Filing with ITIN

[RayT]

Client has an ITIN (967-**.****) and has previously filed using the ITIN as a SS number. However, my software now requires a valid SS # for working in US (doesn't seem to allow the ITIN). Has there been a change in IRS policy re: filing with ITIN numbers?

[BOB W]

It has been that way for a couple of years now. The W-2 probably says 'Applied For". File the return with his/her Itin. I guess you need to paper file????? crossout the SS# that you needed to get the program to work and write in the ITIN on the paper copy.

Are you sure there isn't a check the box in your software. Call your software company for workarounds, if any.

ITIN's are for filing taxes, just not for earned income.

[Koss]

Itin

A tax return with an ITIN can be filed electronically. We have filed several already this year.

The common scenario is that there is an SSN--someone else's SSN--on the Form W-2.

This is the reality of how undocumented immigrants work in the US. The IRS is well aware of it, and it is part of the system. The worker gives the employer an SSN.

In your software, you start the return with the ITIN, because that is the proper number for the taxpayer to use for filing the tax return.

However, if the return is to be filed electronically, you need to enter all data from the Form W-2 into the software, exactly as it appears on the Form W-2. This means that on the W-2 screen, you enter the SSN that appears on the W-2. Entering this data will not change the ITIN that appears at the top of Form 1040.

And this is how these returns get filed electronically.

This is how the IRS wants them filed. This information is in Publication 1345.

BMK

[FEDUKE404]

Showing taxpayer address on actual W2

....In your software, you start the return with the ITIN, because that is the proper number for the taxpayer to use for filing the tax return.

However, if the return is to be filed electronically, you need to enter all data from the Form W-2 into the software, exactly as it appears on the Form W-2. This means that on the W-2 screen, you enter the SSN that appears on the W-2. Entering this data will not change the ITIN that appears at the top of Form 1040.

And this is how these returns get filed electronically.

This is how the IRS wants them filed. This information is in Publication 1345.

BMK

I once had an "extended" conversation with someone regarding the need to enter the taxpayer's mailing address as it was shown on the W2.

Most software will automatically "fill in" the address on a W2 or 1099R from the general client information entered.

It was/is my understanding that it is the responsibility of the preparer to submit the client address information as shown on the document, even if an override type action is necessary to do so. My position was you are, for all intents and purposes, "submitting" the actual document and what you submit electronically must match the information shown on the paper document.

Your valued opinion is??

FE

[Koss]

Address on Form W-2

Your interpretation is correct.

See the updated, electronic version of Publication 1345:

Be Careful with Addresses

Addresses on Forms W-2, W-2G or 1099-R; Schedule C or C-EZ; or on other tax forms supplied by the taxpayer that differ from the taxpayer’s current address must be input into the electronic record of the return. Providers must input addresses that differ from the taxpayer’s current address even if the addresses are old or if the taxpayer has moved. EROs should inform taxpayers that when the return is processed, the IRS uses the address on the first page of the return to update the taxpayer’s address of record. The IRS uses a taxpayer’s address-of-record for various notices that it is required to send to a taxpayer’s "last known address" under the Internal Revenue Code and for refunds of overpayments of tax (unless otherwise specifically directed by taxpayers, such as by Direct Deposit).

Here's the link:

http://www.irs.gov/efile/article/0,,id=205385,00.html

With that being said, my software (TaxAct) doesn't prompt or query whether the address on Form W-2 is different from the taxpayer's current address, so I have to admit that I haven't always caught it.

The reference in the IRS article to Schedule C is a little odd. Schedule C is not a form that is "supplied by the taxpayer," so this doesn't really make sense.

It's badly written. The IRS is probably referring to the fact that Schedule C has a field where you can enter the address of the business. In other words, we should not assume without asking, for example, that a college student with a 1099-MISC for tutoring is working out of his home. There might be a different address that belongs there.

BMK

[NSNM]

Old address on W-2

Thanks for bringing up this topic of address.

ATX software enters address from the general address section to "W-2 input records" automatically.

My question is,
does the software show address input "error" message and accept efile,
or
reject the efile, not allowing transmission.

I will check this up on my software when I prepare the next return.

In the meanwhile, how any of you are handling that situation.

Incidentally,
not entering the address as shown on W-2 - could this attract preparer penalty?

