Monday, December 31, 2018

ANNUAL NEW YEAR'S EVE DAY TRADITION

It's New Year's Eve -

Time to make the W-2s.

Tonight I am going out to celebrate for the first time in about 40 years!
























Thursday, December 27, 2018

THE YEAR IN TAXES 2018


2018 was truly another terrible year for America and the world – with dangerous, deplorable, despicable, incompetent, ignorant, and mentally unstable malignant narcissist Trump still in the White House.  But this post is about taxes. 

The big tax story of 2017 was the year-end passage of the “Tax Cuts and Jobs Act” (officially “An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018”), more appropriately known as the GOP Tax Act.  The GOP Tax Act did not affect 2017 returns filed in 2018, with minor exceptions (specifically returning the AGI exclusion threshold for medical expense to 7½%), but it certainly dominated tax preparer CPE in 2018.  I attended 4 separate events throughout the year, from May to November, that were either totally or partially devoted to the new tax laws – two from the National Association of Tax Professionals, one from the NJ chapter of NATP, and one from a new, for me, independent commercial CPE provider.  For the most part the presentations were redundant, as few new developments in the official interpretation and application of the law were released during the year.    

Three things continued to be reinforced by the GOP Tax Act presentations I attended -

(1) There is still a lot we don’t know yet about how many of the provisions of the Act will be interpreted and implemented.

(2) Because the Act was basically written overnight, the wording of the law is often defective, confusing and unclear.  “Technical corrections” legislation is clearly needed.

(3) It is very obvious that those who actually write tax law and the members of Congress who vote on it have absolutely no concept of the practical implementation of the tax legislation they write and pass, or of the actual preparation of tax returns.

I published a book on THE GOP TAX ACT AND THE NEW 1040.

As for the 2018 tax filing season, like the 2017 filing season, it ran smoothly.  This season I got an answer to the question posed by the Beatles decades ago (at least for me) – my 1040 clients still needed me, and some of them still fed me, now that I was 64!

The IRS announced it would begin accepting and processing 2017 tax returns on January 29th (later than last year’s January 23rd start date), but, as always, the season officially began for me on February 1st.  I ended the season on April 16th (the day before this year’s filing deadline of April 17 – I never work on the actual last day), with only 26 GDEs (by now I expect you know what this stands for) – similar to the previous 2 years.  I prepared about 20 less sets of returns during the season this year, for a variety of reasons.  

The tax filing deadline was extended from April 17 to April 18 at the last minute when the IRS encountered “system issues” early on the morning of the 17th.

No auto, computer, equipment, or weather issues during the 2018 filing season.  And only a couple of IRS or state refund or processing delays or FUs in 2018, as usual mostly with NJ returns.

There was a small difference in my practice this filing season.  I was truly “locked behind closed doors” for the entire season.  I was up at my desk each morning between 4 and 5 AM during this time, and when February 1st came around, I forgot to plug my phone in at 9 AM each morning.  After about a week I got spoiled – I enjoyed working through the day without the interruption of the phone (even though I have always screened calls) – and never plugged the phone in (unless I was expecting a specific call).  I did, however, constantly check my email accounts, and responded promptly when appropriate.  I found that, from my point of view, not having the phone on did not adversely affect the preparation of returns.

After preparing each tax return this season, I calculated the tax on 2017 income and deductions using the new tax law and rates of the GOP Tax Act, to see how clients would have fared if the Act had been effective for 2017, and shared the result with the client.   I found that most would have paid less – ranging from $2.00 to several thousand dollars – but a handful would have paid more.  One thing I learned from this exercise is that many returns will be much simpler next season and beyond because many clients would no longer be able to itemize under the new law.  I am NOT complaining. 

Taxpayers could no longer remain silent on full-year health insurance coverage, as they could last year, and I actually had to calculate a pro-rated Obamacare individual responsibility penalty for 2 clients (my first time using this procedure).  A handful of clients had to reconcile advance premium credits, and I was able to save a married couple $1,500 by having them make a $1,000 deductible IRA contribution.

