Friday, December 29, 2017


Let me end the year 2017 by saying what needs to be said loudly every day until the situation is fixed.

I am going to say what I believe at least 75% of every journalist, every elected official, and every government employee has said to themselves and in private, and wishes they could say out loud – Donald Trump is an idiot!

Trump is clearly a self-absorbed and self-important malignant narcissist.  It is obvious he has no conscience, no shame, no humility, no empathy, and, saddest of all, no humanity.

I have never seen any evidence that Donald Trump has ever performed a totally positive and totally unselfish act in his entire life.  I challenge anyone to provide me with evidence to the contrary.

Every President – perhaps every national politician - in my lifetime, regardless of whether or not I have agreed with them politically, and regardless of their individual eccentricities and personality faults and their degrees of ethical or moral challenges, has at least at some time in their political life shown evidence of humanity and humility, and has performed totally positive and unselfish acts.  And have actually admitted when they have made an error.   

Donald Trump is incapable of admitting he has ever made a mistake.  And Donald Trump cannot speak about anything to anyone anywhere without prefacing any statement or remarks by basically saying, “look how great I am”, spouting easily identifiable delusional lies as proof.

It is clear that Trump is more interested in the perception of the size of his abilities, accomplishments, crowds, reception, wealth, and body parts than in the principals of American democracy or the American people.

Despite all the talk of his alleged political "agenda", Trump has none.  His only agenda is, and has always been, (1) feed ego and (2) line pockets.

Donald Trump is literally the very last person who should ever be occupying the White House.  He is ignorant, he is incompetent, he is unfit, he is unstable, and he is dangerous!



And so, another year has come to an end.  An eventful year for taxes.  Or more appropriately – taxes of the future.

The big story of 2017 was, of course, the year-end passage of the “Tax Cuts and Jobs Act” (officially, it appears, “An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018”), along strict Party lines. 

The Republican Party, despite having control of both houses of Congress, was not able to accomplish anything in terms of legislation during 2017 – thanks for the most part to the fact that arrogant arsehole Donald T Rump was in the White House.  But they did finally manage to pass major tax legislation, and arsehole Trump signed it into law on December 22, 2017. before he left for one of his resorts (so he could unethically pocket even more of the American taxpayer’s money), in time for Christmas.  Whether or not it is a true Christmas present depends on your individual facts and circumstances. 

The GOP tax plan began as a couple of basic concepts – nothing more than scribblings on the back of a cocktail napkin.  It was expanded a bit to a written “framework”.  Actual details were eventually revealed just in time for the House vote.

Trump, of course, claimed a victory.  However, it was obvious, at least to me, that the fool didn’t give a rodent’s hind quarters what was actually in the bill (as long as it benefited him financially) – he just wanted ANY bill passed before the end of the year so he could say “look what I did for you”.   

And, despite what serial liar Trump said about this legislation, it was NOT a massive tax cut for the middle class, and Trump and his family most certainly WILL receive a massive tax cut.  As I have said in previous posts, the Act is not as good as the Republicans claim and not as bad as the Democrats insist.  In my opinion there is good in the legislation and there is bad in the legislation.  What is true about the new Tax Act is that it will affect every single taxpayer.  And it can truly be called the new “Accountants’ Full Employment Act”.

As for the 2017 tax filing season, it once again ran smoothly.  Despite an advertised slight delay in the date the IRS would begin processing returns - Monday, Jan. 23rd - the season officially began for me, as it always has, on February 1st.    

There were no auto, computer, equipment, or other issues.  The weather did impact the season on one occasion – a 30+ inch blizzard in mid-March literally buried my car and I could go nowhere for almost 2 weeks.  I have always said that I welcomed a huge snow storm in March so I could catch-up without interruption – and I got my wish this year.  

I had no issues with late-issued corrected Consolidated 1099 Tax Statements from brokerage houses this year.  The returns of several clients who usually had to wait until late March to send me their “stuff” were done earlier than usual.  And more cost basis information was provided, to both taxpayers and the IRS, for long-term transactions.

