WHAT’S THE BUZZ? TELL ME WHAT’S A HAPPENNIN’ – SPECIAL FRIDAY EDITION

Another special Friday edition of the BUZZ.  Lots of interesting stuff!

* Looking for stocking stuffers?  Click here and here and here and here.

* Have you seen the latest posts at THE TAX PROFESSIONAL?  Check out “The Discussion Continues” and “A Truly Heinous Business Expense”.

* I recently came across a quote from journalist Kevin Williamson (thanks to a “tweet” from Joe Kristan).  As usual, the highlights are mine -

“The so-called fiscal cliff is one installment in a series of manufactured crises, the purpose of which is to provide the political establishment with small problems it can solve or pretend to solve while steadfastly refusing to address the much thornier problem of the long-term non-sustainability of U.S. public finances.”

While I do believe there is truth to this statement, I also believe that by not addressing certain aspects of these crises, however manufactured, promptly and properly, the idiots of the “political establishment” will create real, tangible, and what could have been avoidable problems for the American public.  Specifically I am talking about the issue of the dreaded AMT patch.

* Kay Bell brings us “Tax Carnival #109: Tax Stocking Stuffers” at DON’T MESS WITH TAXES.  My post on locking in 2012 medical deductions is included.

* “No, I Don’t Plan to Take the RTRP Exam”.  So says Enrolled Agent Jason Dinesen (and not me, although I do not want to take it) of DINESEN TAX TIMES.

Jason points out that –

“Some enrolled agents are taking the RTRP exam so they can add the RTRP designation to their name. The logic being, ‘registered tax return preparer’ is more palatable to the public than ‘enrolled agent’.”

There is no need for an EA to take the RTRP exam.  They just need either a better name or better PR.

* A blast from the past - Jim Blankenship’s November 2009 post “Not So Fast! 9 Special Considerations Before Rolling Over Your 401(k)”.

* And Jim identifies “An Unexpected Result From Roth Conversion – Increased Medicare Premiums” in a current post.

* A post from TAX PROF Paul Caron led me to the paper “The Economic Costs of Tax Policy Uncertainty: Implications for Fundamental Tax Reform” by Seth H. Giertz of the University of Nebraska at Lincoln and Jacob M. Feldman of the George Mason University’s Mercatus Center -

“The economic literature finds that policy uncertainty is harmful to the economy in a variety of ways. Clearly, uncertainty discourages investment and results in the misallocation of resources. As mentioned earlier, Baker, Bloom, and Davis show that policy uncertainty can help explain the United States’ lackluster growth (in jobs and overall economic activity) in recent years. In addition to the other avenues by which policy uncertainty harms the economy, we argue that it fosters rent-seeking and unproductive entrepreneurship.”

The paper suggests “What can be done to lessen tax policy uncertainty” –

“Enduring fundamental tax reform would certainly help. Aside from policy uncertainty, there are many good reasons to support tax reform. Although recent years have been marked by great political discord, few of any political bent would dispute the contention that the U.S. federal income tax is unfair, inefficient, and needlessly complex, and that it raises far less revenue than Congress commits to spend. These are reasons enough for tax (and spending) reform. However, tax policy uncertainty is another, often overlooked, reason.”

* Speaking of the TAX PROF - For years now, when clients have complained about paying too much tax, or asked if they are making too much money, I have always said, “At least you are not an equal partner with the government,” meaning that each additional dollar earned was taxed at less than 50%.

I may not be able to say that to some clients anymore.  Paul Caron references a new report that suggests “Top Marginal Tax Rate Will Exceed 50% in California, New York, and Hawaii in 2013”.

Actually back when I started preparing 1040s (February of 1972) there was a “Maximum Tax” form that made sure the federal tax assessed on “earned income” was limited to 50%.

* It’s that time of the year again – “Nominations Due for 2012 Tax Offender of the Year” over at TAXABLE TALK.

Russ Fox announces - 

“With just under a month to go before 2012 is complete, it’s time again for anyone to submit a nominee for the Tax Offender of the Year. To be considered for the Tax Offender of the Year award, the individual must do more than cheat on his or her taxes. It has to be special; it really needs to be a Bozo-like action or actions.”

My vote for the 2012 Tax Offender of the Year goes to last year’s winner – The United States Congress.  I can think of no bigger Bozo. 

