Friday, October 31, 2014


Here is a scary thought for Halloween.  What if the 114th Congress turns out to be made up of most of the same idiots as the 113th Congress!

The current 113th Congress is perhaps the worst Congress in history.  It is certainly the least productive.

A recent article in the New York Post reported -

The divided House and Senate have managed to pass just 163 laws that garnered President Obama’s signature since the two-year term began in January 2013. At this rate, Congress will have no problem beating the previous record set during the 2011-2013 session in which 284 laws were passed. That was down from 385 laws passed in the 2009-2011 session.”

The current idiots in Congress are incapable of working together to accomplish anything of substance.  And they are incapable of independent thought – merely “following orders” from, and quoting from the script provided to them by, the Party leaders.

They have proven that they have absolutely no interest in the American public or the proper administration of the American government.  Their main goal and motivation is getting themselves and fellow party members re-elected.

When there is actual legislation to vote on the idiots in Congress do not vote based on what they think is good or bad for the country.  They vote based on what the Party tells them is good or bad for the Party!  And, as I have said before, if the Republicans came up with legislation that would truly guarantee world peace the Democrats would vote against it because it was not introduced by the Democrats, and vice versa.

The American public obviously recognizes these facts.  According to Gallup -

With less than two months to go before the midterm congressional elections, 14% of Americans approve of how Congress is handling its job. This rating is one of the lowest Gallup has measured in the fall before a midterm election since 1974.

Americans' rating of Congress, from Gallup's latest Social Series survey, conducted Sept. 4-7, is barely changed from the August reading, and matches the 14% average so far in 2014. The all-time low congressional approval rating is 9%, measured in November 2013.”

So what are we to do?  Vote the bastards out!  Get a GRIP (Get Rid of Incumbent Politicians) in November, when 435 seats in the House of Representatives are up for election, by voting against the re-election of any current member of Congress.  Just be sure not to vote in any member or supporter of the Tea Party.

I am very serious.  No Congress could be worse than the one we have now (unless it was controlled by the Tea Party) – so we couldn’t end up worse than we already are.

Send a message to Washington, a la “Network” – “"We're as mad as hell, and we're not going to take this anymore!” 

If the 114th Congress turns out to be just as bad as the 113th the blame will belong to the voters (and the non-voters). 


Thursday, October 30, 2014


The BUZZ is a day early.  It was rather meaty already – and I have a special Halloween post scheduled for Friday.

* The November “issue” of THE TAX PROFESSIONAL will be up on Saturday.  Have you seen the October issue yet?  Please check it out and let me know your thoughts on the topics I discuss.  

* The NATIONAL SOCIETY OF ACCOUNTANTS announces “DC Court Shoots Down AICPA Tax Preparer Lawsuit”.

A D.C. federal judge on Monday decided the Internal Revenue Service can continue its voluntary Annual Filing Season Program for uncredentialed return preparers.”

U.S. District Judge James E. Boasberg hit the nail on the head, stating –

the crux of [the AICPA’s] concern is apparent:  its membership feels threatened by the specter of increased competition from previously uncredentialed tax return preparers who choose to complete the program.”   

The AICPA erroneously feels that CPA’s “own” the tax preparation business, and wants to discourage any credential or designation that identifies competence and currency in preparing 1040s.

The NSA item tells us Judge Boasberg felt “. . . the AICPA didn’t have the authority to sue the authority because it was not harmed by the Program”.

So the IRS voluntary Annual Filing Season Program will continue.

* The TAX FOUNDATION has issued its “2015 State Business Tax Climate Index”.

The Tax Foundation’s State Business Tax Climate Index enables business leaders, government policymakers, and taxpayers to gauge how their states’ tax systems compare. While there are many ways to show how much is collected in taxes by state governments, the Index is designed to show how well states structure their tax systems, and provides a road-map to improving these structures.”

No surprise here.  Once again like Oliver Twist, New Jersey is last on the list.  My former home state is #50, just behind New York (#49) and California (#48).

