Sunday, January 31, 2016


Joy to the world - tax season’s here.
I’ll soon be flush with cash!
Let every client be organized,
and give me all I need, and give me all I need,
and give me all I need to prepare their returns!

My 45rd tax season will officially begin tomorrow - let the deluge begin!

As is my custom, due to the demands of the filing season I will be taking my annual “tax season hiatus” from posting to THE WANDERING TAX PRO.

Between now and April 18th I will barely have time to relieve myself let alone blog!  Nor will I have time to respond to comments. If a comment requires a response I will do so after April 18th.


I am NOT accepting any new 1040 clients (or any other kind of tax preparation clients). So don’t email me asking if I can prepare your 2015 tax returns.  THE ANSWER IS A MOST DEFINITE "NO". 

I will be publishing a WHERE THE FAKAWI post occasionally here at TWTP to keep my clients up-to-date on my progress during the season and to report changes or additions to my tax season policies and procedures. Clients can also keep track of my tax season progress by following me at TWITTER (@rdftaxpro).
I realize that I am abandoning you at a time when you may need me the most – but I need to make a living!

I find it a bit amusing that the period of time when TWTP gets the most “hits” is during the tax filing season when I am not posting.

“Talk” to you when it is all over!



Friday, January 29, 2016


This is the last BUZZ until late April – due to my annual tax season hiatus.  You can avoid BUZZ withdrawal by checking out Joe Kristan’s weekday daily Tax Round-Up.  

* Professor Jim Maule quotes idiot Donald Trump’s question “Who Knows the Tax Code Better Than Me?” at MAULED AGAIN.

Jim says – “I am very confident that there are people who know the tax code better than does Donald Trump”.  He is certainly correct.  A lot of people know a lot of things much better than fool Trump.  Unfortunately a disturbingly large percentage of the “great unwashed masses” don’t know very much – proven by the fact that they support the dangerous buffoon for President.

The professor’s bottom line –

So, the answer to Donald Trump’s question is, ‘Your great people, for starters. And a lot of other people, too’.”

* Jill Dodd, and Claire Hofbauer of Manatt, Phelps & Phillips, LLP talk about “New Basis Reporting Requirements for Executors and Others Who File Estate Tax Returns” at JD SUPRA BUSINESS ADVISOR (highlight is mine) –

The new requirements apply to all who are required to file an estate tax return with the IRS on or after July 31, 2015. Executors who are not required to file an estate tax return, or who do so only for the purpose of making an allocation or election respecting the generation-skipping transfer tax, are not subject to these new reporting requirements under the Act.”

The current federal Estate Tax exemption is $5,450,000 – so this is really no help for the average taxpayer - or us tax professionals who need to determine cost basis on investment sales.

The item goes on to describe the new IRS Form 8971, "Information Regarding Beneficiaries Acquiring Property from a Decedent."

* Over at DINESEN TAX TIMES Jason Dinesen’s “Glossary” series continues with a brief description of the “529 Plan”.

* A final reminder for tax pros – be sure to check out TAXPRO BUZZ, THE TAX PROFESSIONAL, my tax reform petition, and please tell your co-workers and colleagues about them.

* And a final reminder for those looking for a tax preparer – begin your search at FIND A TAX PROFESSIONAL.

* Tax Mama (I still want to know if there is a Tax Papa) Eva Rosenberg deals with the often asked question “Can My Ex Claim My Child When Filing Taxes?” at EQUIFAX.

Mama also provides advice on “What if one parent claims the child without permission?”.


I couldn’t leave you for the tax season without one last Trump comment.

I don’t pray much.  But I am praying that dangerous buffoon Tronald Dump loses in Iowa and, unable to properly and maturely cope with the loss, gets angry with Republican voters (in the Dumpster’s mind, if they didn’t vote for him they must be stupid) and drops out of the race.


Thursday, January 28, 2016


Do you have to file a 2015 tax return?  Let’s review.

