FREE AT LAST!

Free at last!  Free at last!  Thank God almighty, free at last!  Free of the danger and damage of the Trump presidency and the Trump Administration.  When Joe Biden is sworn in as President today our 4-year national nightmare will finally be over.

Donald J Trump has proven every single day of his presidency with every single word, tweet and deed that he is totally worthless, completely devoid of humanity, and does not possess a single redeeming positive human quality or value.  Trump has been the most ignorant, the most incompetent and the most corrupt – the absolute worst – President in US history.  I will go further  - he has been the worst human being to ever hold national public office in US history.

Trump does not care about America – he never has.

Trump does not care about the American people – he never has.

Trump does not care about American democracy, American values, or the Constitution – he never has.

Trump does not care about the Republican Party – he never has.

Trump does not care about conservative or Christian beliefs, values, or policy – he never has.   

Trump does not care about his core cult of ignorant racists – he never has.

Trump cares about one, and only one, thing – Trump.  He always has and he always will.  He is the ultimate textbook example of a malignant narcissist and a sociopath. 

The legacy of the Trump presidency is the emboldening, empowering and attempted “legitimization” of racism, bigotry and white supremacy.  He has organized racists, bigots and white supremacists, his core cult or “base”,  into a unified voting bloc.

Sadly, for the rest of my life I will judge the intelligence and character of every person based on whether they supported or opposed Trump and his presidency.  There is and was absolutely no intelligent, legitimate, rational or acceptable reason for any American, regardless of party affiliation or political philosophy, to support, defend or vote for Trump.

The Republican Party has totally abandoned all credibility, integrity and honor by supporting, defending and enabling – by embracing – Trump and Trumpism consistently over the past 4 years.  The Republican Party, and every Republican member of Congress almost to a man and woman, is directly responsible for every single bad act committed by Trump as President.  The recent discovery of a conscience by some Republican Congresspersons is too little too late.  The entire current leadership of the Republican National Committee must resign and be replaced by consistent anti-Trumpers if the Party is to survive.    

Going forward Trump must be aggressively investigated, indicted, prosecuted, convicted, and imprisoned for his multiple federal and state crimes.  He must be held accountable for his multitude of “sins’.  We must forcefully say “never again”.  There must never be any degree or act of respect or honor usually provided a past President given to Trump.  He must be publicly vilified and disgraced.  History will condemn America if this is not done.   

President Joe Biden and his Administration has a big job ahead – to undue the substantial damage done to America, American values and American democracy by Trump and his Administration, and to restore America’s credibility, stature and standing on the world stage.  I wish Joe luck and give him my complete and total support.

TTFN

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

* A warning from Kay Bell at DON’T MESS WITH TAXES – “Undeliverable COVID-19 payments offer another scam route”.
 
* The NATP BLOG explains “ABLE accounts can provide value for clients with disabilities”.
 
* And NATP also discusses “Coronavirus-related distributions from an IRA or qualified plan”.
 
* Check out the latest “Theatre BUZZ” at my blog FRIENDS OF THEATRE AND ART
 
* And also check out the latest posts at THE TAX PROFESSIONAL.
 
* And – one more reminder - also check out my new free monthly online newsletter BOBSERVATIONS.
 
THE LAST WORD
 
IMPEACH – INDICT – IMPRISON! 
 
The best end to the story of Donald T Rump would be his eventual death broke and disgraced in prison.
 
TTFN

MISLEADING INFORMATION

The income tax filing season begins on February 1^st - at least it has for me each year for 49 years.  The 2021 tax filing season begins on February 1st.  

Bloggers and journalists are falsely indicating that the tax filing season begins on February 12^th.

February 12^th is the date that the IRS will begin accepting and processing paper and electronic tax returns.  Period.  This is later than usual due mostly to late enacted tax legislation.

Taxpayers should not put off contacting their tax professionals with 2020 tax information if they have truly received everything needed to properly prepare the return. 

Time is a precious commodity for tax pros from February 1 through April 15.  Do not make their job more difficult by waiting until February 12 if you are not missing for any forms or information.

