Tuesday, January 31, 2017


Before I take my tax-season hiatus from posting I feel I must make one more statement about the Presidency.
People say I must “accept” that arrogant buffoon Trump is our President, give him the respect that the office entitles him to, and “move on”.
I “accept” that the election was “legitimate” and that, despite losing the election by close to 3 Million votes, Trump has completed the legal process to be selected as President.  There is no doubt he is indeed legally the 45th President of the United States.
But I do not “accept” or “respect” Donald Trump the man.  He was a deplorable and despicable human being, a dangerous mentally unstable narcissist and sociopath, before running for office, during the campaign, and after being selected as President.  He has not automatically been endowed with honor, integrity, or intelligence where none existed before by mere virtue of his being sworn in as President.  He is still the same dangerous, deplorable and despicable mentally unstable narcissist and sociopath.
I strongly oppose and denounce Trump the man.  It has nothing to do with his alleged politics or policies.  It is not because he is Republican and I voted for the Democratic candidate.  Trump has absolutely no political beliefs, convictions, or philosophy.  The only thing he truly believes is “Trump is good and Trump is great”.
I do oppose and denounce the policies and proposals he ran on during his campaign – but these were not necessarily what he believed but what he believed his followers wanted to hear and were put forward by Trump solely to be able to hear “the roar of the crowd” at his rallies.
Trump does not deserve any respect from anyone, regardless of the office he holds, because he has shown no respect for anyone or anything.
I cannot “move on” because I truly believe that Trump’s Presidency poses a serious threat to the future of America and the world.  I must vocally and aggressively denounce and oppose him at every available opportunity.

It is obvious from his words and actions that Trump is mentally unstable - unfit and unable to properly carry out the duties and responsibilities of President.  He must be removed from office based on his mental incompetence.
Opposition to Trump is NOT politics – it is patriotism!

Monday, January 30, 2017


None of the ads for commercial tax preparation chains or for Credit Karma mention anything about the competence of tax preparation or competence, training, or knowledge of their preparers, or the ability of their preparers to properly prepare accurate returns so you pay the least amount of tax legally possible.  They only mention “come in and get a check” or “preparation is free”.  I truly believe that no one should use Credit Karma or a commercial preparation chain to prepare their 2016 federal or state tax returns. 
That said – on with the last BUZZ before my tax-season hiatus!
* Some excellent advice worth repeating again and again from Russ Fox, author of the TAXABLE TALK blog, in dealing with “2017 Mailbag #1: The 1099 Doesn’t Show Up, So I Don’t Have to Report It, Right?” (highlight is mine) -

Yes, you need to report the income. All income is taxable unless Congress exempts it. Yes, the company you did work for is supposed to issue you a Form 1099-MISC. But whether or not you receive a 1099 doesn’t change whether income is taxable or not. You were paid for services, and that’s income. Simply total what you received and include it in your gross receipts for your business.”

And –

Remember, simply report all of your income regardless of whether or not you receive a 1099 (or other paperwork). It’s easier to sleep at night when your tax return is accurate.”

* Did you see my open letter to Vice President Pence and Congress?  Click here to read it.

* The NSTP BLOG reminds us “ICYMI: New Two-Stage E-Mail Scheme Targets Tax Professionals”.  

* FYI – I updated my article on “The Cost of Tax Preparation” at FIND A TAX PROFESSIONAL based on most recent NSA fee study.

* An interesting analysis from the Tax Policy Center’s BRIEFING BOOK -  How do US taxes compare internationally?

* Peter J Reilly quotes me, and references my “eccentricity”, at the end of his announcement that “TaxProf Calls An End To Day By Day IRS Scandal Coverage”.

* From RUBIN ON TAX – “Reminder: FBARs Due in April Starting This Year”. 

FYI - FBAR stands for “Reports of Foreign Bank and Financial Accounts” and is not to be confused with FUBAR, which is the formal description of the current US Tax Code.

* NJ taxpayers – did you know there was a special newsletter written just for you?  Learn the joy of avoiding NJ taxes! Click here for more info.