Generally, you do not have to file a 2015 Form 1040, or 1040A, unless your “gross income” is at least -

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

“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).

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 legally 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. 

The numbers for individual state income tax returns differ.  You may not have to file a federal return, but you must, or should, file a state return.  For example, the State of Pennsylvania is a gross income tax with no personal exemptions or standard, or itemized, deductions.  You must file a PA-40 and pay the 3.07% flat state income tax if “you received total PA gross taxable income in excess of $33”.  

So if you do have to file, or want to file, a 2015 tax return get thee to a tax professional. 

Would you like to know “What’s New In Taxes for 2015”?  Click here.  


Wednesday, January 27, 2016


I had never heard of before.  I learned of it recently when a client emailed to ask if a donation made via this site would be deductible.

Gofundme advertises itself as “The World's #1 Personal Fundraising Site” with over $1 Billion raised.  Wikepedia tells us –

GoFundMe is a crowdfunding platform that allows people to raise money for events ranging from life events such as celebrations and graduations to challenging circumstances like accidents and illnesses.”

My client wanted to make a contribution to help with a friend’s medical expenses.  He was told one way to do so was via the gofundme “John Doe’s Cancer Fund” (this is obviously not the real name of the fund).

The initial answer I gave my client was –

You cannot deduct money given or donated to a specific individual as a charitable contribution, regardless of how needy the person or how charitable your intent.  It is a gift and not a charitable contribution.  There would have to be a special fund-raising activity sponsored by an existing organized church or charity and you would then contribute to that particular church or charity.  

The usual example is you cannot deduct the value of a coat you give directly to a specific homeless person - you must give the coat to the Salvation Army or similar organization that gives clothing to the homeless.”

I looked at the webpage for “John Doe’s Cancer Fund” and could find no indication that this was a legitimate charitable organization.

A Google search led me to “Is my donation tax-deductible?” at the site’s Help Center, where I was told –

Donations made to a GoFundMe Personal campaign are generally considered to be personal gifts and are not guaranteed to be tax-deductible. You can always check with a tax professional to be sure. Only donations made to a GoFundMe Certified Charity campaign are guaranteed to be tax-deductible.

Not sure if you donated to a Certified Charity campaign? You should've received a tax-deductible receipt from our charity partner FirstGiving. You can also visit the campaign you donated to and look for the 'Certified Charity' badge. Here's how it looks:

If you don't see the 'Certified Charity' badge on the campaign you donated to, then it's likely a Personal campaign. You'll need to consult with a tax professional in your area to see if your donation is eligible to claim as a tax deduction.”

There was no such “badge” anywhere on the “John Doe’s Cancer Fund” page, so I told my client that any contributions he made would not be tax deductible.

I told the client that I was unfamiliar with gofundme, and to be safe if he wanted to give money to his friend to help with medical expenses he should just write a check to “John Doe”.  This way he knew all the money would go directly to “John”.


Tuesday, January 26, 2016


I got very little snow in my hometown in Northeast PA on Saturday.  More than ever glad that I no longer live in New Jersey.

* Want to know “What’s New for Taxes for 2015”?  Click on the blue title in quotes for a free compilation of the COLA and inflation adjustments for 2015.

* Are you wondering “Do I Need Form 1095-Cto File My Tax Return?  Jason Dinesen gives us the answer at DINESEN TAX TIMES –

The short answer is: you do not need to have Form 1095-C in your possession before you file.”

The form 1095-C “is sent to employees, by employers who provide insurance coverage to employees”.  Your Form W-2 may indicate that you are covered by an employer health plan. 

There is also form 1095-B.  This form is sent by insurance companies to individuals covered under a private health insurance plan.”

You, or your tax preparer, does not need to have either of these forms “in hand” in order to prepare your 2015 tax return.  Your preparer just needs to know if you were covered under an insurance plan for all, or part, of 2015.  In my opinion, your word is good enough (at least it would be if you were my client).  A tax preparer has no legal requirement to verify via independent documentation your coverage.

