Tuesday, July 31, 2018


* Have you checked out my new non-tax blog – the return of THE LAKE REGION SOMETHING – yet?  Why not? 

BTW, a new “issue” will be posted tomorrow morning (August 1st).

* Since the passage of the GOP Tax Act I have been saying that many states whose state tax system follows the federal will benefit “huuuugely” from the changes to federal tax law in the Act.  Over at the TAX FOUNDATION Katherine Loughead reports that “Five States Accomplish Meaningful Tax Reform in the Wake of the Tax Cuts and Jobs Act”.

New Jersey, Pennsylvania and New York are not among the five.  But New Jersey and Pennsylvania do not follow the federal format and really does not benefit from the GOP Tax Act changes.

* Let me educate you – on how to be a successful tax planner.  Check out THE NATIONAL TAX PLANNING NETWORK.

* Kay Bell, the yellow rose of taxes, suggests “Capital gains indexing would mean more tax savings for long-term investors” at DON’T MESS WITH TAXES.

I do not support indexing capital gains.  What I would like to see indexed is the $3,000 maximum annual capital gain deduction.  It has been $3,000 for decades.  And I would like to allow excess capital losses to be carried back as well as carried forward.

* Third try – third failure.  ABC NEWS reports “IRS losing money on targeting debts of low-income earners”.

The IRS spent $20 million on private debt collectors who ultimately collected just $6.7 million, according to a report from the Taxpayer Advocate, the agency’s in-house watchdog.”

Forcing the IRS to use outside collection agencies is just more proof that the members of Congress are idiots.  As I have said before, they apparently believe that if something doesn’t work you should keep doing it.

* An ambitious and extensive post from Mike of BUDGET KITTY -  How Does A 401k Work (In Plain English)


A quote from one of Clint Eastwood’s Dirty Harry movies – Harry’s response to an arrogant superior officer – sums up the essence of Donald T Rump.

You’re a legend in your own mind.”


Thursday, July 26, 2018


The recent “House GOP Listening Session Framework – Tax Reform 2.0” released by the Ways and Means Committee once again brings up the idea of a “USA” account, calling for “Creating a new Universal Savings Account to offer a fully flexible savings tool for families”.

The idea of a Universal Savings Account, or USA, not described in detail in the Ways and Means release, is not a new one.  I think it was first proposed during Dubya’s tenure.

Here are my thoughts on what a USA would be from my tax reform recommendations discussed in “The Tax Code Must Be Destroyed” -

I would replace the current IRA, HSA, MSA, ESA, and Section 529 plan tax-deferred savings accounts with one all-encompassing USA (Universal Savings Account).  ALL taxpayers, without exception, could contribute up to $10,000 per year.  Contributions would be fully deductible and there would be no tax on earnings for qualitied withdrawals. 

Distributions made before age 62 for education costs, medical expenses or to purchase a first home (only one first home per lifetime) would be considered qualified withdrawals.  There would be no penalty on non-qualified withdrawals after age 59½, but earnings would be taxed; all withdrawals after age 62 would be considered qualified.   

While there would be NO taxation of earnings on qualified distributions from the 'traditional' USA, there would still be a required minimum distribution (RMD) beginning at age 72 - but on only 50% of the account balance.  And ALL beneficiaries, not just spouses, could roll-over the entire amount of an inherited account into their own USA and NOT have to take any RMDs until age 72 themselves.  With the ROTH option, all distributions after age 62 would be totally tax free, as contributions were not deductible, and there would be no RMD requirement and no tax on any withdrawals by a beneficiary.

All existing accounts – IRA, HSA, MSA, ESA, Section 529, etc. – would be automatically converted to a USA by the Trustee.  Taxpayers could consolidate individual USA accounts from the same or different Trustees via rollover without any tax consequences.”  

And on the business side -

All current employer and self-employed retirement plans – 401(k), 403(b), 457, SEP, SIMPLE, KEOGH, etc. - would be replaced by an RSA (Retirement Savings Account).  Employers could elect to contribute up to 25% of wages annually, up to a maximum of $25,000, and all employees could elect to contribute up to $25,000 of wages annually.  There would be no requirements for either to contribute.  There would be 'traditional' (employee contributions 'pre-tax') and ROTH options (employee contributions 'after-tax', all qualified distributions totally tax free, and no RMD requirement).  Self-employed individuals could contribute up to 20% of their adjusted earnings from self-employment, up to a maximum of $25,000.

