Friday, September 27, 2019

LET ME BE PERFECTLY CLEAR



While I am stable, I am not a genius.  I am not an expert on politics or government or history.  I am just a relatively intelligent citizen who cares about my country. 

I am not a registered Republican or a registered Democrat.  I have, in the past, voted for Democratic candidates, Republican candidates, and 3rd party candidates for various elected offices.  I vote based on the person and the issues and not based on Party.  I am liberal on some issues and conservative on others.

It is clearly obvious to me, based on my knowledge of his words, deeds and “tweets” both before and after throwing his hat in the ring for the Presidency, that Trump is an ignorant, incompetent, delusional, and mentally unstable narcissist and sociopath who cares only about himself and absolutely nothing else.  These are, to me, proven facts that are obvious to anyone with a brain.  

He was an unethical businessman, consistently, unapologetically and gleefully screwing his shareholders, investors, lenders, vendors, contractors, employees, and customers while lining his pockets.  I am personally aware of specific anecdotal evidence of his unethical behavior as a businessmen. 

He is a proven crook and conman for his despicable Trump University scam and for using his family charitable foundation to make purchases of sports memorabilia and other items for his personal use and to pay bribes to government officials.

He lies to everyone every day about everything.  This is a proven  and indisputable fact.  It is very literally impossible to believe a word that comes out of his mouth.

Trump has clearly abused the power of the office of the President.  He has certainly damaged and diminished the honor, integrity and credibility of the office of the President of the United States and the honor, integrity and credibility of the United States in the eyes of the world.

And has also clearly obstructed justice multiple times.  He has absolutely no respect or concern for the rule of law or the Constitution.

As a human being Trump is a totally worthless piece of garbage.  He has never performed a single completely unselfish positive act in his adult life.  It is impossible to find good or positive to say about Trump.

Trump is the worst, most ignorant and incompetent, most unfit and unqualified, and most mentally unstable President in my lifetime, and probably in the history of the United States.

There is no issue more important for the security and future of the United States and the world than removing Trump from the White House.

It is my firm belief that it is impossible for any patriotic American with a brain and a conscience to support and defend Trump.

And it is my firm believe that it is the patriotic duty of every American who cares about our country to vocally and aggressively oppose and denounce Trump and work for his removal from office and his eventual prosecution.














Thursday, September 26, 2019

TRULY DISTURBING


What is perhaps the most disturbing fact we have learned from the Trump Presidency?

The national Republican Party believes pandering to Trump’s core cult of ignorant racists is more important than protecting and defending American values, American democracy and the Constitution.

It is impossible for any person, regardless of their political philosophy, with a brain and a conscience who cares anything about America, American values, American democracy, and the Constitution to support and defend Trump.

Anyone who affirmatively supports Trump’s continuance in office is either, like Trump, a racist and a white supremacist, or, like Trump, a clueless moron, or, like Trump, puts his or her personal self-interests above the law and above the interests of the country.

The national Republican Party has clearly put its self-interests above the rule of law and the interests of the United States of America.  





























SO YOU WANT TO BE A TAX PREPARER


Have you ever considered becoming a paid tax preparer?  With tax returns more confusing than ever, especially with all the changes made by the GOP Tax Act, taxpayers need the help of tax professionals now more than ever.

I share my advice and comments on the tax preparation business, based on my 47 years in the business, in my book SO YOU WANT TO BE A TAX PREPARER.

This book can also provide help to tax preparers who would like to expand their practice.

Any Frye of the Pronto Tax School had this to say about this book – "Mr. Flach's book . . . should be required reading for anyone who's considering getting into the tax business as a tax preparer."  Click here to read his full review.

In this book I discuss in detail -

·         LEARNING HOW TO PREPARE TAX RETURNS
·         THE PTIN
·         TAX PREPARER MEMBERSHIP ORGANIZATIONS
·         CONTINUING PROFESSIONAL EDUCATION
·         PROFESSIONAL RESPONSIBILITY – ETHICAL STANDARDS AND PRACTICES
·         BUILDING A PRACTICE
·         USING A BLOG TO PROMOTE YOUR TAX PRACTICE
·         GETTING A CREDENTIAL
·         STRUCTURING YOUR TAX PRACTICE

The APPENDIX includes copies of a Code of Ethics and Standard of Professional Conduct, a sample Engagement Letter and the TAX PROFESSIONAL’S ONLINE RESOURCE GUIDE.

The cost of this book is only $5.45 delivered as a pdf email attachment, or $9.45 for a print version sent via postal mail.

