Saturday, October 31, 2015


While this is a tax blog, this is technically not a post about taxes – although, as you will see, there is a tax component.  I just thought I would outline my positions on the current Presidential race.

It is appropriate that I post this on Halloween – as it is a holiday known for scary stuff and “trick or treat”.  Politics, and politicians, are often scary, at least to me, and it is a proven fact that politicians and political candidates provide us with more “tricks” than “treats”.

FYI – my family was politically unique.  They were admittedly registered Republicans in corrupt Democratic machine stronghold Hudson County NJ (think Frank Hague and John V Kenny).  Obviously nobody in my family worked for any component of city, county, or state government.

I moved from “blue” NJ (Garden State residents are often “blue” in several senses of the word) to “red” rural PA a few years ago.  My first time voting as a PA resident was the 2012 presidential election. 

As I introduced myself to the “panel” at my polling place and was signing in the Republican “challenger”, who had overheard that I was a new PA resident, came over to welcome me, publicly announcing (I assume jokingly) –

“Here in Pennsylvania the Republicans pay $20.00 per vote.”

My response –

“I just came from Hudson County, NJ where the Democrats paid $25.00 per vote.”

Democratic voters in Hudson County were also told to vote early and vote often, and to remind deceased relatives to do the same.

I was not upset or offended by the challenger’s greeting, and accepted it as a joke.  But I couldn’t help thinking that if he had said that to me at a Jersey City polling place he would have been promptly physically evicted, and possibly taken to jail.

So, anyway, here I go -

I sympathize with those who are disgusted with professional politicians, which has led to the popularity of and support for Ben Carson, Carly Fiorina, and, unfortunately for the Republican Party and the country, narcissistic buffoon Donald Trump.  I could support a “non-traditional”, “non-politician”, “political outsider” candidate, although I would obviously never, ever even consider supporting Trump for any elected office.  I have not studied Carson or Fiorina enough yet to be able to make any decisions about them.  

I acknowledge that Congress is full of incompetent idiots (I rarely discuss Congress without using the preface “idiots in”), and would very likely not support any member of Congress for President.  The idiots in Congress cannot get anything done because they are incapable of compromise and incapable of independent thought.  Each year we see many articles that have identified the current Congress (in office at the time of the article) as the worst and least productive in history.  If I were to support a “professional politician” I would much prefer a Governor over one of the idiots in Congress.

I am skeptical about another Bush in the White House.  I do not recall having any complaints about the elder Bush, but Dubya was the worst President in my lifetime, despite the so-called "Bush" tax cuts.  When it comes to clan Bush I would rather be safe than sorry.

I most certainly would not support any candidate who supports the religious right, and its champions the Tea Party.  I truly believe the Tea Party is dangerous.  I oppose all efforts to legislate, or oppose legislation based solely on, the specific, individual religious beliefs of any one religion or religious group. 

Religious beliefs are a personal matter.  Religious freedom means that the government cannot dictate how a person should believe or worship.  But specific religious beliefs should never be legislated.  If a person’s religious beliefs tell him or her that homosexuality, same-sex marriage, or abortion is wrong, then that person should not engage in homosexual acts, not marry someone of the same sex, and not have an abortion.  But that person cannot force the application of his/her specific personal religious beliefs on a “non-believer” or someone with different religious beliefs.

Calling America a “Godless country” is not a criticism.  It is a statement of fact. 

I am a tax professional, so the tax proposals of the individual candidates interest me.  I believe the US Tax Code is a mucking fess and should be completely shredded and rewritten from scratch, with simplicity and fairness as the main ingredients. 

I believe the one and only purpose of the Tax Code is to raise the money necessary to run the government.  The Tax Code should most definitely not be used to “redistribute wealth” or to deliver government social welfare or other benefits.  I also do not believe that we should excessively tax the rich simply because they can afford it.  I oppose a tax system that punishes ambition, entrepreneurship, and just plain hard work, and support one that encourages saving and investment.  I would support a flat tax.  So therefore when it comes to taxes I prefer the Republican point of view over that of the Democrats.

Along those lines I also do not support most extreme left socialistic policies.

