Monday, December 19, 2016


Another “meaty” BUZZ – the last before Christmas.

Before I begin an FYI – the 2016 Form 1040 is now available to download.  It is, line-for-line, exactly the same as the 2015 Form 1040, except for the changes in the standard deduction and personal exemption amounts.

* I recently came across a post from Robert W Wood at FORBES.COM that I missed in last week’s BUZZ – “Seven Crazy Tax Laws Trump Should Change”.

I totally agree with the 7 items of “craziness” that RWW identifies.  While I do admit I am not really very familiar with the “carried interest” item, I expect from its constant criticism across the tax blogosphere that it should be on the list.

And I most certainly also agree with the “bottom line” of the post (highlight is mine) -

These are only a few provisions, mind you. There are thousands of pages of tax law needing reform. Although some parts of our tax law make sense, many do not or lead to abuses. Besides, they inject a level of complexity that no one would wish upon anyone. We need a better, simpler, fairer and flatter tax system.”

I discuss principles of tax reform at A TAX PROFESSIONAL FOR TAX REFORM.  I also explain why I believe that a simpler tax system will not adversely affect my business at this site.

As an aside - I would replace the word “Trump” with the word “Congress” in the title – idiot Trump can’t change any laws, only Congress can. 

* Kay Bell suggests “Buying a car could boost your sales tax deduction” at DON’T MESS WITH TAXES.

I certainly do not advocate running out in the next two weeks to buy a car just so you can get a sales tax deduction.  But if you need a new car, or have been thinking about purchasing a new car, doing it before the end of the year might be a good move.

Currently you have the option of deducting either state and local income tax or state and local sales tax if you are able to itemize on your 2016 Schedule A.

First you must do a comparison to see which type of tax will provide the greater tax deduction.  In high state tax locations – New Jersey, New York, California, etc – there is no contest, deducting state income taxes is “more better”.  But if you live in a state with low or no state income tax, or your age or sources of income result in low or no state tax liability, you should take a look.

You can deduct sales tax based on an amount in an IRS-generated table – to which you can add the sales tax paid on “big ticket” items like an automobile.  The 2016 IRS state sales tax table has not yet been published (that I can find).  You can go here and use the calculator for 2015 to get an idea of what you will be allowed.

For more detailed information on deducting state and local sales tax get my Guide to Schedule A. 

* Kay also gives us an education on “the tax-related medical programs that businesses and individual taxpayers must know and sort through as they evaluate health care coverage” via “Comparing tax-favored HSA, HRA & FSA medical options”.

* Jason Dinesen has a good discussion on “What Responsibility Does a Client Have in Proactive Planning with an Accountant?” at DINESEN TAX TIMES.

* And Jason continues his “Getting Your Business Off to a Good Start” series with “Part 3: Bookkeeping Systems”.

Some words of wisdom from Jason (highlights are his) –

Software will accept whatever you put into it.

If you don’t know what you’re doing, your bookkeeping system can turn into a massive trainwreck!

And –

Should You Keep Your Own Books?

Yes …

But only if you feel comfortable and you know what you’re doing. Know your limits and when to ask for help.

Being able to plug numbers into Quickbooks does not make you an accounting or bookkeeping expert.

* The NATP recently sent me the following information on tax relief for the victims of Hurricane Matthew -

Victims of Hurricane Matthew, which took place beginning on October 4, 2016, in parts of North Carolina, may qualify for tax relief. The declaration permits the IRS to postpone certain deadlines for taxpayers who reside or have a business in the disaster area.

Affected areas that currently qualify include Beaufort, Bladen, Columbus, Cumberland, Edgecombe, Hoke, Lenoir, Nash, Pitt and Robeson counties. Continue to check the Tax Relief in Disaster Situations page to stay up-to-date on eligible areas and updated deadlines. The IRS expects additional states to be included in the extended relief.

Certain deadlines falling on or after October 4, 2016, and on or before March 15, 2017, have been postponed to March 15, 2017. This includes the 2015 individual returns on extension originally due on October 17 and the January 17, 2017, deadline for making quarterly estimated tax payments. Also included are the October 31 and January 31 deadlines for quarterly payroll and excise tax returns.

The IRS automatically identifies taxpayers located in the covered disaster area and applies automatic filing and payment relief. But affected taxpayers and their tax preparers who reside or have a business located outside the covered disaster area must call the IRS disaster hotline at 866.562.5227 to request this tax relief.”

* FYI – I have updated my “What’s New In Taxes For 2017” compilation to include the newly announced 2017 standard mileage allowance numbers.  Click here to download.

* IRS Information Release 2016-170 - “Tax Preparedness Series: What to Do Before the Tax Year Ends Dec. 31” – provides some good reminders of what to do before year end, such as –

ü  take your RMD if required,

ü  notify the IRS of any change of address by filing Form 8822, and

ü  notify the Social Security Administration of any name changes due to marriage or divorce.

* Perhaps in anticipation to her upcoming annual “12 Days of Charitable Giving” TaxGirl Kelly Phillips Erb lists “12 Tips For Making Your Charitable Donation Tax-Deductible” at FORBES.COM.

* Did you know “The minimum wage is about to rise in 19 states”.  Check out Paul Ausick’s piece at MSN MONEY to see if you are affected.


 NO tax software package, or online filing service, is a substitute for knowledge of the Tax Code, and NO tax software package, or online filing service, is a substitute for a competent, experienced tax professional.
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