Tuesday, August 22, 2017

WHAT’S THE BUZZ, TELL ME WHAT’S A HAPPENNIN’

* Good advice from Tony Nitti of FORBES.COM – “Tax Preparer Promises A Big Refund? Beware Of Claims Too Good To Be True” -
 
If a preparer guarantees they can get you a refund before you've given them your tax information, be afraid.
 
If a preparer guarantees you the exact amount of the refund they can get you after seeing only your W-2, be very afraid.
 
If a preparer requires you to pay a fixed percentage of your projected refund over to them as their fee, walk away; and
 
If a preparer plans to generate your refund by offsetting your wages with a substantial business loss -- and you, you know...don't actually own a business, for the love of God, run away.”
 
While it is my plan to no longer accept ANY new clients – I might be willing to echo Tony’s bottom line lesson (highlight is mine) –
 
The lesson, of course, is if you've got a return that needs prepping with only a W-2 and you're willing to pay $4K for the process, call me first. I can't promise you a refund, but I can promise that I'll happily take your four grand.” 
 
* Over at THE TAX PROFESSIONAL my post this week is "A Question of Ethics". 
 
Fellow tax pros - what do you think about what I say in this post?
 
* JOE TAXPAYER talks about “The Broken 401(k) Solution”.
 
* Jason Dinesen answers the question “Can I Claim My Disabled Daughter as a Dependent?” at DINESEN TAX TIMES.
 
* And for those interested in tax history Jason gives you “Revisiting a History of Marriage in the Tax Code, Part 3”.
 
 
* Do you volunteer for a charity? Charities can reprint my VOLUNTEER TAX GUIDE free of charge!  
 
* While I would certainly NEVER recommend that ANYONE use Henry and Richard to prepare their tax returns, I will acknowledge when they give good advice in their blog.
 
Case in point –What School Expenses Are Tax Deductible?” from Julieann Wood Riley.
 
An always important bottom line, regardless of the tax topic –
 
Once you understand what expenses will count as a tax credit or deduction, you should keep records of those expense so they can save money later when they file your return.”
 
* Paul D Allen explains the “Military Reservist Travel Deduction” at the PIM TAX SERVICES BLOG.
 
* Fellow tax pro and tax blogger Doug Spiker tells it like it is in “The Forgotten Eclipse of November 8, 2016” at TAX SNAFU -
 
His bombastic, bullying nature, his ego-maniacal narcissism, his self-aggrandizing manner make him wholly unsuited to lead this great nation.”
 
THE LAST WORD
 
Trump's pathological NEED to insult and belittle anyone who disagrees with or criticizes him makes him mentally incompetent.
 
Trump's pathological NEED to always lie about how great he is or what great things he's done makes him mentally incompetent.
 
Trump INABILITY to accept any reality other than deluded "alternative reality" in his mind makes him mentally incompetent.
 
Trump's pathological DELUSION that he's smarter than everyone else & can do anything better than anyone else makes him mentally incompetent.
 
REMOVE TRUMP NOW!
 
TTFN
 
 
 
 
 
 
 

Monday, August 21, 2017

DOCUMENTION FOR EDUCATION TAX BENEFITS

Parents, if your children are preparing to begin or return to college here is some good advice.
 
The US Tax Code currently provides several benefits to help pay for a college education.  You should save the following documentation and information as it is received and give it to your preparer next year at tax time
 
(1)  All “Burser’s Statements” and other financial statements from the college that identifies charges and payments for all tuition and fees.  Sometimes a “hard copy” of these statements is not provided – but they are available to download and print from the student’s “account” online at the college website.  While you must give your tax pro any Form 1098-T you receive from the college – the college’s financial statements are usually more important, and provide more accurate and useful information, than the 1098-T (historically the Form 1098-T has been as useful as tits on a bull).
 
(2)  Receipts for all books and other required classroom materials purchased, regardless of where purchased.  If the student sells back used textbooks to the college or other book store be sure to make a note of the amounts received (this is NOT taxable income, but will reduce the amount of allowable expenses).
 