Once again, despite the fact that Congress required that IRS Form 1098-T issued by colleges and universities actually contain the correct information necessary to properly claim education tax credits and deductions beginning with tax year 2016, the IRS erroneously delayed this requirement.  In most cases 2017 Form 1098-Ts continued to be as useful as tits on a bull.  Thankfully it appears that this will not be the case with 2018 1098-Ts issued in 2019.

On the state side, I used NJWebFile to electronically submit NJ returns whenever possible, and permitted by the client, and used the state’s somewhat enhanced fill-in form when needed.  I took full advantage of the excellent NY state truly enhanced fill-in Forms IT-201 and IT-203.   
There were really no new tax developments during 2018 that did not involve the GOP Tax Act.   

The IRS released a draft version of the new 2018 “postcard” Form 1040 and 6 new schedules at the end of June.  The final versions are now available at the IRS website.  What once could be fit on two well-crafted pages must now be entered on 7 separate forms.  This new 1040 is probably the stupidest thing I have ever seen in my almost 48 years in the tax preparation business.  

There is now a Schedule 1 for additional income and Adjustments to Income, a Schedule 2 for one group of other taxes, a Schedule 3 for nonrefundable credits, a Schedule 4 for another group of other taxes, a Schedule 5 for refundable credits, the totals of which would be carried over to the “post-card”, and a Schedule 6 for a foreign address and the information for a third-party designee,

This new “1 form into 7” was certainly not the idea of the IRS.  It makes no sense for administration and processing of return filings.  The Service was told to create a post card and it did.  Idiot Trump promised his core cult a post-card sized 1040, so he must deliver a post-card sized 1040, regardless of whether it has any real value, legitimacy or appropriateness.

On the legislative front, the Bipartisan Budget Act of 2018, signed into law in February, expanded the foreign earned income exclusion and extended some residential energy credits through 2021.  The House passed 3 bills that made up what they called “Tax Reform 2.0” at the end of September, including a bill that would make the provisions of the GOP Tax Act set to expire in 2025 permanent, but nothing has been done in the Senate.  It is doubtful that the Senate will even consider the “2.0” bills – so they are pretty much dead.

In the 2018 mid-term elections the Democrats took control of the House (a truly good thing for the country considering the current state of the Republican Party), but Republicans maintained a majority in the Senate.  So, for the next 2 years there will very likely be no legislation of any substance enacted on taxes – or anything.  What the Democrats pass in the House will not make it through the Senate, and vice versa.  Again, a good thing – none of Trump’s nonsense will become law.       

So, fellow tax professionals, did I miss anything important?

Let me end with the same wish I had at the end of 2017.  Let us pray that the new year will bring the removal of mentally unstable malignant narcissist Donald T Rump from the White House.

TTFN










Tuesday, December 25, 2018

MERRY CHRISTMAS



A VERY MERRY CHRISTMAS!

AND A HAPPY NEW YEAR.

LET'S HOPE IT'S A GOOD ONE-

WITHOUT ANY TRUMP!

Robert D Flach 
and Turbo










Monday, December 24, 2018

ANNUAL CHRISTMAS EVE TRADITION

Today is Christmas Eve.  

Every year on Christmas Eve I spend the day 
typing W-2s - mine and for my clients.  

Tonight - a leisurely and bountiful meal 
at my favorite local restaurant.

HO! HO! HO!















Tuesday, December 18, 2018

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


A “meaty” BUZZ as we approach the end of 2018.

* I hope you are up-to-date on all the breaking tax news I reported here last week - here, here and here.

* Did you see it yet?  The latest “issue” of THE LAKE REGION SOMETHING that is.  Last "issue" of 2018.   

* I missed this last month.  Once again, the TAX FOUNDATION dispels the myth that the wealthy do not pay their fair share of income tax in its “Summary of the Latest Federal Income Tax Data, 2018 Update”.

Some of the highlights (highlight is mine) -

ü  In 2016, 140.9 million taxpayers reported earning $10.2 trillion in adjusted gross income and paid $1.4 trillion in individual income taxes.

