Tuesday, October 16, 2018

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


Sorry I have not posted lately – have been finishing GDEs and corporate returns to meet the October 15th filing deadline.  Thankfully I am done!  I still have a couple of GDEs left – but I did not received the information yet and they will obviously be filed late and at my leisure.

* Have you checked out the new “issue” of THE LAKE REGION SOMETHING?

* Jason Dinesen tells us “I Don’t Like Calling Myself a ‘Tax Expert’ Anymore” at DINESEN TAX TIMES.

I understand where Jason is coming from.  With the tax law so complex and ever-changing it is impossible for anyone to be a true “expert” in the totality of the US Tax Code. 

It is like the medical profession.  There are tax pros who are truly “expert” in specific aspects of the Code, like a neurologist or a urologist, and there are, the biggest category, “general practitioners” who need to refer patients, or clients, to specialists in certain situations.

We tax pros are literally, as Jason says, learning new things every day – even “old war horses” like me.  I do believe you can teach an old dog new tricks – if the dog wants to learn.  For me personally there are tricks I do not necessarily want, or need, to learn.  I no longer accept any new clients, and I am “winding” down my practice toward retirement – so if a “new trick”, or an old trick that I do not know enough about, arises I usually prefer to send the affected client to a “specialist”. 

* I have two new articles up at MEDIAPOST –



* Kay Bell reports that “Social Security benefits, taxable wage base go up in 2019” at DON’T MESS WITH TAXES –

The Social Security Administration announced that she {Kay’s mother} and her fellow Social Security recipients will get a get a 2.8 percent cost-of-living adjustment (COLA) in 2019.”

And –

In conjunction with the COLA that will take effect on Jan. 1, 2019, the amount of earnings that are subject to Federal Insurance Contributions Act (FICA) Social Security tax goes up to $132,900.”
   
* The Social Security Administration has created a new Fact Sheet on the 2019 COLA changes.

* FYI – what is not in either Kay’s post or the Fact sheet is the SSA announcement that the Nanny Tax threshold remains at $2,100 for 2019.  

* Returning to Kay Bell, who lists “7 ways to make the most of your 401(k)”.

Pay special attention to #’s 5 and 6.

* For once PA is higher than NJ on a list of state taxes!  The TAX FOUNDATION’s latest “map” shows that “Pennsylvania’s gas tax rate is highest at 58.7 cents per gallon”.  NJ is #11 at 37.10 cents per gallon.

This map appears to be from July - and I think NJ's rate has been slightly raised since then, but there is still a big difference.  That is why I try to fill up whenever I am in NJ (at least once every other week).


Hurricane Michael victims in parts of Florida and elsewhere have until Feb. 28, 2019, to file certain individual and business tax returns and make certain tax payments, the Internal Revenue Service announced today.”

THE LAST WORD

The arguments for supporting and defending Donald T Rump don’t hold water.  Read this.

TTFN











Tuesday, October 9, 2018

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


* Have you checked out the latest THE LAKE REGION SOMETHING?


His first observation (highlight is mine) -

If the Trump family did commit tax fraud, the statute of limitations for all the taxes thus evaded is still open. The criminal statute of limitations has long since passed and, of course, the elder Trump is dead (can't send a corpse to jail). But the taxes can still be collected. And, not only that, the tax is subject to the civil fraud penalty (which for many of the years was 75% of the tax but for some years 50% of the tax). And both the tax and the civil fraud penalty are subject to compounded interest from the due date that the tax should have been paid. That will add up to a lot of money. (You financial geeks will remember compounding and the time value of money.) Indeed, I suspect that it could easily wipe out Trump's real net worth (not his claimed net worth which is false).”

There is obviously no “if” involved.  Let us truly hope this happens.

* According to MONEY WISE is #2 - on the list of “America's Worst States to Retire In” that is.  It is the 2nd worst state in the US to retire in.

Looks like I did good.  Pennsylvania is not on the list.

Being #2 does that mean NJ will try harder to be #1?  I do believe NJ just raised its gas tax (although still cheaper than PA).
   