(3)  Receipts for any “off-campus” apartment or room rentals during the school year that are not paid to or through the college and included on college financial statements – for example if your son or daughter rents, alone or with other students, an apartment in town as an alternative to campus housing.  This expense may not provide a tax benefit – but it is important to have the information available just in case. 
 
FYI, the IRS website has a good “Tax Benefits for Education: Information Center” with, as the title suggests, explains the various tax benefits for education. 
 
TTFN
 
 
 
 
 
 
 
 
 

Thursday, August 17, 2017

PER DIEM RATES FOR OCTOBER 2017 – SEPTEMBER 2018 ANNOUNCED

The General Services Administration has released the fiscal year (FY) 2018 travel per diem rates, which will take effect on October 1, 2017.
 
To find specific CONUS per diem rates go here.
 
The GSA establishes the per diem rates meals and incidental expenses and lodging each year for the fiscal period October through September.  These rates are “based on Average Daily Rate (ADR) data from the lodging industry, which GSA obtains through a contract with a leading provider of lodging industry data”.  
 
The new maximum standard per diem rate for travel locations not specifically identified in the per diem rate tables will increase from $142 to $144 ($93 for lodging, $51 for M&IE).   Fiscal 2018 meals and incidental per diems remain at the fiscal 2017 standard range of $51 to $74. 
 
A refresher course –
 
The GSA per diem rates can be used by employers to reimburse employees for business travel, and the per diems for meals and incidental expenses can be used by unreimbursed employees and the self-employed to claim a tax deduction for business travel.
 
Self-employed taxpayers filing a Schedule C, and employees who are not covered by an employer reimbursement plan, cannot use the per diem method that includes lodging. To claim a deduction for lodging expenses these taxpayers must substantiate the actual cost.  And corporations cannot use the per diem that includes lodging for owner-employees with more than 10% ownership, based on direct or indirect ownership.
 
Similar to how the Standard Mileage Allowance works for business use of your automobile, you can elect to deduct either the actual amount of your out of pocket expenses for meals and “incidental” expenses while away from home on business, or claim the appropriate federal per diem allowance determined by the location of the trip.  If you claim the per diem allowance you do not have to save receipts for actual expenses.
 
The per diem rates are based on the city where you “lay your head” at night. If your business meetings are in New York City, but you stay overnight at a hotel in New Jersey to get a lower room rate, you would use the New Jersey location to determine the appropriate per diem amount.
 
You can decide whether to deduct the GSA meals and incidental per diem rate or actual expenses on a trip by trip basis, but you must use the same method for all days within any single business trip. I can use the actual expenses for my trip to Washington DC last week to attend the NATP National Conference and the per diem rate for my upcoming September trip to Atlantic City for the NATP Forum.
 
The per diem rate for meals and incidental expenses includes tips given to porters, baggage carriers, bellhops, hotel maids (the “incidental” expenses) – so the actual out of pocket for these incidentals are not deductible if you claim the per diem.
 
There is also a separate per diem rate for incidental expenses only, to use if you do not incur meal experiences while traveling.  It is currently $5.00 per day.
 
On the first and last day of a business trip you claim 75% of the per diem amount, unless you can show you leave before breakfast on the first day and return after dinner on the last.
 
Any questions?
 
TTFN
 
 
 
 
 
 
 
 

Wednesday, August 16, 2017

A CAPITOL IDEA – THE 2017 NATP NATIONAL CONFERENCE – PART 2


Let me return to the 36th annual National Conference of the National Association of Tax Professionals at the Marriott Wardman Park in Washington DC, which I attended along with about 1000 colleagues (attendance was down from past NATP conferences I have been to) last week. 

