Wednesday, April 1, 2020
NJ has finally joined New York and Pennsylvania, and many other states, to extend the filing deadline for the NJ-1040 from April 15 to July 15.
Here is an excerpt from the joint statement by Murphy and the state’s Senate President and Assembly Speaker -
“The ongoing COVID-19 pandemic has caused hardships, financial strain, and disruptions for many New Jerseyans and New Jersey businesses. As part of our response, we have reached agreement that the state income tax filing deadline and the corporation business tax filing deadline will be extended from April 15th to July 15th.”
Monday, March 30, 2020
New York State has now officially extended the filing and payment deadline for state tax returns from April 15 to July 15. Click here for notice N-20-2.
“2019 returns due on April 15, 2020, and related payments of tax or installments of tax, including installments of estimated taxes for the 2020 tax year, will not be subject to any failure to file, failure to pay, late payment, or underpayment penalties, or interest if filed and paid by July 15, 2020.”
No word from New Jersey yet. No clue why Murphy is waiting – and no reason for him not to extend the NJ filing and payment date.
Saturday, March 28, 2020
Based on what I have read, in addition to the $1,200 per taxpayer, plus $500 per dependent child under age 17, stimulus payment the economic relief package that Trump has signed into law includes the following items of interest –
(1) There is an automatic suspension through September 30, 2020 for payments of any student loan held by the federal government – a “direct loan”. Interest will not accrue on the loan during the suspension period.
(2) For calendar year 2020 nobody will be required to take an RMD (required minimum distribution) from any individual retirement accounts (IRA) or workplace retirement savings plans (401k). This does not affect “traditional” pensions. This way the plan will not be forced to sell investments at a loss resulting from the virus-inspired market drop to generate cash to distribute.
(3) You can make a premature withdrawal of up to $100,000 from an IRA or workplace retirement plan for virus-related purposes without having to pay the 10% penalty. The federal income tax on a qualified withdrawal is spread over 3 years. You can return all or part of the withdrawal before 3 years from the date you took the withdrawal. You qualify for the penalty exemption and special tax treatment if you, your spouse or a dependent tested positive for the virus or you experienced negative economic consequences related to the pandemic – for example from being quarantined, furloughed, laid off, having reduced hours, or being unable to work due to a lack of child care.
(4) Taxpayers who do not itemize can deduct as an adjustment to income (deduction from gross income) up to $300 in charitable contributions on their 2020 Form 1040 (or 1040-SR). This appears not to be limited to tax year 2020.
Thursday, March 26, 2020
Wednesday, March 25, 2020
The IRS has released a “Filing and Payment Deadlines Questions and Answers” page at irs.gov.
Here are some highlights –
* The postponement of the filing and paying deadline to July 15, 2020 applies to Form 1040, 1040-SR, 1041, and 1120.
* The relief “applies only to Federal income tax returns for the 2019 taxable year.” It does not extend the April 15, 2020 deadline for filing an amended 2016 Form 1040.
* No relief has been provided for filing or payment dates other than April 15, 2020. The filing of Federal tax returns due March 16, 2020, such as Form 1065 and Form 1120-S, has not been postponed.
* “Normal filing, payment, and deposit due dates continue to apply to both payroll and excise taxes.”
*“Normal filing and payment due dates continue to apply to estate and gift taxes.”
As for IRA contributions –
* “Contributions can be made to your IRA, for a particular year, at any time during the year or by the due date for filing your return for that year. Because the due date for filing Federal income tax returns has been postponed to July 15, the deadline for making contributions to your IRA for 2019 is also extended to July 15, 2020.”
Saturday, March 21, 2020
The Internal Revenue Service has officially announced that the deadline for filing the 2019 Form 1040 has been moved from April 15, 2020 to July 15, 2020.
This means it is not necessary to either mail a finished return or submit a Form 4868 – request for automatic extension – to the IRS by April 15th.
Previously the Service announced that it would not charge interest and penalties for payments made between April 15 and July 15, 2020 – but that the actual filing date was not extended. The Service has now announced, via Notice 2020-18 –
“ . . .the due date for filing Federal income tax returns and making Federal income tax payments due April 15, 2020, is automatically postponed to July 15, 2020. “
This automatic extension applies to tax returns and payments due April 15, 2020 for individuals, trusts, estates, partnerships, and corporations. It also applies to “Federal estimated income tax payments . . . due on April 15, 2020.”
I personally will continue to work to prepare the returns I have received as soon as possible. While, no longer having the original April 15th deadline hanging over my head, I may work a bit more leisurely, I do not intend to make any change to my daily tax season schedule . I certainly do not intend to stretch my season out till July 15th.