* Jason Dinesen identifies “The 4 Factors of Small Business Success” and looks at “How Does an Accountant Play In?” at DINESEN TAX TIMES.  

I agree with JD’s bottom line.

As I have shouted from the rooftops many times, and will do so again here:  the ball is always really in the CLIENT’S court on all of this stuff. Accountants and tax preparers can help but we can’t work miracles, we can’t make a client do something, and there are many factors outside of the accountant’s control.”

* Good news!  Meals continue to be deductible under new IRS guidance” explains Sally P. Schreiber at the JOURNAL OF ACCOUNTANCY -

The IRS on Wednesday issued guidance clarifying that taxpayers may generally continue to deduct 50% of the food and beverage expenses associated with operating their trade or business, despite changes to the meal and entertainment expense deduction under Sec. 274 made by the tax law known as the Tax Cuts and Jobs Act.”

* In response to this good news Kay Bell lists “5 ways to maximize tax-deductible business meal expenses” at DON’T MESS WITH TAXES.

* And some more good news from Kelly Phillips Erb, the FORBES.COM TaxGirl – “Jersey Shore's Mike 'The Situation' Sorrentino Headed To Prison On Tax Charges”.

It is nice to see a self-absorbed reality tv idiot being appropriately held accountable for his or her stupid behavior.

* David McKnight makes some good points in his opinion piece “Avoid making these 3 huge tax mistakes ahead of your retirement” at MARKETWATCH.

Specifically mistake #1 – “Assuming you’ll be in a lower tax bracket in retirement”.

* The IRS has released a full list of the counties in North Carolina and South Carolina that qualify for tax relief related to Hurricane Florence.    Hurricane Florence victims have until Jan. 31, 2019, to file certain individual and business tax returns and make certain tax payments. The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area.


* Jim Blankenship talks about “Withholding and Social Security Benefits” at GETTING YOUR FINANCIAL DUCKS IN A ROW.

THE LAST WORD

One of the best descriptions of Trump, Trumpism and the Trump legacy come from the final paragraph of “The Cruelty Is The Point” by Adam Serwer in THE ATLANTIC -

Trump’s only true skill is the con, his only fundamental belief is that the United States is the birthright of straight, white, Christian men, and his only real, authentic pleasure is in cruelty. It is that cruelty, and the delight it brings them, that binds his most ardent supporters to him, in shared scorn for those they hate and fear: immigrants, black voters, feminists, and treasonous white men who empathize with any of those who would steal their birthright. The president’s ability to execute that cruelty through word and deed makes them euphoric. It makes them feel good, it makes them feel proud, it makes them feel happy, it makes them feel united. And as long as he makes them feel that way, they will let him get away with anything, no matter what it costs them.”

Donald T Rump’s core cult of ignorant and racist deplorables have always been on the fringes of the Republican Party, but they have never before had an alleged Republican politician personally low enough to pander directly and almost exclusively to them.

What Trump has done, and what is the most damaging and dangerous legacy of Trump, is to organize them in support and defense of his legitimacy and create an actual voting block within the Republican Party to whom, unfortunately, the Party is listening and responding.

TTFN











Thursday, October 4, 2018

ABORTION RIGHTS AND SAME-SEX MARRIAGE ARE NOT CONSERVATIVE ISSUES!


Once again I briefly stray from tax policy, planning and preparation.

With filling the open seat on the Supreme Court the current top news story, it is important to understand that opposition to abortion and Roe v Wade is NOT a true conservative position.  And opposition to same-sex marriage is NOT a true conservative position.  A judge who supports overturning Roe v Wade or the same-sex decision may be a “Republican” judge, but he or she is NOT a “conservative” judge.

It is my understanding that the principles of American conservative political philosophy are:

• Protect & Maximize Individual Rights 
• Ensure a Limited Government
• Uphold the Rule of Law
• Commitment to Federalism and the Separation of Powers
• Maintain Free & Open Markets (Economic & Social)

These principles certainly prevent the opposition to abortion and Roe v Wade and alternative sexual orientation.  As indicated above, true conservatism calls for prioritizing the rights of the individual and minimum involvement by the government in the personal life of the citizen. 

