SO LONG, FAREWELL, AUF WIEDERSEHEN, GOODBYE!

 

Today is the 25^th “Birthday” of THE WANDERING TAX PRO.

My first WANDERING TAX PRO post appeared on Sunday, July 22, 2001.  I had learned about blogging at a presentation on “The Future of Easy Web Site Design” by internet consultant Lenny Charnoff at the National Association of Tax Professionals National Conference in New Orleans on July 13, 2001.

I originally decided to write a blog to provide year-round advice and information for my existing 1040 clients and to promote my tax preparation and accounting services.  When I decided to stop accepting new clients, I continued to blog to provide a source of updated federal and state tax information for my clients and to attempt to market my various special reports and newsletters, provide easily accessible samples of my writing for potential publishers, and, quite frankly, because I just enjoyed it.  Blogging has provided me with a national (perhaps international) exposure and reputation.

Over the years I also wrote and published the tax blogs THE NEW JERSEY TAX PRACTICE BLOG and THE TAX PROFESSIONAL, as well as other non-tax blogs.  FYI - One of my posts from THE TAX PROFESSIONAL was referenced in a footnote to the brief filed in federal court by the Institute for Justice opposing the IRS request for a stay of the injunction in the famous LOVING v IRS case that shut down the IRS Registered Tax Return Preparer licensing program.

In my first blog post I discussed Section 529 college savings plans and my trip to New Orleans for the above mentioned NATP annual conference.

I retired from preparing 1040s, actually all tax returns, after completing 50 consecutive tax-filing seasons (my first season was in 1972 for 1971 returns), but continued to post here at THE WANDERING TAX PRO.  Having now reached the 25-year mark I have decided to also retire from tax blogging as well– so this will be my last WANDERING TAX PRO post.

I have enjoyed writing THE WANDERING TAX PRO these past 25 years and am thankful for the support and camaraderie of my fellow bloggers in the “tax blogosphere”.

If you have enjoyed reading THE WANDERING TAX PRO and found my posts helpful with your tax planning and preparation over the years perhaps you can express your appreciation by purchasing one of my tax-related e-books for Kindle available at Amazon (click here – FYI BOBSERVATIONS is a non-tax book with essays on a variety of topics). 

Or purchasing my reminiscence on 50 years as a professional tax preparer THE JOY OF PREPARING TAXES – sent as a pdf email attachment.  Here is what one former client said about it –

“It makes an interesting read - like a memoir spanning a 50-year long career of accounting and preparing taxes.  It is informative and interesting with a sprinkle of your personal funny anecdotes based upon your keen observation and experiences. Your wry sense of humor is admirable. I thoroughly enjoyed.”

Hey – you can have it for only $2.00 instead of $3.00!

I will continue to blog on a variety of topics at BOBSERVATIONS when the spirit moves me.

And so I say, “So long, farewell, auf wiedersehen, goodbye!”

THE FINAL FINAL WORD

Before I sign off just a reminder –

The greatest threat and danger to American freedom and democracy Donald Trump and today’s Trump-embracing, racist and repressive Religious Right controlled Republican Party.

As I have “said” here often in the past the future of American freedom and democracy demands that EVERY intelligent and patriotic American vote against EVERY Republican candidate for EVERY office at EVERY level in November.

If Republicans win in November America, and Americans, truly lose!

TTFG

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

 

* JD SUPRA reports that due to the rising cost of gas resulting from Trump’s attack on Iran “IRS Increases Standard Mileage Rate for Second Half of 2026 to 76 Cents per Mile”.

Also (highlight is mine) – “The mileage rate for moving and medical expenses also increased from 20.5 cents per mile to 23.5 cents per mile. The mileage rate for charitable mileage is fixed by statute at 14 cents per mile and has not changed.”

* More good news for taxpayers – “IRS simplifies penalty relief, introduces automatic process for eligible taxpayers” (highlights are mine) –

“AEP applies to eligible original returns beginning with tax year 2025 and 2026 quarterly returns, as well as future tax periods. Taxpayers qualify if they have a history of timely filing the return and paying any tax due in the three prior years (or 12 consecutive quarters for quarterly returns). When taxpayers qualify, penalties are not assessed during processing for:

Failure to file.

Failure to pay.

Failure to deposit.

Taxpayers do not need to take action to receive this relief. If eligible, the IRS will apply AEP and issue a notice confirming that the relief was granted.”

