Tuesday, December 31, 2013


As you are reading the final BUZZ of 2013 I will be typing W-2s!

* Attention NJ tax pros – the Winter 2013 issue of NJ TAXING TIMES, the newsletter of the NJ chapter of NATP, is out!  Click here to download.

Be sure to check out my article on “K-1s and the NJ-1040”.

* William Perez provides his take on the “Top Tax News Stories of 2013” at ABOUT.COM – listing a baker’s dozen.

* The MOTLEY FOOL lists “8 States That Cut Income Taxes in 2013”.  None of them are in the northeast.

* Would you believe, as THE WIRE tells us, that “The FBI Considered 'It's a Wonderful Life' to Be Communist Propaganda”?  My answer = “yes”.

From the film’s release in 1946 until 1956, it was listed by the Federal Bureau of Investigation as suspected Communist propaganda.”

* Manasa Nadig takes on the task of “Clearing Up Common Myths About Life Insurance Proceeds” at THE BUZZ ABOUT TAXES.  

* Oops, they did it again.  Here is the word from the NJ Division of Taxation –

The filing deadline for 2012 Homestead Benefit Applications has been extended to January 31, 2014. The original filing deadline was November 22, 2013. Applications were mailed to homeowners beginning in early October 2013.”

Click here for the press release.

I still say the application should be once again included in the NJ-1040 filing.

* Jean Murray explains “End of Year Employee Paychecks - Which Year's Taxes?” at ABOUT.COM.

Jean points out –

The rule is:  The paycheck is considered as taxable income in the year the paycheck is ISSUED (dated), even if the work was done and the pay was earned in a different year . . .

But there is an exception, which she identifies.

* Barbara Weltman considers “Tax Increases By Any Other Name” at BARBARA’S BLOG –

In 2014, there are new government fees that essentially raise taxes. After all, payments to the government, whether labeled taxes, fees, penalties, fines, or something else, all do the same thing, which is transfer funds from taxpayers to the federal coffer.”

A word of warning – the “shared responsibility” penalty “for individuals who do not have ‘minimum essential coverage’ at the start of the year” is not as simple as it may appear.  It involves a convoluted calculation.  As I have mentioned before, those who use a tax preparer to calculate the penalty are doubly penalized – they must pay the penalty and must pay a higher fee to their tax pro for calculating the penalty.

The item quotes BO –

And, my office is ready, willing and eager to engage both parties in having a conversation about how we can simplify the tax code, make it fairer, make it work to create more jobs and do right by middle-class Americans.”

I hope he is sincere, but so far BO has not demonstrated any indication that he wants true substantial tax reform.  He has clearly shown that he wants to continue to wrongly use the Tax Code to redistribute income, and wants to “tax the rich” simply because they can afford it.

The item also tells us –

In a related development, House Budget Committee Chairman and former vice-presidential candidate Paul Ryan, R-Wis., has officially expressed interest in succeeding Camp as Ways and Means chairman when Camp ends his term at the end of 2014.”

This is definitely not something I would support.

* Howard Gleckman presents “The Tax Vox 2013 Lump of Coal Award: Wait ‘Til Next Year Edition” for the top 10 “worst tax and fiscal policies of 2013” at, where else, TAX VOX, the blog of the Tax Policy Center.

Some interesting entries.  I certainly agree with #1 on the list - the government shutdown.

And an excellent bottom line -

If 2013 is remembered for anything—and perhaps it is best forgotten—it may be for all that didn’t happen.”

A result of the most unproductive and useless Congress in history.  Don’t forget to vote out any incumbents running for re-election in 2014!  

Highlights of the new single-piece First-Class Mail pricing, effective Jan. 26, 2014 include:

·     Letters (1 oz.) — 3-cent increase to 49 cents
·     Letters additional ounces —  1-cent increase to 21 cents
·     Letters to all international destinations (1 oz.) — $1.15
·     Postcards — 1-cent increase to 34 cents

It appears that the new 49 cent rate is temporary and will last no more than two years. 

