Tuesday, January 23, 2018

A LITTLE THIS-A, A LITTLE THAT-A


I have always said that H+R et al “charge gourmet restaurant prices for fast food service”.  Basically, I am observing that Henry and Richard, and the others, ain’t cheap, or even reasonable, and the fees are certainly not commensurate with the service.  But comparing the service at tax preparation chains to that received at fast food chains is not fair – nor true.

Prior to being diagnosed with diabetes I was a frequent patron of McDonald’s, Burger King and Wendy’s.  For the most part, I found the service provided by these chains to be most definitely “appropriate”.  And, again for the most part, I most certainly received value for my money. 

Those who use tax preparation chains will NOT be able to say the same thing when describing their experience.

And I must point out that nobody at McDonalds, Burger King or Wendy’s tried to force me to buy fries or onion rings that I neither wanted nor needed.

So, more appropriately, H&R et al “charge gourmet restaurant prices for service that is inferior to the service you get at a fast food chain.”

Of course, to be fair, I must always include in my assessment of tax preparation chains the following statement –

It may actually be possible that the best tax preparer, at the best price, for your particular situation is an H+R Block, or other chain, employee.  But this is only because of the individual education, experience, ability, temperament, and other factors that are specific to that individual preparer or perhaps that unique and specific franchisee.

Hey, it is better to be safe than sorry.  Bottom line - don’t use Henry and Richard or another chain to have your 2017 income tax returns prepared.  If you are looking to find a tax pro you can start here.

+ Hey fellow tax pros – did you see Monday’s post at THE TAX PROFESSIONAL?

+ This past Sunday was the first payroll I processed for a business client using the new tax withholding tables that were revised to reflect the changes of the GOP Tax Act.  I was curious to see if employees were actually getting any more money in their paychecks.

The gross payroll – total wages paid - for 20 employees for the 2-week pay period was up about $3,600 from the January 8th payroll, but the federal income tax withholding was $1,050 less.  So, there actually was more money in the paychecks.

However, the pay checks of the two highest paid employees, including the millionaire owner of the business, with the same gross income for the two payroll periods being compared, were increased by over $750 due to reduced federal income tax withholding.  Obviously, the increases in the paychecks of the lower paid employees were small.

I do worry, being cynical, that the withholding tables are a bit too “generous” to try to prove that serial liar Donald T Rump was telling the truth for once when he said workers would see increased paychecks thanks to the Act.  I expect that, while individual paychecks will be slightly higher, 2018 tax return refunds may be lower, or balances due higher, especially for employees who live in New Jersey, as the employees of the above client do.

I am not alone in my concerns.  In “Democrats raise concerns about IRS withholding tables” at TAXPRO TODAY Michael Cohn tells us (highlights are mine) -

The ranking Democrats on the tax-writing House Ways and Means Committee and Senate Finance Committee are worried the Internal Revenue Service might succumb to political pressure by releasing withholding tables this year that cause employers to withhold too little in federal taxes from their employees’ paychecks to make it appear the tax cuts are larger than they really are, with the result that taxpayers will end up owing more money on their taxes next year.”

+ Speaking of business clients and the GOP Tax Act, also this past week-end a business client, a family owned “regular” (non-S) corporation with 2 shareholders that usually has net taxable income of under $50,000, asked if its tax will be reduced under the new tax law.

When the lower corporate tax rate was originally discussed I had thought the entire rate scale would be reduced. I think I had read somewhere that those currently paying 15%, based on net taxable income, would pay 8% under “tax reform”. However, everything I have read says the income tax rate in the Act is a flat 21% tax rate on net taxable income for all “regular” (non-S) corporations.

So smaller closely held corporations, with net taxable income of $50,000 or less, who previously paid 15% in federal income tax will actually see a 6% tax increase, and, because the sliding scale of tax rates is gone, those with $75,000 or less in taxable income will see a 2+% increase.

Once again true small business gets screwed!

+ FYI - some guidance from the IRS on one of the changes in the GOP Tax Act.

The weekday daily “Checkpoint Newsstand” email newsletter tells us what it learned from the “Frequently Asked Questions” (FAQs) posted to the IRS website -

The FAQs clarify that a Roth IRA conversion made in 2017 may be recharacterized as a contribution to a traditional IRA if the recharacterization is made by Oct. 15, 2018. A Roth IRA conversion made on or after Jan. 1, 2018, cannot be recharacterized.”