[FEDUKE404]

Entering correct document information IS required

Thanks for bringing up this topic of address.

ATX software enters address from the general address section to "W-2 input records" automatically.

My question is, does the software show address input "error" message and accept efile, or reject the efile, not allowing transmission.

I will check this up on my software when I prepare the next return.

In the meanwhile, how any of you are handling that situation.

Incidentally, not entering the address as shown on W-2 - could this attract preparer penalty?

I don't quite understand your comment - apparently your software could "know" there is an error/mismatch?

My guess is the software can be set to "use" the taxpayer mailing address as a default, much like a similar setting can be used to fill in the "same" amounts for FICA/Med wages as is shown in box 1 of the Form W2. Some software might even "calculate" those amounts of tax withheld without any preparer input. That is certainly a realistic approach, **IF** the preparer is careful to catch/correct any unexpected differences when entering the document data.

But you certainly should be able to enter the CORRECT information as shown on the Form W2, Form 1099-R, and similar. Koss has already provided to us definitive proof of that requirement.

I cannot address the preparer "being at fault" issue. One thing that intrigues me while reading these boards is that certain folks can be very selective as to the rules they personally decide to follow. Past things I have noted are related to interest/dividend reporting if <$10, signatures on documents, "receipts," and even some 2441 issues. More than one mini-sermon has appeared here....

My suggestion would be to read the rules carefully and then simply make your own decisions. There are also many wise posts on these boards to assist you. But the only person responsible for what goes on returns I prepare is.....ME !!

For my own 2¢ worth, it is pretty clear to me that a preparer is "required" to provide the relevant document information, i.e. entering exactly all of the information shown on the W2/1099-R. But others will easily differ in that determination and/or don't mind taking a few short-cuts whenever possible. (The "I've never had any problems with that in the past" logic......) Their personal actions are of no great concern to me.

FE

[Koss]

Address Entry

I think every tax program automatically imports the taxpayer's current address into the W-2 screen. The programs differ as to whether and how they prompt for a different address, and how easy or intuitive it is to enter a different address on each Form W-2.

I don't use ATX. But I don't think any tax software, or the IRS, will reject a return based on the taxpayer's address. There is no matching process or real-time verification.

As noted in other threads, a W-2 will cause the return to be rejected if it has a bad EIN.

Most tax software will prevent electronic filing if the address itself is defective, i.e., if the address is incomplete, if the ZIP code is invalid, or if the ZIP code does not match the state.

But the address itself is not checked against anything. You could put in the address of the White House as the taxpayer's current address, and the address of the Capitol Building on each Form W-2, and the return will sail through the system.

As to your question about a preparer penalty...

I don't think there is a codified penalty for this particular mistake. It is certainly not like EIC Due Diligence, failure to sign the return, failure to give the client a copy of the return, or filing a return without first getting the proper signatures on Form 8879.

It's also not as serious as certain procedural violations, such as filing a return with a pay stub instead of waiting for the W-2 or getting a duplicate.

In an earlier post, I admitted that I have sometimes overlooked the fact that a Form W-2 has an old address. So I'm guilty of this mistake just like many others.

It is in fact a compliance failure in the sense that it violates the rules of the IRS e-file program. If it is part of a documented pattern of e-file noncompliance, I think it could lead to sanctions, such as suspension or termination from IRS e-file.

If it's a few isolated mistakes, that are explained by a weakness in the software, and were remedied by appropriate training, then I don't think the IRS would take any action.

BMK

[Koss]

Further Thoughts

This is really something that the software developers need to address.

It should be a no-brainer to incorporate a prompt, for every Form W-2 and Form 1099-R, that simply asks the user: Is the address on Form W-2 different from the taxpayer's current address?

I am certainly not saying that we have no responsibility as preparers. And I hate it when people "blame the computer." But the IRS has a fairly robust set of standards for software compliance with electronic filing. The simple fact is that most tax software, in my opinion, is not compliant on this issue because it does not provide an intuitive step to enter the correct data. The software assumes that the address on Form W-2 is the same as the current address, forcing the user to change it.

How do you think the IRS and the professional community would feel if a program assumed that a dependent lived with the taxpayer all 12 months of the year, forcing the user to scroll waaaaay down, to a field that is not otherwise visible, in order to change this data?

The software is defective.

BMK