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

Another “meaty” BUZZ!

* Just call me "Rambing Rob".  Please check out my RAMBLINGS.  And share with friends, family, and co-workers.  Here's an idea - why not subscribe to the posts.  Thanks!

* Let me begin with an excerpt of a recent post from a state-specific tax professional FACEBOOK group to which I belong (highlight is mine) –

“Client got a CP-2000 and quickly agreed and paid the amount asked for. Then they showed me the notice. Turns out the IRS added the same item twice, so the amount due is about half.”

I share this with you as a reminder to never assume a balance due notice from the IRS or a state tax agency is correct and just pay it!  In my experience 2/3 – 3/4 of all notices are at least partially incorrect.  If you receive a notice from the IRS or a state agency give it to your, or a, tax professional immediately!

* A “Special Edition Tax Tip” from the IRS – “IRS Offers Tips to Help You Prepare for Hurricanes, Natural Disasters”.

* A pop culture milestone - the SURLY SUBGROUP announces “the Beatles’ hit song Taxman has just turned 50” in “Taxman at 50”.

This is a new, to me, tax blog by tax academics who teach at law schools around the country that I discovered via Joe Kristan’s weekday daily BUZZ-like “Tax Round-up”.

* A request from Jim Blankenship at GETTING YOUR FINANCIAL DUCKS IN A ROW – “If your hobby makes money, read this”.

“If you have a hobby that makes money, you may need to claim this money as income, net of your expenses, on your tax return.”

The post is actually a reprint of an IRS “Summertime Tax Tip” – but does include important information for hobbyists.

* Kay Bell is correct when she says “Tax holidays mean use taxes for out-of-state shoppers” at DON’T MESS WITH TAXES.

However, between you and me, I expect that only a very small handful of shoppers, if any, are actually paying state use tax.

* And at Kay’s BANKRATE.COM blog we find “Tax phishing scam mimics software providers”.

Once again I am glad I do not use flawed and expensive tax preparation software to prepare client 1040s.

 

MY AUGUST SPECIAL OFFER-

 

I have created a new monthly newsletter titled BOBSERVATIONS with

 my observations on "life, liberty, and the pursuit of happiness".  

 

The cost of this new monthly newsletter is normally $9.95 for 12 monthly issues delivered as a pdf email attachment.  For all orders postmarked in August 2016 you the cost is only $6.65 – 1/3 off!

 

Plus I will send you as a free gift my e-book WON'T YOU TAKE THIS ADVICE I HAND YOU LIKE A BROTHER - a compilation of my best tax advice from 45 years of preparing 1040s that currently sells for $7.95.

 

Click here to download a free copy of the premiere issue.

 

Send your check or money order for $6.65 payable to Robert D Flach, and your email address, to –

 

BOBSERVATIONS, ROBERT D FLACH, PO BOX A, HAWLEY PA 18428 

 

* The CCH week-day daily Headline News reports “Wyden Touts Tax Proposals for Housing” -

“Sen. Ron Wyden, D-Ore., ranking member of the Senate Finance Committee (SFC), continues to promote his renewed first-time homebuyer tax credit while Congress is in recess. The First-Time Homebuyer Credit Bill of 2016 (Sen 3175) would allow qualified first time homebuyers to receive up to a $10,000 refundable tax credit.”

This legislation must never pass.  Refundable tax credits are fraud magnets.

Back in 2010 CNN Money quoted a Treasury Department report finding that “more than 1,200 prison inmates, including 241 serving life sentences, defrauded the government of $9.1 million in tax credits reserved for first-time homebuyers”. 

In 2011 the Washington Reporter announced “more than 100 employees of the Internal Revenue Service cheated the government by fraudulently claiming a first-time homebuyer tax credit included in the 2008 and 2009 economic stimulus packages, according to federal investigators”.

And it was not successful.  An article in the John Marshall Law Review by SJ Webber from 2011 suggests that the credit failed to deliver on its promises.

If you want to provide money to encourage individuals to purchase a home then offer a direct federal point-of-purchase subsidy payment.

Read my lips – NO REFUNDABLE TAX CREDITS!

