Thursday, August 8, 2013
WHAT’S THE BUZZ, TELL ME WHAT’S A HAPPENNIN’
"’Do you pray for the Senators, Dr. Hale?’, someone asked, ‘No, I look at the Senators and I pray for our country.’" - Reverend Edward E. Hale
The BUZZ is chock-a-block! I couldn’t wait until Friday.
* I miss the posts of Professor Mary O'Keeffe, whose blog BED BUFFALOES IN YOUR TAX CODE has not had a new entry since March.
Here is a good example of her advice, from December 31, 2012 – “Under Penalty of Perjury!”.
The post properly chastises taxpayers who sign their tax returns without reading them first, and correctly points out -
“You--not your accountant!--are the person ultimately accountable to the IRS for the accuracy of what is on your return. You are signing--under penalty of perjury--and submitting a document to a government agency with the power to pursue both civil and criminal charges against you, to seize assets, garnish wages, and generally create a great deal of hassle down the road.”
But Mary, Mary, Mary, of course even CPAs make errors on tax returns – in my experience more so than other tax preparers. But singling out CPAs for emphasis only continues to perpetuate the totally untrue “urban tax myth” that CPAs are automatically 1040 experts. You should have simply said “Studies have shown that tax pros frequently make mistakes on tax returns”.
* FOXBUSINESS correctly explains “The Right and Wrong Ways to Resolve Tax Issues” -
“While there are reputable firms with accredited certified public accountants, enrolled agents and tax attorneys to assist in settling tax issues, there are also unscrupulous companies pledging to resolve tax problems for pennies on the dollar—and that isn’t a reality, claim experts.”
* Our favorite Mad Tax Accountant, Jamaal Soloman of TAX FACTOR, gives us installment #3 – “Dealing with the IRS”.
I agree with JS when he says –
“Not being able to communicate with the IRS via email is insane! Faxing, mailing and calling is so the 80s. The IRS has to find a way to act like it is the year 2013. A lot of time spent on my IRS cases could have been reduced in half, if I was able to email correspondences.”
I can deal with state tax agencies (at least in NJ) via email – so why not the IRS. I understand that they do not contact taxpayers via email – but they should be able to communicate with tax professionals with a POA via email.
The bottom line of the post –
“I have learned that you should always treat the IRS with respect. Even if the IRS agent is Satan himself, you must treat them with respect. Don’t get respect confused with fear. If you are ‘on-point’ with your case, you have nothing to fear.”
* At THE BUZZ ABOUT TAXES EA Manasa Nadig begins a new series on Employer Retirement Plans for Small Businesses with “A 401(k) Plan for Self Employed Individuals”.
The post ends with some good advice –
“Stay informed & know your responsibilities! Or best yet, engage a Tax Professional to take care of the intricacies for you, and help you decide which is the best Retirement Plan for your Small Business.”
* TaxGirl Kelly Phillips Erb has released "Podcast 1.02", discussing the week in taxes.
“This week, Obama issues his nod for the new IRS commissioner, the Housewives of New Jersey get real, Congress tries to stop the Health Care Act from being enforced and I talk liens and levies.”
* Speaking of KPE – It seems years since Kelly got to know me on a Tuesday. Well, it was. Kelly has revived her “Getting To Know You Tuesday” interviews with fellow tax pros. She gets to know “the other” Peter J Reilly (not her FORBES.COM tax blogging colleague) of Newburyport, Massachusetts.
I especially liked one of Peter’s answers (highlight is mine) –
“If you had the opportunity to make one change in the tax code tomorrow – an extra credit, a disallowed deduction, whatever – what would it be?
NO refundable tax credits, credits can 0 out your tax liability but cannot create a refund, IRS needs to stop being a welfare agency.”
Right on, Peter!
* Bruce McFarland, the MISSOURI TAXGUY, published a guest post from Angela Quint with some good advice titled “Tax Planning for Freelancers: Are You Prepared?”.
Angela begins with –
“Unfortunately, one of the most common mistakes that freelancers make is that they don’t properly budget for taxes. When you work for an employer, they automatically deduct the right amount of taxes from your paycheck. However, as a freelancer, it’s up to you to remember to set aside money for taxes. Keep in mind that just because you receive a $1,000 check from a client, not all of that money is yours to keep; the government gets a portion of it as well.”
And ends with –
“Planning for taxes does add more work to the business end of being a freelancer, but it will ultimately be worth it when you don’t have to scramble to find information and you get through your taxes without owing a fortune.”
* Joe Kristan begins his “Tax Roundup, 8/6/2013” at the ROTH AND COMPANY TAX UPDATE BLOG by explaining “Sometimes a big refund isn’t a good thing”.
The issue here is the refundable Earned Income Credit -
“While it may seem odd that the IRS would have a problem with taxpayers reporting too much income, the Earned Income Tax Credit is the motivation. If you have around $10,000 of businss or wage income, you can maximize this refundable credit, generating a nice check from the IRS.”
To re-quote from the Peter J Reilly interview at TAXGIRL – “NO refundable tax credits”.
* THE TAX FOUNDATION’s series of case studies on “tax expenditures” deals with the Earned Income Credit in “Case Study #7”.
The study looks at whether the EITC is actually accomplishing its objective (highlight is mine) –
“The credit does help workers with very low incomes. For workers with higher earnings, the credit continues to raise incomes until it is fully phased out. The phase-out, however, does discourage workers from accepting more hours worked by reducing the amount of additional pay they would otherwise receive. As a research, our research suggests that the negative impact of the phase-out depresses the labor supply by more than the phase-in bolsters it.”
The bottom line – the case study (again, highlight is mine) –
“. . . found that pairing an EITC repeal with an across-the-board tax cut would increase GDP by $125 billion per year and add 783,000 full-time jobs. Those additional opportunities would also be good for low-income workers.”
Regardless of whether or not the EITC actually does any good – it does not belong in the Tax Code!
* THE NSA BLOG (from “the other NSA”) gets your “Bankruptcy Questions Answered”.
* Michael Cohn over at ACCOUNTING TODAY surprises us with a good idea from Congresscritters (and Democrats at that) - “Senators Introduce Bill to Limit Tax Write-offs for Executive Bonuses” –
“A pair of Senate Democrats have introduced legislation to end unlimited tax write-offs on performance-based executive pay, allowing publicly traded corporations to deduct only up to $1 million in pay per employee.”
I do believe I proposed something similar, if not the same thing, a while ago.
* FYI – here is a first look at the new $100 bill to come out in October. I would love to receive many, many of these – please!