* REUTERS give us the news that “New York Regulates Tax Preparers as U.S. IRS Effort Drifts” -

New York will require independent preparers to pass a competency test and take continuing education classes.”

I expect this will not apply to the upcoming tax filing season, and will begin with the filing season for 2014 tax returns, and that this new development will be covered in detail in the NYS tax update presentation at the annual “Famous State Tax Seminar” given by the NJ chapter of NATP on January 11th.  I will let you know more information as I find it.

BTW – did you ever wonder what became of former IRS tax preparer regulation and electronic filing “czar” David Williams?  He is now “chief tax officer at Intuit Inc {TurboTax – rdf}, which sells tax preparation software”.

* Russ Fox addresses the Small Business and Entrepreneurship Council’s 18th Annusl Small Business Policy Index in “Bring Me the Usual Suspects: Small Business Policy Index 2013”.

It is no surprise that my former home state of New Jersey is on the bottom of the list again - #49.  Only California is a worse state in which to do business.


Did you hear the DUCK DYNASTY Christmas carol?

May your days be merry and pleasurable.
And may all your neighbors be heterosexual!

BTW – there is also an Archie Bunker version.

Best wishes for a Happy New Year.  May 2014 be less taxing!


Monday, December 30, 2013


2013 marked the 100th birthday of the federal income tax.  February 3, 1913 was the 100th anniversary of the ratification of the 16th Amendment — the one saying "The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration."  And Congress passed the Revenue Act of 1913 on October 3, 1913, which created the first permanent federal income tax.
The IRS was plagued with several scandals in 2013.  It started with a seemingly endless string of IRS training and motivational videos based on TV shows (Star Trek, Gilligan’s Island, The Apprentice, Mad Men) that were clearly a waste of government funds.
It was also discovered that the IRS had targeted political groups applying for tax-exempt status for closer scrutiny based on their names or political themes. The FBI began investigating the IRS's actions as part of a criminal probe ordered by the US Attorney General, which led to both political and public condemnation of the agency and triggered further investigations. 
Initial reports had described the targeting as almost exclusively aimed at conservative groups with terms such as "Tea Party" in their names, but further investigation revealed that certain terms and themes in the applications of liberal-leaning groups and the Occupy movement had also triggered additional scrutiny.
As a result of the scandals Steven T. Miller, Acting IRS Commissioner resigned and Joseph H. Grant, commissioner of the Tax Exempt and Government Entities Division, and Lois Lerner, the Internal Revenue Service official at the center of the scandal, elected early retirement.
In August BO nominated John Koskinen, former chairman and CEO of Freddie Mac, as the next Commissioner of the Internal Revenue Service and he was just recently approved by the Senate.  My only concern is that he is “a 74-year-old multimillionaire”.  I would have liked a younger, and less wealthy, person in the job.  
Democrat Max Baucus and Republican Dave Camp, chairmen of the Senate and House tax writing committees, called for serious and substantial tax reform legislation in 2013 and spent the summer touring the country to promote the need for tax reform.  However nothing was accomplished.  The US Tax Code remains a mucking fess.  Camp did tell reporters earlier this month that work on reform legislation would continue in 2014, but I am, to say the least, skeptical that anything of substance will be accomplished next year. 
FYI, Baucus has announced he's not running for re-election in 2014, and was just nominated by BO as Ambassador to China so he may be leaving Congress sooner.  While Camp has no plans of leaving Congress any time soon, his chairmanship of the House Ways and Means Committee has a term limit, and he'll only hold the position through 2014.  
