Tuesday, October 21, 2014

WHAT’S THE BUZZ, TELL ME WHAT’S A HAPPENNIN’ - TUESDAY EDITION


* If I may be allowed to repeat a previous BUZZ item:  Hey tax pros - I am still waiting to hear from youse guys on the topics discussed in the October “issue” of THE TAX PROFESSIONAL! Please email me your thoughts at rdftaxpro@yahoo.com with THE TAX PROFESSIONAL in the “subject line”.  Please!

* As promised – from Peter J Reilly “UnFair: Exposing The IRS - Does Not Make Strong Case Or Decent Documentary” at FORBES.COM. 

While there are many aspects of the current Tax Code that are truly unfair, this film apparently did not address any of them.

Peter’s bottom line - “Craig Bergman’s argument does not make a lot of sense.”

Not surprising, as the film is basically a “reiteration of a political and cultural platform” – the platform of the infamous Tea Party.

As Peter says the film was “a rally the troops type of piece that would only work on those who were already convinced of the viewpoints expressed”.

Peter approached the film with an open mind and a true interest, but came away with nothing –

I was genuinely interested in the topic and hoped that in the 90 minutes I spent watching the film and the panel discussion afterwards that this documentary would have disgorged some credible factual information or leave me with new insights.  Regretfully that did not happen.”

The film calls for the end of the income tax and the implementation of the “Fair Tax” – a national sales tax.  While I do not necessarily support this, I have not totally dismissed the concept of a national sales tax.  I talked about the potential benefits of such a tax way back at the very beginnings of TWTP – and repeated the discussion in the 2009 post “So What Do You Think – A National Sales Tax? 

* Daniel Hood reminds us that “PTIN Renewal Season Open” at TAXPRO TODAY -

The IRS announced that professional tax preparers can now register for or renew their PTINs on IRS.gov.”

And –

First-time PTINs cost $64.25; renewals are $63.”

Why?  There used to be no charge for a PTIN.  The fee was originally initiated to pay for the now dead RTRP mandatory registration program.

See my ACCOUNTING TODAY 2013 editorial “Why Is There Still an Excessive PTIN Fee?"
 
I have already paid my annual $63.00 extortion fee to the IRS.  Now I just have to pay my $100.00 extortion fee to New York State.
 
FYI, only those individuals with a valid PTIN are permitted to prepare federal income tax returns for compensation.

* TAXPRO TODAY reports on the recent NATP Fee Survey in “Preparers’ Fees, Workload Increasing: Survey”.  

No surprise here - the survey indicates that CPA preparers charge, on average, 60% more than the overall average fee for a Form 1040  and, again on average, $100 more than the average individual "unenrolled" preparer charges.

* My former home town of Jersey City turns up at #10 on the list of the “15 Worst Cities for Retirees” at LIFEHEALTHPRO.  Newark NJ is #2.

Also on the list – Baltimore, Boston, Chicago, New York, and Philadelphia.

The ranking is based on an extensive series of metrics — 25 total — across five categories: affordability, activities, quality of life, health care and jobs” applied to “the 150 largest American cities”.

This slide-show is taken from WALLETHUB’s “2014′s Best and Worst Places to Retire”.  Of the 15 best places to retire 6 are in Florida and 4 are in Texas (Tampa is the best city for retirees) – the last 2 states to which I would want to retire.    I would not want to retire to any of the cities in the top 15. 

The WALLETHUB study says Jersey City is tied with Yonkers for the Highest Adjusted Cost of Living of the 150 cities.  Why do you think I moved to PA?

TTFN

Friday, October 17, 2014

WHAT’S THE BUZZ, TELL ME WHAT’S A HAPPENNIN’


Another BUZZ-Light. 

The 2014 Tax Filing Season (for 2013 returns) is finally over – now it is time to get ready for the 2015 season (for 2014 returns).  It never ends!

* A “tweet” from @TaxManBoston that bears repeating –

And respect your tax practitioner! It's not THEIR fault when you owe taxes!!!