As I said in Part 1, several of the sessions identified in the conference material caught my eye -

ü  Unusual Income Items
ü  Is It Above the Line, Below the Line or Not Deductible?
ü  Tax Stuff You Thought You Knew
ü  Special Occupations
ü  Every Choice Has a Consequence for Your Clients
ü  Panel Discussion

In addition to the above sessions I also attended classes on “Business use of Automobiles”, “Dealing With Divorce” (I had written on the tax issues of divorce in the latest issue of NATP’s TaxPro Journal and wanted to make sure I got it right), and “Casualty Losses and NOLs” (a topic that applied to a specific client’s 2016 situation).

I have been asking for a “Special Occupations” session on my conference evaluation forms for decades.  But just not necessarily the occupations this session addressed.  Discussed here were clergy, gamblers, teachers, and truck drivers.  I am more interested in police officers, firefighters, actors, and artists.  However I did attend this session.

NATP has not had a “panel discussion” session at a conference I have attended in many, many years.  I think the last time it was offered it was called “Ask the Experts”.  This conference session had 4 NATP instructors answering questions from the floor.  I would have preferred a more structured session – with maybe 1 or 2 more panel members and having questions submitted beforehand, either online prior to the conference or handed in at the Registration Desk during the conference (the panel discussion was the last session on the last day).  Questions from the floor could have been taken if there was time left after the previously submitted issues had been dealt with.

For those of you who also attended this session - my thoughts on the last question discussed were posted in “Silence is Golden” here at TWTP back in February.

One of the problems I have with the conference schedule – similar to my issue with the sessions at both the IRS and NATP Forums – is that each session was limited to 100 minutes, or 2 CPE hours.  This is not always enough time to properly cover a more involved topic.  I would prefer some extended sessions, similar to the schedule at the California Society of Enrolled Agents “Super Seminar” held each year in Vegas where there are some half-day sessions.  And some topics could be perhaps 75 minutes.

I did go to the annual “Tax Update” session, held in “general session” for all to attend at the same time (which I like, since almost everyone usually does attend).  However it was of no real value this year.  With no new tax laws and only minimal developments they had to really stretch to cover the 100 minutes.  The “tag team” of instructors filled some time by discussing “proposed” legislation.  I do not like this inclusion – I only want to hear about actual passed and signed tax law at this session so as not to cause confusion.  Perhaps there could be a separate session (here the shorter time frame would work) to discuss the various tax proposals with audience feed-back.

The keynote speaker at the conference this year was IRS Commissioner John Koskinen – appropriate since we were in Washington DC.  He opened his remarks by saying, “I’m going to read the fine print of the contract next time around to see what I am getting myself into.”

Koskinen was a good and humorous speaker.  He told us the recent 2017 tax filing season was the smoothest filing season in his tenure.  And he explained, as expected, that most of the IRS problems and deficiencies were due to underfunding by Congress and the continued adding of “unfunded” responsibilities related to the administration of government social benefit programs like the Affordable Care Act.  See the CCH news item “Koskinen Discusses Taxpayer Service, Return Preparers at NATP Event” for more on what he said in his prepared remarks.

He spoke for half of the 100 minutes and then opened the floor up for questions – telling us we could “ask anything and complain about anything”.

To be perfectly honest – I had a better opinion of the Commissioner after hearing him speak than I did before the session.

As is the case at most CPE events, most of what is discussed is basically a review and reminder of what I already knew, but I always learn some new things. 
 
I found one of the statements made by an instructor, new to me, to be verrrrry interesting (sorry – showing my age).  He said (in effect – I didn’t write down the exact quote) that if an answer to a tax question seems logical and reasonable and sounds right it is probably wrong.  Obviously our current Tax Code is rarely logical or reasonable.
 

As usual NATP did a good job of putting together an informative and entertaining conference, with excellent and knowledgeable instructors (many of whom were familiar to me) – and deserves kudos.  I was glad I attended.  I do believe I earned 22 CPE credits for the 4 days of classes.

I will not be attending next year’s conference in Anaheim – too hot, already been to Anaheim, not interested in Disney, overall will cost more than the value of the education received, and I don’t want to fly.  But I will be returning to Chicago for the 2019 conference.