* Lew Taishoff of the TAISHOFF LAW BLOG reminds us of what I have been telling my self-employed artist clients for years in “An Artist’s Stock In Trade”.

The word, as Lew properly explains, is (highlight is mine) “an artist who contributes her own works to a charity, and can substantiate the contribution sufficiently for Section 170 and Reg. 1.170A-13(b)(1), is limited to a deduction not for the retail or fair market value of the contributed artwork, but only for what would amount to cost of goods sold”.

The artist can only deduct the actual cost of the item donated, and not what he or she could sell it for.

Lew’s post discusses a recent court case and ends with the following good advice that applies to all taxpayers and not just artists –

“Takeaway for artists- Save the receipts for any materials you use. Could be very handy.”

* A "Constipation, Mr Holmes" moment at the Tax Policy Center’s TAXVOX blog, where Roberton C. Williams reminds us of the obvious – “Federal Taxes Are Very Progressive” – and provides some recent statistics –

“Updated estimates from the Tax Policy Center project that effective federal tax rates this year will range from 3.5 percent for households in the lowest-income quintile (or fifth) to 33.0 percent for those in the top 1 percent.

The effective federal tax rate for all households—including individual and corporate income taxes, payroll taxes, excise taxes, and estate and gift taxes—will average 19.9 percent in 2016. Individual income taxes will account for half of total revenue (9.9 percent of income) and payroll taxes will provide just over a third (6.9 percent of income). Most of the rest will come from corporate income taxes (2.1 percent of income) with just 5 percent coming from excise and estate and gift taxes (a combined 1 percent of income).”

I have continually supported a more flat tax rate over a highly progressive tax system.  Entrepreneurship, success, and ambition should not be punished.  The “wealthy” should not be more highly taxed merely because they can afford it.

* And from the Tax Foundation’s TAX POLICY BLOG, in a take on a previous entry in the series, the Foundation’s newest map shows “The Real Value of $100 in Metropolitan Areas”.

The post identifies the ten most expensive cities in the United States.  Not surprising #3 on the list includes my former home - $100 in the “New York-Newark-Jersey City, NY-NJ-PA” metropolitan area is worth only $81.77.  Still more proof that moving to northeast PA was a good idea.

* FYI - IRS Summertime Tax Tip 2016-17 helps you to “Find Easy-to-Use Online Tools on IRS.gov”.

* Let me end with Bill and Hillary Clinton’s 2015 federal income tax return (click here).  The return shows that the couple had an AGI of about $10,600,000 and donated $1,042,000 – 9.8% of AGI - to charity.  They paid about $3,323,000 in combined federal income tax and Obamacare surtaxes – 31.4% of AGI – and $301,700 in self-employment tax.

Of course, Dangerous Donald’s return still remains a mystery, and I expect will never be released.

THE FINAL WORD

I realize it looks like I am obsessing on Dangerous Donald.  But I just can’t turn my head and pretend I just don’t see.  I truly believe, for the future safety of America and the world, that this message needs to be constantly repeated until it is finally understood.

I will say it again - regardless of your political beliefs, it is vitally important that Trump NEVER become President!

The reason is not his alleged political policies.  The problem is truly with the man and not with his politics (however unacceptable his politics may be).

Donald Trump suffers acutely from “Narcissistic Personality Disorder”.  Because of this he is incapable of acting or speaking intelligently, maturely, truthfully, and rationally.  And, part of his disorder, he is incapable of dealing with criticism and challenges like a mature adult.

Even if Hillary is as bad as her worst critics make her out to be (which I personally do not believe), a President Clinton is a hundred times better, and safer, for the country, and the world, than a President Trump.

Before I go – kudos for another Republican with a conscience and balls.  Click here.  We need more Republican Congresspersons and candidates to follow!

TTFN

Do you want to learn how to pay the absolute least amount of federal and state income tax possible – and experience the joy of avoiding taxes?  Click here to check out my library of tax planning and preparation books, guides, reports, and newsletters.

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

* The NSA Blog reports “AICPA Again Loses Suit Over IRS Voluntary Filing Season Program.”

