Friday, October 24, 2014

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


* It is almost time for the new issue of THE TAX PROFESSIONAL! Please email me your thoughts on the issues I have discussed in the September and October issues at rdftaxpro@yahoo.com with THE TAX PROFESSIONAL in the “subject line”.  Please!
 
* I tell you about the Social Security increases for 2015 in "Social Security Recipients to Receive An Increase of This Much in 2015" at MAINSTREET.COM.

* Are you self-employed, or thinking about starting a business. You need THE NEW SCHEDULE C NOTEBOOK!

* Joe Kristan quotes IRS Commissioner John Koskinen from an interview with Tax Analysts in “Tax Roundup 10/21/14: Gander Gets Sauced! And: IRS Commissioner’s Prophecy of Tax Season Doom” at the ROTH AND COMPANY TAX UPDATE BLOG -

So we have right now probably the most complicated filing season before us that we’ve had in a long time, if ever.”

I have been around for over 40 filing seasons and I doubt the upcoming one will be the most complicated “ever”.  My vote would probably be for the first tax season in the mid-80s that reflected the changes from TRA 86. 

But I do agree that Obamacare issues (if that is what he was talking about – you have to be a paid subscriber to read the complete interview) will add to the ongoing complication of the upcoming filing season.  Again we have the idiots in Congress to thank for this.

* Joe celebrates the anniversary of Reagan’s signing into law the Tax Reform Act of 1986 in “Tax Roundup, 10/22/14: Remembering Tax Reform”.

Joe reminds us that TRA 86 was not all good -

It included the current alternative minimum tax, which adds huge complexity to individual compliance. It had some benefits that phased out based on income, such as passive losses for active renters and for some IRA contributors. But at the time those could be seen as flaws to be fixed. Instead, they were weeds that would be cultivated.”

And he points out -

I count 47 ‘major’ post-tax reform tax laws in the Tax Policy Center list. Every one of them has done its part to undo tax reform.”

Joe ends on a hopeful note –

Still, 1986 did happen. Top rates came down from 50% to 28%. The base was broadened and rates reduced. It happened once, so maybe it can happen again.”

However neither Joe nor I are holding our breath.

* I just got this week’s email newsletter from Jean Murray, who covers business law and taxes for ABOUT.COM.

 This week, I'm focusing on issues involved with contracts and agreements.” 

* Jean also deals with the issue of “Who Is Self-Employed? Why It Matters”.

* Just in case you wondered why I never refer to Congress without the preface “idiots in”.  CCH HEADLINES reports (highlight is mine) -

Senate Minority Leader Mitch McConnell, R-Ky., wants to hold a vote on a package of expiring tax provisions known as ‘extenders as soon as the 114th Congress convenes in January, according to ‘The Hill’ newspaper.”

The idiots have been irresponsible enough waiting this long – and continuing to wait until after the election.

The perennial delay in passing the “extenders” causes multiple problems and issues for the IRS and tax software vendors as well as taxpayers who file electronically.

These idiots need to shit or get off the pot and vote NOW to extend, or let die, the various “extenders”.  Or more better - vote to either make permanent or let die the “extenders”.  Temporary tax breaks that do not directly relate to a specific natural disaster are not good policy. 

* I agree with Jason Dinesen.  It's okay to be Joe the Window Washer.”  Joe and I have a lot in common.

You can “Meet Joe the Window Washer” at DINESEN TAX TIMES.

* Joseph Spector of the DEMOCRAT AND CHRONICAL tells us about “Round 2: New York State Tax Rebate Checks Hit Mailboxes” -

The second round of rebate checks started hitting mailboxes in recent days.

The checks, about 2.8 million costing about $400 million to the state, will provide rebates to homeowners on school property taxes if their district last May stayed under the tax cap, which limits the growth in taxes to less than 2 percent a year.”

* Did you know that the “Tax Refund Size Increased This Year”?  So says Michael Cohn at ACCOUNTING TODAY -

The average tax refund in 2014 was $2,696, up 1.5 percent from the average refund of $2,656 in 2013, according to a new report on how well the Internal Revenue Service operated last tax season.” 

Michael also reports that, despite the best efforts of the idiots in Congress to make things difficult. “. . . the Treasury Inspector General for Tax Administration, found that the IRS managed to function well this past tax season”.

Let’s hope they are able to function just as well during the 2015 tax filing season, as the idiots in Congress wait until the very last minute to deal with the “extenders”.

TTFN

Wednesday, October 22, 2014

THIS JUST IN - SOCIAL SECURITY COLA INCREASE FOR 2015


According to the Social Security Administration the monthly Social Security and Supplemental Security Income (SSI) benefits will increase by 1.7% effective January 2015.

The Social Security Act ties the annual COLA to the increase in the Consumer Price Index as determined by the Department of Labor’s Bureau of Labor Statistics.

The monthly Medicare Part B premium will remain $104.90 for 2015.  Higher income beneficiaries will pay a higher premium in 2015 based on 2013 AGI plus tax-exempt municipal bond income.    

If your yearly income in 2013 (for what you pay in 2015) was
You pay (in 2015)
File individual tax return
File joint tax return
File married & separate tax return
$85,000 or less
$170,000 or less
$85,000 or less
$104.90
above $85,000 up to $107,000
above $170,000 up to $214,000
Not applicable
$146.90
above $107,000 up to $160,000
above $214,000 up to $320,000
Not applicable
$209.80
above $160,000 up to $214,000
above $320,000 up to $428,000
above $85,000 and up to $129,000
$272.70
above $214,000
above $428,000
above $129,000
$335.70

The maximum amount of earnings subject to the Social Security tax (and the Social Security component of the self-employment tax) will increase from $117,000 to $118,500 for 2015.  The maximum Social Security tax to be withheld from wages in 2015 will be $7,357.  And the maximum amount of the Social Security component of self-employment tax will rise to $14,694 for 2015.

TTFN 

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