Members of the National Association of Tax Professionals receive a 25% discount on both versions.

An e-book version is available for reading on Kindle from AMAZON.COM for $5.99.  Click here for more information.  No discount is available on this option.

To order your copy of this book send your check or money order FOR $5.45 OR $9.45, payable to TAXES AND ACCOUNTING, INCORPORATED, and your email or postal address, to –

TAXES AND ACCOUNTING, INC
SO YOU WANT TO BE A TAX PREPARER
POST OFFICE BOX A
HAWLEY PA 18428

TTFN












Wednesday, September 25, 2019

SOME TRULY BASIC TAX BASICS


Let me review some truly basic tax “stuff” – things that I would have thought everyone knows, but still get questions about.

(1) Your filing status for the tax year is determined by your status on the last day of the year – December 31st. 

a. If you are legally married on December 31, 2019, even if your wedding was December 30, you must file your 2019 tax returns for as either Married Filing Jointly or Married Filing Separately. 

b. If you are legally divorced on December 31, 2019, you must file your 2019 tax returns as either Single or Head of Household.

(2) If a person is alive for at least one day of the year he/she is considered for tax purposes to be alive for the entire year, and receives all the appropriate tax benefits, whether a dependent or an independent filer, for the entire year. 

a. If your spouse passes away at any time during the year, including January 1st, you can file as Married Filing Joint for that year. 

b. If a child is born at any time during the year, including December 31st, you can claim that child as a dependent, with all the applicable tax benefits (Child Tax Credit, Earned Income Credit), for that year.  

c. If a child is born on May 1st and passes away on May 2nd you can claim the child as a dependent for that year.

(3) You will only receive a tax benefit for an expense or action that qualifies as an itemized deduction if you itemize your deductions by filing a Schedule A – if your total itemized deductions exceed the applicable Standard Deduction amount for your filing status and situation.

Charities advertise that you can get a tax deduction for donating your car to their organization.  This statement is true – but only if you are able to itemize. 

If you donate a car with a deductible value of $2,000 to, for example, Kars 4 Kids, and you are in the 22% federal tax bracket and -

a. you itemize on Schedule A, and the full amount of the $2,000 deduction is in excess of your Standard Deduction, you will put $440 in your pocket (plus any state tax savings).   $2,000 x 22% = $440.

b. your total allowable itemized deductions, including the $2,000 for the car, is $11,000 and your Standard Deduction is $12,200 (the Standard Deduction amount for a Single filer for 2019) you put absolutely nothing in your pocket – you get no tax benefit from donating your car to the charity.  $11,000 less $12,200 = $0.00.

c. your total allowable itemized deductions, including the $2,000 for the car, is $13,000 and your Standard Deduction is $12,200 you out only $176 in your pocket (plus any state tax savings).  $13,000 less $12,200 = $800 x 22% = $176.

The above item (3) is actually inspired by a true story from my practice.  Years ago, a client came to see me and was happy as a pig in reality tv.  She said she had donated her car to charity and was told she would get a big tax deduction.  She could not itemize, even the car deduction, and got zip.  Clearly, she was not pleased.

TTFN












  

Tuesday, September 24, 2019

WHAT’S THE BUZZ, TELL ME WHAT’S A HAPPENNIN’?


* Do your wonder “Does Your State Have a Marriage Penalty?”.  The TAX FOUNDATION provides the answer.

NJ = yes.  PA = no.  NY = yes.  

* Another question answered – “Does working past 70 affect my Social Security benefits?” – at USATODAY.

Earnings at any age from the year a person turns 22 and onward are used in the calculation of your Social Security benefit.”

And –

If you're still working while receiving your Social Security benefits, each year the earnings from the previous year are added to your record. If the earnings in that year are greater than one of the earlier years, your benefit may be increase.”

* Jeffrey Levine provides a detailed discussion of “Hiring Children In The Family Business For Tax (And Other) Benefits” at Michael Kitces’ NERD’S EYE VIEW.

* Ashlea Ebeling tells us “Need Cash? Hardship Withdrawals From Your Retirement Plan Just Got Easier” at FORBES.COM.

* Also at FORBES.COM, Tony Nitti continues his series on “Reviewing The Democratic Candidates' Tax Plans” with “Elizabeth Warren”.

* Matt Lebo discusses “Taxation at Birth/Taxation at Death – The Circle of Life” at the new to me Drucker & Scaccetti TAX WARRIORS blog.

* Attention procrastinators.  Russ Fox tells it like it is at TAXABLE TALK -  It’s Time to Panic!

