There has been a special “gimmick” for each of the past two tax seasons. Two years ago taxpayers who normally would not have to file needed to submit a special Form 1040EZ-T to get a $30.00 - $60.00 refund of telephone excise tax paid. Last year normal non-filers had to file at Form 1040A with a “0” tax liability in order to get a $300.00 minimum “stimulus” rebate check.
While there was nothing this tax season that required non-filers to file, the “gimmick” was a “second chance” at last year’s GWB “stimulus” rebate fiasco via the refundable “Recovery Rebate Credit”. The rebate checks sent out last year were based on information reported on the 2007 tax return. If an individual or couple’s situation changed for 2008 – i.e. the birth of a child, a reduction in Adjusted Gross Income, or an increase in taxable income that resulted in a positive tax liability – it was possible to add an additional rebate amount to tax withheld or paid in on the “Payments” section and either increase the 2008 refund or reduce the 2008 balance due. I had several clients who were able to take advantage of this “second chance” for all of the named reasons.
Another kind of “gimmick” for 2008 was the refundable “First-Time Homebuyer Credit” of up to $7.500. It was not really a true credit but really an interest-free loan, as it has to be paid back over an extended period of time beginning in two years. I had three clients who took advantage of this “gimmick” – two on the same property (non-married co-owners) – and it looks like one of the GD extensions will be claiming this credit. I did not have anyone who purchased in 2009 but claimed the credit on the 2008 return.
I also took advantage of the weird one-time only additional standard deduction of $500 or $1,000 for real estate taxes paid on quite a few returns. As I predicted in most cases this added deduction benefited retired taxpayers.
Last year the State of New Jersey stopped sending out booklets with forms and instructions to most NJ taxpayers, and the IRS, in its infinite wisdom, stopped sending out pre-printed estimated tax voucher packages. This year I was prepared and provided the coupons and envelopes to clients who file quarterly with their finished returns.
This year the State of New York decided not to send out forms to resident or non-resident filers – forcing me to purchase bulk copies. I am still mad at NY for making me write the information from W-2s on its IT-2 form instead of just attaching a copy of the W-2 to the return, as every other state and the IRS does.
There was a glitch with NJWebFile this year. A few weeks into the season I found that, while I was able to access the system and begin a return, as I finished the first page of data entry the internet would automatically shut down and I would get an error message from Microsoft saying in effect it had a problem with NJWebFile and could not continue. I wrote to a contact at NJDOT about the problem and prepared all NJ-1040s manually. I would go back and check it every other day and finally a return went through. After that there were no problems with the online filing of NJ-1040s for the rest of the season.
NJWebFile still allows one to condense 100 stock transactions into a single entry, but will not allow returns with Schedule C, partnership or Sub-S income, or more than 3 pension and annuity sources per taxpayer (and 6 W-2s per return).
The season got off to a smooth start. For the first two weeks of February the turn-around was relatively quick – with returns being done as they were received. However by February 15th the floodgates had opened and the deluge began. For perhaps the first three weeks of February the turn-around time was never more than two weeks – but by the end of the month and pretty much through March it became four weeks.
I made it a point this season to finish all returns received in February, for which I had all the information necessary to complete the returns, before beginning any of the returns received in March.
Partially because I did not have a car for much of February I started the season by going to my “mail drop” to pick up new returns only once a week – on Sunday – a practice which continued throughout the season. In the past I went almost every other day – which wasted a lot of time.
Often times a tax filing season will have a recurring theme. There was one year when every third person in the door had won something in the lottery – from $1,000 to $50,000. Another year, more recent, it seems that every homeowner had refinanced at least once. The only recurring item this season that I noticed was an abundance of round numbers - $2,300, or $6,600, or $52,000. Either the AGI or the total of itemized deductions or the taxable income or the tax liability or refund on quite a few returns was a nice round number.
I am pleased to say that not a single client had undergone foreclosure on a personal residence in 2008. While some are not exactly the most fiscally frugal it seems that I have instilled some sense of financial responsibility in my clientele.
This year I completed returns as they were received – I did not put off more involved ones until the end of the season and then find I had to file a GD extension because I did not have enough time to properly devote to them. I finished “red-filed” (need more information) returns as soon as the missing information became available – so there were no returns “hanging over my head” throughout the season.
There were several surprise “early birds” this season, and I was able to get some of the more involved returns out of the way in February. Of course many returns were delayed because of the late issuance of brokerage “Consolidated 1099” statements – specifically permitted by the IRS this year. However I do believe that there were less “corrected” Consolidated 1099s issued by brokerages than there had been in the past.
I strictly enforced my “read my lips – no new clients” policy this year, which was a help. I did accept two “lost lambs” back into the fold.
Health issues with my mother caused the loss of a few days during the end of the season – including causing me to end the season a half day earlier than usual – and dealing with the car repair issue took away some valuable hours in February. Still I managed to end the season with less GD extensions than ever – although still too many.
I ended this year with 32 federal extensions filed, and 2 state returns waiting for additional information. About 2/3 of the GDEs were either specifically requested by clients who needed more time to get their “stuff” ready, or returns that were not “in my hands” by March 31st, or returns that needed more information to properly complete. A dozen were received by March 31st, but either arrived during the last week of March or close thereto.
I never felt “overwhelmed” during this 38th tax season. I used to say that there were three stages to a tax filing season –
Stage 1 is “Bring on the 1040s – there is plenty of time.”
Stage 2 is “Oh my God – there is so much to do and so little time. I will never get them all done. What am I going to do?”
Stage 3 is “F-ck it! It they get done they get done.”
This season did not provide me with three stages – it seemed relatively smooth throughout the 2½ months.
I am indeed glad the season is over. Now I have to clean my office, closet and kitchen, do my laundry, get my hair cut, have my car inspected (I have just had it tuned-up) . . . and, oh yes, get to work on the GD extensions.
Only 12 more tax seasons to go (I want to be able to say I prepared taxes for 50 years).
An interesting non-related item – I checked my blog “statistics” yesterday and it seems that I had about 3 times as many visitors to TWTP during the tax season, when I do not blog at all, then during the “normal” year when I try to blog daily.
And, despite the fact that I clearly stated that I would not be reading or responding to tax questions submitted via email or as post comments during the season, I of course got lots of questions. They were, as I said they would be, automatically placed in “inventory” unread to be used as the source of future ASK THE TAX PRO postings. I will review them after I have a good number of GD extensions “under my belt”. I expect that quite a few are situation-specific questions sent to me in an attempt to avoid having to pay a local tax professional to deal with the issue.