Clients with refunds will want their returns done promptly so they can get their money. And those who may owe will want to know how much, even though payment does not need to me made until July.
The only change is that I will not stop work on April 14th as planned (actually April 13th, as the 14th is usually spent writing up the extensions), and will postpone my annual recuperative trip to the Jersey shore for a week or two, assuming the hotel will be open.
It is my intention that all returns for which I will receive all the necessary information in a timely fashion will be finished before the end of April. As of this writing I have actually either completed, received a package from, or heard from just about all of my 1040 clients.
What this postponement of the filing deadline means is that I will probably have only 1 or 2 actual GDEs (the E is for “extension”) this year – as 1 client waits for K-1s from multiple limited partnership investments to arrive before filing and another is just a procrastinator.
Wednesday, March 18, 2020
FYI, here is the text of a memo I am including in the finished return package of all 1040 clients who have a balance due to Uncle Sam -
"It appears that the federal government will not charge penalty or interest on late payments of 2019 federal income tax due for 90 days after the April 15, 2020 filing deadline.
You will still have to file the Form 1040 by the April 15 deadline. But you won’t have to pay any tax due for 90 additional days. During that time, you will not be subject to interest or penalty payments.
If the enclosed federal tax return has a balance due, and
(1) you are paying the tax with the return - mail the signed return with the Form 1040-V payment coupon and your check in the envelope provided before April 15, 2020.
(2) you are not paying the tax due with the return - mail the signed return to Internal Revenue Service, Kansas City MO 64999-0002 before April 15, 2020. Mail the check for the full amount due and the Form 1040-V payment coupon in the envelope provided before July 15th (by July 1st to be safe).
This payment delay is for federal returns only. This is not for state tax returns. If you have a balance due to Phil or Andy file the return with full payment before April 15, 2020."
Monday, February 17, 2020
Today is the day we celebrate the lives and accomplishments of the 44 men who served America as President –
and try, for at least one day, not to think about the deplorable and despicable moron who currently occupies the White House, who has never accomplished anything positive and serves no one but himself.
Saturday, February 1, 2020
Here it is – what you have been waiting a year for!
THE TWELVE DAYS OF TAX SEASON
(updated for the GOP Tax Act)
On the first day of tax season my client gave to me a Closing Statement for the purchase of a home.
On the second day of tax season my client gave to me 2 W-2 forms.
On the third day of tax season my client gave to me 3 mortgage statements (without, of course, any analysis of how much of the mortgage interest reported represents interest on acquisition debt).
On the fourth day of tax season my client gave to me 4 Salvation Army receipts.
On the fifth day of tax season my client gave to me 5 Form K-1s.
On the sixth day of tax season my client gave to me 6 1099-DIVs.
On the seventh day of tax season my client gave to me 7 cancelled checks.
On the eighth day of tax season my client gave to me 8 useless items.
On the ninth day of tax season my client gave to me 9 medical bills.
On the tenth day of tax season my client gave to me 10 stock sale confirms.
On the eleventh day of tax season my client gave to me 11 employee business expenses (despite being no longer deductible).
On the twelfth day of tax season my client got from me a finished tax return, 11 employee business expenses, 10 stock sale confirms, 9 medical bills, 8 useless items, 7 cancelled checks, 6 1099-DIVs, 5 Form K-1s, 4 Salvation Army receipts, 3 mortgage statements, 2 W-2 forms, and a Closing Statement for the purchase of a home.
And, of course, on the thirteenth day of tax season the client gave to me a corrected Consolidated 1099 from Wells Fargo Advisors!
- - - - - - - - - -
And so it begins - the 2020 tax filing season. My 49th! Open the floodgates and bring on the 1040s (and 1040-SRs)!
As is my custom, due to the demands of the filing season I will be taking my annual “tax season hiatus” from posting to THE WANDERING TAX.
Between now and April 14th I will barely have time to relieve myself let alone blog! Nor will I have time to respond to comments. If a comment requires a response I will do so after April 20th.
DO NOT EMAIL ME OR SUBMIT COMMENTS WITH SPECIFIC QUESTIONS ABOUT YOUR 2019 TAX RETURN! ALL SUCH ITEMS WILL BE PROMPTLY DELETED UPON DISCOVERY!
I am NOT accepting any new 1040 clients (or any other kind of tax preparation clients). So, don’t email me asking if I can prepare your 2019 tax returns. THE ANSWER IS A MOST DEFINITE "NO".
