Wednesday, June 29, 2016
A friend and client whose car recently “died” told me he may donate it to charity for a tax deduction. So I thought I would review the rules for donating a car.
I have seen a lot of ads that entice you to donate your car to a charity and get a tax deduction - but you should be aware . . .
First, you will get no tax benefit from donating your personal automobile to charity unless you can itemize on Schedule A! This means the total of your “itemizeable” deductions exceeds your applicable Standard Deduction amount. While the donation itself can put you over the top and cause you to be able to itemize, to get the maximum tax benefit you must be able to itemize without the car donation.
Years ago a client expressed true joy when telling me she donated her car to charity, and she expected to get a big tax deduction. Her tax benefit from the deduction was zero, nothing, nada. She was not able to itemize, and had not in the past, and even with the addition of the value of the car she was still not able to itemize.
FYI – you may want to itemize if your total deductions do not exceed your applicable Standard Deduction amount if you are a victim of the dreaded Alternative Minimum Tax (AMT). The Standard Deduction is not allowed in calculating AMT, but an itemized deduction for charitable contributions is.
Second, the amount you receive “in your pocket” will be only a small percentage of the car’s value. The amount of cash you will realize depends on your federal and, if your state allows a similar tax deduction (New Jersey does not), state tax bracket. If the allowable deduction is $1,000.00 a New Jersey resident may only realize $150.00 or $250.00 “in pocket”.
And third, you have to wait to file your tax return to get the money. If you donate a car to charity today you will not see the cash until at least next February.
That said, here is what I wrote about donating a car to charity in my CHARITABLE CONTRIBUTIONS GUIDE -
When you donate a vehicle (car, motorcycle, boat, or airplane) to a church or charity the amount you can deduct depends on what the organization does with the donated vehicle.
(1) If the organization sells the vehicle without significant interim use or material improvement your tax deduction is limited to the gross proceeds from the sale.
(2) If the organization intends to temporarily or permanently use the vehicle in its operations, or make "material" improvements to the vehicle before selling it, or sell the car to a "needy" individual at a price that is significantly below market value, or give the car to such an individual, you can deduct the "fair market value" of the vehicle.
You can use the "private party value" for the vehicle, adjusted for mileage and condition, as listed in the Kelly Blue Book (www.kbb.com) or a similar established used vehicle pricing guide. If the fair market value of the vehicle is more than $5,000.00 you must obtain a formal appraisal.
To claim a deduction of more than $500.00 for donating a motor vehicle to charity you must include Copy B of the IRS Form 1098-C, provided by the charity, with the filing of your Form 1040.
The Form 1098-C will include the name and Taxpayer Identification Number of the donee organization, the vehicle identification number, the date of contribution, and information on what the charity did with the vehicle. Form 1098-C must be issued within 30 days of either the date of the contribution or the date of the disposition of the vehicle by the donee organization. The charity can give you a statement in lieu of Form 1098-C as long as it contains all the necessary information discussed above.
Tuesday, June 28, 2016
As promised House Speaker Paul Ryan released a “blueprint for tax reform” last Friday, an installment in the Republican’s “Better Way” agenda.
The TAX FOUNDATION has published an overview of the “Details of the House GOP Tax Plan”. The full plan can be downloaded by clicking here.
According to the TAX FOUNDATION summary, the plan -
· Consolidates the current seven tax brackets into three, with rates of 12 percent, 25 percent, and 33 percent (see table at TAX FOUNDATION).
· Provides a 50 percent exclusion of capital gains, dividends, and interest income. This is equivalent to taxing capital gains, dividends, and interest income at half the rate of ordinary income: with three brackets of 6 percent, 12.5 percent, and 16.5 percent.
· Increases the standard deduction from $6,300 to $12,000 for singles, from $12,600 to $24,000 for married couples filing jointly, and from $9,300 to $18,000 for heads of household.
· Eliminates the personal exemption.
· Creates a $500 non-refundable credit for dependents who are not children.
· Increases the child tax credit to $1,500 per child, the first $1,000 of which is refundable, as under current law.
· Raises the phaseout threshold for the child tax credit for married households from $110,000 to $150,000.
· Eliminates all itemized deductions besides the mortgage interest deduction and the charitable contribution deduction.
· Taxes income derived from pass-through businesses at a maximum rate of 25 percent.
· Allows the cost of capital investment to be fully and immediately deductible.
