Friday, August 5, 2022

2022 DRAFT 1040

 

The Internal Revenue Service has released, early this year, the draft versions of the 2022 Form 1040 and accompanying schedules.  Click here.  The draft 2022 Form 1040-SR has not yet been released.

The 2022 Schedule A appears to be exactly the same as the 2021 Schedule A.  I haven’t reviewed the other 1040 schedules (and have no real desire to do so at this point). 

But there have been several changes to the Form 1040 –

* The virtual currency question has been refined for those involved with BitCoin and other “virtual” or “digital” investments.

* While the amount of content on each page has expanded the 1040 still does not completely cover a normal 8½ x 11 page (as the pages of the 1040-SR do).  God only knows why.

* Line 1 to report wages, salaries, tips, etc, from Form W-2 has expanded, for some unknown reason, to 10 “sub-lines” to separately report a multitude of obscure wage-based income items.  If separate identification was needed why is it not added to Schedule 1?  These new lines are a waste of 1040 space and only add to taxpayer confusion.

* A Line 6c under the reporting of Social Security benefits has been added as a checkbox to indicate the taxpayer is making a “lump sum election” for Social Security reporting.

* The line – 12b last year – for claiming the “non-itemizer” charitable deduction has been removed since this deduction has expired and is not available for 2022. 

* The sub-lines for Line 27, where the Earned Income Credit is claimed, have been eliminated as the special considerations applicable on the 2021 return that necessitated these additional sub-lines have expired and are not available for 2022. 

* Line 30 – used in 2021 for the Recovery Rebate Credit – remains on the 2022 Form 1040 identified as “Reserved for future use”.

The final Form 1040 may be different from this initial draft version – which represents tax law in existence as of this writing.  Who know if Congress will, as they often do, FU things by passing retroactive tax legislation late in the year?

TTFN












Thursday, August 4, 2022

WHAT THE US TAX CODE SHOULD AND SHOULD NOT BE

 


FYI, here is what I believe the US Tax Code should look like -

First and foremost -the one and only purpose of the Tax Code is to raise the money necessary to fund the government.  

The Tax Code SHOULD –

(1) Be simple – easy for everyone to understand.  Simplicity for simplicity’s sake. 

(2) Be fair and equitable - treat all taxpayers equally.

(3) Be consistent – treat specific conditions, situations, and activities, and maintain specific definitions and descriptions, the same in all instances.

(4) Encourage savings, investment, and growth.

(5) Index for inflation all allowable deductions and credits.

The Tax Code SHOULD NOT –

(1) Be used for social engineering, to redistribute income or wealth, or to deliver social welfare and other government benefits.

(2) Encourage or discourage certain economic decisions (other than savings, investment, and growth), or provide exclusive benefits for specific industries, business activities, or classes of taxpayers.

(3) Contain any refundable credits, or any phase-outs, exclusions or adjustments based on Adjusted Gross Income or Modified Adjusted Gross Income.  

(4) Contain any “alternative” tax calculation systems (such as the “Alternative Minimum Tax”).

(5) Contain any temporary deductions, credits, benefits, or provisions.

Your thoughts?

TTFN














Tuesday, August 2, 2022

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

 

* Kay Bell reportsInflation prompts 16 states to issue stimulus checks” at DON’T MESS WITH TAXES -

 

They are sending their residents checks, some as much as $1,500, to help them cope with the current higher cost of living.

The states are California, Colorado, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Maine, Massachusetts, New Jersey, New Mexico, Oregon, South Carolina, and Virginia.”

New Jersey residents with at least one qualifying dependent have started to receive rebate checks worth up to $500. The rebates are being sent by paper check.  For more information on the NJ Middle Class Tax Rebate program click here.

Unfortunately, I no longer live in New Jersey (not really unfortunately) and do not have any dependents (also not really unfortunately).  Here in Pennsylvania Governor Wolfe had wanted to send residents with income under a certain threshold $2,000 each out of excess federal recovery money, but this did not happen.

* Professor Annette Nellen discusses a bill introduced by Republican Senator Grassley, the Middle-Class Savings and Investment Act, in “New Inflation Adjustments Proposed for Some Tax Rules” at TWENTIETH CENTURY TAXATION.