* The TAX FOUNDATIN BLOG celebrated July 4^th by telling us “What 250 Years of Tax History Reveal About the US Tax Code” –

“While most taxes levied in the 18th century are still levied in some form today, the federal government’s reliance on them, the complexity of the tax code, and Americans’ overall tax burdens have shifted considerably.”  

* The IRS reminds us “Marriage means making changes before next filing season”.

* NJ DIGEST tells us “New Jersey Senior Freeze Checks Arrive Soon—Here’s What to Know” -

“New Jersey’s Senior Freeze property tax reimbursement checks start going out this week, with the first wave scheduled for Wednesday, July 15.

The Senior Freeze program reimburses eligible senior citizens and disabled residents for increases in their property taxes or mobile home park site fees on their primary residence. Rather than actually freezing your tax bill, the program locks in your tax amount from the year you enroll and reimburses you for any increases beyond that baseline each year, according to Kiplinger.

Here’s the payment schedule based on when you filed your application:

Filed before May 1: Payment issued as early as July 15, 2026

Filed May 1 – June 1: Payment issued as early as September 1, 2026

Filed June 2 – September 1: Payment issued as early as November 1, 2026

Filed September 2 – October 31: Payment issued as early as December 1, 2026”

ANCHOR benefit payments should begin on September 15^th.  The last two 2024 quarterly STAY NJ payments will be paid in August and November and the first two 2025 payments will be paid in February and May of 2026.

TTFN

A NOT SO HAPPY 4TH OF JULY

 

How sad that we mark 250 years of American freedom and democracy at a time when a totally self-absorbed fascist wannabe king and convicted felon and indicted traitor (Trump) and a racist and repressive Religious Right controlled Republican Party control the government.

The future of American freedom and democracy demands that EVERY intelligent and patriotic American vote against EVERY Republican candidate for EVERY office at EVERY level in November.

If Republicans win in November America, and Americans, truly lose!

TTFN

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

 

* Russ Fox tells of his frustration in trying to contact the IRS by phone in"Don’t Call Us” at TAXABLE TALK.

His bottom line (highlight is mine) –

“Meanwhile, the proposed IRS budget features a $1.4 billion cut.  IRS staffing is down by about one-third from early 2025.  As much as I like small government (and I do), the IRS needs to be correctly funded and that means a budget increase, not a cut.  Perhaps one day online services can fully replace humans, but that day isn’t today.  If you’re a taxpayer–and everyone reading this is–complain to your Representatives and Senators.  There are almost certainly areas of the federal budget that can be cut (given the reports of fraud); however, the IRS isn’t one of those today.”

Russ finally got lucky – “The 43rd Try Was a One-Third Success” –

“ . . . to my surprise the 43rd try got me into the queue with a 15 to 30-minute hold time (it ended up being 24 minutes).”

* The F.I. TAX GUY gives us a primer on “ROTH IRA Withdrawals”.

* At the height of my career, I did the tax returns of several Lutheran ministers.  The NATP BLOG helps tax preparers and clergy with “Understanding the minister's housing allowance” –

“Few tax provisions are as unique as the minister's housing allowance. For qualifying clergy, the allowance can provide a valuable income tax benefit. However, the rules are highly specific and mistakes can lead to reporting errors, missed tax savings or unexpected tax liabilities.”

* This just in – “National Taxpayer Advocate issues 2026 mid-year report to Congress” –

“National Taxpayer Advocate Erin M. Collins today released her Fiscal Year 2027 Objectives Report to Congress, highlighting a largely successful 2026 filing season in which the IRS processed nearly 139 million individual tax returns, issued more than 90 million refunds, and successfully implemented extensive tax law changes despite significant operational challenges.”

TTFN

DEAR GRADUATE

Here is some advice for graduates starting out in their first full-time job that I have posted often over the years -

Dear Graduate:

*  Participate in your employer’s 401(k) or 403(b) plan.  If cash-flow permits, contribute the maximum, which for 2026 is $24,500.  If you cannot contribute the maximum, try to contribute at least enough to qualify for the maximum amount of any employer matching contribution.  If your employer offers a ROTH 401(k) or 403(b) option choose this option.  As an alternative, if you are contributing the maximum put 50% in a “traditional” account and 50% in a ROTH account.

*  Participate in your employer’s medical expense Flexible Spending Account (FSA).  Be conservative and start with $1,000.  You can increase your contribution in subsequent years once you get a handle on your annual out-of-pocket medical expenses.

