Friday, December 29, 2017
THE YEAR IN TAXES 2017
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?