That said, I do not automatically dismiss Hillary Clinton, although she would certainly not be my first choice for President.  To be honest, my reason for not dismissing Hillary is more because of her husband then because of her beliefs or credentials.  While I did not necessarily agree with all his federal income tax policies, I will admit Slick Willy was a smart and relatively good President.  We had a budget surplus under Clinton.  His contributions and accomplishments were limited because of having to devote too much time to dealing with the persecution by Kenneth Starr and Newt Gingrich.  When it comes to infidelity and sexual misconduct, the only difference between Clinton and the majority of politicians, both past and present, is that he got caught (and his taste was a bit questionable).  I actually do believe that 9/11 might possibly have been avoided were it not for Kenneth Starr.  

So there is where I stand on the Presidential candidates, just in case you were interested.  Any comments?


Friday, October 30, 2015


So how do you like the new look of THE WANDERING TAX PRO?  Email me at with “TWTP NEW LOOK” in the subject line.

* Kay Bell has completed her Tax Glossary at DON’T MESS WITH TAXES.  

* Tax pros – check out the new THE TAX PROFESSIONAL site.

* Jason Dinesen, he of DINESEN TAX TIMES, asks, and answers, a very good question – “Why Make Estimated Tax Payments?

The example that Jason provides to illustrate the answer he gives is an excellent one – and similar to a situation with one of my self-employed clients.

There are many reasons why you should make estimated tax payments – but the best answer is to avoid penalties.

And estimated tax payments are not just for the self-employed.  They are for anyone whose income tax withholding at work does not cover the tax cost of other income – such as investment income. 

Once you have begun your first year of making estimated tax payments it is easy to determine how much to send each subsequent year by using the “safe harbor” method.  Perhaps I will write a post with more details on this topic.

Withholding, regardless of when the money is actually withheld, is always better than quarterly payments.  So if you find you have underpaid estimated taxes you should make up the shortage via increased year-end withholding.  There is another way to cover a shortage of tax payments that I discuss in my “2015 Year-End Tax Planning Guide” – yours for only $3.00.

* Last summer I wrote an article on “Maximizing Retirement Savings Through Smart Tax Planning” for MAINSTREET.COM that you may want to read if you did not see it when it first appeared.

* Professor Annette Nellen, who writes the 21st Century Taxation blog, has written “Poor Recordkeeping Hurts Taxpayers: Problems and Preventions” for the TAX INSIDER.

Annette tells us –

Every year a few taxpayers go to court hoping for a better outcome than the one offered by the IRS. Usually, they lose due to poor records, not meeting all requirements for particular deductions, or inadequately separating business from personal expenditures.”  

Her article discusses 2015 court cases where taxpayers lost because of poor records, etc.

And she offers some good advice for taxpayers at the end of the article–

Taxpayers lacking records or with incomplete records or who treat personal expenses as business expenses will have those deductions disallowed. Invalid and unsubstantiated expenses, of course, should never be included in the information provided to the return preparer.”

And -

Keep separate bank accounts and credit cards for business and personal expenses.”   

So keep good records, and keep your business and personal life separate and do not try to deduct obviously personal expense as business expenses.

* POLITICO comments on Wednesday night’s 3rd Republican debate in “GOP candidates air sharp differences on taxes”.

* And speaking of tax proposals from the debate, Ross Urken, my editor at MAINSTREET.COM, discusses the flat tax in #GOPDebate Candidates Love a Flat Tax: Does It Actually Work?

As Ross explains, “A national flat tax, as opposed to our current system of progressive taxation, would tax all income levels at the same rate.”  Despite being a tax professional whose income usually spikes with the added complication of the Tax Code, I would support a flat tax.

A good point about this tax concept -

A flat tax system would also remove incentives toward consumption by eliminating the various deductions that offset costs, and instead encourage savings. Advocates also argue that the possibility of reaching a higher tax bracket would no longer disincentivize people from earning more and crossing a tax bracket threshold, thus contributing to long-term economic growth.”

Ross quotes Nathan Daschle, president and COO of The Daschle Group, on the feasibility of a flat tax -

"Tax reform of this magnitude is up there with curing cancer.  It's something a lot of people across the spectrum would like to see, but it will never happen, largely because there is no critical mass around how to do it. Everything that people call 'loopholes' are policies that Congress deliberately put into place. They have constituencies and they've already won. Undoing each and every one of them is a gargantuan task, as much as people agree that our tax code is a disaster."

