Thursday, August 4, 2016
WHAT’S THE BUZZ, TELL ME WHAT’S A HAPPENNIN’ – SPECIAL THURSDAY EDITION
Can’t wait until Monday to BUZZ – it is chock-a-block already!
* Chris Johnson suggests what to do “When the IRS Says You Owe More” at CAJ TAX SOLUTIONS.
I certainly agree with his statement –
“When you receive an IRS notice demanding additional tax, do not pay until you are sure your liability was computed correctly.”
As I have been saying for years, in my experience 2/3 to 3/4 of all IRS notices are wrong.
But the point of Chris’ post is this – “Uncle Sam’s counterpart at the state level will need to know about the changes to your federal return if it has an effect on your state tax liability” whether you owed Sam more or Sam actually owed you.
If your federal return is changed it may also change your state return – and the state should be advised. If you don’t tell the state that your federal return was changed and you owe more you can be sure the IRS will (Sam and states share information) – and you can end up “receiving a notice from the state automatically assessing additional taxes, interest and penalties” down the road.
* At THE SLOTT REPORT Beverly DeVeny discusses “the hierarchy of tax guidance and how it interacts with retirement plans” in “Tax Guidance: What Can You Depend On?"
* The August issue of ROBERT D FLACH'S THE 1040 LETTER is here! Hey – it’s free! Click here to download.
* TaxGirl Kelly Phillips Erb of FORBES.COM helps parents with “Sorting Out Tax Breaks For College, Even When You're Still In High School” by using an example involving her daughter.
* And Kelly repeats the word that “IRS Warns Again On Scams Targeting Taxpayers” –
“Specifically, the IRS is reporting an increase in “robo-calls” where scammers leave urgent callback requests telling taxpayers to call back to settle their “tax bill.” These fake calls, which often sound threatening, claim to be the last warning before legal action is taken.”
The IRS will never attempt to collect back taxes in this way. If you receive a call from someone claiming to be from the IRS just hang up!
* Over at DON’T MESS WITH TAXES Kay Bell, the yellow rose of taxes, lists “3 reasons to file your extended taxes now” -
“So whatever your reason for not filing your extended tax return yet, get off the stick and file ASAP.”
* Another from Kay – a reminder of current and upcoming “State Sales Tax Holidays”.
* Returning to FORBES.COM, I cannot find fault with Tony Nitti’s statement “There are a thousand good reasons to never get married” (I have never been legally married), and agree with his observation “there are also significant tax hits that come with getting hitched, or as they’ve collectively been coined, the ‘marriage penalty’.”
In “IRS Increases' Marriage Penalty’, Unmarried Cohabitants To Get Twice The Mortgage InterestDeduction” he tells us –
“Late last week, the IRS exacerbated the marriage penalty by offering a very large reward for unmarried taxpayers who co-own a home: double the mortgage interest deduction available to married taxpayer.
In AOD 2016-02, the IRS acquiesced in the Ninth Circuit’s decision in Sophy v. Commissioner, in which the appeals court overturned a Tax Court decision and allowed a same-sex, unmarried, co-habiting couple to each deduct the mortgage interest on $1.1 million of acquisition and home equity debt. In reaching its conclusion, the Ninth Circuit determined that the mortgage interest limitation is meant to apply on a per-taxpayer, rather than a per-residence, basis. The AOD issued by the IRS confirms that the Service will follow this treatment.”
Of course this situation applies to very few taxpayers – i.e. those who purchase a home for more than $2 Million. But it does highlight the existence of the marriage penalty.
The Tax Code should neither encourage nor discourage marriage. It should be “marriage neutral”. Click here to read how I said I would rewrite the Tax Code regarding marriage back in 2011.
* Please check out the free copy of the premiere issue of my new subscription newsletter ROBERT D FLACH’S THE SCHEDULE C LETTER. Click here to download.
* You can “subscribe” to TWTP blog posts by entering your email address in the space under “FOLLOW BY EMAIL" in the left border. Receive my posts in your inbox!
* While I continually advise readers to never use Henry and Richard, or others of their “ilk”, to prepare their tax returns, I can recommend a post from the H+R blog – “Breaking Down A Paycheck: Teaching Your Teen About Tax Withholding”.
What the post forgot - for NJ and some other state employees payments via withholding also include required employee contributions to the state’s unemployment, disability, and/or family leave funds.
* FYI – I have reached 1200 Twitter followers! You can follow me at @rdftaxpro.
THE FINAL WORD
Is this the man you want as President?