We are told that New Jersey “suffers from some of the highest property tax burdens in the country, is one of just two states to levy both an inheritance and an estate tax, and maintains some of the worst structured individual income taxes in the country.”

The top file are –

1. Wyoming
2. South Dakota
3. Nevada
4. Alaska
5. Florida

My current home state of Pennsylvania is #34.

* This week Jean Murray’s weekly newsletter on Business Law and Taxes from ABOUT.COM covers change.

If your business is changing, or the ownership has changed, or you are in a different tax situation, you may want to change your business legal structure.”

She also deals with “changing your name and other business changes”.

* Russ Fox is only one of the bloggers who brought to our attention the disturbing story of “SARs Leading to Forfeiture: The IRS Oversteps” this week.

The New York Times story notes the case of a restaurant owner in Iowa who had about $33,000 seized {by the IRS} solely because she made regular cash deposits of less than $10,000.”

There was no illegal activity proven, or even suspected, by any law enforcement agency.  This resulted from a “Suspicious Activity Report” (SAR) filed by the bank.

Thankfully, Russ tells us -

The only good news from the article is that the IRS is apparently going to limit the practice. In a statement made to the Times, Richard Weber, head of IRS Criminal Investigation, said the practice will be curtailed.”

The practice should not be curtailed – it should be eliminated!  If the IRS felt there was “suspicious activity” it should have investigated further before just grabbing the money.  I do not find is “suspicious” that a popular restaurant would generate $6,000 in cash in the course of its normal business activity.

Whatever happened to “innocent until proven guilty”?

* At MONEYSMARTLIFE  Kevin Mercadante talks about “How it’s Never Too Late to Start Saving for Retirement”.

The article basically explains, in great detail, that “Any Retirement Savings is Better than Nothing“.

* HEALTHCARE.GOV provides important “Dates & Deadlines” for signing up for 2015 health care coverage through the Obamacare ACA Marketplace.

* It’s year-end tax planning time again.  PARKER PUBLISHING brings us “In-Depth: Year-End Tax Planning for Individuals in Light of Uncertainty Regarding Tax Extenders”.


With all the hoopla about corporate tax inversions the tax reform discussion seems to be centered on corporate tax reform.  Obviously there is need for corporate tax reform.  But let’s not forget what started the discussion in the first place – individual (Form 1040) tax reform.

I fear the idiots in Congress will make token corporate tax changes and forget the mucking fess that is the 1040 altogether.

The ENTIRE Tax Code needs to be written from scratch!


Wednesday, October 29, 2014


The IRS recently announced the inflation adjustments for the Retirement Savings Contributions Credit (aka Saver’s Credit) for 2015.

This credit applies to up to $2,000 in contributions to a traditional or ROTH IRA and employee contributions to a 401(k), 403(b), 457, SIMPLE or SEP plan.
You must be at least 18 years old at the end of the year. If you are claimed as a dependent on someone else's return or were a full-time student for any part of 5 calendar months during the year you are not eligible for the credit.  Rollover contributions (money that you moved from another retirement plan or IRA) are not eligible for the credit.

The credit is reduced by any distributions received from an IRA or employer plan during a “look-back” period.  For 2014 returns the look-back period is January 1, 2012 through the due date, including extensions, of your 2014 tax return

This is a credit – a dollar for dollar reduction of tax liability.  Depending on your income it is possible to contribute $2,000 to an IRA or employer retirement account and get $1,000 back from Uncle Sam – so the government will in effect fund 50% of your retirement savings!  Those with higher AGIs can get 20% or 10% of their retirement savings covered by the government.

If your standard or itemized deduction(s) or personal exemptions wipe out the tax liability you get no benefit from the Savers' Credit. It is not refundable, and it cannot be carried forward.