* Hey tax pros - I am still waiting to hear from youse guys on the topics discussed in the October “issue” of THE TAX PROFESSIONAL! Please email me your thoughts at rdftaxpro@yahoo.com with THE TAX PROFESSIONAL in the “subject line”.  Please!

* Over at FORBES.COM my fellow tax blogger Peter J Reilly quotes me in his post “UnFair - One Night Stand Tonight - Exposing IRS Or Fair Tax Infomercial?”.

I did not view this film, despite its endorsement by Chuck Norris (hey- Tuesday night is NCIS).  As my quote states I truly believe the Tea Party Movement is dangerous and should not be encouraged in any way – and that the only possible Congress worse than the one we now have would be one controlled by Tea Party members and supporters.

I will reference Peter’s review of the film in next Tuesday’s BUZZ.

* I am also quoted in Jim Stimpson’s item “Gimme Gimme: Handling Requests for Free Advice” at TAXPRO TODAY.

* It appears that “October Is A Good Month to Start Investing”.  This is what Michael Zhuang, aka THE INVESTMENT SCIENTIST, discovered in a stock market seasonality study.

We assumed that at the beginning of each year we invested $1 in the {S+P 500} index, and we observed how the investment fluctuated over the year. Then we took the average over three different periods of time: the last 20 years, the last 50 years, and the last 86 years.”

October is the reflection point when the good season starts, while May is the reflection point when the good season ends.”

In my recent personal experience (I received an inheritance last October) I found that this was true.

* Kay Bell gives us an update on state same-sex marriage rules in “Same-Sex Tax Filing Changes Official in Virginia and Wisconsin” at DON’T MESS WITH TAXES.

The Supreme Court earlier this month gave same-sex couples the ability to get married in five more states when it refused to hear appellate cases that had struck down the states' bans on such ceremonies.

Gay and lesbian couples in Indiana, Oklahoma, Utah, Virginia and Wisconsin lined up soon after the High Court non-ruling to exchange vows.

Now the affected state tax departments must adjust their rules to accommodate the newlyweds.”

TTFN

Tuesday, October 14, 2014

WHAT’S THE BUZZ, TELL ME WHAT’S A HAPPENNIN’ - TUESDAY EDITION


Not much BUZZ this installment.
 
BTW - You do realize that the deadline for filing extended 2013 federal and state income tax returns is tomorrow!  However, this deadline is really only important if you owe tax on the returns.  Click here.

* I am still waiting to hear from fellow tax preparers on the topics discussed in the October “issue” of THE TAX PROFESSIONAL!

You can read what other taxpros have had to say at the MAILBAG Page.

* Over at BUSINESS WEEK Drake Bennett reviews the book “We Are Better Than This” by Edward Kleinbard (“a tax partner at the law firm Cleary Gottlieb Steen & Hamilton, then chief of staff of U.S. Congress’s Joint Committee on Taxation, and is now a professor at the University of Southern California’s law school”) in “Tax Expert Says Everyone's Too Obsessed With Taxes". 
 
I know that I am obsessed with taxes - but it is how I make a living.
 
Drake tells us -

. . . when he set out to write a book about how to fix the American tax system, it made him realize that the problem wasn’t the tax system; it’s everyone’s fixation on the tax system.”

And quotes Kleinbard -

Our greatest public finance policy mistake over the past few decades has been to obsess over tax policy, while simultaneously failing to have serious and rational debates over spending policy.”

As Drake puts it - “The issue is not how government gets its money; it’s how it spends it.”

While I am not sure Edward and I interpret it the same way – I certainly agree with the above statement.

* Kay Bell explains “Extended Tax Filers Aren't Automatic Audit Targets” at DON’T MESS WITH TAXES.

I am unaware of this “urban tax myth”.  The myth I am familiar with is just the opposite – that you can avoid an audit by extending and filing close to the deadline.

When you file your return has nothing to do with when you file your return – but with what you put on your return.

Read my 2013 TWTP post “How the IRS Decides to Audit”.

* And Kay deals with the “High Tax Cost of Cellular Service” at her BANKRATE.COM blog.

