Tuesday, December 31, 2019



The Internal Revenue Service today issued the 2020 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on January 1, 2020, the standard mileage rates for the use of a car will be:

57.5 cents per mile driven for business use, down one half of a cent from 2019,

17 cents per mile driven for medical or moving purposes, down three cents from 2019, and

14 cents per mile driven in service of charitable organizations.

The charitable rate is set by Congress and remains unchanged.

I do believe this is the latest these rates have been announced.


Monday, December 30, 2019


The last BUZZ of 2020!   

* Oops, he did it again.  Jeff Stimpson once again quoted me in his article “In the ballpark: Preparers discuss giving estimates” at ACCOUNTING TODAY.

*  Kell Phillips Erb, the blogosphere’s favorite TaxGirl continues her “12 Days of Charitable Giving 2019” at FORBES.COM with “The Garden Conservancy”,  13thirty” and “The Sunday Love Project”.

* At her BLOOMBERG TAX blog, KPE queries “Santa, Tell Me: Are Elves Employees or Independent Contractors?”.

* And for a trifecta – at KPE’s TAXGIRL blog she asks the question "Should Congress extend the deduction for charitable deductions to non-itemizers, and make it an above-the-line deduction (like student loan interest deduction)?" in her “Fix The Tax Code Friday” post “Charitable Deductions For All Taxpayers”.

* Did you read my review of “The Year in Taxes 2019” yet?  Why not?

* Kay Bell discusses a different MAGI – Modified AGI – in “Tax and other gifts of the MAGI” at DON’T MESS WITH TAXES.

* For those of you who are interested, here is some information about me for the purpose of “Full Disclosure”.  


May you have a happy and safe New Year’s Eve celebration. 


Friday, December 27, 2019


2019 was the first year that we prepared tax returns under the multitude of changes enacted by the GOP Tax Act.

As I said in my review of the tax season, regardless of how long a person has been in “the business” there is always the challenge of dealing with changes in tax law resulting from new legislation, often illogical and inequitable and reflective of the ignorance and agendas of those who actually write and pass tax law.

I had been well-educated on the tax law changes during 2018.  And last tax season when preparing my clients’ 2017 tax returns, I calculated the tax on their income and deductions using the new tax law and rates of the GOP Tax Act.  However, it took a while to get used to the flow of the ridiculous new “postcard 1040” and the accompanying new Schedules 1 through 6 (although I only used 1 - 5).  The idea of a tax return that fits on a postcard is a gimmick – and a gimmick totally lacking in legitimacy and with no basis in reality.  It is very literally impossible to have an individual income tax return that fits on a postcard under our current Tax Code. 

Otherwise the 2019 tax filing season ran smoothly.  There were no auto, computer, equipment, or weather issues.  The season began, for me as always February 1st, and ended on time, again for me the day before the statutory April 15th filing deadline.  I ended the season with only 26 GDEs – the same as last year.  Although I actually prepared 16 less sets of returns by season-end than last year.

As expected, very few of my clients were able to itemize on their 2018 Form 1040, due to the increased Standard Deduction and the limitations on and elimination of allowable deductions.  Since almost all of my clients live in New Jersey or New York they were substantially affected by the new $10,000 limit on the “SALT” deduction – some losing $10,000 - $20,000 in allowable itemized deductions.  The few clients who could itemize were those with excessive medical expenses, single filers with mortgages, and couples with recent new home purchases. 

On the NY state income tax returns residents and non-residents were able to itemize using the “old” pre-GOP Tax Act rules, and could itemize on the state return even if they could not on the federal.  So, in some instances I still needed information on home equity loans and investment and unreimbursed employee business expenses.

Last year I had advised my clients of the importance of keeping separate track of acquisition debt and home equity debt going back to their original purchase mortgage, provided instructions and worksheets on how to do it, and offered to do it for them during the year.  No client contacted me about this issue last year, and no client provided me with information on the source of their 1098 interest when giving me their 2018 “stuff” this year.  They totally ignored this issue.  Luckily because most clients were not able to itemize this issue only applied to a handful of returns.  For some, since I keep copies of every return I have ever filed for current clients as well as some back-up documentation, I was able to easily determine or estimate the amount of acquisition debt interest.

This year the Form 1098-T sent to college students by universities was finally no longer the equivalent of tits on a bull.  It actually provided the information necessary to calculate the education tax credits – “the total payments received by an eligible educational institution in 2018 from any source for qualified tuition and related expenses less any reimbursements or refunds made during 2018 that relate to those payments received during 2018”.  Previously these forms only told us what the college billed, which was totally useless.  