As mentioned earlier, perhaps the top tax story of 2013 was the death of DOMA (the 1996 Defense of Marriage Act).  On June 26th the US Supreme Court declared that the Defense of Marriage Act was unconstitutional and that the federal government has no right to deny benefits to same-sex individuals who have married in a state that has legalized same-sex marriage.      
Fellow tax blogger Kelly Phillips Erb (aka TaxGirl) explained in her initial post on the decision that “it wasn’t so much about the individual rights of folks to marry but the rights of states to write their own laws defining marriage”.  The decision did not say that same-sex marriages should be legal, or that same-sex couples have a legal right to marry.  It merely said a same-sex couple that a state has legally joined together in matrimony will be recognized as being married by the federal government.     
In response, the IRS ruled that a same-sex couple legally married in a state that recognizes same-sex marriages will be treated as married for federal tax purposes.  The ruling applies regardless of whether the couple lives in a state that recognizes same-sex marriage or one that does not.  The "state of celebration" determines the federal tax treatment and not the state of residence.  Legally married same-sex couples can move freely throughout the US, from state to state, and their federal filing status will not change.
From a tax standpoint, same-sex couples who were legally married in a state that recognizes and permits same-sex marriages must file their federal income tax return(s) as either Married Filing Jointly or Married Filing Separately from now on.  This is true regardless of their state of residence.  How the couple will file their state income tax return(s) depends on the laws of their state of residence.   Legally married same-sex couples were given the option to amend previously filed prior-year open federal returns (2010, 2011, and 2012) to file as married.
The theme of American politics continues to be “clowns to the left of me, jokers to the right”.  Nothing of consequence was accomplished during 2013.  Congress passed the fewest number of new laws in 66 years, only about 60.  They did, however, manage to pass a bill “To specify the size of the precious-metal blanks that will be used in the production of the National Baseball Hall of Fame commemorative coins."  Thank God the Democrats and Republicans could come together to accomplish that! 
During 2013 the members of Congress from both parties did time and again prove themselves to be self-absorbed idiots incapable of independent thought.  However it was the Republican Party leadership’s pandering to the fanatical Tea Party and religious right that literally shut down the government for over two weeks in October.
As a result of the shutdown the IRS announced that, once again, it will not be able to begin processing 2013 tax returns until January 31, 2014, because it needs “time to get things right with our programming, testing and systems validation”.  Once again this delay will not affect me at all.
The year ended without an extension of the usual “extenders” that expired on December 31, 2013.  These include –
·      the $250 above-the-line deduction for qualified expenses of K-12 educators,
·      the above-the-line deduction for up to $2,000 or $4,000 of qualified tuition and fees,
·      the itemized deduction for mortgage insurance premiums,
·      the option to claim an itemized deduction for state and local general sales taxes instead of state and local income taxes,
·      the $500 lifetime maximum credit for qualified energy efficient improvements to a taxpayer's principal residence,
·      the ability to make a direct tax-free transfer from an IRA to a charity and apply this as a Required Minimum Distribution, and
·      the exclusion from income of the discharge of qualified principal residence debt.
Whether or not these items will be on the 2014 Form 1040 will not be decided until 2014 (let’s hope early in the year and not December).
So there you have it – the year 2013 in taxes.
What will happen in 2014?  Not much, I am sure.  We continue to elect idiots to Congress, and until this changes we can look forward to more of the same inaction and incompetence in Washington.

Friday, December 27, 2013


2013 continued the ongoing saga of the irresponsibility of the idiots in Congress, which shows no sign of ending soon.

