Tuesday, August 30, 2016

ONLINE UPDATE

FYI – the September 2016 issue of my free tax planning and preparation e-newsletter ROBERT D FLACH’S THE 1040 LETTER is now available to download.  Click here.
 
I begin the issue with a message that needs constant repeating, report a new wrinkle on this message, introduce a new special report, review the rules for documenting charitable contributions, give you a special tax tip, provide another list, and end with a reminder for taxpayers with dependents who will be attending college this fall.
 
And, while I have you, just want to let you know that my latest RAMBLINGS post is up.  Click here.
 
Thanks.
 
TTFN








Monday, August 29, 2016

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

* Kay Bell gives us the bad news that “IRS wants to more than double some payment plan fees”.

There originally was no fee for entering into an installment payment agreement with the IRS.  And that is how it should be.  Taxpayers are already paying the IRS interest and some penalty – that is enough.

Setting up an installment payment agreement when filing a balance due tax return is good for the IRS and good for taxpayers – but it is not so good for taxpayers any more with these fees.  I used to advise clients to use installment agreements when there was no fee – but I no longer recommend formal agreements because of these fees.

One of my clients had set up an installment agreement with the IRS, with the fee added to the amount due.  Then he received additional income and was able to pay the full balance due in one payment, no longer needing an installment agreement.  However he was still forced to pay the fee for setting up the unused agreement.


* And for the trifecta, check out Kay Bell’s recent post “Tax deductions for allergy-related medical costs”.

* Just a reminder to check out my RAMBLINGS if you have not done so yet.   And let me know what you think.  BTW - a new post is coming August 30th.

* Joe Kristan ends his “Tax Roundup, 8/22/16:USA #1! I’m not talking about medal counts. Also: links on AIRbnb taxes, scams, frivolity and much more!” at the ROTH AND COMPANY TAX UPDATE BLOG with a truly great quote from TAZX ANALYSTS’ David Brunori (highlight is mine) -

But why is every good goal accompanied by a tax plan? Why is it that every time someone thinks something is wrong, they turn to the tax law for a fix? Folks, the tax laws are supposed to be for raising revenue, not engineering whatever it is we’re trying to engineer this week. We do this all the time. Obesity? Fat tax. Urban violence? Gun tax. Skinny polar bears? Carbon tax. Skinny polar bears? Prius credits. Let’s just stop it.”

Right on, Brother David.  That is what I have been saying for years.

* The IRS actually has a “Sharing Economy Tax Center” for those who participate in “online platforms available to rent a spare bedroom, provide car rides, or to connect and provide a number of other goods or services” like Uber, Lyft, and AirBNB.

* Another self-absorbed and self-important reality tv idiot in trouble with the IRS.  Kelly Phillips Erb, FORBES.COM’s Taxgirl, gives us the scoop in “More 'Real Housewives' Tax Drama As IRS Hits NeNe Leakes With Massive Tax Lien”.

As Kelly points out, this boob isn’t the first “Real Housewife” (these drunks are neither “real” nor what I would consider a “housewife”) to be in trouble with Uncle Sam.  Click here for a FORBES.COM slide show of reality show idiots who were thinking about themselves so much they forgot to think about taxes.

 
MY AUGUST SPECIAL OFFER-
 
I have created a new monthly newsletter titled BOBSERVATIONS with
 my observations on "life, liberty, and the pursuit of happiness".  
 
The cost of this new monthly newsletter is normally $9.95 for 12 monthly issues delivered as a pdf email attachment.  For all orders postmarked in August 2016 you the cost is only $6.65 – 1/3 off!
 
Plus I will send you as a free gift my e-book WON'T YOU TAKE THIS ADVICE I HAND YOU LIKE A BROTHER - a compilation of my best tax advice from 45 years of preparing 1040s that currently sells for $7.95.
 
Click here to download a free copy of the premiere issue.
 
