Wednesday, July 21, 2021


In reaction/response to the COVID-19 pandemic the Internal Revenue totally closed down all operations and offices for many months in 2020.  During this period, the IRS did not process tax returns – current and amended – and did not process taxpayer and tax professional correspondence.  I do not know the extent to which payments made during this period were acknowledged and processed.
The “correctness” of the extent and duration of the IRS closure is open to interpretation.  But it happened and we must now deal with the consequences. 
When the IRS finally opened up again its system continued to spew out automatic intimidating balance due notices based on the information in the system prior to the closure.  However, much of the backlog of unopened and unprocessed correspondence were responses by taxpayers and tax professionals to erroneous balance due assessments, explaining the IRS error or correcting a taxpayer error.
Taxpayers in general are truly intimidated by continual, however erroneous, IRS notices.  And they will pay the requested balance due although they know the amount requested being wrong.  Many taxpayers paid the IRS what it asked for, despite having previously written, or had their tax professional write, to the IRS to explain errors in the assessment.
The IRS has acknowledged the backlog of returns and correspondence.  But it continues to automatically issue balance due notices, regardless of the fact that it is aware that the taxpayer may have previously responded to the notice providing information and documentation.  These continued notices assume the taxpayer had totally ignored all previous notices, which is often not true.
Responses to the continued erroneous mailings create more correspondence and increase the already humongous backlog.  And taxpayer erroneous overpayment of incorrect assessments must be addressed by taxpayers and tax pros, creating more correspondence to add to the pile.  This only compounds the problem.
What the IRS should have done, and should do now, is put a temporary hold on all open balance due accounts and cease from sending out automatic notices and other collection activities for these accounts until the backlog of correspondence is processed.  As correspondence regarding a taxpayer notice is acknowledged in the IRS system the hold must be continued until the issue is resolved.
Tax professional membership organizations should join together to urge the IRS to do this now.

Tuesday, July 20, 2021


* Attention NJ taxpayers – you may soon be getting a check in the mail from your Uncle Phil for up to $500 (highlight is mine) -   
Beginning July 2, 2021, the Middle Class Tax Rebate will be issued to eligible New Jersey residents that file a 2020 resident Income Tax return (NJ-1040) with a tax balance of $1 or more. There is no need to apply for this rebate. A rebate will be calculated automatically for eligible taxpayers when you file your NJ-1040.”
For more information go here.
* Kay Bell provides a “Guide to IRS online ways to get, track or change Advance Child Tax Credit payments” at DON’T MESS WITH TAXES.
She prefaces the post with a warning –
Don't fall for scammers who falsely say they can help you get, or get more, of the enhanced Child Tax Credit amounts that started going out this week. Instead, get help from a tax pro or use the Internal Revenue Service's online tools.”

* The recent report by the National Taxpayer Advocate reported that at the end of the 2021 tax filing season the IRS faced a backlog of over 35 million individual and business income tax returns that require manual processing.  This includes about 16.8 million manual (paper) returns waiting to be processed and about 2.7 million amended returns awaiting processing.  And that does not count the backlog of correspondence.


Russ Fox emphasizes what you need when waiting for a federal refund or a response to correspondence in “At Least I’m Not Classified as “Dead” at TAXABLE TALK -


The overall theme when dealing with the IRS remains the same: patience.  You need it when dealing with the IRS.  I do expect things to slowly improve once the IRS moves employees back to the Service Centers (probably this Fall), but given the humongous backlog it will takes years for the IRS to be back to normal.”


There is hope for those waiting for refunds.  I have heard from 3 clients recently who have finally received their 2020 refunds.


BTW – a few years ago I also had a client who received a letter from the IRS telling him the Service was not issuing his requested refund because he was dead.  Thankfully it did not take 7 years to fix.



{Once again I DID NOT enter the first few paragraphs in all caps. The Blogger system is apparently totally FU-ed and automatically does this - I have no idea why.}

Tuesday, July 6, 2021


* Kay Bell tells usMost U.S.taxpayers believe tax cheating is wrong” at DON’T MESS WITH TAXES –


87 percent said it is not at all acceptable to cheat on their income taxes.


Even more, 94 percent, believe it is a civic duty to pay their fair share of taxes.


Another 91 percent said everyone who cheats on their taxes should be held accountable.”


