IRS form 8958 processing delays.

Technical topics regarding tax preparation.
#1
EZTAX  
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In the past few years we have filed a greater number of MFS and RDP returns using form 8958 to properly show the community property split. (We are in California.)

In the past most of these returns have gone through smoothly (it took a year or two for the RDP same sex marriage returns to be processed properly).

In the current tax season we have had at least 8 returns get held up, many still waiting "review".

I have tired calling the hotline in each case. Occasionally the representative has been able to straighten the problem out. For most of the returns however we were orginally told to wait 60 days, and for many of those we have now been told to wait another 60 days.

Some of my clients have received notice requesting copies of W-2's or even identity proof.

I have had a few hotline representatives acknowledge that it is a system - wide problem resulting from new security procedures.

FYI and UGH.
 

#2
WEISSEA  
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In the current tax season we have had at least 8 returns get held up, many still waiting "review".

Filed MFS for couple in 2016 and only hang up was on the wifes return where they asked for a copy of the husbands W-2.
For 2017 lots more issues, hung up the return in front end processing sending letter wanting copy of 1040- first 2 pages, and W-2's. Took about 8 weeks to get it processed. I was thinking why e file maybe would have been better to mail it.
Last edited by WEISSEA on 19-Jul-2018 5:38pm, edited 1 time in total.
 

#3
makbo  
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EZTAX wrote:In the past few years we have filed a greater number of MFS and RDP returns using form 8958 to properly show the community property split. (We are in California.)

That's not all there is to it. Did you also create pro forma W-2s for each spouse in the efile, for each job, allocating the wages and withholding from Box 1 & 2 to each? If not, how was the IRS to check the W-2 info?

Less important, for any mortgage interest deduction, did you show on Schedule A that the spouse who wasn't shown on the Form 1098, did not receive Form 1098?

Once couple I was doing RDP returns for through TY2015 never had a problem, and I used UltraTax built in feature for splitting community property, which involves creating the two W-2s, one for each, for each real-world W-2. They got married in 2016, so I didn't have to do it for them anymore.

For 2016, I had a high income couple filing MFS in California to reduce the 1% mental health surtax. Same thing, the W-2 info was allocated on the actual W-2 input, and caused no problems. In fact the only problem was allocating the estimated tax payments made jointly.
 

#4
EZTAX  
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Yes we did the W-2's with the split income and also reported the wife's mortgage interest on line 11 with a note regarding the name on the 1098.

The IRS computers just are not handling it well this year. Weissa last post seems to confirm we are not the only ones having issues.

More MFS returns due to both the mental health care tax on the California return and also income based student loan payments being affected by filing status (lower payments if MFS with community property split than MFJ.
 

#5
kathyt  
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Wow on Hold with IRS practioner hotline right now, was just scrolling through this as I waited. Same issue here, both returns form 8958 community property state, Louisiana.
 

#6
Joanmcq  
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I didn’t have any issues once the form 8958 came out until this year. Main problem has been withholding for the spouse/partner who had less per tax forms, but was allocated extra withholding. Btw, I do not split the W2, I use an adjusting entry on lone 21.
 

#7
WEISSEA  
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Btw, I do not split the W2, I use an adjusting entry on lone 21.

I do your way also. Note I attached all W-2's using pdf feature, seemed to help with regard to withholding.
 

#8
EZTAX  
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UPDATE:

I am still struggling to get 7 or more returns processed that were submitted before the April deadline, even after several phone calls and faxing information to them.

Most practitioner hotline representatives have been of little help - saying they will request that the return be processed and that we need to wait another 60 days etc.

One representative took a greater interest and said she would look into it. Greatly surprised when she called back the following week and said that there was a Taxpayer's Advocate Systematic Problem Resolution window on the IRS website. I reported the problem to them and was once again surprised to receive a phone call a week later. I gave the caller information on the problem. Three weeks later I received a phone call from a different representative. They thanked me for bringing this to their attention, agreed that it was a problem with the new security software updates, and said they would get it fixed for next year.

When asked if they could do anything with the stack of problems on my desk, they said no, I would need to contact the regular Taxpayer Advocate department.

Sorry this is so long winded but at least it seems there is progress. We can only hope.
 

#9
EZTAX  
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Update: The more things change the more they stay the same.

I tried reporting this again last week to the systematic problem resolution department.

Just got a call back from them. She acknowledged the problem and said they are working on it and putting in a request to update software to deal with it better.

I told her I had a similar response from her department 3 or 4 years ago and yet here we are. She said maybe this time.

We can only hope. :)
 


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