* Ryan Ellis of the TAX INFO BLOG (the blog formerly known as “Tax Playa”) reports on an interesting development for individuals who pay for their own private health insurance premiums. According to Ryan, “The IRS this week has announced that employees can defer from their paychecks pre-tax the cost of individual health insurance. That is, the employer health exclusion does not simply apply to employer-sponsored plans. Employers can either directly-reimburse employees for part or all of the plan cost, or can allow the employees to take a pre-tax deduction from their paycheck.” This is the first I have heard of this change. I will investigate and report more on what I find out in a future posting.
* KPE at TAX GIRL answers one of the most frequently asked questions posed to tax professionals over the years in her posting “Ask the Taxgirl: Blood Donations”. Alas the answer to this FAQ is not the one that taxpayers want to hear.
* GLG at GINA’S TAX ARTICLES touches on the issue of “annualizing income” to avoid the penalty for underpayment of estimated taxes for a self-employed taxpayer with seasonal income fluctuations when answering a question in her posting “Estimated Tax: Self-Employed”.
Gina also offers some valuable words of wisdom in her posting on “Investment Newsletters”. Just because an item is “deductible” does not necessarily mean you will receive a tax benefit from deducting the item. As Gina points out, “Many tax deductible expenses do not end up providing a tax deduction. Salespeople will rightfully tell you when something they are selling MAY be tax deductible, only they always seem to say it as it definitely IS deductible and fail to mention the various exclusions that apply. The most painful of these is usually related to a home purchase that they have been told will result in a big annual tax savings, which for many people does not. It is always a mistake to purchase something because you believe it will provide you with a tax deduction without first asking your tax adviser if it is true in your case.”
While the investment newsletter discussed in the posting is a deductible item, you will only get a tax benefit if –
(1) you itemize deductions on Schedule A,
(2) your total miscellaneous deductions from Schedule A exceeds 2% of your Adjusted Gross Income (AGI), and
(3) you are not a victim of the dreaded Alternative Minimum Tax (AMT) – miscellaneous expenses are not deductible in calculating AMT.
* Kay Bell of DON’T MESS WITH TAXES reports that “IRS Formalizes Child Care Regs”. There is really nothing new here. As Kay points out, most of the final regulations “reflect proposed regulations that were published on May 24, 2006, and have been in use by filers since then”.
* The Tax Foundation’s TAX POLICY BLOG adds baseball’s Mr. Strawberry to the list of celebrity tax cheats in its posting “Daaaaaaaaaaarryl: Your Taxes Are Due”. The post reminds us that, “Yes, Mr. Strawberry, when you charge people for autographs, that is income according to the IRS”.
* The Times of London reports that “Pope Set to Declare Income Tax Evasion 'Socially Unjust'”. Remember, “Render Unto Caesar…” Thanks to Paul L Caron, the TAX PROF, for pointing out this article.
* I always enjoy reading Trish McIntire’s comments on “the tax preparation business from my perspective”. As usual, I feel your pain, sister, with regards to your posting “Tax Preparation-Jack of All Trades?”. My clients are also often asking me questions that have absolutely nothing to do with taxes, and asking me to fill out mortgage or loan applications, census forms, college financial aid applications, prescription drug or utility discount program applications, or any other such forms. As I state on the back of my “finished return” letter, “I have no special experience, knowledge or expertise with any of these forms. I do not know any more about them than you do.”
* KPE at TAX GIRL answers one of the most frequently asked questions posed to tax professionals over the years in her posting “Ask the Taxgirl: Blood Donations”. Alas the answer to this FAQ is not the one that taxpayers want to hear.
* GLG at GINA’S TAX ARTICLES touches on the issue of “annualizing income” to avoid the penalty for underpayment of estimated taxes for a self-employed taxpayer with seasonal income fluctuations when answering a question in her posting “Estimated Tax: Self-Employed”.
Gina also offers some valuable words of wisdom in her posting on “Investment Newsletters”. Just because an item is “deductible” does not necessarily mean you will receive a tax benefit from deducting the item. As Gina points out, “Many tax deductible expenses do not end up providing a tax deduction. Salespeople will rightfully tell you when something they are selling MAY be tax deductible, only they always seem to say it as it definitely IS deductible and fail to mention the various exclusions that apply. The most painful of these is usually related to a home purchase that they have been told will result in a big annual tax savings, which for many people does not. It is always a mistake to purchase something because you believe it will provide you with a tax deduction without first asking your tax adviser if it is true in your case.”
While the investment newsletter discussed in the posting is a deductible item, you will only get a tax benefit if –
(1) you itemize deductions on Schedule A,
(2) your total miscellaneous deductions from Schedule A exceeds 2% of your Adjusted Gross Income (AGI), and
(3) you are not a victim of the dreaded Alternative Minimum Tax (AMT) – miscellaneous expenses are not deductible in calculating AMT.
* Kay Bell of DON’T MESS WITH TAXES reports that “IRS Formalizes Child Care Regs”. There is really nothing new here. As Kay points out, most of the final regulations “reflect proposed regulations that were published on May 24, 2006, and have been in use by filers since then”.
* The Tax Foundation’s TAX POLICY BLOG adds baseball’s Mr. Strawberry to the list of celebrity tax cheats in its posting “Daaaaaaaaaaarryl: Your Taxes Are Due”. The post reminds us that, “Yes, Mr. Strawberry, when you charge people for autographs, that is income according to the IRS”.
* The Times of London reports that “Pope Set to Declare Income Tax Evasion 'Socially Unjust'”. Remember, “Render Unto Caesar…” Thanks to Paul L Caron, the TAX PROF, for pointing out this article.
* I always enjoy reading Trish McIntire’s comments on “the tax preparation business from my perspective”. As usual, I feel your pain, sister, with regards to your posting “Tax Preparation-Jack of All Trades?”. My clients are also often asking me questions that have absolutely nothing to do with taxes, and asking me to fill out mortgage or loan applications, census forms, college financial aid applications, prescription drug or utility discount program applications, or any other such forms. As I state on the back of my “finished return” letter, “I have no special experience, knowledge or expertise with any of these forms. I do not know any more about them than you do.”
.
I also strongly identify with her final comments - “But for me the problem is not being asked questions out of my field but that non-tax experts are being asked to give info on taxes. Just as I don't know what are good investments, few brokers understand all the nuances of how an IRA distribution can effect a client's return. No one wants to say they don't know the answer and possibly lose business. So they give a general answer and at tax time I clean up the nuances.” Trish – “nuances” is too nice a word. What you really mean is “mucking fess”.
I also strongly identify with her final comments - “But for me the problem is not being asked questions out of my field but that non-tax experts are being asked to give info on taxes. Just as I don't know what are good investments, few brokers understand all the nuances of how an IRA distribution can effect a client's return. No one wants to say they don't know the answer and possibly lose business. So they give a general answer and at tax time I clean up the nuances.” Trish – “nuances” is too nice a word. What you really mean is “mucking fess”.
.
TTFN
TTFN
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