The proposal also eliminates the dreaded Alternative Minimum Tax (AMT) and the Estate Tax and keeps intact the Earned Income Credit.
The text of the plan explains (highlights are mine) –
“This Blueprint will simplify the current array of tax benefits for families looking to make education more affordable for their children. The Committee on Ways and Means will work to simplify and consolidate the current-law provisions to provide a more effective and efficient package of higher education tax benefits that will cover both college and vocational training programs, including a savings incentive, such as 529 plans, and tax relief targeted at helping low- and middle-income families with the costs of higher education, such as the American Opportunity Tax Credit.”
“The Committee on Ways and Means will explore the creation of more general savings vehicles, using as a model the retirement accounts that have proven so successful. . . . This Blueprint will continue the current tax incentives for savings. The Committee on Ways and Means will work to consolidate and reform the multiple different retirement savings provisions in the current tax code to provide effective and efficient incentives for savings and investment.”
So the plan wants to consolidate the many current tax benefits for education and retirement savings, and is considering the idea of an IRA-like “Universal Savings Account”.
Concerning the surviving mortgage interest deduction –
“The Committee on Ways and Means will evaluate options for making the current-law mortgage provision a more effective and efficient incentive for helping families achieve the dream of homeownership.”
But (again, highlight is mine) –
“ . . .no existing mortgage will be affected by any changes in the tax code. Similarly, no changes will affect re-financings of existing mortgages”.
My thoughts –
(1) I obviously applaud the overall theme of simplifying the Tax Code.
(2) I like the ideas of a smaller number of tax brackets, an increased Standard Deduction/Personal Exemption combo, the return of the 50% capital gain deduction and its application to dividends and interest, a consolidating of the various retirement plans, the Universal Savings Account, and certainly the end of the dreaded Alternative Minimum Tax. I do not oppose the elimination of the Estate Tax, as long as we keep the “stepped-up basis” rules. I also like the elimination of the various Obamacare tax surtaxes and penalties, not specific to this blueprint but included in a previous “installment” of the Republican “Better Way” agenda.
(3) I could support the increased Child Tax Credit (CTC) and the lower non-child dependent credit as a replacement to the Personal Exemption for dependents, but oppose any AGI-based phase out of the CTC.
(4) I am not totally on board with the elimination of Itemized Deductions for state and local taxes (income, sales, and real estate), investment interest, and investment and job-related Miscellaneous Expenses. And what about the itemized deduction for gambling losses? Will net, and not gross, gambling income now be taxed on Page 1 of the Form 1040?
(5) I like that the deductions for Charitable Contributions and Mortgage Interest are maintained. But I would limit the mortgage interest deduction to acquisition (including home improvements) debt on the taxpayer’s principal personal residence only – eliminating the deduction for home equity interest and interest on a second personal residence.
(6) I continue to oppose the use of the Tax Code to distribute federal welfare and social benefit programs like the Earned Income Credit, the refundable Child Tax Credit, and the education tax benefits. The benefits themselves should not be eliminated – they just should not be delivered via the 1040.
(7) I also continue to have concerns about a “post-card” tax return, but it might be less objectionable with a much simpler Tax Code.
(8) I also have concerns about the reduced top tax rate on pass-through business income from partnerships and sub-S corporations. The pass-through of business income to general partners is basically the equivalent of Schedule C income and should be taxed as Schedule C income is taxed. The pass-through of all income to limited partners and the pass-thru of sub-S corporation income to shareholders are basically dividends and should be taxed as dividends are taxed.
(9) I believe that corporations should be taxed on net book income, without any special industry-specific tax benefits, and that there should be a “dividends-paid” tax deduction. I also still support the elimination of the depreciation deduction on real property (buildings) for all business activities (including rental). I could support an expanded “Section 179” deduction.
I clearly support the Republican Party, and strongly oppose the Democratic Party, take on tax reform, as well as the recently announced Republican idea for replacing Obamacare. I tend to support the Republican Party’s domestic plans, except for the religious-right influenced anti-abortion and same-sex marriage ban policies, and the Democratic Party’s world view and foreign policy.
So – what do you think of the Republican’s “blueprint for tax return”?
Monday, June 27, 2016
“Ninety-eight percent of the adults in this country are decent, hardworking, honest Americans. It’s the other lousy two percent that get all the publicity. But then, we elected them!” -
* NJ taxpayers - have you checked out my unique newsletter THE NJ-1040 LETTER yet? It is, I believe, the only publication devoted exclusively to NJ state income taxes.