TTFN

“BAIT” AND SWITCH

I am trying to understand the legitimacy of the new “NJ BAIT”.

 

As explained on the “Business Alternative Income Tax” (BAIT) FAQ page of the NJ Division of Taxation website –

 

“For New Jersey tax purposes, income and losses of a pass-through entity are passed through to its members. However, for taxable years beginning on or after January 1, 2020, pass-through entities may elect to pay a Pass-Through Business Alternative Income Tax due on the sum of each of the member’s share of distributive proceeds. The member(s) may then claim a tax credit for the amount of tax paid by the pass-through entity on their share of distributive proceeds.”

 

The website of an accounting firm I found in a search tells us –

 

“The significance of this election is that the business taxes paid by an eligible entity can be deducted in determining federal income that passes-through to the owners, resulting in less federal tax paid by the owners on their share of the PTE income.”  

 

I assume the entity’s BAIT payment is claimed as a state income tax deduction on the federal Form 1065 or 1120-S, reducing the net taxable income passed-through to the partner or shareholder.

 

But what is actually happening?  The pass-through entity is making a payment of state income tax, calculated on the income of the entity, on behalf of the partner or shareholder.  The income of the entity, before any deduction for the BAIT, is still passed-through to the individual partners or shareholders on the NJK-1 and reported on Line 21 or 22 of the NJ-1040.  The partners’ or shareholders’ individual NJGIT liability is calculated based on this income. 

 

The BAIT payment allocated to the partner or shareholder is in effect an estimated tax payment of NJGIT.  If the actual tax cost of the pass-through income is more than the BAIT payment the partner or shareholder pays the additional tax.  If the tax cost is less than the allocated BAIT payment the partner or shareholder gets a refund or reduces the balance due.  

 

The BAIT payment made by the entity is not an expense of the entity but a payment made on behalf of the partner or shareholder.  It is not an expense of the entity, but a distribution of partner capital or shareholder PTI made to the State of New Jersey.

 

It appears to me that this is just a scam to allow New Jersey taxpayers to legally cheat on their federal income tax return.  The GOP Tax Act limited the itemized deduction for State and Local Taxes (SALT) to $10,000.  The BAIT is a way to “work around” this limitation so taxpayers could deduct a portion of their NJ state income tax, calculated on their NJ state individual income tax return, somewhere else on the federal return.

 

I certainly understand what New Jersey is trying to do.  I personally oppose the SALT limit – but for a unique reason (see my post “Defending the Deductions for Taxes and Mortgage Interest”).   But what about “substance over form”?  You can call it a “credit” and not an estimated tax payment, but if it walks like a duck  . . .

 

To be an actual legitimate entity-level state income tax should not the election be to pay BAIT on the entity’s net taxable income in lieu of passing the entity’s income to its partners or shareholders?  The entity would elect to not pass through its income to partners or shareholders.  An entity electing BAIT would not issue a NJK-1 to its partners or shareholders, and the partners or shareholders would not report any income from the entity on Form NJ-1040 Lines 21 or 22.  Since the individual partner or shareholder is not paying NJGIT on the income of the entity there would be no BAIT credit on the NJ-1040.   

 

So, what do you think?

TTFN

Over the past 4 years I have aggressively and consistently warned that the greatest threat to the safety, security and future of America, American values and American democracy was not ISIS, Russia or China - but Trump.

It gives me no pleasure to say “I told you so”.

WHAT’S NEW FOR THE 2020 NEW JERSEY STATE TAX RETURN

 

There are very few changes to the 2020 NJ-1040.  There are three (3) new lines, and other lines have been somewhat revised so that the 2020 return has a total of 78 lines instead of 76.

The three new lines are –

Line 36 – to enter the Organ/Bone Marrow Donation Deduction.  NJ taxpayers who donated organs or bone marrow in 2020 can deduct up to $10,000 in unreimbursed “out-of-pocket” expenses for related travel, lodging, and lost wages.

