Thursday, December 31, 2020



“The Consolidated Appropriations Act of 2021” was finally signed into law by Trump on Sunday night, December 27.  In addition to the $600 per taxpayer and dependent child Economic Impact Payment (discussed here), the Act includes the following items that affect Form 1040 (and 1040-SR) filers -


Taxpayers can use their 2019 income to determine eligibility for and calculate the 2020 Earned Income Credit and Additional Child Tax Credit if it results in a bigger credit than actual 2020 income.


* Business-related “food or beverages provided by a restaurant” are 100% deductible for 2021 and 2022 (remember - employee business expenses, including employee-paid business meals, are no longer deductible on Schedule A).   

* The "above-the-line" deduction of up to $300 per taxpayer for qualifying charitable contributions for taxpayers who do not itemize on Schedule A, a per return deduction for 2020, is per taxpayer for 2021.  The maximum deduction for a married couple filing a joint 2021 return is $600.

* The 7½% of AGI exclusion for medical expenses on Schedule A is made permanent

* The MAGI-based phase-out amounts for the Lifetime Learning Credit are permanently increased to equal the amounts for the American Opportunity Credit.

* The lifetime $500 credit for 10% of qualified residential energy purchases is extended for 2021.

The Act also included new and extended business and payroll tax relief and other non-1040 items.


Wednesday, December 30, 2020



The last BUZZ of 2020!

* TAXGIRL Kelly Phillips Erb continued with her “12 days of Charitable Giving 2020” blog series.  Click here to see all the days so far.

* The TURBOTAX BLOG gives us a “Capital Gains Tax Calculator” to “help you estimate your capital gains/losses, capital gains tax, and compare short term vs. long-term capital gain if you’ve already sold or are considering selling”.

* And another calculator.

Now that asshole Trump has finally signed the COVID relief bill the second round of stimulus payments will soon be distributed.  KIPLINGER.COM has a “Second Stimulus Check Calculator” so you can see how much, if anything, you will be getting.

FYI - I will be reviewing the 1040 components of the Act and will post about them here in a few days.

* Speaking of the stimulus payments – “Treasury and IRS begin delivering second round of Economic Impact Payments to millions of Americans” -

Today {December 29 – rdf}, the Internal Revenue Service and the Treasury Department will begin delivering a second round of Economic Impact Payments as part of the Coronavirus Response and Relief Supplemental Appropriations Act of 2021 to millions of Americans who received the first round of payments earlier this year.

The initial direct deposit payments may begin arriving as early as tonight for some and will continue into next week. Paper checks will begin to be mailed tomorrow, Wednesday, December 30.”