All existing employer and self-employed retirement accounts would be automatically converted to an RSA by the Trustee.  Taxpayers could roll-over any RSA to a Universal Savings Account (USA).”

And -

Required Minimum Distributions (RMD) would be required to begin from a 'traditional' RSA at age 72 but based on only 50% of the account balance.    And ALL beneficiaries could roll-over the entire amount of an inherited RSA into their own USA and NOT have to take any RMDs until age 72 themselves.   With the ROTH option, all distributions after age 62 would be totally tax free, as contributions were 'after-tax', and there would be no RMD requirement and no tax on any withdrawals by a beneficiary.”

So, what do you think?


Tuesday, July 24, 2018


* Have you checked out my new non-tax blog – the return of THE LAKE REGION SOMETHING – yet?  Why not?

* From Kay Bell at DON’T MESS WITH TAXES – “Taxpayer Advocate, private debt collectors square off.

Like Kay, I totally agree with Nina’s objections to forcing the IRS to use outside debt collectors.  This is a horrible idea, and it has failed miserably in the past.  The idiots in Congress apparently firmly believe in the old adage – if it doesn’t work, keep doing it. 

Collection agencies do not care whether money is actually owed – or about the financial condition of their “victims”.  They get paid only when the collect money – and will do whatever they can to get money from their “victims”, including continual harassment.  The IRS has an ethical duty to make sure that outstanding tax debt is legitimate, and to take into consideration the financial condition of debtors.

If you are contacted by an outside collection agency on behalf of the IRS tell them you refuse to deal with them – that you will only deal directly with the IRS.

* Jason Dinesen discusses “When and How to Fill Out a Form W-9” at DINESEN TAX TIMES.

* For those who are interested, the new issue of NJ State Tax News is out.  I like the new look.

The issue did clear up something for me.  Years ago I had been told by a reliable source that the original June 1st due date for filing the PTR forms, identified on the cover of the application package, was established by statute, which is why each year the Governor had to “graciously” extend the filing deadline to October.  While tax professionals always anticipated the extension, I was afraid that one year the State, in need of money to waste on pork and entitlements for politicians, would surprise us all by not extending the deadline.   

This year’s forms package identified the due date as October 31st, so there was no need for magnanimous action by “Uncle Phil”.  According to an item in the newsletter -

Administrative Changes to the Senior Freeze (Property Tax Reimbursement) Program — P.L. 2017, c.370, signed into law on January 16, 2018, and effective immediately, changes the annual deadline for filing an application to October 31. Additionally, the law allows an individual who erroneously receives payment to set up an installment payment plan to repay any amounts owed.”

It is rare that I applaud the NJ legislature for actually doing something right.

* Speaking of NJ taxes – it has been verified to me by an employee of the NJ Division of Taxation that the increased maximum $15,000 deduction for property taxes on the NJ-1040 starts with the 2018 tax year (discussed in an earlier BUZZ installment).

* Kelly Phillips Erb tells us “Social Security Issues Warning About Scams Similar To Those IRS Phone Scams” at FORBES.COM.


Here is an interesting and insightful history lesson co-written by my long-time friend and client Ron Mehta, in response to Donald T Rump's deplorable immigration policies - "Lesson from India to Make America Great Again" at FAIR OBSERVER.

Of course, the lesson would be lost on Trump.  It has certainly been proven that he is ignorant of and unconcerned with history.

With great sadness, and disgust, I agree with the article's observation that under the Trump Presidency "the US has now become Trumpistan, a land that is not only cruel and intolerant, but also dishonest and hypocritical in almost all its claims and actions".


Tuesday, July 17, 2018


* Have you checked out my new non-tax blog – the return of THE LAKE REGION SOMETHING – yet?

* Kay Bell discusses “SCOTUS nominee Brett Kavanaugh's judicial take on taxes” at DON’T MESS WITH TAXES.

I certainly supported at least one of his past court decisions.  As Kay explains –

In 2013, Kavanaugh became a hero to many independent tax preparers {myself included – rdf}.

In Loving v. IRS, the D.C. court on which Kavanaugh serves ruled that the Internal Revenue Service exceeded its statutory authority when it attempted to regulate tax preparers.