Send your check or money order for $6.65 payable to Robert D Flach – and your email address – to –
 
BOBSERVATIONS, ROBERT D FLACH, PO BOX A, HAWLEY PA 18428 
 

* A recent CHECKPOINT NEWSSTAND week-day daily email newsletter reports “New self-certification procedure for taxpayers who miss 60-day rollover deadline” -

In a Revenue Procedure {Rev Proc 2016-47, 2016-37 IRB; IR 2016-113 – rdf}, IRS has provided a new self-certification procedure designed to help recipients of retirement plan distributions who, due to one or more specified reasons, inadvertently miss the 60-day time limit for properly rolling these amounts into another retirement plan or individual retirement arrangement (IRA). The new self-certification procedure allows these taxpayers to claim eligibility for a waiver of the 60-day rollover requirement that can be relied upon by a plan administrator or IRA trustee in accepting and reporting receipt of the rollover contribution.”

Sally P. Schreiber lists the 11 reasons that qualify for relief in this new procedure in detail in her article “IRS allows self-certification for late rollovers of retirement plan funds” at the JOURNAL OF ACCOUNTANCY. 

* Jason Dinesen correctly warns that “Payroll Penalties Are Almost Impossible to Get Rid Of” at DINESEN TAX TIMES (highlight is mine) –

I preach this to my clients all the time: payroll is a big deal. If you choose to go down the road of having employees, you MUST jump through the hoops.”

* At the Tax Foundation’s THE TAX POLICY BLOG Scott Greenberg suggests there are “Three Good Ideas in Clinton’s Small Business Tax Plan”.

I strongly oppose the Democratic Party’s tax platform and proposals (see my TWTP post “Politics and Tax Reform”).  But I do somewhat agree with Scott when it comes to these 3 items.

I definitely do agree with Scott when he says -

If expensing and cash-flow taxation are good policies, then the Clinton campaign should push to extend them to all U.S. businesses, not just the smallest ones.”

In addition to the proposals discussed above “Clinton’s small business plan would create a new standard deduction for small businesses, which would give businesses the option to stop keeping track of their business expenses for tax purposes.”

This is not really a good idea.  Businesses must be taught and encouraged to keep track of their business expenses for all sorts of reasons, not just for taxes, and should not be given any "excuse" to avoid this task.  And it must be done even with a standard deduction option.  As with any other tax return option, to make an intelligent decision regarding which to use you would need to compare actual business expenses to the standard deduction.

THE FINAL WORD

Republicans, conservatives, and independents – your opposition to Hillary Clinton, based on political or trust issues, is NOT a good enough reason to vote for dangerous narcissist Donald Trump.

There is absolutely no good reason to vote for Trump. The only rational and intelligent option is to vocally oppose and denounce him. If Trump wins America and the world truly loses.

If you oppose Hillary Clinton vote for the Libertarian Party ticket of Gary Johnson and Bill Weld, two former Republican governors.

TTFN

Do you want to learn how to pay the absolute least amount of federal and state income tax possible – and experience the joy of avoiding taxes?  Click here to check out my compilation of FREE TAX STUFF








 

Wednesday, August 24, 2016

OBAMACARE AND MEDICAL EXPENSES FOR SENIORS

I was reminded this morning that the 7.5% Adjusted Gross Income (AGI) exclusion of medical expenses for taxpayers age 65 or older who itemize on Schedule A will expire on December 31, 2016.  So the 2016 Form 1040 is the last year that seniors can take advantage of this lower AGI exclusion. 
 
Beginning with tax year 2017 all taxpayers who itemize must reduce medical expenses by 10% of their AGI.
 
This increased income threshold came out of the Affordable Care Act (ACA), aka “Obamacare”.  The application of the increase took effect for most taxpayers with tax year 2013, but had been postponed for seniors.
 
This presents a tax planning opportunity for seniors.  If -
 
(1)  you will be able to itemize for 2016, and
 
(2)  your 2016 medical expenses will, or have already, exceeded the 7½% exclusion, and
 
(3)  you think that, based on past tax returns, your 2017 medical expenses will not exceed 10% of AGI
 
you should look at accelerating medical expense to be able to claim them in 2016.
 
Pay any outstanding medical bills and schedule, and pay for, prescription renewals, check-ups, doctor visits, elective surgery, and needed dental work before the end of December.
 
As a point of information, if you will be a victim of the dreaded Alternative Minimum Tax your 2016 medical expenses will only be deductible to the extent they exceed 10% of AGI regardless of your age.
 