The Last Word –

No Trump comments today.  See my final statement before tax-season hiatus about the idiot in the White House in a special post tomorrow.

I do want to bring your attention to a unique new political organization and campaign – Brand New Congress. 

According to its website the plan of this organization is – “to recruit over 400 extraordinary ordinary Americans to challenge both Democrats and Republicans in congressional primary races across the country in order to replace almost all of Congress in one fell swoop. These will be people who have track records of integrity and service in their communities and who are not all career politicians -- we're looking for nurses, teachers, engineers, scientists, factory workers, and so on.”

For years I have been complaining about the incompetence and inability to work together to accomplish anything of the idiots in Congress.  This sounds like an excellent solution to this current ongoing problem.

I have read and agree on principal with much of what has been published on the website about their platform.  Of course I will reserve final judgment until I read more details of the organization’s specific platform proposals – but so far I am truly impressed.

Please visit the organization’s website and give it careful consideration.

FYI - On Wednesday I will be giving you what you have been waiting a year for!


 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.
Do you need to find a qualified and competent tax professional?


Wednesday, January 25, 2017


As I previously mentioned in an introduction to an earlier BUZZ installment there is no change to the 2016 Form 1040, or 1040A.  They are “line-for-line, exactly the same as the 2015 Form 1040, except for the changes in the standard deduction and personal exemption amounts”.
I was waiting to see the 2016 Form NJ-1040 instructions to find out when the new $3,000 exemption for veterans became effective.  The answer was recently provided in an announcement on the NJDOT website -
Under a new State law, veterans may qualify for an exemption of up to $3,000 on their New Jersey tax return for income earned in 2017. This exemption, part of a bill passed by the Legislature and signed into law by Governor Christie last October, is in addition to other exemptions or deductions for which veterans may qualify. The exemption is available for all veterans who received honorable discharges or who were released under honorable circumstances from active duty in the Armed Forces of the United States, a reserve component thereof, or the National Guard of New Jersey in a federal active duty status. Veterans may claim the exemption when they file their Tax Year 2017 returns. The exemption does not apply to 2016 income.” 
I have finally seen the 2016 Form NJ-1040 and the one and only change to the form, other than the year, is replacing the boxes in the bottom section of Page 1 for entering the amount of the check enclosed for the balance due (on the 2015 NJ-1040) with boxes for entering a Driver’s License Number (see below).  Otherwise it is exactly the same as the 2015 NJ-1040.
The changes that affect the preparation of the 2016 NJ-1040 are –
(1) Residents who are eligible and file for a federal Earned Income Credit can also receive a NJ Earned Income Credit equal to 35% of the federal amount.  This increased % was part of the gas tax increase deal.
(2) The maximum employee contributions for the various state benefit funds for 2016 are:
·         Unemployment Insurance and Workforce Development = $138.56
·         Disability Insurance = $65.20
·         Family Leave Insurance = $26.08
If you had 2 or more NJ employers during 2016 and contributed more than these maximum amounts you can receive a refund of the excess on the NJ-1040 via Form NJ-2450.
(3) The percentage used to calculate the allowable “Alternative Business Calculation Adjustment” deduction on the 2016 Schedule NJ-BUS-2 (and going forward) is 50%.  The ABCA deduction is now fully phased-in.
(4) The Fund for the Support of New Jersey Nonprofit Veterans Organizations has been added to the list of charities to which NJ taxpayers can contribute via the 2016 NJ-1040.  It is identified with code number “22” on the “Other Designated Contribution” line on the form.
NJ taxpayers hoping for a quick refund by filing early will be out of luck.  No NJ refunds will be issued until March 1, 2017, regardless of how early the returns have been filed.
And, according to the NJ Division of Taxation website –
“• Returns filed electronically may take a minimum of four weeks to validate and process.
Returns filed on paper may take a minimum of 12 weeks to validate and process.”
So don’t bug your tax preparer if you haven’t received your NJ refund promptly. 
For some reason the State of New Jersey is dragging its arse – the 2016 individual income tax forms and instructions are not yet available to download on the NJDOT website.  I was able to view the 2016 NJ-1040 and instructions because a client received the booklet in the mail last week.
There have been no changes to New York state income taxes and the 2016 New York IT-201 or IT-203 – other than the statutory cost of living adjustments to the Standard Deduction and the Tax Rate Schedules and some changes to obscure tax credits.  The only credit changes worth mentioning are -
·   NYC school tax credit - Beginning with tax year 2016, the credit will now be a New York State personal income tax credit for residents of New York City.  Previously, the credit was a New York City personal income tax credit for residents of New York City.
·   Noncustodial parent earned income credit - This credit has been permanently extended.  Previously, this credit was due to expire December 31, 2016. See Form IT-209, Claim for Noncustodial Parent New York State Earned Income Credit, and its instructions.”
There is a new requirement for taxpayers who use software to prepare NY state returns, which I do not do (highlight is mine) –
The taxpayer’s driver license or state identification information is required. If the taxpayer and/or spouse has been issued a driver license or state identification card, they are required to provide that information to be entered into the software. Taxpayers must provide the ID number, issuing state, issuing date, and expiration date for all licenses or identification cards. If the taxpayer license/ID is a New York State driver license or non-driver ID, the document number found on the license/ID must also be entered. In the event that a taxpayer does not have a driver license or state-issued ID, you will be prompted by the software to indicate this. If the taxpayer does not have either a driver license or state-issued ID, marking the check box indicating that they have neither will fulfill the new requirement. We are requiring this information as an additional means of validating the taxpayer’s identification, and not having the information will not cause delays. However, if all other efforts to validate the taxpayer’s identity are unsuccessful, the processing of the refund may be delayed.”
The “document number” referenced above is specific to the New York State driver’s license and is typically found in the bottom right corner on the front, or on the back of the license.
NJ also asks for a driver’s license number, but it is optional.  Entering a driver’s license is not required for the processing of the NJ state return.
The 2016 New York State, and Pennsylvania, tax forms and instructions are now available to download from the state tax agency websites, as are the 2016 federal forms available at www.irs.gov.  God only knows when the NJ forms and instructions will be available.

