WHO MUST FILE A 2021 TAX RETURN?

Generally, you do not have to file a federal 2021 Form 1040, or 1040-SR, unless your “gross income” is at least –

FILING STATUS	ON 12/31/19 YOU WERE	GROSS INCOME
SINGLE	UNDER AGE 65	12,550
	65 OR OLDER	14,250
MARRIED FILING JOINT OR QUALIFYING WIDOW(ER)	BOTH SPOUSES UNDER 65	25,100
	ONE SPOUSE 65 OR OLDER	26,450
	BOTH SPOUSES 65 OR OLDER	27,800
MARRIED FILING SEPARATE	ANY AGE	5.00
HEAD OF HOUSEHOLD	UNDER 65	18,800
	65 OR OLDER	20,500

Your dependent child must file a tax return if –

* Unearned income (interest, dividends, capital gains, etc.) was over $1,100

* Earned Income (W-2 wages and self-employment) was over $12,550

* Gross income was more than the larger of $1,100 or earned income up to $12,200 plus $350.

“Gross income” means all income you received in the form of money, goods, property, and services that is not exempt from tax, including any income from sources outside the United States or from the sale of your main home (even if you can exclude part or all of it). Do not include any Social Security benefits unless (a) you are married filing a separate return and you lived with your spouse at any time in 2020 or (b) one-half of your social security benefits plus your other gross income and any tax-exempt interest is more than $25,000 ($32,000 if married filing jointly). 

Gross income includes gains, but not losses, reported on Form 8949 or Schedule D.  If you are a sole proprietor filing a Schedule C, gross income is the amount reported on Line 7 of Part 1 – gross receipts less returns and allowances and cost of goods sold plus “other income”.  And if you are a landlord gross income includes the gross rents reported on Schedule E.

So, you see that the filing requirements are not based on actual "net" taxable income.  For any type of business income or capital gains the income before deducting any expenses or deducting the cost basis of investments sold is counted.  You must file a return to identify the expenses and cost basis.

The numbers for individual state income tax returns differ.  You may not have to file a federal return, but you must, or should, file a state return.  For example, the State of Pennsylvania is a gross income tax with no personal exemptions or standard, or itemized, deductions.  You must file a PA-40 and pay the 3.07% flat state income tax if “you received total PA gross taxable income in excess of $33”.  

Regardless of the amount of your gross income, you generally must file an income tax return for 2021 if -

* you had net self-employment income of $400 or more,

* you owe household employment taxes,

* you owe additional taxes on a premature retirement plan withdrawal,

* you failed to take a required minimum distribution from a retirement plan,

* you must repay the 2008 Homebuyer Credit,

* you owe Social Security and Medicare taxes on unreported tip income, or

* you did not receive an Economic Stimulus Payment in 2021 but were entitled to receive one or you received a payment that was less than the amount to which you were entitled, or

* you received an advance payment on the Premium Tax Credit.

There are times you should file a tax return even if you don’t have to -

1. To get a refund.  This is the most obvious reason.  If you do not have enough gross income to file a tax return you still need to file a return to get a refund of any income tax withheld or estimated tax payments, or to apply any of the tax to 2022.

2. If you are entitled to any of the refundable tax credits or refundable portions of tax credits – such as the Earned Income Credit, the Child Tax Credit, the American Opportunity Credit and the Child and Dependent Care Credit.

3. To establish or maintain a carryover of unused deductions or losses, such as a capital loss carryover, a carryover of IRA “basis” on Form 8606 (non-deductible IRA contributions), a carryover of unused home office deductions, or a carryover of suspended passive losses.

4. To “start the clock” on the 3-year audit statute of limitations.   The IRS normally has three years from the due date of a retur,n or the actual filing date, whichever is later, to audit a Form 1040. This is doubled to 6 years if you omitted 25% or more of your income. 

TTFN

DON’T BE IN SUCH A HURRY – BUT DON’T WAIT TILL THE LAST MINUTE

 

According to the IRS today, January 24^th, is the first day the tax agency will begin accepting and processing 2021 tax year returns.

