Friday, June 3, 2011

MORE FINE WHINE!

(1) The biggest time waster during this past tax season was spending time staring at a frozen computer screen. My GDMFPOS computer was FSAM on occasion – wasting valuable time. As you know I do not use tax preparation software to prepare federal returns, but I do submit NJ returns online when possible and use the computer extensively during the season for research and word processing.

The second biggest time waster was trying to determine whether purchases of new windows, doors, water heaters, boilers and furnaces by clients qualified for an energy credit (is seems more so for 2010 returns than for 2009 returns).

While I instructed my clients to send me the Manufacturer’s Certification for all energy-efficient purchases, which verifies qualification for the credit, few actually did. For the most part I was given a copy of a bill or receipt for a potential energy-efficient item, or a note stating “I purchased a new hot water heater for $800.00”.

I then had to email the client and ask if they had a Manufacturer’s Certification, and, if not, explain the specific qualifications and ask if the item met these qualifications (a certain statutory minimum measure of energy efficiency), When the reply said they did not have a Certification and they did not know if the item met the specifications I would then have to ask for the make and model number of the product and, upon receipt, search through online listings to see if I could find a match.

This will not happen during next year’s tax season, when a limited energy credit is still available (as I discussed yesterday). If I am told “I bought a new hot water heater for $800.00” I will reply “Isn’t that special”.

If clients want to claim an energy credit on their 2011 federal return they will have to either send me a Manufacturer’s Certification Statement or verify by some other method that the item qualifies for the credit.

As I suggested in yesterday’s post, if a client has purchased what he/she thinks may qualify for the credit, but was not given a Manufacturer’s Certification Statement at the point of purchase, they should, before sending me their stuff, go back to the salesman and ask for one, or go the website of the item’s manufacturer and download a statement.

Clients can also go to the Energy Star website to find out what the specific qualifications are for individual items and compare these specifications to those identified in any manuals or paperwork received with the item. Those who do not have easy access to a computer can email me during 2011 and I will provide them with the required specifications.

I will not waste any of my time during the tax season trying to determine if the item qualifies.

Here is another great example of a tax credit that, while the main purpose of which is legitimate, has no business being in the Tax Code and only increases a tax preparer’s workload.

The credit for qualifying energy-efficient products should be given as a direct discount at the point of purchase – much like the Cash for Clunkers program of a few years back.

(2) While I provide most clients a Medical Expense Worksheet in my annual January mailing, telling them to fill it out themselves, I still receive from some a pile of medical bills, receipts and statements, as I did from one whose GD extension I just completed.

I tell clients not to send me their medical bills – and try to discourage them by saying I will charge $50.00 per hour for my time to sort through these bills – but some still do not listen.

Much of what I receive, as was the case with this client, is Blue Cross+Blue Shield, Medicare, or other insurance statements. For my purposes these statements are like tits on a bull – totally useless. They tell what the insurance provider has paid, but not what the client has actually paid during the year. What they often say is “you may be asked to pay” a certain amount – the amount not covered by insurance – but this is not always the case. Many medical providers will accept as payment in full what is given to them by the insurance company.

Next tax season if I receive a pile of medical bills, receipts and statements from a client I will promptly mail the pile back with another copy of my Medical Expense Worksheet.

Thank you for letting me vent!

TTFN

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