Friday, December 19, 2014
WHAT’S THE BUZZ, TELL ME WHAT’S A HAPPENNIN’
* Tax pros, PLEASE check out the December “issue” of THE TAX PROFESSIONAL and let me know your comments on my “Soapbox” editorial.
* At MAINSTREET.COM I provide some more year-end tax advice in “Tax-Wise Holiday Giving: Generosity That Warms Your Heart and Protects Your Money” and discuss the Senate finally passing the tax extenders bill in “Senate Passes the Tax Extenders Act Finally: How It Benefits You”.
* Jason Dinesen goes into more detail on how he is “Changing the Way I Work with Business Clients” at DINESEN TAX TIMES.
While I have prepared Schedule C’s for sole proprietors over the years based on just a worksheet of income and expenses provided at tax time, with no year-round “relationship”, I have never prepared a corporation or partnership business income tax return or report based solely on a year-end worksheet or spreadsheet.
In most cases I have personally maintained the general ledger. For two active full-time corporations I have been the year-round accountant and “full-charge bookkeeper” for the business. In all cases I have prepared any payroll tax returns and at the very least reconciled the balance sheet, whether or not required on the federal return (a balance sheet has always been required on the NJ state returns).
My practice has always primarily been a 1040 practice. I have not solicited corporate or partnership accounts, and have only prepared corporate and partnership returns for existing 1040 clients (with the exception of the two full-time corporations mentioned above).
I agree with Jason that business entity returns have an increased potential for agita and aggravation, including federal and state preparer penalties, and that this potential has increased in more recent years. And I think his changes are good ones.
Recently I have been looking back over my 40+ year career and thinking about what, in hindsight, I would have done different. If I were starting out today I would truly limit my practice to 1040s, and would NOT prepare corporate or partnership business income tax returns - although I would, out of necessity, provide bookkeeping services and prepare payroll tax returns.
* I agree with the advice given by Jim Blankenship in “Retirement vs College Saving in a Nutshell” at GETTING YOUR FINANCIAL DUCKS IN A ROW –
“. . . a general rule of thumb with regard to this conflict is to put money aside for retirement first, and college second.”
* Trish McIntire returns to blogging at OUR TAXING TIMES after a too-long absence with an overview of “The New ABLE Accounts”.
I came across a list of the qualified disability expenses for the ABLE account at another source. They include:
• Employment training and support
• Assistive technology and personal support services
• Health, prevention and wellness
• Financial management and administrative services
• Legal fees
• Expenses for oversight and monitoring
• Funeral and burial expenses
• Other expenses approved by the IRS
* Jean Murray’s weekly ABOUT.COM email newsletter on business taxes deals with holiday topics.
* TAX MAVEN Diane Gilabert explaims “How Roth IRA Conversions can Optimize Year-end Tax Planning” –
“In the right situation, a Roth IRA conversion can permit a client to preserve tax benefits that might otherwise expire unused. And the long-term benefits of a Roth IRA as compared to a traditional IRA are compelling.”
* From TAX-NEWS - “Hatch Outlines His Comprehensive Tax Reform Principles”.
His 7 principles are –
1. Economic growth, entailing cuts in tax rates.
2. Fairness, through broadening the tax base.
3. A simpler tax code to reduce compliance costs.
4. Permanence, to avoid the large number of tax provisions that expire.
5. Competitiveness, by reducing the high tax rates on businesses.
6. The promotion of savings and investment.
7. Revenue neutrality.
I support all 7, and am glad he included #4.
I am also glad that the conversation on substantive tax reform remains alive, although I do not hold any hope for true substantive tax reform any time soon.
* Michael Cohn reports that “Congress Requires Self-Preparers and Consumer Tax Software to Check for Improper Tax Credits” at ACCOUNTING TODAY (highlight is mine) –
“The $1.1 trillion spending bill passed by Congress this week and signed into law by President Obama on Tuesday contains a provision directing the Treasury Department to implement uniform standards for taxpayers claiming refundable credits such as the Earned Income Tax Credit to stem improper payments.
The language contained in the recently passed federal appropriations bill directs ‘… the Department of the Treasury to ensure that the same questions are being asked of taxpayers whether they are preparing their returns with a paid tax preparer or via do-it-yourself methods such as paper forms, preparation software, or online preparation tools…’.”
This clearly refers to Earned Income Credit claims. The article references “the TIGTA report, which estimated EITC improper payment rates ranged from $16 to $19 billion for the fiscal year ended Sept. 30”.
The piece does not suggest just how this will be implemented. Will “self-preparers” be required to prepare and separately sign a form similar to the 8867 (Paid Preparer's Earned Income Credit Checklist)? I look forward to seeing how this will take “form”.
Of course the best way to do away with the tax fraud resulting from refundable credits like the Earned Income Credit and the Additional Child Tax Credit is to remove them from the Tax Code!
BTW – I like the comment.