I will be publishing a WHERE THE FAKAWI post occasionally here at TWTP to keep my clients up-to-date on my progress during the season and to report changes or additions to my tax season policies and procedures. Clients can also keep track of my tax season progress by following me at TWITTER (@rdftaxpro).
I realize that I am abandoning you at a time when you may need me the most – but I need to make a living!
I find it a bit amusing that the period of time when TWTP gets the most “hits” is during the tax filing season when I am not posting.
“Talk” to you when it is all over!
Friday, January 31, 2020
A few reminders and notes before I say good-bye for the tax filing season -
+ I member of the NJ chapter of NATP (I am an “honorary member” since I live in PA) wanted me to remind you that New York state allows an itemized deduction for the full amount of union dues paid – it is not subject to the 2% of AGI limitation that applies to all other unreimbursed employee business expenses.
+ Are you interested in my best tax advice from almost 50 years in “the business”? Here is where you will find it – TAX SMARTS.
+ Don’t be in a hurry to be among the first to file your 2019 tax return. Do not give your stuff to your tax pro, or prepare your return, until you are absolutely sure you have received all the information returns necessary to properly complete the return. Remember, if you have a brokerage account you will very likely receive at least one corrected Consolidated 1099 Statement in late February or early March.
+ Would you like to receive my monthly email tax newsletter? It is issued on the 1st of each month, including during tax filing season. Send an email to email@example.com with ROBERT D FLACH’S 1040 EMAIL NEWSLETTER in the “subject line”.
+ Regardless of what you think of the IRS, or your state tax agency, their websites have a wealth of information to help in preparing your returns. The IRS website, where you can get among other things forms and instructions, is www.irs.gov.
+ A reminder of what you need to give your tax pro – click here.
+ Joe Kristan is back! His new blog continues his practice of “Tax Round-Ups” – which can help you with BUZZ withdrawal while I am on tax season hiatus. Check out the EIDE BAILLYTAX NEWS AND VIEWS BLOG.
Don’t forget to come back tomorrow for my annual posting of THE TWELVE DAYS OF TAX SEASON!
Tuesday, January 28, 2020
Yesterday (Monday) New York State finally released the 2019 Form IT-201 and 2019 Form IT-203. These forms are now available online at the NY Department of Taxation and Finance website, and online filing and “enhanced” fill-in forms is also available.
There appear to be no changes to the format or layout of the 2019 forms. They look exactly the same as the 2018 forms. The few minor changes to NYS individual income taxes are -
* A few new obscure credits have been added and some expired ones have been extended.
* There are now so many voluntary contribution options on the IT-201 and IT-203 that New York has created a new Form IT-227 to claim voluntary contributions, with a total amount carried over to the IT-201 or IT-203.
* NY had originally “decoupled” from the new increased 60% of AGI limitation on the federal itemized deduction for cash (or check) contributions, keeping the previous 50% of AGI limit. The state has changed its mind and has retroactively “recoupled” with this GOP Tax Act change – accepting the increased 60% deduction limit for 2018, 2019 and subsequent returns (until 2025).
Speaking of “decoupling” - a reminder that NYS has “decoupled” from most of the Form 1040 changes enacted by the GOP Tax Act -
* On NYS resident or non-resident income tax returns alimony continues to be included in income or allowed as a “adjustment to income” deduction, regardless of when the decree or agreement is dated, and there are new addition and subtraction modifications to be entered on the IT-201 and IT-203 to report or deduct alimony not reported on the 2019 federal Form 1040. These modification codes are A-119 to report taxable alimony income and S-136 to deduct alimony paid.
* And NY continues to allow you to itemize on your NY State IT-201 and IT-203 regardless of whether you itemized deductions or claimed the Standard Deduction on your federal Form 1040. Like last year, New York Itemized Deductions are computed using the “old” federal rules as they existed prior to the enactment of the GOP Tax Act. The deduction for property taxes is not limited to $10,000, and home equity interest on up to $100,000 in principal, all casualty and theft losses, and all previously allowed Miscellaneous expenses, including investment expenses and unreimbursed employee business expenses, are deductible on the NY return. So, if you will be filing a NY state income tax return for 2019, your tax preparer will need information on all these deductions.
Monday, January 27, 2020
* Check out “An Open Letter to Congress” from Tax Mama Eva Rosenberg at TAX BUZZ (I like the title).
Right on, sister Eva!
* FYI – I have “resurrected” a non-tax blog at a new address – BOBSERVATIONS. Check out my first post about “The Bayonne Bleeder”.
* Kay Bell does a good job of “Decoding your W-2” as part of her “Tax Forms Tuesday” series at DON’T MESS WITH TAXES.
* NATP answers the question “What is a statutory employee?” at its BLOG.