Basically, as long as the lobbyists for the individual tax “expenditure” (aka “loopholes”) have money with which to line the pockets of the idiots in Congress true, substantive tax reform/simplification is, unfortunately, just a dream.


Some fact checking from the Associated Press

TRUMP: "I'm putting up 100 percent of my own money."

THE FACTS: No, he's not.

Of $3.9 million raised for his campaign in the latest fundraising quarter, only $100,000 came from his own pocket. That was one major revelation from the latest batch of presidential fundraising reports, filed Oct. 15 with the Federal Election Commission.

That's a drastic shift from his springtime fundraising report, when he loaned his campaign nearly all of the $1.9 million it had.”


Wednesday, October 28, 2015


Acting State Treasurer Robert A. Romano has announced that the deadline for filing 2013 Homestead Benefit applications has been extended from October 30 to December 31, 2015.

To be eligible for a benefit for calendar year 2013, you must be a New Jersey resident who owned a principal residence on Oct. 1, 2013, and paid property taxes on that home. You must also have reported $75,000 or less in New Jersey gross income for 2013 or, if you were disabled or age 65 or older on Dec. 31, 2013, you must have reported gross income for 2013 of $150,000 or less.”

Most beneficiaries should receive a credit that will be applied against one of the quarterly tax billings in 2016.  Qualifying homeowners will only receive a check if their home was a unit in a co-op or a continuing care retirement community they no longer owned your home.  

The state had totally skipped issuing a Homestead Benefit one year – no Homestead Benefit applications were mailed out in 2014, and no credits against property tax installments were issued in 2014.  The credits that would normally have been issued in 2014, based on 2012 information, were applied to the May 2015 real estate tax billing.

Click here for information on the program.


Tuesday, October 27, 2015


For New Jersey taxpayers and tax professionals – here is some information from a fellow member of the New Jersey chapter of the National Association of Tax Professionals (although I now live in PA I still consider myself a member of the NJ chapter) that was new, and a pleasant surprise, to me -

Did you know that you can order copies of filed NJ tax returns? Well you do now!

You can obtain a copy of a previously filed New Jersey income tax return by completing Form DCC-1. There is a fee of $1.00 per side of the return. Mail the completed form, with payment, to: New Jersey Division of Taxation, Document Control Center, P.O. Box 269, Trenton, NJ 08695-0269.

Copies of previously filed New Jersey income tax returns (Form NJ-1040, NJ-1040NR, or NJ-1041) may also be obtained by delivering a completed Form DCC-1 with the appropriate payment to a Division of Taxation Regional Office. Regional Offices can provide copies of previously filed New Jersey income tax returns only to the person(s) who signed the requested tax return or to the authorized representative of the taxpayer(s) who provides a Form M-5008-R, Appointment of Taxpayer Representative, that covers the return(s) being requested. A photo ID of the taxpayer (or the taxpayer’s authorized representative) is required.

Note: Payment for copies of tax returns can only be made by check or money order; payment cannot be made in cash or by credit card.”


Her bottom line – for a joint return to be considered valid it must be signed by both spouses.

Kay does points out –

There are two exceptions to this rule, as laid out in Section 6061.

The first is when one spouse acts as an agent of the other, e.g., acting with a legal power of attorney, and complies with those rules.

The second is when one spouse is physically unable to sign due to disease or injury.”

Kay suggests “Most couples file a joint tax return”, which is true.  But filing jointly is not necessarily the best choice for many couples.  Married taxpayers should have their tax preparers do a comparative analysis of joint vs separate to see which filing status results in the least amount of combined federal, state, and local income taxes.

* Have you ordered my “2015 Year-End Tax Planning Guide” yet?  What are you waiting for?  It’s only $3.00 and is chock-a-block with year-end strategies to help you make sure you pay the absolute least amount of federal and state income tax possible.  And it has worksheets and all the pertinent 2015 and 2015 tax information. 

* TAX PROF Paul Caron hits another milestone in his daily IRS Scandal series – “Day 900”. 

As I have said each time I have referenced a milestone in this series – can you say “obsession”?

* Back to Kay Bell, the yellow rose of taxes looks at challenges facing the IRS resulting from continued budget cuts, as identified by the office of the Treasury Inspector General for Tax Administration (TIGTA) in her post “Securing taxpayer data is the IRS' biggest challenge”.