TTFN
 
 
 
 
 

Tuesday, August 15, 2017

WHAT’S THE BUZZ, TELL ME WHAT’S A HAPPENNIN’

* Some wise words from “Voices: Why tax reform is so fiendishly difficult in the U.S.” at ACCOUNTING TODAY (highlights are mine) –
 
The U.S. tax system is such an atrocity of self-defeating complexity that it offers enormous scope for improving both fairness and efficiency -- an overhaul that should please liberals and conservatives alike. But to grasp this possibility, both parties need to start looking for ways to agree, not disagree.”
 
And -
 
The core of successful tax reform -- last achieved in the U.S. more than 30 years ago -- must be an effort to limit, and as much as possible eliminate, deductions and other preferences from personal and corporate taxes, while using the proceeds to lower tax rates.”
 
And -
 
In principle, making the Tax Code more fair and efficient isn’t hard. If tax reform fails to happen, it will be partly because of the power of special interests, which jealously guard the status quo. But it will be mostly because of Washington’s dysfunctional parties, which want to embarrass their opponents more than they want to help their constituents.”
 
* Speaking of tax reform – this week’s post at THE TAX PROFESSIONAL is “Tax Reform – A Better Way”.  Taxpros – please check it out.  And please share it with co-workers and colleagues.
 
* “Is your college scholarship taxable? Probably not.”  So says Kay Bell at DON’T MESS WITH TAXES.
 
* Kay has also updated her 2009 post “Hobby or business? Taxes either way
 
* And for the trifecta Kay lists “4 tax tips for new businesses”.
 
She forgets an important 5th tip – seek out and engage an experienced tax professional!
 
* We return to ACCOUNTING TODAY, which goes further on this topic with a slide show of “6 Tax Tips for Start-ups”.  It adds another “must-do” – Keep Good Records.
 
* Jason Dinesen proves once again what I have been saying for years – the answer to just about any tax question, except “Should I cheat?”, is “It depends!” – in dealing with the question “What is the Income Threshold for Going from Sole Proprietor to S-Corp?” at DINESEN TAX TIMES.
 
Despite what most lawyers will tell you, the decision to incorporate a business activity is not a “no-brainer”, and truly depends on the specific facts and circumstances of the specific situation.
 
* Do you know "The Earliest Age You Can Withdraw Retirement Money Without Penalty“?  Jim Blankenship tells you at GETTING YOUR FINANCIAL DUCKS IN A ROW.
 
Hint – it’s a trick question and the answer is not necessarily what you think it is.
 
* An answer to an Ask The Taxgirl question from Kelly Phillips Erb, FORBES.COM’s TaxGirl, in “Filling Out A Form W-9 When You're Paid In Cash”.
 
* For those going Back to School Sarah Brenner counts down “10 Things You Must Know about Using your IRA for Educational Expenses” at THE SLOTT REPORT.
 
THE LAST WORD
 
Trump's "unique take on accuracy"- he never tells the truth!  He never has told the truth in his lifetime!
 
Watch this video from CNN on “Trump and the Truth”.
 
And, Republicans, please watch this video from Keith Olbermann –
 
 
TTFN
 
 
 
 
 
 

Monday, August 14, 2017

A CAPITOL IDEA – THE 2017 NATP NATIONAL CONFERENCE – PART 1


Last week I attended the 36th annual National Conference of the National Association of Tax Professionals at the Marriott Wardman Park in Washington DC.  This was my 19th NATP conference.  My first was the 1988 conference in Orlando, Florida.  I had registered for the 2015 conference in New Orleans, which would have made this year my 20th, but a health emergency kept me from attending.

I now choose which conferences to attend based on (1) the location and (2) the value of the education provided.  While there are many locations to which I would gladly return, with some one visit was sufficient – and I really no longer want to fly if I can help it.  No fear of flying – it has just become too much of a PITA. 