You do, however, need (highlight is Jason’s) “Form 1095-A: Health Insurance Marketplace Statement. This form is sent to people who get healthcare through a state exchange. If this applies to you, you MUST have this form before you can file your tax return.”

* Another reminder for tax pros – Be sure to check out TAXPRO BUZZ, THE TAX PROFESSIONAL, my tax reform petition, and please tell your co-workers and colleagues about them.

* Good advice from ABOUT.COM’s William Perez on how to “Communicate Effectively with Your Tax Preparer”.

* Not exactly a tax issue – but Dustin Pellegrini of EQUIFAX.COM wanted to know “Are Americans Saving Enough for Retirement?

He discovered a disturbing statistic -

21 million Americans workers aren’t saving for retirement.”

Are you?

* Kay Bell tells us “the list of states warning taxpayers that they'll have to wait longer for their tax refunds is growing” in “Minnesota, Montana, North Dakota and South Carolina tax refunds slowed by fraud prevention measures” at DON’T MESS WITH TAXES.

* And Kay also tells us “Taxpayers want up-front pricing from paid tax preparers”.  But read my comment to her post.  

* Need to find a tax pro to prepare your 2015 returns?  Go to FIND A TAX PROFESSIONAL. 

Avoid the “fast food chains” – they ain’t cheap!  And don’t rely on a “box” to correctly prepare your returns.  No tax software package, online preparation service, or “app” is a substitute for a competent and qualified independent tax professional.  Remember – garbage in-garbage out.  And you can’t avoid interest and penalties by blaming your software when the IRS comes after you.

* Joe Kristan opens his Monday Tax Round-Up with good advice on “How to make your tax return cheaper”.  

* Jim Blankenship explains “Everything YouNeed to Know About File & Suspend and the April 30 Deadline” at GETTING YOUR FINANCIAL DUCKS IN A ROW.

Jim tells us –“If you were born after April 30, 1950, file & suspend (under the old rules) is not for you”.  This is all Greek to me – and I have no reason to doubt Jim.


Part 1 –

I didn’t think anything could be more stupid than last year’s television ads for Henry and Richard with the bow-tied fool throwing money out of a plane.  I was proven wrong when I saw this year’s nonsense.

Neither ads make any mention about competently preparing tax returns for a reasonable fee – because Henry and Richard does neither.

Part 2 -

American’s disgust with traditional “establishment” politicians is understandable.  The idiots in Congress are so polarized and contentious that nothing gets done.  True outsiders, especially those who are not “beholding” to anyone, do look good.

However the worst thing that Americans can do is turn to a self-important, self-absorbed, immature narcissist, who cares about nothing else other than feeding his undeservedly enormous ego, like Tronald Dump.  The Dumpster as President is far worse than any other alternative.

It is truly disturbing that the Republican establishment, while not exacting embracing the fool, even considers accepting Trump as a legitimate candidate worth voting for.


Monday, January 25, 2016


You should not rush to be among the first taxpayers of the year to have your taxes done. Do not give or send your tax preparer your ‘stuff’, or attempt to prepare your own returns, until you have received all the forms and information needed to complete the returns! That means every W-2, every 1099, and every K-1 and all the cost basis information on the sale of investments.

I have had many experiences where a client came in very early in the season and had his/her return prepared, only to receive another Form 1099 in the mail the day after he/she had sent the finished returns off to his/her “uncles”.

But, on the other hand, don’t wait until the last minute to prepare your returns or have your returns prepared.

Many taxpayers who expect to owe their “uncles” wait until the very last minute to get their “stuff” together to prepare their return. Even if you think you will owe taxes you should have the return prepared early, once you have all the necessary information in hand.
You don’t have to actually file the returns and pay the tax until April 15th. But by having your 1040 prepared early you will know exactly how much you will owe and have over a month to come up with the money, instead of running around trying to juggle funds days before the deadline. Hey, you might even be surprised to find that you will be getting a refund!