But don’t be in such a hurry to file.  You should not rush to be among the first taxpayers of the year to have your taxes prepared.   Do not give or send your tax preparer your ‘stuff’, or attempt to prepare your own returns, until you have received ALL the forms and information needed to complete the returns! That means every W-2, every 1099, and every K-1 and all the cost basis information on the sale of investments.

During my 50 years in “the business” I have had many experiences where a client came in very early in the season and had his/her return prepared, only to receive another Form 1099 in the mail the day after he/she had sent the finished returns off to his/her “uncles”.

Be aware that if you have a brokerage account there is an excellent chance that you will receive at least one, if not two, corrected “Consolidated 1099 Statements” to report taxable dividends, interest and gross proceeds after the initial statement arrives in late January.  The final corrected 1099 may not arrive until mid-March.

However don’t wait until the last minute.

Many taxpayers who expect to owe their “uncles” wait until the very last minute to get their “stuff” together to prepare their return.  Even if you think you will owe taxes you should have the return prepared early, once you have all the necessary information in hand.  You don’t have to actually file the returns and pay any tax until April 18th.  But by having your 1040 prepared early you will know exactly how much you will owe and have over a month to come up with the money, instead of running around trying to juggle funds days before the deadline. Hey, you might even be surprised to find that you will be getting a refund!

Also consider the workload of your tax preparer.  I had a strict long-standing rule that all returns that are not literally in my hands, with all the necessary information, by a specific date in March will be automatically extended!

There are some tax-related things you should do as early.  Make your 2022 contribution to your traditional or ROTH IRA, and Coverdell Education Savings Account, Section 529 College Savings Plan, or Health Savings Account as early as possible in the year.  Thanks to the miracle of tax-free compounding, by making your contribution on the first available day of each year you will have substantially more in the account by the time you are ready to retire, or when you need the money to pay for education or medical bills, than if you wait till the last minute.

If you make a 2022 ROTH contribution now and later discover that you are not eligible for a ROTH, or, for whatever reason, decide you would rather have the funds in a traditional IRA, you have until the due date of your return to "recharacterize" the contribution.

When making your contribution to a tax-deferred account be sure to identify the year for which it is being made.  Write, for example, “2022 IRA contribution” clearly in the memo section of the check.  If you enclose a payment voucher or coupon provided by the trustee make sure the correct year is marked.  Follow up by checking the next statement for the account to verify the contribution was applied to the correct year.

TTFN

NJ, NY AND PA FOLLOW IRS FILING DEADLINE EXTENSION

NJ.COM reports “N.J. extends tax deadline to May 17, matching federal change” –

“But there will not be an extension for first quarter 2021 individual estimated tax payments, the statement said. Those will still be due on April 15.”

I have not seen anything on the NJ Division of Taxation webpage yet.

As For New York, according to N-21-1 –

“The Commissioner of the New York State Department of Taxation and Finance has extended the due date for personal income tax returns, and related payments, for the 2020 tax year from April 15, 2021 to May 17, 2021.” 

But, as with the IRS – 

“This relief does not apply to estimated tax payments for the 2021 tax year that are due on April 15, 2021. These payments are still due on April 15, 2021.” 

And from the Pennsylvania Department of Revenue –

“The Department of Revenue today announced the deadline for taxpayers to file their 2020 Pennsylvania personal income tax returns and make final 2020 income tax payments is extended to May 17, 2021.”

And -  

“Those who make estimated income tax payments should continue to do so on the same filing schedule that they would normally follow. This includes taxpayers with estimated tax payments due on April 15, 2021.” 

Not from New Jersey, New York or Pennsylvania.  You should check the website of your state tax agency to see if it has extended the filing and paying deadline.

TTFN

FILING AND PAYING DEADLINE EXTENDED!

The IRS, in IR-2021-59, has announced that “the federal income tax filing due date for individuals for the 2020 tax year will be automatically extended from April 15, 2021, to May 17, 2021.”

 

According to the notice -

 

“Individual taxpayers can also postpone federal income tax payments for the 2020 tax year due on April 15, 2021, to May 17, 2021, without penalties and interest, regardless of the amount owed. . . . Penalties, interest and additions to tax will begin to accrue on any remaining unpaid balances as of May 17, 2021. Individual taxpayers will automatically avoid interest and penalties on the taxes paid by May 17.”

