Monday, January 17, 2022

WHAT’S THE BUZZ, TELL ME WHAT’S A HAPPENNIN’?

I think I will return the BUZZ to a weekly Monday posting schedule.

* It will be déjà vu all over again.  Michael Cohn of ACCOUNTING TODAY reports “Taxpayer Advocate warns of tax refund delays this season” (highlight is mine) -

National Taxpayer Advocate Erin Collins expressed deep concerns Wednesday about the upcoming tax filing season in her annual report to Congress on the 2021 filing season.

The report found that tens of millions of taxpayers saw delays in the processing of their returns last year, and with 77% of individual taxpayers receiving tax refunds, ‘processing delays translated directly into refund delays.’  Similar delays or worse are likely to occur this year.”

The IRS itself anticipates continued delays in return processing for the upcoming filing season, so expect delays in getting refunds requested on your 2021 returns.  And, most important, there is absolutely nothing whatsoever your tax preparer can do to expedite the processing of a return or the issuance of a refund – so do not call or email your tax pro if your 2021 refund is delayed!

* Speaking of the Taxpayer Advocates annual report to Congress, Kay Bell discusses it in more detail in “Top 10 Taxpayer Problems of 2021 likely to repeat in 2022” at DON’T MESS WITH TAXES.

Click here for the TA’s full report.

* And Kay lists and explains “Tax statements you need to file your 2021 return”.

Here is one statement you especially need to be aware of, and save and give to your tax professional -

Letter 6475 — Similarly, this IRS letter details how much of the COVID-19 third economic impact payment (EIP) you got last year. The maximum, as also provided by ARPA, was $1,400 per person. If you didn't get that much, you might be able to get additional relief money by claiming the Recovery Rebate Credit. The information in Letter 6475, officially titled Your 2021 Economic Impact Payment, will help you calculate just how much you're still due. If you didn't get any EIP last year, but qualify, you can claim the Recovery Rebate Credit, no letter needed.”

When you receive the applicable forms in the mail be sure to check the Social Security numbers for accuracy and, if possible, verify the dollar amounts reported with your records. 

I hope my clients are “listening”.

* Matt Lebo, CPA discusses in detail “Considerations When Inheriting an IRA” at the new to me TAX WARRIORS blog.

* And we have another Kay Bell trifecta with her “Tax return checklist & questions to help you file your taxes”.

THE LAST WORD

We seem to be dealing with TWO pandemics.

Not only COVID, but a serious outbreak of STUPIDITY. The stupidity outbreak is exacerbating the COVID outbreak. 

There are, sadly, too many complete idiots in America today - and almost all seem to be Republicans.

TTFN












Tuesday, January 11, 2022

WHAT’S THE BUZZ, TELL ME WHAT’S A HAPPENNIN’?

 

* Kay Bell tells us “Some state tax laws changed on Jan. 1, 2022” at DON’T MESS WITH TAXES.  

* KIPLINGER.COM lists “11 Surprising Things That Are Taxable”. 

Some are not particularly surprising, certainly not to me.

* Russ Fox explains “Tax Season (For Individuals) to Begin on January 24th” at TAXABLE TALK –

The IRS announced today that Tax Season will begin on Monday, January 24th.  That’s the first date that electronically filed returns (and extensions) for the 2021 tax year will be accepted for individuals.”   

For me the tax filing season always officially began on February 1st every year.

Russ ends his post with a prediction and warning (highlight is mine) -

As for how this year’s Tax Season will go, expect a repeat of last year.  The IRS still has not processed all 2020 returns (but they’re through April!).  Until IRS staff is fully back at their Service Centers, there’s no reason to expect anything to change.  This is not a scenario to make any IRS stakeholder–be it a tax professional, taxpayer, or Congressman–happy.  I can state for the record that I absolutely expect the same issues with delayed processing of refunds this year.  (I have a client whose 2019 return is still stuck in limbo!).”

Taxpayers (and especially my clients) please remember – there is absolutely nothing I, or ANY tax preparer, can do to expedite the processing of a tax return or the issuance of a refund.  So, don’t call or email me, or your tax pro, to ask where your refund is!

THE LAST WORD

During a devastating flood a man is sitting on his roof. A boat comes by to rescue him and instead of getting in the boat the man says, “No thanks.  God will save me.”  Another boat comes by and the man gives the same answer.  A helicopter descends to rescue the man, but again he says, “No thanks. God will save me.” 

The floodwater continues to rise and the man drowns.  In heaven he asks God, “Why didn’t you save me?”  God replies, “What do you mean?  I sent you two boats and a helicopter!”

If the moron “evangelical” anti-vaxxers who claim God will save them happen to pass God on their way to hell after dying of COVID you can believe God will say to them, “You idiots – I sent you a vaccine!”

