Thursday, November 29, 2018


As mentioned in this week’s BUZZ installment, I attended the National Association of Tax Professionals’ annual year-end tax update “The Essential 1040” on Monday at Bally’s on the Boardwalk in Atlantic City.  I attend this one-day seminar every year, and have done so for over 30 years, and also occasionally attend the second day, “Beyond the 1040” (although not this year) depending on the topics being discussed.

Bally’s is a good location.  I have no complaints about the classroom facility or my room, which, as a member of the Total Rewards program, was extremely reasonable – certainly cheaper than that at any other location this class is offered.  This year the seminar included, as it does every year, a relatively skimpy, and definitely not diabetic-friendly, continental breakfast buffet, and an afternoon dessert break.  And, for the first time in 30+ years, the cost of the event included a box lunch (also not diabetic-friendly), paid for by a sponsor who gave a presentation for those who wanted to listen.

As a “stand-alone” offering the seminar was, as usual, excellent, and covered just about everything tax preparers need to know to prepare 2018 Form 1040s.  But, as I said to my business banker on the phone on Monday morning, I was listening to what I had already been told 3 times this year.  Because the only real new development for 2018 was the GOP Tax Act, and I had already attended 2 full-day sessions exclusively on the Act and one 2 hour review of it as part of the NATP Forum, almost everything covered at this seminar was truly redundant for me.  I did, however, learn a couple of new things, which I discuss later in this post.

One saving grace – because there was so much to cover with the new Act this year’s seminar did not include the usual 2 hours of redundant and unnecessary (for me) ethics preaching.  So, one paid for eight 50-minute hours of real education and one actually got eight 50-minute hours of real education.

I had signed up for classes that I knew would cover the GOP Tax Act scheduled later in the year, like this one, because I had hoped that the IRS would be releasing new regulations, interpretations, clarifications and information about the tax law changes.  Unfortunately, very little new details have been released.

Three things continue to be reinforced by GOP Tax Act seminars and discussions –

(1) There is still a lot we don’t know yet about how many of the provisions of the Act will be interpreted and implemented.

(2) Because the Act was basically written overnight, the wording of the law is often defective, confusing and unclear.  “Technical corrections” legislation is clearly needed.

(3) It is very obvious that those who actually write tax law and the idiots in Congress who vote on it have absolutely no concept of the practical implementation of the tax legislation they write and pass, or of the actual preparation of tax returns.

Of this I am certain - by the time we tax professionals fully learn and understand the ins and outs of the new law, the IRS has released all the appropriate regulations, and the Tax Court has clarified the issues of confusion, the Act will expire and we will be back to the Tax Code as it was for 2017.

And the more I review the new “postcard” Form 1040 and its 6 supplemental schedules the more I come to believe that this is probably the stupidest thing ever in my 45+ years in the tax preparation business.

So, here is what I learned at the seminar -

* It appears that the Form 1098-T will no longer be as useful as “tits on a bull”. 

The PATH Act of 2015 correctly required educational institutions to report the total amount of payments received for qualifying tuition and fees from a student during the year.  Previously, in most cases, only the amount billed was reported.  The institutions cried that they needed more time to rewrite their software to be able to generate this information (if you ask me a total load of malarkey) and the IRS granted them delays in complying with this new requirement.

Some good news.  It looks like all educational institutions must comply with this requirement for all 2018 Form 1098-T forms.  The draft of the 2018 form shows Item #2, the section previously used to report amounts billed, blocked out with no description and the instructions say this line is “reserved for future use”.

* Sub-chapter S corporation shareholders who have

·         reported a loss from Form K-1, or
·         received a distribution of profits (other than a salary or expense reimbursement), or
·         disposed of shares of stock in the corporation, or
·         received a loan repayment from the corporation

must now attach a computation of their S-corporation stock and loan basis to their Form 1040.  The draft copy of the 2018 Schedule E includes a new column on Page 2 for entries on Line 28 which states “Check if basis computation is required”.  This is not the result of the GOP Tax Act or any tax legislation, but a new requirement established by the IRS.   

* Computers and peripheral equipment are no longer considered to be “listed property”.

Listed property was first created in the Tax Reform Act of 1984.  This act restricted the depreciation deduction for business use of items “lending themselves easily to personal use” and established requirements, such as keeping a log, for substantiating personal and business use.  Computers and peripheral equipment – except for such equipment used 100% for business at a “regular business establishment”, which could include a qualified home office – had been on the “list” of “listed” property.  I explained listed property in a 2008 post here at TWTP – click here.