* Jason Dinesen begins a new post series “A Little About 1099s: Types of 1099s” at DINESEN TAX TIMES, beginning with “1099-A thru 1099-C”.
* Another reality tv excrement self-important idiot guilty of tax fraud (multiple in this case). Kelly Phillips Erb, the FORBES.COM TaxGirl, tells us “'Dance Moms' Star Abby Lee Miller Reaches Deal With Feds, Will Plead Guilty”.
Reality television shows (I do not include talent competitions or home improvement shows in this category) are steaming piles of excrement and actually dangerous to society. The “stars” are all idiots, and many are tax cheats, and the great unwashed masses are fools for bestowing any kind of “celebrity” on these idiots.
* Kelly also reports “Ryan Again Vows To Repeal Obamacare, Unveils GOP Alternative” (highlight is mine) –
“Under Obamacare, there have been a number of new taxes on health providers, taxpayers, and businesses, including the 0.9% payroll tax on wages and self-employment income; the 3.8% tax on dividends, capital gains, and other investment income for high-income taxpayers (the NIIT); the so-called “Cadillac tax” on high-cost plans; shared responsibility payment (penalty); employer-related mandate; medical devise excise tax; and the 10% adjusted gross income (AGI) floor on the medical expense deduction. Under Ryan’s proposal, House Republicans would repeal all of those taxes.”
* And before I leave the TaxGirl, Kelly explains “When Raising A Child Costs $245,340, It Pays To Strategize For Tax Breaks”, in which she announces her new e-book from FORBES titled “Ask The Taxgirl: Everything Parents Should Know About Filing Taxes”
* The July 2016 issue of my free monthly online newsletter ROBERT D FLACH’S THE 1040 LETTER is now available to download! I discuss the mortgage interest deduction, education tax benefits, and urban tax myths. Click here.
* I had referenced the “NUA” in an earlier BUZZ installment. Beverly DeVeny lists “11 NUA Don’t’s” at the SLOTT REPORT.
* Kay Bell celebrates the 1st anniversary of the Supreme Court decision in Obergefell v. Hodges, which declared same-sex marriage legal throughout the United States, with “Same-sex marriage tax and estate planning tips” at her BANKRATE.COM blog.
* Click here for books and publications of tax planning and preparation advice, information, and resources for the average middle class taxpayer.
* Some advice for online gamblers from David Luczaka, a member of my Facebook group “Tax Pro Forum” (highlight is mine) -
“If you gamble online at one of the many poker or slot sites remember that you are in fact establishing a foreign financial account since NONE of the on line gambling site is located within the US. Should you be fortunate enough to have winning in excess of $10K you are required to file FINCEN114, and possible IRS Form 8938. Many people do not realize that gambling on line may trigger the need for these forms and the fines for non-compliance can be hefty.”
Thanks, David, for the word.
* Let me end with Jamaal Solomon, who asks some questions in “Chronicles of Stikks aka “The Tax Guy”: Was It Worth It?” at STIKKS TALKS TAXES.
THE FINAL WORD
I keep talking about Tronald Dump because I very strongly believe that all Americans who care anything about freedom, democracy, civil rights, the economy, and the future of the country and the world have an obligation to publicly denounce and aggressively oppose Donald Trump and his campaign for the Presidency.
Attention Republicans - just read this editorial from the conservative magazine THE NATIONAL REVIEW, aka "America's most widely read and influential magazine and web site for conservative news, commentary, and opinion" – “This Election Is Not an A/B Test”.
“Donald Trump is unfit for the office.
He is unfit for any office, morally and intellectually.
A man who could suggest, simply because it is convenient, that his opponent’s father had something to do with the assassination of President Kennedy is unfit for any position of public responsibility.
His long litany of lies — which include fabrications about everything from his wealth to self-funding his campaign — is disqualifying.
His low character is disqualifying.
His personal history is disqualifying.
His complete, utter, total, and lifelong lack of honor is disqualifying.
The fact that he is going to have to take time out of the convention to appear in court to hear a pretty convincing fraud case against him is disqualifying.
His time on Jeffrey Epstein’s Pedophile Island, after which he boasted about sharing a taste with Epstein for women ‘on the younger side’, is disqualifying.
The fact that he knows less about our constitutional order than does a not-especially-bright Rappahannock River oyster is disqualifying.”