ü  The share of reported income earned by the top 1 percent of taxpayers fell slightly to 19.7 percent in 2016. Their share of federal individual income taxes fell slightly, to 37.3 percent.

ü  In 2016, the top 50 percent of all taxpayers paid 97 percent of all individual income taxes, while the bottom 50 percent paid the remaining 3 percent.

ü  The top 1 percent paid a greater share of individual income taxes (37.3 percent) than the bottom 90 percent combined (30.5 percent).

ü  The top 1 percent of taxpayers paid a 26.9 percent individual income tax rate, which is more than seven times higher than taxpayers in the bottom 50 percent (3.7 percent).

* A client suggested that I share “The Secret Way Seniors CanKeep Deducting Gifts to Charity” from the WALL STREET JOURNAL with BUZZ readers.

I posted about this “secret” in “Wunnerful, Wunnerful”.

* Kelly Phillips Erb, FORBES.COM’s TaxGirl, lists “14 Tips For Making Your Charitable Gift Tax-Deductible In 2018”.

* And KPE’s annual “12 Days Of Charitable Giving” has gotten underway with “The Women's Tax Resolution Center, Inc.”, “America's Vet Dogs”, and “First Book”.

* Jason Dinesen confesses “Sometimes I Wonder What I’m Missing” at DINESEN TAX TIMES.

Like Jason, over the years I have seen lots of incorrect returns prepared, purposefully or through incompetence and ignorance, by other tax preparers, often CPAs, that went unaudited and uncaught.

Thankfully most of the preparers I come in contact with, via blogs and my association with NATP and NJ-NATP, are, like Jason, are honest and ethical.

Unfortunately, we honest and ethical preparers are forced to waste (and pay for) at least 2 hours per year sitting through redundant ethics preaching.  As I have said for years now – if after 45+ years in the business I am not ethical 2 hours of preaching ain’t going to change anything.  The fraudulent and incompetent preparers, who need to be schooled on ethics, do not find “revelation” from having to sit through this ethics preaching.

* At TAXBUZZ (I like the name – wonder where they got it) Lee Reams provides a handy “infographic” of the “Tax deadlines for filing 1099-Misc, 1099-DIV, 1099-INT and 1099-R”.

* Always good advice from Russ Fox at TAXABLE TALK – “Hug Your Tax Professional” (alternative title is “The Upcoming Horrible, Miserable, Rotten, and Delayed Tax Season”).

For me the upcoming tax filing season will NOT be horrible, miserable, rotten, or delayed.  Many taxpayers will no longer be able to itemize and I expect none of my clients will be victims of the dreaded AMT – so returns should be easier and smoother.  With perhaps 3 simple exceptions (all taxpayers under the income threshold for complication) I will not be dealing with the ridiculous new Section 199a deduction.  And for me the tax season will begin, as it has begun for the past 40+ years, on February 1st. 

* Enough is enough.  This nonsense is getting out of hand.  Annette Nellen explains “TCJA Expanded Preparer Due Diligence Beyond What Congress and IRS Highlight” at 21st CENTURY TAXATION.

Tax preparers should not be forced to become Social Workers.  As I have said before, soon we will be required to do random night time bed checks of client dependents during the year.

For years I have been saying that the tax preparation industry needs a vocal lobby in Washington to fight against nonsense like this.

* A timely post from Robert W Wood at FORBES.COM – “Universal Tax Lessons (Even for President Trump)In Michael Cohen Guilty Plea”.

Of course, we all know that moron Donald T Rump never learns any lessons.  He thinks he knows everything already.

---------------------------------------------------------

Obviously, there will be no BUZZ installments on the next two Tuesdays.  I will post any tax-related “breaking tax news” – but other than that no more BUZZ till 2019.

TTFN









Saturday, December 15, 2018

THIS JUST IN - THE BREAKING NEWS CONTINUES!


U.S. District Judge Reed O’Connor ruled last night that the Affordable Care Act is unconstitutional - because of a recent change in federal tax law. 