Also consider the workload of your tax preparer. I have a strict long-standing rule that all returns that are not literally in my hands, with all the necessary information, by March 19th will be automatically extended!

Another good reason not to wait - the IRS is advising taxpayers to file early this year in an attempt to avoid identity theft by crooks who may file a return under your name claiming a refund.  The reason for filing early is to ensure you are the first person to file under your name. 

While this is good advice, it does not change my above advice to wait until you have received all the forms and information needed to complete your returns.  


Friday, January 22, 2016


* Russ Fox of TAXABLE TIMES reminds us that, when it comes to claiming deductions, “Same as Last Year Doesn’t Work”, quoting from my post on what to give your tax pro.  

* Joe Kristan has some good information in his lead item commentary in “Tax Roundup, 1/19/16: Thieves Holiday! Filing Season Underway Today” at the ROTH AND COMPANY TAX UPDATE BLOG.

* Hey fellow tax pros – have you seen the January 15 TAXPRO BUZZ, or THE TAX PROFESSIONAL yet?  Or signed my petition on tax reform yet? 

Why not?

* William Perez explains that the answer to the question “Is Head of Household Status Possible for Two People at the Same Address” isn’t as easy as you would think at ABOUT.COM.

* William’s ABOUT.COM colleague Jean Murray deals with the question “How Do I Register to Collect Sales Tax in My State?” for those starting a business.

Sales tax law is truly complicated and varies from state to state.  To be honest, if I were accepting new business clients I would not accept one that was subject to sales tax collection.  A particular item may be subject to sales tax in one specific situation but not in another.  It is important that if you are starting a business that will sell a product or service that may be subject to state and local sales tax that you consult a tax professional who is knowledgeable and experienced in local sales tax law.

* You will find links to all the installment in Jason Dinesen’s excellent blog series in “Choosing a Business Entity: Wrap-up Post” at DINESEN TAX TIMES.

* The “The Forbes 2016 Tax Guide” provides links to tons of helpful tax posts from the FORBES.COM “stable” of bloggers.

* Speaking of FORBES.COM - Don’t be too concerned with Robert W Wood’s post “Beware: IRS Now Has Six Years To Audit Your Taxes, Up From Three”.

The title is misleading – it is actually incorrect.  The “3-Year Rule” has not changed.  The IRS, and most state tax authorities, still has three years from the due date (or filing date if you had an extension) of a filed tax return to audit and revise that return.  If you filed your 2014 Form 1040 by the initial April 2015 due date, “Uncle Sam” has until April 15, 2018 to audit it and ask for additional taxes.  However if the Service can prove intentional tax fraud they can go back forever and audit every tax return you have ever filed.

And, as RWW points out –

The three years is doubled to six if you omitted more than 25% of your income.”

The basis of RWW’s post –

In U.S. v. Home Concrete & Supply, LLC, the Supreme Court slapped down the IRS, holding that overstating your basis is not the same as omitting income. The Court said 3 years was plenty for the IRS to audit. But Congress recently overruled the Supreme Court and gave the IRS six years in such a case.”

But if you file an honest tax return, with the correct basis for any investments sold, report all of your taxable income, and you have proper documentation for what you claim on your return, you have nothing to worry about.

* Before I leave FORBES.COM, TaxGirl Kelly Phillips Erb reports “Yet Another State Announces A Delay In Tax Refunds, Citing Fraud Concerns”.

I think most state, and federal, tax refunds will take a few days to a week later to get to you this year than in the past, even with direct deposit.  It is a small price to pay to avoid tax fraud.  However, direct deposit, if available, is still a better option, and cheaper for the government, than waiting to receive a paper check in the mail.

* Let me end with a plug for my website FIND A TAX PROFESSIONAL – the place to start your search for a qualified and competent tax preparer.  It has lots of informative articles and advice on choosing a tax pro.