* And Kay outlines “3 Advance Child Tax Credit moves (& more!) to make in July”.


* Following up on an earlier post titled "The Tax Field Is Broken" Jason Dinesen provides his thoughts “On Clients Hating TheirTax Pro”.


Jason makes an excellent point about the task of today’s sincere and ethical tax pro -


Taxes are hard — I used to be fascinated by the complexity of taxes; now the complexity simply scares me. I spend so much time trying to get things right on tax returns and deal with the constant changes and the complexity and the risk . . .”


* The WASHINGTON POST reports “IRS faces 35 million unprocessed tax returns as backlog swells, watchdog says” -


The Internal Revenue Service closed the most recent filing season with more than 35 million in unprocessed tax returns, as the agency’s backlog grew markedly amid a crush of challenges related to the pandemic and economic relief efforts, a government watchdog said Wednesday.


Erin Collins, the National Taxpayer Advocate, said in her report that about 17 million paper tax returns are still waiting to be processed and approximately 16 million additional returns have been placed on hold because they require further review manually. Another 2.7 million amended tax returns have not been processed.”


* A reminder – don’t call or email your tax preparer to ask where your refund is.




If you are not part of the solution you are part of the problem.


Every single Republican who does not vocally oppose, denounce and disavow Trump and his lies is equally as responsible as Trump and the current Republican leadership for the damage being done to America, Americans, American values and American democracy.




{editorial note - I have no idea why the blogger system printed the first item in all caps and all italics and the second item in all caps.  This is not how I entered the text.  Blogger is FU-ed - or it really likes Kay Bell.}




Sunday, July 4, 2021


America truly has a reason to celebrate this July 4th.  

Thankfully we now have a President with intelligence, integrity and humanity - something that was truly lacking on the past four July 4ths.

Friday, June 25, 2021


For tax year 2021, families claiming the Child Tax Credit will receive up to $3,000 for each qualifying child who is between the ages of 6 and 17 at the end of 2021. They will receive $3,600 per qualifying child under the age 6 at the end of 2021.     

The increase – the additional $1,000 or $1,600 - is reduced (phased out), for incomes over $150,000 for married taxpayers filing a joint return, $112,500 for heads of household, and $75,000 for all other taxpayers.  The remaining $2,000 is phased out based on the pre-2021 rules.  For 2021 the credit is fully refundable. 

Advance payments of up to 50% of the 2021 Child Tax Credit will begin to be made regularly from July through December to eligible taxpayers who have a main home in the United States for more than half the year.  You can elect not to receive these advance payments.   

Like the advance premium tax credit, any advance payment of the Child Tax Credit will be reconciled on the 2021 Form 1040.  Please be aware that if you do receive advance Child Tax Credit payments in 2021 this will reduce the potential federal refund on your 2020 Form 1040.

The IRS website has established the following tools to assist families in dealing with the changes to the credit. 

Child Tax Credit Eligibility Assistant: allows families to answer a series of questions to quickly determine whether they qualify for the advance credit

Child Tax Credit Update Portal: allows families to verify their eligibility for the payments and, if they choose to, unenroll or opt out from receiving the monthly payments

Child Tax Credit Non-filer Sign-up Tool: allows eligible individuals who don’t normally file an income tax return to register for payments

It is my understanding that the IRS will provide those who receive advance payments with a statement in January.  Be sure to save this statement and give it to your tax preparer.       


Wednesday, June 23, 2021


 A day late, but hopefully not a dollar short.

* “I Haven’t Received My IRS Refund. Can You HelpMe?  I have received several emails with this message.  So has Russ Fox of TAXABLE TALK and many other fellow tax pros.


Russ joins me in pointing out (the highlights are mine) –


Neither I nor any other tax professional can speed up your IRS refund.”


And –


Your tax professional cannot fix this.  There is no one to call to have this resolved.  Indeed, the IRS asks that you do not call them as there really is nothing that can be done.  Please don’t call your tax professional either; he or she cannot make your refund come to you any faster this year.  You must just be patient.”


* Speaking of Russ, he provides a review of “The 2021 Tax Season (Part 1)”.  Part 1 refers to the period ending May 15th – Part 2 ends October 15th.


* BTW - have you seen my annual review of THAT WAS THE TAX SEASON THAT WAS yet? 