 

It also explains –

 

“Individual taxpayers who need additional time to file beyond the May 17 deadline can request a filing extension until Oct. 15 by filing Form 4868.”

 

This applies only to the federal Form 1040 or 1040-SR.  “This relief does not apply to estimated tax payments that are due on April 15, 2021. These payments are still due on April 15.”

 

It also does not necessarily apply to the deadline for filing state income tax returns and paying any balance due.  “State filing and payment deadlines vary and are not always the same as the federal filing deadline. The IRS urges taxpayers to check with their state tax agencies for those details.”

 

I will post here when I hear about any change to New Jersey and New York state return deadlines.

TTFN

WHO MUST FILE A 2017 TAX RETURN?

Do you have to file a 2017 tax return?  Let’s review.

Generally, you do not have to file a federal 2017 Form 1040, or 1040A, unless your “gross income” is at least -

Single = 10,400

Single, Age 65 or Older = 11,950 

Head of Household (with one dependent) = 17,450

Married Couple = 20,800

Family of 4 = 28,900

Married Couple, One Spouse 65 or Older = 22,050

Married Couple, Both 65 or Older = 23,300

“Gross income” means –

“All income you received in the form of money, goods, property, and services that is not exempt from tax, including any income from sources outside the United States or from the sale of your main home (even if you can exclude part or all of it). Do not include any social security benefits unless (a) you are married filing a separate return and you lived with your spouse at any time in 2014 or (b) one-half of your social security benefits plus your other gross income and any tax-exempt interest is more than $25,000 ($32,000 if married filing jointly).” 

Gross income includes gains, but not losses, reported on Form 8949 or Schedule D.  If you are a sole proprietor filing a Schedule C, gross income is the amount reported on Line 7 of Part 1 – gross receipts less returns and allowances and cost of goods sold plus “other income”.  And if you are a landlord gross income includes the gross rents reported on Schedule E.

So, you see that the filing requirements are not based on actual "net" taxable income.  For any type of business income or capital gains the income before deducting any expenses or deducting the cost basis of investments sold is counted.  You must file a return to identify the expenses and cost basis.

You must file a tax return for a dependent if any of the following applies –

*  unearned income is more than $1,050

* earned income is more than $6,350, or

* gross income is more than the greater of $1,050 or the sum of $350 and the individual's earned income (total not more than $6,350).

Regardless of your gross income, you generally must file an income tax return if -

* you had net self-employment income of $400 or more,

* you owe household employment taxes,

* you owe additional taxes on premature retirement plan distributions

* you failed to take a required minimum distribution from a retirement plan,

* you must repay the 2008 Homebuyer Credit,

* you owe Social Security and Medicare taxes on unreported tip income, or

* you received an advance payment on the Premium Tax Credit.

And, whether or not you are required to do so, you should file a tax return to get a refund of tax withheld or to take advantage of a refundable tax credit like the Earned Income Credit or the Additional Child Tax Credit.

Another reason to file a tax return, even if you are not legally required to do so, is to start the clock running on the normally 3-year statute of limitations for IRS audit or review of a return. 

The numbers for individual state income tax returns differ.  You may not have to file a federal return, but you must, or should, file a state return.  For example, the State of Pennsylvania is a gross income tax with no personal exemptions or standard, or itemized, deductions.  You must file a PA-40 and pay the 3.07% flat state income tax if “you received total PA gross taxable income in excess of $33”. 

Any questions?  Ask your, or a, tax professional.  To find a qualified tax professional in your area go to FIND A TAX PROFESSIONAL.  Whatever you do, do not email me.  I am no longer accepting any new clients.  

Want to know “What’s New In Taxes for 2017”?  Click here.  

TTFN

DON’T BE IN SUCH A HURRY – BUT DON’T WAIT UNTIL THE LAST MINUTE

Some more good advice from WON’T YOU TAKE THIS ADVICE I HAND YOU LIKE A BROTHER.

You should not rush to be among the first taxpayers of the year to have your taxes done. Do not give or send your tax preparer your ‘stuff’, or attempt to prepare your own returns, until you have received all the forms and information needed to complete the returns! That means every W-2, every 1099, and every K-1 and all the cost basis information on the sale of investments.

