Saturday, July 9, 2011


* Have you seen my new FREE monthly (except February and March) newsletter LOIS? Click here to download the premiere issue.

* Trish McIntire reminds us of the basic “Energy Credits for 2011” over at OUR TAXING TIMES.

She points out something very important to remember –

The maximum credit is $500. Of that, only $200 can come from windows. And this is the maximum lifetime credit. So if you took this credit anytime after 2005, you have to include the prior credit in the calculation. Say in 2007 you took a credit for windows for $200, that only leaves you $300 possible credit left and none for windows. Those new windows/ doors, heat pump in 2010 that got you a $1500 credit back when you did your 2011 tax return, maxed you out. No more credit no matter the cost of the new improvements.”

I would like to add to her comments that not all storm windows and doors or water heaters and boilers qualify for the credit. To be eligible the item purchased must meet certain standards. As I point out in my June posting on the subject –

When you purchase any of the listed items ask the salesperson for a Manufacturer’s Certification Statement - a signed statement from the manufacturer certifying that the product or component qualifies for the tax credit.

If you have already purchased an item that you think may qualify but do not have a Manufacturer’s Certification Statement go back to the salesman and ask one. You can also go to the website of the item’s manufacturer and download a Certification Statement."

You can go to the Energy Star website to find out what the specific qualifications are for individual items.

You are not required to attach a copy of the Manufacturer’s Certification Statement to your tax return – but you need to keep one “on file” with your 2011 documentation in case you are questioned. And you will need to give a copy of the Certification Statement to your tax preparer at tax time to verify that your purchase qualifies for the credit.”

* Trish also reports on a recent Tax Court decision in “Personal Caregivers”.

The post proves that “brevity is the soul of wit” – and is so concise that I think I will reprint it in its entirety. Her “bottom line” (aka “best suggestion”) is an excellent point.

The Tax Court has held that payments to individuals for personal care can be a medical deduction. The case in question (Estate of Baral, 137TC no. 1), centered on the IRS disallowing the medical deduction for payments made to individuals who provided personal care to the taxpayer. These were not professionals who provided medical care for the taxpayer but employees who came into take care of a patient who could no longer care for herself. The goal was to keep the lady in her home as opposed to a medical care facility.

The Tax court ruled that personal care services can be classified as qualified long term services if they are prescribed by a licensed physician as part of a plan of care for someone who is chronically ill.

Best suggestion for taxpayers, or their families, who are paying for sitters and attendants; get a Doctor’s statement that the expense is necessary for the proper care of the patient (taxpayer). Then it can be a deducible medical expense

* As 2011 recently passed the half-way mark, Kay Bell gives us a “slide show” of “10 Mid-Year Tax Moves to Make Now” at her BANKRATE.COM blog.

It's summer, the best time of the year to think about your taxes. Really.”

Some good moves on the list –

· Adjust Your Withholding
· Evaluate Estimated Tax
· Get Organized

You may need patience to view all of Kay’s moves. I don’t know if it was just my GDMFPOS computer, often FSAM, but it took an awful long time to view the entire slide show (I almost gave up half way through).

* TAX PROF Paul Caron brings us a list of “
The 25 Documents You Need Before You Die” from a Wall Street Journal item.

Having been the Executor for my parents’ estates I know the importance of having these documents organized and readily available place before going to your final audit.

* At BNASoftware Diane Freda tells us “
Tax Preparers' Comments Run Gamut on IRS Competency Testing

Some tax preparers who will be affected by official competency testing with the Internal Revenue Service take the most extreme view that IRS should force return preparers to get an accounting degree, while others say anyone preparing taxes for five years without problems should be grandfathered, according to recent comments to the agency.”

When the IRS first began investigating the possibility of regulating tax preparers, and made its initial call for comments on the concept, I recommended a “grandfathering” exemption from testing for those preparers who had earned a certain number of total CPE credits in the five-year period prior to the initiation of the regime. I don’t know if the 5-year look-back mentioned above refers to my input (I did not respond to this particular call for comments), of if other preparers agree with my idea.

Diane points out -

The middle view in comment letters IRS received on Notice 2011-48 was that mandatory testing should be mainly multiple choice, focus on common errors found in the Form 1040 series, make 75 percent to 80 percent accuracy a passing grade, and be offered frequently enough that preparers who fail can take the test again quickly. Preparers also said they did not want to have to travel too far to take the test.”

While I would still prefer being exempt from the test via “grandfathering” as per my suggestion, if I have to take the damned thing I would agree with the “middle view”.

* With all the talk about the need to raise taxes and cut essential services to balance federal and state budgets, Sean Eichenberger, author of the FRESH PERSPECTIVE blog at, lists the “
Fifteen Silliest Uses of Taxpayer Money” on the federal level.

Troubled Asset Relief Program: $700 billion. Project budgeted deficit for 2011: $1.4 trillion. Spending $3 million of taxpayer money on treadmills for shrimp: Shameless!

Here is one of the fifteen -

Study of baby names: $1 million

This study aimed to ferret out trends in baby naming. The astounding conclusion: ‘Popular names are popular with parents’

Hey, I could have told them that for only $25.00!

Let’s face it – any government budget could be easily balanced without raising taxes or cutting services by simply removing pointless pork.

* Professor Annette Nellen brings to our attention the “
Senator Rockefeller Tax Proposal” over at 21st CENTURY TAXATION.

As is usual with the idiots in Congress it is a simple quick fix, not at all addressing the problem of tax complexity and the issue of hiding social programs in the Tax Code but simply making a few changes to raise money. Annette briefly comments on each of the major items in the proposal.

I have not heard the name “Rockefeller” in a long time. I remember his more famous relative Nelson, who was Governor of New York and Vice President under Gerald Ford in the mid 1970’s. I seem to recall that he died “in the saddle”, so to speak, at age 70. And I also recall that his wife’s nickname was Happy.

* BO is a twit! I am not “dissing” our President, just acknowledging the fact that he, like me, is on Twitter. Michael Cohn explains in “
Obama Tweets on Taxes” at ACCOUNTING TODAY.

President Obama took to Twitter for the White House’s first-ever Twitter Town Hall, answering questions from his “tweeps” about taxes, the economy and other subjects.”

Here is one question posed to the President -

What changes to the tax system do you think are necessary to help solve the deficit problem and for the system to be fair?

Would you be surprised to find that the answer basically bragged about his achievements in providing tax relief for middle-class families and totally avoided a proper answer to the question, mentioning his popular corporate jet sound bite (i.e. reading from the Party script)? BO is, after all, a politician.

* Joe Kristan heads to the hills for a “
Summer Break 2011”. Until he returns at the end of July the ROTH AND COMPANY TAX UPDATE BLOG will go with “summer reruns” of past gems of wit from Joe.

I am stuck in NJ for the month of July, finishing the GD extensions and doing corporate returns for the few corporations that I still do (can’t say no), although I do have some theatre outings scheduled for throughout NJ.

So, Joe, enjoy!

* I get my Christmas cards from the American Humane Association each year. Like the birthday cards I send out during the year, they are all cat/kitten-themed, with the occasional dog/puppy. Get a head start on the Christmas season - click
here to check out this year’s selections.


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