+ The last word - As with any post, your appropriate comments, and not “praise” that is really only trying to promote your site or product, are always welcomed.  I also want to know if you find any tax law inaccuracies, or typos or other clerical FUs, in the post.


TTFN








Monday, January 22, 2018

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

* Over at GO BANKING RATES Michael Keenan gives us the “Average Tax Return and Tax Refund Schedule for 2017”.

One important date to note –
  
Feb. 27, 2018: If you’re claiming the earned-income tax credit or need to apply for the child tax credit, you’ll have to wait longer. The IRS expects refunds for tax returns claiming those tax credits to be available starting Feb. 27, at the earliest. If you’re claiming either credit, that means the IRS holds back your entire refund — not just the portion connected to the specific tax credit.”

* Staying with that topic – JDSUPRA lists “Six Reasons to Get Your Tax Return Prepared Early”, all good ones.

* Ken Berry (not the actor – showing my age again) states the obvious in “2018 Tax Reform: Pass-Through Income Deduction More Complex Than Thought” at the CPA PRACTICE ADVISOR.   

* Last week’s “Ask The TaxGirl” at FORBES.COM dealt with “Claiming A Tax Refund When You Owe Tax”.

Some good stuff in KPE’s answer (highlights are mine) –

I am going to assume further that you filed your 2016 tax return early based on an estimate or last pay stub because you wanted your refund quickly.

Not only is that a bad idea, it's against the rules: The Internal Revenue Service (IRS) specifically bars tax preparers from e-filing your tax returns without receipt of forms W-2, W-2G and 1099-R. And while there are some tax preparers who will do anything for a dollar, I would advise you to find a tax professional who is willing to explain what can happen to you when you file without the right documentation.”

* And in another “Ask The Taxgirl” post KPE tackles “The $10,000 SALT Cap & Vacation Homes”.

Kelly says that property taxes paid on a personal use vacation home can be included in the $10,000 maximum deduction.

So, it appears you can deduct up to $10,000 in a combination of property taxes and state and local income or sales taxes on Schedule A for 2018 – 2025.  If the property taxes on your primary personal residence are $6,000, and you have a vacation property with property taxes of $3,000, you can deduct up to $1,000 of state and local income or sales taxes to come up with the maximum $10,000.

* Let us make it a TaxGirl “trifecta” with the good news that “Mike 'The Situation' Sorrentino Expected To Plead Guilty To Tax Charges”.  Thankfully the government is spared the cost of a trial.

No surprise about the tax evasion – and getting caught. All these reality tv "celebrities" (including the one in the White House) are merely self-absorbed and self-important idiots with limited intelligence.

* Did you know that if you owe too much money to your Uncle Sam the IRS can revoke your passport, or deny your passport application or renewal?   Also at FORBES.COM, Robert W Wood explains “How Overdue Taxes Can Jeopardize Passports”.

* The TAX FOUNDATION reports on the "Summary of the Latest Federal Income Tax Data, 2017 Update" - “data on individual income taxes for tax year 2015, showing the number of taxpayers, adjusted gross income, and income tax shares by income percentiles.”

Curious about whether the wealthy are paying their “fair share” of taxes?  The summary points out that (highlights are mine) -

The top 1 percent paid a greater share of individual income taxes (39.0 percent) than the bottom 90 percent combined (29.4 percent).”

And -

In 2015, the top 50 percent of all taxpayers paid 97.2 percent of all individual income taxes while the bottom 50 percent paid the remaining 2.8 percent.”

THE FINAL WORDS

Part I -

The ridiculous Turbo Tax tv ads seem to be saying that taxpayers should not be afraid to use TT software to prepare their tax returns.

This is obviously not true.  Individuals who use a “box” to self-prepare their 1040 need to be afraid that the return was not prepared correctly and that the IRS will charge them penalties and interest when the errors are eventually discovered.

It is difficult to decide whose tv ads are more stupid – Turbo Tax or Henry and Richard.

Part II –

Trumpocracy: The Corruption of the American Republic” is a great new book by a respected Republican that “offers a persuasive and detailed account of how Trump is undermining American institutions, including the presidency itself.”

