Wednesday, July 7, 2010


* Mary O’Keefe continues the discussion on tax software and electronic filing in her posts “I Am Not a ‘Tax Artisan" (BTW – when I referred to Mary as an artisan I was referring to her as a teacher and not a tax preparer) and “Do US Presidents E-file Their Tax Returns?” at BED BUFFALOES IN YOUR TAX CODE.

In the first post Mary wisely points out (the highlight is mine) –

Thanks to our legislators, who have continued a trend of exponentially increasing tax complexity and who insist on tinkering with tax laws right up to the last minute before the filing season begins, tax software is extremely complex and intricate. Tax software is a useful tool, but I consider it vitally important to check the results carefully before filing.”

She also points out that many so-called tax pros rely too much on tax software without understanding the return that is generated –

Even knowledgeable and highly trained tax professionals can fall into this trap. For example, tax attorney Steve Rosenthal described his inability to explain his own teenage children's tax returns to them or even to understand what was going on in his own tax return {prepared using TurboTax – rdf}.”

As I pointed out in my comment on her post – “A tax preparer who relies 100% on software and does not understand the numbers or theory on the resulting return is not a tax preparer at all - but simply nothing more than a data entry clerk.”

And the answer to the question “Do US Presidents e-file their tax returns?” is “apparently not”.

For the past few decades, Presidents and Vice Presidents have routinely made their tax returns public while in office. The Tax History Project has archived their returns, which you can see here.
All the presidential tax returns currently available in that archive appear to be conventional paperfiles, not efiles. . . . recent presidential returns appear to have been prepared using tax software, but they were apparently signed and mailed rather than filed electronically

FYI – “the only efiler evident in the archives is Sarah Palin”.

* While, at least if prepared by me, a handwritten 1040 can be a work of art, I do agree with Trish McIntire of OUR TAXING TIMES that handwritten 1099s and W-2Gs can be problematic, as she explains in her post “A Gambling Suggestion”.

I also agree with her suggestion –

I'm proposing that the casinos take one step out of their process and put the winner's info into a computer at the time of the win and use that info to generate a neat printed W-2G or 1099MISC. Make this the file the IRS gets. It may take up a minute or two more of the gambler's time but it will save the rest of us time and aggravation down the road.”

I have also seen my share of handwritten W-2s in my time. I do believe that all information returns, W-2s, W-2Gs, 1099s, etc, should be typed if not computer generated. I type all the W-2s for my clients.

* I like the Friday's Tax Quote - July 2, 2010 from Rob Teuber’s TAX LAW FORUM blog.

It is actually more of a tax definition than a tax quote-

Capital punishment: The Income Tax." - Jeff Hayes

* Don’t forget to check out MISSOURI TAX GUY Bruce’s regular Sunday “Reads From Last Week”. As usual Bruce “wanders” through more personal finance blogs than I do and always finds some gems.

For example, Kevin of NO DEBT PLAN adds to the “Classic Debate: Should You Pay Off Your Mortgage or Invest That Extra Money?” – and will continue the discussion in a subsequent post. I have always led toward the paying off your mortgage side of the question, after doing the math of course.

* Did you work for two or more employers in the great State of New Jersey in 2009? If you did chances are you bent over for NJ’s corrupt elected officials – something NJ residents are used to doing. Check out my post at the NJ TAX PRACTICE blog titled “NJ Screws Taxpayers Again (What Else is New?)!

* Kay Bell talks about some of the ideas floating around Congress for oil spill relief in “Gulf Coast Oil Spill Tax Relief Measure” over at DON’T MESS WITH TAXES.

* And don’t forget to check out Kay’s “Tax Carnival #72: Independence Day” (although it was actually published on July 5th).

Here are a few entries you should check out -

“Start Now: Get Organized for Tax Filing in 2010” from Back Taxes Help (for a great way to get organized click here).

“Inherited IRA Rules” from The Oblivious Investor.

“What Fools These "CongressCritters" Be!” from The Wandering Tax Pro (hey – that’s me!).

* Before we leave Kay – she also offers an FYI post on “What World Leaders Are Paid”.
* A “tweet” led me to “Tax Deductions for Writers: Guest Post by Pamela S. Thibodeaux” at AUTHORCULTURE (“inspiring, enlightening, and uniting writers and readers”).

* Another “tweet” took me to an item from BUSINESSWEEK.COM that indicates “Wash. Income Tax Initiative Steps Closer to Ballot”.

The State of Washington currently has no state income tax, as I know because I have been doing the 1040 for a Washington resident, formerly from NJ, for many years now. But, according to the item, “A campaign to impose an income tax on the state's wealthiest residents is likely headed to the November ballot, as supporters {including Bill Gates’ father – rdf} submitted boxes of petitions Thursday morning”.

Author Rachel La Corte tells us –

The income tax would have two brackets. The first is 5 percent of any income above $200,000, or $400,000 for couples. The second bracket is 9 percent on the income above $500,000 for individuals or $1 million for couples.

The initiative also would cut the state property tax by 20 percent and increase the business-and-occupation tax credit to $4,800

* William Perez proves that brevity is the soul of wit when telling us that “New Mexico to Offer Tax Amnesty” at WILLIAM’S TAX PLANNING BLOG. It “will run from June 7, 2010, to September 30, 2010”.

* Having celebrated 1 Million hits (on the ROTH AND COMPANY TAX UPDATE blog that is) Joe Kristan is taking a well deserved vacation. While he is wandering the blog will post “Summer Reruns” of items Joe has posted on other websites.

Enjoy your time off, Joe!

In “50-State Tax Increase Ranking” TAX PROF Paul Caron quotes from a U.S. News & World Report item titled “10 States Where Taxes Are Rising the Most” by Rick Newman.

Newman “used NASBO data to compile the total tax hikes in each state since 2009, including proposed tax increases for 2011. Then I divided each aggregate figure by the state's population, based on Census Bureau data, and ranked the states according to the amount of new taxes per person.”

#1 on the list is New York State, which raised its state taxes by $419 per person.

* Before I go – I got a letter in today’s mail from “Internal Revenue Service, Commissioner’s Correspondence and Customer Support” in response to my Dear Commissioner Shulman. The letter, from a lackey, acknowledged receipt of my letter to DS, saying they “have assigned your inquiry to an IRS business unit for review”. I was told I “should receive a response from the assigned staff within 45 days from the date of this letter”.


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