When adding up your 2016 medical expenses be sure to include travel to and from doctors, dentists, clinics, hospitals, therapy, etc. at 19 cents per mile and related parking and tolls.  And check out Kay Bell’s recent post “Tax deductions for allergy-related medical costs” at DON’T MESS WITH TAXES.
 
My MEDICAL EXPENSE GUIDE provides a detailed listing of what you can deduct as a medical expense on Schedule A - if you are lucky, or unlucky, enough to have enough expenses to exceed the AGI exclusion - plus several worksheets to help you keep track of your deductions.  It is available for $2.00 delivered as a pdf email attachment, or $4.00 in print form sent by postal mail.  Click here for more information.
 
A complete 2016 year-end tax planning guide will be available in early October.
 
TTFN
 
 
 
 
 
 

Tuesday, August 23, 2016

TAX GUIDES FOR VOLUNTEERS AND CONTRIBUTORS

Charities depend on the “kindness of strangers” to survive – kindness expressed through donations of cash and property and by volunteering.
 
I have prepared tax guides that explain the various tax benefits available to volunteers and contributors.  I have a long-version and short-version “Volunteer Tax Guide” and a “Contributor Tax Guide”.
 
A qualified tax-exempt non-profit organization, including a qualifying church, can reprint these guides for the purpose of providing copies free of charge to volunteers, members, and contributors of the organization.  There is no charge to the church or charity for the “reprint rights”. 
 
These guides will be delivered as an email attachment in word document format, so the organization can personalize them with its name and address.
 
Churches and charities who would like to use my tax guides as free gifts to contributors and volunteers should email me at rdftaxpro@yahoo.com with “TAX GUIDES FOR CHARITIES” in the subject line.
 
TTFN
 
 
 
 
 
 
 

Monday, August 22, 2016

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

* Have you checked out my RAMBLINGS yet? Please do! And let me know what you think.

* And also check out my compilation of FREE TAX STUFF!

* More proof that moving from NJ to PA was a great idea, via “15 Worst States to Live in During Retirement” from KIPLINGER (highlights are mine) -

The combined state and local tax burden {of New Jersey – rdf} is the second-highest in the nation. And it doesn't ease up after you die—the money you leave behind is subject to both an estate tax and inheritance tax (though there are exemptions for spouses and some others). Plus, with the second-worst ranking for fiscal soundness, behind only Illinois, the tax picture is unlikely to improve soon.

More bad news: New Jersey's living costs are the fourth-highest in the country, with retiree health care costs ranking third-highest in the nation.”

* A blast from the past from FIDELITY VIEWPOINTS, brought to my attention by a recent “issue” of Accountant’s World Daily News weekday daily email newsletter, lists “Nine compelling benefits of a Roth IRA”.

The bottom line of the article –

No matter what your age, because a Roth IRA may improve your tax picture, it makes sense to take the time to learn how a Roth works and see whether you would benefit from one.”

* CCH has created a “Tax Briefing” on the “2016 Tax Policies of the Major Presidential Candidates”.

Unfortunately it only covers the proposals of Clinton and Trump – no information on policies of Gary Johnson or Jill Stein.  Since Trump will lose the election - nobody with any intelligence should vote for the fool - there is no reason to read what he proposes.  So the only value of this briefing is to see the bad proposals of Hillary.


* Kay Bell reports “Louisiana flood victims get special tax consideration” at DON’T MESS WITH TAXES.

 
MY AUGUST SPECIAL OFFER-
 
I have created a new monthly newsletter titled BOBSERVATIONS with
 my observations on "life, liberty, and the pursuit of happiness".  
 
The cost of this new monthly newsletter is normally $9.95 for 12 monthly issues delivered as a pdf email attachment.  For all orders postmarked in August 2016 you the cost is only $6.65 – 1/3 off!
 
Plus I will send you as a free gift my e-book WON'T YOU TAKE THIS ADVICE I HAND YOU LIKE A BROTHER - a compilation of my best tax advice from 45 years of preparing 1040s that currently sells for $7.95.
 