Tuesday, January 24, 2017


Some reminders as you prepare to have your 2016 tax returns prepared, from my website FIND A TAX PROFESSIONAL
DON’T ASSUME (my annual, perhaps controversial, warning)
The last item – YOU ARE RESPONSIBLE – is very important.  Regardless of who prepares your return you are ultimately responsible for all the information reported on your return!
Before I go – some shameful self-promotion.  Even if you use a tax professional to prepare your 1040, the more you know about what you can deduct the more prepared you will be when meeting with your tax pro.  Learn about what you can and cannot deduct in my GUIDE TO SCHEDULE A.

Monday, January 23, 2017


Except for the first item, in this BUZZ I let the posts and articles I reference speak for themselves.

* Stacy Cowley of THE NEW YORK TIMES reports that, unfortunately, “Tax Refund Loans Are Revamped and Resurrected” - 

Fast, free money. That’s what H&R Block, the nation’s largest tax-preparation chain, is advertising on giant banners outside its storefronts and in TV commercials featuring Jon Hamm of ‘Mad Men’: ‘You could get a refund advance of up to $1,250.’

Two of H&R Block’s biggest rivals, Jackson Hewitt and Liberty Tax Service, are hyping nearly identical offers — dangling up to $1,300 cash.”

The article acknowledges –

The loan offers are open to all customers, but they are particularly aimed at low-income Americans who live paycheck to paycheck and rely on their tax refund as their biggest annual cash infusion.”

None of the ads that the article talks about say anything about the qualifications or competence of the chains’ employees or their ability to properly and correctly prepare tax returns.  The quality and competence of tax preparation is not important, nor is the high cost of preparation.  The only thing that is important is that you can walk in with an empty pocket and walk out with a check.