Thursday, January 21, 2016


As the deluge of tax-related articles, columns, blog posts, and television and radio discussions that always accompanies the tax filing season begins I thought I would provide a very important reminder of what I have identified as my best tax advice from 44 years of preparing 1040s –

Do not accept tax advice from anyone other than a professional tax preparer!

Don’t listen to a broker, a banker, an insurance salesman, or your Uncle Charlie!  You wouldn’t ask your butcher for a medical opinion, so why would you accept tax advice from your MD?

Over the years clients have come to me wanting to claim the strangest things – telling me “my neighbor” or “a guy I ride in to work with on the train” said it was deductible.  And it seems that just about every workplace has a resident self-proclaimed “tax pro”.

Many people in the “financial industry” may be experts in their particular field but know absolutely nothing at all about federal or state income taxes. Well maybe not nothing. They may have a little knowledge about taxes – but in this case a little knowledge can truly be dangerous.

I am sure for the most part those who give you free tax advice are doing so out of a genuine desire to help you, and sincerely think they know what they are talking about. But there are also those out there who are only interested in making a commission by selling you an investment and give you false tax advice to try to convince you to give them your money.

When you are given advice from a so-called financial professional always consider the source.  Remember, an insurance broker is a salesman, as is a stock broker and, to a degree, a banker. They make their money by selling you something. 

And do not automatically assume that tax advice you read in a print or online article, column, or blog, or hear on a television or radio program, is correct or applies to you.

Also be aware that the availability and amount of any specific deduction, credit, or other tax benefit that you read, hear, or are told about is dependent on the individual facts and circumstances of your specific situation.  The correct answer to the questions "can I deduct this?" or "can I claim this?" or "must I report this?" is always "it depends".

If you are given any tax information by any non-tax person, read something about taxes in a newspaper, magazine, or blog, or hear something on tv or the radio, be sure to check it out with a qualified and experienced tax professional before taking any action.

For more of my best tax advice check out WON’T YOU TAKE THIS ADVICE I HAND YOU LIKE A BROTHER.


Wednesday, January 20, 2016


In the next few weeks you will be getting the information forms you will need to prepare your 2015 tax returns in the mail – W-2s, 1099s, 1098s, K-1s, etc.  You may have already started to receive these items.

Here is a chart of the delivery due dates for various IRS information returns (you may need to click on the image to read better) –

As you receive 2015 information returns you should check the amounts reported on the forms against your own records.  And it is important to verify that the Social Security numbers on all forms are the correct numbers.  If you discover an error, or something you don’t understand, contact the employer or financial institution for an explanation or a corrected return.

A bank may issue one 1099-INT for all accounts – savings, money market, CDs – belonging to the same name and Social Security number.  Verify each account listed on the form to make sure they all belong to you.  A few years back one of my clients received a 1099-INT with someone else’s account included. Had he not carefully checked the form he would have paid close to $100.00 in federal and state tax on another person’s income.

Some information returns may come attached to other documents. Check the contents of each envelope carefully. Your Form 1098 for mortgage interest may arrive attached to the January or February monthly mortgage statement. Some year-end dividend checks have a Form 1099-DIV attached. Don’t separate the check and throw out the 1099-DIV thinking it is a stub. And check 1099-DIVs you receive to see if there is a check attached. I can’t tell you how many times I have found checks attached to 1099s given to me by clients. 

Just because you didn’t receive a 1099 for income does not mean that one was not submitted to the IRS. You must report all taxable income, whether or not you have received a Form 1099. 1099-DIV and 1099-INT does not have to be issued if the amount is under $10, and Form 1099-MISC may not need to be issued if the amount is under $600, but all taxable dividends, interest and “miscellaneous” income must be reported regardless of the amount received.

When asked about a Form 1099-INT for an account, banks often tell depositors that you only have to report interest on your 1040 if it is $10 or more. This is wrong! Banks may not have to issue a Form 1099-INT if the interest is less than $10, but you are required to report all interest on all accounts from dollar one.

Many states will no longer mail out 1099-Gs for state tax refunds or unemployment benefits. You may need to go online to your state tax department’s website to download the form.

