Tuesday, January 23, 2018
A LITTLE THIS-A, A LITTLE THAT-A
+ I owe an apology to McDonald’s, Burger King, Wendy’s, Taco Bell, etc. for using them in a description of Henry and Richard and other commercial tax return mills of that ilk.
I have always said that H+R et al “charge gourmet restaurant prices for fast food service”. Basically, I am observing that Henry and Richard, and the others, ain’t cheap, or even reasonable, and the fees are certainly not commensurate with the service. But comparing the service at tax preparation chains to that received at fast food chains is not fair – nor true.
Prior to being diagnosed with diabetes I was a frequent patron of McDonald’s, Burger King and Wendy’s. For the most part, I found the service provided by these chains to be most definitely “appropriate”. And, again for the most part, I most certainly received value for my money.
Those who use tax preparation chains will NOT be able to say the same thing when describing their experience.
And I must point out that nobody at McDonalds, Burger King or Wendy’s tried to force me to buy fries or onion rings that I neither wanted nor needed.
So, more appropriately, H&R et al “charge gourmet restaurant prices for service that is inferior to the service you get at a fast food chain.”
Of course, to be fair, I must always include in my assessment of tax preparation chains the following statement –
It may actually be possible that the best tax preparer, at the best price, for your particular situation is an H+R Block, or other chain, employee. But this is only because of the individual education, experience, ability, temperament, and other factors that are specific to that individual preparer or perhaps that unique and specific franchisee.
Hey, it is better to be safe than sorry. Bottom line - don’t use Henry and Richard or another chain to have your 2017 income tax returns prepared. If you are looking to find a tax pro you can start here.
+ Hey fellow tax pros – did you see Monday’s post at THE TAX PROFESSIONAL?
+ This past Sunday was the first payroll I processed for a business client using the new tax withholding tables that were revised to reflect the changes of the GOP Tax Act. I was curious to see if employees were actually getting any more money in their paychecks.
The gross payroll – total wages paid - for 20 employees for the 2-week pay period was up about $3,600 from the January 8th payroll, but the federal income tax withholding was $1,050 less. So, there actually was more money in the paychecks.
However, the pay checks of the two highest paid employees, including the millionaire owner of the business, with the same gross income for the two payroll periods being compared, were increased by over $750 due to reduced federal income tax withholding. Obviously, the increases in the paychecks of the lower paid employees were small.
I do worry, being cynical, that the withholding tables are a bit too “generous” to try to prove that serial liar Donald T Rump was telling the truth for once when he said workers would see increased paychecks thanks to the Act. I expect that, while individual paychecks will be slightly higher, 2018 tax return refunds may be lower, or balances due higher, especially for employees who live in New Jersey, as the employees of the above client do.
I am not alone in my concerns. In “Democrats raise concerns about IRS withholding tables” at TAXPRO TODAY Michael Cohn tells us (highlights are mine) -
“The ranking Democrats on the tax-writing House Ways and Means Committee and Senate Finance Committee are worried the Internal Revenue Service might succumb to political pressure by releasing withholding tables this year that cause employers to withhold too little in federal taxes from their employees’ paychecks to make it appear the tax cuts are larger than they really are, with the result that taxpayers will end up owing more money on their taxes next year.”
+ Speaking of business clients and the GOP Tax Act, also this past week-end a business client, a family owned “regular” (non-S) corporation with 2 shareholders that usually has net taxable income of under $50,000, asked if its tax will be reduced under the new tax law.
When the lower corporate tax rate was originally discussed I had thought the entire rate scale would be reduced. I think I had read somewhere that those currently paying 15%, based on net taxable income, would pay 8% under “tax reform”. However, everything I have read says the income tax rate in the Act is a flat 21% tax rate on net taxable income for all “regular” (non-S) corporations.
So smaller closely held corporations, with net taxable income of $50,000 or less, who previously paid 15% in federal income tax will actually see a 6% tax increase, and, because the sliding scale of tax rates is gone, those with $75,000 or less in taxable income will see a 2+% increase.
Once again true small business gets screwed!
+ FYI - some guidance from the IRS on one of the changes in the GOP Tax Act.
The weekday daily “Checkpoint Newsstand” email newsletter tells us what it learned from the “Frequently Asked Questions” (FAQs) posted to the IRS website -
“The FAQs clarify that a Roth IRA conversion made in 2017 may be recharacterized as a contribution to a traditional IRA if the recharacterization is made by Oct. 15, 2018. A Roth IRA conversion made on or after Jan. 1, 2018, cannot be recharacterized.”
+ The last word - As with any post, your appropriate comments, and not “praise” that is really only trying to promote your site or product, are always welcomed. I also want to know if you find any tax law inaccuracies, or typos or other clerical FUs, in the post.