Refund Anticipation Loans, or whatever you call them, are bad.  While there are apparently no interest or fees for the loan itself (the interest rates charged by H&R and others for the original RALs were truly usurious), low income taxpayers are forced to pay the high tax preparation fees of these commercial chains for minimal service and value.  As I say each year at tax time – Henry and Richard ain’t cheap!

I believe that tax preparers should be forbidden by law from offering RALs or any other kind of advance refund loan. 

If you need to borrow money go to a bank!

* Manasa Nadig talks about “Trust Fund Recovery: Penalties & Pitfalls” at THE BUZZ ABOUT TAXES.

* Also for employers - Jean Murray tells you Where to Get W-2 Forms and 1099-MISC Forms: Annual Report Forms for Employees and Independent Contractors” at her U.S. BUSINESS LAW AND TAXES blog from THE BALANCE.

* Beverly Bird lists and discusses “Tax Mistakes Everyone Makes — and How to Avoid Them” at GO BANKING RATES.

* Kelly Phillps Erb, FORBES.COM’s TaxGirl, reviews “10 Quick Facts About The Upcoming Tax Season That You Need To Know”.

* Are credit card rewards considered taxable income that must be reported on your 1040?  As usual, the answer is “it depends”.  Kay Bell explains in “Are reward points taxable or not? Yes: Different rewards mean different IRS rules” at CREDIT CARDS.COM.

* Some good advice from MOTLEY FOOL’s “The Alert Investor” - "Have It Your Way" Retirement Accounts: 4 Things to Know About Self-Directed IRAs".

* The NSTP BLOG gives us the word on “The Combat-Injured Veterans Tax Fairness Act of 2016”.  

* Jason Dinesen answers an interesting question that has never been asked of me -“Can I Start a Not-for-Profit to Shield Income?  Read the post to find out the answer (hint – as usual it is “it depends”).

* Speaking of tax questions – I return to KPE, at her old TaxGirl blog site this time, for “Have A Tax Question? What You Need To Know Before You Ask The TaxGirl”.

* Sterling Raskie provides a brief preliminary “Tax Time To-Do List” at GETTING YOUR FINANCIAL DUCKS IN A ROW.

The Last Word –

Friday, January 20, 2017, a day that will live in infamy, will go down in the books as the worst day in the history of the United States.  Pray that this day was not truly the beginning of the end.

We must continue to vocally and aggressively denounce and oppose dangerous mentally unstable narcissist Trump.

Opposition to Trump has absolutely nothing to do with politics or political ideology.  It is NOT “sour grapes” by Democrats and Clinton supporters.

Republicans and Democrats and liberals and conservatives alike, with a conscience and concern about the future of America and the world, all oppose and denounce Trump.

Opposition to dangerous mentally unstable narcissist Trump is patriotism!


 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.
Do you need to find a qualified and competent tax professional?



Wednesday, January 18, 2017


Miracles can happen!
I found the following good news on the New Jersey Division of Taxation website - almost as if it were a response to the comment I made in this morning's earlier post about the NJ-NATP Famous State Tax Seminar (highlights are mine) -
NJ will continue to accept paper corporate business tax returns for the current filing year; however, all corporate payments are required to be submitted electronically.

We are in the process of developing a free filing option for corporate business tax returns so corporations can meet the efile requirement without additional cost. When free file becomes available, the mandate requiring all taxpayers and tax preparers to submit corporate business tax returns and payments electronically, will apply to all corporate taxpayers.”

My clients already gladly make all NJ state payments online - so that is not a problem. 
For the first time I can remember I am actually impressed by the NJ Division of Taxation!


This past Saturday I attended the annual “Famous State Tax Seminar” offered by the NJ chapter of the National Association of Tax Professionals, as I have for all but maybe 2 (due to excessive snow) of these offerings for perhaps 25 years now.  It was held, as it has always been, at the now APA Woodbridge Hotel (the hotel formerly known as the Woodbridge Hilton) in Iselin NJ (although the location may change next year due to increased costs).

I have said for years now, this seminar is a true “must attend” for any tax preparer who prepares NJ state individual and business income tax and payroll tax returns.

