Wednesday, July 8, 2020
Monday, July 6, 2020
* Michael Cohn reports “New Taxpayer Advocate sees tax challenges from CARES Act” at ACCOUNTING TODAY –
“National Taxpayer Advocate Erin Collins released her first report to Congress Monday, discussing some of the difficulties confronting taxpayers and the IRS during the COVID-19 pandemic, which has only exacerbated problems with taxpayer service as the IRS struggled to implement the provisions of the CARES Act and the Taxpayer First Act.”
Two items of note from the TA’s report (highlight is mine) -
“Taxpayers who filed a 2019 paper return and are entitled to refunds may have a long wait ahead of them. The IRS needed to suspend the processing of paper tax returns, and as of May 16, it estimated it had a backlog of 4.7 million paper returns. While the IRS is still reopening some of its core operations, it’s not clear when the agency can open and process all the returns sitting in mail facilities.”
“Individuals who didn’t receive some or all of their economic impact payments may have to wait until next year to receive them. To date, the IRS has taken the position that most taxpayers who did not receive their full payments must wait until they file their 2020 income tax returns to claim the amounts as credits against their 2020 tax liabilities, even though there is no legal constraint on the IRS’s ability to issue additional EIP amounts as advance refunds during 2020. Congress enacted the CARES Act both to provide emergency financial relief to taxpayers on an individual level and to boost spending on the national level. TAS will continue to urge the IRS to provide full EIPs to eligible taxpayers throughout 2020 as rapidly as possible. The report says that making taxpayers wait until next year to receive their EIPs harms the affected taxpayers and is inconsistent with congressional intent.”
Click here to read the entire report.
* The FORBES.COM “TaxGirl” Kelly Phillips Erb explains “July15 Estimated Payment Deadline Is Confusing: Here’s How It Works”.
This post provides answers to questions you may have about the first two 2020 federal estimated tax payments.
* And at KPE’s original TAXGIRL.COM blog we have her annual “Taxes A to Z” series.
* Russ Fox has begun his annual “Bozo Tax Tip” series at TAXABLE TALK.
* While I obviously do not believe self-employed taxpayers should use Turbo Tax software to prepare their tax returns – a software program is no substitute for a competent and qualified tax professional – I do suggest they check out the TURBO TAX BLOG’s “Self-Employed Coronavirus Relief Center”.
* Jeff Stimpson tells us “Deadline looms for unclaimed billions in federal refunds” at TAXPRO TODAY.
THE LAST WORD
There have been corrupt politicians and selfish politicians in Washington in the past.
But NEVER in the history of the United States has there EVER been a more ignorant, more incompetent, more corrupt, and more totally self-absorbed politician in Washington than Trump.
Saturday, July 4, 2020
Tuesday, June 30, 2020
From IR-2020-134 dated June 29, 2020 (highlight is mine) ―
“The Department of the Treasury and IRS today announced the tax filing and payment deadline of July 15 will not be postponed. Individual taxpayers unable to meet the July 15 due date can request an automatic extension of time to file until Oct. 15.”
An automatic extension is requested on IRS Form 4868. You can also request an extension online – go here,
FYI, the automatic extension extends the time to file, not the time to pay. If you think you will owe your “uncle” you should send a check with the extension to avoid penalties and interest.
July 15th is also the deadline for filing most state returns.
Monday, June 29, 2020
* From the NTA Blog - “Keep an Eye on Your Mailbox: Millions of Backlogged Notices Are Being Mailed Over the Next Few Months, Some Reflect Expired Action Dates. But Don’t Panic, See Inserts Providing Extended Due Dates”
* Kay Bell reminds us that the “White House stimulus letter is an official IRS tax document you need to save” at DON’T MESS WITH TAXES.
The stimulus payment you received is NOT taxable income, but is “reconciled” when filing your 2020 Form 1040 (or 1040-SR) – you may be able to get an additional payment as a refundable credit on your 2020 tax return.
* Peter J Reilly “New August 31 Deadline To Return Required Minimum Distributions” -
“Notice 2020-51 grants relief. To the extent distributions taken from IRA and other retirement plans would have qualified as required minimum distributions - including those made prior to April 1 for people who turned 70 1/2 in 2019 to cover the 2019 RMD you now have until August 31 to put the money back. The move will not count as the one allowed rollover per year, so you may still do a rollover for some other purpose.”
* Jeff Stimpson reports “Tax deadlines extended for tornado victims” at ACCOUNTING TODAY -
“Victims of the April tornadoes, as well as the storms and flooding in Mississippi, Tennessee and South Carolina have until October to file various federal individual and business returns and make tax payments.”