TTFN












Monday, January 10, 2022

THE 2022 NJ-NATP FAMOUS STATE TAX SEMINAR

 


This past Saturday I was where I have been the same time this year for the past 30+ years, with one or two exceptions.  I was in the audience of the annual “Famous State Tax Seminar” presented by the NJ chapter of the National Association of Tax Professionals (I was a founding member of the chapter). 

As the title suggests, this annual “must-attend” event for tax pros who prepare NJ and NY state tax returns for clients is an update on the changes to state tax law for New Jersey and New York resident and non-resident taxpayers to prepare us for the upcoming tax filing season   It discusses individual and business income tax, payroll, sales and inheritance/estate taxes, the NJ property tax relief programs, and often touches on federal tax changes.

Although I have officially retired from preparing tax returns, I still write about federal and state taxes and continue to prepare 1040s and state returns for family and close personal friends.

Unfortunately, the seminar was “virtual” again this year – an online “webinar” – due to COVID.  Like most of my generation of tax pros (I started in 1972) I prefer in-person continuing professional education (CPE).  Being “virtual” apparently did not substantially limit participants – it was announced at the beginning of the seminar that more than 170 tax pros had registered for the event.  It is expected that this event will return to being in-person next January. 

An FYI – my personal interest in (and attention paid to) CPE topics is limited to issues related to my specific clients.  For the last several years this has been restricted to individual income tax issues – in this case NJ-1040 and IT-201 and IT-203 filings. 

The webinar began, as usual, with greetings and opening remarks from NJ-NATP President Josh Mellum (I like the beard).  Followed, again as usual, by the “keynote” presentation from John Ficara, the Acting Director of the NJ Division of Taxation (why still “acting”).  While I appreciate Mr. Ficara’s support of NJ-NATP and his willingness to participate in the seminar, this presentation, thankfully limited to 15 minutes, is usually of little value.  However, this year was different, as he reported on the Division’s operational response to COVID issues.  Thankfully, unlike the IRS, the NJDOT did not shut down in 2020.  Employees continued to work “remotely”.  Mr. Ficara announced NJDOT should return ti full worksite operations during the upcoming tax filing season.

Next was the real “meat” of the event – NJ state tax updates presented by members of NJDOT’s “New Jersey Taxation University”.  NJTU has proven to be the most consistently competent, informed, ethical, and cooperative component of the Division of Taxation.  Tilesha McCall provided individual updates, Solange Pimental discussed the state’s Property Tax Relief Programs (Homestead Benefit and Property Tax Reimbursement), Abra Watson tacked CBT updates (which apparently replaced the sales tax update presentation that had been listed on the printed seminar agenda), and Mike Kovacs explained in detail the relatively new NJ BAIT program.  BAIT (Business Alternative Income Tax) is New Jersey’s legal scam to assist NJ taxpayers in evading federal income tax.  

Here are highlights from the webinar that relate to the 2021 NJ-1040 –

* The initial filing deadline for the NJ-1040 is the same as that for the federal return – April 18, 2022.  For 2020 returns NJ is following the IRS on the extended deadline for taxpayers who were affected by Hurricane Ida – the original January 3rd extended filing deadline has been further extended to February 15th. 

* As in the past, NJ will not begin to issue refunds for 2021 NJ-1040s until March 3, 2022, regardless of when the return was filed.

* COVID-related stimulus, unemployment, “EBT” (Economic Benefit Transfer), PPP loan, and NJEDA and local grant payments and cancellation of debt continues to not be subject to NJ state income tax.  These payments are not reported anywhere on the NJ-1040.

* Changes to the Retirement Income Exclusion (the Pension Exclusion and the Other Retirement Income Exclusion) for 2021 and beyond have been discussed in a previous TWTP post.

* Changes to the NJ Child and Dependent Care Credit have been discusses in a previous TWTP post.  For 2021 there is no limit on the amount of the allowable NJ credit – previously the state credit was limited to $500 or $1,000.

* Changes to the NJ Earned Income Tax Credit have been discussed in a previous TWTP post.

* As usual, excess employee contributions to the various state benefit funds resulting from having more than one employer in 2021 can be claimed as additional state income tax withholding on the NJ-1040 via Form NJ-2450.  The maximum employee contributions for 2021 are:

·         Unemployment Insurance = $153.85

·         Disability Insurance = $649.54

·         Family Leave Insurance = 386.96

There were no real changes to the Property Tax Relief (aka “Senior Freeze”) program.  Here is what you need to know about the 2021 PTR-1 and PTR-2:

The income limitations are –

·         2020 = 92,969

·         2021 = 94,178

Thankfully, the 2020 income limit was not reduced to $70,000 by the state legislature to balance the budget, as had been done in past years (2010 – 2017).

The filing deadline for the applicable PTR form is October 31, 2022.  The application booklets will be sent out in mid-February and checks will be issued beginning on July 15, 2022.