And also read “Lies, Damned Lies, and Donald Trump” –
“Donald Trump must be the biggest liar in the history of American politics, and that's saying something.
Trump lies the way other people breathe.”
“Trump's lies also present a challenge for voters. The normal assumption is that politicians will bend the truth to fit their ideology — not that they will invent fake ‘truth’ out of whole cloth. Trump is not just an unorthodox candidate. He is an inveterate liar — maybe pathological, maybe purposeful. He doesn't distort facts, he makes them up.”
It still remains impossible for me to conceive how anyone with any intelligence can vote for this fool.
Friday, June 24, 2016
Despite what the title of the remake of the James Bond movie THUNDERBALL suggests, sometimes it is ok to say “never”.
Here are three times –
NEVER ignore a balance due notice or a request for information from the Internal Revenue Service or a state tax agency. The problem will not just go away on its own. What may eventually go away is your salary or your home.
But, on the other hand, NEVER assume a balance due notice from the Internal Revenue Service or a state tax agency is correct and just pay it. More often than not – in my experience 2/3 to 3/4 of the time – a balance due notice from the IRS or a state tax agency is wrong.
If you receive a balance due notice or a request for information from the IRS give it to your tax preparer ASAP. If you “self-prepared” the return in question (in which case the chance that the notice may be at least partially correct increases – especially if you relied on a “box” to prepare the return) review it carefully. In such a case I suggest that you consult a competent tax professional before making any payment.
A client had received a balance due notice from the NJ Division of Taxation, which was wrong, during the year and just sent NJ a check. I only learned about it during the tax filing season, and, after the season was over, have been attempting to get the money back from NJ. Believe me - it is a lot easier to explain to the IRS or the state their error upfront than it is to get money back from the IRS or a state agency many months after paying the erroneous balance due.
And if you receive a balance due notice from the IRS or a state tax agency, whatever you do DO NOT call your tax pro and tell him or her “you made a mistake”. The third never – NEVER, NEVER, NEVER assume that receiving a notice from the IRS or a state tax agency means your tax preparer made an error. As I have said above, it is more likely that the IRS or the state tax agency made the error.
Tuesday, June 21, 2016
You are paying too much New Jersey state income tax – and it’s nobody’s fault but your own!
Most NJ taxpayers concentrate on their federal tax return and spend minimal time on their NJ return, simply taking numbers from the 1040 and putting them on the NJ-1040. As a result they are paying more NJ state tax than necessary, often paying tax on income that is not even taxed by NJ.
By becoming informed on NJ state tax law and using proper tax planning you can make sure that you pay the absolute least amount of NJ Gross Income Tax possible for your particular situation.
I have been preparing NJ-1040s for as long as there has been a NJ-1040, and federal income tax returns for even longer. I have created a new newsletter titled THE NJ-1040 LETTER to share my knowledge and experience from over 40 years as a professional tax preparer to help you experience the joy of avoiding NJ state taxes.
Published 6 times a year (January, February, March, April, July, and October), each issue will contain valuable NJ state tax-saving advice and information, updates on NJ state tax law, NJDOT rules and regulations, court cases, and the special NJ property tax relief programs, and links to online resources to help you in planning for an preparing your NJ-1040. Also included in each issue will be special forms, schedules, and worksheets to help you during the year and at tax time.
This is the only publication that I am aware of that deals exclusively with tax planning and preparation advice for the NJ-1040.
A one-year subscription to THE NJ-1040 LETTER delivered as a pdf email attachment is only $11.95. A print edition sent via postal mail is also available for $24.95.
Subscribers will be offered special discounts on other tax-saving reports throughout the year.
You can download a free copy of the premiere July 2016 issue by clicking here.
To order your subscription send your check or money order, payable to TAXES AND ACCOUNTING, INC, for $11.95 or $24.95 and your email or postal address to –
THE NJ-1040 LETTER
TAXES AND ACCOUNTING, INC
POST OFFICE BOX A
HAWLEY PA 18428
Monday, June 20, 2016
Arguing with dangerous buffoon Donald Trump is like debating a monkey. No matter how researched or rational your argument is, the monkey will just throw poop at everyone and strut about like it won.
* I have created a unique newsletter of tax planning and preparation advice, strategies, information, and resources for the New Jersey state taxpayers titled THE NJ-1040 LETTER. It is, I believe, the only publication devoted exclusively to NJ state income taxes. Click on the title for a free copy of the premiere issue, and let me know what you think of it.
