Finally – a substantive BUZZ!
* Jeff Stimpson reports that “Many tax pros are undercharging clients: NATP” at ACCOUNTING TODAY.
I know I am, and have been for decades.
* Speaking of the National Association of Tax Professionals (NATP) fee survey - it once again proves that the most expensive option for choosing a tax professional to prepare your individual Form 1040 is the CPA. The average fee for preparing a basic Form 1040 charged by a CPA is 15.7% higher than the fee charged by an Enrolled Agent (EA), who is more qualified and trained in tax preparation than a CPA, and a CPA charges 43.4% more than an “unenrolled” preparer (no initials).
No surprise here.
And remember, just because a person has the initials CPA after his or her name does not necessarily mean that he or she is knowledgeable, trained or experienced in preparing 1040s.
FYI, the average cost of preparing a basic Form 1040 (Schedules 1-3 only) in the northeast (where I am from) for 2021 was $136.00. The average cost of a Form 1040 with Schedules 1-3 and a Schedule A was $187.00. These numbers are for the federal return only and do not include the fee for preparing the state return.
* Some good advice from Kay Bell, the yellow rose of taxes, at DON’T MESS WITH TAXES – “Moving? Let the IRS know.”
* There is a new format for BOBSERVATIONS. Click here to check it out.
* TaxGirl Kelly Phillips Erb deals with the question “How Long Do You Need to Keep Your Tax Records?” at her BLOOMBERG.COM blog.
I have always told my clients and readers that you should keep the paper copy of your Form 1040, or 1040A, plus all supporting Schedules and Forms, and copies of all your Form W-2s, forever. This provides a permanent record of your financial history. You never know when the information on a prior year’s tax return or W-2 will come in handy for a variety of tax or financial related reasons, or just to satisfy personal curiosity.
* The NJ Division of Taxation’s website identifies “NJ Tax Relief for Hurricane Ida Victims” (highlight is mine) -
“Taxpayers affected by Hurricane Ida now have until January 3, 2022, to file their New Jersey tax returns and submit payments for any return and/or payment, including estimated payments, which have either an original or extended due date between August 26, 2021, and before January 3, 2022. This means that individuals who had a valid extension to file their 2020 returns, due to run out on October 15, will now have until January 3, 2022, to file.”
* A timely “Weekly Tax Tip” from JS TAX CORPORATION – “Reminder: Third Quarter Estimated Taxes Due”.
* Another item that comes as no surprise to me. Michael Cohn reports “$16B in EITC payments in 2020 may have been improper” at ACCOUNGING TODAY.
“A new report, released Thursday by the Treasury Inspector General for Tax Administration, said the IRS estimated that 23.5% ($16 billion) of EITC payments were issued improperly in fiscal year 2020.”
Refundable tax credits are one of the biggest sources of tax fraud. And the US Tax Code should not be used to distribute social welfare program benefits.
* And also at ACCOUNTING TODAY another item from Jeff Stimpson. The IRS reminds us that “COVID tests are eligible medical expenses” -
“As giant retailers prepare to offer cheap at-home COVID-19 tests in the wake of President Biden’s new vaccine rules for employers, the Internal Revenue Service has sent a reminder that the cost of home testing for COVID-19 is an eligible medical expense.”
Of course, you must be able to itemize to claim it, and your total deductible medical expenses for the year must exceed 7½% of your AGI.