The year very literally began with a prime example of this irresponsibility.  In the early hours of January 1st the fools in Washington finally passed the “American Taxpayer Relief Act of 2012”, which
·      made permanent the various “Bush tax cuts” and the dreaded Alternative Minimum Tax (AMT) “patch”,
·      temporarily extended the other “extenders”, the American Opportunity Credit for qualified tuition and other post-secondary education expenses and the enhanced provisions of the Child Tax Credit and the Earned Income Credit, but not the expired 2% reduction of the employee’s share of Social Security Tax withholding and corresponding reduction in the Self-Employment Tax,
·      brought back the PEP and Pease AGI-based reduction of personal exemptions and itemized deductions, and
·      created a new top “regular” and capital gain tax rate.
Perhaps tied for the top tax story of the year (with the death of DOMA, which I will discuss later) is the David-versus-Goliath victory of three independent tax return preparers who felt the cost of the IRS mandatory RTRP tax preparer regulation regime, especially the annual CPE requirement, was “prohibitive” for their small practices and joined with the Institute for Justice to challenge the licensing program in federal court in Loving v IRS.
On January 18th Judge James Boasberg of the U.S. District Court for the District of Columbia pleasantly surprised all of us in the tax preparation industry by deciding for the plaintiffs in Loving v IRS and shutting down the mandatory regulation regime.  The Court ruled that the IRS did not have the legal authority to regulate tax return preparers.  The Service could continue to require tax preparers to register and receive a PTIN (Preparer Tax Identification Number) but it could no longer require preparers to complete a competency test or maintain CPE to be able to prepare tax returns for compensation.  The IRS requested a stay of the injunction pending appeal, but the Court just said no.
I did not find the CPE requirement “prohibitive” (extensive CPE in taxation is truly a necessary business expense for all serious tax preparers), but agreed with the IFJ that the IRS did not have the authority to regulate all paid preparers in this way.  FYI, I was referenced in a footnote to the brief opposing the IRS request for a stay of the injunction submitted by the Institute for Justice.
The IRS appealed the decision, and on September 24th a three-judge panel of the U.S. Court of Appeals for the District of Columbia heard oral arguments from Dan Alban of the Institute for Justice and the IRS.  After the hearing Dan Alban told me that the judges “seemed rather skeptical of the IRS’s arguments and generally receptive to our position.  They seemed focused on the meaning of the statutory language, and also noted the significance of the long period of time (130 years) that it had taken for the IRS to suddenly ‘find’ this new power in the statute (31 U.S.C. 330).”
As of this writing a decision on the appeal has not been issued, but just about everyone in the industry, and the press, agrees that the IRS did poorly in presenting its case and believes that the Court will deny the appeal and uphold the original decision, putting the final nail in the coffin of the mandatory RTRP program.
The Court said the IRS could continue to offer the RTRP credential on a voluntary basis, and I have suggested, in a TAXPRO TODAY editorial and a letter to the new IRS Commissioner, that the Service do just that with a two-tiered program that includes the existing Enrolled Agent designation, with EA replaced by a better name.      
As a result of the last minute legislation the 2013 tax filing season got off to a late start for many tax preparers.  The IRS announced that it would not be able to begin processing either paper or electronically filed 2012 tax returns until January 30th.  And returns with certain forms and schedules, including those involving depreciation and amortization, education and energy credits, and passive losses, would not be able to be processed until late February or early March. 
There were additional delays during the season for some returns claiming an education credit on Form 8863.  Tax refunds for about 600,000 taxpayers who used fast-food tax preparation chains, like Henry and Richard, to prepare their returns were delayed due to a “software glitch”.  Just one more reason not to use fast-food chains to prepare your returns.
But, because for me the tax filing season does not officially begin until February 1st, and I do not, and never will, use flawed and expensive tax preparation software, I experienced no delays in starting the tax season on time.  
This was the first tax season in my new home in a new state.  I lost only a handful of clients because of the move, which is ok as I am trying to “thin the herd” anyway. 
2013 was the second year that brokerage houses and mutual fund companies had to report cost basis information for certain investment sales on Form 1099-B, and preparers and taxpayers had to enter investment sale transactions on as many as three separate Form 8949s, carrying over the totals to Schedule D.  While there was inconsistent treatment of 2011 Form 1099-B reporting among the various houses, resulting in extra work, things were better, and reporting was more consistent and easier to follow, on 2012 statements.
The only new wrinkle to 2012 returns was the added “due diligence” requirements for tax professionals who prepare returns claiming the Earned Income Credit.  I had announced that I would not prepare any 2012 returns that included a claim for the EIC - but I ended up breaking this promise.  All but one of the very, very few 2012 returns with EIC that I did prepare involved clients (all long-time) without children.  The one that did involve a dependent child was a single mother whose returns I have been preparing since before the child was born.  How could I tell her I would not be doing her return this year?  The child involved was in college, so my “due diligence” consisted of looking at the Form 1098-T.
It was a “traditional” season – ending on April 15th (or for me April 14th).  No extra days.  I ended the season with about 40 GD extensions, most for returns that were received by me after March 15th.  The increased number really had nothing to do with IRS processing delays, or even with the lack of extra days, but was the result of choices I made because of my move.  I will do things a little differently next year.
To be continued . . . . .