It is "a must-read for Americans who are in denial about the threat to democracy posed by a president absorbed in narcissism and recklessly indifferent to the institutions and norms of ethics and propriety that have sustained the great American experiment for 2½ centuries.

His attributions are meticulous, his footnotes are extensive, his willingness to call out deviations from his conservative brethren is commendable.

Therein lies the power and credibility of Frum’s conclusions. They are supported by verifiable facts, grounded in historical context, devoid of ideological hue.”


TTFN









Friday, January 19, 2018

WHAT'S NEW ON THE 2017 NJ-1040

While the actual 2017 NJ-1040 is not yet available at the NJDOT website, the 2017 Instruction Booklet and just about all other 2017 forms and schedules can now be accessed there.

Based on the instructions there appears to be only one change to the composition of the actual NJ-1040 form.  In the section for exemptions a new Line 12 (c) has been added for the new $3,000 Veteran’s Exemption.  The appropriate amount – $3,000 if the taxpayer or a spouse qualifies, or $6,000 if both spouses qualify – is included in the deduction on Line 29 for exemptions.

A taxpayer who is “a veteran honorably discharged or released under honorable circumstances from active duty in the Armed Forces of the United States, a reserve component thereof, or the National Guard of New Jersey in a federal active duty status” by the last day of 2017 is eligible for a $3,000 exemption on his or her NJ state income tax return.  This exemption is in addition to any other exemptions the taxpayer is entitled to claim and is available on both resident and nonresident returns. The exemption can be claimed by both spouses on a joint return if they qualify, but the exemption cannot be claimed for a domestic partner or dependents.

You must provide a copy of Form DD-214, Certificate of Release or Discharge from Active Duty, or other appropriate documentation, such as a Form DD-256 or a driver’s license with veteran status, which is a license which has the word “VETERAN” on it.   the first year you claim the exemption. This form does not need to be provided in subsequent years.  The United States National Archives and Records Administration can assist with obtaining a copy of your DD-214.

You can certify for the exemption in advance by sending a copy of your DD-214 and a Veteran Exemption Submission Form to the Division before you file, which may help process your return faster.

Mail a copy of your DD-214 and the submission form to The New Jersey Division of Taxation, Veteran Exemption, PO Box 440, Trenton, NJ 08646-0440 or fax your DD-214 and the submission form to 609-633-8427.

If you do not pre-certify before you will need include a copy of your DD-214 or other acceptable documentation with the filing of your NJ state return.

Back to the NJ-1040 – the only other change is there is a new fund to which you can contribute a portion of your refund on Line 64 – the New Jersey Yellow Ribbon Fund (Code = 23).    

One thing that I was unsure about prior to seeing the 2017 instructions concerned the “Other Retirement Income Exclusion”.  I was not sure that this was available up to the new increased basic “Retirement Income Exclusion” amounts, or if it remained at the old limits.  The instructions clarify that the increased Retirement Income Exclusion amounts – now $30,000 for Single and Head of Household filers, $40,000 for Married, or “Civil Union” couple, Filing Joint Return filers, and $20,000 for Separate filers, twice what it was on the 2016 NJ-1040 – also apply to the "Other Retirement Income Exclusion"

The introductory letter from NJDOT Acting Director John Ficara in the 2017 instruction booklet says -

The pension and/or other retirement income exclusion amount is being increased over a four-year period. This year, you may be eligible for an exclusion of up to $40,000.”

And the “Worksheet D: Other Retirement Income Exclusion” shows the new increased Retirement Income Exclusion amounts in the calculation.

So even if you have absolutely no pension income, if you, and/or your spouse or civil union partner, were 62 or older on December 31, 2017, your gross income on Line 26 is $100,000 or less, and your total income from wages, self-employment, partnerships, and sub-S corporations is $3,000 or less, you do not have to pay any NJ Gross Income Tax if your NJ income, before deductions, is $30,000, $40,000, or $20,000 or less, depending on your filing status.

No other changes that I can see.  When the actual 2017 NJ-1040 is available I will review it and let you know if there are any more changes.


TTFN














Thursday, January 18, 2018

FYI - THE NEW KIDDIE TAX

Under the GOP Tax Act, effective with tax year 2018 the “Kiddie Tax” is no longer calculated based on the parent’s income, and the income of siblings is also no longer a part of the calculation.