Why not?


* A blast from the not-so-distant past that is still valid from Paul Murray at THE GOOD MONEY LIFE (new to me) - “4 Reasons We Picked 529 College Savings Plans for Our Children”.


* Kay Bell explains “Taxpayers now can go online to optout of Advance Child Tax Credit payments, verify eligibility” at DON’T MESS WITH TAXES.




Take the NO GOP PLEDGE.  The future of American democracy depends on it.



Tuesday, June 15, 2021

READ MY LIPS . . . . .


There is absolutely NOTHING I, or any tax professional, can do to expedite the processing of your 2020 federal or state income tax return or to find out why your anticipated federal or state refund has not been issued yet.
There is NOTHING I, or any tax professional, can do to find out the status of your 2020 federal or state tax return that you cannot do yourself – by going to or the corresponding tool on your state tax agency’s website.
The IRS is backed up due to its offices being closed for too many months in 2020.  You need to be patient.
DO NOT call or email me, or your tax professional, to ask about your 2020 refund. 
Got it?

Monday, June 7, 2021



I expect by now you have prepared and submitted your 2020 federal and state tax returns and are waiting, patiently, for your refunds. 

Did you find it difficult to compile all the necessary 2020 information and documentation to give to your tax preparer?  The more organized you are at tax time the more likely you will be able to take full advantage of all deductions, credits and tax-saving strategies available. And the more organized you are the lower your tax preparation fee.

I have created the 2021 GUIDE TO TAX RETURN RECORDKEEPING to help you in gathering and organizing your 2021 tax “stuff” and help you to pay the absolute least federal income tax possible for 2021.

My guide contains detailed text covering what is taxable and deductible and what information and documentation you will need to properly prepare your 2021 tax return, and forms, schedules and worksheets for compiling and identifying the documentation you will need to provide to your professional tax preparer in 2022.  It discusses in detail –


The cost of the Guide is only $10.95 sent as an email attachment – the text in pdf format and the forms, schedules and worksheets in Word format.  A print version sent via postal mail is also available for $15.45.

Send your check or money order for $10.95 or $15.45, payable to Taxes and Accounting, Inc, to -



Wednesday, June 2, 2021


Jim Gill’s Sip Avenue and Newark Avenue offices were both storefronts, so, while he had a large regular clientele, there was, especially at Sip Avenue, which was just a few blocks off Journal Square, a lot of “walk-ins” over the years.  Jim would lovingly (and I do mean lovingly) refer to his clients as “the great unwashed masses”, shortened to “the great unwashed” and occasionally the “GU” (pronounced GOO), and I also adopted the term.  Obviously, some clients were more “unwashed” than others. 

Back in the 80s when workplace sitcoms were popular Jim suggested we could do a sitcom based on our office and clientele.  However, he pointed out, it would be criticized for being “too unbelievable”.

Advertising was never a line item in Jim’s, or my, business budget.  While I would on occasion purchase a business card ad in a charity fund-raising journal when asked by a client, neither of us advertised for business.  With the exception of the walk-ins and personal friends, Jim and my clients all came to us by referral.  

We had a vast and diverse clientele.  Over the years Jim and I prepared the returns for Louis DePalma, John Holmes and Michael Jackson.  I still do Matt Dillon’s returns.  Of course, not “the” Louis DePalma, John Holmes, Michael Jackson and Matt Dillon.

But, due to our proximity to New York City, we did actually prepare the returns of some "semi-famous" taxpayers. One year in the late 1970s we prepared the 1040 for the then captain of the New York Giants football team, who was partner in a local restaurant with one of our long-time clients. This was well before the days when professional athletes all had multi-million-dollar contracts. FYI, this person was one of the rare clients, I can count them on the fingers of one hand, who "stiffed" Jim over the years.

When the drummer for the original off-Broadway production of ONE MO' TIME became sick and a local union musician, our client, took his place we welcomed as new clients most of the members of the cast, who came up to New York from New Orleans where the show had originated. It was the first year we added the Louisiana state income tax return to our repertoire. I remember having complimentary tickets for the show upstairs at the Village Gate and going backstage after the performance to deliver finished returns. We also did the tax returns for members of the road company, which one year included a future Broadway actress who I later saw on Broadway in THE GOODBYE GIRL and also appeared in FOLLIES and more recently CHICAGO.