Thursday, December 26, 2013


For more than 40 years I have been dealing with federal and state governments, as a driver, a college student, an investor, a professional tax preparer, and an individual citizen.  During this time nothing has ever been as frustrating as trying to apply for health insurance under “Obamacare” (aka the “Affordable Care Act”).  Dealing with the IRS and, yes, even the NJ Division of Taxation (although NJDOT has been much more frustrating than my encounters with the IRS) has been a walk in the park compared to my experience with Obamacare.

My saga begins on the morning of October 1, 2013.

For weeks the airwaves and internet had been full of stories and articles telling us we would be able to apply for healthcare and an advance payment of the “Premium Tax Credit” at the online Health Insurance Marketplace beginning on October 1st.

I had used an online calculator I came across in my wanderings on the web to estimate the cost of insurance and the amount of the Premium Tax Credit I would receive based on my location and income.  I learned I would receive a substantial credit.  My total premium would be more than I was currently paying, for additional coverage, but after the advance payment of the credit was applied I would be spending much less “out of pocket”.

I went to HealthCare.gov at 8:00 AM on the morning of October 1 to submit my online application.  I was unable to complete the application process.  I continued trying the rest of the morning and into the afternoon, and finally gave up at about 2:30 PM.

I next called the 800 number listed on the website and, to my complete surprise, I got a live person almost immediately.  I provided all the required information and answered all the questions.  When we were done the person to whom I was speaking told me that my identity was verified and I would receive a notice listing the insurance options available, and the amount of credit to which I would be entitled, in the mail, and perhaps also online, “shortly”.  Nothing ever arrived, either via postal mail or email.

The country soon learned that, despite all the advance publicity, the Health Insurance Marketplace website was not ready to begin processing applications on October 1st and was eventually shut down due to the large volume.  We were promised that the site would be fixed and running properly by the end of November.

During the third week of November I received two emails (one after the other) from HealthCare.gov telling me “You have a new message waiting for you in your Marketplace account. Click here to log in and read the message.”  I did as instructed, but there was no message to be found.  I could not even find a “message center” under my account to look for any message. 

While I was on the site I attempted unsuccessfully to complete the application and verify my identity twice, but “an unexpected error occurred when we tried to verify your information”.  I was instructed to call the Marketplace Call Center.  When I tried my call was promptly “auto-answered”, but I was promptly cut off.

I went back to my Marketplace account on December 10th to try again.  But I got the same message when attempting to verify my identity.  An unexpected error occurred when we tried to verify your information.”  This time I decided to try a “live chat” and after venting my frustration and telling my story I was told to go to a certain website (click here) and download a paper application, which I did.

I wished I had been made aware of the paper filing option much earlier.  Perhaps I missed this alternative on the website or in the publicity, but I do not think so. 

I promptly completed the paper application and mailed it with copies of my Social Security card, Driver’s License, health insurance card, and my most recent premium bill (this was not requested in the instructions, but I figured it couldn’t hurt) to the Department of Health and Human Services in London, Kentucky on the morning of December 11th.

On December 16th I received an 11-page form letter in the mail from the Health Insurance Marketplace telling me that I was “eligible to purchase health coverage through the Marketplace”.  The letter also indicated that I was also eligible for a tax credit and identified the amount of the credit.  Under the category of next steps was “choose a health plan and make first month’s payment”.

On the top of Page 2 was the heading/question “What should I do next?”.  This is exactly what I wanted to know.  However the only item under this heading concerned “if the table above tells you that you are or may be eligible for Medicaid or Pennsylvania CHOP”.  It did not so tell me, so this did not apply.  The remaining 9+ pages of the letter was pro-forma information and disclaimers.  The letter did not tell me “what should I do next”!

