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

 

It is very, very important that you get your federal and state GDE (the “E” is extension) in the mail TODAY.  Take the envelope(s) to the Post Office and hand it/them to a postal clerk and watch him/her stamp the postmark date on it/them.

The penalty for late payment of tax is ½ of 1% (.005) per month.  The penalty for late filing is 5% (.05) per month.

* The IRS has released its list of the “Dirty Dozen tax scams for 2026: IRS reminds taxpayers to watch out for dangerous threats”.

* The NATP blog explains “What every client {taxpayer} needs to understand about taxpayer responsibility” –

“The IRS holds the taxpayer legally responsible for the accuracy of their income tax return, even if a professional prepared it.”

* And NATP explains “How to receive the $1,000 Trump {Section 530A} Account deposit”.

* As he does at this time each year Russ Fox is providing his Top Ten list of “Bozo Tax Tips”.

TTFN

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

 

* The National Association of Tax Professionals (NATP) has prepared a “media backgrounder” outlining several common “Tax myths taxpayers are falling for in 2026”.  

* Hey, NJ, senior homeowners (highlights are mine) –

“The Stay NJ program offers property tax benefits to eligible homeowners aged 65 and older. It reimburses applicants for 50% of their property tax bills, up to a maximum of $13,000, with a 2025 benefit cap of $6,500. To qualify {for 2025 payments send in 2026 – rdf}, you must have owned and lived in a home for the full 12 months of 2025 and have an income below $500,000. . . . . Stay NJ benefits are calculated after ANCHOR and Senior Freeze benefits are determined and are issued quarterly.

And - “We will begin issuing First-Quarter payments for the 2024 Stay NJ Program on February 9, 2026. Eligible recipients will receive their paper checks in the mail.”

* Back to the National Association of Tax Professionals, it provides “Trump 530A Accounts explained for tax professionals” – which also provides useful information for taxpayers.   

* The F.I. TAX GUY provides a guide to help in “Understanding Your Form 1099-DIV”

* The IRS explains “New Schedule 1-A and Form 1040 instructions show how taxpayers will claim important deductions”.

Regarding the section of Schedule 1-A on the new “Senior Deduction” – see my post “Is A Puzzlement”.

TTFN

IS A PUZZLEMENT!

 

As a “senior citizen” (age 65 or older) I am entitled to the new $6,000 “Senior Deduction” on my 2025 Form 1040-SR.  Married seniors are entitled to a maximum deduction of $12,000 on a joint return (the deduction is not allowed if you are filing separately).

The deduction is phased out at 6% of the amount MAGI (AGI plus foreign income excluded) exceeds $75,000 for unmarried filers or $150,000 if married filing a joint return.

So, if a single filer has a MAGI of $80,000 his/her deduction is reduced by $300 ($5,000 x 6%).  He/she can deduct $5,700.

Looking at a real-life example, one would think that a married couple, both of whom are seniors, with a MAGI of $322,030 would reduce the allowable deduction by $10,322 ($172,030 x 6%) and be able to claim $1,678 ($12,000 less $10,322).  But that is not the case.

If you follow the form – Schedule 1-A Part V – the couple gets no Senior Deduction.

Line 31 – Enter the amount from Line 3 (MAGI)             322,030

Line 32 – Enter 150,000 if married filing jointly              150,000

Line 33 – Subtract 32 from 31                                      172,030

Line 34 – Multiply line 33 x 6%                                       10,322

Line 35 – Subtract line 34 from $6,000                      0

For some strange reason the phase-out amount is subtracted from $6,000 and not $12,000.  If there had been a positive number on Line 35 it would have been doubled to get the total allowable deduction.  So, this married couple is screwed out of a $1,678 deduction.

I have no idea why the calculation is done this way.  Is this what Congress intended?  But then the members of Congress who voted on this new tax deduction never actually read the bill but - they voted as they were told to by their Party.

Is a puzzlement. 

TTFN

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

 

And so it begins – the 2026 tax filing season (for 2025 returns).  I am glad I am retired!

* Did you hear – “National Taxpayer Advocate delivers Annual Report to Congress; finds taxpayer service was strong in 2025 but foresees challenges for taxpayers who encounter problems in 2026”.

One item of note that could cause issues with processing and reviewing 2025 returns (highlight is mine) –

“The IRS started 2025 with about 102,000 employees and finished with about 74,000, a reduction of 27%. Reductions were made in virtually all IRS functions, including Taxpayer Services. . .”

All thanks to the deplorable and despicable so-called Department of Government Efficiency (DOGE) and convicted felon and indicted traitor Trump.

* NATP tells us, “IRS releases FAQs on Executive Order 14247 payment modernization” and provides a summary.