I have had many experiences where a client came in very early in the season and had his/her return prepared, only to receive another Form 1099 in the mail the day after he/she had sent the finished returns off to his/her “uncles”.

But, on the other hand, don’t wait until the last minute to prepare your returns or have your returns prepared.

Many taxpayers who expect to owe their “uncles” wait until the very last minute to get their “stuff” together to prepare their return. Even if you think you will owe taxes you should have the return prepared early, once you have all the necessary information in hand.

 

You don’t have to actually file the returns and pay the tax until April 15th. But by having your 1040 prepared early you will know exactly how much you will owe and have over a month to come up with the money, instead of running around trying to juggle funds days before the deadline. Hey, you might even be surprised to find that you will be getting a refund!

Also consider the workload of your tax preparer. I have a strict long-standing rule that all returns that are not literally in my hands, with all the necessary information, by March 19th will be automatically extended!

Another good reason not to wait - the IRS is advising taxpayers to file early this year in an attempt to avoid identity theft by crooks who may file a return under your name claiming a refund.  The reason for filing early is to ensure you are the first person to file under your name. 

While this is good advice, it does not change my above advice to wait until you have received all the forms and information needed to complete your returns.  

TTFN

 

 

 

REMINDERS

I know I reminded you in yesterday's special BUZZ edition - but the reminder needs repeating.

 

Today is the final deadline for filing your 2012 federal Form 1040 and corresponding state tax returns.  It is very important that you get your 1040 in the mail today, even if you cannot pay all, or any, of any balance due.

The penalty for late payment of any tax due is .5% (1/2 of 1%) of the tax due per month.  The penalty for late filing is 5% of the tax due per month – 10 times more!

 

And, because of the mucking fess resulting from the government shut down, it couldn't hurt to mail your return via Priority Mail or registered mail to document the postmark.

 

So get thee to the Post Office!
 

TTFN

PS - Kay Bell provides an additional reminder that October 15 is not just about GDEs in her post "4 Oct. 15 Tax Deadlines: 1 Filing, 3 Retirement Related" at DON'T MESS WITH TAXES.

A QUICK TIMELY TAX TIP

I usually do not recommend that taxpayers do this – as it really does not prove anything – but given the mucking fess arising from the irresponsibility of the idiots in Congress (i.e. government shutdown) I do believe “it couldn’t hurt” and should be done with returns that have a balance due.

Fellow tax blogger William Perez from ABOUT.COM says –

“If you are going to mail in your tax return, I would recommend sending it by certified mail with return receipt. This way, you'll have proof that your tax return was mailed out by the deadline.

FYI – the additional cost is deductible IF you can itemize and if you get a tax benefit from excess Miscellaneous deductions.

TTFN

DON'T BE IN SUCH A HURRY!

Here is another year-beginning post “rerun”, with an added warning and a "PS":

I certainly don’t think you should wait till the last minute to prepare your tax return. I also don’t think you should rush to be among the first taxpayers of the year to have your taxes done.

For me the “tax filing season” officially begins on February 1st. I tell my clients not to come to me until then, and rarely prepare a tax return before the 1st of February unless both the client and I are sure that he/she has received everything necessary to properly prepare the return.

The reason I chose February 1st is because, under federal law, all W-2s, 1099s and 1098s are required to be furnished to taxpayers by January 31st (unless the 31st falls on a week-end). The instructions for these forms state that the “furnish” requirement will be met if the form is properly addressed and mailed on January 31st.

Plus, most banks, brokerages, mortgage companies, colleges and the like are not able to send out 1099s and 1098s until the end of the month because of the volume involved.

Several years ago, when I still had a storefront office open to the public, a long-time client came in on the morning of February 1st to have his return prepared. He had received all the 1099s for interest and dividends for all accounts and investments as well as the 1099s for Social Security and pensions. Upon reviewing the “stuff” he presented to me I found that he had a form for every source of income he had reported on the previous year’s return. He told me he had not sold any stock during the year, and that there had been no spin-offs, mergers or “cash in lieu” for fractional shares. So I prepared the federal and state returns.

He left the office with the completed returns happy in the thought that he was finished with his “uncles” for the year and pleased with himself for being so early. He returned home, signed the returns with his wife, and went directly to the Post Office to mail the returns.