You cannot just magically become a “statutory employee” merely by calling yourself one. As the post explains, only certain types of employees can be considered a statutory employee.
* Don’t be in such a hurry. Returning to Kay Bell, she lists “6 reasons to wait to file your taxes” at DON’T MESS WITH TAXES. The most important are #1 and #2.
But also, don’t wait till the last minute. Many tax pros, myself included, have a cut off date for accepting work to be done by the 4/15 deadline. Mine is Saturday, March 14th (but whatever you do, don’t send me your stuff – I no longer accept any new clients under any circumstances).
And if you will not be filing your return by April 15th be sure to submit a Form 4868 (Application for Automatic Extension) by April 15th.
THE LAST WORD
The targeted audience of the presentation of the House Managers was the American people and Republican Senators. As it should be
The targeted audience of the Trump defense team presentation will be Trump and his core cult of ignorant racists. Period.
Defending and protecting Trump is NOT about defending and protecting conservative values.
Defending and protecting Trump is NOT about defending and protecting Christian values.
Trump is NOT a conservative and NOT a Christian.
Defending and protecting Trump is about defending and protecting a demagogue and a wannabe dictator who cares about absolutely nothing but himself and will do anything to remain in power.
Wednesday, January 22, 2020
It continues to confuse me why the Republican Party has totally abandoned all honor, integrity and credibility to support and defend the worst, most corrupt, most ignorant, most incompetent, and most self-absorbed President in the history of the US.
Is the Party so dependent on keeping his core cult of ignorant racists?
What dirt does Trump have on Republicans?
The Republican Party is a national disgrace!
Monday, January 20, 2020
* Kay Bell, the yellow rose of taxes, explains in detail “Who must file a 2019 tax return” at DON’T MESS WITH TAXES.
* And Kay also identifies “10 reasons to file a tax return even if you don't have to”.
Her #10 is something important – and something that most taxpayers would not think about (highlight is mine) –
“To start the audit statute of limitations clock ticking. Yes, audit rates continue to drop. But no one wants to be in that small percentage of filers whose form get picked for an extra IRS examination, which is what the agency calls the process.
The IRS generally can go back three years to look at your old tax filings. However, that tax audit clock doesn't start ticking until you actually file a 1040. So even if you didn't make quite enough to trigger the filing requirement, you might want to make sure the IRS can't come back, say, five years from now to ask about why you didn't file in 2019.”
* Jim Blankenship discusses the new “QCD anti-abuse rule” in “QCD after the SECURE Act” at FINANCIAL DUCKS IN A ROW.
* If you need to find a tax professional to prepare your 2019 tax returns you should check out the articles in the “Advice and Information” section of my website FIND A TAX PROFESSIONAL.
* From Robert W Wood at FORBES.COM – “IRS Forms 1099 Are Coming, Key Facts for Your Taxes”.
A reminder – if you did not receive a Form 1099 for 2019 income this does not mean you do not have to report the income. Taxable income of all types must be reported whether or not you receive a Form 1099.
* For those who are interested the TAX FOUNDATION identifies “State and Local Sales Tax Rates, 2020”.
* Michael Cohn reports “IRS improves online Withholding Estimator to reflect new W-4” at ACCOUNTING TODAY.
I have not checked this tool out, and really have no reason to, so I can’t speak to its effectiveness. I talk about filling out the new W-4 here.
* Ginita Wall answers the question “Are Your Political Campaign Contributions Tax Deductible?” at the INTUIT TURBO TAX BLOG.
The answer – “political donations are not tax deductible”.
* The FORBES.COM TaxGirl Kelly Phillips Erb tells us “IRS Issues Tax Guidance On Discharged Student Loans”.
* And KPE gives us the word on the “2020 Due Dates For Tax Forms Like Your W-2 & 1099 - And What To Do If They’re Missing”.
THE LAST WORD
This must continue to be said.
It is obvious to anyone with a brain that the Trump Presidency is a clear and present danger to the future of America and the world. As we approach primary season it is very, very important for Democrats to acknowledge this.
Absolutely NOTHING is more important in the 2020 Presidential election than removing Trump from the White House (assuming, as is expected, he survives the impeachment trial).
While the competence, experience, sincerity and integrity of a candidate is an issue in any election, no other issue is more important in 2020 than defeating Trump.
This is NOT the election to debate liberal vs conservative ideals and policies.
Democratic voters MUST choose the person who has the best chance of defeating Trump in the election. The Democratic candidate for President in 2020 MUST NOT give independent or anti-Trump Republicans and conservatives ANY reason to not vote for him or her.