According to O’Connor the reduction of the Individual Mandate tax penalty to 0 in the GOP Tax Act effectively guts the ACA because the U.S. Supreme Court upheld Obamacare in 2015 based on the conclusion that the mandate would be an unconstitutional exercise of federal power without the tax penalty.

The decision states -

"The Individual Mandate can no longer be fairly read as an exercise of Congress's Tax Power and is still impermissible under the Interstate Commerce Clause—meaning the Individual Mandate is unconstitutional."

As the individual mandate was an "essential" element of the ACA, the whole of Obamacare was therefore unconstitutional,

What does this mean for the 2018 tax return?  As the White House officially explained (highlight is mine), after a tweet by Trump expressing his glee at the decision, “We expect this ruling will be appealed to the Supreme Court.  Pending the appeal process, the law remains in place.”  

The Supreme Court had upheld the ACA as constitutional in 2012 and 2015, but, as the Judge explained, this decision is based on the finding in the 2015 decision.

The GOP Tax Act reduced the Individual Mandate penalty to 0 effective with tax year 2019.  The existing penalty for not having “adequate” health coverage for the full year, and not exempt from the penalty under any of the identified exceptions, was still in place for 2018.

So, until the Supreme Court has provided the final word on this decision, as the White House statement says “the law remains in place”. 

Whether it is appropriate to “remain silent” on health insurance coverage on the 2018 Form 1040 - not checking the box on the top of the “postcard” 1040, not calculating an Individual Mandate penalty on Line 61 of Schedule 4, and not including Form 8965 with the return – will depend on the IRS and Treasury Department reaction to this decision.

The two Obamacare surtaxes - the additional Medicare tax and the 3.8% Net Investment Income Tax (NIIT) - are also affected by this decision.  Another potential question for the 2018 return - can these taxes be calculated on the appropriate IRS forms but not entered on Line 62 of Schedule 4 and Line 14 of the "postcard" 2018 Form 1040?  Again, we must wait for IRS and/or Treasury Department guidance.  

The ruling came on the eve of today’s deadline for Americans to sign up for coverage in 2019 via the Obamacare marketplace (www.healthcare.gov).  Despite the ruling, Americans can still sign up for health coverage through the marketplace up until 11:59 PM today (Saturday, December 15th).  

Personally, while I strongly support the Premium Tax Credit component of Obamacare, and the requirement for health insurance to cover pre-existing conditions, I oppose the Individual Mandate and corresponding penalty and some other items in the Act.  The ACA, like the recent GOP Tax Act, was written hastily to get an early legislative victory for the President (then Obama).  Also like the GOP Tax Act, no member of Congress who voted on the ACA, either for or against, actually read it – they just did what they were told to do by their Party’s leaders.

I will report on more developments related to the Form 1040 as they happen.

TTFN









Friday, December 14, 2018

THIS JUST IN - MORE BREAKING NEWS!


The IRS has announced the new standard mileage rates for 2019.

Beginning on Jan. 1, 2019, the standard mileage rates for the use of a car will be:

* 58 cents per mile for business use, up 3.5 cents from 2018,
* 20 cents per mile for medical or moving purposes, up 2 cents from 2018, and
* 14 cents per mile in service of charitable organizations.

It is important to remember that thanks to the GOP Tax Act, taxpayers can no longer claim a miscellaneous itemized deduction for unreimbursed employee business expenses. The standard mileage rate for business is only available to self-employed taxpayers filing a Schedule C, C-EZ or F, and for reimbursement of employees by employers under an accountable plan. 

Taxpayers also can no longer claim a deduction for moving expenses, except for members of the Armed Forces on active duty moving under orders to a permanent change of station.  

The standard mileage rate for business use is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.  The charitable rate is set by Congress and hasn’t changed in a dog’s age. 

Taxpayers still have the option of calculating the actual costs of using their vehicle and apply the appropriate percentage for business, medical or moving use instead of using the standard mileage rates.  The rules for which method is available for business use (for Schedule C, Schedule C-EZ or Schedule F) has not changed.

TTFN












Thursday, December 13, 2018

THIS JUST IN!