The GOP Tax Act removed this equipment from the “list”.  Now computers and peripherals can be depreciated or expenses like any other business property and are no longer subject to the additional substantiation requirements.

* The ridiculous excessive “due diligence” requirements for tax preparers, causing us to become social workers, will now apply to returns for taxpayers claiming the new Other Dependent Credit (ODC), as well as the Earned Income Credit, the American Opportunity Credit, the Child Tax Credit, and, also new for 2018, Head of Household status.  The draft copy of the 2018 Form 8867 includes the ODC in one of the columns.

This nonsense is getting out of hand.  Originally the excessive due diligence was only to be required for returns claiming refundable tax credits like the Earned Income Credit or the Additional Child Tax Credit.  As I have said in other venues, soon tax preparers will be required to make random bed checks of taxpayer homes during the year to check on where a claimed dependent is sleeping.

* Veterans who received disability severance payments, that were originally reported as taxable income, from January 18, 1991 through 2016 can file amended returns (IRS Form 1040-X) for all applicable years (not limited to “open” tax years) to claim a refund for the tax paid on this income.  This is a result of the “Combat-Injured Veterans Tax Fairness Act of 2016”.

There is an IRS established “safe harbor” amount or refund claim based on the year of payment –

1991 – 2005 = $1,750
2006 – 2010 = $2,400
2011 – 2016 = $3,200

Qualified veterans do not have to complete the entire Form 1040-X to calculate the refund due.  They can elect to submit a shell Form 1040-X with the personal information (name, SS#, address, year) and enter the applicable safe harbor amount on Lines 15 and 22.  As with anything else related to taxes, claiming the safe harbor refund or calculating the actual refund based on the original return depends on the specific facts and circumstances.  If you quality consult your, or a, tax preparer. 

NATP continues to erroneously, in my opinion based on my research and what I have been told by experts, teach that casual gamblers can now also deduct on Schedule A travel expenses to casinos, racetracks, etc. if losses do not equal or exceed gains.    

The IRS draft instructions for the 2018 Schedule A does not mention this alleged change – it specifically identifies deductible gambling losses as non-winning tickets under the discussion of “Other itemized deductions” and makes no mention of any change in the “What’s New” section.  I have seen nothing “official” from the IRS that says what NATP is teaching.  

I have no more federal tax CPE scheduled between now and the beginning of the 2019 tax filing season.  So, I will have to rely on finalized IRS forms, instructions and publications, and future online and print articles, for further guidance on the implementation of the tax law changes.  As I learn new “stuff” I will tell you about it here at TWTP.


Tuesday, November 27, 2018


As you read this on Tuesday morning, I am on my way home from Atlantic City, where I attended the National Association of Tax Professionals’ annual year-end tax update class.  I will post about this class later this week.

* Have you checked out the latest “issue” of THE LAKE REGION SOMETHING?

* Rick Newman tells us “Trump’s tax-cut party is officially over” at YAHOO FINANCE -

So, nearly a year after the historic Republican tax cuts, the stock market is lower, a growth slowdown seems to be underway and investors are worried about soaring levels of federal debt. This party barely got started before it was over.”

* Speaking of Disgusting Donnie, why do I oppose and denounce Donald T Rump?  Click here.

* Kay Bell explains “California wildfire, Virginia hurricane victims get tax relief” at DON’T MESS WITH TAXES.

* Amy Bell (I expect no relation) gives us a primer on “How a Roth IRA Works After Retirement” at INVESTOPEDIA.

There’s no question that a Roth IRA offers some extremely valuable benefits after retirement.”

* Looking for some stocking stuffers?  Click here.

* Last Friday’s Checkpoint week-day daily email newsletter for tax pros reported –

White House Economic Adviser Larry Kudlow told reporters on Tuesday (11/20/2018) that the next phase of U.S. tax reform (sometimes called Tax Reform 2.0) will not happen during the final months of 2018 in the ‘lame duck’ session when Republicans will still control Congress.

Last month, President Trump had stated {lied – rdf} that his administration was planning to roll out plans for a 10% tax cut for middle-income people before the November 6 congressional elections.