* According to the IRS (here) -
“Interest on individual 2019 refunds reflected on returns filed by July 15, 2020 will generally be paid from April 15, 2020 until the date of the refund. Interest payments may be received separately from the refund. By law, the interest rate on both overpayment and underpayment of tax is adjusted quarterly. The interest rate for the second quarter, ending on June 30, 2020, is 5% per year, compounded daily. The interest rate for the third quarter, ending September 30, 2020, is 3% per year, compounded daily.”
THE LAST WORD
Trump’s words and deeds are not “political” In nature in terms of a political philosophy or political beliefs.
Trump’s words and deeds come exclusively from his pathological need for attention, acknowledgement and adoration, his delusions of grandeur, and his intense desire to be a dictator or monarch.
Trump’s words and deeds are not those of a rational or mentally stable person.
If ever in our history the application of the 25th Amendment was called for it is today.
Thursday, June 25, 2020
FYI – a review of the NJ state forms and returns that are due July 15, 2020.
Corporation Business Tax:
CBT-100/CBT-100U/CBT-100S/BFC-1 – Annual return for accounting periods ending December 31
CBT-150/BFC-150 – Installment payment of estimated tax originally due April 15
CBT-200-T/BFC-200-T – Tentative return and application for extension of time to file Corporation Business Tax return or Banking and Financial Corporation tax return for calendar year filers. Extension period is 6 months from original April 15 due date
CBA-1 – Notice of Business Activities report by foreign corporations with periods ending December 31
Gross Income Tax (Individual):
NJ-1040 – Resident return
NJ-1040-HW – Property Tax Credit/Wounded Warrior Caregivers Credit application
NJ-1040NR – Nonresident return
NJ-1040-ES – Installment payment of estimated tax for first quarter of current tax year
NJ-1041 – Fiduciary return for calendar year filers
NJ-1080C – Composite nonresident return NJ-630 – Application for extension of time to file resident, nonresident, or fiduciary return. Extension period is 6 months (5½ months for NJ-1041) from original April 15 due date
NJ-1065/NJ-CBT-1065 – Partnership return for calendar year filers
PART-200-T – Partnership application for extension of time to file NJ-1065 for calendar year filers. Extension period is 5 months from original April 15 due date
CBT-206 – Partnership application for extension of time to file NJ-CBT-1065 for calendar year filers. Extension period is 5 months from original April 15 due date
Monday, June 22, 2020
* Kelly Phillips Erb – aka FORBES.COM’s “TaxGirl” – keeps us up-to-date on the progress at the IRS in “IRS Faces Huge Backlog Of Unopened Mail As Workforce Returns” (highlights are mine) -
“So, there's some good news: The Internal Revenue Service (IRS) is processing paper tax returns.
And then there's some not-so-good news: The estimated backlog of unopened IRS mail stands at 11 million.
Realistically, that means that taxpayers who filed returns by paper have experienced significant tax refund delays.”
* The first of the tax year 2021 inflation adjustments have been announced. The NATP BLOG reports “HSA contribution limits to increase in 2021” -
“According to Revenue Procedure 2020-32, for individuals with self-only coverage under a high deductible plan, the annual limitation on deductions is $3,600. This figure is up $50 from this year’s $3,550.
For an individual with family coverage under a high deductible health plan, the annual limitation on deductions is $7,200, up $100 from this year’s $7,100.”
So, I have the first entry in my “What’s New for 2021” report.
* From Kay Bell, the yellow rose of taxes, at DON’T MESS WITH TAXES – “Still waiting for your COVID payment? IRS has answers on what to do to get or track your money”.
* Speaking of the economic stimulus payment, have you seen my previous TWTP post “Understanding the Economic Stimulus Payment”?
* Russ Fox identifies the “2020 Best States for Business: Bring Me (mostly) the Usual Suspects”, and the worst states, too, at TAXABLE TALK.
Hey, NJ is NOT the worst for a change – it is #47. Three states are worse than NJ.
* William Baldwin (no, not “that” William Baldwin) explains “Why You Should Keep Tax Records For More Than Three Years” at FORBES.COM –
“Three years of documents won’t cut it. Seven years is more like it. Some tax records should be kept on hand until you’re dead.”
I certainly agree. I first gave similar advice here on April 27, 2007. And I updated my advice on August 18, 2014.