Click here to download a free copy of the premiere issue.
 
Send your check or money order for $6.65 payable to Robert D Flach – and your email address – to –
 
BOBSERVATIONS, ROBERT D FLACH, PO BOX A, HAWLEY PA 18428 
 

* The CCH Headline News week-day daily e-letter told us “HCTC-Eligible Taxpayers Without Qualifying Coverage Get Hardship Exemption” -

The hardship exemption extends to all eligible individuals and/or qualifying family members who were not enrolled in HCTC-qualifying health insurance coverage for one or more months between July and December 2016, but were HCTC eligible.”

* Jason Dinesen’s post “Is a Rent Reduction Tax Deductible?” concerns a concept that is confusing to many taxpayers.

The landlord in the situation Jason discusses gets a tax benefit for the rent reduction – his net taxable rental income is reduced, or his net deductible rental loss is increased, by the $1,000 rent reduction.  So he is paying tax on $1,000 less net income.  But it is because $1,000 less in income is reported, and not because the landlord is deducting the reduction as a business expense.

Jason is correct when he says –

As you can see, the end result is essentially the same as getting a deduction, but psychologically it seems like people have a hard time with the concept.”

* And Jason also deals with the question of “The $250 Educator Expense Deduction and College Professors”.

* David Brunori of TAX ANALYSTS joins the conversation begun by Kay Bell and continued by Joe Kristan and myself (see my post “Kay Bell – You Asked for It!”) with “Regulating Preparers: A Solution in Search of a Problem”.

Mandatory regulation will not end incompetence and fraud among tax preparers.  Many already licensed and regulated tax preparers are incompetent, or less competent, and many engage in fraud.  Remember it was licensed and regulated CPAs who gave us the Enron fraud. 

The way to reduce preparer incompetence and tax fraud is to rewrite the convoluted mucking fess that the idiots in Congress have turned out Tax Code into.

* Jonathan Medows, a member of the FREELANCERS UNION, gives us a post at the union’s blog that helps freelancers to “Get the 4-1-1 On Self-Employment Tax”.

* At 21st CENTURY TAXATION Professor Annette Nellen shares my opinion (or rather I share her opinion) on the “Olympic Medal Taxation Craziness” -

There is no good reason for excluding this prize income.  All prizes are taxable because they are an accession to wealth which is what our income tax system is based upon. If you win a raffle or win on Jeopardy!, the prizes are taxable. Why should an Olympic medal be different?

THE FINAL WORD

Dangerous Donald has proven that he is a horrible businessman.

What will his run for the Presidency, fueled by his mental disorder, have accomplished?

He already lost his television show.

More than half the country realizes that he is a dangerous and unstable fool, and the number of individuals in America and around the world who come to this realization grows daily.  Once the election is over the name Trump will come to mean big loser.  His “brand” will have absolutely no value.

He will have totally destroyed whatever reputation he may have had.  And will be much more of a national joke then he was before.

He will have wasted millions of his inflatedly reported fortune on a losing campaign.

He may actually have to work for a living!

And he will, regardless of what he childishly whines, have no one to blame but himself.

It couldn’t have happened to a more deserving person!

TTFN

Do you want to learn how to pay the absolute least amount of federal and state income tax possible – and experience the joy of avoiding taxes?  Click here to check out my library of tax planning and preparation books, guides, reports, and newsletters.





Friday, August 19, 2016

A TRULY BASIC INTRODUCTION TO INCOME TAXES

If I may be permitted some shameless self-promotion . . .
 
I have added a new special report to MY DOLLAR STORE, titled “Introduction to Income Taxes”.
 
This report is truly a very basic introduction to the subject of income taxes for the true “great unwashed masses” (I use that term in this context lovingly, as did my mentor when he first introduced it to me). 
 
The purpose of this report is to try to explain some basics of income tax planning and preparation for the taxpayer who really has no clue about the subject – and just gives his or her “stuff” to a tax professional each year and hopes for the best.
 
I firmly believe that even if you use a tax professional to prepare your tax returns, which is a good and intelligent thing to do, you should have a basic understanding of tax terms and concepts.  As I have been saying for decades now, the more you know about taxes, the better prepared you will be when visiting with your preparer at tax time.
 