While Jim’s and my clients were for the most part lower, middle and upper middle-class taxpayers, there was the occasional high-income client.  When Jim’s only $! Million W-2 client (who continued with me until his recent passing) moved to Miami he flew Jim and I to Captiva Island in Florida, where he had several condos, one May, and me to Miami another year, to prepare his return.

Many of Jim’s clients were compulsively consistent, coming in to have their returns done on the same day each year. Back when Abe Lincoln had his own separate legal holiday February 12th was a busy day for us, especially with teachers. We also had our share of clients who would wait until the very last day of each tax season, generally April 15th, to come in. When we saw a certain local police officer come in to the office, the last person on the last day, we knew that the tax season was over! And we had a tv repairman who was always a year and a day late - he would come in on April 16th of 1975, for example, to have his 1973, not 1974, tax return prepared!

Our clients, Jim’s and mine as well, were, and are, extremely loyal. If they moved out of state, they would continue to mail their tax returns to Jim or to me. Back in the 1970s Jim had one client who had retired to the Netherlands and still had us prepare her US Form 1040 each year. 

This 50th tax season many of the clients whose returns I prepared, who were originally from my own practice, had been with me for 20, 30 or 40 years.  And those that I “inherited” from Jim had been clients of “the firm” (first Jim and then me) for over 50 years.  Jim’s Sip Avenue office was around the corner from an Allstate Insurance office, and Jim prepared the returns of all the agents.  My first 1040 was for an agent from that office – and 50 seasons later I still do the returns for one of those Allstate agents (not the same as my first 1040) who retired years ago.   


Monday, May 31, 2021


My first encounter with income taxes came when I was a freshman in college.  I had taken the first half of Accounting 101, but had not taken any tax classes.  I had no experience with or education in any aspect of income taxes.  I had never even prepared my own simple returns. 
On February 12, 1972, my Uncle Ted, my father’s older brother, did what he did every Lincoln’s Birthday.  He went to the storefront office of James P Gill on Sip Avenue, just off Journal Square, where the Jersey Bounce began, in Jersey City to have his tax return prepared.  While there he told Jim that I, a freshman Business Management major at St Peter’s College, had completed the basic Accounting course and was helping him keep the books for the non-profit pre-school he ran. 
Jim, or JP as was known, hired college students during the tax season as “apprentice” preparers.  He told my uncle to send me in to see about a job.
On my initial visit to Jim’s office he took me to a desk, gave me a copy of a client’s previous year’s tax return and a briefcase full of papers that constituted the current year’s tax “stuff”, and told me to “jump in and swim”.
Jim preferred hiring apprentices with no prior tax education, training or experience – so we could learn practical tax return preparation in the “real world” and not the classroom.
If I had a question, I would ask JP, who would take the time to explain the answer or send me to find the answer in his CCH tax library.   So, I was self-taught via on-the-job training.  I learned how to prepare income tax returns in the very best way possible – by preparing income tax returns.  Back then there was no software – so I learned by preparing returns manually.  I firmly believe the best way to learn how to prepare returns is by preparing them manually.   
In the mid-1980s Jim moved his office to Newark Avenue, one block from the County Courthouse.  While I had begun my own tax and accounting practice by then I continued to work for Jim on week-ends and full-time for the last two weeks of the season.
At the beginning of the 1999 tax-filing season some of Jim’s clients, who knew me and how to contact me, told me that his office was locked and they could not reach him at the office phone.  I went to his home in Hoboken and he told me, “I’m 75.  I don’t want to do this anymore.”  He gave me the practice and his office lease in exchange for my paying the few months back rent he owede.  For that first year I worked out of two offices, Jim’s in Jersey City and mine in Union.  When the season was over, I gave up my Union office and settled into Newark Avenue. 
Rolls were reversed, as JP would come and help me out during the last weeks of the season.  In 2001 Jim went to his final audit. We had worked together just one year short of 30 tax seasons.     
In my 50 tax seasons I have never prepared a 1040, or any other federal income tax return, using flawed and expensive commercial tax preparation software.  When asked what software I use I simply say “my brain”.  I am truly the last of the dinosaurs, one of a handful, if not the only, tax professional who still prepares all my 1040s manually.
The closest I came to using software was during my brief tenure as a “para-professional” for the Small Business Department of then big-eight CPA firm of Deloitte Haskins + Sells back in the late 1970s.  I would fill-in an “input sheet” for a Form 1040 and give it to our department’s secretary, who would enter the information in a computer and generate a return using Computax.  My reaction back then was that by the time I finished filling in the input sheet I could have actually prepared the return manually.
At a CPE session in San Antonio many years ago, conducted by legendary veteran tax pro and former director of the IRS Office of National Public Liaison (a division of the agency that serves as a link to tax professionals, business associations, taxpayer assistance groups, and federal agencies) Beanna Whitlock, she asked the participants if anyone still prepared 1040s manually.  Of course, my hand was the only one that went up.  Beanna said she wanted to shake my hand - because I was the only one in the room who really knew how to prepare 1040s!
I actually worked with a computer geek friend to create a tax software program, which went nowhere, back in the early 1980s.  It did not generate an actual Form 1040, but would verify the tax liability that was calculated on a manual return by entering key information and numbers from the 1040.  We called it the Tax Return Verification System.
I doubt if I thought back in February of 1972 that preparing tax returns would become my career.  But here I am 50 tax seasons later.  