Kudlow said that a follow-up to the Republican's 2017 tax overhaul in the Tax Cuts and Jobs Act could be passed in the new session of Congress starting in January, even though Democrats will hold the majority in the House (where revenue and spending legislation originates).”

* It’s that time of year again.  From Kelly Phillips Erb at FORBES.COM - “The 12 Days of Charitable Giving: Here's How to Include Your Favorite Charity”.


Thursday, November 22, 2018




Tuesday, November 20, 2018


* Have you checked out the latest “issue” of THE LAKE REGION SOMETHING?

* The IRS has released the COLA and inflation-adjusted numbers for tax year 2019 (for returns to be prepared in 2020).  Get my special report on WHAT’S NEW FOR 2019 for only $1.00 – available from MY DOLLAR STORE.

* Peter J Reilly suggests you “Ask Your Tax Pro About 199A” at FORBES.COM.

In my opinion, as I said in a post here at TWTP, "The Section 199a Deduction Makes No Sense”. 

* TAXGIRL Kelly Phillips Erb’s latest “Getting To Know You Tuesday” introduces us to "Justin T. Miller", “a national wealth strategist at BNY Mellon, an adjunct professor at Golden Gate University School of Law, and a Fellow of The American College of Trust and Estate Counsel (ACTEC)”.

Kelly tells us “Being a tax professional doesn’t necessarily mean that you prepare tax returns.”  As Justin describes his job – “I serve as a national thought leader for the firm, and I work collaboratively with other advisors to provide comprehensive wealth planning advice to clients and their families.”

Returning to Section 199a, I like his description of the new deduction, quoting Churchill -

It is a riddle, wrapped in a mystery, inside an enigma.”

And correctly adding –

I know that our representatives spent dozens of minutes working on the tax legislation at the end of 2017, but 199A really set the standard for poor drafting by including limitations, exceptions to limitations, exceptions to exceptions, phase-ins, phase-outs, and poorly defined terms.”

* And Kelly’s “Ask The Taxgirl” entry last week involved a couple who was “Married But Faking Being Single”.

Good advice from KPE –

With so many moving parts, keeping up with the lie is going to catch up with you.  As Mark Twain once said, ‘If you tell the truth, you don’t have to remember anything.’ {good advice for Donald T Rump as well – rdf}

The bottom line is that this definitely isn’t a good strategy on the tax side.  Only you can figure out whether it’s a good strategy on the family/relationship side, but it might be worth considering whether you want to start your new life with a lie. Best of luck.”

* Jason Dinesen briefly reviews “Tax Deductions for College Professors” at DINESEN TAX TIMES, with special emphasis on how the GOP Tax Act has changed things.

As Jason correctly points out -

. . . college professors are out of luck in claiming any deductions for their research expenses or other out-of-pocket classroom expenses.”

* Jim Blankenship has some thoughts on “What can you do to save if you have no 401k?” at GETTING YOUR FINANCIAL DUCKS IN A ROW.

* And Jim tries to answer the question “Why are Social Security benefits taxed?”, while reviewing the history of taxing these benefits.

Why are Social Security benefits taxed?  Because the government needs money.

* The National Association of Tax Professionals has warned members of a new Social Security scam -

The acting Inspector General of Social Security, Gale Stallworth Stone, is warning citizens about an ongoing caller ID “spoofing” scheme misusing the Social Security Administration’s (SSA) national customer service phone number. SSA has received numerous reports of questionable phone calls displaying SSA’s 1-800 number on a caller ID screen. This is a scam; citizens should not engage with those calls or provide any personal information.

These reports indicate the calls display the 1-800-772-1213, SSA’s national customer service number, as the incoming number on caller ID. People who have accepted the calls said the caller identifies as an SSA employee. In some cases, the caller states that SSA does not have all of the person’s personal information, such as their Social Security number (SSN), on file. Other callers claim SSA needs additional information so the agency can increase the person’s benefit payment, or that SSA will terminate the person’s benefits if they do not confirm their information. This appears to be a widespread issue, as reports have come from citizens across the country.

The acting Inspector General urges citizens to be extremely cautious, and to avoid providing information such as your SSN or bank account numbers to unknown persons over the phone or internet unless you are certain of who is receiving it. If you receive a suspicious call from someone alleging to be from SSA, you should report that information to the OIG at 1-800-269-0271 or online at”


Monday, November 19, 2018


Looking for some "stocking stuffers"?  Here are some suggestions.