The “old” law added a child’s “excess” net investment to the net taxable income of the parent(s) when calculating the tax, and the income of all dependent children was taken into consideration in the calculation.

I must point out - there is no change to the Kiddie Tax for the 2017 tax return that will be prepared in the next few months.  The 2017 Kiddie Tax is calculated in the same way as the 2016 Kiddie Tax.

And a reminder - the Kiddie Tax applies, in 2017 and 2018, to dependents who are a full-time college student under age 24.

The Earned Income – W-2 income and net earnings from self-employment - of a dependent “child” subject to the Kiddie Tax is taxed at the Single tax rates.  Net unearned income – basically investment income - in excess of $2,100 is taxed using the tax rates for Estates and Trusts.

Here is the new tax rate schedule for 2018 for Estates and Trusts -

If taxable income is = the tax is:

Not over $2,550 = 10%
Over $2,550 but not over $9,150 = $255 plus 24% of the excess over $2,550
Over $9,150 but not over $12,500 = $1,839 plus 35% of the excess over $9,150
Over $12,500 = $3,100.50 plus 37% of the excess over $12,500

While this initially appears to result in higher taxes on the “excess” investment income of dependent children, like what you’re liable to read in the Bible, it ain’t necessarily so.  It depends on the amount of income subject to the kiddie tax and the parents' tax bracket.

This change does, however, somewhat simplify the calculation of the Kiddie Tax, which, as a tax preparer, has always been a bit of a PITA in the past, especially when the income of several dependent children was involved.

TTFN











Wednesday, January 17, 2018

INFORMATION RETURNS

Soon you will be receiving the information forms you will need to prepare your 2017 tax returns in the mail – W-2s, 1099s, 1098s, K-1s, etc.   Here is a list of the forms you could be receiving –

Income Related Documents:

•  Form W-2 = wage and salary income
•  Form W-2G = gambling winnings
•  Form 1099-A = foreclosure of a home
•  Form 1099-B = sales of stock, bonds, or other investments
•  Form 1099-C = canceled debt
•  Form 1099-DIV = dividends
•  Form 1099-G = state tax refunds and unemployment compensation
•  Form 1099-INT = interest income
•  Form 1099-K = business or rental income processed by third party networks
•  Form 1099-LTC = benefits received from a long-term care policy
•  Form 1099-MISC = self-employment and other various types of income
•  Form 1099-OID = original issue discount on bonds
•  Form 1099-PATR = patronage dividends)
•  Form 1099-Q = distributions from an education savings plan
•  Form 1099-QA = distributions from an ABLE account
•  Form 1099-R = distributions from retirement savings plans
•  Form 1099-S = proceeds from the sale of real estate
•  Form 1099-SA = distributions from health savings accounts
•  Form SSA-1099 = Social Security benefits
•  Form RRB-1099 = Railroad retirement benefits
•  Schedule K-1= income from partnerships, S corporations, estates, or trusts  

Deduction Related Documents:

•  Form 1097-BTC = bond tax credit
•  Form 1098 = mortgage interest
•  Form 1098-C = charitable contribution of vehicles
•  Form 1098-E = student loan interest)
•  Form 1098-MA = homeowner mortgage payments
•  Form 1098-T = tuition for higher education

Medical Coverage Documents:

•  Form 1095-A = Health Insurance Marketplace Statement
•  Form 1095-B = Health Coverage
•  Form 1095-C = Employer-Provided Health Insurance Offer and Coverage 

The Form 1095-B and 1095-C are NOT necessary to prepare your returns - so do not hold up doing so, or giving your “stuff” to your tax preparer, until these arrive.  These forms may not arrive in the mail until mid-March.  However, Form 1095-A is most definitely needed to prepare your return.

Most information returns are required to be delivered to you by January 31st.  However, Form 1099-B, Form 1099-MISC reporting attorney fees and “substitute payments”, and Form 1099-S are required to be delivered by February 15th.  The deadline for filing partnership returns, and corresponding K-1s, is now March 15th, but the partnership may request an automatic extension until September 15th.

Brokerage houses (Merrill Lynch, Wells Fargo, UBS, etc) will usually provide a “Consolidated 1099 Statement” that combines the information of 1099-DIV, 1099-INT, 1099-OID, and 1099-B.  There is an excellent chance that the brokerage will issue at least one, if not two, corrected statements.  The final corrected 1099 may not arrive until mid-March.

