WHAT’S THE BUZZ, TELL ME WHAT’S A HAPPENNIN’

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* I have written a series on Year End Tax Planning for MAINSTREET.COM.  Check out Part 1 and Part 2.

* More proof that (1) refundable tax credits are bad, and (2) government welfare programs like the Earned Income Credit do not belong in the Tax Code from the WASHINGTON TIMES – “IRS Paid Out $132 Billion in Bogus Tax Credits Over Last Decade”.  

“The IRS paid as much as $13.6 billion in bogus claims for the Earned Income Tax Credit last year, according to a report the agency’s internal auditor released Tuesday morning.

The Treasury Inspector General for Tax Administration said it warned the IRS in 2011 that it was making the erroneous payments, but two years later the agency hasn’t fixed the problem.

Over the last decade, the IRS could have paid out as much as $132.6 billion in improper payments.”

And further –

“According to the audit, the improper payments accounted for between 21 percent and 25 percent of all EITC claims in 2012.

Those figures do show a little progress. In 2010, as much as 29 percent of EITC payments were erroneous, accounting for up to $18.4 billion.”  

TAX PROF Paul Caron reprints a chart from the report.  Click here.

To quote a lyric from a popular folk song of my youth – “When will they ever learn?”.

The article goes on to state –

“In its response to the report, the IRS said it’s working with the White House Office of Management and Budget to try to reduce bogus payments.”

I can tell the IRS, OMB, and White House how to reduce bogus payments.  Do away with the Earned Income Credit altogether and distribute federal welfare money through the “normal” channels!

* Jason Dinesen tells it like it is in his post “Incorporate Your Life? Not So Fast” at DINESEN TAX TIMES.

Don’t be fooled by ridiculous claims of idiots trying to sell you a book or DVD or combination thereof.  I echo what Jason says in the post.  Read my lips (highlight is his) –

“ . . .simply having a business entity DOES NOT make everything in your life tax deductible.”

Jason correctly explains –

“Forming a corporation doesn’t magically make your mortgage deductible. Forming a corporation doesn’t make your grocery bill deductible. Forming a corporation doesn’t make the purchase of a big-screen TV for your living room tax deductible.

Legitimate business expenses are tax deductible.

Personal expenses are not tax deductible.”

* Jason also deals with “Insolvency and Canceled Debt: Make Sure You Can Prove It!” 

* WEALTH PILGRIM Neal Frankle, CFP does us a great favor by dealing with a true FAQ with his post “Beneficiary IRA Distributions (RMD) Made Simple”.

Actually the post title is misleading, and really doesn’t answer the most FAQ.  This post explains how to calculate the RMD of a non-spouse beneficiary.

You may also want to check out his posts “IRA Beneficiary Rules to Protect Your Family” and “Inherited IRAs – Please Avoid This Mistake”.

* The IRS is already predicting delays with the beginning of the 2014 tax filing season (for filing 2013 returns) due to the most recent irresponsibility of the idiots in Congress (i.e. the government shutdown).  It has announced “2014 Tax Season to Start Later Following Government Closure; IRS Sees Heavy Demand As Operations” -

“The original start date of the 2014 filing season was Jan. 21, and with a one- to two-week delay, the IRS would start accepting and processing 2013 individual tax returns no earlier than Jan. 28 and no later than Feb. 4.”

No problem for me.  My tax filing season has always begun on February 1^st. 

* The Tax Foundation’s TAX POLICY BLOG reports that “A Lot Has Changed in the 27 Years Since the Last Major Tax Reform”.  The last major tax reform being the Tax Reform Act of 1986, which recently celebrated an anniversary.

One change of interest –

“Since 1986, the U.S. tax code has gone from less than 30,000 pages to over 70,000 pages.”

* Sophia Coppolla of ACCOUNTING SCHOOL GUIDE sent me an infographic on “Sin Taxes” that you may find of interest.

* Jim Blankenship gives us a lesson in “How Adding to Your Earnings Can Increase Your Social Security Benefits” at GETTING YOUR FINANCIAL DUCKS IN A ROW.

* Good advice from Tax Mama Eva Rosenberg at EQUIFAX.COM - “Tell the IRS and Your State When You Move”.

* The weekly “Tax Talk Tuesday” (aka McTax Hangout) You-Tube show of Bruce McFarland, the MISSOURI TAXGUY, discusses “Charitable Contributions”. 

In the show Bruce uses a special presentation that was taken in a large part from the Contribution section of my “Itemized Deductions: A Complete Guide to Schedule A”.

THE FINAL WORD –

A good quote from fellow tax blogger Russ Fox EA of TAXABLE TALK –

“This matters because in tax when a statute says ‘x’, it’s ‘x’. A good example of this is some of the ludicrous ways the Alternative Minimum Tax impacts individuals. Judges have stated in their rulings that these make no sense but because it’s written into the statute, there’s no choice on this matter: Until Congress changes the law, they’re stuck.”

Because tax law is written by Congress, and the members of Congress are idiots, tax law can sometimes be idiotic.  The fault lies not with the IRS, who must enforce idiotic tax law, but with the fools who wrote the law.

As I have observed often in the past, most of the idiots in Congress do not actually read in full the laws that they pass.

TTFN