As has been the custom for many years now the program began, after greetings by chapter President Tom Watkins, with the “keynote” presentation by Dennis Shilling, Deputy Executive Director of the NJ Division of Taxation, representing the Executive director who was unavailable.  While I do agree that the ED should be invited to speak each year, this presentation has not been of any real substantive value since Robert Thompson held the position – and this year was no different.

Years ago the seminar featured a presentation by the then Director of the NJ Division of Revenue, which was very informative and eye-opening.  Perhaps next year’s keynote speaker can be the current NJDFOR head.

Up next was a presentation on “Tips for Preparing the NJ Inheritance Tax Return” by attorney Michael Feinberg.  As always Michael, an excellent, well-informed and highly experienced speaker, did a great job.  But, other than his preliminary comments on recent law changes, the presentation was redundant for annual attendees.  He had given a similar talk last year and another a few years ago.  There is no need to repeat an introduction to NJ inheritance and estate taxes each year – we really only need updates.  Perhaps NJNATP can offer a separate half-day workshop on this topic during the year for members who do these returns.  I do not prepare federal or state estate or inheritance tax returns, nor do I want to, so regardless of how good this presentation was it was a waste of time for me.

Michael did suggest that, in his opinion and that of others, the current abolishment of the NJ Estate Tax in 2018 may be overturned.  The State can’t afford to do without this revenue.  He also pointed out that the 2017 $2 Million filing threshold is not really a $2 Million “exemption”.  The first $2 Million of a, for example, $3 Million estate will not be exempt from the tax.  Estates under $2 Million do not have to file a NJ Estate Tax return.  A 2017 estate worth $3 Million will very likely pay the same state estate tax as a 2016 $3 Million estate would, despite the law change.

After a brief break came the reason most of us attend this seminar each year – the “Jake and Alexis Show” (formerly the Jim and Jake Show – with Alexis DeRosa now replacing Jim Gordon, who retired a few years ago), with an able assist from NJ Tax University (a program of the NJ Division of Taxation) colleague Christina Quinones.  John Kelly, a former NJDOT employee who Schilling suggested has now “gone to the dark side” when he went from addressing the audience as a State representative to being a member of the audience as a fellow tax preparer, also added some nuggets from his years of experience to the presentation from his seat.

One comment I made to a chapter board member: the hair style of Jake - Jacob Foy, head of the NJTU – has drastically changed over the years.  When he first began representing NJDOT at these seminars currently short-haired Jake had a long pony tail.

The Jake and Alexis Show was bisected by an excellent buffet lunch included in the cost of the event.  Before lunch was “New Jersey Tax Updates” and after lunch was “New Jersey Property Tax Relief” and a discussion of “New Jersey Individual Income Tax Audit Procedures” by state auditor Robert Skala – certainly knowledgeable and experienced in the topic but not as good or polished a presenter as the NJTU guys.

There was nothing much new to report for NJ state taxes or property tax relief programs – either for 2016 or subsequent returns.  The speakers covered the few changes.  I will discuss what is new for the 2016 NJ-1040 in a subsequent post.  Here, however, are two items for 2016 filings worth emphasizing from the NJ presentation –

(1) No NJ refunds will be issued until March 1, 2017 – regardless of when the return is submitted.   

(2) All NJ state corporation income tax returns – CBT-100 and CBT-100S – for periods beginning January 1, 2016 and later must be filed electronically, regardless if prepared by an outside tax professional or done in house by the corporation.  The problem is that in order to file electronic state corporate income tax returns one must purchase commercial software – you cannot submit a corporate return directly to NJ free of charge via the NJDOT website, as you can with all sales and payroll tax returns and payments and some NJ-1040s.  Unlike the NJ-1040 filing mandate for tax preparers, there is NO “Opt-Out” option for corporate filers.  So the state is forcing every single truly small corporation with minimal activity to unnecessarily waste money purchasing commercial software.  I am not aware if this new mandate is required by legislation passed by the idiots in Trenton, or if this nonsense is just a regulation adopted by NJDOT.