Many states no longer send out Form 1099-Gs for state tax refunds and unemployment compensation.  You will need to go to the website of your state's tax department or unemployment agency to download these forms.  State tax refunds are not necessarily taxable, but unemployment compensation is.

As you receive information returns you should check the amounts reported on the forms against your own records.  And it is important to verify that the Social Security numbers on all forms are correct.  If you discover an error, or something you don’t understand, contact the employer or financial institution for an explanation or a corrected return.

Some information returns may come attached to other documents. Check the contents of each envelope carefully. Your Form 1098 for mortgage interest may arrive attached to the January or February monthly mortgage statement. Some year-end dividend checks have a Form 1099-DIV attached. Don’t separate the check and throw out the 1099-DIV thinking it is a stub. And check 1099-DIVs you receive to see if there is a check attached. I can’t tell you how many times I have found checks attached to 1099s given to me by clients. 

Remember – you are required to report ALL INCOME, whether or not you receive a Form 1099 or other information return.  And just because you have not received a Form 1099 does not mean that one was not sent to the IRS.


TTFN









Tuesday, January 16, 2018

ATTENTION NEW JERSEY TAXPAYERS


I provide a review of this seminar for my fellow tax pros at THE TAX PROFESSIONAL.  For this post I want to review some of the things discussed at the seminar that are of interest to NJ taxpayers.

Most of this seminar is devoted to updates and presentations on the various NJ state taxes by “Jake and Company”, aka the NJ Division of Taxation’s “Taxation University”.  The “Jake” is Jake Foy, head of TU, who has been a fixture at this annual seminar for almost 2 decades.

Jake started off on the topic of “tax updates” by telling us that, as was the case last year, the refunds requested on 2017 NJ-1040s will NOT begin to be issued until March 1stregardless of when you actually file your return.  Otherwise, NJ expects to process NJ-1040s and get refunds to NJ taxpayers within 3-4 weeks.

If you sent in your return today requesting a refund, either manually or electronically, you would NOT get your check, or a direct deposit of your refund, until March 1st

Many NJ taxpayers chose to prepay the February and May 2018 property tax payments in December of 2017 to get a 2017 federal tax deduction, in response to the changes for 2018 – 2025 made by the GOP Tax Act.  If you did this it will not affect either your 2017 or 2018 NJ-1040 filing.   

For NJ-1040 purposes, the state only cares that what is considered the calendar year’s tax assessment – taxes due on February 1, May 1, August 1, and November 1 - are paid in full.  They do not care in what year these assessments are paid.  You can only deduct up to $10,000 in 2017 property taxes on the 2017 NJ-1040, and you can only deduct tax payments due in 2018, again up to $10,000, on the 2018 NJ-1040, regardless of when you actually made the payment.  So, prepaying 2018 taxes in 2017 does not increase your 2017 NJ-1040 deduction, and it does not reduce your 2018 NJ-1040 deduction.
 
With regard to the deduction on the NJ-1040 for property taxes, like, coincidentally, the GOP Tax Act limited to $10,000, NJ has different rules for who can claim how much than the federal rules and regulations for the property tax deduction.  This was not discussed in detail at the seminar, but I will share here what I have learned over the years, often from specific situations with my clients.

The NJ-1040 deduction is available only to the owner(s) on the title of the property, and in the same proportion as their percentage of ownership.  If there are two unmarried owners each is entitled to deduct 50% of the property’s taxes.  NJ considers a married couple to be ONE person

So, if the owners of the property listed on the title are the father, mother and son, although there are 3 people who own the property, because husband and wife are 1 person, the mother and father can deduct 50% of the taxes on their joint NJ-1040 and the son can claim 50% - but only if all three people actually live in the home.  If the parents live in the home, using 100% as their personal residence, and the son lives in another home, the parents can deduct 50% of the taxes, up to $10,000, and the son can deduct NONE of the taxes on that property.  If the son owns and lives in another property he can claim the property taxes on that property as a deduction.

Unlike the IRS, NJ does not care who actually pays the property taxes.  Even if the parents in the above example pay 100% of the real estate taxes they can still only deduct 50% - though the parents can, and do, claim 100% of the property taxes on their federal Schedule A. 