The bill would add annual inflation adjustments to the current dollar amounts for the Child Tax Credit, Other Dependent Credit, Child and Dependent Care Credit, American Opportunity Credit, Lifetime Learning Credit, the student loan deduction and the deduction for charitable mileage.

 

I do believe ALL allowable deductions and credit should be indexed for inflation.  The Child Tax Credit and Other Dependent Credit should most definitely be indexed.

 

The 14-cent per mile charitable mileage deduction, unchanged for decades, should also most definitely be indexed.  It should be made equal to the deduction for medical and moving mileage.

 

I agree with Professor Nellen when she says the American Opportunity Credit for college tuition needs –

 

“ . . . perhaps even removal from the tax law since there are non-tax laws to help low-income individuals attend college . . . Why not use those funds to provide larger Pell grants?

 

In general, I personally oppose using the Tax Code to deliver government welfare and other benefits.

 

The bill would extend the $10,000 SALT deduction limit through 2026 to help cover the costs of inflation adjustment.  I oppose the $10,000 SALT cap altogether.

 

* It’s here!  Check out the August “issue” of BOBSERVATIONS – and share it with your friends, family, co-workers, and colleagues.

 

* According to a summary of the proposed “Inflation Reduction Act of 2022” the Act (highlight is mine) - “ . . . also provides $15,000,000 of funds for the IRS to prepare and deliver a report to Congress on the cost of developing and running a free direct efile tax return system.”  
 
This is good news.  I wholeheartedly support the IRS developing and running a free direct efile tax return system, which does not involve third party commercial preparers, and have done so for years.  But I don’t want just a report – I want implementation.

* We began this installment with Kay Bell - so let's end with her.  Kay suggests "4 tax moves to make this August".   

THE LAST WORD


Correct me if I am wrong, but isn’t the main belief of true Conservative politics a limited/minimal involvement by the government in the personal and business lives of citizens?

 

Today’s Republican Party, controlled by the repressive and racist Religious Right, wants the government to dictate how citizens must live their lives based on extreme Christian fundamentalist distorted and erroneous interpretations of the teachings of Christ and the Scriptures.

 

The policies and agenda of today’s Republican Party is directly contrary to true Conservative policy.  Republicans are NOT Conservatives!

 

TTFN
















Friday, July 29, 2022

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

Once again – I did not want to end the week without some BUZZ.

* The word from the NJ Division of Taxation (via Twitter) –

 

We have begun mailing 2021 Senior Freeze (Property Tax Reimbursement) checks to applicants who filed before May 1, 2022. The deadline for 2021 applications is October 31, 2022. To check the status of your application, visit {here}.”

 

* Kay Bell, the yellow rose of taxes, reports “Tax-exempt bond spear phishing effort is latest tax pro security threat” at DON’T MESS WITH TAXES.

 

* For those interested I outline in detail my political beliefs and philosophy in WHAT I BELIEVE – ROBERT D FLACH.  Your thoughts and comments are welcomed and solicited.
 
* Michael Cohn tells us “IRS sent incorrect balance due notices to couples” at ACCOUNTING TODAY -
 
The Internal Revenue Service admitted that some married couples received erroneous balance due notices for their 2021 tax returns.
 
The IRS added that no immediate response to the notice or phone call were necessary right now and it’s working on fixing the problem
 
An important reminder that you should NEVER automatically pay a balance due notice from the IRS or a state agency.  In my experience over 50 years more than half of such notices are incorrect.  As soon as you receive any correspondence from a tax agency IMMEDIATELY give/send it to your tax preparer.

 

THE LAST WORD

 

We need a new conservative-based political party that totally denounces Trump, his lies and the Evangelicals of the Religious Right - NOT as a third Party but to REPLACE the Republican Party, so that today’s Republican Party becomes the fringe minority third Party.

 

TTFN

















Tuesday, July 19, 2022

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

 

FYI – it appears the IRS has begun to issue refunds for 2021 returns.  One person, who mailed his 2021 paper federal return to the IRS on February 15th, told me one day last week the “Where’s My Refund” tool told him “you may have entered wrong info” and the next day it indicated his 2021 refund was approved.

 

* Michael Cohn reports on a bill in Congress that I would support at ACCOUNTING TODAY – “Democrats introduce bill to provide freetax filing through IRS” -

 

The Tax Filing Simplification Act would direct the IRS to develop a free, online tax preparation and filing service that would allow all taxpayers to prepare and file their taxes directly with the federal government instead of being forced to share private information with third parties. It would actually prohibit the IRS from entering into agreements that restrict its ability to provide free online tax preparation or filing services.”