The AICPA continues to oppose any program that identifies individuals who have proven competency and currency in preparing 1040s.  They feel CPA’s “own” the tax preparation industry and continue to try to maintain the bogus “urban tax myth” that CPAs are 1040 experts.

The AICPA claimed its members were injured parties because they could lose business to the voluntarily registered preparers.  Of course CPAs will lose business if there is a way to properly identify tax preparers who remain current in 1040 tax law – and they should!

See my article “Don’t Assume”.

* ACCOUNTING TODAY gives us a slide show on “Back-to-School Tax Tips”.  It covers what is and is not deductible.

* Sole proprietors – do me a favor and check out the premiere issue of my subscription newsletter ROBERT D FLACH’S THE SCHEDULE C LETTER.  Click here to download

* As #15 in the CPA ADVISOR “2016 Fringe Benefits Tax Series” Ken Berry (not the actor) discusses “Tax-Free Commuting Expenses”.

For links to the first 14 entries in the series go here.  

* From FORBES.COM’s TaxGirl Kelly Phillips Erb – “IRS Announces New Changes, Including Rolling Renewals, To ITIN Procedures”.

* More of an FYI than tax BUZZ – the latest TAX FOUNDATION map shows “The Real Value of $100 in Each State”.

My move from NJ to PA continues to pay off - $100 is only worth $87.34 in NJ, but $101.83 in PA!  It looks like NJ is fourth from the bottom on the list – ahead of only NY, Hawaii, and Washington, DC.   It looks like you get the most bang for your buck in Mississippi.  

* Here is a timely tax topic.  Over at her BANKRATE.COM tax blog Kay Bell tells us “Senate OKs tax break for Olympic medalists” -

“With the 2016 Summer Olympics starting this week in Rio de Janeiro, members of Congress are again doing their version of the ‘USA, USA’ chant. They've introduced legislation that would make the money won by U.S. Olympic medalists tax-free.”  

* Staying on this topic, Kyle Pomerleau asks the question “Should Olympic Prize Money Be Taxed?” at the Tax Foundation’s TAX POLICY BLOG.  Here is Kyle’s answer, which I tend to agree with –

“It makes sense for the IRS to tax this prize money. Olympic athletes, just as most athletes, earn part of their income competing in events and earning prize money. For example, tennis players who will participate in the 2016 U.S. Open will compete for a total prize pool of $46 million. The winner of the men's and women's singles will each get $3.5 million. This prize money is income just as a teacher’s salary is income and is taxed as such. It does not make sense to exempt a specific source of income earned by a specific profession from the income tax, but tax all the income earned by everyone else.”

What do you think?

MY AUGUST SPECIAL OFFER-

 

I have created a new monthly newsletter titled BOBSERVATIONS with

 my observations on "life, liberty, and the pursuit of happiness".  

 

The cost of this new monthly newsletter is normally $9.95 for 12 monthly issues delivered as a pdf email attachment.  For all orders postmarked in August 2016 you the cost is only $6.65 – 1/3 off!

 

Plus I will send you as a free gift my e-book WON'T YOU TAKE THIS ADVICE I HAND YOU LIKE A BROTHER - a compilation of my best tax advice from 45 years of preparing 1040s that currently sells for $7.95.

 

Click here to download a free copy of the premiere issue.

 

Send your check or money order for $6.65 payable to Robert D Flach – and your email address – to –

 

BOBSERVATIONS, ROBERT D FLACH, PO BOX A, HAWLEY PA 18428 

 THE FINAL WORD

Does this remind you of anyone?

Narcissistic Personality Disorder DSM IV Criteria:

Definition: A pervasive pattern of grandiosity (in fantasy or behavior), need for admiration, and lack of empathy, beginning by early adulthood and present in a variety of contexts, as indicated by five (or more) of the following:

(1)  Has a grandiose sense of self-importance (e.g., exaggerates achievements and talents, expects to be recognized as superior without commensurate achievements);

(2)  Is preoccupied with fantasies of unlimited success, power, brilliance, beauty, or ideal love;

(3)  Believes that he or she is "special" and unique and can only be understood by, or should associate with, other special or high-status people (or institutions);

(4)  Requires excessive admiration;

(5)  Has a sense of entitlement, i.e., unreasonable expectations of especially favorable treatment or automatic compliance with his or her expectations;

(6)  Is interpersonally exploitative, i.e., takes advantage of others to achieve his or her own ends;

(7)  Lacks empathy:  is unwilling to recognize or identify with the feelings and needs of others;

(8)  Is often envious of others or believes that others are envious of him or her;

(9)  Shows arrogant, haughty behaviors or attitudes.