While refunds requested on 2025 returns will be issued via direct deposit –

“For now, mailed payments to the IRS, including checks and money orders, will still be accepted and processed.”

* From the instructions for the 2025 Form 5695 (highlight is mine) -

“Beginning January 1, 2025, if you are claiming the energy efficient home improvement credit for specified property placed into service in 2025, you must include the four-character alphanumeric unique qualified manufacturer identification number (QMID) for each item.”

This number should be provided by the seller of the item.

* The New Jersey 2025 PAS-1 property tax relief application and instructions are now available at the NJ Division of Taxation website.

* The 2025 PA state income tax forms and instructions are finally available online.

TTFN

THE TWELVE DAYS OF TAX SEASON

Although I have retired, I still celebrate the beginning of the tax-filing season with my annual posting of -

THE TWELVE DAYS OF TAX SEASON

On the first day of tax season my client gave to me a Closing Statement for the purchase of a home.

On the second day of tax season my client gave to me 2 year-end brokerage statements.

On the third day of tax season my client gave to me 3 mortgage statements (without, of course, any analysis of how much of the mortgage interest reported represents interest on acquisition debt).

On the fourth day of tax season my client gave to me 4 W-2s.

On the fifth day of tax season my client gave to me 5 Salvation Army receipts.

On the sixth day of tax season my client gave to me 6 1099-DIVs.

On the seventh day of tax season my client gave to me 7 cancelled checks.

On the eighth day of tax season my client gave to me 8 useless items.

On the ninth day of tax season my client gave to me 9 medical bills (not enough to exceed 7 1/2% of AGI).

On the tenth day of tax season my client gave to me 10 stock sale confirms.

On the eleventh day of tax season my client gave to me 11 employee business expenses (despite being no longer deductible).

On the twelfth day of tax season my client got from me a finished tax return, 11 employee business expenses, 10 stock sale confirms, 9 medical bills, 8 useless items, 7 cancelled checks, 6 1099-DIVs, 5 Salvation Army receipts, 4 W-2s, 3 mortgage statements, 2 year-end brokerage reports, and a Closing Statement for the purchase of a home.

And, of course, on the thirteenth day of tax season my client gave to me a corrected Consolidated 1099 from Wells Fargo Advisors!

TTFN

GETTING READY TO PREPARE YOUR RETURN

 

You will soon be receiving the various forms needed to prepare your 2025 Form 1040. Employers, banks, brokers, mortgage companies, mutual funds, etc. are required to provide taxpayers with W-2s, 1099s and 1098s by January 31, 2026. If you have not received all your information returns by February 15th, contact the employer, bank, broker, or whoever and arrange to receive a duplicate copy.

When you receive your W-2s and 1099s check the figures against your own records to make sure the amounts reported are correct. Carefully compare the gross federal and state wages, federal, state and local income tax withheld, and Social Security and Medicare taxes withheld numbers on your W-2s to the amounts on your paystubs or other records. Also verify that the Social Security numbers on the forms are correct. If you find an error or discrepancy, contact the appropriate employer or financial institution for an explanation or a corrected copy.

A bank may issue one Form 1099-INT for all the accounts – savings, money market and CDs – that belong to the same name and Social Security number. There may be 6 or 7 accounts listed on a 1099-INT. It is important to verify each account listed on the form to make sure all of them belong to you. Years ago, one of my clients received a 1099-INT last year with someone else’s account, that earned $300+ interest, included in the listing! Had he not carefully checked the form he would have paid close to $100.00 in unnecessary federal and state income tax. If you find an error on a Form 1099-INT go to the bank immediately and request a corrected form.

If you collected unemployment during 2025 the state may not mail you a Form 1099-G.  You may need to go online to the state labor department website and print-out the Form.  This is the case for New Jersey.

TTFN

VERY VERY IMPORTANT!

 

This post, which I issue every year at this time, is for all of the journalists and bloggers out there.

When writing about taxes this filing season DO NOT advise your clients to ask, consult, contact, or talk to your CPA or a CPA!

The correct advice is – ask, consult, contact, or talk to your or a tax professional.

The mere existence of the initials “CPA” after a person’s name does not in any way, shape, or form indicate that he or she knows his or her arse from a hole in the ground when it comes to preparing 1040s.

The initials related to competence in preparing 1040s are EA for Enrolled Agent.

A particular CPA may indeed be competent and experienced in preparing 1040s, and many are, but it is only because of the education, training, experience, and other factors that are unique to that specific individual, and has nothing whatsoever to do with the initials “CPA”. 

And that specific individual is just one of your many choices among tax professionals.

Got it?

TTFN