Monday, December 28, 2020


2020 was a year unlike any other.  The COVID-19 virus affected the lives of every single person in America. 
It was the first year in my tenure, and probably in history, that the mid-April initial filing and paying deadline for federal, and most state, income tax returns was extended – to July 15, 2020.  Taxpayers had until July 15th to file their 2019 federal returns and pay any tax due, without penalty or interest, and to make the first two quarterly federal estimated tax payments.
The 2020 tax-filing season – my 49th - ran smoothly for me, despite the pandemic.  There were no auto, computer, equipment, or weather issues of consequence.  I have been working at home for more than a dozen years, so the “stay at home” order issued at the end of March did not affect me.  And my business did not suffer financially from the virus – clients continued to send me their stuff, although some later than usual, and money continued to come in.  But much less was going out.  My business and personal expenses were greatly reduced.
I ended the extended tax filing season with only 7 GDEs (the “E” is for “extension”) - obviously due to the extended deadline - and ended the year preparing 12 less sets of returns than I did in 2019.
There were no real changes to tax law that affected returns prepared in 2020, other than the last-minute retroactive extension of the now infamous “extenders” by Congress at the end of 2019, a common practice, which affected very few of my clients. 
The big change in federal forms for the year was what I call the return to sanity.  The completely ridiculous “postcard” format of the 2018 return was gone and the 2019 Form 1040 was most certainly “more better”, with a return to a more logical flow of information.  There was a new Form 1040-SR for senior filers, created for no other reason than it was required by the Bipartisan Budget Act of 2018, which was line-for-line exactly the same as the 2019 Form 1040 except it has bigger print and included a Standard Deduction chart.  And the previous 6 supplemental schedules to the 1040 was reduced to 3.
Thankfully, the excessive federal under-withholding FU for 2018 was for the most part fixed for 2019 income.  As a further correction to the problem, at the beginning of the year the IRS issued a new Form W-4 for calendar year 2020 withholding which completely did away with the concept of “withholding allowances”. The revised format, while more involved and complicated, appears to be, in my opinion, an improvement - but I will have to wait until the 2021 filing season to find out if it caused any under-withholding issues.
There was no change for me to New York State return filing, but there was a change to my NJ filings.  The NJ Division of Taxation did away with its online NJWebFile system, which I had used whenever possible to submit NJ returns in the past.  But it was replaced with a superior “New Jersey Online Income Tax Filing” system, which allowed me to electronically submit all 2019 NJ-1040s (NJWebFile had many limitations), and request direct deposit of refunds when applicable, online free of charge without the need for separate email addresses and passwords for each return.  I used this system for just about every NJ return I prepared, except for a few balance due returns.
The biggest issue for 2020 was the excessive IRS delay in issuing refunds, regardless of how the return was filed.  The IRS offices were closed due to the pandemic from the end of March through mid-July and nobody was opening the mail or processing returns.  When the offices finally opened up again there was a huge backlog of returns and correspondence to process.  However, when refunds were finally issued they did include interest from April 15th until the issuance of the payment. For the most part, state refunds, at least for my clients, were not similarly delayed.
There was one major piece of tax legislation affecting 1040s that was signed into law (on March 27th) in 2020 – The Coronavirus Aid, Relief and Economic Security Act (aka CARES).  Among other things, including business and payroll tax credits and benefits, the Act provided for –
* “Recovery Rebate” stimulus payments of up to $1,200 per taxpayer and $500 per qualifying child, phased-out based on AGI,
* penalty-free withdrawals of up to $100,000 from retirement accounts for “coronavirus-related distributions”,
* a waiver of 2020 Required Minimum Distributions (RMDs) from retirement accounts (no RMD was required for anyone for 2020), and
* an “above-the-line” deduction on the 2020 Form 1040 (or 1040-SR) of up to $300 of qualifying charitable contributions for taxpayers who do not itemize.
The stimulus payments were to be calculated based on 2019 tax return information, but due to the closing of the IRS offices and the delay in processing 2019 returns many were based on 2018 information.  The payment will be reconciled on the 2020 tax return and those who did not get a full, or any, payment can claim a refundable credit for any shortage when filing their 2020 return.
As of this writing deplorable and despicable Trump has refused to sign the second bi-partisan COVID economic stimulus legislation (part of the “‘‘Consolidated Appropriations Act of 2021’’) - passed just before Christmas - which would provide $600 stimulus payments, extended unemployment checks and eviction protection, and extend and refine some tax benefits – after it had been announced that he would.  His action was definitely NOT because he cares about Americans getting $2,000 instead of $600 - but because Trump wants to punish McConnell for not publicly endorsing and supporting his demented election delusions.  We will need to see if Congress will override any veto – stay tuned here at TWTP for updates.  THIS JUST IN - idiot Trump has finally signed the legislation.  Look for a review of the 1040 components of the ACT here in a few days.
The 2020 election – Biden’s win a true victory of intelligence and patriotism over ignorance and hate – put an end to our national nightmare (i.e. the Trump presidency).  The Democrats maintained control of the House, but we will need to wait until the special Georgia election in January 2021 to see if the Republicans lose control of the Senate.  If Republicans remain in control there will be little to no chance of any substantive non-COVID related tax legislation being enacted until at least 2023.
So, my fellow tax pros, as I ask you each year at the end of my year in review – did I miss anything important?