{As an aside – it appears to me that the State of NJ does not want corporation filers.  First it made the minimum filing fee for a corporation $500.00 per year, and now this.}

The final presentation of the day, again as per usual, was “New York State Updates” from one of the chapter’s favorite speakers Kathryn Keane.  As with NJ, nothing of consequence changed in the filing of resident and non-resident individual income tax returns for 2016.  Kathryn mostly discussed administrative and operational issues with her usual humor.

Obviously, the value to the tax pro of this seminar usually depends on the degree of changes to tax law that affect current and ongoing filings.  There was not much new to discuss at this year’s seminar.  However the chapter did its usual great job and I thank NJ-NATP for presenting this excellent seminar each year.


Tuesday, January 17, 2017


The US Tax Code says “everything is taxable, except” and “nothing is deductible, except”.  It is the “excepts” that make the current code such a confusing and convoluted mucking fess.
The “excepts” are known as “tax expenditures” – deductions, credits, and exclusions from taxable income - and, according to the recent 2016 Annual Report to Congress by IRS Taxpayer Advocate Nina Olson, they cost the Treasury $1.42 Trillion in FY 2016.   
“Tax expenditures” include -
·   The distribution of federal social program benefits – such as welfare via the Earned Income Credit and refundable Child Tax Credit, student financial aid via the multiple education tax credits and deductions, assistance in paying for health insurance premiums and excessive medical expenses via the Premium Tax Credit and the deduction for medical expenses in excess of 10% of AGI, and rebates for energy-efficient purchases via the energy credits.  These are expenses of the federal government that are not paid directly from the budget and properly recorded by category, but “washed” through the Tax Code and distributed via the 1040 or 1040A, resulting in reduced gross income.  This does not belong in the Tax Code!
·   Incentives to encourage certain behavior – such as savings and investment, home ownership, and charitable giving. 
·   Allowance for the costs of generating taxable income – such as the itemized deductions for investment interest, employee business expenses and investment expenses.

The National Taxpayer Advocate is required by law to submit two annual reports to the House Committee on Ways and Means and the Senate Committee on Finance.  In the report just issued the Taxpayer Advocate has identified as the #1 legislative recommendation for Congress “TAX REFORM: Simplify the Internal Revenue Code Now” -

It has now been more than 30 years since Congress enacted the Tax Reform Act of 1986 to substantially simplify the tax code, and since that time, the code has grown more complex by the year, as evidenced by the fact that Congress has made more than 5,900 changes to the code — an average of more than one a day — just since 2001. The compliance burdens the tax code imposes on taxpayers and the IRS alike are overwhelming, and we urge Congress to act this year to vastly simplify it.”
Nina believes the current US Tax Code –
Undermines trust and confidence in the tax system, as many taxpayers do not understand how their taxes are computed or even what rate of tax they pay.”
And –
Leads to lower levels of tax compliance, as taxpayers make high rates of both inadvertent and deliberate errors, and the complexity of tax returns limits the IRS’s ability to detect noncompliance through audits or other means.”
As pointed out in a recent blog post by Ashlea Ebeling at FORBES.COM, she has recommended, as I have been recommending for years now –
“. . . that Congress start with a tax code without any tax expenditures, and then add a provision back in only if lawmakers decide that the public policy benefits of running the provision through the tax code outweigh the tax complexity burden the provision creates for taxpayers and the IRS.”
Nina has been calling for tax simplification and reform in her reports to Congress for years now, as I have in my posts here and editorials elsewhere.  She also correctly continues to call for, as I do, the repeal of the dreaded Alternative Minimum Tax.
I have identified my “Principles of Tax Reform” at my website A TAX PROFESSIONAL FOR TAX REFORM.  I also explain there why federal social welfare program benefits should not be distributed via the tax return.
For the first time in years everything is in place for substantive federal tax reform.  I expect tax reform legislation to be enacted relatively early in the year.  While I am almost certain that the idiots in Congress will not completely “get it right” – I can certainly hope.