Is this the man you want as President?

TTFN

 

Do you want to learn how to pay the absolute least amount of federal and state income tax possible – and experience the joy of avoiding taxes?  Click here to check out my library of tax planning and preparation books, guides, reports, and newsletters.

 

BE AFRAID! BE VERY AFRAID!

 

 

The reasons to NOT vote for Dangerous Donald are endless - beginning with his mental disorder-

(narcissistic personality disorder).

 

But perhaps the most important reason is identified here in this poster.

 

If you care anything about the future of America and the world you CAN NOT vote for this dangerous narcissist!

 

If Trump wins America, and the world, truly loses!

 

TTFN

WHAT’S THE BUZZ, TELL ME WHAT’S A HAPPENNIN’ – SPECIAL THURSDAY EDITION

Can’t wait until Monday to BUZZ – it is chock-a-block already!

 

* Chris Johnson suggests what to do “When the IRS Says You Owe More” at CAJ TAX SOLUTIONS.

 

I certainly agree with his statement –

 

“When you receive an IRS notice demanding additional tax, do not pay until you are sure your liability was computed correctly.”

 

As I have been saying for years, in my experience 2/3 to 3/4 of all IRS notices are wrong.

 

But the point of Chris’ post is this – “Uncle Sam’s counterpart at the state level will need to know about the changes to your federal return if it has an effect on your state tax liability” whether you owed Sam more or Sam actually owed you.

 

If your federal return is changed it may also change your state return – and the state should be advised.  If you don’t tell the state that your federal return was changed and you owe more you can be sure the IRS will (Sam and states share information) – and you can end up “receiving a notice from the state automatically assessing additional taxes, interest and penalties” down the road.

 

* At THE SLOTT REPORT Beverly DeVeny discusses “the hierarchy of tax guidance and how it interacts with retirement plans” in “Tax Guidance: What Can You Depend On?"

 

* The August issue of ROBERT D FLACH'S THE 1040 LETTER is here!  Hey – it’s free!  Click here to download.

 

* TaxGirl Kelly Phillips Erb of FORBES.COM helps parents with “Sorting Out Tax Breaks For College, Even When You're Still In High School” by using an example involving her daughter.

 

* And Kelly repeats the word that “IRS Warns Again On Scams Targeting Taxpayers” –

 

“Specifically, the IRS is reporting an increase in “robo-calls” where scammers leave urgent callback requests telling taxpayers to call back to settle their “tax bill.” These fake calls, which often sound threatening, claim to be the last warning before legal action is taken.”

 

The IRS will never attempt to collect back taxes in this way.  If you receive a call from someone claiming to be from the IRS just hang up!

 

* Over at DON’T MESS WITH TAXES Kay Bell, the yellow rose of taxes, lists “3 reasons to file your extended taxes now” -

 

“So whatever your reason for not filing your extended tax return yet, get off the stick and file ASAP.”

 

* Another from Kay – a reminder of current and upcoming “State Sales Tax Holidays”.

 

* Returning to FORBES.COM, I cannot find fault with Tony Nitti’s statement “There are a thousand good reasons to never get married” (I have never been legally married), and agree with his observation “there are also significant tax hits that come with getting hitched, or as they’ve collectively been coined, the ‘marriage penalty’.”

 

In “IRS Increases' Marriage Penalty’, Unmarried Cohabitants To Get Twice The Mortgage InterestDeduction” he tells us –

 

“Late last week, the IRS exacerbated the marriage penalty by offering a very large reward for unmarried taxpayers who co-own a home: double the mortgage interest deduction available to married taxpayer.