I can attest to this.  I recently got a cell phone only so I would be able to call the AARP emergency auto service if my car broke down on the road, or call a client if I was stuck in traffic – and for no other reason.  I do not give my number out – I do not even know it offhand – and I would never answer the phone if it rang.  Callers cannot leave a message.  And I would never text (I don’t think I can).  It appears I can take pictures, but I haven’t looked into this yet.

I got the Consumer Cellular phone advertised on tv, and was told it would cost $9.50 per month after my AARP discount.  Of course when I got my first bill it did not cost $9.50 per month – it cost $13.02 per month after adding $2.22 in “government taxes and fees” and $1.30 for “surcharge and other charges”.  While I am not thrilled about the high percentage of taxes and fees, I am perhaps more upset by the false advertising – the advertising tell me it costs $10.00 per month!    

TTFN

Friday, October 10, 2014

WHAT’S THE BUZZ, TELL ME WHAT’S A HAPPENNIN’


* I am still waiting to hear from fellow tax preparers on the topics discussed in the October “issue” of THE TAX PROFESSIONAL!

* For NY, NJ, and PA tax pros – the NY Department of Taxation and Finance has announced the dates and locations of free 4-hour federal and state update CPE sessions in October and November that would qualify for the CPE requirement for tax pros preparing NYS returns (although deadline for meeting the requirement is December 31, 2015).

Even though it is not necessary to take any of these courses, because the CPE is free these classes are a good source of NY state tax updates.

Click here for information on these sessions.

* Michael Cohn reports “IRS Offers Tax Relief to Drought-Stricken Farmers and Ranchers” at ACCOUNTING TODAY –

The Internal Revenue Service is providing more time to farmers and ranchers in 30 drought-stricken states to defer taxes on any gains from forced sales of livestock.

Farmers and ranchers who previously were forced to sell livestock due to drought, like the drought currently affecting much of the nation, will have an extended period of time in which to replace the livestock and defer tax on any gains from the forced sales, the IRS said Tuesday.”


Internal Revenue Service commissioner John Koskinen has written a letter to the leaders of Congress’s main tax committees urging them to decide soon on what to do about extending dozens of expired tax provisions, or else next tax season and the processing of tax refunds could be delayed.”

If I may paraphrase Mr Koskinen – idiots in Congress, shit or get off the pot!

* Julian Block make a good point about timing year end payments in “How to Take It to the Brink with Year-End Payments” at ACCOUNTING WEB

Whether a deduction falls into this year or next depends on a check's date of delivery, which isn't necessarily the date written on the face of a check. Fortunately, "date of delivery" doesn't mean that you have to depend on the sometimes unpredictable United States Postal Service to actually deliver your checks by Dec. 31.

Just as long as you put payments in mailboxes in sufficient time for letters to be postmarked by midnight Dec. 31, you nail down deductions for this year, even if your checks reach recipients next year. That applies to payments of business expenses, charitable contributions, medical bills, interest expenses, state and local taxes, and all other deductions.”

It would appear that checks dated in late December (as late as December 31) that are hand delivered to payees by December 31st would be deductible in the current year.  

If we look at the reverse of what Julian says – income is reported in the year it is received (again “date of delivery”) and not in the year it is deposited in the bank.  So a business cannot push income into 2015 by just holding on to cash and checks actually received in-hand in 2014.

* Over at ABOUT.COM William Perez explains “How to get copies of missing documents needed for your tax return” in “What if You Don't Have All Your Tax Documents?



Don’t forget – October 15th is the final deadline for timely filing your 2013 Form 1040 (and corresponding state returns) – and this date is very important if you owe any of your “uncles” tax on your returns.

THE FINAL WORD:

The answer to balancing the federal budget, or any government budget, is not to raise taxes or lower taxes.  The answer is to effectively manage expenditures.

We need an truly independent government ombudsman-like agency that would read completely every piece of legislature and provide to Congress, and publicly publish for the American public, a “report card” on the fiscal responsibility of, and paperwork, financial, and other burdens created by compliance for, the legislation.  