Thursday, May 27, 2021



I recently completed my 50th tax filing season.  I have been a paid preparer of 1040s since February of 1972.

This is the first in a series of looking back over my 50 tax seasons as a tax preparer.

Most people remember their first love. I remember with fondness the first Form 1040 I prepared – which for me is really the same thing. 

My first 1040 was the 1971 model (I can actually tell you the name of the taxpayer).  This was back when a deduction was really worth something and everyone itemized. As we used to tell clients, "Uncle Sam will reimburse you for up to half of our fee!" 

Back then -

* a savvy tax preparer could "pull a rabbit out of a hat" and save a client literally thousands of dollars in federal income tax with "Income Averaging" or "10-Year Averaging" (and in doing so be assured a client for life),

* credit card interest, auto loan interest and personal loan interest, as well as our tax preparation fees, were fully deductible,

* "Employee Business Expenses" were allowed as an adjustment to income,

*there was no such thing as an Adjusted Gross Income exclusion or threshold or the "phase-out" of a deduction or credit,

* we had never heard of a PIG, PAL, ACRS, MACRS, or MAGI, at least in the context of tax returns,

* and one-half of long-term capital gain just disappeared from the tax return.

For 1971 the starting tax rate was 14% and the top rate was 70%. There was a "Minimum Tax", not yet alternative, and a "Maximum Tax" (the maximum tax on "earned income" was 50%). While we did prepare a few maximum tax forms, I do not recall ever preparing a minimum tax form. The Alternative Minimum Tax did not begin to affect my clients until the 2nd half of the 1990s.  And there was the previously mentioned Income Averaging and 10-Year Averaging.

On Page 1 of the 1971 Form 1040 one would indicate name, address and Social Security numbers of the filer(s). In the case of a return for a married couple the names were listed as “Richard and Mary Taxpayer” on one line instead of a separate line for the name of each spouse. The filing status was checked and exemptions were claimed. The taxpayer and spouse could each claim an additional exemption for being 65 or over and blind. The names, but not Social Security numbers, of dependent children were listed, with no indication of whether they “lived with you” or “did not live with you”. The names, but again not Social Security numbers, of “other” dependents were listed on Page 2 of the 1040.

Income was reported on Lines 12 through 18 on Page 1, with lines for wages, dividends (no designation of “qualified”), interest (taxable only – no reporting of tax-exempt interest), and “income other than wages, dividends and interest”, the sub-total, total “adjustments to income” and Adjusted Gross Income. The line for dividends included (a) for gross dividends and (b) for an exclusion amount. If gross dividends and/or total interest exceeded $100 one would have to complete and attach Schedule B.

The net tax liability was reported on Lines 19 through 23. Federal Income Tax withheld, Estimated Tax Payments, and “Other payments” were deducted and a balance due or refund was indicated.  Line 31 of the Form 1040, and not Schedule B, was where the taxpayer was asked about foreign accounts.

Part I of Page 2 of the 1040 was where other dependents were listed, along with relationship, months live in taxpayer’s home, did dependent have income of $675 or more, amount taxpayer furnished toward support, and amount furnished by all others, including the dependent.