Each of these tax-saving reports are only $1.00 each -

WHAT’S NEW FOR 2018 - A compilation of the inflation and cost of living adjusted numbers you need to know for 2018 federal tax planning and return preparation, incorporating all the changes enacted by the GOP Tax Act.

THIS JUST IN! WHAT'S NEW FOR 2019 - A compilation of the inflation and cost of living adjusted numbers you need to know for 2019 federal tax planning and return preparation.

FLACH'S TAX FACTS - A compilation of some basic information about Form 1040.  I talk about who has to file a federal tax return, filing status, dependents, the difference between "above the line" and "below the line" deductions, the difference between deductions and credits, and the penalty for underpayment of tax.  This report also includes a timeline of the History of the Federal Income Tax.  

Each of these tax-saving reports are only $2.00 each -
2018 YEAR-END TAX PLANNING GUIDE - This special guide explains in details what you can do during the last two months of 2018 to reduce your federal tax bill in the context of the new rules for Form 1040 enacted by the GOP Tax Act.  It also contains a 2018 Preliminary Return Worksheet and details of what is new for federal individual income taxes for 2018.

MORTGAGE INTEREST GUIDE - I explain in detail the new rules for deducting mortgage interest as an itemized deduction on Schedule A, discussing the various types of mortgage debt and the deduction limitations, the importance of keeping separate track of acquisition debt and home equity debt, points, and refinancing.  I include two worksheets - one for Acquisition Debt Activity and one for Home Equity Debt Activity - and provide a detailed example of how to use the worksheets.  

The reports will be sent to you as a pdf email attachment.  

You can receive a print copy of these reports sent via postal mail for an additional $1.00 to cover postage, paper and ink costs.  So, $2.00 for the $1.00 reports, and $3.00 for the $2.00 reports.

FYI - the worksheets contained in these reports are copyrighted material and for your personal use only.

Send your check or money order payable to TAXES AND ACCOUNTING, INC for $1.00, $2.00, or $3.00 per report, and your email or postal address, to –



Thursday, November 15, 2018


This just in - the State of New Jersey’s latest Tax Amnesty Program has begun!    

Under the program you will only pay the amount of outstanding tax you owe and one-half of the balance of interest due (as of November 1, 2018).  You will not be charged any penalties, “Referral Cost Recovery Fees”, or cost of collection fees.  You also avoid a 5% amnesty penalty that will be assessed on all eligible tax balances remaining after the amnesty period ends.  This 5% amnesty penalty cannot be waived or abated.

The amnesty period begins November 15, 2018 and ends January 15, 2019.  If you have an outstanding tax balance you should be notified by mail on or about November 15th. This notice will provide instructions on how to participate in the program.

The program covers liabilities incurred for tax returns due on or after February 1, 2009 and prior to September 1, 2017 for all taxes administered and collected by the New Jersey Division of Taxation.  Amnesty is not available for local property taxes and payroll taxes owed to the New Jersey Department of Labor.   

NJ has created a special NJ Tax Amnesty website with information, guidelines, forms and FAQs.

The website tells us -

"All requests for amnesty must be filed electronically. To apply, log in to our Amnesty Processing Center using the Amnesty ID and PIN printed on your amnesty notice. Once you are logged in, you can:

·         View your balance(s) due;
·         View any delinquent tax returns;
·         Submit a payment.

If you have not received a notice and want to submit a payment or file delinquent returns, visit the Non-Outreach Portal. You will be prompted for the required information for identification purposes."



I was surprised to get the following email question from a taxpayer -

I read your article on MSN stating that you can no longer deduct mileage for business.  

I reached out to the IRS and according to the website you still can.

Please let me know.”

FYI, the item the writer was referring to was “10 things you can't deduct from your taxes anymore”.

My response -

Employee business expenses, including business mileage by an employee, along with the other Miscellaneous Expenses that had been subject to the 2% of AGI limitation, are not deductible on Schedule A of Form 1040 for 2018 through 2025 as a result of the GOP Tax Act.

An employee who is not reimbursed for business mileage by his employer cannot deduct business mileage as a Miscellaneous Expense on Schedule A.

Self-employed taxpayers filing Schedule C or C-EZ can still deduct business mileage. 

Farmers filing Schedule F can still deduct business mileage. 

Landlords can still deduct business mileage related to rental properties on Schedule E. 

Employers can still reimburse employees for business mileage and claim a deduction on their business tax return.”