TIGTA listed the top 10 “management and performance challenges the IRS will face in the new fiscal year.  Number 2 on the list is “Implementing the Affordable Care Act and Other Tax Law Changes”.

The purpose of the Internal Revenue Service, and the US Tax Code, is to raise the money necessary to run the government.  Period.  The IRS, and the US Tax Code, should not be charged with implementing government social and other benefit programs.

* Russ Fox of TAXABLE TALK is continually reporting on what he calls “Bozo Tax Preparers” who get caught by the IRS and end up in “Club Fed”.  In “Monsters Under the Bed” he talks about two such bozos recently caught “doing many of the practices that bad preparers use to get bad refunds: false earned income tax credit, incorrect filing status, phony businesses, fake unreimbursed business expenses, and one that we don’t see that often: unconscionable fees”.

His bottom line (highlight is mine) -

There are two main points to realize from this story. First, if it sounds too good to be true it probably is. If your tax ‘professional’ is promising you a huge refund but something doesn’t sound right, there likely is something wrong. Second, the IRS has methods today to go after bad tax professionals. Suppose I start inventing deductions and credits, adding phony dependents, and otherwise abuse the system, the IRS can come after me. Even unlicensed tax professionals can be gone after–and it appears that’s the case here.”  

* A “tweet” from Jim Blankenship led me to a 2014 post at GETTING YOUR FINANCIAL DUCKS IN A ROW that lists “Five Things You Need to Know About Retirement Plans”.  These five things seem to apply mostly to contributions to 401(k), 403(b), or 457 employer-sponsored retirement plans.

In his first item he explains –

As you defer money into your retirement account, each dollar that you defer could be worth as much as $1.66.”

How?  Read the post to find out.   

And item #5 offers some very good advice –

No matter how tempting it is, taking a loan out from your deferred compensation plan, in more cases than not, results in derailing your hard work in saving and building up your account. Not only are you strapped with having to pay back the funds to your account with interest, but you have also given up whatever growth might have occurred within your account since the funds are being used for an outside purpose.”

It can also be expensive, tax-wise, if you leave your employer before paying back the loan.

* There is still time to get my best tax advice at a 25% discount.  Click here.


Buffoon Donald Trump dismisses polls that do not show him as #1 because he says the organizations conducting the polls don’t like him.  He would obviously quote the same polls with pride if they showed him as #1.  And, of course, any paper that conducts a poll that does not show him as #1 is a “bad” paper.  He is delusional.

While watching a rerun of LAW AND ORDER: SVU the other day I found that Dr. Huang’s description of a suspect’s behavioral disorder sounded like a perfect description of Trump.   


Monday, October 26, 2015

WHO MUST FILE A 2016, or 2015, TAX RETURN?

FYI, based on the new inflation adjustments recently announced by the Internal Revenue Service, you do not have to file a 2016 Form 1040, or 1040A, unless your “gross income” is at least -

Single = 10,350

Single, Age 65 or Older = 11,900
Head of Household (with one dependent) = 17,400

Married Couple = 20,700

Family of 4 = 28,800

Married Couple, Both 65 or Older = 23,200

The numbers for tax year 2015 are –

Single = 10,300

Single, Age 65 or Older = 11,850 
Head of Household (with one dependent) = 17,250

Married Couple = 20,600

Family of 4 = 28,600

Married Couple, Both 65 or Older = 23,100

The only differences between 2016 and 2015 for single and married filers involve the $50 increase ($4,000 to $4,050) to the personal exemption amount.  The standard deduction amount for Head of Household filers did increase by $50 ($9,250 to $9,300)

“Gross income” means “all income you received in the form of money, goods, property, and services that is not exempt from tax, including any income from sources outside the United States or from the sale of your main home (even if you can exclude part or all of it). Do not include any social security benefits unless (a) you are married filing a separate return and you lived with your spouse at any time in 2014 or (b) one-half of your social security benefits plus your other gross income and any tax-exempt interest is more than $25,000 ($32,000 if married filing jointly). 
Gross income includes gains, but not losses, reported on Form 8949 or Schedule D.  If you are a sole proprietor filing a Schedule C, gross income is the amount reported on Line 7 of Part 1 – gross receipts less returns and allowances and cost of goods sold plus “other income”.  And if you are a landlord  gross income includes the gross rents reported on Schedule E.
So you see that the filing requirements are not based on actual "net" taxable income.  For any type of business income or capital gains the income before deducting any expenses or deducting the cost basis of investments sold is counted.  You must file a return to identify the expenses and cost basis.