Specific items of income, adjustments to income, credits, other taxes, other payments, and the actual Tax Computation were reported on Lines 34 through 64 in Parts II through VII.

Social Security, Railroad Retirement, and Unemployment benefits were totally exempt from federal income tax. One could use the “3-year” rule for recovering employee contributions to determine the taxable portion of pensions and annuities. This was calculated on Part I of Schedule E.

Adjustments to income included –

* Sick pay,
* Moving expense.
* Employee business expense, and
* Payments as a self-employed person to a retirement plan, etc.

The only credits indicated on the 1040 were –

* Retirement income credit,
* Investment credit, and
* Foreign tax credit.

The personal exemption amount was $675. Tax could be calculated by “using Tax Rate Schedule X, Y or Z, or if applicable, the alternative tax from Schedule D, income averaging from Schedule G, or maximum tax from Form 4726”. Other taxes included a line for “Minimum tax”, not yet alternative.

On Schedule A –

* Medical and dental expenses were reduced by 3% of Adjusted Gross Income (this was the only item on the Form 1040 that was reduced based on AGI).

* Taxes included state and local gasoline tax (from gas tax tables), general sales tax (from sales tax tables) and (not or) state and local income tax, with an additional deduction allowed for sales tax paid on “major purchases”.

* Contributions were deductible pretty much as they are now, except there was no strict requirement for documentation.

* Interest expense included not only home mortgage interest (fully deductible – not limited to interest on “acquisition debt” and no principle restrictions) but also interest on installment purchases, credit cards, and other “personal” interest.

* Miscellaneous deductions were not reduced by a % of AGI; certain employee business expense, as mentioned earlier, were deductible as an “above-the-line” adjustment to income.

Schedule D allowed for a 50% deduction for net long-term capital gain – only half of such gains were included in AGI. So, if net long-term capital gain (or net combined long-term and short-term gain if smaller) was $10,000, only $5,000 was reported as income on Page 2 of Form 1040. The maximum net capital loss deduction was $1,000.

The 1971 standard deduction was $1,050 for both a single person and a married couple. The standard deduction was originally 10% of AGI up to a maximum of $1,000. It wasn’t until 1975 that the standard deduction for married was more than that for single.

There were no computers in those days. During my first few years we did not even have a copy machine in the office. Returns were prepared by hand on 3-page carbonized forms purchased from Accountant's Supply House.  As most of you know, I still prepare all of my federal income tax returns manually.

As I started out in the tax preparation business the matching of 1099s to 1040s had just begun. I remember a client who came into the office during my first or second year with a humungous print-out from the IRS listing by source all the interest and dividends that he had failed to report on his previous year's 1040.

During my early years you were not required to list the Social Security number for dependents claimed on your return. One year a married client, let's call him John and his wife Mary, left his "stuff" off at the office, which included a handwritten sheet listing, among other deductions, "dependents" John, Mary, Paul and George. The college student who prepared the return that year (not me) listed 4 dependents - John, Mary, Paul and George. The client received the refund requested on the return without question.

The next year John came in and stayed while I prepared the return. I asked if he was still claiming his four kids, John, Mary, Paul and George, and he told me that he only had two children - Paul and George! The John and Mary he had listed on the sheet the previous year was apparently he and his wife. It appears that the student who had prepared the earlier return had forgotten our first, and most important, rule of tax preparation - always review the prior year's return when preparing the current 1040.

At the IRS Tax Forum several years back, it was reported that in the first year you were required to list a Social Security number for all of your dependents about 5 Million dependents mysteriously disappeared from tax returns.

Of course, in the "good old days" we never filed an extension. We finished all the returns on April 15th - even if we had to stay in the office until the wee hours of the morning, with the client present, to do so!  I often made an 11:30 PM run to the Jersey City main Post Office on April 15th

So, you can see there have been a lot of changes to tax law, and tax preparation, since my first 1040.  And there will be more changes going forward.  It appears the only constant in tax law is change.  Today’s tax law is certainly much more complicated and convoluted than the 1917 US Tax Code.

One thing has not changed.  The basic challenge for the tax professional is still the same today as it was in 1971– getting all the necessary information from the client to properly prepare the return.