The next afternoon I got a call from the client. He had gotten another 1099-R in the mail that morning! His wife received a pension from Lucent Technologies and, while the amount of the annual pension generally remained constant, early in the year Lucent had made a special one-time distribution to its retirees from a fund other than the regular pension fund, and issued a separate 1099-R for this distribution.

The client returned to my office that afternoon and I prepared amended returns, for an additional fee, to claim the income and withholding from the new 1099-R. I instructed him to wait to mail the amended returns until he received the refund checks from the original returns, so as not to confuse the IRS and NJ by having two returns in the system at the same time. The bottom line is that the client had to pay twice for filing his returns.

More recently another long-time client – a single mother with a daughter in college – gave me what she thought was all her and her daughter’s “stuff” on January 27th. I cautioned her that she should wait for a few more days to make sure she had received everything – but she assured me she had. She was, of course, in a hurry to get the refunds, which she always had directly deposited into her bank account.

Luckily I did not rush to do the return. The next day she called to say that something else had arrived in the mail – a W-2 for her daughter’s work-study, which she dropped off for me. Again I did not rush to put pen to paper. The next day she called again to say that still another tax form had arrived – a Form 1098-T for college tuition. It was a good thing I had waited!

If you have a brokerage account there is an excellent chance that you will receive at least one corrected “Consolidated 1099 Statements” to report taxable dividends, interest and gross proceeds after the initial statement arrives in late January. The final corrected 1099 may not arrive until mid-March.

And don’t get me started on K-1s. These forms from partnerships, LLCs and sub-chapter S corporations are not required to be distributed by January 31st, and many do not arrive until the end of March or beginning of April!

My instructions to clients clearly state:

“Do not give or send me your ‘stuff’ until you have received all the forms and information needed to complete the returns! That means every W-2, every 1099, and every K-1. I do not want to receive your 'stuff' in installments. If you are waiting for an information return such as a Form K-1, for details from your broker on the cost of stock sold during the year, or for anything else, please do not give or send me anything until you have everything in hand!”

And, whatever you do, DO NOT listen to erroneous ads that say you can file your return using your last pay-stub.  THIS IS NOT TRUE!

So – don’t be in such a hurry!

PS- Also do not wait until the last minute.  For one thing, your tax preparer may have, as I do, a “cut-off date” after which he/she will not accept work to be completed in time for the April 17^th filing deadline.  Even if you expect to owe your “uncles” it is “more better” to have the return prepared early – so you have more than a month to figure out how to come up with the money you owe.

TTFN

GIT 'ER DONE!

This past Monday was the deadline for filing extended Form 1040s (and 1040As) – unless you live in a state that was affected by Hurricane Irene.  Individuals (and businesses) in these states have until October 31^st to get their GD extension in the mail (see my post “It Ain’t Necessarily So”). 

But if you do not live in a state that was a victim of Irene and did not get your extended 2010 Form 1040 (or 1040A) in the mail on Monday do not panic.  You should complete your return as soon as possible and get it in the mail to Uncle Sam.

If you are due a refund there is no penalty.  You will only be penalized if you owe your “uncle”.

If you do owe your “uncle” you have missed the statutory deadline and are now “filing late” as well as “paying late”.  The penalty for late filing is 5% of the balance due per month until it is paid in full – which is 10x the penalty for merely paying late.  So the longer you wait the more you will be penalized.

Don’t decide not to file because you are now late.  The IRS will eventually “reconstruct” your return in the worst possible way (i.e. married filing separately instead of joint filing or Single instead of Head of Household with no dependents and Standard Deduction instead of itemizing) based on the income information it has in its system from W-2s and 1099s, assess penalties and interest, and send you a bill.

So if you still have not completed and mailed in your 2010 income tax return – git ‘er done!

TTFN

A WASTE OF MONEY

I realize I am too late to make a difference for this tax filing season, but I must take exception to the advice provided by my blogging buddy Joe Kristan in his post “Don’t Waste Your Tax Prep Fee by Cheaping Out on Postage” at the ROTH AND COMPANY TAX UPDATE, a true rarity (except for the issue of tax preparer registration).