THE LAST WORD

Forget about Trump’s alleged political positions, as bad as they may be.  All patriotic Americans, regardless of Party or political beliefs, must oppose and denounce Trump because he has been proven to be -

·         Ignorant and incompetent, unwilling to listen or learn

·         Totally self-absorbed, caring about absolutely nothing but himself and his perception, whose only agenda is feeding his ego and lining his pockets.

·         Enamored with and envious of dictators and authoritative leaders.

·         Incapable of dealing with criticism like a mature adult.

·         Incapable of admitting and accepting responsibility for errors.

·         Delusional and mentally unstable.

·         Do you need any more reasons?

TTFN











Tuesday, September 17, 2019

WHAT’S THE BUZZ, TELL ME WHAT’S A HAPPENNIN’?


OOPS!  I almost forgot to post today’s BUZZ.

* It didn’t hit me until the day itself – but last Friday was Friday the 13th.  Key Bell celebrated with “Don't fear, or fall for, these 13 seemingly scary tax tidbits” at DON’T MESS WITH TAXES.

Pay special attention to #6, 7, 12, and 13.

* This has nothing to do with taxes, but WALLETHUB identifies “2019’s Happiest States in America”.

There is something wrong with this survey.  New Jersey is #5 and Pennsylvania is #26.  I am happier in PA than I was in NJ.

* This is not official, and I debated whether or not to include this item, but Kelly Phillips Erb provides “Your First Look At 2020 Tax Rates: Projected Brackets, Standard Deduction Amounts And More”, “projected” being the operative word, at FORBES.COM.

The actual inflation-adjusted numbers will be announced next month, and I will let you know when they are available and compile my annual “What’s New For 2020” when they are.

* In this week’s new post at BOBSERVATIONS I explain that “The Second Amendment is Obsolete” and has no relevance today.

* A la the old DAVID LETTERMAN SHOW (the only part of the show I found funny), Andy Ives presents “Top 10 RMD Goofs, Gaffes and Blunders” at THE SLOTT REPORT.

* Tony Nitti begins a series on “Reviewing the Democratic Candidates' Tax Plans” at FORBES.COM.  First Up: Bernie Sanders”.

I will wait till the end of the series to provide my thoughts on these plans and proposals.

TTFN











Wednesday, September 11, 2019

NEVER FORGET!





 Police Officer Maurice Barry - PATH Emergency Service Unit - P.O. Shield #1038

A Port Authority officer for 16 years, Maurice "Moe" Barry, 48, was assigned to the PATH commuter train system. The resident of Rutherford, NJ, upon hearing the reports of the terrorist attacks, was one of the first on scene when he rushed from Jersey City to Lower Manhattan and then into the North Tower to help in the rescue efforts. As thousands fled the searing flames and smoke of the Towers, Officer Barry was attempting to reach trapped and frightened workers on the upper floors. The last time he was seen, he was on his way to the higher floors to get people out.
.
Moe had a history of heroism - he was involved in rescue efforts during an airplane crash at La Guardia airport; he once climbed a bridge to retrieve the body of a person electrocuted there; he was involved in the rescue effort during the 1993 bombing of the World Trade Center; and he rescued a woman from her home, by boat, during Hurricane Floyd. Moe was also a volunteer for the Rutherford Ambulance Corps.
























Tuesday, September 10, 2019

NO BUZZ TODAY


No BUZZ of any consequence to report.

I just want to share Kay Bell’s post “Ways to help Bahamas' residents recover from Dorian” from DON’T MESS WITH TAXES.

TTFN

Wednesday, September 4, 2019

WHEN CHOOSING A BUSINESS ENTITY DON’T FORGET FICA TAXES


An often-overlooked issue when deciding on the type of entity to choose to operate your one-person or closely-held business is the FICA or FICA-equivalent tax (self-employment tax).

If you operate as a sole-proprietor, filing a Schedule C, (or as a partnership) your FICA-equivalent self-employment tax is calculated on net earnings from self-employment BEFORE deducting health insurance premiums and retirement plan contributions.

The net amount on your Schedule C is $100,000.  You also deduct $24,000 in self-employed health insurance and a $15,000 contribution to your SEP retirement plan as adjustments to income.  So, your net “out of pocket” is $61,000.  Your self-employment tax is $14,130 - $100,000 x .9235 = $92,350 x 15.3% = $14,130.  The Schedule C filer is entitled to a tax deduction, as an “adjustment to income”, of $7,065 for half of the self-employment tax.