With no instructions provided I reluctantly returned to the website, but found nothing there.  I initiated a live chat and asked what to do next.  I was told to “log in” using the “Application ID” number that was provided in the letter.  I clicked on “log in” but was not asked to enter an ID number.  It asked me to log in using my username and password.  I did so and was told my application was still being processed.  This was not true – according to the letter my application had been fully processed and approved.  I went back to “live chat” and was told to call the 1-800 number.

I called the number and promptly connected with a real person.  I gave her the information and she proceeded to provide me with my policy options and, according to her, successfully enrolled me in the plan I chose.  I had selected the lowest price policy in the top “platinum” category.  I was told I would receive a bill from the insurance company in the mail in a few days. 

On the day after Christmas (today) what to my wondering eyes should appear but a letter from my new health care provider welcoming me and telling me that I must submit payment for the first premium “before your insurance can be put into effect” and indicating the amount due.  I sat right down and wrote out the check and rushed to the local Post Office.

I finally successfully acquired Obamacare insurance partially funded by an advance tax credit.

As a point of information, the cost of my current insurance premium increased, without notice or explanation, by 33.5% with the November 1st invoice.  It was not my policy’s “anniversary” date.  I can only assume that was because the plan had to change to meet Obamacare requirements.  I did turn age 60 in mid-November, but I do not think this affected the premium cost.

The final result of my frustrating saga is that, beginning January 1, 2014, thanks to the advance tax credit available to me, I will be paying less out of pocket for my health insurance than I was prior to the November 1st price increase for more and better coverage than I previously had.

So what can we take away from my saga?

If I was not eligible for coverage and a credit via the Marketplace my private health insurance cost would have increased by 33.5%.

The healthcare.gov website was a total waste of time. 

My first call to the 1-800 number on October 1st was also a total waste of time.  The person to whom I spoke apparently lied to me when he said my application was received and processed, my identity was verified, and I would be receiving information on my eligibility in the mail within a few weeks.  I never received anything. 

The live chat function was only partially helpful – telling me where to go to get a paper application.

I had to go “old school” and submit a paper application in order to get any results.  This process was easy and I got a prompt response.  I should have done this on October 1st! 

Whatever problems that had made my October 1st call to the 1-800 number a total waste of time have apparently been fixed – my December 16th call actually got results.  Or maybe it was just the competence of the person I spoke to that made the difference.

And the bottom line – the US Tax Code is not the only mucking fess to come out of Washington.

Just so you know here is my opinion on “Obamacare” in general.

“Obamacare” is not the spawn of the devil, nor is it the answer to all our problems.  It is a flawed piece of legislation that was passed by flawed idiots in both houses of Congress (and upheld as constitutional by the Supreme Court) who did not actually read in full the bill they were voting on (it appears that this is also a common practice in Washington).  The Act was not well thought out and was created and pushed through Congress in haste (more common practices in Washington).   

While the Act itself is a convoluted mess, the basic underlying concept is a good one.  Universal health insurance coverage is good for the individual American and good for the country as a whole.  It is good public economic and health policy to encourage and assist individuals to acquire health insurance coverage, whether through direct individual purchase or employer group coverage.  But individuals should not be forced to sign up for health insurance, and businesses should not be forced to provide coverage for employees, by being assessed a penalty for not doing so.


Wednesday, December 25, 2013



Monday, December 23, 2013


* Let’s start off with an FYI.  The 2013 Form 1040 is, line for line, the same as the 2012 Form 1040, except that Line 60 identifies the new IRS Forms 8959 and 8960, which are used to calculate the new “Obamacare” taxes for “wealthy” taxpayers.  The form is available to download at the IRS website, as is the 2013 Form 1040A, but the instruction booklets are not.

* If you want something to read over the holidays check out the December “issue” of THE LAKE REGION SOMETHING.  

* My post DON’T CALL ME was referenced in TAXPRO TODAY’s weekly BUZZ-like “In the Blogs”.  The titled theme of the week was “Flies in the Figgy Pudding”.

* William Perez has been running a good series on year-end tax moves at ABOUT.COM, most of which I also covered in my series at MAINSTREET.COM.  But here is a move that I did not cover – “Using a Donor-Advised Fund to Donate to Charity at Year End”.