Here is a table showing the new numbers for 2015 -
Filing Status/Adjusted Gross Income for 2015
Amount of Credit
Married Filing Jointly
Head of Household
50% of first $2,000 deferred
$0 to $36,500
$0 to $27,375
$0 to $18,250
20% of first $2,000 deferred
$36,501 to $39,500
$27,376 to $29,625
$18,251 to $19,750
10% of first $2,000 deferred
$39,501 to $60,000
$29,626 to $45,750
$19,751 to $30,500

And here is the table for 2014 -

Filing Status/Adjusted Gross Income for 2014
Amount of Credit
Married Filing Jointly
Head of Household
50% of first $2,000 deferred
$0 to $35,500
$0 to $26,625
$0 to $17,750
20% of first $2,000 deferred
$35,500 to $38,500
$26,625 to $28,875
$17,750 to $19,250
10% of first $2,000 deferred
$38,500 to $59,000
$28,875 to $44,250
$19,250 to $29,500

     The credit is claimed on IRS Form 8880.


Tuesday, October 28, 2014


I guess some BUZZ is better than no BUZZ.

* It is almost time for the new issue of THE TAX PROFESSIONAL! Please email me your thoughts on the issues I have discussed in the September and October issues at with THE TAX PROFESSIONAL in the “subject line”.  Please!

* Check out my article “2015 Contribution Limits for Pension Plans Are Announced” at MAINSTREET.COM.

* Sterling Raskie explains “Why You Should Consider Long Term Care Insurance” at GETTING YOUR FINANCIAL DUCKS IN A ROW.

I have found that LTCI is basically for the middle and upper-middle classes who have accumulated substantial savings.  If long-term care, especially nursing home care, is needed, the poor are covered by Medicaid from dollar one, and the rich can afford to pay out of pocket.  It is the middle and upper-middle classes who have saved all their life or have substantial equity in real estate that need it.  These people are forced to bankrupt themselves before being covered by Medicaid.

It is also for people with beneficiaries.  While I considered buying it, I feel I do not need LTCI because if I am bankrupted by nursing home care nobody loses.  I do not have a spouse or children, or even nieces or nephews, who would lose an inheritance. 

* Tom Herman tells you “How to Find a Missing Tax Refund” at THE WALL STREET JOURNAL.


Monday, October 27, 2014


I wholeheartedly agree with Megan McArdle, who tells it like it is in “Can't Afford a House? Don't Buy One” at BLOOMBERG VIEW, and the following advice included therein (highlights are mine) -

But buying a house is a good idea only if you meet the following conditions:

1. You can afford a sizable down payment to cushion you from the effects of local economic downturns or you have a super-stable job, such as working for the government or your father-in-law, that makes you unlikely to ever miss any payments.

2. You can afford the maintenance as well as the payments, insurance and property taxes.

3. You have good disability and/or mortgage insurance to make sure that you do not miss any payments even if you break your back and can’t do your job anymore.

4. You are pretty sure you do not want to leave your area or move to a larger, more expensive home anytime in the next five years.

5 .Your payment is a reasonable percentage of your take-home pay (I shoot for under 25 percent; anything over 35 percent is far too risky).

6. You have a sizable emergency fund to deal with contingencies.

7. You can afford other forms of savings, rather than counting on your house as a piggy bank for future needs. In general, if declining home prices would send you into a hysterical panic about your financial situation, you are buying too much house.

If you do not meet these conditions, then buying a house is gambling -- not just on rising home prices, but also on the continued soundness of your roof, boiler and plumbing. If you wouldn’t borrow the money to go to Vegas, then don’t borrow it for a house, either.”

For some time now yuppies and others think all they need is 5%, or less, down .  This is wrong. 

A decade ago my sister had two separate offers to purchase her condo a who wanted to put only 5% down.  Both offers fell through at the last minute when the bank eventually wanted more down, which the “offerers” did not have (my sister eventually got fed up and sold the condo to my parents).