Opposition to abortion and same-sex marriage is based in religious belief.  Contrary to conservative principles, the so-called “evangelicals” of the religious right want the government to tell people how to live their lives.  The specific religious beliefs of one sect or group must never be legislated. The separation of Church and State is a cornerstone of American democracy.

If your religious beliefs instruct you that abortion is bad – then do not have an abortion.  If your religious beliefs tell you that homosexuality and same-sex marriage is wrong - then don’t practice homosexuality or marry someone who is the same sex as you.  But you cannot force your specific religious belief on your neighbor, regardless of any sincere desire to save him or her from the “fires of hell”.  The religious can certainly "preach the gospel" to those who will listen, but cannot make the government force non-believers to follow it. 

Here is what Senator Barry Goldwater, the politician most often credited with sparking the resurgence of the American conservative political movement in the 1960s, explained decades ago–

Religious factions will go on imposing their will on others unless the decent people connected to them recognize that religion has no place in public policy.

And -

I am a conservative Republican, but I believe in democracy and the separation of church and state. The conservative movement is founded on the simple tenet that people have the right to live life as they please as long as they don't hurt anyone else in the process.”

And -

"Today's so-called 'conservatives' don't even know what the word means. They think I've turned liberal because I believe a woman has a right to an abortion. That's a decision that's up to the pregnant woman, not up to the Pope or some do-gooders or the Religious Right. It's not a conservative issue at all."

As a post-script – looking at the principles of American conservative political philosophy identified above, it is very clear that Donald Trump is NOT a conservative.

TTFN


















Wednesday, October 3, 2018

IRS DRAFT 2018 FORMS


We have already seen the IRS draft of the stupid new 2018 Form 1040 “postcard” andits 6 new supplemental statements.  The IRS has now also issued draft copies of the 2018 Schedule A and Form K-1s for partnerships and S-corps and the instructions for the 2018 Form 1040.

The 2018 Schedule A section for “Taxes You Paid” begins with “State and local taxes”.  There are lines for income taxes or general sales taxes, real estate taxes and personal property taxes.  The wording and format for indicating if you are claiming state and local sales tax instead of state and local income tax has changed, but the option still exists.  After entering amounts for these three items and coming up with a total there is a line that says “Enter the smaller of line 5d {total taxes claimed – rdf} and $10,000 ($5,000 if married filing separately).”  Here is where the new limitation is applied.   

This section also contains a line for “Other taxes” that is after the application of the $10,000 limit, which indicates that these taxes are deductible in addition to the $10,000.  I am curious to read the instructions to find out what “other taxes” they are talking about.   In the past I have put employee withholding for state unemployment, disability and family leave contributions, but these taxes are really part of state and local income taxes and are included in the $10,000 limit.

The “Interest You Paid” section includes a new box to check under the line for “Home mortgage interest and points” if “you didn’t use all of your home mortgage loan(s) to buy, build, or improve your home”, referring the taxpayer to the instructions.  Here is where you must indicate if you have any home equity debt.  I cannot stress enough how the elimination of the deduction for home equity interest affects the preparation of the Schedule A. 

There is also a line identified as “Reserved”, which has been suggested exists because the IRS thinks the idiots in Congress may reinstate the inappropriate deduction for mortgage insurance premiums for 2018 before the end of the year.

The “Casualty and Theft Losses” category line identifies the new limitation of the deduction to “casualty and theft loss(es) from a federally declared disaster”.

The entire “Job Expenses and Certain Miscellaneous Deductions” section is gone, as these items are no longer deductible.  And the “Total Itemized Deductions” section no longer asks if your AGI is over the former Pease threshold, as the phase-out of itemized deductions no longer exists.

I am truly eager to see the draft of the instructions for Schedule A for many reasons, including the explanation of what is deductible as gambling losses.  There has been conflicting advice and information provided by tax preparation CPE providers.