Joe says –

“If you aren't filing electronically, now isn't the time to cheap out. You ought to spring for the extra $5.10 to file your return ‘certified mail, return receipt requested’. It's well worth the time and trouble of going to the post office to get that postmarked receipt.”

I agree it was very important to make sure that your tax returns, or extension applications, were postmarked by midnight on April 18th. I point out the importance in my April 18th TAX TIP at MainStreet.com. However you shouldn’t waste your time by waiting on a humongous line or your money by paying extra for ‘certified mail, return receipt requested’.

You should not simply have put your envelopes in a mailbox on the street. You should have gone to a post office branch and mailed the envelopes inside the branch – more better actually handing the envelopes to a postal clerk at the window (if the line was not out the door).

But the extra you spend to get a return receipt is a total waste of money. It means absolutely nothing – only that the IRS received an envelope from you that was postmarked on April 18th. It doesn't hurt to do this (except your wallet) - but it really doesn't help either.

At one of the many continuing education seminars I attended years ago a participant told the story of a colleague who sent an envelope to the IRS, and his state tax agency, on the 15th of every month of the year, paying for “certified mail, return receipt requested”. This way, he believed, if any correspondence or form was ever actually sent late, or lost, or actually never sent, he would have a green card signed by the IRS or the state to prove that it had been timely filed and received by the IRS. The participant did not say if this strategy ever worked.

I believe the IRS will give more weight to a statement, given under penalty of perjury, that the envelope was delivered to the post office by the due date than to a return receipt card. As the above story indicated, all the green card indicates is that an envelope sent on the 15th, or 18th, of the month was received by the IRS – it does not indicate that the envelope contained the actual return or form in question.

I would be interested to hear from fellow tax preparers of any instances where the green return receipt card actually worked in proving timely filing to the IRS?

TTFN

DON'T BE IN SUCH A HURRY!

I certainly don’t think you should wait till the last minute to prepare your tax return. I also don’t think you should rush to be among the first taxpayers of the year to have your taxes done.

For me the “tax filing season” officially begins on February 1st. I tell my clients not to come to me until then, and rarely prepare a tax return before the 1st of February unless both the client and I are sure that he/she has received everything necessary to properly prepare the return.

The reason I chose February 1st is because, under federal law, all W-2s, 1099s and 1098s are required to be furnished to taxpayers by January 31st (unless the 31st falls on a week-end). The instructions for these forms state that the “furnish” requirement will be met if the form is properly addressed and mailed on January 31st.

Plus, most banks, brokerages, mortgage companies, colleges and the like are not able to send out 1099s and 1098s until the end of the month because of the volume involved.

Several years ago, when I still had a storefront office open to the public, a long-time client came in on the morning of February 1st to have his return prepared. He had received all the 1099s for interest and dividends for all accounts and investments as well as the 1099s for Social Security and pensions. Upon reviewing the “stuff” he presented to me I found that he had a form for every source of income he had reported on the previous year’s return. He told me he had not sold any stock during the year, and that there had been no spin-offs, mergers or “cash in lieu” for fractional shares. So I prepared the federal and state returns.

He left the office with the completed returns happy in the thought that he was finished with his “uncles” for the year and pleased with himself for being so early. He returned home, signed the returns with his wife, and went directly to the Post Office to mail the returns.

The next afternoon I got a call from the client. He had gotten another 1099-R in the mail that morning! His wife received a pension from Lucent Technologies and, while the amount of the annual pension generally remained constant, early in the year Lucent had made a special one-time distribution to its retirees from a fund other than the regular pension fund, and issued a separate 1099-R for this distribution.

The client returned to my office that afternoon and I prepared amended returns, for an additional fee, to claim the income and withholding from the new 1099-R. I instructed him to wait to mail the amended returns until he received the refund checks from the original returns, so as not to confuse the IRS and NJ by having two returns in the system at the same time. The bottom line is that the client had to pay twice for filing his returns.

More recently another long-time client – a single mother with a daughter in college – gave me what she thought was all her and her daughter’s “stuff” on January 27th. I cautioned her that she should wait for a few more days to make sure she had received everything – but she assured me she had. She was, of course, in a hurry to get the refunds, which she always had directly deposited into her bank account.