The bottom line – the deduction for using your car for business, whether you claim the Standard Mileage Allowance or the business use percentage of actual expenses, is still allowed as a business expense on business returns – Schedule C or C-EZ, Schedule E, Schedule F, Form 1120 and 1120-S, and Form 1065.  It is an ordinary and necessary expense of doing business. 

But employees can no longer deduct any unreimbursed business expenses on Schedule A.  This includes business mileage, union or professional dues, job-related education, tools and supplies, home-office expense, business use of a computer or cell-phone, etc, etc, etc.

Employee business expenses, and the other Miscellaneous itemized deductions that were temporarily done away with by the GOP Tax Act, including business mileage, are deductible on the 2017 Schedule A for those, like a couple of my clients, who have still not filed their 2017 Form 1040.

If an IRS employee is telling taxpayers anything otherwise then he or she is wrong.  I do believe that IRS employees, especially those who are answering questions from the public, have been trained in the new law.  I expect that the taxpayer probably did not ask the question of the IRS person correctly.

Are they any other aspects of the GOP Tax Act that you want clarified?


Tuesday, November 13, 2018


* Have you checked out the latest “issue” of THE LAKE REGION SOMETHING?

* Kay Bell explains “When health insurance premiums are tax deductible” at DON’T MESS WITH TAXES.

* And Kay continues her post medical procedure recovery with more discussion of medical itemized deductions in “Thumbing through the IRS' medical deduction (or not) list”.

* Another Kay Bell trifecta, with Kay's suggestions on “How to help California wildfire victims”.

* A good primer on “What Happens to a Joint Account When One of the Owners Dies?” by Julie Garber at THE BALANCE.  Julie reviews the income tax, estate tax, and other consequences.

* Tony Nitti is running a post series on “The Top Tax Court Cases Of 2018” at FORBES.COM.  He starts off with “Conner V. Commissioner Was A Real Estate Potpourri”.

* Friday’s “Ask The Taxgirl” post from Kelly Phillips Erb dealt with the “Standard Deduction Versus Itemized Deductions”.


Part One -

Why do people assume that those who oppose and denounce Donald T Rump, and the Republicans who support and defend him, MUST be liberals?

1. Trump is a deplorable and despicable human being.

2. Trump is NOT a conservative.  Read this!

Part Two –

Do you know what Donald T Rump really believes?  Click here to find out.


Friday, November 9, 2018


A potpourri of tax “stuff” -

+ The IRS recently announced, in Notice 2018-83, the contribution limits for retirement plans for calendar year 2019.

The maximum contribution to a traditional or ROTH IRA, or a combination of the two, is increased from $5,500 to $6,000.  The catch-up contribution for individuals age 50 or older remains at $1,000.

The maximum contribution to a 401(k), 403(b) and 457 retirement plans is increased from $18,500 to $19,000.  The catch-up contribution remains at $6,000.

The maximum contribution to a SIMPLE retirement plan is increased from $12,500 to $13,000.  The catch-up contribution remains at $3,000.

The maximum contribution to a SEP or Solo401(k) plan is increased from $55,000 to $56,000.  SEP and Solo401(k) contributions are based on a % of “compensation” or adjusted net earnings from self-employment.

+ Usually you are given the option of having IRA administrative, custodial or management fees deducted from the account balance or paying them directly by personal check.  You should pay these fees directly by sending the trustee a check.

By doing this you increase the tax-deferred accumulation within the account, so more money is available at retirement.

A reminder – investment expenses like IRA administrative, custodial or management fees are no longer deductible on Schedule A.  

+ Beginning in 2018 job-related moving expenses are no longer deductible.  And reimbursements of these deductible job-related moving expenses are included in taxable wages reported on Form 1040.  For tax years 2018 through 2025 only moving expenses incurred by a member of the Armed Forces on active duty who moves due to a military order are deductible.

However, according to IRS Notice 2018-75, if you made a job-related move in calendar year 2017 any qualified moving expenses related to the move that you were reimbursed by your employer in calendar year 2018 are excluded from gross taxable wages, if the reimbursement would have been excludable from income if made in calendar year 2017.  

+ Now that the Democrats, thankfully, control the House the GOP Tax Act will not be made permanent. 

FYI, here is my take on what true “tax reform” should look like – THE TAX CODE MUST BE DESTROYED.

What do you think?