Sunday, December 27, 2020



It has been difficult remaining quiet during the Christmas celebration.
With every single word and deed Trump continues to prove to America and the world, and to history, that he is the absolute worst human being to ever hold national public office in the history of the United States, and clearly the absolute worst US President in history.

Never in the history of the United States has a national elected official been so totally self-absorbed - completely unconcerned about the consequences of his/her words and deeds and interested in absolutely nothing but his/her personal self-interest – as deplorable and despicable Trump.

Every single Republican at any level – federal, state and local - who has supported Trump’s demented and delusional nonsense or who has not unconditionally acknowledged Biden’s honest victory in the election MUST be publicly denounced and voted out of office.  These individuals are truly traitors to the Constitution and to American democracy.
Once Trump is carried out of the White House on January 20th he MUST be investigated, indicted, prosecuted, convicted, and sentenced to prison for his multitude of federal and state crimes.

The bottom line - Trump is a totally worthless piece of shit!

Friday, December 25, 2020

Thursday, December 24, 2020


I just completed my annual required online New York State tax preparer CPE. 

I barely prepared more than 10 NY state tax returns in calendar year 2020 – 14 total.  And I will probably prepare at least a dozen NY state returns in calendar year 2021.  So, I must register for calendar year 2021 and pay the $100 extortion fee (my invoice for a client with a NYS tax return includes a line item of $5.00 for “NY State Tax Return Preparer Extortion Fee Surcharge” – which will be $8.00 in 2021).   

This year for the first time I was automatically enrolled in all the required sessions as soon as they become available – I did not have to separately enroll in each presentation.

And this year instead of a slide presentation followed by a multiple-choice questionnaire the NEW YORK STATE UPDATES AND DEPARTMENT MESSAGES and HOW TO FILE A SALES TAX RETURN offerings took the form of an actual audio presentation accompanying the slides - equivalent to an in-person seminar (only without the ability to ask questions) with no subsequent “test”.  This format, in my opinion, is much, much more better.  The format of the remaining sessions were the same as past years.

Here are my comments on the sessions:

UPDATES AND MESSAGES - I only prepare IT-201 and IT-203 returns for employees or retired individuals, and I do not accept any new clients from anywhere. I have absolutely no need for, or interest in, business, payroll, sales, or product-specific taxes or obscure personal credits and deductions updates.  So, most of the update presentation was of absolutely no value to me – and under this new format the time wasted sitting in front of my computer screen was much more than in past years.  It would certainly be “more better” if the update presentation was broken down into separate optional components for the different types of taxes.

SALES TAX – I had absolutely no interest in this topic and paid absolutely no attention to the audio presentation.

GIG ECONOMY WORKERS AND TAXES - None of my NYS clients are, or will be, “gig workers”, so this offering was a total waste of time.  I quickly sped through the slides.

DEDUCTIONS – I actually reviewed more carefully some of the slides in this presentation – speeding through the bulk of them.  This was for the most part an update on the rules for federal Schedule A before the GOP Tax Act.

STANDARDS OF CONDUCT AND ETHICS FOR TAX RETURN PREPARERS, PROTECTING YOUR CLIENT’S DATA, and RECORDKEEPING – As usual, redundant stuff.  I quickly sped through the slides in all 3 presentations.

While the new format for the two presentations is certainly a substantial improvement over past years - as I say each year, the CPE requirement component of the registration process would still be much more effective if registrants could satisfy it by attending actual CPE seminars and workshops – in-person or online - offered by tax preparer membership organizations and commercial CPE providers. 

Upon completion of the CPE sessions I could not immediately register and pay the extortion.  I expect, like last year, it will take a few days for my completion to be processed.

Once again, this “continuing education” process was a total waste of my time.  To be perfectly honest I did not learn anything.  As I also say each year - I learn much, much more from Kathryn Keane’s NYS update presentation at the annual NJ chapter of NATP’s “Famous State Tax Seminar” than I do from the required state-created offerings.


