* Tax pros – have
you seen the new post at THE TAX PROFESSIONAL yet? Why not?
I pose some
questions that I would like tax pros to answer.
And please tell
your fellow tax preparers about THE TAX PROFESSIONAL.
* Read about my
recent trip to Lancaster PA in BOB’S BABBLINGS.
* Around this time
of the year clients begin to receive a Form 5498 for 2014. They are emailed or postal mailed to me with
questions about WTF they are for.
Bill Perez explains
the situation in detail in the appropriately titled “Form 5498” at ABOUT.COM -
“Form 5498 is an annual document issued by a
financial institution to report information about individual retirement
accounts and other tax-preferred savings accounts. Form 5498 is filed with the
Internal Revenue Service and a copy is also sent to the person who owns the
account. Essentially, Form 5498 provides independent confirmation to the IRS of
the amounts you contributed to IRAs and other tax-preferred savings accounts.”
It is basically for
information only, and the 2014 Form 1040 does not need to be changed, as any
IRA contributions or withdrawals have already been reported. I do not need to see them – although it
couldn’t hurt to have them in the client file.
* Billionaire
Warren Buffett makes an excellent statement, but is wrong when it comes to the
solution to the problem. According to a
post by Dan Bigman at FORBES.COM - “Warren Buffett: Stop Blaming The Rich for Income Inequality. If You Really Want To Help, Do This” -
“The world’s third-richest man weighed in on
the national debate over rising levels of income disparity in the United States
yesterday, saying that while the gaps between the country’s haves and have nots
are definitely increasing, it is not the fault of those at the top. Nor will it
be solved by traditional methods, like improving education or hiking the
minimum wage. His solution: Increase access to the Earned Income Tax Credit.”
Buffett is correct
when he says (highlight is mine) –
“No conspiracy lies behind this depressing
fact: The poor are most definitely not
poor because the rich are rich. Nor are the rich undeserving {some
rich are undeserving – the name Kardashian comes to mind - rdf}. Most of them have contributed brilliant innovations
or managerial expertise to America’s well-being. We all live far better because
of Henry Ford, Steve Jobs, Sam Walton and the like.”
But Buffet is wrong
when he says the solution is to increase access to the Earned Income Tax
Credit. The current access to the
refundable EITC, and other refundable tax credits, results in a large
percentage of erroneous and fraudulent claims, and billions of wasted tax
dollars – about $25 Billion according to a recent TIGTA report. While federal welfare, which is what the EITC
is, may be appropriate, it should not be distributed via the US Tax Code.
Personally I firmly
believe that, for the most part, we are ultimately responsible for our own
financial condition. I am not a
millionaire today because of the choices I made over the past 40+ years. I am not complaining – I am happy with most
of my life choices.
The problems of
income inequality will not be resolved quickly.
But I do believe that improved education is a part of the answer.
* Trish McIntire
discusses issues involved with “Graduation and Taxes” at OUR TAXING TIMES.
I had offered
graduates some advice in past posts “Dear Graduate” and “Advice for a New Graduate Starting Out in His/Her first Full-Time Job”.
* And, in honor of
Memorial Day, Trish also discusses “Taxes and The Military”, providing an
overview of the “special tax treatments
available to the military; active duty, reserve or retired”.
* In “From the Archives: New Preparer Requirements on Earned Income Credit = Higher Fees forClients” Enrolled Agent Jason Dinesen looks back at his predictions for how the
then new excessive due diligence rules would affect his practice –
“What I’ve found in my practice is, the EIC
documentation requirements have indeed resulted in higher fees for returns claiming
the EIC, but I didn’t raise fees as much as I had thought I would.
I also have found that the paperwork burden is not
nearly as bad as I had thought it would be. I don’t deal with a lot of EIC
claims, but for those that I have dealt with, getting the needed paperwork and
filling out the Form 8867 isn’t that onerous.”
I file only a small
handful of EIC claims each year for long-time continuing clients (as you
probably know I do not accept any new clients).
I have not required any additional paperwork to support the claims – I
am well aware of the clients’ situation based on years of preparing their
returns. The only affect the new
requirements have had on me is to waste time filling out the Form 8867 – really
nothing more than an inconvenience.
However I still
feel that this additional due diligence is uncalled for – and still would like
to see a lobbying organization for all tax professionals that would fight
thrusting this type of additional work on preparers.
TTFN
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