Up-to-the-minute advice, information, resources, and, on occasion, commentary on federal and New Jersey state income taxes, and the various New Jersey property tax rebate programs, and insights and observations on tax policy and professional tax practice, by 40-year veteran tax professional Robert D Flach.
Thursday, December 29, 2016
THE YEAR IN TAXES 2016 – PART I
another year comes to an end.Time to
look back and reflect.
The year in
taxes 2016 was truly uneventful – from a tax point of view.
the big story of the year was the Presidential election.The absolute worst that could happen did
indeed happen – unfortunately for the country and the world, despite receiving
almost 3 million less votes than Democrat Hillary Clinton, dangerous,
deplorable and despicable narcissist Donald Trump, the truly surprising
Republican candidate, will be the 45th President of the United States!
beginning of the primary season I said that the most disturbing political development
in my lifetime - I was 62 at the time - is the fact that dangerous, unstable,
irresponsible, and irrational realty television cartoon clown Donald Trump is being
taken seriously as a candidate for the office of President of the United
States.I since revised that statement
twice – first to say “is the official nominee of the Republican Party” and
finally to say “will be the President of the United States”.
post is about the year in taxes.
tax season (only 5 more to go) started off without any problems and went very
smoothly. There were no weather,
equipment, computer, or other issues.The idiots in Congress passed the PATH Act in mid-December last year,
which, in a rare show of intelligence, made permanent many of the more
appropriate “extenders”.So there was no
delays in the beginning of tax return processing or the availability of IRS
forms.I was able to begin my tax season
as always on February 1st.
consumer service and return processing reached historic lows in 2015 – due to
the continual reduction of the IRS budget Congress and continued IRS
mismanagement.I heard from more clients
about seriously delayed refunds and processing FUs last year than in all the
years before combined – including one client who was told by the IRS that his
refund could not be processed because he was dead.But there were no similar FUs or delays that
I was made aware of this season.I only
heard from two clients whose NJ refunds appeared to be a bit late.I expect this is because the states, and the
IRS, was taking a bit longer to process returns in attempts to avoid identity
basis reporting requirements become “older”, more and more investment
transactions are becoming “covered”, which increased filing efficiency.And there is now more uniformity in 1099-B
reporting by brokerage and mutual fund houses.While there were still corrected Year-End Tax Reporting Statements
issued by brokerages, there seemed to be less corrections (not more than one
per account), and they were issued earlier in the season than past years.
the first year that Obamacare Forms 1095-B and 1095-C were required.The IRS delayed the filing deadline for these
forms until mid-March – and we learned late in 2016 that this will continue
during the 2017 filing season as well. Most arrived after I had already prepared a
client’s return.I got tons of emails in
late March with attachments of 1095-Bs and Cs, which wasted some valuable
time.In most cases, as I have been
telling clients when they ask about these forms, they are just additional
wasted government paperwork and I really do not need these to determine if
clients are covered by “appropriate” insurance.All I need is the client’s representation that all applicable family
members were adequately covered for the entire year. Thankfully the few 1095-As I needed were all
issued in early February.
none of my clients had to pay the Obamacare “shared responsibility” penalty,
the very few without insurance were exempt due to “affordability”, and only a
handful of returns involved the advance premium credit reconciliation.
discover an issue involving the “second lowest cost silver plan” numbers that
are included in the calculation of the allowable credit.In one case the numbers provided for 2015
were substantially different, higher (and therefore resulting in a lower
allowable credit amount), than the numbers given for 2014 for the same family
situation.When I went to the
Marketplace website tool to search for the SLCSP numbers for 2015 using the
family’s information I came up with different, lower, numbers.I used the lower online amount in the
reconciliation, with an attached statement of explanation, which resulted in a
smaller credit payback.
state side – I was extremely pleased with New York’s new “enhanced” online Form
IT-201 and IT-203 “fill-in” (but manually filed) forms.The “enhancement” automatically did the math
and actually calculated the tax – saving valuable time.I used the new enhanced process for all of
the 20+ New York returns I prepared – and continued to add to my invoice a
$5.00 “New York State Tax Preparer Extortion Fee Surcharge” for all clients
with NY state returns.
to use NJWebFile to electronically submit NJ-1040s directly to Trenton, free of
charge and without a “middleman” (I wish the IRS would initiate a similar
program), whenever possible (unless specifically forbidden by the client’s
request).However there are still too
many situations where this option is not available.When I had to manually prepare the return for
the client to mail I used the online “Fill-In” Form 1040, which did some math
but did not automatically calculate the tax.I did not encounter any issues with NJ returns.
apparently especially efficient this season - I ended it with slightly less
than half the number of GD extensions than last year, only 24, and most because
of late receipt of client “stuff”.This
may be the least amount of GDEs since I began keeping track of season-end
GDEs!To pat myself on the back, all returns that
were in my hands by the deadline of March 19th that I announced to clients in
my annual January mailing were dealt with during the “season”.
I do think
the delayed filing deadline – April 18 instead of April 15 this year – and the
additional day provided by being a leap year did help somewhat in reducing
season-ending GDEs.As usual the tax
season ended for me not on April 18th but on April 17th.