And just this month a client had a firm offer on his home, with the buyer only putting 5% down.  A closing date was set and the client put his furniture in storage and moved into his father’s apartment temporarily - and put a 20% down payment on a new home in Florida.  Again at the very last minute – days before the scheduled closing - the mortgage fell through because of the minimal down payment.

Read my lips – you should not even think about buying a house, or a condo, unless you have at least 20% to put down!

Friday, October 24, 2014


* It is almost time for the new issue of THE TAX PROFESSIONAL! Please email me your thoughts on the issues I have discussed in the September and October issues at with THE TAX PROFESSIONAL in the “subject line”.  Please!
* I tell you about the Social Security increases for 2015 in "Social Security Recipients to Receive An Increase of This Much in 2015" at MAINSTREET.COM.

* Are you self-employed, or thinking about starting a business. You need THE NEW SCHEDULE C NOTEBOOK!

* Joe Kristan quotes IRS Commissioner John Koskinen from an interview with Tax Analysts in “Tax Roundup 10/21/14: Gander Gets Sauced! And: IRS Commissioner’s Prophecy of Tax Season Doom” at the ROTH AND COMPANY TAX UPDATE BLOG -

So we have right now probably the most complicated filing season before us that we’ve had in a long time, if ever.”

I have been around for over 40 filing seasons and I doubt the upcoming one will be the most complicated “ever”.  My vote would probably be for the first tax season in the mid-80s that reflected the changes from TRA 86. 

But I do agree that Obamacare issues (if that is what he was talking about – you have to be a paid subscriber to read the complete interview) will add to the ongoing complication of the upcoming filing season.  Again we have the idiots in Congress to thank for this.

* Joe celebrates the anniversary of Reagan’s signing into law the Tax Reform Act of 1986 in “Tax Roundup, 10/22/14: Remembering Tax Reform”.

Joe reminds us that TRA 86 was not all good -

It included the current alternative minimum tax, which adds huge complexity to individual compliance. It had some benefits that phased out based on income, such as passive losses for active renters and for some IRA contributors. But at the time those could be seen as flaws to be fixed. Instead, they were weeds that would be cultivated.”

And he points out -

I count 47 ‘major’ post-tax reform tax laws in the Tax Policy Center list. Every one of them has done its part to undo tax reform.”

Joe ends on a hopeful note –

Still, 1986 did happen. Top rates came down from 50% to 28%. The base was broadened and rates reduced. It happened once, so maybe it can happen again.”

However neither Joe nor I are holding our breath.

* I just got this week’s email newsletter from Jean Murray, who covers business law and taxes for ABOUT.COM.

 This week, I'm focusing on issues involved with contracts and agreements.” 

* Jean also deals with the issue of “Who Is Self-Employed? Why It Matters”.

* Just in case you wondered why I never refer to Congress without the preface “idiots in”.  CCH HEADLINES reports (highlight is mine) -

Senate Minority Leader Mitch McConnell, R-Ky., wants to hold a vote on a package of expiring tax provisions known as ‘extenders as soon as the 114th Congress convenes in January, according to ‘The Hill’ newspaper.”

The idiots have been irresponsible enough waiting this long – and continuing to wait until after the election.

The perennial delay in passing the “extenders” causes multiple problems and issues for the IRS and tax software vendors as well as taxpayers who file electronically.

These idiots need to shit or get off the pot and vote NOW to extend, or let die, the various “extenders”.  Or more better - vote to either make permanent or let die the “extenders”.  Temporary tax breaks that do not directly relate to a specific natural disaster are not good policy. 

* I agree with Jason Dinesen.  It's okay to be Joe the Window Washer.”  Joe and I have a lot in common.

You can “Meet Joe the Window Washer” at DINESEN TAX TIMES.

* Joseph Spector of the DEMOCRAT AND CHRONICAL tells us about “Round 2: New York State Tax Rebate Checks Hit Mailboxes” -

The second round of rebate checks started hitting mailboxes in recent days.