* Leslie Book reports on a recent Tax Court case where the taxpayer was royally screwed (much like the stockholders in Trump's casinos), proving that common sense logic is not always an effective defense, in “Paying Tax on the Same Income Twice, and Getting a Civil Penalty to Boot” at PROCEDURALLY TAXING.
The problem with this case, and, I believe, the main reason the taxpayer lost, was the fact that he appeared “pro se” - "on one's own behalf" – representing himself and therefore proving himself to be the proverbial fool. As much as I dislike, for the most part, the legal profession, the taxpayer would probably have won if he had been competently represented, which it appears Leslie suggests in the post.
Of course, if you read the facts of the case, there would have been no double taxation if the taxpayer had properly deducted as a refund the monies he gave back to the original payer in the year he did so. But, considering the inherent cheapness that his representing himself in court betrays, I wonder if he was similarly penny wise and pound foolish by not paying a competent tax professional to prepare his tax returns.
* Kay Bell provides a timely warning in “Beware of scams in wake of Pulse mass shooting” at DON’T MESS WITH TAXES.
* Jim Blankenship, always working on GETTING YOUR FINANCIAL DUCKS IN A ROW, explains “Net Unrealized Appreciation” –
“This widely misunderstood section of the IRS code can be quite a benefit – if it happens to fit your situation.”
* Sarah Benner tells us “HSA Rules Get Tricky Once You Hit Age 65” at THE SLOTT REPORT.
* Thinking of forming a non-profit organization? Over at DINESEN TAX TIMES Jason Dinesen continues his discussion of “501(c)(3) vs. 501(c)(4) vs. 501(c)(7)” with “Part 2” -
“In this part, I’ll give the same explanation I give to clients who ask me which status is best for them when they’re trying to start a not-for-profit.”
* Speaking of non-profit organizations (I just had to sneak this in) – “Donald Trump Accused of Using His Charity as a Political Slush Fund”.
As fellow tax blogger TAX PROF Paul Caron has suggested –
“Trump's foundation should be rigorously audited and all its political dealings exposed, exactly as the Clinton's tax-exempt foundations have been treated since their creation.”
* Back to Jason Dinesen – he also provides assistance to confused taxpayers in “Help! I Just Got a Form 5498” at DINESEN TAX TIMES –
“The good news is, Form 5498 seldom directly affects the tax return, so in most cases you won’t need to amend or do anything with the form.”
* I am truly interested in your thoughts and comments on my newsletter BOBSERVATIONS.
* This just in –
“The City of Philadelphia has reduced the City Wage Tax rate effective July 1, 2016.
• The new Wage Tax rate for residents of Philadelphia is 3.9004% (.039004).
• The new Wage Tax rate for non-residents of Philadelphia who are subject to the Philadelphia City Wage Tax is 3.4741 % (.034741).
What does this mean to you?
Any paycheck that you issue with a pay date after June 30, 2016 must have Philadelphia City Wage Tax withheld at the new rate.”
THE FINAL WORD
Right on, Conan O’Brien!
“These are weapons of war and they have no place in civilian life.”
People need to understand that the 2nd Amendment has absolutely nothing to do with a person’s “God-given” civil right to own an assault rifle. The 2nd Amendment was passed because many of the Founding Fathers were concerned about the potential dangers of a peacetime standing federal army, which the Constitution gave the Congress the power to "raise and support”. They wanted to secure and protect the individual state militias. Guaranteeing the right of the people to keep and bear arms was as a check on the standing army.
As I tweeted last week – damn the NRA and the gun lobby!
When are the idiots in Congress, and state legislatures, going to do something about this other than pray?
To echo the sentiments of another tweet from last week – I pray for a new Congress.
Tuesday, June 14, 2016
(1) One of the reasons I am called the “Wandering” Tax Pro is because once the tax filing season ends I enjoy travel via all methods – car, bus, plane, ship and train (not necessarily in that order).
Over the past 30+ years my annual travel itinerary has often included several totally tax-deductible domestic vacations to attend tax-related conferences, conventions, and other CPE offerings.
You can deduct expenses that are “ordinary and necessary” for your business. An “ordinary” expense is one that is common and accepted in your specific trade or profession and a “necessary” expense is one that is helpful and appropriate.
One “ordinary and necessary” business expense for which you can claim a tax deduction is the cost of education that is (1) expressly required by an employer, by law, or by government regulation, or (2) maintains or improves skills required in your current trade or business. If a conference or convention falls under this category the associated registration and travel expenses are deductible.