There was no change to the application and distribution of the Homestead Benefit.

Unlike in-person offerings, there was no actual “lunch break” for this webinar.  We all had lunch at our desks while continuing to watch the presentations.  As an aside, the breakfast and lunch offerings at the in-person Famous State Tax Seminars held at what used to be known as the Woodbridge Hilton, actually in Iselin NJ, were consistently the best meal offerings of any CPE event I have attended in my 50 years in “the business”.

The last NJDOT presentation before leaving New Jersey was a Discussion Panel, new last year, which is an excellent addition to the seminar agenda (one I had recommended in past reviews).  Christina Quinones moderated a panel of NJDOT upper management to discuss systemic, operational and procedural issues.  I was glad the panel once again included NJ-NATP’s old friend Jake Foy (I also liked his beard).  Unfortunately, Jake’s screen view was fuzzy due to excess light coming from his windows.  Another aside – I miss past presenters Alexis and, of course, John Kelly.

I like that we could submit questions for the panel prior to the event.  As a component of this annual seminar, due to time constraints, it is, however, important that the seminar planners carefully review the submitted queries and consolidate similar and related questions to compose one edited question per specific topic.

Actually, there would be real value in a separate full-day in-person seminar with two NJDOT panels – one in the morning to respond to systemic, operational and procedural issues and another after lunch to answer questions and provide clarification on actual state tax law.  NJ-NATP Board – are you listening? 

The seminar ended, as it always does, with presentations by veteran tax pro and long-time NJ-NATP friend, and, like me, honorary member Kathryn Keane, EA of New York.  

While having state tax updates presented by official representatives of the NJDOT is important and valuable, there is also value in a review and interpretation of updates by an experienced tax preparer, who can discuss the practical application of tax law changes.

There is not much new for the 2021 New York IT-201 and IT-203 forms, except for these items:

* New York now has a PTET (Pass Through Entity Tax), which is the Empire State’s version of NJ’s BAIT scam.

* New York continues to decouple from federal tax law changes.  It currently does not follow the temporary or permanent federal changes to the Earned Income Tax Credit (EITC).

* There is a new NY Real Property Relief Credit of between $250 and $350 that is calculated on NY Form IT-229.  The NY itemized deduction for property tax paid that is claimed on IT-196 is reduced by the amount of the credit claimed on IT-229.

Lately Kathryn has also given a presentation on federal updates at this seminar, which I feel is actually unnecessary and not applicable to the event’s purpose.  This year’s presentation, titled “Post Pandemic Practice Management”, provided a different, more practical and interesting take on federal issues.

KK told us that, interestingly, the IRS did not see a reduction in Schedule A mortgage interest deductions as a result of the GOP Tax Act’s elimination of the deduction for home equity interest.  As I expected taxpayers and tax preparers are not properly complying with this tax law change (one that I actually support).

And she reminded us that the $300/$600 non-itemizer deduction for charitable contributions is for cash contributions only, and does not include non-cash contributions such as donations of clothes or household items to Goodwill, the Salvation Army, etc.

There were minimal technical issues with the virtual offering this year.  A “commercial” for one of the event sponsors ran occasionally during the webinar, replacing the tables manned by sponsors outside the “classroom” at in-person offerings.  And “Quick Poll” questions popped up throughout the day, a tool to verify the “attention” and “presence” of the participants for CPE credit purposes.  The results of the polls were also shown.

There was one interesting, but not surprising, poll result.  59% of the tax pros “in attendance” still have clients who are waiting for their 2020 Form 1040 (or 1040-SR) to be processed by the IRS.

The presenters were, as usual, good and experienced speakers, highly knowledgeable in their topics.  And the presentations were comprehensive.  The true value of this type of seminar is based on the extent of the changes to state tax law, regulations and procedures, and, of course, the extent the presentation content is relevant to a tax pro’s specific practice and clientele.  While the value to me personally, considering the limitations of my specific practice, may not have been especially high, it is important that the topics I am not interested in be presented at this seminar each year and the value for the average practitioner, and especially the newer one, was certainly very high.

I do believe that it is also important that the seminar content remain primarily true to the intended purpose of providing updates on changes to state tax law, regulations and procedures for the current tax filing season.  Comprehensive reviews and discussions of ongoing continuing tax law are topics for other offerings.

Once again kudos to the NJ-NATP Board, the NJ Taxation University and KK!

FYI – next year’s Famous State Tax Seminar is scheduled for Saturday, January 14th and is expected to be, and I sincerely hope it is, an in-person event.

TTFN
















Friday, January 7, 2022

WHAT'S NEW ON THE 2021 NJ-1040

 


The 2021 state income tax forms, schedules and instructions are now available to view and download at the NJ Division of Taxation website.  Go here.