Despite the fact that Congress required that IRS Form 1098-T issued by colleges and universities actually contain the correct information necessary to properly claim education tax credits and deductions beginning with tax year 2016, the IRS erroneously delayed this requirement – so with only minor exceptions, 2016 Form 1098-Ts continued to be as useful as tits on a bull.

The IRS did much better processing returns this year.  I did not hear of any excessive refund delays or other processing FUs.  NJ announced in January that no refund, regardless of how submitted, would be issued until March 1st, due to additional identity verification - and I advised February filers with refunds of this fact.

Beginning with the 2017 tax filing season the ridiculous excessive additional “due diligence” requirements for tax professionals, forcing us to be social workers as well as tax preparers, was expanded to include returns for clients claiming the American Opportunity Credit and the Child Tax Credit.  I did absolutely nothing different or additional this season regarding the due diligence of EITC, AOTC, and CTC claims than I had done in past years.  I was surprised and happy to find that Form 8867 was reduced to 2 pages this season and wasted less of my time to prepare.  My biggest issue with this form was having to remember to include it for taxpayers claiming the Child Tax Credit.

The Obamacare “individual mandate penalty” was not an issue for me this season.  Nor was the advance premium tax credit reconciliation.  Forms 1095-A, B, and C arrived earlier this season, though the late receipt of Form 1095-B or C would not hold up my preparation of a return.  Information on W-2s and Social Security statements and client representations are enough for me to indicate full-year health insurance coverage. 

There was only one client who would have been subject to the shared responsibility penalty – but the IRS announced that it would not delay processing of returns that were “silent” on full-year health insurance coverage (did not check the box to verify full-year coverage and did not include Form 8965), so, believing “silence is golden, I completed the return without checking the box and without completing Form 8965.  As of this writing it appears the IRS had not requested any additional information from this client. 

On the state side – I continued to be extremely pleased with New York’s new “enhanced” online Form IT-201 and IT-203 “fill-in” (but manually filed) forms.  I also continued to use NJWebFile to electronically submit NJ-1040s directly to Trenton free of charge whenever possible (unless specifically forbidden by the client’s request).   I did not encounter any issues with NY or NJ returns, other than normal processing FUs by the state tax departments.  

I ended the season with only 22 GDEs (the “E” is for “extension” – you can guess what the “GD” is).  This is lower than the 24 from last tax season, which at the time was the least amount of GDEs since I took over my mentor’s practice in 1999.  All GDEs were the result of client delays - not a single one was due to my workload!  Every single return received in my hands by March 18th was completed and returned to the client, as were several received after that date.  

At the end of July, the Treasury Department decided to end the myRA program, which had been initiated in 2014, due to a lack of participation by taxpayers.  I thought this program was a good idea to help lower income individuals begin to save for retirement, with a minimal contribution needed to open and minimal allowable ongoing contributions, and was sorry to see it go.

And 2017 saw the initiation of the IRS being forced by Congress to once again use private agencies to collect outstanding tax debt, despite the failures of this practice in the past and the serious concerns of the National Taxpayer Advocate.  Using outside collection agencies is a bad idea, another example of the apparent practice by the idiots in Congress of “if at first it fails, do it again”.  As in the past, I advised taxpayers who receive a notice from an outside collection agency to tell them that they refuse to deal with a private agency and will only deal directly with the IRS.

Once the GOP Tax Act was passed I received numerous emails from clients asking me if it was a good idea to pre-pay their 2018 real estate taxes, if possible.  The Act specifically prohibited a deduction for prepaid state and local income tax, but said nothing about real estate tax.  As with anything else tax related, the answer depended on the client’s individual facts and circumstances, and I advised accordingly.  One client who prepaid told me there was a long line at the municipal tax office of others waiting to do the same thing.

2018 will be a busy year – with taxpayers, tax pros and the IRS trying to figure out how to implement and deal with the many changes made by the Act and the anticipated, and required, “technical correction” legislation.  Keep visiting TWTP during 2018 for all the details. 

Let us pray that 2018 will also bring the removal of mentally unstable malignant narcissist Donald T Rump from the White House.
So, there you have it – 2017, the year in taxes.  Fellow tax professionals, did I miss anything important?