The biggest issue of this tax season was the occasionally disastrous results of what I called “the IRS withholding FU”.  As I explained to clients in my explanatory memo, last February the IRS revised the federal withholding tables to reflect the reduced tax rates.  But they did it too “liberally” – on purpose I believe so it would look like the GOP Tax Act benefited taxpayers more than it really did.

Almost every taxpayer whose 2018 withholding was based on the federal tables – and not a flat amount as with most IRA withdrawals and Social Security benefits – was under-withheld.  This was especially disastrous with multiple sources of withholding – like two-income couples, taxpayers with more than one job, and those receiving both pension and W-2 income.  I had clients owing $4,000, $9,000 and $20,000 because of the IRS withholding FU.

It was déjà vu all over again.  Once again, the idiots in Congress reminded me why I call them “the idiots in Congress” by waited until the very last minute to pass retroactive tax legislation.  At the end of December, a temporary retroactive extension of a laundry list of expired tax benefits and special interest loopholes, the now infamous “extenders”, was included in the government funding bill. 

Constantly and retroactively temporarily extending specialized tax benefits and loopholes every year or every other year is totally ridiculous.  If the idiots in Congress think a tax benefit is appropriate it should be included in permanent tax legislation.  But then – they are idiots who do what they are told by lobbyists and Party leadership.

Also included in the funding bill was “The Setting Every Community Up for Retirement Enhancement (aka SECURE) Act of 2019” which made some big changes to retirement savings account rules, most effective beginning with tax year 2020.  These changes are, for the most part, actually good and welcomed.

The only other significant tax legislation passed in 2019 was the “Taxpayer First Act”, which dealt with taxpayer protections and identity theft prevention.   

In the fall of 2019, the IRS issued a revised Form 1040 and corresponding numbered supplemental schedules for 2019 and created a new 1040-SR for senior citizens, which was mandated by the Bipartisan Budget Act of 2018.  The new 1040 is a 2-sided form that is 2/3 of a full 8½ x 11 sheet, instead of a ½ a full sheet like the ridiculous 2018 “postcard” version.  The content of the new 1040 and 1040-SR are exactly the same – line for line and word for word.  The only difference is that the 1040-SR has substantially bigger print and includes a Standard Deduction Chart.  The revised format is clearly much better than the 2018 Form 1040, with a more logical flow of information.

The previous 6 supplemental schedules have been cut to 3 – Schedule 2 and 4 are combined in the 2019 Schedule 2, Schedule 3 and 5 are combined in Schedule 3 for 2019, and the information previously reported on Schedule 6 is now on the 1040.  Reporting Schedule D income or loss has been moved from Schedule 1 to a line on the 2019 Form 1040. 
And the IRS also issued a new Form W-4 effective for tax year 2020.  The major change to this form is that the concept of “withholding exemptions” no longer exists.  The new form requires taxpayers to enter a lot more information, and is now a full page instead of just coupon-sized.  While it is more involved and perhaps complicated, I believe it is actually “more better” than the old method of calculating withholding considering the changes made by the GOP Tax Act, and fixes “the IRS withholding FU”.  I provided my advice on filling out this new W-4 here.  Unfortunately, the FU was still in place for 2019 returns to be filed in 2020.  I anticipate under-withholding for many clients again on 2019 Form 1040s. 

So, fellow tax professionals, as I ask each year - did I miss anything important?

Let me end with the same wish I had at the end of 2017 and 2018.  Let us pray that the new year will bring the removal of mentally unstable malignant narcissist Donald T Rump from the White House, either via impeachment or the 2020 election.


Wednesday, December 25, 2019




Monday, December 23, 2019


The BUZZ is a day early this week, considering tomorrow is Christmas Eve.  For the first time in decades I will not be spending Christmas Eve day and New Year’s Eve day typing W-2s!  This is part of the “winding down” of my practice.

* Last week’s big news in taxes - it was déjà vu all over again.  Once again, the idiots in Congress reminded me why I call them “the idiots in Congress” by waited until the very last minute to pass retroactive tax legislation.  Temporary retroactive extensions of a laundry list of expired tax benefits and special interest loopholes, the now infamous “extenders”, was included in the government funding bill signed by Trump on December 20th. 