The 2021 NJ-1040 appears to be exactly the same as the 2020 NJ-1040 with one exception.

For 2021 the NJ Child and Dependent Care Credit is refundable.  To reflect this change you now claim the credit on Line 63 as a component of “Total Withholdings, Credits, and Payments”.

This eligible credit has also been increased and made available to more taxpayers –

NJ Taxable Income          % of the
(NJ-1040 Line 41)        federal credit  

$ 0 - $ 30,000                    50%
$ 30,000 - $ 60,000           40%
$ 60,000 - $ 90,000           30%
$ 90,000 - $120,000          20%
$120,000 - $150,000         10%
$150,000 and over              0%

There is a new option for donating a portion of your refund on the 2021 state return – the Meals on Wheels in New Jersey Fund.  You would claim this contribution as an “Other Designation Contribution” on Line 74 or 75.

There are changes to the NJ Earned Income Tax Credit (NJEITC) for 2021.  According to the 2021 Instructions – “New Jerseyans who are at least 18 and who cannot claim a qualifying child are eligible for the NJEITC even if they are not eligible for the federal credit due to the age limits. The State credit for these taxpayers is calculated based on the federal maximum credit for taxpayers with no qualifying child. A new law also eliminates the maximum age limit for the credit for those who do not claim a qualifying child.”

And the NJ legislature finally adjusted the income threshold for claiming the Retirement Income exclusion for 2021 and forward, although not in the way we had hoped and expected.  A limited exclusion is now allowed for qualifying taxpayers with NJ “Total Income” (Line 27) of between $101,000 and $150,000.

2021 Exclusion Allowed -

$100,001 -  $125,000

    50 %

Married filing jointly

25 %

Married filing separately

37.5 %

Single/head of household/
Qualifying widow(er)

$125,001 -  $150,000

25 %

Married filing jointly

12.5 %

Married filing separately

18.75 %

Single/head of household/
Qualifying widow(er

Over $150,000

No exclusion

 

TTFN










 

 

Wednesday, January 5, 2022

WHAT’S THE BUZZ, TELL ME WHAT’S A HAPPENNIN’?

 

The first BUZZ of 2022!  Sorry to be a day late.

* Did you see my “The Year In Taxes 2021” Part 1 and Part 2 yet?  Why not?

* Russ Fox announces “The 2021 Tax Offenderof the Year” a TAXABLE TALK.

I think the IRS should be #1 on the list instead of #2. 

And Congress deserves at least an honorable mention each year – for 2021 they passed tax legislation in mid-March that included some items that were retroactive to 2020 and affected the filing of 2020 Form 1040s (and 1040-S’s), and put off to 2022 legislation that included (at least in the version that was passed in the House) an increase in the SALT deduction limit.

* And here is Russ Fox’s annual beginning of year reminder – “It’s Time to Start Your 2022 Mileage Log”.

Russ explains –

Why, you ask? Because if you want to deduct all of your business mileage, you must do this! IRS regulations and Tax Court rulings require this. Written is defined as ink, so that means you need a paper log or must be able to prove your smart phone log is contemporaneous.”

As we all know by now, employees can no longer deduct business mileage on Schedule A, so this reminder is only for the self-employed.

* Kay Bell, the yellow rose of taxes, starts the year off with “4 tax moves to make in January 2022” at DON’T MESS WITH TAXES.

Regarding #3 - find professional tax help – you can start here at my FIND A TAX PROFESSIONAL website.

* And Kay reports “Colorado wildfire victims join growing May 16 delayed tax deadline list”. 

* If you are interested check out what “I Believe” at my BOBSERVATIONS blog. I hope to be posting there more frequently in 2022.

TTFN









Tuesday, January 4, 2022

MY ANNUAL VERY IMPORTANT MESSAGE FOR JOURNALISTS AND BLOGGERS

 

I almost forgot this annual post for all the journalists and bloggers out there.  It actually contains information that is important for all taxpayers to know.

When writing about taxes this filing season DO NOT advise your clients to ask, consult, contact, or talk to your CPA or a CPA!

The correct advice is – ask, consult, contact, or talk to your or a tax professional.

The mere existence of the initials “CPA” after a person’s name does not in any way, shape, or form indicate that he or she knows his or her arse from a hole in the ground when it comes to preparing 1040s.

A particular CPA may indeed be competent and experienced in preparing 1040s, and many are, but it is only because of the education, training, experience, and other factors that are unique to that specific individual, and has nothing whatsoever to do with the initials “CPA”. 

And that specific individual is just one of the many choices among tax professionals.

Got it?

TTFN












Saturday, January 1, 2022

HAPPY NEW YEAR!

 




I LOOK FORWARD TO AN END TO COVID-I9 IN 2022 -

AND TO TRUMP BEING INDICTED, PROSECUTED, CONVICTED, AND JAILED!