TTFN

Tuesday, October 7, 2014

WHAT’S THE BUZZ, TELL ME WHAT’S A HAPPENNIN’ - TUESDAY EDITION


I am working away on the last of the GD extensions this week – and am “locked behind closed doors”.  I put it off long enough.  So no posts except for the two BUZZ installments this week.

* I am still waiting to hear from fellow tax preparers on the topics discussed in the October “issue” of THE TAX PROFESSIONAL!

* Joe Kristan continues his comments on the topics discussed in THE TAX PROFESSIONAL by tackling the ethics requirement for CPAs and others in “Tax Roundup, 10/6/14:Nine More Days, folks. And: Four Hours of Ethics to Rule Them All!” at THE ROTH AND COMPANY TAX UPDATE BLOG.

* Joseph J. Thorndike suggests “Let’s Stop Talking About Tax Reform” at THE TAX ANALYSTS BLOG.

The bottom line of his long piece is -

The political bosses are not interested in introducing meaningful tax reform. They’re only interested in talking about it, because talk is cheap.”

Unfortunately, truer words were never spoken.

* In a related item, over at THE HILL Bernie Becker tells us “Poll: Voters Want Teamwork on Tax Reform" -

Seven in 10 voters in several states with high-profile elections this year want President Obama and Congress to work to overhaul the tax code, according to a new poll released by the U.S. Chamber of Commerce.”

The piece quotes Bruce Josten, the Chamber’s executive vice president for government affairs –

Voters are making it clear that they want their elected representatives to enact real, comprehensive tax reform.”

Hey, we voters can dream.  However getting the current idiots in Washington to work together on anything of substance is perhaps “The Impossible Dream”.

* Good news from TaxGirl Kelly Phillips Erb – “'Real Housewives' Reality Stars Joe & Teresa Giudice Sentenced To Jail”!

Giuseppe ‘Joe’ and Teresa Giudice, stars of the Bravo reality television show, The Real Housewives of New Jersey, finally learned their fate today as a federal judge handed down the sentences in their financial and tax fraud cases. Joe Giudice has been sentenced to 41 months in federal prison for financial and tax fraud. His wife, Teresa, will serve 15 months.”

Giuseppe must also pay $414,588.90 in restitution.

* The following news item came to me via the NATP’s TaxPro Weekly email newsletter-

Local Lodging Expenses

TD 9696 finalizes rules that the IRS put into effect in 2012 which allow employees to deduct certain expenses paid or incurred for local lodging as business expenses. Taxpayers may deduct certain expenses for lodging when not traveling away from home (local lodging). These include local lodging expenses that are considered ordinary and necessary business expenses in appropriate circumstances. Some of these circumstances include:

·   The lodging is necessary for the individual to participate fully in or be available for a bona fide business meeting, conference, training activity or other business function.

·   The lodging is for a period that does not exceed five calendar days and does not recur more frequently than once per calendar quarter.

·   If the individual is an employee, the employee’s employer requires the employee to remain at the activity or function overnight.

·   The lodging is not lavish or extravagant under the circumstances and does not provide any significant element of personal pleasure, recreation or benefit.”

* The “moral” to the lead item from Joe Kristan’s Friday “Tax Roundup, October 3, 2014: A Gold Mine, or Just a Pile of Old Clothes? And: Economic Self-Development! bears repeating (highlight is mine) –

When you have make a clothing donation (or any donation, for that matter) over $250, you need to get a written receipt meeting IRS rules to support your donation — a cancelled check or blank slip with detail of donation doesn’t cut it. If your donation goes over $5,000, and it’s not a traded security, you must have a qualified appraisal.  No appraisal, no deduction.”

And let me add – letters of acknowledgement must specifically identify the goods or services given to the donor for making the contribution or include the statement that "no goods or services, other than intangible religious benefits, were provided in exchange for the donation”.

* Kay Bell reports “Amazon Collecting Sales Tax in 23 States” at her BANKRATE.COM blog.