THE LAST WORD -
THE LAST WORD -
It continues to remain impossible for me to understand how anyone – other than an ignorant racist or someone who puts his own personal self-interests above everything else – could possibly support, even reluctantly, Trump and his continuance in office.
He is clearly ignorant and incompetent. He is clearly totally self-absorbed and does not care about anyone or anything but himself. It is obvious that he is completely devoid of humanity, honor and integrity and does not possess a single redeeming positive human quality.
There is no intelligent or rational reason to support and defend Trump the man or Trump the President.
Wednesday, June 17, 2020
In the past I have told clients and readers whose federal tax refunds were late in arriving to check the IRS website “Where’s My Refund” tool.
Unfortunately, this will not work for manual 2019 Form 1040 (or Form 1040-SR) filers whose refunds have not yet arrived.
The IRS offices have been closed since the end of March, and are only now re-opening. While these offices were closed nobody was opening mail or processing manual returns. So, the IRS system has no idea if a manually-filed return has been received. If it was received it most certainly has not been processed yet. And clearly no refunds have been issued.
There is absolutely nothing that a tax preparer can do to expedite the processing of a 2019 tax return or the issuance of a 2019 tax refund. Period. End of story. DO NOT CONTACT YOUR TAX PREPARER TO ASK WHERE YOUR FEDERAL REFUND IS.
Again unfortunately, taxpayers expecting refunds need to be patient. They will eventually come.
The IRS office closure also means that correspondence has not been opened and read and amended returns have not been processed. In the best of times you need patience concerning IRS correspondence - you obviously need much more now. And be aware that the IRS will most likely be paying interest, at a rate much higher than banks, on amended return refunds - so the longer it takes to process your 1040X the more interest you will earn.
Tuesday, June 16, 2020
Here is a review of what we know about the recent economic stimulus payment.
All US residents who are not a dependent of another taxpayer and have a work-eligible Social Security number are entitled to a stimulus payment of up to $1,200, or $2,400 for married couples, with an additional $500 for each dependent child under age 17.
The amount of the check is based on your 2019 Adjusted Gross Income (AGI) – or your 2018 AGI if the 2019 return has not been filed or processed. The payment phases out once your AGI exceeds $75,000 if single, $150,000 if married or $112,500 if you are considered a Head of Household. You will lose $5 of your payment for every $100 your AGI exceeds those thresholds. Single individuals with an AGI of $99,000, heads of household with an AGI of more than $136,500 or more and married couples with an AGI of $198,000 or more, who have no dependent children, will not receive a payment.
The phase-out threshold increases by $10,000 for each qualifying dependent child under age 17. For example, the phaseout threshold for a Single taxpayer with minor dependents are:
One child: $109,000
Two children: $119,000
Three children: $129,000
KIPLINGER.COM has created a stimulus check calculator tool – go here.
In many cases the payment was calculated based on your 2018 AGI, because your 2019 Form 1040 or 1040-SR, if filed, had not been processed when the amount of the payment was calculated. The IRS offices were closed from the end of March until June and your 2019 return may not have been processed. So, your payment may be less than the actual amount to which you are entitled. However, according to the IRS website, as of this writing, “The IRS is not able to correct or issue additional payments at this time and will provide further details on IRS.gov on the action people may need to take in the future.”
This payment is administered via new Internal Revenue Code Section 6428. It is NOT taxable income. The payment will be treated as an “advance credit”, like the Obamacare advance premium credit, and must be reconciled based on 2019 information when preparing your 2020 tax return next year. If you are entitled to more than you received you can claim the additional amount as a refundable credit on your 2020 return. If you received more than you should have you do not have to pay back the excess.
Because for many the 2020 economic stimulus payment was calculated based on 2018 tax return information, those who were claimed as a dependent on their parents’ 2018 return but not on the 2019 return did not get a payment, even though they were entitled to receive one. When these taxpayers file their 2020 tax return, they can claim the full amount of the $1,200 payment not received, within the AGI limitations, as a refundable credit.
The IRS will issue a Notice 1444 (Your Economic Impact Payment) shortly after your payment has been issued. The IRS recommends you keep this notice in your files. When you file your 2020 tax return next year you will need to report the amount you received – not as taxable income but when reconciling the allowable credit.
The IRS provides detailed answers to questions about the stimulus payment here.
Please understand that there is absolutely nothing your tax preparer can do to expedite the processing of your 2020 stimulus payment or the issuance of your stimulus payment check. Do not ask your tax preparer why you have not received your stimulus payment yet, or when you will get it.