Bottom line – the NJ-1040 deduction for property taxes is not always the same as the federal deduction for property taxes.

In the above example the same 50% applies to the Homestead Benefit and, if applicable, Property Tax Reimbursement applications of the parents.

The NJ Retirement Income Exclusion will increase to $75,000 for individuals, $100,000 for joint filers, and $50,000 for married couples filing separately over four years beginning with the 2017 NJ-1040.  Here, from the NJDOT website, is the phase-in schedule.  Note the numbers for tax year 2017.


A NJ taxpayer who is “a veteran honorably discharged or released under honorable circumstances from active duty in the Armed Forces of the United States, a reserve component thereof, or the National Guard of New Jersey in a federal active duty status” by the last day of 2017 is eligible for a $3,000 exemption on his or her NJ state income tax return.  This exemption is in addition to any other exemptions the taxpayer is entitled to claim and is available on both resident and nonresident returns. The exemption can be claimed by both spouses on a joint return if they qualify, but the exemption cannot be claimed for a domestic partner or dependents.

You must provide a copy of documentation of your honorary discharge when filing your return.  According to Jake, the Division will be flexible in considering documentation of a taxpayer’s veteran status, and will accept copies of the DD214, DD256, or a driver’s license with veteran status – which is a license which has the word “VETERAN” on it.  This documentation must be submitted ONLY in the first year you are claiming the additional veteran’s exemption.  If you submit your documentation when filing your 2017 NJ-1040 you do not have to submit any documentation again in future years.

I was pleased that Jake announced the state’s corporate business income tax return (CBT) e-file “mandate” has once again been suspended.  This requirement, that does not have an “opt-out” option like the NJ-1040 does, and applies regardless of whether or not the corporation uses a paid tax professional, will not be enforced until NJDOT is able to allow corporations to submit their CBT-100 or CBT-100S returns directly to the state online, without having to buy outside software, as it does with 1040s via the NJWebFile system (which I use whenever possible).

The seminar also discussed the NJ Property Tax Relief programs – the Homestead Benefit and the Property Tax Reimbursement (aka “Senior Freeze”).  There is nothing new here – other than that it is “anticipated” that the NJ Homestead Benefit property tax credits for the application filed in 2017 will be applied to either the May 1 or August 1 quarterly payments and checks sent out soon thereafter.  Of course, there is no guarantee that this will be done – as the cafones in the NJ legislature always defer or curtail the property tax relief programs to balance the budget (God forbid they should actually try to cut government expenses, especially the excessive “entitlements” provided to legislators and other government officials).

The TU speaker addressed two scenarios related to the Property Tax Reimbursement program.  One is the homeowner that qualified to participate in the program years ago, but is just now submitting his or her first application.  This person should complete and submit a separate Form PTR-1 for each past year that they qualified for the reimbursement.  They will obviously not get any actual reimbursements for any of these years, but doing this will establish a “base year” tax amount that represents the actual first year they qualified.  The base year is used in calculating the reimbursement.  If the base year tax was $6,000 and the current application year tax is $10,000, the qualifying homeowner will get a check for $4,000.

Another scenario concerned a qualifying couple who had been filing the PTR-2 application each year, and receiving a reimbursement, but, for some reason, such as the severe illness of one spouse, they forgot to file two or three years of applications, and in doing so lost their base year.  They should call the NJDOT and request PTR-2 applications forms, preprinted with their original base year, for each missed year and complete and submit these applications.  Again, no reimbursement will be issued for the missing years, but by doing this they can reinstate their original base year.

It is important to remember that in calculating the income used to determine eligibility for the reimbursement ALL income is included, including income not taxed on the Form NJ-1040 (Social Security or Railroad Retirement benefits, unemployment, tax exempt interest or dividends, etc.).

Usually an applicant must own title to the property for which he/she is applying for both programs.  But, if a qualifying person lives in the property as a “life tenant” under a “life estate” and the title is in the name of another individual(s) or a family trust, he/she, the “life tenant”, can apply for the benefit or reimbursement.

As a point of information, the NJDOT speaker told us that the Homestead Benefit amount is currently based on the tax assessed on the property for 2006.  The benefit amount is either 5%, 6.6667% or 10% of this tax assessment, based on the applicants age (or if disabled) and level of applicable year’s (tax year 2016 will be used for the 2018 Homestead Benefit application for benefits issued in 2019) NJ Gross Income (line 28 on the NJ-1040).