‘It might be that allowing the IRS to regulate tax return preparers more stringently would be wise as a policy matter," Kavanaugh wrote in his majority opinion in Loving. "But that is a decision for Congress and the President to make if they wish by enacting new legislation.’"

Judge Kavanaugh was mentioned in an installment of the BUZZ from 2013 regarding the IRS appeal of Loving v IRS – see the “Final Word”.

Coincidentally, the same BUZZ installment also began with reality cartoon clown Donald T Rump before he was candidate Rump.  See what I said about the idiot back then –

Trump certainly is a fool, isn’t he?  Talk about the pot calling the kettle black!  Except for the members of clan Kardashian, I can think of no other individual who has made such a successful career out of shameless self-promotion, without possessing anything of actual consequence, importance, value, or even interest to promote!  The Dumpster is truly one of the best examples of someone who is famous for merely being undeservedly famous.”

* Paul D. Allen provides a primer on “Tracking Your IRA's Taxable Basis” at the PIM TAX SERVICES BLOG.

* Jason Dinesen answers the question “Can I Claim My Disabled Spouseas a Dependent?” at DINESEN TAX TIMES.

The answer – yes, but “why would anyone want to file this way instead of just filing jointly? 

* A reminder - my new book of tax planning and preparation advice – TAX SMARTS: MY BEST ADVICE FROM 45+ YEARS AS A TAX PROFESSIONAL – has “gone to press”.

* At FORBES.COM a reader decided to Ask the TaxGirl “Invest Or Roll Your Tax Refund?” and Kelly Phillips Erb, aka TaxGirl, answered.

Of course, as with just about every tax question, the answer is “it depends”.

* And in a subsequent “Ask the TaxGirl” installment KPE responds to the question “Can You Save Taxes By Treating Your Home As A Rental?”.

It seems politicians and legislatures in highly taxed states are not the only ones coming up with totally specious attempts to “get around” the $10,000 limitation on the itemized deduction for taxes.

* Michael Cohn reports “IRS owes tax refunds to 133,000 injured veterans”.


Check out the video from my friend Tres Hanley’s new CD, which should “drop” this December in time for Christmas.  Click here.

I “knew her when”.

We don’t agree on politics, but I support and honor her championship of animal causes.


Monday, July 16, 2018


Sorry – this is not an announcement about taxes.  Just more shameless Trump-like self-promotion.

Check out the return of my non-tax blog THE LAKE REGION SOMETHING.  The first issue of this new version is now “up”.

I explain the title of the blog, discuss some “culture shock” I experienced moving from metropolitan Jersey City NJ to rural Hawley PA, tell you why checks for tax liabilities are now made payable to United States Treasury, and talk about a great outdoor performance I attended on Saturday night.


Tomorrow, back to business with some BUZZ.


Friday, July 13, 2018


In “Trump-mode” again with some more shameless self-promotion.  However, unlike Donald T Rump, what I am promoting has actual value.

Here are some suggestions for summer reading.   



Thursday, July 12, 2018


While the GOP Tax Act did not do away with the dreaded Alternative Minimum Tax (AMT) for individuals, it is as good as gone.

First, some background.

The AMT (a more appropriate name would be the Mandatory Maximum Tax) was originally enacted in 1969 in response to testimony by the Secretary of the Treasury that 155 individuals with Adjusted Gross Income of more than $200,000 (over $1 Million in today’s dollars) paid “0” tax on their 1967 tax returns. Congress received more letters that year on the Secretary’s testimony than they did on the Vietnam War!

Of course, Congress, being lazy idiots, rather than responding by acting logically and eliminating the loopholes in the Tax Code that allowed the high-income individuals to avoid paying tax, reacted and created a complicated alternative tax system.

The tax was originally just a “Minimum Tax” (back when I started in “the business” there was also a 50% “Maximum Tax” on earned income).  It was calculated on Form 4625 and reported in the “Other Taxes” section of the 1040.  Beginning with the 1979 Form 1040 the an “Alternative” Minimum Tax reported on Form 6251 was added to the Minimum Tax.  The Minimum Tax was repealed in 1982, leaving just the “Alternative” version effective with 1983 tax returns. 