Line 48 – to enter a “Credit for Employer of Organ/Bone Marrow Donor” for self-employed employers who provided paid time off to an employee who missed work to donate an organ or bone marrow.

Line 63 – to enter the new “Pass-Through Business Alternative Income Tax Credit”.  The amount to be reported here is taken from a new Schedule PTE-K-1 provided by a pass-through entity – i.e. a partnership or a sub-S corporation – or a Schedule K-1 provided by an estate or trust.

As per new tax law –

1) The final phase-in of the increased Pension and Other Retirement Income Exclusion takes effect - the maximum deduction is $75,00 for Single or Head of Household, $100,000 for Married/CU Couple Filing Joint Return, and $50,000 for Married/CU Couple Filing Separate Return.  Unfortunately, the “Total Income” (NJ-1040 Line 27) limitation remains $100,000 – so as little of $1.00 in additional income can cause a NJ taxpayer to pay hundreds or more in NJ state income tax.

2) The 2020 NJ Earned Income Tax Credit (EITC) is increased to 40% of the 2020 federal credit.  And NJ residents who were not eligible for a federal EITC are eligible for an NJ EITC of $215 if they met the following requirements during 2020 -

· did not have a qualifying child; and

· were age 21 to 24 on the last day of the tax year; and

· met all federal EIC requirements except the minimum age requirement. 

3) The 2020 maximum employee contributions to the unemployment, disability and family leave programs, used to calculate any excess contributions based on more than one employer on Form NJ-2450, are much higher than in past years –

Unemployment = $150.03

Disability = $350.74

Family Leave = $215.84 

4) A new tax rate of 10.75% applies to net taxable income over $1 million. 

Go here to download 2020 NJ state individual income tax forms, schedules and instructions.

TTFN

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

A bit late – but here is the first BUZZ of 2021!

* I was truly surprised when I received my $600 economic stimulus payment in the mail on January 4^th!   .
 
Check out this “IRS Statement about Second Economic Impact Payments”.
 
* I forgot to include the following “extender” extension in my December post on the 1040 components of the second economic stimulus package.  The totally ridiculous IRS Section 163(h) deduction of qualified mortgage insurance premiums as mortgage interest, which never should have been allowed in the first place, is extended for 2021.
 
* Good advice in Russ Fox’s annual January post “It’s Time to Start Your 2021 Mileage Log” at TAXABLE TALK – if you haven’t already done so.  
 
Of course, keep in mind that employees can no longer deduct un-reimbursed employee business expenses on Schedule A.  So, if you are an employee a mileage log may be important in terms of getting reimbursed by your employer it will not provide you with a federal tax deduction.  FYI, NY state continues to allow employee business expenses in excess of 2% of AGI as an itemized deduction on the state income tax return.
 
* Erica York of THE TAX FOUNDATION suggests “Three New Year’s Resolutions for Tax Policymakers”.
 
All three are good resolutions – and obviously all three will be totally ignored by tax policymakers.
 
* Hey – did you see my new free monthly online newsletter BOBSERVATIONS yet?  Why not?  Click here.
 
* For NJ senior and disabled homeowners – “Deadline to Apply for the Senior Freeze Property Tax Reimbursement Extended Again” -
 
“New Jersey property owners who are eligible for the Senior Freeze property tax reimbursement program will have an additional month to apply for the relief program, with the application deadline now being extended until February 1, 2021.”
 
* Ashlea Ebeling tells us about the “Healthcare And Childcare FSA Fix For 2021, Finally” at FORBES.COM.

 

THE LAST WORD

Clearly yesterday's chaos at the Capital was the direct result of Trump's words and deeds.

But every single Trump supporter, defender and enabler must share equal responsibility for the treasonous attack on the Capital.

Pearl Harbor was an attack on America.

9/11 was an attack on America.

The storming of the Capital was an attack on America.

There is no difference between these three actions.

After yesterday any American who continues to support and defend Trump is clearly a traitor to America and American democracy.

There has NEVER been an intelligent, acceptable or rational reason to support, defend and enable Trump.

TTFN