Monday, November 23, 2015


I celebrated my 62nd birthday attending the annual National Association of Tax Professionals’ year end “Essential 1040” workshop, followed the next day by “Beyond the 1040”.  I often find myself at year-end CPE classes on my natal day – usually NATP offerings. 

I chose to attend in the offerings in Hasbrouck Heights NJ this year, as the first day coincided with a bi-annual “Boys Night Out” with friends from grammar school, high school, and college (most of whom are also 1040 clients).

The first day is always a review of the COLA and inflation adjustments and tax developments - court cases, revenue rulings, and new legislation - for, and components of prior years’ legislation taking effect in, the current tax year, in preparation of the upcoming tax filing season.  And, of course, the annual 2 hours of redundant ethics preaching.  No reflection on the seminar leader, but, for me (not legally required) this is a total waste of 2 hours, and I usually zone out or daydream during most of the presentation.

I have compiled “What’s New for 2015” with the 2015 COLA and inflation-adjustment information, which I will send you free.  Just send an email request to with “What’s New for 2015” in the subject line.

The second day covers 2 or 3 tax topics in depth.  This year “Beyond the 1040” covered the “alphabet soup”, as the instructor put it, of medical tax benefits – HAS, FSA, MSA, HRA, PTC, etc – and issues affecting older/retired taxpayers.

Here are some of the items that I was reminded of during the 2 days –

* The American Opportunity Credit is only with us through 2017.  Unless extended or made permanent, for tax year 2018 we will return to the rules for the original HOPE Credit.

* The only real advantage of opening a Coverdell Education Savings Account (ESA) is that it can be used for grammar school and high school costs.

* In order to be able to properly claim gambling winnings on Page 1 of your Form 1040, and not just report total gross W-2G proceeds, beginning with 2016 you must use a casino “Player’s Card” to track your slot activity.  If you come out ahead, at year end you should request a detailed day-by-day report from each casino and not just the one page total annual wins and losses report.

* Under the new IRS proposed regulations effective with tax year 2016, when determining net gambling winnings or losses for a “session of play”, a session is determined on a calendar day, and will end at 12 midnight.  If you are feeding the slots in a casino continually from 9 PM till 2 AM you will have 2 separate sessions – 9PM to Midnight is one and Midnight till 2AM is a second.  Records should be kept accordingly.

* If you are making contributions - either directly or via employer payment or employer withholding - to a Health Savings Account and receiving distributions from the account to reimburse you for qualifying medical expenses you will receive information returns from the account.  You must file IRS Form 8889, even if there is no allowable deduction or taxable income to be claimed on your Form 1040, or else you will receive an IRS notice down the road.

* If you turn age 65 on January 1st, the IRS considers you to be age 65 on December 31st for purposes of the additional standard deduction.

* The tie-breaker rules for claiming the dependency deduction for a child will only apply is there is actual a tie to break – a case where two individuals claim the same child on separate tax returns.  If all parties agree on who will claim the child you do not have to follow these rules.

* You should keep separate physical accounts for “contributory” (you actually make annual contributions) and “converted” (you convert a traditional IRA or other retirement plan balance) ROTH IRAs for purposes of tracking the 5-year holding requirement.  Each type of ROTH – contributory and converted – will have a separate 5-year holding period.

* While some states will tax Social Security benefits, under federal statute Railroad Retirement benefits are exempt from state taxation – they can never be taxed on the state level.

If you have any questions on the items I have listed above contact your tax professional.

It was interesting to hear comments from fellow attendees concerning the recent total breakdown of taxpayer “customer service” by the IRS.  One attendee could not believe how rude and abusive an IRS employee who answered the telephone was.  And another told of being on hold with IRS for well over an hour before finally just being cut off (one reason I have never called the IRS).

To repeat what I have said before – the solution to mismanagement at the IRS is not to cut the budget at the expense of taxpayer service, but to change the management.

As usual NATP did a great job.  If you are a tax professional and you do not belong to NATP you should.  Email me at with “NATP Inquiry” in the subject line and I will send you membership information.


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