Essentially, donor-advised funds function like a mutual fund. You can put money into a pooled fund, with the money permanently earmarked for charity. Once it goes into the fund the person can take a deduction for the amount of the contribution. Later on, once a person has selected their desired charity, they simply instruct the fund to send the money to the charitable organization. In the meantime, the funds can be invested for earnings, and those earnings can go to the charity as well.”

So you can make a contribution to the pooled fund now, and claim a 2013 tax deduction, and decide which charities will get the money at your leisure.

William also points out that –

Donor-advised funds can also keep the identity of the donor anonymous to the charity.”
* Not something I would ask for.  CPA Ben Rugg of RUGGNOTES tells us “All I Want for Christmas is a New Bulldozer”.

I doubt Ben is hoping to find a bulldozer under his tree on Wednesday.  He uses the bulldozer to explain the tax differences between of buying, and placing in service, expensive business equipment in 2013 and 2014.

* According to organization Executive Vice President John Ams, writing at the NSA BLOG, the organization is preparing for the worst case scenario - “Tax Preparer Legislation: NSA Meets with Lawmakers”.

John points out that, unfortunately -

The tax writers on Capitol Hill have taken notice and believe the IRS should have the authority to regulate the unregulated—let’s call them RTRPs—and have begun meeting with interested parties to craft a legislative solution.”

While the last thing I want is to have the idiots in Congress legislate tax preparer regulation, I do agree with what the NSA as said.  See my comment.

* Celebrate 12 days of Christmas by reading the 12 days of year-end tax tips from Joe Kristan at the ROTH AND COMPANY TAX UPDATE BLOG through 12/31.  The first is “2013 Winter Solstice Tax Tip: S Corporation Basis”.

* Speaking of the 12 Days of Christmas, have you been following TAXGIRL Kelly Phillips Erb’s “12 Days of Charitable Giving”.  She ended last week with “Feeding America”.


Wonder what I will be doing on Christmas Eve?  What I do every year during the day on Christmas Eve – type W-2s.  I do the same thing during the day on New Year’s Eve.

I will drive in to NJ for a home cooked Christmas dinner with my sister and her two Burmese cats on Wednesday.

Best wishes for a “successful” Christmas holiday!  HO! HO! HO!


Friday, December 20, 2013


When donating to charity during the holiday season don’t forget to include your local animal shelter.
* If you haven’t already done so, please check out the December “issue” of THE LAKE REGION SOMETHING.   

* I discuss “The Cost of Using a Paid Tax Preparer” at MAINSTREET.COM.

* Bill Bischoff, aka Tax Guy, provides a good primer on the alimony deduction in “There is One Tax Break for Divorcees” at MARKET WATCH.

He includes a review of “deemed child support” - a trap that can void the alimony deduction and trigger alimony recapture.

Bill’s bottom line is very important (highlight is mine) -

Just calling payments to your ex deductible alimony in the divorce papers won’t get the job done. Instead, you must jump through tax-law hoops to secure the anticipated deductions. Plus you’ll need to spread out the payments to avoid the alimony recapture rule. Hiring a tax pro with lots of experience in divorce-related tax matters is a good idea when significant dollars are at stake. Many divorce attorneys lack the required tax expertise, although they may be unwilling to admit it.”

* Prof James Maule takes on the policy of temporary tax breaks, and the constant extension thereof, in “Let’s Not Extend The Practice of Tax Extenders” at MAULED.COM, and, as the title suggests, comes up with the correct solution -

Yes, indeed. It is time to stop extending the practice of tax extenders.”

The idiots in Congress need to excrete or get off the pot.  If a tax benefit is appropriate it should be made permanent.  Except possibly in the case of natural disasters there should be no temporary tax laws.

* As part of his continuing coverage of the tax consequences of the death of DOMA, Jason Dinesen asks perhaps the most important question at DINESEN TAX TIMES – “Will Same-Sex Married Couples Pay More or Less in Taxes Now?”.