Wednesday, December 23, 2020


The IRS has announced the new Standard Mileage Allowance rates for calendar year 2021.

Beginning on January 1, 2021, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

* 56 cents per mile driven for business use, down 1.5 cents from the rate for 2020, 

* 16 cents per mile driven for medical or moving (for qualified active duty members of the Armed Forces only) purposes, down 1 cent from the rate for 2020, and 

* 14 cents per mile driven in service of charitable organizations, the rate is set by statute and remains unchanged from 2020.

The standard mileage rate for business use is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs (does not include depreciation).  The rate for charitable driving is set my Congress and has not been increased for decades.

Remember - employees can no longer deduct employee business expenses, including business mileage, as an itemized deduction on Schedule A.

BTW - Trump has refused to sign the new stimulus bill discussed yesterday.  So the second round of checks is not law yet.


Tuesday, December 22, 2020



Congress has passed COVID relief legislation.  It is expected Trump will sign the bill into law today.
The package includes a second “Economic Impact Payment” (EIP) of $600 per person. 
An email alert sent to members of the National Association of Tax Professionals by the association explains -
The full credit amount is $600 per individual, $1,200 per couple and $600 for {dependent} children. It is available for individuals with AGI at or below $75,000 ($112,500 for heads of household), and couples with AGI at or below $150,000. If you have children, you will receive an additional $600 per child.
For those above this income level, your tax rebate amount will be reduced by $5 for each $100 your AGI exceeds the above thresholds.”
It is anticipated that the IRS will begin issuing the payments at the end of December through the first two weeks of January, based on data it already has in its system from the first round of checks.  If the Service has your direct deposit information, your payment will be directly deposited to your bank account.  If not, your payment will be mailed to you.
As with the first payment, this one is also not considered taxable income.  And, also like the first payment, it will be reconciled on your 2020 tax return.  If you did not receive the full amount to which you entitled you can claim it as a refundable credit on the return.  Excess payments not due to fraud do not have to be repaid.

Monday, December 21, 2020


* If you moved in 2020 be sure to tell the IRS.  Click here.

* And if you changed your name due to marriage or divorce, or for any other reason, be sure to tell the Social Security Administration.  Click here.

If your name and Social Security number on a federal income tax return does not match exactly your name and Social Security number in SSA records it could seriously delay your refund.

* FORBES.COM blogger Laurence Kotlikoff answers your questions about Social Security in ASK LARRY.

* How did I miss this?  From a November post to Jason Dinesen’s blog – “Retirement Savers Credit and Prior Retirement Withdrawals”.  

* Check out my latest post at FRIENDS OF THEATRE AND ART.


* A reminder from Kay Bell at DON’T MESS WITH TAXES – “If you receive unemployment benefits, expect to receive Form 1099-G”.


I would make one comment on the title.  While you will be issued a Form 1099-G do not necessarily expect to receive it.  Many states, NJ included, no longer mail out these forms to unemployment recipients, just as they no longer mail out Form 1099-Gs for state tax refunds.  You have to go online to the website where you applied for the benefits to download and print the form.  Be sure to do so – and give the copy to your tax preparer.


* Kelly Phillips Erb began the “12 Days Of Charitable Giving 2020” series at her TAXGIRL blog with “Voices Of Ascension”.  Day 2 was “Center On Wrongful Convictions Of Youth”.



Wednesday, December 16, 2020

No more mention of moron Trump until after Christmas.

This is the season to celebrate peace, joy, love, and humanity.  

I do not want to ruin the holidays with thoughts of the most totally worthless piece of excrement to ever hold national office in the history of the United States.

Monday, December 14, 2020


* Oi vey!  Russ Fox tells tax professionals “IRS Considering Extending 2021 Tax Season” at TAXABLE TALK.

Russ says, “The IRS is requesting that tax professionals contact their local stakeholder liaison express their opinion.”