The checks, about 2.8 million costing about $400 million to the state, will provide rebates to homeowners on school property taxes if their district last May stayed under the tax cap, which limits the growth in taxes to less than 2 percent a year.”

* Did you know that the “Tax Refund Size Increased This Year”?  So says Michael Cohn at ACCOUNTING TODAY -

The average tax refund in 2014 was $2,696, up 1.5 percent from the average refund of $2,656 in 2013, according to a new report on how well the Internal Revenue Service operated last tax season.” 

Michael also reports that, despite the best efforts of the idiots in Congress to make things difficult. “. . . the Treasury Inspector General for Tax Administration, found that the IRS managed to function well this past tax season”.

Let’s hope they are able to function just as well during the 2015 tax filing season, as the idiots in Congress wait until the very last minute to deal with the “extenders”.


Wednesday, October 22, 2014


According to the Social Security Administration the monthly Social Security and Supplemental Security Income (SSI) benefits will increase by 1.7% effective January 2015.

The Social Security Act ties the annual COLA to the increase in the Consumer Price Index as determined by the Department of Labor’s Bureau of Labor Statistics.

The monthly Medicare Part B premium will remain $104.90 for 2015.  Higher income beneficiaries will pay a higher premium in 2015 based on 2013 AGI plus tax-exempt municipal bond income.    

If your yearly income in 2013 (for what you pay in 2015) was
You pay (in 2015)
File individual tax return
File joint tax return
File married & separate tax return
$85,000 or less
$170,000 or less
$85,000 or less
above $85,000 up to $107,000
above $170,000 up to $214,000
Not applicable
above $107,000 up to $160,000
above $214,000 up to $320,000
Not applicable
above $160,000 up to $214,000
above $320,000 up to $428,000
above $85,000 and up to $129,000
above $214,000
above $428,000
above $129,000

The maximum amount of earnings subject to the Social Security tax (and the Social Security component of the self-employment tax) will increase from $117,000 to $118,500 for 2015.  The maximum Social Security tax to be withheld from wages in 2015 will be $7,357.  And the maximum amount of the Social Security component of self-employment tax will rise to $14,694 for 2015.


Tuesday, October 21, 2014


* If I may be allowed to repeat a previous BUZZ item:  Hey tax pros - I am still waiting to hear from youse guys on the topics discussed in the October “issue” of THE TAX PROFESSIONAL! Please email me your thoughts at with THE TAX PROFESSIONAL in the “subject line”.  Please!

* As promised – from Peter J Reilly “UnFair: Exposing The IRS - Does Not Make Strong Case Or Decent Documentary” at FORBES.COM. 

While there are many aspects of the current Tax Code that are truly unfair, this film apparently did not address any of them.

Peter’s bottom line - “Craig Bergman’s argument does not make a lot of sense.”

Not surprising, as the film is basically a “reiteration of a political and cultural platform” – the platform of the infamous Tea Party.

As Peter says the film was “a rally the troops type of piece that would only work on those who were already convinced of the viewpoints expressed”.

Peter approached the film with an open mind and a true interest, but came away with nothing –

I was genuinely interested in the topic and hoped that in the 90 minutes I spent watching the film and the panel discussion afterwards that this documentary would have disgorged some credible factual information or leave me with new insights.  Regretfully that did not happen.”

The film calls for the end of the income tax and the implementation of the “Fair Tax” – a national sales tax.  While I do not necessarily support this, I have not totally dismissed the concept of a national sales tax.  I talked about the potential benefits of such a tax way back at the very beginnings of TWTP – and repeated the discussion in the 2009 post “So What Do You Think – A National Sales Tax? 

* Daniel Hood reminds us that “PTIN Renewal Season Open” at TAXPRO TODAY -

The IRS announced that professional tax preparers can now register for or renew their PTINs on”

And –

First-time PTINs cost $64.25; renewals are $63.”

Why?  There used to be no charge for a PTIN.  The fee was originally initiated to pay for the now dead RTRP mandatory registration program.