In a year when there is a lot of tax law changes and developments there is much more value.  There was no new tax law or developments this year – but I was intrigued by the titles and descriptions of some of the new educational sessions. 

I have been going to tax conferences, conventions, forums, and events for 30 years and at this point many of the educational sessions are truly redundant.  Or not relevant. 

I am in a unique situation.  I am winding down my practice and do not accept any new 1040 clients (or any new clients for that matter).  So I have no interest in tax law that does not apply to my current clients, except occasionally as a writer on tax planning and preparation issues.  While in the few years left before my official retirement clients may have new, different, or unique situations with which I have no experience and about which I have minimal if any knowledge.  In such a situation whether or not I would continue to prepare the return depends on the client – and if I did continue I would research the new issue or seek help from a colleague when it arose.

The location this year, unlike past CPE events I have attended in DC, was not in the downtown area – near the government buildings and monuments and the theatres.  It was on the outskirts of the Adams-Morgan section, and a couple of blocks from the Zoo.  I had never been to this part of DC before, and have no complaints about the location.  I am, however, curious to learn from my NATP Board friends if the choice was purposeful, or if downtown hotels like the JW Marriott were much more expensive or not available. 

I travelled to DC via Amtrak, driving to Jersey City from PA and taking the PATH to Newark.  The train going down to DC was “chock-a-block” and I was actually assigned a specific seat for the trip.  When I went to my gate at Washington’s Union Station for the return trip I found a very long queue.  However, I was pleased that, when it came time to actually board, a conductor came along the line looking for seniors, which apparently applied to me at age 63, and I was moved to the much shorter “priority” queue.  The train home was less crowded and seating was not assigned.

As has been my custom lately, I did not stay at the host hotel.  I selected the Windsor Park Hotel, just off Connecticut Avenue about ¾ of a mile from the Marriott across the bridge over the Potomac.  The room rate was a bit less than the Marriott and it provided free breakfast (adequate for my diabetic limitations – cereal but no fruit).  So I figured I saved about $200 in total, plus the side benefit of the exercise provided by the walk back and forth each day.

My room was clean and comfortable, if not luxurious.  The only issue was that I couldn’t get the tv to work (confusing directions), but this really wasn’t bad.  There was nothing much on tv anyway, and I watched new episodes of the BBC series VERA on my laptop via Acorn.com in the evenings, and listened to CNN being streamed live on Tunein.com in the mornings.

There were no restaurants either in or near my hotel – but there were several choices near the Marriott, on Connecticut Avenue and Calvert Street.  I had two dinners and a lunch at the Woodley Café, on Connecticut, and dinner at Sorriso Bistro and a restaurant named for me (not really – I was told Robert’s Restaurant was named for the son of the hotel’s owner) at the Omni Shoreham, both on Calvert Street.  I had one dinner, at Harry’s Pub, and three lunches, one at Stone’s Throw the others from The Pantry, in the Marriott.     

I had hoped to be able to see Washington’s resident comedy troupe CAPITOL STEPS while in DC – I especially wanted to see their take on the current political situation (in the troupe’s unique “pig latin” Donald Trump is, appropriately, Tronald Dump) - but they were not performing at their home venue while I was there.  They will be in Red Bank NJ in the fall, so I will have to wait until then.  I could not find any theatre or entertainment venues in the nearby area, and there was no evening entertainment at the Marriott.  What I miss at high-end chain hotels is a piano bar – like Bobby Short at Café Carlyle in NYC’s Carlyle Hotel.

On Wednesday, here at TWTP, I will discuss the content of the various educational sessions of the NATP National Conference in Washington, and provide some tax information of interest from the sessions.

TTFN
 
 
 
 

Tuesday, August 8, 2017

WHAT’S THE BUZZ, TELL ME WHAT’S A HAPPENNIN’

As you are reading this I am in Washington DC attending the annual National Association of Tax Professionals (NATP) National Conference.  I will talk about what was discussed, and what I learned, here in subsequent posts.
 