* The SAYEDUCATE personal finance blog considers “Tax Software: Should You Do It Yourself?”.  It begins by telling us (the highlight is mine) -

“When it comes to preparing your state and federal incomes taxes, do you rely upon a tax professional or do you undertake this arduous process yourself? With the former choice, you can ensure that the person that does your taxes knows what he or she is doing. With the latter, you risk making important mistakes, perhaps missing out on an important deduction or failing to follow complicated instructions.

There is, of course, a third way — do your taxes yourself with the help of a third-party tax preparation software program.”

His bottom line –

“So, the answer to this question has largely to do with two matters: your time and your computer’s ability to handle a program. For some consumers, the only answer here is to make a call their tax accountant and arrange a meeting to have those taxes prepared. In this case you’ll leave the hard work to a trust professional, enabling you to concentrate on other matters.”

The author has missed another “matter” to consider when evaluating the choice of using tax preparation software – your knowledge of the Tax Code.  As with any software, the rule is “Garbage In – Garbage Out”. 

Unless you really know a lot about taxes, by using a tax preparation software package “you risk making important mistakes, perhaps missing out on an important deduction or failing to follow complicated instructions”.

* TAXGIRL Kelly Phillips Erb kicks off her “12 Days of Charitable Giving 2012” at FORBES.COM with “Be An Elf”.

* Happy Birthday to the Tax Foundation - you don’t look 75!

* TAXPRO TODAY presents “The NAEA’s Degen on the Biggest Challenges Facing Tax Preparers”, the latest in a series of interviews with the heads of tax preparer membership organizations.

Frank Degen, president of the National Association of Enrolled Agents, was asked - “What is the biggest challenge facing tax preparers today?”.  His answer –

“Uncertainty. The challenge is two-fold. First is the uncertainty in the legislative area. What will Congress do? What will happen to the Bush tax cuts, the extenders, the AMT patch, and so on? Because of this, it is extremely difficult for practitioners to give sound advice to their clients.

Second is the uncertainty in the tax administration area. Will the IRS effectively administer the new preparer registration regime? There appear to be a large number of preparers who still must be tested and registered. Additionally, will the IRS effectively publicize the significant differences between the federal designations -- the senior credential of Enrolled Agent and the junior credential of registered tax return preparer?”

While the RTRP designation may be “junior”, many of those who do, or will, qualify for these initials are far from “junior”.  I have been doing this for over 40 years now.

* We get the word from Trish McIntire that the “Education Credits Form Changes” for 2012.

While the new form will take a bit more time to fill out, at least we, as tax preparers, do not need to personally call the educational institution and check transcripts. 

Unfortunately, the Form 1098-T that is supposed to be used to report qualified tuition and fees paid is basically tits on a bull, and tax preparers have had to spend valuable time chasing down alternative documentation to calculate the appropriate education benefit for several years now.

As Trish suggests, the form has been expanded because the American Opportunity Credit is partially refundable and therefore a magnet for tax fraud. 

There is already a system for providing government-funded student financial aid in place.  The AOC benefits should be distributed via this system, up front when the money is needed, and not run through the Tax Code. 

THE FINAL WORD

I truly miss the annual Christmas shows of Bob Hope, Bing Crosby, Andy Williams, Perry Como, etc. from my youth.  Unfortunately traditional variety on broadcast tv is dead (and was killed for good by Rosie O’Donnell). 

Thank God for PBS, which occasionally runs compilations of classic variety shows and specials, and continues to re-run Lawrence Welk each week.

The last original entertaining Christmas variety show that I can remember was on TVLand! 

A recent early Blake Shelton (wtf?) NBC “special” was anything but – the failed attempts at comedy were distasteful and vulgar.

I realize that, with the exception of Tony Bennett, there are no longer iconic performers of the stature of Bob Hope, Bing Crosby, Andy Williams or Perry Como.  But many rock icons, like Rod Stewart and Paul McCartney, have embraced traditional popular standards lately, and could properly host a traditional Christmas show, and there are plenty of talented performers who could guest.

Rod Stewart actually did a too early (pre-December, I think) Christmas special for PBS based on his new album that was certainly far superior to the BS fiasco – but it was, unfortunately, chopped up by extensive begging breaks (my one ongoing complaint with PBS).  

TTFN