Monday, June 15, 2020
Just a reminder - 2019 tax returns, and payments, and the 1st quarter 2020 estimated tax payments are due in one month (July 15th).
* The NATP BLOG discusses "The value of a superseding tax return" in a guest post by Erin Collins, the new IRS Taxpayer Advocate.
* The NATP BLOG discusses "The value of a superseding tax return" in a guest post by Erin Collins, the new IRS Taxpayer Advocate.
I admit that I am one of the tax professionals who has never heard of a “superseding tax return”.
* Attention fellow tax pros who are unfamiliar with this issue – John Sheeley EA of Tax Practice Pro, inc told us about the workshop “Superseding or Amending: Does It Really Matter?” in a Facebook tax pro group post.
* The FORBES.COM TaxGirl Kelly Phillips Erb gives us “IRS Warns On COVID-19 Scams Involving Stimulus Checks, Fake Cures & More”.
* Kay Bell reports “Tax claims now allowed for some TS Cristobal damages” at DON’T MESS WITH TAXES.
* And Kay reminds us that “Summer day camp costs, even in coronavirus time, still eligible for a tax credit”.
This applies to DAY camp only. Overnight or “sleep-away” camp does not count.
* Surprisingly, and stupidly, the NY Department of Taxation and Finance has issued “N-20-8: Announcement Regarding June Estimated Tax Payments”.
This notice states –
“The due date for estimated tax payments due on June 15, 2020, for personal income, fiduciary, and corporate taxpayers remains in place.
Accordingly, for purposes of 2020 estimated tax payments:
• Individuals and fiduciaries should consider the estimated tax payment due on June 15, 2020, as the 1st installment payment towards the 2020 tax year.
• Individuals and fiduciaries should consider the estimated tax payment due on July 15, 2020, as the 2nd installment payment of the 2020 tax year.”
To repeat – stupid!
THE LAST WORD -
The Republican Party’s continued acceptance, support and defense of ignorant and incompetent Trump, despite his total inappropriateness and unfitness to hold any position of power anywhere, in exchange for acquiring and maintaining the support and votes of his core cult of ignorant racists – or for those more inclined to conspiracy theories (and it is actually a legitimate possibility) due to blackmail perhaps because of Trump’s closeness to Jeffrey Epstein – is deplorable and despicable and certainly divests it of its past credibility as a legitimate political party.
Tuesday, June 9, 2020
Did you hear? I have a new Dollar Store of tax-saving reports.
Each of these tax-saving reports id only $1.00 each!
WHAT’S NEW FOR 2020
A compilation of the inflation and cost of living adjusted numbers you need to know for 2020 federal tax planning and return preparation, incorporating all the changes enacted by the GOP Tax Act.
WHAT'S NEW FOR 2019
If you still haven't completed your 2019 tax return this will provide you with most of the information you will need to know.
HOW TO PASS LESS NJ STATE INCOME TAX
Most NJ taxpayers concentrate on their federal tax return and spend minimal time on their NJ return, simply taking numbers from the 1040 and putting them on the NJ-1040. As a result, they are paying more NJ state tax than necessary, often paying tax on income that is not even taxed by NJ. By becoming informed on NJ state tax law you can make sure that you pay the absolute least amount of NJ Gross Income Tax possible for your particular situation. This report discusses a few of the ways you can pay less New Jersey state income tax.
CHARITABLE CONTRIBUTION GUIDE
The recently passed CARES (Coronavirus Aid, Relief, and Economic Security) Act allows taxpayers who do not itemize to claim a deduction for most charitable gifts made in cash (or check) of up to $300 on the 2020 Form 1040 (or 1040-SR). This report reviews what you can and cannot deduct as a charitable contribution on your tax return and the rules for claiming a deduction.
THE IMPORTANCE OF KEEPING SEPARATE TRACK OF MORTGAGE DEBT
With the elimination of the itemized deduction for home equity debt interest under the GOP Tax Act it is more important than ever to keep separate track of acquisition debt and home equity debt - going back to the original purchase of your home. This report explains the new, and some old but still applicable, rules for deducting mortgage interest and provides a detailed example of how to properly track your mortgage debt.
The reports will be sent to you as a pdf email attachment. You can receive a print copy of these reports sent via postal mail for $2.00 - the additional $1.00 to cover postage, paper and ink costs.