I have written a special report - POSITIVELY TAXES: A TAX DEDUCTIBLE VACATION - that explains in detail how to make your next vacation tax deductible by attending a job or business related conference or convention, and includes worksheets to help you keep track of your deductible expenses.
(2) It has always been important for frequent gamblers to keep detailed “contemporaneous” records of gambling activity to minimize the tax cost of winnings, but recent developments have made this even more vital.
Gross gambling winnings must be reported as “other income” on Line 21 of your Form 1040. Gambling losses, to the extent of reported winnings, are allowed as a “Miscellaneous” Itemized Deduction. If you report gambling winnings of $10,000 on Line 21 of your Form 1040 the most you can deduct as gambling losses on Schedule A is $10,000. Allowable gambling losses are deducted in full, and are not subject to the 2% of AGI exclusion.
Losses from any type of wagering transaction can be deducted against your reported gross gambling winnings. If you win in the slots your deduction is not limited to losses from slot machines. You can deduct losses from the lottery, 50-50s, bingo, table games such as poker and blackjack, charity raffles, horse racing, keno, etc., up to the amount of your total winnings.
I have also written a special report – POSITIVELY TAXES: MINIMIZING REPORTED GAMBLING WINNINGS - that explains the basics of how gambling activity is taxed describes in detail how recent Tax Court case decisions allow you to reduce the amount of gambling winnings you must report, and reduce the tax cost of your gambling activity to a minimum, via proper documentation of your casino visit wins and losses. It also contains valuable worksheets.
(3) For years now I have been telling clients and readers that it is your “Adjusted Gross Income”, or AGI, and not your net taxable income that is the most important number on your tax return.
Why is AGI so important? Many tax deductions and credits are reduced, phased-out, or altogether eliminated based on your AGI, or in some cases a “Modified” AGI, and several items of income are increased, and some deductible losses are reduced, as this number grows.
There are “above the line” deductions and “below the line” deductions. Above the line deductions reduce your Adjusted Gross Income and your Net Taxable Income. Below the line deductions, which include the Standard Deduction, Personal Exemptions, and itemized deductions, reduce Taxable Income, but not Adjusted Gross Income.
A below the line deduction of $1,000 will reduce your tax liability by the amount of your marginal tax rate. For a taxpayer in the 25% a below the line deduction of $1,000 will reduce the tax liability by $250. But an above the line deduction of $1,000 can reduce the tax liability by substantially more than $250. It is actually possible for a reduction of only $5 in AGI to reduce your tax liability by $500 or more!
Guess what? I have written a special report – POSITIVELY TAXES: REDUCING ADJUSTED GROSS INCOME – that discusses how to reduce your 2016 AGI during the year and when preparing your Form 1040 and minimize your tax liability. In it I explain how a reduction of $5 in AGI can reduce your tax liability by $500 or more.
The above referenced special reports are the first 3 items in MY NEW DOLLAR STORE (a work in process) - and are available to you, as you might expect, for only $1.00 each sent as a pdf email attachment, or $2.00 each for a print edition sent via postal mail.
If you enjoy reading THE WANDERING TAX PRO and have found it helpful to you over the years one way you can say “thank you” is by purchasing one of the above POSITIVELY TAXES reports.
To order send your check or money order, payable to TAXES AND ACCOUNTING, INC, for $1.00 or $2.00 for each report you want and your email or postal address to –
MY NEW DOLLAR STORE
TAXES AND ACCOUNTING, INC
POST OFFICE BOX A
HAWLEY PA 18428
BTW – I also have more extensive and detailed TAX DEDUCTION GUIDES available for $2.00 or $4.00 each. Click here for more information.
Monday, June 13, 2016
* Have you seen the premiere issue of my new FREE monthly tax planning and preparation newsletter ROBERT D FLACH’S THE 1040 LETTER yet? What are you waiting for? You are welcome to share it with friends and family and colleagues, co-workers, and clients.
* Arielle O'Shea explains “How to Roll Over a 401(k) to an IRA” at NERDWALLET (highlight is mine) -
“When it comes to a 401(k), you can take it with you.
In fact, you probably should, in the form of a 401(k) rollover. But making the most of the money you’ve built up means performing the rollover correctly. Here’s the four-step process for how to roll over a 401(k) to an IRA. As with any big decision, it’s always good to know your options before you go all in, so let’s start there.”