You must file a tax return for a dependent if any of the following applies –

·         unearned income is more than $1,050,

·         earned income is more than $6,300, or

·         gross income is more than the greater of $1,050 or the sum of $350 and the individual's earned income (total not more than $6,300).

These same numbers also apply to tax year 2015.

Regardless of your gross income, you generally must file an income tax return if –

• you had net self-employment income of $400 or more,
• you owe household employment taxes,
• you owe additional taxes on premature retirement plan distributions,
·   you failed to take a required minimum distribution from a retirement plan,
• you must repay the 2008 Homebuyer Credit,
• you owe Social Security and Medicare taxes on unreported tip income, or
• you received an advance payment on the Premium Tax Credit.

And, whether or not you are required to do so, you should file a tax return to get a refund of tax withheld or to take advantage of a refundable tax credit like the Earned Income Credit or the Additional Child Tax Credit.

Another reason to file a tax return, even if you are not required to do so, is to start the clock running on the normally 3-year statute of limitations for IRS audit or review of a return.  

Would you like to know the IRS inflation and COLA adjustments for 2016?  Email me at, with “What’s New in Taxes for 2016” in the subject line, and I will send you as a pdf email attachment my report.


Friday, October 23, 2015


No cause for much commentary from me this BUZZ, but lots of good information.

* It is almost time to do your year-end tax planning.  It is time to reserve your copy of my 2015 Year-End Tax Planning Guide.  Now that the IRS has announced the 2016 COLA adjustments I can “go to press”.  It is too late for the special discount – but $3.00 is still a great price.

* And anytime is a good time to get my best tax advice in “Won’t You Take This Advice I Hand You Like A Brother”!  You still have time to take advantage of the 25% TWTP reader discount.

* And speaking of the COLA adjustments for tax year 2016 – I have compiled “What’s New for 2016” as a separate report.  If you are not ordering my 2015 Year-End Tax Planning Guide (in which it is included) I can send you a copy of the 2016 compilation free in pdf format if you send an email request to with WHAT’S NEW FOR 2016 in the “subject line”.

* Jason Dinesen continues his blog series on “Choosing a Business Entity” with the beginning of a discussion on “S-Corporation vs. C-Corporation” at DINESEN TAX TIMES.

* Speaking of choosing a business entity, Diane Gilabert recently “tweeted” a blast from the past (Sept 2013) from her TAX MAVEN BLOG – “Choice of Entity: 10 Reasons Partnerships Trump S Corporations”.

When choosing an entity, whether you are a one-person business or have partners, if you are not going to incorporate (and not everyone should) you should at least register as an LLC (unless the state annual filing costs are excessive).
Don't be concerned about the "Trump" in her title.  It has nothing to do with the buffoon who is running for President.

* Barbara Weltman gives small business a good primer on “Accounting for T&E Expenses” at BARBARA’S BLOG.

* Paul Neiffer gives a good basic review of “What is a Marginal Tax Bracket” at FARM CPA TODAY.

* William Perez explains the various types of “Individual Retirement Accounts” at ABOUT.COM.

* Jeffrey Levine dispels “3 Roth IRA Myths You Can't Afford to Believe” at THE SLOTT REPORT.


Thursday, October 22, 2015


A long-time client (actually they all are) just sent me the following email -

I have an opportunity to do some consulting work for about 12 weeks and would like to understand how much I should set aside for taxes.”

This is a common question.  Here is how I responded -

As a ‘self-employed’ contractor you will receive a Form 1099-MISC for your payments.

You can deduct direct expenses related to the consulting "gig" - business meals and entertaining, possible mileage at 57.5 cents per mile (not commuting), supplies and materials, research, etc.

You will pay federal and NJ state income tax on the net amount (after deductible expenses) at 25% for Sam and 5.525% for Chris {these are her anticipated tax brackets based on her 2014 Form 1040.  Sam is obviously “Uncle Sam”, and Chris is “Uncle Chris Christie”, as she is a NJ resident}.  You will also pay ‘self-employment tax’ (the equivalent of Social Security and Medicare) to Sam on the net amount.  The effective cost of the self-employment tax is 12.36%.

A safe bet would be to set aside at least 40% of the gross payments (assuming you will have some deductions).