If you have a brokerage account there is an excellent chance that you will receive at least one, if not two, corrected “Consolidated 1099 Statements” to report revised taxable dividends, interest, and gross proceeds after the initial statement arrives in late January. The final corrected 1099 may not arrive until mid-March.

I tell all my clients to wait until they have received all of their information returns – W-2s, 1099s, 1098s, K-1s, etc – until giving me their tax “stuff”.  See "What I Need to Prepare Your 2015 Returns".
Do not hold up having your return prepared if you have received all other information returns and are just waiting for a 1095-B and/or 1095-C form.  You  do, however, need Form 1095-A, if applicable, in order to properly prepare your 2015 return.


Tuesday, January 19, 2016


There are two means of refuge from the miseries of life: music and cats.”

~ Albert Schweitzer.

* A correction to my post on the NJ-NATP “Famous State Tax Seminar”.  Not that I made an error – but the wrong information was provided by a state speaker. 

In the post I stated as an item of interest that “You can check the ‘base year’ amount for the PTR-2 application online at the NJDOT website”.  The apology from NJDOT to NJ-NATP told us – “The option to find PTR base years online doesn't exist. We apologize for the mistake. We had this option for a very short period of time. It hasn't been up for w couple years. We've just made a suggestion to bring this capability online for you and your clients and we'll update you if we can bring it back.

When you do receive your tax forms the first thing to do is to check the information reported on the form with your own records, such as your final paystub for the year.  Also check to see if the Social Security number is correct.  If you find an error, or think there may be an error, contact the issuer – i.e. the employer or bank.

* A reminder – the TAX FOUNDTION has an interactive tool, updated frequently, for “Comparing the 2016 Presidential Tax Reform Proposals”.

* And a reminder to fellow tax pros – if you agree with me that the US Tax Code needs to be totally shredded and rewritten from scratch sign my petition.

Also for tax pros – the January 15, 2016 issue of TAXPRO BUZZ is now available!

 * Jean Murray explains “Barter Transactions and Business Taxes” at ABOUT.COM -

Although no money is exchanged in the barter transaction, barter is still considered taxable by the IRS. Like other income, barter income can affect your total income tax liability, self-employment tax, excise taxes, state taxes, and employment taxes.”

* An interesting statistic reported by DAVE RAMSEY in his blog post “Tax Refund Heartache for Self-Filers” (highlight is his) -

In a survey of 2,000 taxpayers, we found that people who file their own taxes get an average refund of $1,824. That’s not bad, right?

Well, get ready for a heartbreaker.

People who worked with a tax expert to file their taxes received an average refund of $2,615! That’s $840 more than the average self-filer!

If you are looking for a competent and qualified tax preparer you can begin your search at FIND A TAX PROFESSIONAL.

* Ann Carrns, the New York Times’ YOUR MONEY ADVISOR, warns “State Tax Refunds May Be Delayed by Security Precautions”.

So don’t go crying to your tax professional if you do not have your state tax refund in your hands in 10 days.  Be patient!  FYI – there is nothing that your tax pro can do to expedite your refund, and there is nothing he/she can do to check the status of a refund that you cannot do yourself on the State’s tax authority website.

* I it is suppose not so surprising to learn that “Millennials Find Tax Refund Anticipation Loans Appealing”, as Kay Bell tells us at DON’T MESS WITH TAXES, considering that they “Have inadequate financial knowledge”, and “Don't seek professional financial help”, as Kay also points out.

Kay goes on to properly “explain why RALs are bad”.

Thankfully Henry and Richard have stopped pushing RALs on their “victims” – one less way they can screw them.

I firmly believe that tax preparers should be banned from offering RALs.  We are tax preparers – not loan sharks!

* Let's end with another good post from Jean Murray at ABOUT.COM - a primer for new employers on “What is aW-2 Form? A Quick Review of the W-2”.