Send your check or money order payable to TAXES AND ACCOUNTING, INC for $1.00 or, $2.00 per report, and your email or postal address, to –
TAXES AND ACCOUNTING, INC
MY DOLLAR STORE
POST OFFICE BOX A
HAWLEY PA 18428
Monday, June 8, 2020
On June 3, the IRS said it is taking the next steps to reopen additional operations in:
Georgia and Tennessee beginning June 15
Missouri and Michigan beginning June 15
Indiana and Ohio beginning June 29 and
California, Puerto Rico, Oregon beginning June 29.
These include key processing centers, notice print facilities and call center operations. The IRS will continue to focus on non-portable work.
Kansas City MO is the IRS center that processes New Jersey and New York manual tax returns without a payment enclosed – i.e. manual returns requesting a refund.
* At the JOURNAL OF ACCOUNTANCY Sarah Ovaska discusses “Protecting seniors from COVID-19 fraud”.
“Offers to sign up for a COVID-19 vaccine, an IRS agent calling to confirm a stimulus payment, or someone at the door offering to swab your nose to see you have the coronavirus.
These are among the ploys scammers are implementing right now against American seniors in hopes of profiting from the uncertainty, fear, and anxiety that the novel coronavirus pandemic has caused.”
* Prof James Maul reminds us that, no matter how generous and rewarding it may be, there is “No Charitable Contribution Deduction for Donating Services” at MAULED AGAIN –
“Treasury Regulations section 1.170A-1(g) states, ‘Contributions of services. No deduction is allowable under section 170 for a contribution of services.’”
* Anyone interested? “IRS seeks nominations for the Internal Revenue Service Advisory Council for 2021”.
* FORBES.COM’s TaxGirl Kelly Phillips Erb reports “IRS Urges Non-Filers To Register To Get Stimulus Checks By Year End” -
“Millions of low-income people and others who aren't required to file a tax return may still be eligible for a stimulus check. Those folks can register for a payment by using the Non-Filers tool on the IRS website. . . .
The Non-Filers tool will remain available through the summer and fall. However, to receive your payment by the end of the year, you must register by October 15.”
THE LAST WORD
From James Mattis, the esteemed Marine general and one-time Trump Administration Secretary of Defense (highlight is mine) -
“Donald Trump is the first president in my lifetime who does not try to unite the American people—does not even pretend to try. Instead, he tries to divide us. We are witnessing the consequences of three years of this deliberate effort. We are witnessing the consequences of three years without mature leadership. We can unite without him, drawing on the strengths inherent in our civil society. This will not be easy, as the past few days have shown, but we owe it to our fellow citizens; to past generations that bled to defend our promise; and to our children.”
“Instructions given by the military departments to our troops before the Normandy invasion reminded soldiers that the Nazi slogan for destroying us … was ‘Divide and Conquer’. Our American answer is ‘In Union there is Strength’. We must summon that unity to surmount this crisis—confident that we are better than our politics.”
Asshole Trump’s response was to belittle Mattis in a tweet.
Monday, June 1, 2020
* While written specifically for one profession, “Snap A Pic of These Tax Deductions Photographers Can Take” from the TURBO TAX BLOG gives all self-employed taxpayers an idea of what is deductible.
* More evidence that bloggers love lists – “44 Sources Of Money & Benefits That You Don't Have To Pay Taxes On” from TaxGirl Kelly Phillips Erb at FORBES.COM.
A reminder – be aware that the answer to just about every tax question, including “is it taxable?”, is “it depends”.
* And, oi vey, a warning from KPE – “Don’t Mistake Your Stimulus Debit Card For Junk Mail”.
In a time of stupid ideas – the ultimate one being that a totally self-absorbed reality tv cartoon clown would be an acceptable choice for President – using debit cards for this purpose is certainly another one.
* For those of you who are interested, ACCOUNTING WEB explains “How to Keep on Top of Taxes for Household Workers During COVID-19”.
* According to IR-2020-107 –
“The Internal Revenue Service announced today that later this summer taxpayers will for the first time be able to file their Form 1040-X, Amended U.S Individual Income Tax Return, electronically using available tax software products.”
Unfortunately, electronic submission of 1040-X returns will require flawed and expensive tax preparation software.
* The NATP BLOG updates us on “IRS’s Economic Impact Payment data as of May 2020” -
“Approximately 130 million Americans received payments worth more than $200 billion in the Economic Impact Payment program’s first four weeks, according to the IRS.”
THE LAST WORD
“If you are not a liberal at 25, you have no heart. If you are not a conservative at 35 you have no brain.” Winston Churchill (?)
“If you support and vote for Trump, and those who support him, you have no heart AND no brain.” Robert D Flach