Here is the email I sent my local Stakeholder Liaison Office –

Dear Stockholder Liaison:

I understand that the IRS is asking tax professionals to contact their local Stakeholder Liaison office and comment on the possibility of extending the initial deadline for filing individual tax returns and paying any tax liability due again in 2021.

I have been preparing federal and state income tax returns since February of 1972.  I oppose extending the initial 2021 filing season beyond April 15th.  I do not want to encourage taxpayer procrastination nor do I want to extend the stress to tax pros of the filing season.

I would not oppose some kind of extension of the time to pay an outstanding tax liability penalty and interest free for a COVID-related reason, or a blanket extension of the date at which the IRS begins to assess a penalty for late payment of any outstanding tax liability.”

* Did you know “Answers to tax questions arejust a few clicks away on”?

Regardless of what you may think of the IRS, its website is full of valuable information and resources, as are most state tax agency websites.

* Check out last Friday's post from FRIENDS OF THEATRE AND ART.


* An interesting question from Robert Farrington at FORBES.COM – “How Early Can You File Your Taxes To Get Your Tax Refund?”.


Obviously - “Americans cannot legally file their tax returns for the prior year until January 1st, meaning you cannot file your taxes for 2020 until January 1, 2021.”


Don’t be in such a hurry to file your tax return.  Be sure you have received all of your information statements – W-2s, 1099s, 1098s, K-1s, etc. – and have all the information you need before giving your “stuff” to your tax professional.  And remember – if you have a brokerage account you will probably get at least one “corrected” consolidated Form 1099 statement in early March.


But, of course, also do not wait until the last minute – even if you think you will owe tax. 


* Sorry, New Jersey, but you're the least tax-friendly state in the country for retirees.  So says KIPLINGER.COM in its list of “10 Least Tax-Friendly States for Retirees”.  


Delaware tops the list in the “10 Most Tax-Friendly States for Retirees”.


You can find your home state in the “State-by-State Guide to Taxes on Retirees”.




I very sincerely believe it is literally impossible for anyone with a brain, a conscience, or any concern for American values and democracy to support and defend Trump. 


The extent of Trump’s continued support is a sad commentary on the lack of intelligence and character of too many Americans and too many politicians.




Sunday, December 13, 2020

Friday, December 11, 2020



Here is the truth – indisputable proven facts.
1. In the history of the United States no one person has done more damage to America, Americans, American values, and American democracy than Trump.
2. Every single problem America has faced, and every single bad thing that happened, in the past 4 years has been the direct or indirect result of, or severely exacerbated by, the words and deeds of Trump and his Administration.
3. Trump is the absolute worst human being, and the most ignorant, incompetent, delusional, and unstable person, to hold a national public office in America.
4. There is no rational, intelligent or legitimate reason for any American to support, defend or enable Trump.  Those who do either have no brain or have no conscience.

Thursday, December 10, 2020



Here is a reminder of some things you need to be aware of when planning for and preparing your 2020 income tax returns.

* The IRS was closed for 3 months beginning at the end of March.  During this time mail was not opened and returns were not processed.  As a result, the issuance of requested refunds was seriously delayed.  Due to the excessive delay the refund checks finally received by taxpayers included a payment of interest calculated from April 15, 2020 till the date of issuance. 

This interest is taxable income for 2020.  You will receive a 2020 Form 1099-INT from the Department of the Treasury (IRS) in January of 2021, and this income must be reported on your 2020 Form 1040 (or 1040-SR) and state income tax return.

* Unemployment benefits received in 2020 due to the pandemic are fully taxable on your 2020 federal income tax return, and may also be taxable on your 2020 state income tax return (not on the New Jersey state return). 

As most individuals collecting unemployment in 2020 needed every penny of the benefit. I expect they did not request federal income tax withholding on their benefits, and may end up owing federal income tax on their 2020 Form 1040 or 1040-SR.

Many states, New Jersey included, no longer mail out a paper Form 1099-G to report unemployment benefits paid and federal income tax withheld.  If you received unemployment in 2020 you may need to go to your state’s unemployment benefit website – the site you used to apply for unemployment – and download a copy of your 2020 Form 1099-G to give to your tax professional.