The official version of the ridiculous new "postcard" 2018 Form 1040 and the 6 new schedules, and the instructions for the Form 1040 and accompanying schedules, are now available to download at the Internal Revenue Service website.

Click here  
















DEALING WITH TAX MYTHS ABOUT THE GOP TAX ACT


My legitimate ongoing concern about the “urban tax myth” that CPAs are automatically 1040 tax exports by virtue of their initials (they are most certainly NOT) doesn’t mean that online CPA-related sources do not provide excellent and timely information and commentary on 1040 issues.

Case in point “Tax Reform Myths and Facts for 2019: What the TCJA Really Means for Taxpayers” by Dave Duval, EA (you will note that he is an EA and not a CPA) at CPA PRACTICE ADVISOR.

Dave makes some excellent points in his piece, beginning with – “As tax practitioners, we wear many hats: tax aficionado, document sorter, government form translator, timekeeper, empathetic ear, and counselor.”

The article deals with the “plethora of information (and more pointedly, misinformation) about the Tax Cuts and Jobs Act of 2017” that is out there.  

Here are some of the good “take-aways” from Dave’s discussion (highlights are mine) –

* State Income Taxes: “Depending on the state, there may be full conformity {with the GOP Tax Act} or none at all. For example, in California taxpayers will still be able to deduct unreimbursed employee business expenses that are over 2% of their federal adjusted gross income. It will be crucial communicating to our clients that states may or may not have conformed to the federal changes, and it is still important to continue to retain documentation on certain deductions that may have been eliminated at the federal level but still apply at the state level. Retaining the documentation may result in lower state taxes, thereby easing the sting of losing the deductions on the federal return.”

NJ residents can still deduct out of pocket medical expenses, including some expenses that may be “pre-tax” for federal tax purposes but not for NJ state taxes, in excess of 2% of NJ Gross Income whether or not they itemize on the federal return.  And PA residents are able to deduct most employee business expenses without any income limitation.

* Alimony: The changes to the rules for reporting and deducting alimony “is only true for divorce or separation instruments executed on or after January 1, 2019. Alimony that is paid pursuant to a divorce or separation agreement executed before January 1, 2019, will still adhere to the alimony rules in place before TCJA. Divorce or separation agreements that were in place before January 1, 2019, and are modified after December 31, 2018, will still follow the old alimony rules unless the modified agreement specifically states it now follows the new rules.”

* Home Equity Interest: “As tax practitioners, we may need to spend more time with our homeowner clients discussing the difference between acquisition and equity loans, and performing interest tracking on how the proceeds were used. Additionally, we may need to request additional paperwork from our clients, such as the loan documents, and hope they recall where they spent the money.”

It is the responsibility of the taxpayer, and not the tax preparer, to separately track acquisition debt and home equity debt.  The importance of doing this cannot be stressed strongly enough.  Taxpayers should begin to work on this task NOW.  Check out my “Mortgage Interest Guide”. 

* Section 199a Deduction: “Many small business taxpayers are anticipating a big tax break this year due to the new 20% qualified business income deduction. Those small businesses that are organized as C corporations may be wanting to switch to a sole proprietorship or S corporation in order to take advantage of the deduction as fast as possible. Hopefully, these taxpayers will be contacting us first and not an online legal site where they can make the switch themselves {very, very important – consult your tax professional before you do anything regarding a change of business entity – rdf}. Many small business owners are not aware of the limitations and complexities to this deduction. Furthermore, there may have been very important reasons why a business formed as a C corporation that goes beyond taxes. By switching entities, these reasons may fall by the wayside.”

The Section 199a deduction is ridiculous, and ridiculously complicated, and unnecessary.  More proof that the members of Congress are idiots.

* The New “Postcard” 1040: “Some taxpayers will be lulled into a false sense that this means taxes are now simpler, and therefore the fee to prepare the return will be lower. As we know, expensive things can come in small packages. With all the changes courtesy of TCJA and state nonconformity, this tax season may be one of the most complicated we have seen. As such, we will need to educate our clients on this and caution them that the preparation fee may be larger this year.”