His answer - “yes, no, maybe.”  Or, as I say is the answer to just about every question about taxes, “it depends”.

Jason goes on to say, as I had expected –

In my practice, approximately 2/3 of my clients in same-gender marriages will owe more in taxes by filing as married than they did by filing as two unmarried people.”   

The “marriage penalty” in action.

* Tax Mama Eva Rosenberg says she lists “Four Ways to Write off Gifts on Your Taxes” at EQUIFAX – but I can only see three identified.

* Shannon from the READY FOR ZERO blog explains “Charitable Giving – How to Make Sure Your Money is Going to the Right Place”.

* USA TODAY brings a TIGTA report to our attention that has some very disturbing news - “Report: IRS Vendor Owed $525M in Back Taxes”.

Altogether, 1,168 IRS vendors owed back taxes totaling $589 million as of July 2012, according to the report released Tuesday. Only 50 were in a payment plan to pay off their debt.”

The article tells us -

The IRS checks whether vendors owe back taxes when the agency awards contracts, the IRS said. But the IRS doesn't continuously monitor whether vendors are current in their tax bills after contracts are awarded, the report said.”

J. Russell George, the Treasury Inspector General for tax administration, has recommended the IRS require an annual tax check for all contractors, but the agency says federal acquisition regulations don't authorize them.

Why not?  All government contractors should be subject to an annual tax check, and payments should be garnished to apply toward outstanding tax liabilities if they are found to be delinquent, unless there is an installment payment plan in place and all installment payments are being made on a timely basis.
* Keep on truckin’.  MISSOURI TAXGUY Bruce McFarland gives us a lesson in “Tax for Truckers”.

* ACCOUNTING TODAY reports “IRS Sets the Date: Tax Season Starts Jan. 31”.

That is just fine with me.  For over 40 years now the tax season has always begun for me on February 1st. 

* Jason Alderman asks us “Who's Afraid of the Alternative Minimum Tax?” at Huffington Post’s THE BLOG.

Jason tells is like it is with his opening paragraph –

Year after year, Congress keeps kicking meaningful income tax reform down the road. Consequently, taxpayers continue to be stuck with an archaic, overly complicated mess that pleases no one -- except perhaps some tax accountants who charge by the hour.”

Trust me, I get no pleasure from the dreaded AMT.

And Jason agrees with me that the AMT is truly dreaded.

* Another tax question answered by Neal Frankle at WEALTH PILGRIM - “Is Your IRA A Source for Short Term Borrowing?”.

As Neal says – “there are plenty of reasons to think twice or three times before moving forward with this scheme”. 

Barbara Walters and I certainly disagree on the meaning of the word “fascinating”.

A google search for the definition resulted in “extremely interesting” and provided the following synonyms - interesting, captivating, engrossing, absorbing, enchanting, enthralling, spellbinding, riveting, engaging, compelling, compulsive, gripping, thrilling.

I would certainly not use any of these adjectives to describe Kanye West and wife Kim Kardashian or the stereotypical hillbillies of DUCK DYNASTY.  Extremely self-absorbed, extremely self-indulgent, and extremely self-important are better descriptions.  None of them are even mildly interesting, other than in the curiosity of their celebrity.  There are literally hundreds of people who have been in the public eye in 2013 who are much, much more fascinating than these duds.

I believe that Kanye West is a singer, but I do not recall every hearing anything of his.  The only time I have heard his name is in connection with his arrogance and big mouth. 

At least Miley Cyrus is interesting.  And the rest of the list – Jennifer Lawrence (I really do not know who she is other than an actress), Robin Roberts, Edward Snowden, Prince George (should be an interesting interview – can he talk yet?), Pope Francis, Hillary Clinton, and Diana Nyad - are certainly interesting, as well as some of the other synonyms listed above, and worth interviewing.

Barbara’s annual list has always included poor choices.  The Trumpster (perhaps the most extremely self-important of all the “celebrities” who are famous for being famous, and not for any talent, ability, or accomplishment) was on her list twice in the past!

Obviously I did not watch the program, and never do.