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

Very, very important – you MUST get your extended tax returns in the mail (postmarked) TODAY – even if you cannot afford to send your “uncle(s)” the total amount of any tax due!

 

A “meaty” BUZZ today.

 

* Today at THE TAX PROFESSIONAL - "The AFSP - Boon or Bust?".

 

* For those affected, ACCOUNTING TODAY has a slideshow on “Rebuilding tax records after a disaster”.

 

* Have you ever thought about becoming a professional tax preparer? If the answer is yes you should check out my book SO YOU WANT TO BE A TAX PREPARER.  Click here to read a review.  And click here to order a copy in e-book format you can read on Kindle.

 

* I have talked often about how ending the federal Estate Tax might result in the end of the step-up in basis of inherited assets, which would be a total disaster for tax preparation.    Daniel Berger suggests another result from eliminating the “death tax” in “The Unintended Consequences of Killing the Estate Tax” at TAX VOX, the blog of the Tax Policy Center -

 

“But there are other considerations to repealing the estate tax. One is that many wealthy people use charitable giving while alive or through bequests to reduce or eliminate their estate tax liability. In the mid-1940s the bequests of Henry Ford’s sons made the Ford Foundation the largest philanthropy in the world, and in 2014 businessman Ralph Wilson Jr. left $1 billion to his charitable foundation. In 2015, charitable bequests amounted to around $20 billion dollars.

 

While it is not possible to know how the estate tax affected any individual bequest, nor should the generosity of these gifts be minimized, there is evidence to suggest that the existence of an estate tax does effect decisions to leave charitable bequests and increases lifetime giving.

 

The economics are relatively simple. Each dollar bequest to charity lowers the size of the taxable estates by a dollar, and reduces the amount of estate tax liability by as much as 40 cents. Eliminating the estate tax would make leaving money to charity more “expensive”, compared to current law. The same logic follows with lifetime giving. If a high-income household claims an itemized deduction for a charitable contribution on its income tax, the gift will lower its current tax bill and at the same time the contribution will reduce the amount of money that might eventually be subject to the estate tax.”

 

This is certainly something to think about when evaluating the fate of the Estate Tax.  I have not been a fan of the Estate Tax, but to be honest, at current levels it only affects at most 2 or 3 of my clients.

 

* Jeffrey Bartash tells us “Here’s how much Social Security checks could increase in 2018” at MARKET WATCH –

 

“By triggering higher inflation in August and September, the storms may have boosted the expected increase in benefits in 2018 by the most in six years. The annual COLA, or cost-of-living adjustment, could be as much as 2% versus the 1.6% to 1.8% increase that seemed likely a few months ago.”

 

* FORBES.COM’s TaxGirl Kelly Phillips Erb deals with a little-understood tax form in her “Ask the TaxGirl” post “Should I Cancel A Form W-9?”

 

* Kay Bell warns that “IRS e-Services is bait in new tax ID theft phishing scheme” – a scheme aimed at tax professionals.

 

Kay tells us –

 

“Everyone — tax professionals and all us individual taxpayers — should be cautious when we receive any tax or financial-related unsolicited emails.”

 

I personally never “open” an email from an address I do not know.  I do sometimes miss legitimate emails from clients and their representatives whose email addresses are not familiar to me – but it is more better to miss an email than to FU your computer or open yourself up to identity theft. 

 

I also know that email addresses can often be hacked, as mine has been on occasion, so I use either the subject line as a guide to determine if I will open an email from a client, or evaluate the “body” of the actual email before clicking on any links.

 

* Kay celebrates Friday the 13^th by staying on the same topic with “Friday the 13th alert: Beware these 13 tax ID theft scams”.

 

She ends the post with two important reminders –

 

“Remember, tax scams don't die. Like Halloween (and TV and movie) zombies, they just keep coming back in new forms in search of more identity theft victims.

 

Remember, too, that tax crooks goblins and ID theft ghouls are out there year-round, not just in Halloween's host month of October.”

 

* Fellow tax pros – I have added a Classified Ad Page to the website THE TAX PROFESSIONAL.

 

* Oops, they did it again! Michael E. Batts reports “Court (Again) Rules Clergy Housing Allowance Exclusion Unconstitutional – Appeal Likely” at the Batts, Morrison, Wales and Lee NONPROFIT SPECIAL ALERT.

 

Peter J Reilly also discusses this development, in more detail, in “Clergy Housing Tax Break Ruled Unconstitutional – Again” at FORBES.COM.

 

How will this affect my one remaining clergy client?  In “5 Takeaways from the Clergy Housing Allowance Ruling” from MANAGING YOUR CHURCH Richard R. Hammar says (highlight is mine) -  

 

“Note that a ruling by the Seventh Circuit Court of Appeals would apply to ministers in that circuit, which includes the states of Illinois, Indiana, and Wisconsin. It would become a national precedent binding on ministers in all states if affirmed by the United States Supreme Court--an unlikely outcome because the Supreme Court accepts less than 1 percent of all appeals. Note, however, that the IRS would have the discretion to follow or not follow an eventual ruling by the appeals court nationally to promote consistency in tax administration.”

 

So, this decision does not directly affect my client in Maryland yet.  But the “fat lady has not sung” yet – and there may be further developments on this issue in the future.

 

* Robert Farrington provides a primer on “What Are Qualified Expenses For A 529 Plan (And What Doesn’t Count)?” at THE COLLEGE INVESTOR.

 

His bottom line -

 

“When it comes to time to actually use the money you’ve saved, be sure that you know the laws and are utilizing your 529 savings in the most efficient way possible. If you have specific questions, it never hurts to speak to an accountant that’s familiar with 529 plans.

 

Make your college savings work for you!”

 

* FREE! FREE! FREE! New tax e-newsletter - TAX TOPICS.  Check it out!

 

TTFN