Included in the 23 are my current and former home states – PA and NJ.

* Jim Blankenship explains in detail how to “Minimize Taxes by Adjusting your Portfolio” at GETTING YOUR FINANCIAL DUCKS IN A ROW.

* Tony Nitti brings good news for some of my clients.  He says “Artists Rejoice! Tax Court Concludes Painter's Activity Isn't A 'Hobby'” at his FORBES.COM blog.

TTFN

Friday, October 3, 2014

WHAT’S THE BUZZ, TELL ME WHAT’S A HAPPENNIN’


I’m back from Lancaster PA.  I expect I will return for a longer visit in the next year or so.  My hotel provided free wi-fi – so I was able to “wander” the web in search of BUZZ.

* Attention tax pros - have you seen the October “issue” of THE TAX PROFESSIONAL yet?  Please check it out – email your comments on the topics I have discussed to rdftaxpro@yahoo.com, and spread the word to fellow tax preparers.  

* Joe Kristan has read October THE TAX PROFESSIONAL and adds his more than 2 cents to the first topic in the “issue” – Obamacare – in his yesterday’s “Tax Roundup, 10/2/14: The IRS Helps Fulfill a Vow of Poverty. And: ACA – Good in Theory?” at the ROTH AND COMPANY TAX UPDATE BLOG.
 
Joe promises to comment on the other topics discussed in the "issue" in subsequent posts.  I look forward to reading his thoughts!

* Even though I am NOT a CPA - Shauna O'Brien includes me at #3 (I do not know if the order means anything) on her list of “25 CPA Blogs That Will Make You A Better Investor” at DIVIDEND.COM.  It is a good list, with several blogs that are new to me.

* The Fall 2014 issue of NJ TAXING TIMES, the newsletter of the NJ chapter of NATP, is available to download!  Click here.

Lots of good “stuff” in this issue.  I have written a couple of items.

* Scott Stevens explains “Misconceptions Cloud Understanding of Affordable Care Act” in a 2-part post at OMAHA.COM that lists “the top 10 most common ACA misconceptions that I have come across”.  Click here for Part I and here for Part II”.
 
* And William Perez takes up the daunting task of explaining the mucking fess that is the Obamacare “Individual Shared Responsibility Payment” at ABOUT.COM.  Payment, smayment.  It ain’t a tax, either.  Let’s call a spade a shovel – it is a penalty.

This “payment”, and the administration of Obamacare in general, should not be a part of the 1040!
 
* I promise this is the last BUZZ reference to brain-dead reality show idiot Mike Sorrentino’s recently discovered tax fraud.  It is “Understanding 'The Situation's' Tax Situation: Separating Fact From Fiction” from Tony Nitti at FORBES.COM and it is excellent.

The next time I mention this arsehole here will be to reference the announcement of his conviction and jail sentence.

* Also at FORBES.COM TaxGirl Kelly Phillips Erb continues with her “Back to School” series.

* Jason Dinesen is “Letting My Hair Grow Back” because “DIY is Not Always Better”

His point about tonsorial maintenance is applied to tax preparation –

“. . . if you feel comfortable doing it yourself, you know what you’re doing and you have time to do it, then certainly you should try doing it yourself. But know your limitations and know the value of your time.”

I have always said that a majority of my clients have the smarts to be able to prepare their own returns, but they don’t want to waste the time it would take to read the instructions and keep up-to-date - or to just sit down and prepare them.  Besides, they want to be sure they do not miss anything.  It is truly cheaper, certainly in terms of the value of time, to have me prepare them.

* A few BUZZ installments ago I told you about rebate checks going out to New York State residents.  The DEMOCRAT AND CHRONICAL now tells us “NY tax Rebate Checks all Mailed, But Watch Out for Scams”.

First -  

The $350 rebate checks should all hit mailboxes by this Friday, the agency said. If you don't get one and think you should, you can check here later in the week to apply for it.

And –

The tax department warned that scam artists have been contacting taxpayers by telephone seeking personal information to ‘confirm’ they are eligible for a tax rebate. The state said that they've received initial reports in central New York of the scam.”