* This week’s post at THE TAX PROFESSIONAL is “If I Had My Druthers”. 
 
* Oi vey!  Over at FORBES.COM Robert W Wood reports “Ignoring 83% Of Payroll Tax Mismatches, IRS Leaves $7 Billion Uncollected...Until Now”.
 
I wonder if the lack of appropriate action on this issue is the result of the underfunding of the IRS by the idiots in Congress or just IRS mismanagement.
 
* Kay Bell welcomed August (well, not really) with “Hot, hot, hot August tax moves can produce cool tax savings” at DON’T MESS WITH TAXES.
 
* Yes! Yes! Yes!  That is the answer to “Does My Business Need a Separate Bank Account?”.  Jason Dinesen provides the correct answer, and gives three reasons for the answer, at DINESEN TAX TIMES.
 
* In “Be Very Careful What We Wish For” at FARM CPA TODAY Paul Neiffer discusses a very real potential consequence of putting an end to the federal Estate Tax.
 
As Paul points out -
 
Under current law, when a person passes away, their heirs get a step-up in basis on most inherited assets.”
 
This happens because of the existence of the Estate Tax, which values all assets at market value on date of death (or 6 months after date of death).  Eliminating the Estate Tax could also mean eliminating the step-up in basis.
 
As I have always said, doing away with the step-up in basis would be disastrous – especially, I will selfishly admit, for tax preparers.  Most taxpayers have no clue what they paid for investments they themselves purchased in the past.  It would be almost impossible to properly determine the cost basis of an investment their grandparents purchased decades before they were born!
 
While I am no fan of the Estate Tax – I would only support its elimination if some kind of basis step-up remained.
 
So be careful what you wish for.  Many people wanted to see a real successful and savvy businessman as President – and look what we got!  Arrogant buffoon Trump is not a successful and savvy businessman – he has had more business failures than successes, and he was a reality tv cartoon clown who inherited millions of dollars and invested in real estate in New York.
 
* Have you ever thought about becoming a tax professional?  Check out my SO YOU WANT TO BE A TAX PREPARER.  It is also a good resource for new tax pros.
 
* Scott Greenberg of the TAX FOUNDATION suggests “Five Ideas for Simplifying the Individual Tax Code”.
 
Sound good to me!
 
TTFN
 
 
 
 
 
 

Thursday, August 3, 2017

IRS PHONE SCAM

Please beware of this IRS Impersonation Scam.  I have heard from one client in NJ who was called yesterday (8/2).
 
The following information is from the Treasury Inspector General for Tax Administration (TIGTA) -
 
WHAT?
 
Individuals impersonating Internal Revenue Service (IRS) employees are making unsolicited threatening telephone calls to taxpayers. They use the threat of arrest to obtain money from victims by falsely representing that the victims owe back taxes or other fees. The perpetrators demand that the victims send them money via iTunes cards, other prepaid debit cards, money orders, or wire transfers from their banks.
 
WHO?
 
The perpetrators are individuals who falsely claim to be IRS employees and tell intended victims they owe taxes and must pay using an iTunes card, other pre-paid debit card, money order, or wire transfer. Some of them are in the United States; however, there is a strong international component to this crime as well.
 
WHEN/WHERE?
 
Since October 2013, TIGTA has received reports of these fraudulent calls in every State in the country. The perpetrators are calling with multiple caller IDs from around the world.  
 
WHAT TO DO?
 
First, hang up! Do not engage with these callers. If you owe Federal taxes, or think you might owe taxes, hang up and call the IRS at 800-829-1040. IRS workers can help you with your payment questions.
 
If you do not owe taxes, fill out the “IRS Impersonation scam” form on TIGTA’s website, www.tigta.gov or call TIGTA at 800-366-4484. You can also file a complaint with the Federal Trade Commission at www.FTC.gov. Add “IRS Telephone Scam” to the comments in your complaint.     
 
TTFN