The funding bill also included “The Setting Every Community Up for Retirement Enhancement (aka SECURE) Act of 2019” which made some big changes to retirement savings account rules, most effective beginning with tax year 2020.  The changes do not affect the 2019 Form 1040.  These changes are, for the most part, actually good and welcomed.

Kelly Phillips Erb (“Congress Passes Bill Chock-Full Of Extenders, Healthcare TaxRepeal & Retirement Plan Tweaks”), Kay Bell (“Tax law changes, fromextenders to disaster relief to retirement and more, now official”) and the JOURNAL OF ACCOUNTANCY (“Year-end government spending bill contains many taxprovisions”) provide good initial brief reviews of the tax and retirement changes included in the bill.

I will include the changes that are effective for 2019 and 2020 in revised editions of the applicable “What’s New in Taxes for . . .” compilation when I have digested, verified and confirmed the various changes.  As a Christmas present both of these reports together are available for only $1.00, sent as email pdf attachments.  To order send your dollar to TAXES AND ACCOUNTING, INC, WHAT’S NEW IN TAXES, POST OFFICE BOX A, HAWLEY PA 18428. 

And I will discuss the changes that affect 2019 in the premiere issue of my new free monthly email newsletter ‘ROBERT D FLACH’S 1040 EMAIL LETTER”.  If you would like to receive this free newsletter in your email inbox each month send an email to rdftaxpro@yahoo.com with “ROBERT D FLACH’S 1040 EMAIL LETTER” in the “subject line”.

* Returning to FORBES.COM’s TaxGirl, Kelly Phillips Erb continues with her “12 Days of Charitable Giving 2019” post series. 

So far my vote will go to “Pets In Need” –

Pets In Need of Greater Cincinnati (PIN) provides affordable, high-quality veterinary services for pets living in low-income families. The organization is committed to helping to keep vulnerable pets healthy and safe in loving homes.”   

She continues with “Literacy For Incarcerated Teens”.

* Not really a tax issue – but I suggest a Medicare option that I have never heard anyone else propose or discuss at the end of my post “Medicare for All? I Vote No” at AMERICANS FOR COMMON SENSE.

* Katherine Loughead of THE TAX FOUNDATION identifies “State Tax Changes as of January 1, 2020”.  

* Back to FORBES.COM, Robert W Woods discusses “Holiday Gifts As Tax Write-Offs”.

*  It is vitally important that all Americans recognize and acknowledge “The Obvious Truth”.


Thursday, December 19, 2019


I am neither a Democrat nor a Republican.  I vote based on the candidate and the issues.

As a human being and an American I have nothing but disgust and contempt for Trump and the hypocritical and dishonorable Republicans in the House.

I am proud of the actions of the Democrats in the House.

There is nothing more vital for the future and security of America and the world, and no issue more important in the 2020 election, than removing Trump from the White House, and removing his deplorable enablers from Congress.

Tuesday, December 17, 2019


A relatively “meaty” BUZZ as we begin the countdown to Christmas.

* A timely post from Kay Bell at DON’T MESS WITH TAXES – “Tax-free office holiday parties and employee gifts”.

* Russ Fox of TAXABLE TALK announces “Nominations for the 2019 Tax Offender of the Year Are Due -

To be considered for the Tax Offender of the Year award, the individual (or organization) must do more than cheat on his or her taxes. It has to be special; it really needs to be a Bozo-like action or actions.”

* The TURBO TAX BLOG reminds us to “Save the (Tax) Dates!

* Another reminder, this one from me.  Donald T Rump lost the 2016 presidential election.  The fact that his presidency was “the will of the people” is just “Another Republican Lie”.  

* Jason Dinesen explains “Contributions to a Roth Account Do Not Reduce Taxes in the Current Year” at DINESEN TAX TIMES

Can you guess which is the worst.  It is not a surprise.

* TaxGirl Kelly Phillips Erb has begun her “12 Days of Charitable Giving 2019” at FORBES.COM with “The Elephant Sanctuary”.

And continues with “MEANS Database”.

* Michael D. Koppel, CPA deals with the issue of “Independent contractor or employee? Varying tests” at THE TAX ADVISOR.

* Just so you know – Trump is not the only one guilty of obstruction.  Check out my post “Obstruction of the Constitution” at AMERICANS FOR COMMON SENSE.

COMING SOON TO TWTP – My annual review of 2019 The Year in Taxes!  Keep your eye out for it.