Like the IRS, the New York Department of Taxation and Finance will never contact a taxpayer by telephone –

The tax department said it would always make first contact by letter, which includes a phone number you can contact to verify that it was sent by the agency.”

* I have done it for years now – work from home that is.  Carolyn O'Hara lists “5 Ways to Work from Home More Effectively” at the HBR BLOG NETWORK.

I don’t work in my pajamas (I don’t wear pajamas) – but I have been known to be at my desk all day in nothing but my robe.

THE FINAL WORD –

The PA-NATP workshop, the reason I travelled to Lancaster PA, was very good – although I do believe I misunderstood its purpose.  It dealt with preparing the PA corporate tax return for one-person LLCs who filed federally on a Schedule C.  I was not aware that this was required.  And as I do not accept new clients and do not do PA returns I have no interest in that topic. 

I thought it was for one-shareholder corporations, such as I am.  I went to find out how to file the PA state corporate tax returns for my corporation.  I did learn what I needed to know during the morning session – so it was not a waste.  Regardless, both presenters – one from the PA Dept of Revenue and one from the PA-NATP membership – were knowledgeable and good, and humorous, experienced speakers.      

TTFN

Tuesday, September 30, 2014

WHAT’S THE BUZZ, TELL ME WHAT’S A HAPPENNIN’ - TUESDAY EDITION


I am off to Lancaster PA to learn how to prepare my PA corporation’s state income tax return.  I will return with a Friday BUZZ.

* The October “issue” of THE TAX PROFESSIONAL will be up early tomorrow morning.  It has some more food for thought for tax preparers, and I would appreciate hearing your comments on the topics discussed.  You can email them to rdftaxpro@yahoo.com with “THE TAX PROFESSIONAL” in the “subject line”.

I am also interested in your comments on topics discussed in previous “issues”. 

* KIPLINGER.COM warns “Retirees, Watch Out for the State Tax Bite”.

The item looks “at three primary categories: state tax treatment of pensions and retirement income, Social Security, and estates and inheritances.”

* That reality show idiot “The Situation” is claiming stupidity as his defense for cheating on his taxes.  In this case it is a credible defense – the fool certainly is stupid. 

Actually he is blaming the FU on his brother, who, in turn, is blaming everything on their accountant.  So TMZ (a truly rare source for a BUZZ item) tells us in “The Situation Clueless on Tax Filings ...Mi Familia Screwed It Up”.

* Kay Bell is a much better source of reliable information on the tax indiscretions of the brain-dead reality tv show “star”.  In her BANKRATE.COM post “Bad Tax ‘Situation’ for Reality TV Star” Kay tells us –

The feds charge that the Sorrentino brothers knowingly provided their accounting firm with false information, which was used unbeknownst to the paid preparers, to file incorrect tax returns.”

In this “situation” I tend to believe the Feds regarding the paid preparers.

* And at her DON’T MESS WITH TAXES blog Kay continues the discussion of the reality show fool’s tax FUs and correctly advises “Lying to Your Tax Pro Could Result in a Bad Tax Situation” –

We all know the old adage used when discussing tax-filing software: Garbage in, garbage out.

It also applies to taxpayer-tax preparer relationships. If a taxpayer isn't honest or forthcoming about his or her tax circumstances when working with a tax pro, then that preparer is going to complete and submit a 1040 that's flat-out wrong.

And that creates problems for both the taxpayer and the tax preparer.”

* Strange but true.  The IRS Says I’m Not Authorized to Speak On My Own Behalf”.  So says Jason Dinesen at DINESEN TAX TIMES.  Oi vey! 

* At TAXPRO TODAY Jeff Stimpson’s piece “IRS to Send EITC Due Diligence Warnings” explains one of the reasons why the Earned Income Credit does not belong on the 1040 –

The IRS estimates that from 22 percent to 26 percent of all EITC claims contain ‘some type of mistake’ that altogether cost the government a total of $13.3 billion to $15.6 billion in 2013.”  

TTFN