For 2013 you received a {sizeable} federal refund - so, depending on the income, you would not necessarily be ‘out of pocket’ for Sam.  You would just get a smaller refund.  You did owe Chris last year, so you would very likely be ‘out of pocket’ for the state income tax cost.

While the self-employment tax rate is 15.3%, this is applied to 92.35% of net earnings from self-employment. 

As I explain in one of the discussions in my THE NEW SCHEDULE C NOTEBOOK -

If net earnings from self-employment for the year is $10,000 (and this amount combined with your Social Security wages from W-2s is less than maximum income base) you will pay $1,413 in self-employment tax ($10,000 x .9235 = $9,235 x 15.3%). So in effect the self-employment tax is 14.13% of your Schedule C (or C-EZ) bottom line.

You are also allowed an ‘above-the-line’ deduction (an ‘adjustment to income’) for one-half of your self-employment tax from Schedule SE.

So, taking into account the 50% self-employment tax adjustment to income, the “effective” cost of your self-employment tax is –

  15% Bracket = 13.07%
  25% Bracket = 12.36%
  28% Bracket = 12.15%
  33% Bracket = 11.80%
  35% Bracket = 11.66%

In her case, based on her 2014 refund, she would not necessarily need to make a 4th Quarter 2015 federal estimated tax payment in January of 2016 – again depending on the amount of the income.  But it couldn’t hurt to make a 4th Quarter NJ estimated tax payment – in December 2015 instead of January 2016 to get a deduction on her 2015 return.

Any questions?


Wednesday, October 21, 2015


The Internal Revenue Service has announced the COLA adjustments for 2016 via Revenue Proclamation 2015-53.

I will be spending tomorrow reviewing the information and creating a “What’s New for 2016” report, which I can send you via email upon request, and which I will include in my “2015 Year-End Tax Planning Guide”.

It is too late to get the 25% discount – but at $3.00 the Guide is still a bargain.


Tuesday, October 20, 2015


We piddle, twiddle, and resolve.  Not one damn thing do we solve!”

John Adam’s observation about Congress from 1776 is perhaps more applicable today than in revolutionary times.

The idiots in Congress continue to demonstrate their total incompetence.  It is less than 2½ months till the end of the year and the idiots have still not addressed the issue of the “tax extenders”. 

Shit or get off the pot!

It is very, very important that one “extender” is extended - if it is going to be extended - before the very last minute.  I speak of the direct tax-free transfer from an IRA to a charity in satisfaction of an RMD.  By waiting till the end of December it will be too late for most taxpayers who would benefit from this to take advantage of it. 

BTW – I finally broke the 1000 followers mark at Twitter.  Are you following me (rdftaxpro)?

* Chris Edwards and Veronique de Rugy of THE CATO INSTITUTE took a close look at the Earned Income Tax Credit, and have reported their findings in “Earned Income Tax Credit: Small Benefits, Large Costs”.

The conclusion that Chris and Veronique came to after their examination of the program agrees with what I have been saying for years (highlights are mine) -

We conclude that the costs of the EITC are likely higher than the benefits. As such, the program should be cut, not expanded. Policymakers could better aid low-income workers by removing government barriers to investment, job creation, and entrepreneurship.”

Some items of interest from the article (highlights are mine) –

·      In 2015 it will provide an estimated $69 billion in benefits to 28 million recipients.  The EITC is the largest federal cash transfer program for low-income households.”  {said another way -  “the biggest federal welfare program” – rdf}

·      The Internal Revenue Service reports that the EITC error and fraud rate in 2014 was 27 percent – which amounted to $18 billion in overpayments.”

·      The EITC generates a large bureaucratic cost. . . The credit is so problematic that 39 percent of all IRS audits under the individual income tax are done on EITC filers.”

·      The EITC is primarily a spending program. . . . 88 percent of the benefits - $60 billion a year – are payments to people who owe no income tax.”

The Earned Income Tax Credit, any “refundable” credit, does not belong in the Tax Code.  The Tax Code should not be used to distribute federal welfare and other social benefit programs.

* The latest TAX FOUNDATION map answers the question “How Do Property Taxes Vary Across The Country?”.  It shows “the average property tax deduction taken on the Schedule A, per tax return, for each county in the United States”.

