Thursday, December 29, 2016


And so another year comes to an end.  Time to look back and reflect.
The year in taxes 2016 was truly uneventful – from a tax point of view.
Obviously the big story of the year was the Presidential election.  The absolute worst that could happen did indeed happen – unfortunately for the country and the world, despite receiving almost 3 million less votes than Democrat Hillary Clinton, dangerous, deplorable and despicable narcissist Donald Trump, the truly surprising Republican candidate, will be the 45th President of the United States!
At the beginning of the primary season I said that the most disturbing political development in my lifetime - I was 62 at the time - is the fact that dangerous, unstable, irresponsible, and irrational realty television cartoon clown Donald Trump is being taken seriously as a candidate for the office of President of the United States.  I since revised that statement twice – first to say “is the official nominee of the Republican Party” and finally to say “will be the President of the United States”.
But this post is about the year in taxes.
My 45th tax season (only 5 more to go) started off without any problems and went very smoothly.  There were no weather, equipment, computer, or other issues.  The idiots in Congress passed the PATH Act in mid-December last year, which, in a rare show of intelligence, made permanent many of the more appropriate “extenders”.  So there was no delays in the beginning of tax return processing or the availability of IRS forms.  I was able to begin my tax season as always on February 1st. 
IRS consumer service and return processing reached historic lows in 2015 – due to the continual reduction of the IRS budget Congress and continued IRS mismanagement.  I heard from more clients about seriously delayed refunds and processing FUs last year than in all the years before combined – including one client who was told by the IRS that his refund could not be processed because he was dead.  But there were no similar FUs or delays that I was made aware of this season.  I only heard from two clients whose NJ refunds appeared to be a bit late.  I expect this is because the states, and the IRS, was taking a bit longer to process returns in attempts to avoid identity theft.
As the basis reporting requirements become “older”, more and more investment transactions are becoming “covered”, which increased filing efficiency.  And there is now more uniformity in 1099-B reporting by brokerage and mutual fund houses.  While there were still corrected Year-End Tax Reporting Statements issued by brokerages, there seemed to be less corrections (not more than one per account), and they were issued earlier in the season than past years.
This was the first year that Obamacare Forms 1095-B and 1095-C were required.  The IRS delayed the filing deadline for these forms until mid-March – and we learned late in 2016 that this will continue during the 2017 filing season as well.  Most arrived after I had already prepared a client’s return.  I got tons of emails in late March with attachments of 1095-Bs and Cs, which wasted some valuable time.  In most cases, as I have been telling clients when they ask about these forms, they are just additional wasted government paperwork and I really do not need these to determine if clients are covered by “appropriate” insurance.  All I need is the client’s representation that all applicable family members were adequately covered for the entire year.  Thankfully the few 1095-As I needed were all issued in early February.
This season none of my clients had to pay the Obamacare “shared responsibility” penalty, the very few without insurance were exempt due to “affordability”, and only a handful of returns involved the advance premium credit reconciliation. 
I did discover an issue involving the “second lowest cost silver plan” numbers that are included in the calculation of the allowable credit.  In one case the numbers provided for 2015 were substantially different, higher (and therefore resulting in a lower allowable credit amount), than the numbers given for 2014 for the same family situation.  When I went to the Marketplace website tool to search for the SLCSP numbers for 2015 using the family’s information I came up with different, lower, numbers.  I used the lower online amount in the reconciliation, with an attached statement of explanation, which resulted in a smaller credit payback.   
On the state side – I was extremely pleased with New York’s new “enhanced” online Form IT-201 and IT-203 “fill-in” (but manually filed) forms.  The “enhancement” automatically did the math and actually calculated the tax – saving valuable time.  I used the new enhanced process for all of the 20+ New York returns I prepared – and continued to add to my invoice a $5.00 “New York State Tax Preparer Extortion Fee Surcharge” for all clients with NY state returns.
I continued to use NJWebFile to electronically submit NJ-1040s directly to Trenton, free of charge and without a “middleman” (I wish the IRS would initiate a similar program), whenever possible (unless specifically forbidden by the client’s request).  However there are still too many situations where this option is not available.  When I had to manually prepare the return for the client to mail I used the online “Fill-In” Form 1040, which did some math but did not automatically calculate the tax.   I did not encounter any issues with NJ returns.
I was apparently especially efficient this season - I ended it with slightly less than half the number of GD extensions than last year, only 24, and most because of late receipt of client “stuff”.  This may be the least amount of GDEs since I began keeping track of season-end GDEs!   To pat myself on the back, all returns that were in my hands by the deadline of March 19th that I announced to clients in my annual January mailing were dealt with during the “season”.
I do think the delayed filing deadline – April 18 instead of April 15 this year – and the additional day provided by being a leap year did help somewhat in reducing season-ending GDEs.  As usual the tax season ended for me not on April 18th but on April 17th.
To Be Continued . . . . .

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