 

In AOD 2016-02, the IRS acquiesced in the Ninth Circuit’s decision in Sophy v. Commissioner, in which the appeals court overturned a Tax Court decision and allowed a same-sex, unmarried, co-habiting couple to each deduct the mortgage interest on $1.1 million of acquisition and home equity debt. In reaching its conclusion, the Ninth Circuit determined that the mortgage interest limitation is meant to apply on a per-taxpayer, rather than a per-residence, basis. The AOD issued by the IRS confirms that the Service will follow this treatment.”

 

Of course this situation applies to very few taxpayers – i.e. those who purchase a home for more than $2 Million.  But it does highlight the existence of the marriage penalty.

 

The Tax Code should neither encourage nor discourage marriage.  It should be “marriage neutral”.   Click here to read how I said I would rewrite the Tax Code regarding marriage back in 2011.

 

* Please check out the free copy of the premiere issue of my new subscription newsletter ROBERT D FLACH’S THE SCHEDULE C LETTER.  Click here to download.

 

* You can “subscribe” to TWTP blog posts by entering your email address in the space under “FOLLOW BY EMAIL" in the left border.  Receive my posts in your inbox!

 

* While I continually advise readers to never use Henry and Richard, or others of their “ilk”, to prepare their tax returns, I can recommend a post from the H+R blog – “Breaking Down A Paycheck: Teaching Your Teen About Tax Withholding”.

 

What the post forgot - for NJ and some other state employees payments via withholding also include required employee contributions to the state’s unemployment, disability, and/or family leave funds.  

 

* FYI – I have reached 1200 Twitter followers! You can follow me at @rdftaxpro.

 

THE FINAL WORD

 

Is this the man you want as President?

 

CNN on Trump  University

 

Donald Trump's Victims: Michael Diehl

 

TTFN

 

Do you want to learn how to pay the absolute least amount of federal and state income tax possible – and experience the joy of avoiding taxes?  Click here to check out my library of tax planning and preparation books, guides, reports, and newsletters.

 

 

 

 

 

 

 

 

 

 

IT AIN’T NECESSARILY SO – AMT EDITION

Here is something that you should know if you are or will be a victim of the dreaded Alternative Minimum Tax (AMT) – which I recently had to explain to a client who was a victim for 2015.

The “published” AMT tax rates are 26% and 28%.  But the true “effective” tax rates could actually be 32.5% and 35%.

Your AMT exemption, based on your filing status, is reduced by 25% for every dollar that your Alternative Minimum Taxable Income (AMTI) exceeds a specific threshold amount, again based on your filing status.

For 2016 the AMT threshold amounts are –

•    $119,700 – Single and Head of Household

•    $159,700 – Married Filing Joint and Qualifying Widow(er)

•    $ 79,850 – Married Filing Separately

The AMT base exemption amounts are –

•    $53,900 - Single and Head of Household

•    $83,800 - Married Filing Joint and Qualifying Widow(er) 

•    $41,900 - Married Filing Separate 

So if you are filing a joint return and your MAGI is $169,700 you reduce your exemption, and increase the income subject to AMT, by $2,500.  The exemption allowed will be $81,300 and not $83,800.  So you will be paying AMT on $88,400.

If your MAGI was $159,700 you would get the full exemption of $83,800 and pay AMT on $75,900. 

The additional $10,000 in income increases the amount of income subject to AMT by $12,500.  In the 26% AMT bracket that $10,000 of excess income cost you $3,250 in federal tax ($12,500 x 26%), or 32.5%. 

Of course there does come a point when the level of your AMTI totally wipes out the allowable exemption.  Once you reach this point additional income is effectively taxed at the published rate of 26% or 28%.

Any questions? 

TTFN

 

 

 

Do you want to learn how to pay the absolute least amount of federal and state income tax possible –

and experience the joy of avoiding taxes? 

Click here to check out my library of tax planning and preparation books, guides, reports, and newsletters.