This was not news to me (highlight is mine) –

The most heavily-shaded state is New Jersey, which has the highest property tax collections per capita.”

* Some startling news from Millie Dent at THE FISCAL TIMES – “Taxpayers Lose $23 Million in IRS Phone Scam” -

Roughly 4,550 people have paid more than $23 million over the past two years to scammers claiming to be employees of the Internal Revenue Service (IRS), according to a news release from the Treasury Inspector General for Tax Administration.

The Treasury Inspector General, J. Russell George, reports that while progress has been made in the investigation of ‘the largest of its kind’ scam, the case is still underway and taxpayers are urged to remain on ‘high alert’.”

What to do? (highlight is mine)

George advises to hang up immediately if you receive a phone call from somebody claiming to be from the IRS demanding immediate payment. An estimated 736,000 people have reported receiving these calls since October 2013.”

* Russ Fox paraphrases my annual “That Was The Tax Season That Was” post title with an early review of “That Was the Year that Was” (can anyone identify the source reference of these post titles?).  It is actually a belated (although not if you consider 10/15/15 as the end of the filing season) review of the 2015 tax filing season (for 2014 returns), at TAXABLE TALK.

He agrees with me somewhat, stating “This definitely wasn’t the best tax season but it also wasn’t the worst” yet adding “(but it was close to the bottom)”.  For me it was not close to the bottom.

We agree on most points –

"·      Tax extenders were passed late, but there weren’t any surprises. Thus, the impact to the 2015 Tax Season was minimal.

·      For the most part ObamaCare did not impact many of my clients.

·      The same can’t be true for the IRS budget cuts. This probably impacted me more than any of the other issues I faced.”

However, my issue with the budget cuts was not “Calling the IRS was almost a joke” (I never call the IRS or any state tax agency), but the serious delays in sending out client refunds.

Russ also felt “The property regulations almost had a huge impact”.  This was not true for me, I expect to the differences in our client make-ups.


Monday, October 19, 2015


The Social Security Administration has announced that the "Law Does Not Provide for a Social Security Cost-of-Living Adjustment for 2016" -
With consumer prices down over the past year, monthly Social Security and Supplemental Security Income (SSI) benefits for nearly 65 million Americans will not automatically increase in 2016.

The Social Security Act provides for an automatic increase in Social Security and SSI benefits if there is an increase in inflation as measured by the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).  The period of consideration includes the third quarter of the last year a cost-of-living adjustment (COLA) was made to the third quarter of the current year.  As determined by the Bureau of Labor Statistics, there was no increase in the CPI-W from the third quarter of 2014 to the third quarter of 2015.  Therefore, under existing law, there can be no COLA in 2016.”

This means that there will be no cost of living increase in the checks for Social Security beneficiaries for 2016. 

It also means that there will be no change in the maximum amount of earnings subject to the Social Security component of the FICA tax.  The maximum amount of wages subject to the 6.2% Social Security tax for 2016 remains at $ 118,500.  The maximum Social Security tax withholding for 2016 will remain $7,347, and the maximum Social Security component of self-employment tax for 2016 will remain $14,694. 

Also unchanged is the earnings limitations for those electing to begin receiving their benefits before full retirement age, and for the first year that a recipient reaches full retirement age –

Retirement Earnings Test Exempt Amounts:
Under full retirement age
NOTE: One dollar in benefits will be withheld for every $2 in earnings above the limit.
The year an individual reaches full retirement age
NOTE: Applies only to earnings for months prior to attaining full retirement age. One dollar in benefits will be withheld for every $3 in earnings above the limit.
There is no limit on earnings beginning the month an individual attains full retirement age.

There is a change in the maximum Social Security benefit – a decrease.  The maximum benefit for a worker retiring at full retirement age was $2,663 per month for 2015, but will be $2,639 per month for 2016.  A decrease in full maximum benefits occurs when there is no COLA, but there is an increase in the national average wage index.

As for Medicare Part B premiums -

The Department of Health and Human Services has not yet announced Medicare premium changes for 2016.  Should there be an increase in the Medicare Part B premium, the law contains a “hold harmless” provision that protects approximately 70 percent of Social Security beneficiaries from paying a higher Part B premium, in order to avoid reducing their net Social Security benefit.”

So the premium will remain the same for 2016 for most Social Security beneficiaries.

Click here for a Fact Sheet on “2016 Social Security Changes”.