All the discussions of the unnecessary new Section 199a deduction mention that the K-1s from partnerships and sub-S corporations will be reporting important information related to this deduction.  But the draft K-1s for 2018 do not look any different than those of past years.  Perhaps the information will be included in “See attached statement for additional information”.  I certainly hoped, and had assumed from what I had been taught at GOP Tax Act CPE sessions, that the front page of the K-1 would specifically address the Section 199a deduction requirements.

I have very briefly skimmed the 1040 instructions, but have not reviewed it in any detail yet.  I did, however, check to see and found that it does include a "Simplified Worksheet" for calculating the Section 199a deduction.  

I will let you know as more draft forms with GOP Tax Act changes are released.

TTFN











Tuesday, October 2, 2018

WHY EVERYONE - DEMOCRAT AND REPUBLICAN - MUST OPPOSE AND DENOUNCE TRUMP



It is possible to both support traditional Republican and conservative political philosophy and oppose and denounce Donald T Rump.

Actually, it is necessary!

Every single American - Republican and Democrat, Independent and Libertarian, Liberal and Conservative, Christian, Jew, Muslim, and Atheist, Man and Woman, Young and Old, Gay and Straight - must vocally and aggressively denounce and oppose Donald Trump.  Trump is indefensible.  Support and defense of Trump’s continuing to serve as President, either publicly or by silence, is indefensible and a betrayal of America and its people and ideals.

Donald Trump is a delusional, ignorant, immature, incompetent, totally self-absorbed and self-important mentally unstable narcissist and sociopath. 

Trump the human being is deplorable and despicable, totally devoid of ethics, morality, integrity, and humanity.  Trump has never performed a totally unselfish positive act in his lifetime.

Trump doesn’t know his ass from a hole in the ground about anything, and shows no interest in becoming more informed and educated on important issues.

Trump lies about everything to everyone all the time.  He has not made a completely truthful statement since becoming a candidate.

Trump is pathologically incapable of making a public statement or address without beginning with how great he is via obviously and easily proven false statements about his accomplishments and abilities.

Trump is pathologically incapable of dealing with challenges, criticism or questions like a mature adult.  He must insult and belittle anyone who criticizes, challenges, disagrees with, or questions him.  In his sick and delusional mind, he is infallible.  People who do not recognize and acknowledge this delusion have no value, and so their opinion has no value.

Trump never thinks before he speaks or “tweets” – often spewing whatever nonsense comes into his head in the wee hours of the morning.  He has absolutely no concern for how his words and tweets affect America.

Trump always claims personal credit for positive results that he had absolutely nothing to do with, and never accepts any responsibility for bad results that he has directly caused, always blaming someone, anyone, else.

Trump was not elected President of the United States by the American people.  He is not a Republican, not a conservative, and most definitely not a Christian.  He does not possess any political or religious beliefs or convictions.

Trump thinks those who support and promote the #MeToo movement, and women who now feel empowered to stand up and talk about their experiences, are “very evil people” but Nazis and white supremacists are “very fine people”.

Trump attacks, insults and alienates America’s allies while embracing the authoritative and dictatorial leaders of America’s enemies like Putin, Un and others.  This is because he wants to be An authoritative and dictatorial leader like Putin and Un.

Trump the businessman consistently and gleefully screwed his investors, shareholders, contractors, vendors, employees, clients and customers while lining his pockets.  Still just about every one of his businesses that did not directly involve real estate development have failed.

Trump has not divested himself of his business holdings and unethically, and to some degree unconstitutionally, profits financially by being President, frequently at the expense of the American people (his weekly golf outings at the resorts he owns).

Do I need to go on?  The list of reasons to oppose and denounce Trump is endless.

If America’s democracy and values are to survive, and America is truly to be great again, as it was before the 2016 election, we MUST remove Donald T Rump from the White House ASAP!

TTFN












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


* Check out the new “issue” of THE LAKE REGION SOMETHING!  And let me know what you think.

* As usual, Jason Dinesen is right – “S-Corps Don’t Make All Taxes Go Away”.  

I like his “See Jane Run” explanation of the taxation of S-corps.