The “postcard” 1040 is perhaps the stupidest idea I have seen in over 45 years of preparing tax returns. 

Dave’s bottom line truly tells it like it is –

One thing is for certain about the upcoming tax season − just about every tax return is going to take extra time and care.”

Thanks to Dave for an excellent discussion that should be read by all taxpayers and tax preparers (not just CPAs).

TTFN









Tuesday, December 11, 2018

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


* Did you see it yet?  The latest “issue” of THE LAKE REGION SOMETHING that is.  See what I have to say about so-called “reality tv”.

* Michael Cohn relays “10 year-end tax-planning tips after tax reform” from international accounting firm of Grant Thornton at ACCOUNTING TODAY.  Some good advice.

You can order my 2018 Year-End Tax Planning Guide for only $2.00 from My Dollar Store.  Also available there is “What’s New for 2018” and “What’s New for 2019”.

* An early reminder from Jason Dinesen at DINESEN TAX TIMES – “Don’t Forget to Check Online for Investment 1099s”.

I will add that, unfortunately, most brokerage houses will be issuing at least one “corrected” set of 1099s later in the season – usually sometime during the first 2 weeks of March.

I have arranged with the brokers of several of my clients to have them email me directly client Consolidated Year-End Tax Statements containing all the appropriate 1099s – including the inevitable corrected ones.

* A reminder that you are invited to take my “Trump Challenge”.


As a result, participants in 401(k) plans, employees of public schools and tax-exempt organizations with 403(b) tax-sheltered annuities, as well as state and local government employees with 457(b) deferred-compensation plans may now be eligible to take advantage of these streamlined loan procedures and liberalized hardship distribution rules. Though IRA participants are barred from taking out loans, they may be eligible to receive distributions under liberalized procedures.”

* Also from the IRS – Notice 2018-94 extends the due date for furnishing Forms 1095-B and 1095-C to individuals. Typically, Forms 1095-B and 1095-C, which report employer-provided health insurance coverage, must be provided to individuals each year on Jan. 31st.  The due date is extended to March 4, 2019.   

These forms are not needed to complete your tax return; they are informational only.  So, you should not hold up preparing your return, or giving your tax “stuff” to your preparer, waiting for them to come.  The only 1095 series form that is necessary for preparing your 1040 is Form 1095-A, which is for individuals who have received an advance premium tax credit applied to the monthly insurance premiums during 2018.  These forms are required to be issued by January 31st.

* Peter J Reilly tells us “Law Professor Argues New Pass-Through Rules (199A) Are Horrible” at FORBES.COM.

The law professor is Professor Daniel Shaviro of NYU writing “Evaluating the New US Pass-through Rules” in The British Tax Journal.  Peter quotes Dan as saying (highlights are mine) -

The pass-through rules that the US Congress enacted in 2017—permitting the owners of unincorporated businesses in favoured industries to escape tax on 20 per cent of their income—achieved a rare and unenviable trifecta, by making the tax system less efficient, less fair, and more complicated. It lacked any coherent (or even clearly articulated) underlying principle, was shoddily executed, and ought to be promptly repealed. Given the broader surrounding circumstances, the mere fact of its enactment sends out a disturbing message about disregard among high-ranking US policymakers for basic principles of competence, transparency, and fair governance.”

I agree with Dan 100%!

* One more deduction that is gone thanks to the GOP Tax Act.  Jim Blankenship explains “You can’t deduct IRA losses any more” at GETTING YOUR FINANCIAL DUCKS IN A ROW.

THE LAST WORD

How different from the memorials for President Bush and John McCain the funeral for Trump will be.  

It will truly be Trump's death, and certainly not his life, that will be celebrated. 

Who would eulogize Trump at his sparsely attended service?  Scott Baio or Kellyanne Conway?   

TTFN











Monday, December 10, 2018

SOME GOOD ADVICE


Some good advice from the National Association of Tax Professionals (I have been a member for over 30 years) -

NATP advises working with a trusted tax pro in light of the Tax Cuts and Jobs Act.