If you operate as a corporation and take $55,000 as a salary your FICA tax is $4,207.50 - $55,000 x 7.65% = $4,207.50.  The corporation matches this and also pays $4,207.50, so the total cost is $8,415.  As a corporation you are $3,000 -$5,000 less (the $5,715 in reduced FICA tax less the tax savings you would have received from the self-employment tax adjustment to income) out of pocket.

If the business has a $100,000 net gain, as per the Schedule C, and pays out $55,000 in wages, $39,000 in employee benefits (the owner’s health insurance premiums and pension contribution) and $4,208 in FICA tax the net taxable income of the corporation is $1,792.  The federal corporate income tax if a “C” corporation is $376.  If it is an “S” corporation the taxpayer may be allowed an additional $358 “Section 199a” deduction and pay federal income tax as an individual on $1,434 - $315 for a taxpayer in the 22% bracket.

Clearly the Schedule C filer pays substantially less in FICA-equivalent taxes than the corporation pays in FICA taxes.

However, regarding the 20% Section 199a deduction – for a “C” corporation there is no deduction allowed, for the “S” corporation the deduction is on the net business income reported on K-1 and does NOT include the sole-shareholder’s wages, but for a sole-proprietorship filing a Schedule C the deduction is allowed on the net amount reported on Schedule C less the adjustments to income for self-employment tax, self-employed health insurance and retirement income contributions.  In the above example the taxpayer’s “Qualified Business Income” (QBI) eligible for the 20% deduction is $53,935 - $100,000 less $24,000 less $15,000 less $7,065 = 53,935 – which could result in a deduction that reduces net taxable income by $10,787.

So, a Schedule C filer could pay less federal income tax on his or her net “in pocket”.

Obviously, the payroll tax cost, or the QBI deduction, is not the only consideration to be reviewed when choosing a business entity.  There are additional filing and administrative costs associated with operating as a corporation – when creating the corporation, during its operation, and when terminating/dissolving it.  There will probably be additional state payroll tax costs – unemployment, disability and/or family leave insurance contributions – and may be required worker’s compensation insurance premiums for the owner being paid as an employee that would not exist for a sole-proprietor.  And the management and administration of a corporation is more time consuming and requires more detailed recordkeeping and federal, state and local government filings.

As a point of information – operating as a corporation provides the owner with “limited liability”, but so does registering your Schedule C sole-proprietorship as a “Limited Liability Company” (LLC).  And if you are an LLC you can file your taxes as either a sole proprietor on Schedule C (or as a partnership if more than own owner) or a corporation, either “C” or “S”.

In terms of the Social Security component of the FICA payroll tax, paying the tax on a lower earnings base may affect the benefits you receive when you begin to collect.  In the above example the Social Security earnings for the Schedule C filer is $92,350, but is only $55,000 for the corporate employee.  Social security benefits are based on your 40 highest-earning years.  FYI - there is a maximum wage/earnings cap on the Social Security component of FICA tax, which applies to both wages and net earnings from self-employment.

What I am saying is that choosing a business entity is a serious and complicated matter involving many important issues – both tax and non-tax.  There is no “one size fits all” answer – regardless of what a lawyer may tell you.  When deciding on the entity you should consider the difference in payroll tax costs, and now under the GOP Tax Act the potential savings from the Section 199a QBI deduction.  Do multiple calculations based on various amounts of anticipated income.

And consult a tax professional BEFORE you consult an attorney!

TTFN












Tuesday, September 3, 2019

WHAT’S THE BUZZ, TELL ME WHAT’S A HAPPENNIN’?


*  An interesting development.  Kelly Phillips Erb reports “Charitable Donation Deductions Plummet After Tax Reform” at FORBES.COM.

According to the most recent data available from the Internal Revenue Service (IRS), just 12,177,779 taxpayers claimed the charitable donation deduction for the 2018 tax year, totaling $102.7 billion. That compares to 33,629,985 taxpayers who claimed the charitable donation deduction for the 2017 tax year, totaling $160 billion. That’s a difference of 21,452,206 taxpayers claiming nearly $37 billion less in donations.”

If I may be allowed one correction – it should read “After GOP Tax Act” and not “After Tax Reform”.  The GOP Tax Act was, as its official title identifies, a tax cut and NOT tax reform.

