Thursday, February 23, 2017


Another break from my tax season hiatus for some important information.
A recent post from Kay Bell, the yellow rose of taxes, at DON’T MESS WITH TAXES reveals something that is no surprise to me - “Most taxpayers get failing tax knowledge grades”.
In discussing a recent survey, Kay tells us -
The Nerd Wallet survey, conducted online by Harris Poll, also found that many Americans lack a basic understanding of federal tax rules.
Actually, it was more blunt.
Failing tax grades: Most taxpayers get failing marks for their tax knowledge.
Out of eight questions about IRS rules for common deductions, retirement and education savings plans, only a quarter of the surveyed taxpayers correctly answered the questions.
Breaking down the failing grades, the NerdWallet poll found that nearly half of taxpayers (46 percent) don’t know into what tax bracket their income falls. Seven percent didn't even know what a tax bracket is.
Another 57 percent, or nearly three in five taxpayers, don’t know what a W-4 is.
And yes, the survey group was more than 1,800 adults across the United States who filed income taxes last year and plan to do so again this year. Obviously, they didn't learn from last year.
The answer to a lack of tax knowledge is NOT tax preparation software or an online filing service!  As I say each and every year –
No 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!
If you need to find a qualified tax professional you can begin your search at my website FIND A TAX PROFESSIONAL.
OK – back to the 1040s!

Monday, February 20, 2017


I have decided to interrupt my tax season blogging hiatus to discuss a recent tax development.
Perhaps the most controversial component of the Affordable Care Act (aka “Obamacare”), and the component I oppose the most (along with “age-weighted” premium calculation) is the Shared Responsibility Penalty.
The individual shared responsibility provision of Obamacare requires that each taxpayer, and each member of a taxpayer’s household, either have “minimal essential” health insurance coverage for the entire year or qualify for a health coverage exemption.  If you do have appropriate coverage or qualify for an exemption you are subject to the Code Sec. 5000A Shared Responsibility Payment, aka the penalty for not being insured.
The collection of the Shared Responsibility Penalty is not subject to criminal or civil penalties under the TaxCode, and interest does not accrue for failure to pay such assessments in a timely manner. The only way the IRS can collect an unpaid penalty is by offsetting a current or future refund.
On January 20, 2017, the idiot in the White House signed his first executive order directing the Secretary of Health and Human Services and other department and agency heads to exercise all available authority and discretion to “waive, defer, grant exemptions from, or delay the implementation of any provision or requirement of the Act that would impose a fiscal burden on any State or a cost, fee, tax, penalty, or regulatory burden on individuals, families, healthcare providers, health insurers, patients, recipients of healthcare services, purchasers of health insurance, or makers of medical devices, products, or medications.”
A major manifestation of Trump’s mental disorder is the fact that be believes he can do no wrong.  I, and many others, believe he can do no right.  However, in this specific situation only, his action with this executive proclamation has had a good outcome.
Earlier this year, the IRS was originally rejecting returns during processing when the taxpayer didn’t provide information related to health coverage – i.e. they were “silent” and did not check the box to indicate that they had “full-year coverage”, did not identify an exemption, and did not calculate and include the penalty. However, based on idiot Trump’s executive order, the IRS reversed that position and is now accepting both electronically filed and paper filed returns that are “silent” as to health care coverage.  If you submit a return that is “silent” regarding coverage and requests a refund the return will be timely processed and the refund issued.
The IRS does say “taxpayers may receive follow-up questions and correspondence at a future date, after the filing process is completed”, so, depending on how thing play out in Congress, taxpayers who are “silent” about health coverage on their 1040 or 1040A may receive a notice from the IRS after the tax filing season.
The Republican Party, which now controls Congress, and the idiot in the White House have vowed to promptly repeal Obamacare, and eventually replace its appropriate components with new health care legislation.  At the very least they will repeal many of the components of the ACA, including the Shared Responsibility Penalty.
I strongly oppose the “self-assessment” of IRS penalties like the underpayment of estimated tax or shared responsibility penalties. I especially oppose requiring a taxpayer to pay someone to assess them a penalty.
I will never, under any circumstance, prepare a Form 2210 to calculate a penalty for underpayment of estimated tax as part of the filing of any tax return. If the IRS wants to charge the taxpayer an underpayment penalty that is their right. I have no problem charging a taxpayer a fee to assist in reducing, removing, or abating an IRS assessed penalty – because the client is getting real value for the fee paid in that situation.
I feel the same way about the Shared Responsibility Penalty, especially since the IRS announcement that remaining “silent” about health coverage will not delay the processing of the tax return or the issuance of a requested refund.
At this point, with the repeal of either the entire Affordable Care Act or at least the shared responsibility penalty eminent, and the fact that the IRS does not have the authority to collect any assessed penalty other than by offsetting future refunds, I feel the best course of action for a taxpayer, or a tax preparer, is to remain “silent” about health coverage when the taxpayer would be subject to this penalty, and not include a penalty assessment as part of the tax filing.