* The Economic Impact Payment – a maximum of $1,200 ($2,400 if married filing jointly) plus $500 for each qualifying child you had in 2020 – is not taxable income.  You do not have to report the amount you received as income on your 2020 income tax return. 

But, like the Advance Premium Credit, this payment must be reconciled on your 2020 Form 1040 or 1040-SR.  If you got more than you should have you do not have to pay back the excess.  But if you did not get a payment or you got less than you should have you can claim a refundable Recovery Rebate Credit on your 2020 federal income tax return.  So, you will need the amount you received when preparing your 2020 return

Any questions?


Wednesday, December 9, 2020



It’s that time of year again – time for the 37th 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” – “a light-hearted take on the Bureau of Labor Statistics' (BLS) Consumer Price Index, which measures the average change in prices consumers pay for goods and services over time.

PNC tells us –

Considering the impact of social distancing, PNC calculated the 2020 price tag for the PNC Christmas Price Index at just $16,168.14, a considerable decrease of $22,825.45 or -58.5% over last year's cost, with a third of the index constituents literally not available for purchase this year.

The major differences in the included items are –

* The 2020 cost of the performers in the listing – dancing ladies, leaping lords, piping pipers, and drumming drummers – is $0.00, as live performances are non-existent this year due to the virus.   

* The “birds of a feather” in the list represent a combined increase of $328.50, or 36.4%, from 2019.  The inability for consumers to eat at restaurants or even get takeout during the lockdowns drove an increased need for cooking at home, leading to an unexpected increase in demand (and subsequently prices) for our fowl friends.” 

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.  

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 $20,355.09 - $4,186.95 more than “in store” purchases and $21,903.82, or 51.8%, less than 2019.

The actual true cost of every gift in the song (with each previous day’s purchases repeated over the 12 days) is $105,561.80 in store and $133,355.96 online.

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


Tuesday, December 8, 2020



Here are some suggestions for “stocking stuffers” and other Christmas gifts.





And, of course, my 2021 TAX RETURN ORGANIZER -

And don't forget your local community theatre at Christmas - 


Monday, December 7, 2020



* A blog list from Kay Bell at DON’T MESS WITH TAXES - "10 tax moves to make in December 2020”.


* And Kay passes along a warning in “IRS and FBI warn about business cyber scams that target COVID teleworkers”.


* William Perez provides a primer on “Claiming Capital Losses on Your Tax Return” a THE BALANCE.


One thing to be aware of when planning for capital gains and losses.  Although we are told that long-term capital gains are taxed at a special rate of 0%, 15% or 20% - it ain’t necessarily so.  See my pre-GOP Tax Act post “Trapped By Our Capital Gains Are We’.


* Check out Friday's post at FRIENDS OF THEATRE AND ART.


* Jim Blankenship explains How Remarriage Affects Widow(er)s and Ex-Spouses Differently” at GETTING YOUR FINANCIAL DUCKS IN A ROW.


*  Attention taxpros who prepare NJ returns – you can now register for the NJ chapter of NATP’s annual “Famous NJ State Tax Seminar” – virtual this year. 


This truly “famous” seminar covers updates on NJ and NY personal and business income, sales and payroll taxes and NJ property tax relief programs and is a MUST ATTEND for anyone who prepares NJ state tax returns.


* The IRS lists some “Steps to Take Now to Get a Jump on Your Taxes”.


* The November and December issues of my free tax e-letter discuss year-end tax planning strategies.  You can subscribe my emailing with “E-Mail Tax Newsletter” in the subject line.  When you subscribe, I will send you the November and December issues. 




Moron Trump is ending his Presidency continuing to prove to Americans and to the world by his words, tweets and deeds, as he has proven every single day he has been in office, that he is ignorant, incompetent, demented, delusional, despicable, deplorable, and dangerous - a totally worthless piece of excrement completely devoid of humanity.