 

Before I retired from preparing 1040s, I refused to use flawed and expensive tax preparation software to submit my clients’ federal income tax returns, and I refused to use the IRS Free File program because it required taxpayers to use commercial vendors like Henry and Richard, so I could not electronically file federal returns.  I was able to electronically submit client NJ-1040 returns because the NJ Division of Taxation provided free electronic filing directly to the NJDOT on its website.

 

* According to the NJ Division of Taxation NJ has a “Sales Tax Holiday for Certain Retail Sales” -  

 

The Sales Tax Holiday takes place between August 27 through September 5 of 2022. Sellers should not charge Sales Tax on eligible items when purchased during the Sales Tax Holiday.”

 

The “holiday” applies to “retail sales of computers, school supplies, and sport or recreational equipment when sold to an individual purchaser for non-business use.”

 

* More news for NJ residents, from a recent email notice I received from the NJ Division of Taxation.
 
A new Property Tax Relief Program is replacing the previous Homestead Benefit program. The Affordable New Jersey Communities for Homeowners and Renters (ANCHOR) program will benefit a large number of homeowners and includes tenants.
 
Homeowner benefit amounts will be $1,500 for taxpayers with 2019 gross incomes up to $150,000 or $1,000 for those with 2019 gross income above $150,000 but no higher than $250,000.
 
Tenants with 2019 gross income up to $150,000 will qualify for a $450 benefit. Applications will be available this fall, and the deadline for submission is December 30, 2022. The benefit will be paid no later than May 2023.”


THE LAST WORD


There has NEVER been ANY time from 2015 through 2020 when Donald Trump was EVER an intelligent, rational or acceptable choice for any political office – least of all President.


There has NEVER been an intelligent, rational or acceptable reason for ANYONE to ever listen to, believe, defend, and support Trump.


While I certainly appreciate and am thankful that, as we have learned in the January 6th hearings, there were lines that some people were unwilling to cross, I denounce the fact that these people ever supported and enabled Trump in the first place..


TTFN















Saturday, July 16, 2022

ATTENTION “TRADITIONAL” REPUBLICANS

 

A recently issued petition (click here) provided a well written explanation why true “traditional” Republicans are refusing to support and vote for Trump and his Republican supporters in Congress (highlights are mine) -

. . . the Big Lie about the election, and the behavior of Donald Trump and his enablers after the election and on January 6, disqualify Donald Trump and his enablers from holding office. They lack the civic virtue to hold office.”

What Donald Trump did was un-American. His behavior violates the fundamentals of Americanism. They also are inconsistent with the basic tenets of Republicanism. We believe in the sunny optimism of Ronald Reagan, not the un-American behavior of Donald Trump.”

And -

We do not support the policies of the Democratic Party. However, the short-term risk of those policies, which can be changed by a responsible Republican Party, are less dangerous than are Donald Trump and his enablers.”

I was, and am, not a member of either the Republican Party nor the Democratic Party.  I support some traditional Republican policies and some Democratic policies.  While I cannot sign the petition (not being a Republican) I can certainly support and promote the above sentiments.

TTFN











Friday, July 15, 2022

THE 2022 CHILD TAX CREDIT AND CHILD CARE CREDIT

 

An FYI

The temporary COVID-related expansion of the Child Tax Credit and the Child and Dependent Care Credit expired on December 31, 2021.  For tax year 2022 these credits return to the rules that existed before the expansion.

The Child Tax Credit for 2022 is $2,000 per qualifying child under age 17.  The credit phases out beginning at Modified Adjusted Gross Income (MAGI) of $200,000, or $400,000 on a joint return.  It may be partially refundable up to a maximum of $1,500 (adjusted for inflation).

The Child and Dependent Care Credit for 2022 is 20% - 35% of qualifying expenses up to $3,000 for one child and $6,000 for more than one child.  This credit is non-refundable.

While the Democrats have been attempting to extend the expanded credits for calendar year 2022, as of this writing they have not been successful in passing legislation to do so. 

Stay “tuned” to THE WANDERING TAX PRO for any changes to these credits or any other tax changes for 2022.

TTFN