And FYI - Beginning in January 2020 I will be writing a monthly email newsletter with tax planning and preparation advice, information and resources titled “ROBERT D FLACH’S 1040 E-LETTER”.  If you would like to receive this free newsletter in your email inbox each month send an email to rdftaxpro@yahoo.com with “ROBERT D FLACH’S 1040 E-LETTER” in the “subject line”.


Tuesday, December 10, 2019


The updated 2019 version of my e-book for Kindle AN INTRODUCTION TO SELF-EMPLOYMENT: THE BASICS OF SCHEDULE C is now available at Amazon.com for ONLY $7.99.

Click here to check it out.


The Justice Department announced today that it has filed a complaint with a U.S. District Court in Norfolk, Virginia, seeking entry of a court order requiring Franchise Group Intermediate L 1 LLC, (Liberty) the national franchisor and owner of Liberty Tax Service stores, to refrain from specific acts, enact enhanced internal compliance controls regarding the detection of false tax returns, and pay for an independent monitor to oversee Liberty’s compliance with the proposed court order. Separately, the United States and Liberty filed a joint motion and proposed order that, if adopted by the court, would resolve the matter.”

I have consistently over the years advised taxpayers not to use the services of “fast food” commercial tax preparation chains like Liberty, Jackson Hewitt and Henry and Richard to prepare their tax returns.  If for no other reason – these guys ain’t cheap.  You pay fancy restaurant prices for fast food service.

My apologies to McDonald's, Burger King, etc.  I have often received good service and value for price from fast food franchisees. 

* Jason Dinesen explains “Self-Employment Tax Calculation When Income is Over the Social Security Wage Base” at DINESEN TAX TIMES.

* Sam Brunson of THE SURLEY SUBGROUP blog provides us with “Taxing Student Athletes: An Explainer”.

*  Jeff Stimpson quotes me in his article “Take it away: Helping clients with withholding” at TAXPRO TODAY.

* A timely warning for the season from the IRS – “Taxpayers should watch out for gift card scam”.

* For those who are interested, KIPLINGER.COM lists “15 Things Snowbirds Can Do to Be Taxed as a Florida Resident”.

* Check out my latest post at AMERICANS FOR COMMON SENSE.  I explain why “The Tax Code Must Be Destroyed.  


Monday, December 9, 2019

THE 2020 FORM W-4

The IRS has released the final version of the 2020 Form W-4 – Employee’s Withholding Certificate, to, hopefully, properly reflect the changes enacted by the GOP Tax Act (i.e. the Tax Cuts and Jobs Act).

The major change to this form is that the concept of “withholding exemptions” no longer exists.  And, of course, it is now a full page instead of just coupon-sized.

Every single employed taxpayer will need to file a 2020 Form W-4 with their employer.

The form at one point is concerned that “more tax than necessary may be withheld”.  While for the financially prudent taxpayer owing Sam $1,000 or less at tax time is actually beneficial – excess withholding is an interest-free loan to the government, and owing a small amount means that you had full use of your money during the year – most taxpayers are more concerned with having less tax than necessary withheld, and would prefer a cushion to avoid a balance due on their 1040.  For peace of mind if nothing else being over-withheld is better than being under-withheld.  And many taxpayers have historically used a substantial tax refund as a form of “forced savings”. 

In Step 1 you enter your name, address, Social Security number, and filing status.  There is no long the option to claim “Married, but withhold at higher Single rate”.  And the new W-4 includes the Head of Household status option, which was not on the old W-4.  

As a point of information - claim “Head of Household” status on your W-4 only if you file your Form 1040 each year as a Head of Household.  I learned very early in my career that while some people may consider themselves a “head of household”, the IRS does not.  For IRS purposes a “household” does not consist of one person.  There are very strict and specific rules for this filing status.  Perhaps the best explanation of what the IRS considers a true “Head of Household” is a single parent with a dependent child.

Step 2 of the new W-2 finally recognizes the possibility that the job for which the W-4 is being submitted may not be the taxpayer’s only source of income, especially if he or she is married.  If you have more than one job, or you are married and your spouse also has a job, check the box at item (c) in Step 2.

The complexity of the new W-4 lies in the “Multiple Jobs Worksheet” on Page 3 of the W-4 packet.  Do not use this worksheet – it will very likely have your head spinning.