The recent changes under the Tax Cuts and Jobs Act can make filing a tax return simpler. The increased standard deduction coupled with the elimination of many common deductions will allow a greater number of taxpayers to file their own return; however, NATP advises taxpayers still work with a tax professional as they file their 2018 returns.

Tax pros are indispensable when it comes to helping clients save tax and use the tax laws to their advantage,” Cindy Hockenberry, director of Tax Research and Government Relations, said. “Mistakes made because one doesn’t understand the law is costly in the way of time and money.”

Taxpayers with children, especially college-age children will see changes regarding the dependency deduction and will need to understand the rules for properly calculating the credits they are entitled to claim, and the rules for deducting college tuition costs. There have also been changes to the rules for contributing to a college savings plan.

Certain business owners who own an interest in a pass-through entity such as a partnership, S corporation or sole proprietorship are now entitled to a deduction of up to 20 percent of the qualified business income (QBI). Hockenberry said although there was a characterization that the new tax law would make filing simpler, but “there is nothing simple about [the QBI] deduction and how it’s calculated.”

Overall, some tax professionals may see a slight drop in business this tax seasons due to some of the simplification,” Hockenberry said. “Some are expecting an increase in business because taxpayers in general don’t know how this new law will affect them and will need a tax pro to explain it to them. You can’t get that from a software program, much less, the instructions to the forms.”

FYI – while I agree with NATP that taxpayers should “work with a tax professional as they file their 2018 returns”, and that now is a good time to look for a tax pro if you do not already have one, DO NOT CONTACT ME!  I do not and will not, for any reason or under any circumstances, accept any new clients.  I am actually trying to “thin the herd” as I approach retirement in a few years, after having prepared 1040s for 50 consecutive filing seasons.

If you need help finding a tax pro go to my FIND A TAX PROFESSIONAL website.

TTFN







Thursday, December 6, 2018

THE 2018 PNC CHRISTMAS PRICE INDEX



I’m a bit late in reporting this.  But it’s here - the 35TH annual PNC Christmas Price Index!  

The PNC Christmas Price index reports the cost to purchase the gifts included in the classic holiday song “The 12 Days of Christmas”.

PNC tells us it has “ . . . calculated the 2018 price tag for The PNC Christmas Price Index at $39,094.93, approximately $450 or 1.2 percent more than last year's cost, but less than the government's Consumer Price Index, which increased 2.5 percent through October in year-over-year measurement before seasonal adjustment..”

The major differences in the included items are –

* a 9.1% drop in the cost of gold rings, due to less demand and fluctuations in gold prices throughout 2018,

* an 8.3% jump in the cost of laying geese, after not seeing an increase since 2014, and

* a 3–3½% pay hike for leaping lords and the musicians (pipers and drummers), as lagging wages start to catch up to a tight labor market.

Once again, the labor unions for musicians, dancing ladies and leaping lords proves to be better than the milking maid union.  The milkers were paid the minimum wage of $7.25 per hour for both 2017 and 2018.  While the dancing ladies fee remained the same for both 2017 and 2018, they continue to be the highest paid individuals on the list.  

The chief economist of a bank in Philadelphia, which eventually became part of PNC, began estimating the cost of the 12 Christmas gifts in 1984 as a holiday client letter.  This year’s price is about 95% higher than the first index from 34 years ago.

For those who prefer the convenience of online shopping the Index also calculates the cost of the gifts purchased on the internet.  As online costs are higher due to travel and shipping, the total cost is $41,165.95, $2,071.02 more than “in store” purchases.

The actual true cost of every gift in the song (with each previous day’s purchases repeated over the 12 days) is $170,609.46 in store and $193,360.92 online.

There appears to be some discrepancies in the 2017 numbers reported in this year’s press release and table from PNC and the numbers from the 2017 chart that I had reported in last year’s post.  There were changes to the leaping Lords amount on the “traditional” listing and leaping lords and dancing ladies in the “internet” listing.  The 2018 chart indicates that 2017 prices for these items were adjusted, but I could find no explanation for the changes.

TTFN