See my ACCOUNTING TODAY 2013 editorial “Why Is There Still an Excessive PTIN Fee?"
I have already paid my annual $63.00 extortion fee to the IRS.  Now I just have to pay my $100.00 extortion fee to New York State.
FYI, only those individuals with a valid PTIN are permitted to prepare federal income tax returns for compensation.

* TAXPRO TODAY reports on the recent NATP Fee Survey in “Preparers’ Fees, Workload Increasing: Survey”.  

No surprise here - the survey indicates that CPA preparers charge, on average, 60% more than the overall average fee for a Form 1040  and, again on average, $100 more than the average individual "unenrolled" preparer charges.

* My former home town of Jersey City turns up at #10 on the list of the “15 Worst Cities for Retirees” at LIFEHEALTHPRO.  Newark NJ is #2.

Also on the list – Baltimore, Boston, Chicago, New York, and Philadelphia.

The ranking is based on an extensive series of metrics — 25 total — across five categories: affordability, activities, quality of life, health care and jobs” applied to “the 150 largest American cities”.

This slide-show is taken from WALLETHUB’s “2014′s Best and Worst Places to Retire”.  Of the 15 best places to retire 6 are in Florida and 4 are in Texas (Tampa is the best city for retirees) – the last 2 states to which I would want to retire.    I would not want to retire to any of the cities in the top 15. 

The WALLETHUB study says Jersey City is tied with Yonkers for the Highest Adjusted Cost of Living of the 150 cities.  Why do you think I moved to PA?


Friday, October 17, 2014


Another BUZZ-Light. 

The 2014 Tax Filing Season (for 2013 returns) is finally over – now it is time to get ready for the 2015 season (for 2014 returns).  It never ends!

* A “tweet” from @TaxManBoston that bears repeating –

And respect your tax practitioner! It's not THEIR fault when you owe taxes!!!

* Hey tax pros - I am still waiting to hear from youse guys on the topics discussed in the October “issue” of THE TAX PROFESSIONAL! Please email me your thoughts at with THE TAX PROFESSIONAL in the “subject line”.  Please!

* Over at FORBES.COM my fellow tax blogger Peter J Reilly quotes me in his post “UnFair - One Night Stand Tonight - Exposing IRS Or Fair Tax Infomercial?”.

I did not view this film, despite its endorsement by Chuck Norris (hey- Tuesday night is NCIS).  As my quote states I truly believe the Tea Party Movement is dangerous and should not be encouraged in any way – and that the only possible Congress worse than the one we now have would be one controlled by Tea Party members and supporters.

I will reference Peter’s review of the film in next Tuesday’s BUZZ.

* I am also quoted in Jim Stimpson’s item “Gimme Gimme: Handling Requests for Free Advice” at TAXPRO TODAY.

* It appears that “October Is A Good Month to Start Investing”.  This is what Michael Zhuang, aka THE INVESTMENT SCIENTIST, discovered in a stock market seasonality study.

We assumed that at the beginning of each year we invested $1 in the {S+P 500} index, and we observed how the investment fluctuated over the year. Then we took the average over three different periods of time: the last 20 years, the last 50 years, and the last 86 years.”

October is the reflection point when the good season starts, while May is the reflection point when the good season ends.”

In my recent personal experience (I received an inheritance last October) I found that this was true.

* Kay Bell gives us an update on state same-sex marriage rules in “Same-Sex Tax Filing Changes Official in Virginia and Wisconsin” at DON’T MESS WITH TAXES.

The Supreme Court earlier this month gave same-sex couples the ability to get married in five more states when it refused to hear appellate cases that had struck down the states' bans on such ceremonies.

Gay and lesbian couples in Indiana, Oklahoma, Utah, Virginia and Wisconsin lined up soon after the High Court non-ruling to exchange vows.

Now the affected state tax departments must adjust their rules to accommodate the newlyweds.”