This news does not necessarily mean that Americans are actually donating less to charity – it just means that they are claiming less tax deductions for charitable giving.  In order to deduct a charitable contribution, one must itemize, and the GOP Tax Act resulted in a substantial decrease in the number of taxpayers who itemize.  While being able to deduct one’s contributions is a plus – the tax savings from itemized deductions is pennies on the dollar.  Giving $100 to charity may put $22 back in your pocket via an itemized deduction, but you are still out of pocket $78 – so I doubt very much that people give to charity only to get a tax deduction. 

However, it may mean that the taxpayer in the above example will only donate $78 to the charity instead of $100 if they are unable to benefit from itemizing.  In a tweet responding to a comment on the post KPE tells us studies suggest that actual contributions are also down.

And let’s be honest.  While the issue is not as bad as it had been these past few years - a result of the more stringent documentation requirements - the amount of charitable contributions reported on Schedule A does not necessarily accurately reflect the actual amount of charitable contributions made.  This category has historically been the one where taxpayers have truly been “generous” in their estimations (i.e. – “same as last year” or “whatever I am allowed”).

* Yesterday’s post at BOBSERVATIONS talked about “Found Money” – how I found it and how you can, too.

* In light of Hurricane Dorian Kay Bell explains “IRS and other government resources can help you deal with a natural disaster” at DON’T MESS WITH TAXES.

* And Kay reminds us not to forget about our four-legged “children” during a disaster with “7 tips to ensure your pets' safety during a disaster”.


* Just got the word from NATP -

The General Services Administration (GSA) has released the federal domestic per diem rates for 2020. The IRS permits taxpayers to use these rates to substantiate business expenses for lodging, meals and incidental expenses incurred while traveling away from home.”

The new rates are effective October 1, 2019. Click here to access them.

THE FINAL WORD

Cutting taxes is not the answer to all of our problems.  Taxing the rich, merely because they can afford it, is not the answer to all of our problems. 

We must understand and acknowledge that the one and only purpose of the US Tax Code is to raise the money necessary to run the government – and should not be used for social engineering, to redistribute income or wealth or to deliver social welfare and other government benefits.

The Tax Code must not punish ambition, entrepreneurship or success.  While it can be used to encourage savings, investment, and growth, it must not encourage or discourage specific economic decisions, or provide exclusive benefits for specific industries, business activities, or classes of taxpayers.

TTFN











Monday, September 2, 2019

TAX FORMS, SCHEDULES AND WORKSHEETS FOR THE SELF EMPLOYED


HAPPY LABOR DAY!

No holiday for me (no rest for the wicked) - I am laboring away today on a GDE.

Speaking of laboring, here is a question for my self-employed readers.  Are you keeping good records of your business tax deductions?

In addition to my compilation of TAX PROFESSIONAL FORMS, SCHEDULES AND WORKSHEETS I have also compiled a special package of forms, schedules and worksheets especially for self-employed taxpayers, which I am offering for only $6.95!

You can use these unique forms, logs and worksheets to help document your business tax deductions and to help organize and gather the tax information needed to give to your tax professional.

Please be aware that this is copyrighted material and for your internal use only.

This compilation includes –

In “Portrait” Format:

• BUSINESS MILEAGE LOG
• AUTOMOBILE EXPENSE LOG
• AUTOMOBILE EXPENSE SUMMARY
• CONFERENCES, CONVENTIONS AND EDUCATION
• BUSINESS TRAVEL RECORD
• COMPUTER USE LOG 
• HOME OFFICE DEDUCTION
• ALLOCATING BUSINESS EXPENSES TO SCHEDULE C
• RECORD OF CLIENT MEALS AND ENTERTAINMENT
• SECTION 199a QBI DEDUCTION WORKSHEET 
• EMPLOYEE TIME CARD 
• LISTING OF DEDUCTIBLE BUSINESS EXPENSES

In “Landscape” Format:

• ANALYSIS OF BUSINESS EXPENSES 
• DEPRECIATION SCHEDULE 

The package will be sent as 2 separate “word document” email attachments (portrait format and landscape format), so you may edit and revise them as you see fit to personalize and adopt them for your business and to update the forms for annual COLAs or tax law changes.

BTW – I also have a compilation of forms, schedules and worksheets for taxpayers to record income, Schedule A and Schedule E deductions and other things, for only $6.95.  Click here for more information.  You can order BOTH forms compilations for $9.95.

Send your check or money order for $6.95, or $9.95, payable to TAXES AND ACCOUNTANTS, INC, and your email address to –

TAXES AND ACCOUNTING, INC
BUSINESS TAX FORMS COMPILATION
POST OFFICE BOX A
HAWLEY PA 18428
 .
TTFN