* Michael Cohn reports “IRS updates per diem rates for business travel expenses” at ACCOUNTING TODAY.  

Notice 2018-77 announces the special per diem rates, effective Oct. 1, 2018, that taxpayers may use to substantiate the amount of expenses for lodging, meals and incidental expenses when traveling away from home. The notice also provides the special transportation industry rate, the rate for the incidental expenses only deduction, and the rates and list of high-cost localities for purposes of the high-low substantiation method.”

A reminder – employees can no longer deduct unreimbursed travel, including business mileage, as a Miscellaneous Expense on Schedule A.  So this information is only for employers who reimburse employees and self-employed taxpayers.


However, for me the 2019 tax filing season will begin, as it has begun every day for the past 40+ years, on February 1, 2019.

* In light of all of Trump’s nonsense with tariffs (what does Trump ever do that is not nonsense) Howard Gleckman explains “What Is A Tariff and Who Pays It?” at TAXVOX.

* Hey taxpayers – let me educate you on how to become a successful tax planner.  Check out the National Tax Planning Network.

* The TAX FOUNDATION has just released its “2019 State Business Tax Climate Index.

Once again NJ is, like Oliver Twist, last on the list at #50 – the state with the worst business tax climate.  PA is #34 and NY is #48.

THE LAST WORD

My opinion of Donald T Rump – that he is a totally self-absorbed and self-important moron who doesn’t know his ass from a hole in the ground about anything and who is totally unfit to hold any elected position of power – is based on watching his life on display for close to 2 decades, certainly before the Presidential campaign, and my independent review and analysis of his words and deeds over that time.  His performance during the primaries and the election only cemented my opinion.

My opinion is NOT based on what I am told by the so-called liberal media or the Democratic Party or anyone else.  It is based on my personal observation and my intelligence.

My aggressive opposition to Trump is not partisan politics.  I am neither a registered Republican nor a registered Democrat.  In past elections, Presidential and otherwise, I have voted Republican, Democrat and for a third-party candidate based solely on the individual candidate and the issues involved.  I am more conservative on some issues and more liberal on others.

I obviously listen to those who oppose and denounce Trump, and not to those who defend and support him, because those who oppose and denounce Trump think as I do, and I do believe that “great minds think alike” (being humorous there).  And I have never heard anything from any Trump defender or supporter that actually makes sense or caused me to reconsider anything about Trump.

I firmly believe that supporting and defending Trump is not an intelligent choice or a patriotic choice.  There is no defense possible for Trump, and, to be, no defense possible for defending Trump.

TTFN










Tuesday, September 25, 2018

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


* If you haven’t already done so be sure to check out THE LAKE REGION SOMETHING!

*  My first slide show! And on MSN.COM! Check out my “10 Things You Can’t Deduct from Your Taxes Anymore”.

* Russ Fox suggests “Let Us Entertain You (or Not)” at TAXABLE TALK, applying the “Duck Test” to a client’s suggestion on how to “get around” one of the business tax changes made by the GOP Tax Act.

A funny coincidence.  I was discussing this exact issue and suggestion with the tax pro (who I knew from past state seminars) I was sitting next to in the morning at last week’s NATP Tax Forum in Atlantic City.  While having lunch in my room and checking my emails, Spacebook and Twitter I came across this post from Russ.

* Russell Settle of “Money Talk News” answers the question “Can I Get My Ex’s Social Security Instead of My Own?” in a “Social Security Q&A” post that was “covered” by YAHOO FINANCE.

I know the answer to be correct because a long-time friend and client did just this last year.

* From Michael Cohn at ACCOUNTING TODAY – “IRS gives taxpayers a break on employee moving expenses”.

The IRS said Friday that employer payments or reimbursements in 2018 for employees’ moving expenses that were incurred prior to 2018 can be excluded from an employee’s wages for income and employment tax purposes.”

TTFN






















Monday, September 24, 2018

THE NEW NATIONAL TAX PLANNING NETWORK OFFERING


Sick of paying too much income tax?  Join the club!  The NATIONAL TAX PLANNING NETWORK that is.