Thursday, December 28, 2017


The “Tax Cuts and Jobs Act” is NOT tax reform. Congress was correct not to include the term “Reform” in the bill’s title.

The Act adds more complexity to the Tax Code than it provides simplification. And it retains most of the current complexity.

Deductions, credits and loopholes that provide special treatment for specific actions, industries, and groups, the distribution federal government social welfare and other program benefits, and refundable credits still remain in the Tax Code.

Here is, in my opinion, what true tax REFORM would look like (click on the title) –



The final BUZZ for 2017!

* Jason Dinesen of DINESEN TAX TIMES lists his “Top 5 Blog Posts of 2017”.

* While it is no surprise that “IRS Extends Due Date for Employersand Providers to Issue Health Coverage Forms to Individuals in 2018” there is really no reason for this. 

Insurers, self-insuring employers, other coverage providers, and applicable large employers now have until March 2, 2018, to provide Forms 1095-B or 1095-C to individuals, which is a 30-day extension from the original due date of Jan. 31.

You do NOT have to wait until you receive these forms to prepare your 2017 tax return, or to give your “stuff” to your tax preparer.  However, you DO NEED to have Form 1095-A in hand in order to properly prepare your Form 1040 (or 1040A).  This form should be mailed out by the end of January.

* Jonathan Curry gives us a “Year in Review: Tax Bill Takes aTopsy-Turvy Road to GOP Victory” at TAX ANALYSTS.

He reminds us about the last time the Tax Code was so drastically changed –

. . . the last major tax reform effort, in 1986, which took nearly three years to complete after President Reagan issued his call for it and involved dozens of congressional hearings with testimony from hundreds of individuals . . .”

The way tax reform, which the current bill actually is not, should actually be done.  Unlike Donald T Rump, Reagan was intelligent and competent, as were, to a degree, the members of Congress of both Parties at the time.

FYI – my annual tax year in review post will appear tomorrow.

* Tony Nitti tries to explain the truly convoluted mucking fess that is the new tax treatment of “pass-through” business income in “Tax Geek Tuesday: Making Sense Of The New '20% Qualified Business Income Deduction'” at FORBES.COM.

It is obvious that the GOP Tax Act is most certainly NOT “tax simplification”. 


Wednesday, December 27, 2017


Now that the idiot in the White House has officially signed the Tax Cuts and Jobs Act (officially, it appears, “An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018”), let me discuss some of what this means for taxpayers for 2018.

First - contrary to what Donald T Rump has said (a statement that must be made all too often today, considering that idiot Trump is a serial liar) – the GOP Tax Act did not repeal Obamacare!  What it did was repeal the “individual mandate” – the requirement that every American must purchase or obtain “adequate” health insurance for every member of his or her household for the entire year.  And it repealed the penalty assessed on the tax return for not having adequate full-year coverage.  But this is effective with tax year 2019.  The individual mandate and the penalty is still in effect for tax year 2018.  You will be penalized on your 2018 Form 1040 if every member of your household does not have adequate health insurance coverage for all of 2018 and you do not qualify for a statutory exemption.  The penalty does not disappear until 2019.

When it comes to recordkeeping –

(1) It is still important to keep track of medical expenses, and medical mileage, for 2018.  Perhaps even more so, as the AGI exclusion is returned to 7½% (down from 10%) for all taxpayers, regardless of age, for 2018 (and 2017) only

NJ taxpayers must keep track of medical expenses, whether or not they have been able to claim a federal deduction, because you can deduct unreimbursed medical expenses on the NJ-1040 if the total exceeds only 2% of your “NJ Gross Income”.  And you can deduct health insurance premiums deducted from your paycheck on the NJ-1040.  While these payments may be considered “pre-tax” for the federal return, they are NOT pre-tax when it comes to reporting NJ state wages.  And NJ taxpayers do not have to reduce the medical deduction claimed on NJ-1040 by reimbursements and payments from employer-sponsored Flexible Spending Accounts (FSA) or Health Savings Accounts (HSA), for the same reason.

(2) Under the GOP Tax Act, the following expenses are no longer deductible on Schedule A for tax years 2018 through 2025 -

* Job-related moving expenses, except for members of the Armed Forces who move due to a military order.   And employer moving expense reimbursements, again except for military personnel, are no longer excluded from income and will be included in taxable wages reported on Box 1 of your W-2.