If you are using withholding as savings, do not make any entries in Step 3 for any dependents you are claiming.  If this is not an issue, as a safety matter claim only half the number of actual dependents – if you have two children under age 17 claim only $2,000 here for one dependent; if you have two children age 17 or older claim only $500.  For a married couple only the spouse with the higher W-2 income should claim any amount for dependents.  If you are married and both spouses work and one or both of the spouses has a second job neither of you should claim anything for dependents in Step 3.

Most definitely include any taxable non-W-2 income on line 4(a) in Step 4.  This includes interest and dividends, capital gains, K-1 pass-through income, net self-employment income from Schedule C or C-EZ (after any adjustments to income for health insurance and pension contributions and the Section 199a QBI deduction) and any amounts that would be included on Line 8 of Form 1040 Schedule 1.  You can use your 2019, or in January the 2018, tax return as a guide for completing this Section.  If you are receiving IRA. Pension or Social Security income you do not have to include this income here.  You can request a specific percentage be withheld for federal income tax for these sources – and you should have federal income tax withheld from each source. 

It is my recommendation that you do not include anything for “Deductions” on line 4(b) of Section 4 – even if you will be able to itemize or are entitled to any additional deductions.  Here is another opportunity to provide a cushion.

As for entering any “Extra withholding” on line 4(c) – on the initial 2020 W-4 filing you can leave this blank.  If after a month of withholding under the new W-2 you think you may need more withheld you can submit another W-4 with the same entries you made on the original but adding an additional amount on 4(c).  After preparing your 2019 return you may want to submit a revised W-4.

It is important that you keep a copy of every 2020 Form W-4 you give to an employer for your records.

Looking at the form there is no place on the form for an employee to indicate “EXEMPT”, as there was on the old W-4.  Dependent children with summer and after-school jobs do not need to have any income tax withheld.  However, the instructions tell you to write "'EXEMPT' on Form W-4 in the space below Step 4(c)".  Do not enter anything in Steps 2 and 3 or elsewhere in Step 4. 

While the 2020 Form W-4 is more involved, I believe it is actually “more better” than the old method of calculating withholding, especially under the GOP Tax Act.


Sunday, December 8, 2019


The updated 2019 edition of the Kindle e-book version of THE JOY OF AVOIDING NEW JERSEY TAXES is now available for purchase at Amazon.com!

Click here to order the book - only $9.99!  

Wednesday, December 4, 2019


It’s that time of year again – time for the 36TH annual PNC Christmas Price Index!  

The PNC Christmas Price index reports the cost to purchase the gifts included in the classic holiday song “The 12 Days of Christmas”.

PNC tells us it has “ . . . calculated the 2019 price tag for The PNC Christmas Price Index at $38,993.59, a negligible $67.56 or 0.2% more than last year's cost, but less than the government's Consumer Price Index, which increased 1.8% through October in year-over-year measurement before seasonal adjustment.

The major differences in the included items are –

* a 20% drop in the cost of turtle doves, “the first drop in price since 2004”.  

* a 10% increase in the price of 5 gold rings.  After falling in 2018 due to less demand and fluctuations in gold prices, Gold Rings rebounded” in 2019.  

* a 7.7% jump in laying geese “largely due to an increase of interest in backyard farming”.

* a 4.5% drop in the cost of one partridge in a pear tree, resulting from a $10.00 drop in the price of the tree.

Once again, the labor unions for musicians, dancing ladies and leaping lords proves to be better than the milking maid union.  The milkers were paid the minimum wage of $7.25 per hour for 2017 through 2019.  After the individual partridge, costing $20.18, the $58.00 price tag for 8 milking maids was the lowest on the list.  Leaping lords got $1,000 each, slightly more than dancing ladies.  The musicians got a small .8% raise for 2019.  

The chief economist of a bank in Philadelphia, which eventually became part of PNC, began estimating the cost of the 12 Christmas gifts in 1984 as a holiday client letter.  This year’s price is about 95% higher than the first index from 34 years ago.

For those who prefer the convenience of online shopping the Index also calculates the cost of the gifts purchased on the internet.  As online costs are higher due to travel and shipping, the total cost is $42,258.91, $3,265.32 more than “in store” purchases.

The actual true cost of every gift in the song (with each previous day’s purchases repeated over the 12 days) is $170,298.03 in store and $194,502.72 online.

There appears to be some discrepancies in the 2018 numbers reported in this year’s press release and table from PNC and the numbers from the 2018 chart that I had reported in last year’s post.  PNC tells us the 2018 prices were “adjusted to better reflect open market pricing”. 

Click here for the press release that includes the full chart.