* A good lesson about how to properly conduct business as an LLC from Paul Neiffer at FARM CPA TODAY - “LLC Does Not Provide Legal Protection (if you mess up)”.
While Paul discusses it from a farm perspective his advice applies to all LLC activities.
Paul lists what a court would look at to determine where liability exists if there is an accident, the first being –
“Does the LLC have a bank account? If not, the court will likely assume that there is no business since a business need a checking account.”
Paul is correct when he concludes – “For me, the most fatal flaw is not having a checking account”. It is vitally important that you maintain a separate checking account for the LLC or any self-employed business activity.
Years ago a fellow blogger condemned me for giving bad advice when I said that every self-employed business activity must have a separate banking account. Time, and every other reputable blogger and business advisor as well as the courts, have proven me to be right.
* The TAX FOUNDATION has released “Options for Reforming America's Tax Code”. I haven’t had a chance to read it yet – but may post about it when I do.
* Hey, if you haven’t already done so do me a favor and download the free sample issue of my other new monthly newsletter BOBSERVATIONS and let me know what you think.
* FYI from CCH TAX NEWS HEADLINES – “IRS Announces Interest Rates Unchanged for Calendar Quarter Beginning July 1, 2016 (IR-2016-84; Rev. Rul. 2016-12)”.
* Fellow tax professionals – join me in the campaign to reform the mucking fess that is the US Tax Code by joining TAX PROFESSIONALS FOR TAX REFORM.
* TaxGirl Kelly Phillips Erb tells us the “IRS Taxpayer Transcript Service Back Online” at FORBES.COM –
“The Internal Revenue Service (IRS) has announced that the ‘Get Transcript’ tool is back online and it has a more rigorous e-authentication process. The process, according to IRS, will significantly increase protection against identity thieves impersonating taxpayers to access tax return information through the website.”
* Over at DINESEN TAX TIMES Jason Dinesen begins a discussion of “501(c)(3) vs. 501(c)(4) vs. 501(c)(7)” with “Part 1”.
The discussion concerns the different types of tax-exempt non-profit organizations.
* And Jason adds “Net Operating Loss” to his Glossary post series.
* Another FYI - news from the NYS Department of Taxation and Finance – “New ‘One-Stop Shop’ Webpage Highlights Variety of Tax Credits and Incentives Available to Business Owners”
* Russ Fox of TAXABLE TALK reports on a major state tax agency FU in “Withholding Notice Snafu in California” –
“The Franchise Tax Board, California’s income tax agency, apparently issued a boatload of withholding mismatch notices. Some (but not all) of those notices appear to be in error; additionally, the FTB’s phone and chat lines have been swamped.”
Some good tax advice worth constant repeating – NEVER assume a balance due notice you receive from the IRS or a state tax agency is correct. If you receive correspondence from the IRS or a state tax agency send it to your tax professional immediately.
* Not to be outdone by the west coast, the east coast also FUs on tax notices. Kay Bell gives us the word that “CT DMV computer mess messes up 50,000 auto tax bills” at DON’T MESS WITH TAXES.
THE FINAL WORD
Right on brother Josh Barro at BUSINESS INSIDER!
In “Hoping Donald Trump will change his entire personality is not a strategy” Josh correctly observes –
“They say there are five stages of grief: denial, anger, bargaining, depression, and acceptance.
Establishment Republicans went through all of them with regard to Donald Trump, and now have come all the way back around to denial.
They're not in denial that he will be their nominee, like they were last fall and winter. They're in denial about who he is. They believe, if he is handed immense power, he might turn into a reasonable person.
Here's a news flash for anyone who is thinking this way: Donald Trump was an impetuous child yesterday, he is one today, and he will be one tomorrow.”
And (highlight it mine) -
“Trump loves arbitrary exercises of power. Given the power of the presidency, who is to say he won't become even more unstable and dangerous? Why would anybody assume that handing him massive power would make him more responsible rather than less?
The only defensible thing is to look at this man and say he cannot possibly be made president. Anyone who supports him on the basis that he might change for the better is engaging in pathetic self-deception — and proposing to risk the country's entire future on a foolish bet.”
And one more development about Trump just released – from USA TODAY “Hundreds allege Donald Trump doesn’t pay his bills”.
Republican leaders need to grow some balls – call a spade a shovel – and just say NO to dangerous buffoon Donald Trump!