* Investment interest

* Unreimbursed employee expenses (including union and professional dues, continuing professional education, job-related subscriptions and publications, home office expenses, uniform expenses, business use of your car, travel expenses, meals and entertainment expenses, license fees, tools used for work, and job search expenses) – except for the $250 adjustment to income for the unreimbursed expenses of K-12 educators.

* Tax preparation and advice costs and expenses relating to tax audits

* Investment fees and expenses, including safe deposit box rental fees

* Legal expenses for the collection or protection of income.

* Hobby expenses

So, unless you need to do so for employer reimbursements, you no longer need to keep track of business expenses or mileage, or the other items listed above, for 2018.  Of course, business expenses are still fully deductible by self-employed sole proprietors who file a Schedule C or C-EZ and for farmers filing a Schedule F. 

For business entities, including Schedule C filers, business “entertaining” – “entertainment, amusement, or recreation that is directly related to (or, in certain cases, associated with) the active conduct of the taxpayer’s trade or business” – is no longer deductible.  Under current law businesses can deduct 50% of these expenses.  What this means is that you can no longer deduct the cost of taking a client to the theatre or a sporting event following a legitimate business discussion.  Perhaps the cost of the client’s ticket could qualify as a business “gift”, with the deduction limited to $25.00.

(3) Beginning in 2018 home equity interest is no longer deductible, regardless of when the loan was initiated.  Period.  There is no grandfathering of existing home equity debt interest.  It is truly more important than ever to keep separate track of acquisition and home equity debt, going back to when you first incurred home equity debt!  Most taxpayers don’t do this – but they had better start doing this beginning in 2018.  We currently do not know if or how the Form 1098 will change for tax year 2018 to reflect the new law. 

I am in the process of rewriting my “Mortgage Interest Guide” to reflect the new law, which includes worksheets and instructions for doing this.  Click here for more information on this report.

Just so you know, home equity loan interest on up to $100,000 of principle, and the other expenses discussed above, is still deductible for 2017

So, some taxpayers will have less work related to tax recordkeeping during the year for 2018 – 2025, and some will have more.

Any questions?


Tuesday, December 26, 2017


I am in the process of proofing the January 2018 issue of ROBERT D FLACH’S 1040 INSIGHTS and getting ready to “go to press”.

This issue discusses –

* “year-beginning” tax moves to make,

* information returns that will begin to appear in the mail in January,

* the changes to the 1040 that will affect most taxpayers that are in the new Tax Cuts and Jobs Act,

* using a “box” or online service to prepare their tax returns, and

* the Social Security changes for 2018.  

You can order a copy of this issue for only $2.00 – a special discounted price for this issue.  It will be sent to you as a pdf email attachment. 

Send your check or money order for $2.00, payable to Taxes and Accounting, Inc, and your email address to –


For information on subscribing to this newsletter click here.


Monday, December 25, 2017



Sunday, December 24, 2017


Today is Christmas Eve.  

Every year on Christmas Eve I spend the day 
typing W-2s - mine and for my clients.  
This year is no different.

Tonight - a leisurely and bountiful meal 
at my favorite local restaurant.


Friday, December 22, 2017


You're a mean one, Mr. Trump.
You really are a heel.
You're as cuddly as a cactus,
You're as charming as an eel,
Mr. Trump.
You're a bad banana with a greasy black peel

You're a monster, Mr. Trump.
Your heart's an empty hole.
Your brain is full of spiders,
You've got garlic in your soul,
Mr. Trump.
I wouldn't touch you with a
Thirty-nine and a half foot pole

You're a vile one, Mr. Trump.
You have termites in your smile.
You have all the tender sweetness of a seasick crocodile,
Mr. Trump.
Given the choice between the two of you
I'd take the seasick crocodile.

You're a foul one, Mr. Trump.
You're a nasty wasty skunk.
Your heart is full of unwashed socks,
Your soul is full of gunk,
Mr. Trump.
The three best words that best describe you
Are as follows, and I quote"

Ain’t it the truth!