I have been preparing 1040s for individuals in all walks of life since 1972.  Let me educate you.  Help you save when you file.  Let me share some tax tips, some old and then some new tips.  It’s really worth your while. 

Due to a lack of response to the original NATIONAL TAX PLANNING NETWORK offering, I am now revising it to become a special exclusive “members only” Facebook group that provides tax planning and preparation advice, information and resources throughout the year to help you to pay the absolute least amount of federal income tax possible. 

Even if you use a tax professional to prepare your return – the more you know about tax law and tax rules and regulations the more prepared you will be at tax time.

At this Facebook Group you will find -

* periodic posts with updated tax planning and preparation advice and information and links to online resources that provide updated tax planning advice and information, and

* files with tax planning advice and information, including my periodical membership newsletter “Robert D Flach’s The 1040 Letter” and forms, schedules and worksheets that will be helpful in preparing your 1040. 

This Facebook Group currently includes as downloadable "files" my compilation of forms, schedules and worksheets and "What's New for 2018".

In addition, members receive a 15% discount on all books and offerings from Taxes and Accounting, Inc. 

Membership in this unique Facebook Group is only $9.95 per year!  Obviously, you must have a Facebook account to join.

To join send your check for $9.95 payable to TAXES AND ACCOUNTING, INC, and your Name, Mailing Address, Email Address, and Facebook Address to –

NATIONAL TAX PLANNING NETWORK
TAXES AND ACCOUNTING, INC
POST OFFICE BOX A
HAWLEY PA 18428

TTFN










Wednesday, September 19, 2018

QUESTIONS FROM A CLIENT


A client recently emailed me some questions that I think are often asked of tax preparers, especially now with the changes made by the GOP Tax Act.  The answer to these questions, and the debunking of some common misconceptions the answer includes, are important to understand.

Robert -

1. Just wanted to ask you how do you report taxes at end of year on a 1099?  I imagine in this case you report less than if your employer was reporting on a W-2. Please explain what is advantage AND disadvantage?

2. I hear is that when you are working on your own or providing home care you can report whatever you want, but I still want to accumulate for my Social Security.  Am sure in this case you don’t have to pay city taxes or Medicare, etc.

Madame X

My response:

Madame X -

1. Income from a Form 1099 is reported based on the source of the income.  If it is a Form 1099-MISC reporting “non-employee compensation” it is reported on a Schedule C or C-EZ of Form 1040, with deductions for directly related out of pocket expenses allowed.  The net amount is subject to federal and state, and if applicable city, income tax and federal “self-employment” tax, which is the equivalent of both halves of Social Security and Medicare.  A new special tax deduction of 20% of the net income may be allowed.  However, this new deduction does not reduce net income subject to the self-employment tax.

The amount that is reported by the payee on a Form 1099-MISC for non-employee compensation is the same as the amount of gross wages reported for an employee – the gross amount of the payment to you for services provided.  Less income may be actually subject to tax because of the deduction of direct out of pocket expenses related to earning the income.

The advantage of receiving income as a “sub-contractor” on a Form 1099-MISC vs receiving income as an employee on W-2 is the availability of the deduction for directly related out of pocket expenses and the new 20% deduction for “pass-through” business income.  The disadvantage is that you pay both halves of the Social Security and Medicare tax – as an employee you pay half and your employer pays half - although the amount of income on which the self-employment tax is paid may be less than the gross wages reported on a W-2 that are subject to these payroll taxes.

2. It is NOT true that if you are working on your own you can report “whatever you want”.  By law you MUST report WHATEVER YOU RECEIVE in full, whether or not you actually receive a Form 1099-MISC. 

A person being paid for providing home care is a “household employee” of the person who is being cared for.  The person being cared for would need to withhold income and Social Security and Medicare taxes, as any other employer would, and issue the person providing the home care a Form W-2.

As a self-employed person, you would continue to pay into Social Security via the “self-employment tax” and your net income would count toward the determination of Social Security benefits.

RDF

Do you have any questions?

TTFN