 

 

 

 

 

 

 

 

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

"Throughout his career, Trump has left behind a well-documented record of bankruptcies, thousands of lawsuits, angry shareholders and contractors who feel cheated, and disillusioned customers who feel ripped off.  Trump says he wants to run the nation like he's run his business. God help us."

Michael Bloomberg

* The August issue of ROBERT D FLACH’S THE 1040 LETTER is here!  Hey – it’s free!  Click here to download.

 

* Have you taken the “No Trump Pledge” yet?  Tweet if you do.

 

* A good “Summertime Tax Tip” from the IRS – “Check Your Tax Withholding this Summer to Prevent a Tax-Time Surprise “.

 

I discussed this topic in my earlier TWTP post “Evaluating Your Withholding”.

 

* I have added a TAX REFORM BUZZ page to the website of TAX PROFESSIONALS FOR TAX REFORM.

 

* Ashlea Ebeling (“I write about how to build, manage and enjoy your family's wealth”) of FORBES.COM reports “Tennessee To Become Income-Tax-Free State No. 8” – not yet, but down the road.

 

“The state’s estate tax was repealed effective Jan. 1, 2016. And now the Hall Tax is repealed—as of Jan. 1, 2022. In the meantime, the tax rate was cut from 6% to 5% retroactive to Jan. 1, 2016, and the legislature is meant to decrease the rate one percentage point a year, assuming the state meets certain revenue targets.”

 

The TN Department of Revenue tells us –

 

“The Hall income tax is imposed only on individuals and other entities receiving interest from bonds and notes and dividends from stock.  It was enacted in 1929 and was originally called the Hall income tax for the senator who sponsored the legislation.”   

 

* Please check out the free copy of the premiere issue of my new subscription newsletter ROBERT D FLACH’S THE SCHEDULE C LETTER.  Click here to download.

 

* Sheldon Cooper gave you “Fun With Flags”.  Now you can have fun with maps, thanks to the TAX FOUNDATION – “Announcing the Tax Foundation Monthly Map Club!”.

 

* Daniel Hood lists some “Tax Tips for Newlyweds” at ACCOUNTING TODAY.

 

The first tip is very important –

 

“New names? Whether one of the spouses takes the other’s name or not, the names and Social Securities on their tax return must match their Social Security Administration records – so if any names are changed, they’ll need to report it to the SSA with Form SS-5, Application for a Social Security Card. The form is available on www.ssa.gov, or by calling (800) 772-1213.”

 

* A good post from Jim Blankenship of GETTING YOUR FINANCIAL DUCKS IN A ROW from earlier this year – “5 Secrets About Your 401k Plan”.

 

* We all know that dangerous narcissist Tronald Dump is morally bankrupt.  Kay Bell of DON’T MESS WITH TAXES joins Seth Myers to suggest that “Donald Trump is broke, says late-night TV show host”.

 

It is obvious that the Dumpster has not released his tax returns because doing so would reveal the lies he has told about his wealth.  And also probably show that he is not very charitable.   

 

THE FINAL WORD

 

Top Ten Reasons Why Donald Trump Must NEVER Become President-

 

1. He suffers from acute “narcissistic personality disorder”, which makes him incapable of acting intelligently, maturely, or rationally.

 

2. He is incapable of dealing with criticism and challenges like a mature adult.

 

3. He shows no respect for any individual, organization, or group.

 

4. As a businessmen he consistently and unapologetically screwed his investors, lenders, contractors, vendors, employees, and customers while lining his pockets.  He is not a “savvy” businessman – he has had more business failures than business successes.

 

5. He has no experience in government or any kind of public service.

 

6. His main “claim to fame” is being a reality tv cartoon clown.

 

7. He has no political convictions.  He says whatever he thinks people want to hear to get attention and admiration.

 

8. He has no detailed plans for action – just “Trust me” and “I alone can fix this”.

 

9. He is uninformed on foreign and domestic policy issues.

 

10. He lies constantly - more than the most "traditional" of politicians.

 

Do you need any more?

 

TTFN

 

Do you want to learn how to pay the absolute least amount of federal and state income tax possible – and experience the joy of avoiding taxes?  Click here to check out my library of tax planning and preparation books, guides, reports, and newsletters.