The passive activity and other rules included in the Tax Reform Act of 1986 effectively closed many of the loopholes used by the wealthy to avoid taxes that had led to the creation of the Maximum Tax in the first place.  But instead of doing away with it, as should have been done, the Act revised it into a kind of “stealth tax” to deceive the American public.  We were told that TRA 86 would reduce and, to a degree simplify, taxes for all – which it did under the “regular” income tax.  But what Washington gave with one hand via the regular tax they took back from the middle and upper middle class with the other hand via the revised AMT.

My clients, and those of my mentor, first became victim of the AMT in the early 1990s.  In the new millennium I have had to at least check the AMT exposure of about 2/3 of my clients each year.  To be sure the pre-TCJA AMT did not affect the truly wealthy – the so-called 1%.  It took its toll on the middle and upper middle class, especially penalizing families in highly taxed states (like NJ). 

The “preferences” of the AMT, added back to “regular” taxable income to determine Alternative Minimum Taxable Income (AMTI), that usually made taxpayers victims of the dreaded tax were –

* Personal Exemptions
* Medical Expenses (the AMT exclusion was 10% of AGI instead of 7.5%)
* Taxes
* Home Equity Interest
* Miscellaneous Expenses subject to the 2% of AGI exclusion (employee business expenses, investment expenses, tax preparation costs, legal fees)

None of these items were deductible in calculating the AMT.

Under the GOP Tax Act, for 2018 through 2025 I expect none of my clients will be victims of the AMT.  Why? 

* The Personal Exemption deduction is repealed.

* The medical expense AGI exclusion (beginning in 2019) is 10%.

* Home equity interest and miscellaneous expenses (subject to the 2% exclusion) are no longer deductible.

* The itemized deduction for taxes is limited to $10,000.

It is interesting how the “new” 1040 follows closely the “old” AMT rules for deductions (originally taxes were not going to be deductible at all – but the $10,000 was added to appease Republican Congresscritters from highly taxed states).  I had heard that one option being considered for “tax reform” was replacing the “regular” tax system with the AMT system for all taxpayers.   

Pre GOP Tax Act, the AMT “exemption” was reduced, and eventually phased out altogether, as AGI, and therefore AMTI, increased beginning at a relatively low threshold.  So, for example, while qualified dividends and long-term capital gains were taxed at special lower rates for both regular tax and the AMT, this income increased AGI, and AMTI, and could reduce the AMT exemption.  But now the phase out begins at $500,000 for unmarried taxpayers and $1,000,000 for married ones.  So this will not be an issue for my clients. 

The changes to the AMT make up for losing substantial deductions for exemptions and property and state income taxes, which were not deductible anyway in the old AMT, for many of my highly taxed NJ clients.

So, while the Act did not do away with the AMT altogether, thankfully it actually did away with it for most taxpayers. 


Wednesday, July 11, 2018



As a veteran tax professional who has been preparing 1040s for individuals in all walks of life since 1972 I am often asked by friends, family, clients, readers, and cocktail party guests, “What is your best tax advice?”

As an answer I have written a compilation of my best tax advice to share wisdom accumulated from my 45+ years of preparing 1040s.

This book does not discuss specific deductions (well, I do talk about gambling losses and IRA contributions), credits and “loopholes”, which are revised, changed, deleted and reinstated frequently at the whim of whichever political Party is in power.  And it is not specific to 2018 or 2019 or any individual year’s tax returns.  It is concerned with universal tax planning and preparation concepts and advice that remain constant year after year.

It also includes the best tax advice of fellow tax bloggers and a listing of online tax planning and preparation resources, a section on “Cool Tools” (online tax planning and preparation resources), a history of taxes in America, and a basic introduction to the federal income tax.   

Here is what a couple of fellow tax bloggers have said about the advice in this book:

The . . . pages of tax advice within the e-book (a pdf document) are full of good, common-sense advice  . . . any individual who follows Robert’s advice will be far, far better off than those who don’t.”

Russ Fox, EA of Nevada – author of TAXABLE TALK

I think your book is great. What I like most is that it is in plain English. You are not trying to appear like a ‘know-it-all’.  It is simple enough for non-tax professionals to understand. However, it is informative enough to help tax preparers learn something new.”

