stimulus Rebate ONLY, tax return 2007, I did not file a return for in 2008. There was no filing requirement.

I would think that these particular "recipients" of the $250 then in 2009 would also not be required to file an income tax return.

I believe we are only having to concentrate for (2009 filings) on those clients that received the $250 SSA rebate or VA rebate, that have a filing requirement due to other income such as pension retirements, investments, interest, etc.



Sandy

[dyne]

Since the SSI could reduce or eliminate the Making Work Pay Credit, we NEED to ask
EVERY client (who is possibly entitled to this credit) if they received SSI. I imagine none
or very few will have received SSI but if we do not ask, we might be penalized by IRS.
I have already prepared a questionnaire which I will ask EVERY such client to sign
which has the question: Did you or your spouse receive SSI:? That question alone will require
our time since many clients will not know what SSI is. What a mess!

[Black Bart]

Just thinking about it,

Since the SSI could reduce or eliminate the Making Work Pay Credit, we NEED to ask
EVERY client (who is possibly entitled to this credit) if they received SSI. I imagine none
or very few will have received SSI but if we do not ask, we might be penalized by IRS.
I have already prepared a questionnaire which I will ask EVERY such client to sign
which has the question: Did you or your spouse receive SSI:? That question alone will require
our time since many clients will not know what SSI is. What a mess!

Sandy and Joan are probably right -- there shouldn't be many SSI people because most of them don't usually make enough to file anyway. But I don't think I'm going to quiz every customer (they won't know anyway); that would be more trouble than explaining to a few clients why their refund is $250 short.

[Uncle Sam]

Three New Credits

My whole point is - the government SHOULD BE mailing out SOME FORM of documentation to taxpayers receiving the $ 250 advising them to show it to their tax preparer. If they don't have a preparer because they don't need to file a return - that's fine - but at least there's notification provided just in case they need to file a return.

[Black Bart]

No argument there

My whole point is - the government SHOULD BE mailing out SOME FORM of documentation to taxpayers receiving the $ 250 advising them to show it to their tax preparer. If they don't have a preparer because they don't need to file a return - that's fine - but at least there's notification provided just in case they need to file a return.

Obviously that would be the proper and prudent thing to do and maybe they will send a notice like last time except I didn't have much luck getting customers to bring it to me. Did you? I hope they put up a website to go to for the amount like they did with the stimulus payment -- that thing really saved us.

[dyne]

Upon reflection I may NOT ask every client (who is entitled to the Making Work Pay Credit)
if they received SSI.
But to show how this can be a problem: I talked to my sister today and she advised me
that she DID receive SSI last year of which I was NOT aware.

[AZ-Tax]

Each of these credits going to have their own new form?

I just realized how complicated the three new credits will make preparation of tax returns
become for this coming year.
1. The Making Work Pay Credit of 6.2% of earned income is not to exceed $400 for one
taxpayer or $800 for a joint return. BUT, this credit MUST be reported on the tax return
and the credit reduced by the two other credits listed below.
2. Those who received Social Security benefits during November of 2008 or SSI,
Railroad retirement and VA disability benefits will get a one-time payment of $250 during 2009
for each spouse who had such income or benefits. This is NOT taxable. Again the Making
Work Pay Credit above reduces the amount of the allowable making work pay credit in item 1 above.
3. Certain government retires who do NOT receive social security benefits will be entitled
to a one-time payment of $250 during 2009. This credit reduces the amount of the
Making Work Pay credit outlined in item 1 above.
It appears that we will be required to calculate all or part of this on the 2009 tax returns.Actually
the heading should say: One New Credit with two reductions..

Will these credits have their own form like a 1099-R etc. that the TP will recieve in the mail? OR should have the TP kept track?

[ChEAr$]

Will these credits have their own form like a 1099-R etc. that the TP will recieve in the mail? OR should have the TP kept track?

No to all three.
The making work pay credit is computed on schedule M and uses information from
your # 2 and 3 to do it.

Form 1099SSa does not show that special stimulus payment of 250$.

[Black Bart]

Anybody

heard of a new "stimulus payment site" like last year? If they don't give us one, it's going to make a lot of work for us to find out what making work pay was.

I just checked the old one and it's dead.

https://sa2.www4.irs.gov/irfof/lang/en/irfeatureunavailable.jsp?app=IRACTC

[tilt53]

No site to check because the IRS didn't sent out the $250. But our IRS liaison told us that if the client doesn't remember whether they received it or not, that we should not include it on the return when we efile. If they did receive it, the return will reject with a message saying why. Then we can correct it and resubmit.

[Black Bart]

Oh yeah, I forgot

No site to check because the IRS didn't sent out the $250. But our IRS liaison told us that if the client doesn't remember whether they received it or not, that we should not include it on the return when we efile. If they did receive it, the return will reject with a message saying why. Then we can correct it and resubmit.

about SSA sending them out and the board discussion a while back on whether or not it would be on the SSA-1099. I don't think it will be and no use asking clients (last year I got maybe two correct answers out of 25 or so before giving up and checking the stimsite for all).

Talk about unknowing clients, I checked bank statements and found my own $250 so I think I'll assume everybody drawing SS also got their $250 and go with that.