Thursday, December 21, 2017


Just so you know – while “technically” the Standard Deduction amounts are almost doubled, the net tax benefit, to taxpayers, if there are any, is nowhere near equal to almost doubling the Standard Deduction

This is due to the elimination of the Personal Exemption deduction.  While, to make up for this, qualified children get the equivalent of a $1,000 credit via the doubling of the Child Tax Credit, and "non-child" dependents get a $500 credit, the individual taxpayer and spouse get NO TAX CREDIT to replace the loss of the deduction.

The Standard Deduction for a single taxpayer goes from $6,350 to $12,000.  But when you factor in the loss of the Personal Exemption of $4,050, the actual tax deduction goes from $10,400 to $12,000.  This is only $1,600 more – nowhere near a 50% increase in net the net deduction.

The increase in tax benefit for a non-itemizing married couple filing a joint return goes from, effectively, $20,800 to $24,000, or an increase of $3,200 – again nowhere near 50%.

And the $500 credit for children age 17 and older and other dependents does not make up for the loss of a $4,050 per dependent deduction. 

And, as has been frequently discussed everywhere, the limitation on the itemized deduction for taxes will substantially increase the net taxable income of many taxpayers in highly taxed “blue" states like New York, New Jersey and California. 

To be fair, it is true that the actual tax rates are lower and the income brackets expanded – so this may make up for some of the increase in net taxable income.  More net income is taxed, but at a lower rate. 

So, while there are good things in the Act that I do support, and many taxpayers will end up with some more money “in pocket” as a result, the Tax Cuts and Jobs Act is by no means a MASSIVE tax cut for anyone other than taxpayers like Donald T Rump and his family.

Just saying.


Wednesday, December 20, 2017


One vote down, and one to go (or actually two, as the House must vote again) – as of this writing! Two votes down - one to go.

Complying with the changes in the Tax Cuts and Jobs Act will create a new nightmare for both taxpayers and tax preparers.

On one hand there is some reduced required recordkeeping.  Doing away with the deduction for employee business expenses means that taxpayers who are not reimbursed for expenses by employers under an accountable plan will no longer need to keep track of business mileage and other expense during the year.

But on the other hand, there is the new limitation on the mortgage interest deduction.  

Only interest on $750,000 of “acquisition debt” – money borrowed to buy, build or “substantially improve” a property - can be deducted on new mortgage loans initiated after December 15, 2017.  For existing mortgages, the $1 Million limitation is “grandfathered”. 

Home equity interest is no longer deductible.  Period.  The House bill had grandfathered all existing mortgage debt, including home equity debt, under the “old” law – but I believe the final bill does not grandfather home equity debt.  I actually support limiting the tax deduction to acquisition debt.  Personal interest, like credit card finance charges and auto and pension loan interest, is not deductible.  Home equity interest is personal interest.  Home equity loans may be used to finance capital improvements, but then the debt is actually acquisition debt.   

Under the current law taxpayers are required to keep separate track of acquisition of home equity debt.  Taxpayers frequently refinanced existing mortgages either to get additional money for non-acquisition purposes or to consolidate existing acquisition and equity debt loans.  The Form 1098 issued by banks and mortgage companies did not differentiate between the two types of interest.  I expect at least 80% of homeowners did not separately track the two types of debt.  This was not a problem in many cases, considering the $100,000 principle limitation on the home equity interest deduction.  But now this is truly essential.

Going forward, taxpayers can maintain, or banks and mortgage companies can be required to issue, separate loans for acquisition debt and home equity debt.  And keep these types of debt separate by avoiding the combining of, or not being allowed to combine, the two types of debt instruments when refinancing.  But what about existing mortgage loans?  Here is where the real nightmare will truly occur.

It is the taxpayer, and not the tax preparer, who is required to keep track of the two types of debt.  But what is the tax preparer’s responsibility when the majority of taxpayers do not do this?    

A new Form 1098 should be created to separately report –

1. Total mortgage interest received for the year on all ‘grandfathered’ mortgage debt.

2. Year-beginning principle balance of all ‘grandfathered’ mortgage debt.

3. Total mortgage interest received for the year on ‘new’ acquisition debt on the purchase of, and capital improvement to, the mortgagee’s primary personal residence on up to $500,000 {now $750,000 – rdf} in principle.