So, there you have “the word” on NJ taxes.  The actual 2017 NJ-1040 and applicable instructions are not yet available at the NJDOT website.  I will let you know here when it is, and will identify any changes to the form.

TTFN

















Monday, January 15, 2018

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

* No surprise here. Howard Gleckman of TAX VOX reveals that “The IRS Private Debt Collection Program Once Again Looks Like A Failure”.

What’s the old line about ‘fool me once?’ When it comes to privatizing debt collections for the IRS, Congress has now tried to fool American taxpayers for the third time. According to a new report by the agency’s Taxpayer Advocate Service, the outcome is roughly the same as the last two episodes—the agency is spending far more on the program than the firms are collecting and remitting to the Treasury.

Just as troubling, the reports finds the debt collectors were mostly targeting lower-income taxpayers, some of whom are receiving Social Security Disability Insurance (SSDI)--a group that was supposed to be excluded from the program. Of the 4,100 taxpayers who made payments after their debts were assigned to private collectors, 1,100, or 28 percent, had incomes below $20,000. About 5 percent were receiving SSDI or Social Security retirement benefits. They had a median income of $14,365.

Howard’s obvious bottom line (highlight is mine) –so far, the evidence suggests it’s a much better deal for the debt collectors than for the rest of us”.

* The IRS has provided “Early Release Copies of the 2018 Percentage Method Tables for Income Tax Withholding”.

The IRS Notice says -

Employers should implement the 2018 withholding tables as soon as possible, but not later than February 15, 2018.”

So employees will begin to see the effect of the slightly lower tax rates beginning with February paychecks.

* Last week-end a client told me about California’s attempted scam to change income tax payments into fully deductible charitable contributions.  I told him it wouldn’t work – and that it was a scam.  It appears Russ Fox of TAXABLE TALK agrees with me – as he explains in “Why California’s Attempt to Make State Taxes a Charitable Deduction is Doomed”.

Other states are trying to think “outside the box” to find ways to make the state tax payments deductible.  None of them will work, for similar reasons.

* An interesting “Ask The Taxgirl” question for Kelly Phiilips Erb at FORBES.COM – “Charitable Deductions For Giving Away Free Stuff “.

As usual, KPE provides the correct answer -

Sorry, only donations to qualified charitable organizations are tax deductible.”

And -

Donations to individuals will not qualify for a tax deduction. You cannot deduct contributions to individuals no matter how deserving.”

* Jennifer Dunn tells us “When are the Sales Tax Holidays in 2018?” at TAX JAR, providing a state-by-state listing and description of the various scheduled sales tax holidays.

* At THE TAX PROFESSIONAL I provide my “review” of the annual NJ-NATP "Famous State Tax Seminar", which is truly famous.

* Jason Dinesen continues with his “Glossary” posts at DINESEN TAX TIMES by explaining the term “Independent Contractor”.  

* Michael Cohn reports "Taxpayer Advocate Worried About How IRS Will Handle New Tax Law" at ACCOUNTING TODAY.


* The TAX FOUNDATION explains “State Tax Changes That Took Effect on January 1, 2018”.

* Wow, NJ is only #10 on KIPLINGER’S list of “The Least Tax-Friendly States in the U.S."!  I guess the reduction and eventual elimination of the estate tax helped it to move downward on the list.

Still a fact – “New Jersey’s property taxes are the highest in the U.S.”.

FYI, Maryland is #1 – the least tax-friendly state.

THE FINAL WORDS

It is an error to assume that opponents of shithole President Donald T Rump are limited to Democrats and “the left”. 

Every patriotic American, whether Republican or Democrat, conservative or liberal, MUST oppose and denounce Trump the MAN and not merely Trump a Republican President.  And many Americans of all political “persuasions” do.

The issue is with Trump the despicable, deplorable, unfit, and unstable individual and NOT Trump the alleged Republican or Trump the alleged conservative (he is neither). 

Opposing and denouncing Donald T Rump is opposing and denouncing Donald T Rump – and not the Republican Party or conservative politics.

Republican and conservative politicians who publicly support Trump and attempt to protect or “explain” him are traitors to both the Party and the country.



TTFN