Turbo Tax tells us “You don’t need a genius to prepare your tax return”.  This is true.  You need someone smarter – a competent and qualified tax professional.

Everyone agrees that Albert Einstein was a genius.  He said, “The hardest thing in the world to understand is the income tax.”  And he said this in the early 60s.  The US Tax Code is much more of a mucking fess today. 

From the time he came to America until his death Einstein relied on tax professional Leo Mattersdorf to prepare his 1040s.

Ignore the ridiculous Turbo Tax Ads – don’t rely on a “box” to prepare your tax returns.  Remember – garbage-in, garbage-out.  And also avoid using “fast food” preparation chains like Henry and Richard – they ain’t cheap.

You can begin your search for a competent and qualified independent tax professional at FIND A TAX PROFESSIONAL.


Monday, January 18, 2016


Yesterday while heading toward a business client in Jersey City NJ I passed a storefront office of Liberty Tax Service, a “fast food” tax preparation chain of the same ilk as Henry and Richard. 

The window was plastered with pictures of $50 bills and signs with statements like “Come in and walk out with $50.00” and “Come in and walk out with $750.00”.

Except for the name of the business, I saw no indication in the window that this was a tax preparation business and its employees were educated, competent, and current in 1040 preparation.  There were no signs saying “We know taxes” or “Pay the least amount of tax possible”.  Just come in and walk out with money.

I looked to the Liberty Tax Service website for more information on the offers and was “told” -

Visit your local store, file your taxes with us, and you will receive up to $50 cash with your paid return!

I don’t understand – don’t you have to pay Liberty for preparing your return?  The fee will certainly be more than $50.00.    

And found -

Get $750 at no additional cost if you qualify.”

This is a “Tax Refund Advance Loan” – an infamous “RAL”.  However there supposedly is no interest or processing fee.

Liberty is in business to make as much money as possible.  They ain’t giving money away.  If they are going to give you $50.00 cash when you leave the office and an interest and fee free loan of up to $750.00 the cost of these items is going to come from somewhere – and the only source is the fee they charge to prepare returns.  So an already disproportionately high fee, considering the value and quality of the service provided, is even more inflated to cover these costs.

Like Henry and Richard, I expect Liberty ain’t cheap.  You will do much better using a competent and qualified independent tax professional to prepare your taxes who doesn’t have to rely on a stupid gimmick to get clients.


Dear Client:

I want to make sure you take advantage of all the tax deductions and credits to which you are entitled – but I can only do this if you give me complete and accurate information. 

When providing me with your tax information be sure to include all of the following information (if it applies to your situation):

* Full names, as they appear on the Social Security card, Social Security numbers and dates of birth for you, your spouse, and all dependents.

* Relationship of all dependents, and whether or not, and how long, they lived with you.

* W-2 forms (all copies) and the final pay-stub for the year for all of your employers.  Make a copy of your W-2s to keep with you before sending them to me.

* All 1099s (for interest, dividends, gross proceeds, pensions, distributions from a Qualified Tuition Program, and other income), 1098s (for mortgage interest, contribution of a motor vehicle to charity, student loan interest, and tuition and fees), and K-1s and all attachments (for partnerships, sub-S corporations, estates, and trusts) from all sources.

* Any 1095-A, 1095-B, and 1095-C you receive regarding health insurance coverage.

* All year-end statements and information from brokerage and mutual fund accounts and any AVERAGE COST STATEMENTS received from a mutual fund on the sale of fund shares.

* A detailed listing of-

1. itemized deductions (unreimbursed medical payments, charitable contributions, and job-related, job-seeking, and investment expenses),

2. rental income and expenses, and/or

3. self-employment income and expenses.

I don’t need to see actual bills, receipts, or cancelled checks.  For the most part I just need numbers.  Do not send me a pile of medical bills and receipts and insurance statements and expect me to sort through them to determine your allowable medical deduction.