4. Points paid on the first $500,000 of principle on the purchase of a primary personal residence.

The form would not report any “new” home equity debt interest.

Mortgage lenders should be required to identify the purpose of the borrowing – acquisition debt or home equity debt – via taxpayer certification, and keep separate internal track of the two types of debt.  Perhaps mortgage lenders should create two separate debt instruments and not combine acquisition and home equity debt in the same loan.  Going forward, for simplicity sake, the closing costs on the refinancing of “new” acquisition debt, where the borrower does not take additional money for anything other than capital improvements to the residence, should be included in acquisition debt.” 

As I look back on this earlier post I think the first 2 items on the list of what should be on the new Form 1098 shouldn't be limited to “grandfathered" debt, but just report the total interest paid for the year and the total year-beginning principle balance.  This information is needed for rental properties, which could include a portion of a taxpayer’s personal primary residence.  There is no limitation on the acquisition interest deduction on Schedule E for rental property.

The new GOP Tax Act obviously provides more complexity than simplification – and truly increases the workload of tax professionals.  Like the Tax Reform Act of 1986, it can also be called the “Accountants Full Employment Act”.


Monday, December 18, 2017


Nobody actually asked me, but over the years I have been told by friends and family, and clients and colleagues that I should write a book.

I have written several – but they have all been about taxes.

Just in time for Christmas, my new book BOBSERVATIONS is Bob’s observations (obviously I am Bob) on life, liberty, and the pursuit of happiness, with the occasional rant, ramblings, and fine whine.  It is a compilation of articles, columns, and editorials I have written over the years that have appeared in my various attempts at newsletters and non-tax blogs.

I do talk about taxes a bit, but mostly about popular culture, entertainment (television, movies and Broadway), and personal finance, taking to the soap box and getting serious for the final entries.  And it includes an item on how I lost 90lbs in 9 months!

A copy of this book is only $4.99 – delivered as a pdf email attachment.  An e-book version for Kindle is also available from Amazon.  Click here for more information on this version.

Send your check or money order for $4.99, payable to ROBERT D FLACH, and your email address to –




The big BUZZ of the end of last week was the result of the conference committee on the GOP tax bill.  I will not discuss the specific results here until a final bill has been passed and signed into law.

* A reminder – did you see my post on the new 2018 standard mileage allowance rates?  Click here.

* The first of what I expect to be many similar announcements – the DES MOINES REGISTER reports “Iowa tax refunds will be delayed again in 2018” -

Iowans can again expect longer wait times for state income tax returns in 2018, state officials said Monday.”

The reason for this delay, and the many more that will no doubt be forthcoming, is clearly, as the news item explains, an attempt to “double down on fraud prevention”.  Despite the potential inconvenience from the delays, this “doubling down” is certainly a good thing.

* Kelly Phillips Erb, FORBES.COM’s TaxGirl, has begun posting her annual “12 Days Of Charitable Giving” series.  The charities she has highlighted so far are -

* Jason Dinesen deals with the confusion in “What Tax Benefits Does Form 8332 Give?” at DINESEN TAX TIMES -

With a Form 8332, the non-custodial parent can claim the dependency exemption for the child and also claim the child tax credit — but no other tax benefits associated with the child. The CUSTODIAL PARENT remains eligible to use that child for tax benefits such as: head of household filing status, the earned income credit, and taking the credit for daycare expenses.”

* Today at THE TAX PROFESSIONAL – "What Is Considered Prepaid Income Taxes?". 

* In light of the potential change to the Tax Code the TAX FOUNDATION asks “Does Your State’s Individual Income Tax Code Conform with the Federal Tax Code?”.

As I have said in the past – changes in the GOP Tax Act will most definitely affect many state income tax returns.  Except for NJ and PA, coincidently the home of my clients and my home.  


Did you know that at the beginning of each cabinet meeting Donald T Rump has the members sing the hymn “How Great Thou Art”?

This is not to pander to his evangelical base, or to maintain the lie that he is actually a practicing Christian.  Trump actually thinks the song is about him!