Thursday, February 16, 2017


The IRS recently issued a news release debunking 5 refund tax myths.  Most important – in my opinion – is this one -
Myth 2: Calling the IRS or My Tax Professional Will Provide a Better Refund Date
There are lots of good reasons to use a tax professional {certainly the truth – rdf}. It is a myth, however, that bugging your tax preparer, or the IRS itself, will get refunds to taxpayers more quickly.
In reality, says the IRS, the best way to check the status of a refund is online at's "Where’s My Refund?" tool. Or taxpayers can use their digital device to check via the IRS2Go mobile app.
The IRS updates the status of refunds once a day, usually overnight. Checking either status option more than once a day will not produce new information.
And no, trying to connect with a real person at the IRS will not get you any additional info. Only call for added help if the refund status tool or app instructs you to do so.”
So if your federal, or state, refund has not arrived as promptly as you think it should have DON’T CALL YOUR TAX PREPARER!

Wednesday, February 15, 2017


February is half over – so just two months left.
I have completed 35 sets of returns during the first two weeks of the season.  And I have either done, received, or made arrangements with about 31% of my client list so far. 
I am ahead of last year at this time – I had done 28 sets and heard from 26% of the herd by 2/14/16.  A good sign.
No issues yet this season – processing, computer, or weather.
As is usually the case, for the first two weeks I have been completing returns as they are received, with at most a one day turn-around.  Now the floodgates will open, and turn-around time will gradually increase until it becomes about two-weeks.
Now – back to the 1040s!

Wednesday, February 1, 2017


And now what you have been waiting for – my annual posting of:
On the first day of tax season my client gave to me a Closing Statement for the purchase of a home.
On the second day of tax season my client gave to me 2 W-2 forms.
On the third day of tax season my client gave to me 3 mortgage statements.
On the fourth day of tax season my client gave to me 4 Salvation Army receipts.
On the fifth day of tax season my client gave to me 5 Form K-1s.
On the sixth day of tax season my client gave to me 6 1099s for dividends.
On the seventh day of tax season my client gave to me 7 cancelled checks.
On the eighth day of tax season my client gave to me 8 useless items.
On the ninth day of tax season my client gave to me 9 medical bills.
On the tenth day of tax season my client gave to me 10 stock sale confirms.
On the eleventh day of tax season my client gave to me 11 employee business expenses.
On the twelfth day of tax season my client got from me a finished tax return, 11 employee business expenses, 10 stock sale confirms, 9 medical bills, 8 useless items, 7 cancelled checks, 6 1099s for dividends, 5 Form K-1s, 4 Salvation Army receipts, 3 mortgage statements, 2 W-2 forms, and a Closing Statement for the purchase of a home.
And, of course, on the thirteenth day of tax season the client gave to me a corrected Consolidated 1099 from Wells Fargo Advisors!
And so the 2017 Tax Filing Season – my 46th - officially begins.  Open the floodgates and bring on the 1040s!
As is my custom, due to the demands of the filing season I will be taking my annual “tax season hiatus” from posting to THE WANDERING TAX PRO. 
This also means there will be no BUZZ installments until after April 18th.  To help you deal with BUZZ withdrawal I suggest you follow Joe Kristan’s daily (although I am not so sure of its regularity during the “season”) TAX ROUND-UPs.
Between now and April 18th I will barely have time to relieve myself let alone blog!  Nor will I have time to respond to comments. If a comment requires a response I will do so after April 18th.
I am NOT accepting any new 1040 clients (or any other kind of tax preparation clients). So don’t email me asking if I can prepare your 2016 tax returns.  THE ANSWER IS A MOST DEFINITE "NO". 
I will be publishing a WHERE THE FAKAWI post occasionally here at TWTP to keep my clients up-to-date on my progress during the season and to report changes or additions to my tax season policies and procedures. Clients can also keep track of my tax season progress by following me at TWITTER (@rdftaxpro).
I realize that I am abandoning you at a time when you may need me the most – but I need to make a living!
I find it a bit amusing that the period of time when TWTP gets the most “hits” is during the tax filing season when I am not posting.
“Talk” to you when it is all over!