Jamaal Solomon, EA of JS Tax Corporation

The cost of this book is only $8.95 sent as a pdf email attachment.  A print version sent via postal mail is available for $11.45.

Members of NATP get a 25% discount.  Include your membership number with your order.

Send your check payable TAXES AND ACCOUNTING, INC, and your email or postal address, to –

HAWLEY, PA 18428


Tuesday, July 10, 2018


Here are some highlights -

+ “The budget puts another $150 million into the Homestead property tax program to double the credits homeowners received this May.”

+ “The state income tax deduction for local property taxes is getting a boost, too. Right now, you can only deduct the first $10,000. Under the budget deal, that bumps up to $15,000.”

+ “If you owe back taxes to New Jersey, you'll soon get a chance to pay up without getting socked with penalties and interest. The spending plan includes a tax amnesty program.”

+ “New Jersey's corporations will pay a 2.5 percent surtax this year and next and then 1.5 percent in years three and four before phasing out entirely.”

* Let me educate you on how to become a successful tax planner.  Join the NATIONAL TAX PLANING NETWORK.

*  RECOVER TAX tells self-employed taxpayers “How to Plan for and Minimize the Self-Employment Tax”.  

* It’s here!  My new book of tax planning and preparation advice – TAX SMARTS: MY BEST ADVICE FROM 45+ YEARS AS A TAX PROFESSIONAL.

* While this does not apply to any of my clients, and I expect also not to most of my readers, here is the word from Robert W Woods at FORBES.COM, just in case it applies to you - “IRS Offshore Account Amnesty Closing, How to Get In Under The Wire”.

* And Kelly Phillips Erb, FORBES.COM’s Taxgirl, gives some good advice in “What Kids and Their Parents Should Know About Summer Jobs And Taxes”.

Her final piece of advice – “Save for a rainy day” – echoes what I have been saying here and elsewhere for years.

* Oi vey! According to the WALL STREET JOURNAL “Thousands of Americans Will Be Denied a Passport Because of Unpaid Taxes”.  

* Nothing new here.  Despite the increase in the Retirement Income Exclusion New Jersey is the second worse state in the MONEY WISE list of “America's Worst States to Retire In”.

New Jersey lands at No. 2 on our list because the Garden State can take a serious financial toll on retirees.”

What do they say is the worst state?  Louisiana.


The Investigation Discovery (ID) cable channel had a 2-part show on Sunday morning titled “He Lied About Everything”.

I was surprised to learn it wasn’t about Donald T Rump.  That would be the perfect title for the story of his Presidency – hell, his life.


Monday, July 9, 2018


I realize this is not a tax-related post.  But it is very important that this be said, and constantly repeated, until it is absorbed and understood and the problem has been solved.

Donald T Rump is truly an aberration in the history of American politics.

There is no comparison between the deplorability, despicability and total lack of humanity of Trump the man or the ignorance, incompetence and danger of the Trump Presidency and any other US President ever.

It has nothing to do with political philosophy or partisan politics.

Trump is the only President in our history that has earned and deserves total disrespect – because he does not and never has shown any respect for anyone or anything, except perhaps authoritarian and dictatorial leaders.

No national politician in our history has ever been guilty of gleefully and unapologetically committing as many inappropriate, unethical, immoral, and illegal acts during his lifetime as Trump. He has committed multiple times every single “indiscretion” that has ever derailed any politician in the past.

The Trump Presidency is unacceptable, inexcusable and indefensible.

No other candidate from either major Party who ran for President in the 2016 primaries, nor the candidates in the general election from the Libertarian or Green Parties, could have been a worse, more inappropriate, and more irresponsible choice for President than Donald T Rump.  The "lessor of two evils" argument does not work with Trump.  In any possible comparison to any other alleged "evil" Trump is ALWAYS the more evil choice.

As I suggested in a local letter to the editor when Trump first joined the race, Homer Simpson would have been a better and more responsible choice for President. Both are tv cartoon characters – but Simpson lacks the deplorability and despicability of Trump. And Simpson is smarter than Trump!

We cannot afford to accept, or even tolerate, Trump’s continuation in office. We cannot, as we have done in the past, simply say “this, too, will pass” and do nothing. We MUST act.

Every day he remains in the White House America, and its values, reputation and credibility, is diminished a little more.

American can never be great again until Donald T Rump is told “you’re fired”!