.

Luckily I did not rush to do the return. The next day she called to say that something else had arrived in the mail – a W-2 for her daughter’s work-study, which she dropped off for me. Again I did not rush to put pen to paper. The next day she called again to say that still another tax form had arrived – a Form 1098-T for college tuition. It was a good thing I had waited!

If you have a brokerage account there is an excellent chance that you will receive at least one corrected “Consolidated 1099 Statements” to report taxable dividends, interest and gross proceeds after the initial statement arrives in late January. The final corrected 1099 may not arrive until mid-March.

And don’t get me started on K-1s. These forms from partnerships, LLCs and sub-chapter S corporations are not required to be distributed by January 31st, and many do not arrive until the end of March or beginning of April!

My instructions to clients clearly state:

“Do not give or send me your ‘stuff’ until you have received all the forms and information needed to complete the returns! That means every W-2, every 1099, and every K-1. I do not want to receive your 'stuff' in installments. If you are waiting for an information return such as a Form K-1, for details from your broker on the cost of stock sold during the year, or for anything else, please do not give or send me anything until you have everything in hand!”

So – don’t be in such a hurry!

SOME NEW JERSEY ITEMS

+ Each year the State of New Jersey usually sends out the green NJ Homestead Rebate application to seniors and the disabled in May. This will not be happen this year. Here is the word from the NJ Division of Taxation -

“The proposed State Budget for FY 2011 contains modifications to the Homestead Rebate Program. In years past, rebate applications were sent to senior and disabled homeowners in May. However, until the proposed modifications to the Rebate Program become State Law, no rebate applications will be sent out or accepted by the Division of Taxation. To repeat, THE DIVISION DOES NOT EXPECT TO SEND OUT REBATE APPLICATIONS IN MAY.

The Governor has proposed that 2009 rebates be paid in quarterly installments as credits on the homeowner’s property tax bill. Homeowners would receive the first quarterly credit in May of 2011. Tenants would no longer receive the rebate.

Under the proposal, eligibility requirements and rebate amounts for the 2009 homeowner rebate remain the same as last year. The eligibility criteria used last year for the 2008 homeowner rebate are as follows:

* Domicile (permanent legal residence) is in New Jersey.

* Own and occupy a home in New Jersey that was the applicant’s principal residence on October 1, 2008.

* The home must be subject to local property taxes, and 2008 property taxes must have been paid. However, the State Budget mandates that the 2008 rebate be calculated using 2006 property taxes.

* New Jersey gross income for 2008 does not exceed certain limits. For homeowners age 65 or older and/or disabled on December 31, 2008, the income limit was $150,000 or less. For homeowners under age 65 and not disabled on December 31, 2008, the income limit was $75,000 or less.

Information about the proposed changes to the Homestead Rebate Program is contained in the Governor’s FY 2011 Budget in Brief. AGAIN, as a result of the proposed changes, rebate applications for homeowners will not be mailed in May as they had in past years.”

+ Thankfully the federal and state income tax return filing deadline for residents of Atlantic, Bergen, Cape May, Essex, Gloucester, Mercer, Middlesex, Monmouth, Morris, Passaic, Somerset and Union counties in New Jersey has been extended from April 15th to May 11th because of recent flooding.

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I have several GD extensions for residents of these counties, and, while none of them were directly affected by the flooding, it is nice to have the extra time so as to avoid penalty and interest on extended returns which will have a balance due to Sam or Chris. However it does create another deadline for me to deal with.

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Obviously extended returns for residents of these counties with an anticipated balance due will be given priority over returns with anticipated refunds, regardless of when the returns actually arrived in my hand.

Here is the official word from the NJ Division of Taxation -

“Taxpayers affected by the storms now have until May 11, 2010 to file their New Jersey tax returns such as individual income tax, corporation business tax, sales tax, inheritance tax, estate tax, partnership and other business taxes administered by the Division of Taxation and to submit payments for any return and/or payment, including estimated payments which have either an original or extended due date occurring on or after March 12, 2010 and on or before May 11, 2010.

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If the IRS further extends the filing deadline for federal tax purposes, the deadline for New Jersey returns and payments will also be extended.”

TTFN