* Tony Nitti, one
of the stable of FORBES.COM bloggers, has been running a series of posts on the
new 3.8% investment income tax. In “Overview of the New 3.8% Investment Income Tax, Part 3: Gains from the Sale Of Property”
he addresses the spam email nonsense that has been floating around the internet
for a couple of years now -
“. . . if a taxpayers sells a principal residence and
the gain is properly excludable under Section 121 because the taxpayer owned
and used the home as their primary residence for two of the previous five
years, then no gain from the sale of the
home is included in ‘three little i’ income.”
What does he mean
by the “three little i” income? Check out the post to find out.
* Sandra Block from
KIPLINGER.COM explains “Why You Don't Need a Living Trust”.
I have always been
wary of such creatures, and have warned clients against them. To say the least, as the subtitle of the item
suggests, “They are costly and often
overhyped”.
As one of the
article’s headings points out - “Probate
doesn't have to be a nightmare”.
* In her OUR TAXING TIMES post “RAL Fees in Court” Trish
McIntire reports –
“The California State Supreme Court denied an
appeal made by Liberty Tax Service on a 2009 ruling. Actually, they refused to
hear the case after the state appeals court upheld the original ruling.”
A victory! I have always said Refund Anticipation Loans
(RALs) are bad, and tax preparers should not be offering them. Unscrupulous fast food tax preparation chains
like Henry and Richard and Liberty made a fortune on these usurious loans in
the past, and have been taken to task often by state court.
* Joe Kristan gives
us the word that the “IRS Publishes 2014 Health Savings Account (HSA) Limits”
at the ROTH AND COMPANY TAX UPDATE BLOG -
“The IRS has issued the 2014 contribution
limits for health savings accounts: $3,300 for single plans and $6,550 for
family plans. The 2013 limits are $3,250 for single plans and $6,450 for family
plans.”
* There is hope,
based on recent quotes from House Republicans -
‘‘We’re not going to take the current code and
see what comes out. We’re going to take a blank piece of paper and see what
goes back in.’’ House Ways and Means
Committee chairman Dave Camp.
‘‘The conference will unite around tax reform.’’ House Majority Whip Kevin McCarthy.
“There will be a premium here on
simplicity. If we can craft a code
that’s simpler and the rates are lower, it’s the kind of thing that can carry
us a long way.” House Deputy
Whip.
However, knowing
that, after all, the members of Congress are self-absorbed idiots, my optimism
is cautious.
* Wise words from
Professor Jim Maule of MAULED AGAIN in a letter to the editor to TAX NOTES
TODAY titled “IRS-Prepared Tax Returns: A Theory That Doesn't Work in Practice”
-
“The idea of the IRS preparing individuals’
returns is a classic example of a theory that cannot survive in a practical world.
Like most theories, it deserved an experiment. It had that chance, in
California, and it failed, with only a tiny portion of the eligible population
deciding to participate.
Making taxpayers’ lives easier is a matter of
simplifying the tax law, not enabling the complexities by turning tax preparation
over to the IRS.”
* Kay Bell brings
us “Tax Carnival #116: May Tax Flowers 2013” at DON’T MESS WITH TAXES.
The first item in
the Carnival is a post from Emily of EVOLVING PERSONAL FINANCE titled “Our
Experiences Using Tax Software”. Kay
tell us that Emily "likes to use tax
software to check our returns, but we don't fully trust it. We also do our
returns manually so we can understand them."
In the actual post
Emily explains -
“I do think it’s important to understand your
taxes on a theoretical level, even if you farm out the actual work to a CPA or
tax software. There’s no excuse for not
understanding how marginal tax brackets work or deductions vs. credits! I think you should have a general idea of
what deductions and credits you are taking and why you can take them.”
Emily is certainly
right not to fully trust tax preparation software, and is certainly correct
that taxpayers should understand their taxes, regardless of who, or what,
prepares the return.
BTW – I am
represented in the Carnival with my post on the Home Office “Safe Harbor Deduction”.
TTFN
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