I also do not need to see proof or acknowledgement of each of your individual cash donations.  I only need a listing of your contributions.   FYI you can only deduct contributions for which you have hard copy documentation.  I do, however, want to see any receipts, acknowledgments or listings for non-cash contributions –clothes, books, household items, furniture, etc - to Goodwill, the Salvation Army, or your church.   

When I say “I only need numbers” I mean specific numbers for deductions you are claiming.  “Claim the maximum” or “Whatever I am allowed” or “Same as last year” is not appropriate.  The maximum is what you actually paid – and you are allowed what you actually paid!  I need you to tell me “$1023.50” or “$20.00 per week for 50 weeks” or “4638 miles”!

If any of the following situations apply to you I will need additional information -

IF YOU SOLD STOCK, BONDS, OR MUTUAL FUND SHARES – I need the date of purchase and cost of the investment sold.  This information may be included in the Year-End Consolidated Form 1099 Statement you received from the brokerage firm or mutual fund house.  If cost basis information for all trades is not included on this statement have your broker provide you with a “profit and loss” report for all the year’s trades that reconciles to the Form 1099B for each account.  If you sold an investment you inherited I need to know number of shares you inherited and the date of death of the person from whom they were inherited.  

IF YOU SOLD REAL ESTATE – I need the Closing/Settlement Statements for both the purchase and sale of the property, plus the cost of improvements made to the property over the years and any expenses of sale paid separate from the closing.

IF YOU PURCHASED REAL ESTATE – I need the Closing/Settlement Statement for the purchase of the property.  For rental property I will need the separate amounts of “assessed value” for land and improvements from the tax bill.

IF YOU RECEIVED DISTRIBUTIONS FROM AN IRA – I need the year-end statements for all IRA accounts.

IF YOU RECEIVED DISTRIBUTIONS FROM A PENSION PLAN – I need to know if you rolled-over the distribution to an IRA of “took the money and ran”.

IF YOU ARE PAYING ALIMONY – I need to know the Social Security number of your ex-spouse, the amount of alimony paid for the year, and any other required payments, such as health insurance premiums, real estate expenses, that you are making on behalf of your ex-spouse.

IF YOU PURCHASED A CAR, TRUCK, SUV, MOTORCYCLE, BOAT OF AIRPLANE – I need to know the amount of sales tax paid. 

IF YOU REFINANCED A MORTGAGE – I need the Closing/Settlement Statement for the refinance and the term of the new loan. 

IF YOU DONATED A CAR TO CHARITY – I need to see all the paperwork you received from the charity, especially the Form 1098-C, plus the original cost and date of purchase of the car.

IF YOU HAVE GAMBLING WINNINGS – I need to see all W2-Gs, details of all your gambling losses, regardless of the “category” of gambling (slots, tables, raffles, lottery, racetrack, etc), and any gambling log you kept. 

IF YOU HAVE DEPENDENTS IN COLLEGE – I need all Form 1098-Ts received and all the “Burser’s Reports” for the year that show tuition and other payments.  You may be able to print-out a financial report from the college’s website.  I also need to know what was spent on course-related books, supplies, and equipment.  If you have taken a distribution from a Section 529 Qualified Tuition Program I need to know the cost of room and board.

IF YOU PAID FOR CHILD CARE, WHETHER DIRECTLY OR THROUGH A FLEXIBLE SPENDING ACCOUNT – I need the name, address, Social Security or Employer Identification number, and amount paid for all child-care providers.  If you have more than one child I need to know how much you paid for each child.  You may be able to get detailed statements from the provider(s).    

IF YOU ARE A NEW JERSEY RESIDENT AND YOU OWN YOUR HOME – I need the Lot, Block, and, if applicable, Qualifier numbers of your home.

If this is the first year that I am preparing your tax returns I will also need to see copies of your 2014, 2013, and 2012 federal and state returns.


Your Tax Preparer
FYI - your tax preparer may also need your driver's license number for the first time this year.

Please note – I no longer accept any new clients.  This post is for information only and should most definitely NOT suggest that I am a potential tax preparer for you.