*   If you have any cash from graduation gifts left over open a ROTH IRA account and use this money to fund your 2026 contribution.  The maximum you can contribute to an IRA, “traditional” and ROTH combined, for 2026 is $7,500.

TTFN

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

 

FYI a friend sent me this email – “Mailed tax return February 21.  IRS processed it on April 13.  Refund in my checking account and available on April 18.  56 days total from mailing to receiving refund.  Last year it was 51 days.”  The taxpayer obviously requested direct deposit.  If he wanted a paper check he would still be waiting.  I have not heard of any issues with late refunds (where direct deposit was requested).

* The NATP blog tells us “Tens of millions of taxpayers may be eligible for significant tax refunds (Act by July 10)”.

The post explains –

“This issue arises from recent court decisions, including Kwong v. United States (Court of Federal Claims, Nov. 25, 2025) and Abdo v. Commissioner (U.S. Tax Court, 2024).”

“For COVID-19, a federal disaster declaration was in effect from Jan. 20, 2020, through May 11, 2023.”  

“Based on the court’s reasoning in Kwong, filing and payment deadlines were postponed during that entire period, and as a result, tax returns and payments due anytime within that window were not considered late until after July 10, 2023. By the court’s logic, the IRS should not have assessed penalties for late filing or payment during that 3.5-year period, nor charged interest on those amounts.”

If you were assessed, and paid, a penalty for underpayment of estimated tax or late payment of taxes for 2020 through 2023 returns contact your tax professional to see if you could qualify for a refund.

* The NJ Division of Taxation reports –

“We expect to send the second installment of the 2024 Stay NJ benefit on May 15, 2026. Eligible recipients will receive paper checks in the mail.”

TTFN

IS A PUZZLEMENT!

 

Now is the time that persons of my age need to begin to take Required Minimum Distributions (RMDs) from retirement accounts – IRAs, SEPs, 401(k)s, 403(b)s, etc.  A friend from high school and college, and also a fraternity brother, needed to take an RMD from his 401(k) plan.

A fellow fraternity brother, a former corporate controller who is now a stockbroker, told our friend about a special tax benefit related to “Net Unrealized Appreciation” or NUA -

“I explained to him that since he has appreciated stock in his 401(k) it can be rolled into a taxable brokerage account. The appreciated stock would count towards his RMD while the IRS would only tax his cost basis, saving him thousands of dollars in both federal and state taxes.”

I wrote about this tax benefit here back in November of 2008 in “Here Is A Special Tax Trick” -

“Often employee contributions, and employer matches, to a pre-tax employer pension or savings and investment plan will be invested in the stock of the employer-corporation.

When the employee leaves the company he/she can (a) remain in the plan until retirement age (if allowed by the plan), (b) roll-over the balance in the plan to another tax-deferred account and continue to defer taxable income, or (c) “take the money and run” and be currently taxed on the distribution.

If the employee holds appreciated stock in his former employer’s company in the plan, he/she should not roll-over the stock to an IRA. The thing to do is to withdraw the actual shares of company stock and rollover any remaining cash balance.

The employee will receive a 1099-R reporting a taxable distribution equal to his/her “basis” in the company stock, which is generally the total amount of employee contributions used to purchase the stock. The employee will not be taxed on the full market value of the stock on the date of distribution.

The difference between the basis and the market value is referred to as “net unrealized appreciation” (NUA). This NUA is not taxed until you actually sell the stock. When the stock is sold the NUA, plus any additional gain, will be taxed as a long-term capital gain at the special preferential tax rate – which could actually be “0%” depending on the circumstances.

If you roll-over the company stock to an IRA, when you withdraw money from the rollover IRA it will be fully taxed at ordinary income rates. You would lose the tax benefit of capital gain treatment on the Net Unrealized Appreciation.

You can sell the company stock right away. You do not have to wait to actually hold the stock for a year after the date of the withdrawal – the sale will automatically be considered to be long-term.”

To add to the post – if you keep the money in the 401(k) all RMDs will be taxed as ordinary income at “regular” tax rates.

Did our friend do as his fraternity brother suggested?  No.

“He told me last week that he did his RMD directly from his 401(k).  He asked AI, and AI told him I was wrong, that there was no tax benefit in doing a NAV net assets value rollover of company stock.”

Why our fraternity brother would choose artificial intelligence over the real intelligence of a trained and experienced professional, and 50-year friend, is truly a puzzlement.

The bottom line – don’t rely on “AI” for tax advice!

TTFN