As an aside, this report is something that should be read by the idiots in Congress, who have shown by their constant complication of the US Tax Code that they really don’t know their arse from a hole in the ground when it comes to federal taxation – often especially those who actually create tax legislation.  The incompetent and unproductive Congress rarely has any real knowledge of the issues that they attempt to address, or rather that they manage to avoid addressing.
 
There is a third use for this report.  It can, I believe, also be used as the basis for a high school economics lesson on income taxes.  I will provide free reprint rights to this report as a classroom handout to any public school system that asks (email me at rdftaxpro@yahoo.com).
 
The report includes a glossary to explain some of the terms and concepts discussed, a listing of the appropriate numbers for 2016 tax returns, and a brief history of the federal income tax.
 
Since I have said this report is an addition to MY DOLLAR STORE I expect you can guess that it costs only $1.00, which is true if delivered as a pdf email attachment.  A print version is available for $2.00, sent via postal mail.
 
If you have found any of the posts here at TWTP helpful in the past you can always show your appreciation by purchasing one or more of my special tax reports and guides.  In addition to MY DOLLAR STORE I also offer more detailed and comprehensive tax guides for $2.00, or $4.00, each.  Click here to find out about the $2.00 guides.  Your purchase(s) will be greatly appreciated and help to keep TWTP alive and kicking.
 
If you would like a copy of this new report send your check or money order for $1.00, or $2.00, and your email, or postal, address to –
 
INTRODUCTION TO INCOME TAXES
TAXES AND ACCOUNTING, INC
POST OFFICE BOX A
HAWLEY PA 18428
 
TTFN
 
 
 
 
 
 
 

Thursday, August 18, 2016

POLITICS AND TAX REFORM

It is, I am sure, no surprise to anyone who reads TWTP or follows me on Twitter that I strongly oppose dangerous narcissist Donald Trump in his campaign for the Presidency.

As I have said here and elsewhere before, I very strongly believe that all Americans who care anything about freedom, democracy, civil rights, the economy, and the future of the country and the world have a moral obligation to publicly denounce and aggressively oppose Donald Trump and his campaign for the Presidency.

I have clearly identified the “Ten Reasons Why Donald Trump Must NEVER Become President”.

But, since this is supposed to be a blog about taxes, let me also make this statement – I firmly believe that the Republican Party “take” on federal taxation and tax reform is the more correct one.

I strongly oppose the tax philosophies of the Democratic Party.  The answer to all our problems is NOT to tax the rich merely because they can afford it.  Success, ambition, and entrepreneurship should NOT be punished.  The rich already pay their “fair share” of taxes.  And the US Tax Code must NOT be used to distribute social welfare program benefits or to “redistribute” income or wealth.  The purpose of the US Tax Code is to raise the money needed to run the government – period.

I also believe in doing away with the dreaded Alternative Minimum Tax and the federal Estate Tax (as long as the step-up in basis on inherited assets is maintained) and the federal Gift Tax.

My beliefs on tax reform, as a citizen and as a 40+ year veteran tax professional, are clearly identified on my website TAX PROFESSIONALS FOR TAX REFORM.  
 
However, no Presidential, or any other, vote should be based on only one specific platform issue.  We must consider all the issues of an election, and not just taxes, as well as the history, character and “temperament” of the candidates.  I have voted both Republican and Democratic in past presidential, and other, elections, and I have also on occasion voted for a third-party candidate.  My vote in each election was based on the individual candidate and all the issues involved, not merely on my position on taxes.

I believe, or at least hope, that when someone other than Trump, probably Clinton, is in the White House during the next four years the Republicans in Congress can pass proper tax reform, or at least keep the unacceptable Democratic tax proposals from becoming law.  Just because a citizen denounces and opposes the Republican Party’s candidate for President does not mean that he or she cannot support and vote for some or all of the Party’s Congressional candidates.

But, unfortunately, the 2016 Presidential election is indeed about one issue – keeping Dangerous Donald out of the White House at whatever cost.  The vote this November will, again unfortunately, not be about voting FOR a candidate, but voting AGAINST a candidate.

TTFN