TWO RECENT TAX POSTS WORTH DISCUSSING

During my wanderings on the web in search of BUZZ-worthy items I recently came across two blog posts that require more attention than a mere listing in a BUZZ installment.

The first is “The Tax Code In 2014 -- It Still Stinks” by Christopher Bergin at FORBES.COM.

As is common with Christopher’s commentary, the nail head is forcefully and accurately struck when he talks about the idiots in Congress and the Tax Code.

Speaking about the return of PEP and Pease and the new Net Investment Income tax he calls them “stealth taxes” and explains -

“. . . they are sneaky and cynical and a perfect illustration of the contempt our politicians have for the tax code and taxpayers – which is why the tax code is rotting, and why they don’t do a thing to address that.”

And Congress’ contempt of the Tax Code and taxpayers leads to our contempt of the idiots in Congress.

I used to refer to PEP and Pease as “back door taxes” or the “Read My Lips Taxes”.  The elder Bush attempt to avoid breaking his promise by going through the back door.  He didn’t raise the bridge – he lowered the water.

And, as Christopher points out –

“The NII {Net Investment Income = rdf} tax is a result of Obamacare, and yet another example of what a mess that legislation really is (I’m still trying to figure out why we had to pass it to find out what was in it).

Obamacare is the classic example of the fact that the idiots in Congress do not read the laws they vote on – they merely do what they are told to do, vote yes or vote no, by the Party “leaders”.

The basic idea behind Obamacare is a good one – an attempt to provide universal health care coverage via the existing insurance marketplace.  However the legislation was not given sufficient serious thought (something the idiots in Congress are incapable of) and was pushed through Congress hastily for political expediency to give BO an early win.

These three new taxes for “the wealthy” for 2013 are bad tax policy that just add more unnecessary complexity to an already FU-ed Tax Code.

The second post surprises us by reporting on an actual good common sense proposal from one of the idiots in Congress.  Kyle Pomerleau of the Tax Foundation’s TAX POLICY BLOG reports that “Marco Rubio Proposes a Replacement for the Earned Income Tax Credit”

In a recent speech on the 50^th Anniversary of the “War on Poverty” Republican Rubio, the junior United States Senator from Florida, “mentioned that he wants to replace the Earned Income Tax Credit (EITC) with a low-income wage subsidy”.

Government welfare programs in general, and the Earned Income Tax Credit in particular, do not belong in the US Tax Code.

The post, and Rubio. hits on two good reasons why the EITC must go –

“One weakness of the EITC compared to the minimum wage, however, is the fact that low-wage workers only see the refundable tax credit once a year in a lump sum, rather than a small increase in their paycheck over a full year.”

And –

“Currently the Earned Income Tax Credit has one of the highest payment error rates of all federal programs that cost between $11.6 and $13.6 billion in 2012. Whether these payment errors are due to intentional fraud and abuse or the program’s staggering complexity is up for debate (it is likely a mixture of the two).”

The post tells us –

“It is not entirely clear what form the replacement wage subsidy will take. It could take the form of a tax credit to employers who hire low-income workers or a transfer to low-income workers. Either way, Rubio believes that the subsidy will be an improvement over the EITC.”

I have not read the rest of Rubio’s “anti-poverty” proposals, and am aware that he was once a favorite of the Tea Party extremists (although maybe not so much anymore) – but I am glad he wants to take the EITC out of the 1040 and replace it with a direct payment program.

The idiots in Congress must understand that the purpose of the Tax Code is to raise the money needed to run the government – PERIOD.  It should NOT be used to distribute the benefits of government welfare or other programs.  And it should NOT be used to redistribute wealth.

TTFN

THE FUTURE OF THE RTRP DESIGNATION – THE CONVERSATION CONTINUES

The conversation that began in “A Voluntary RTRP Designation?” and led to “A Voluntary RTRP Designation!” continues. 

In response to my response Jason Dinesen asked me the following question in a “tweet".

“If a 3rd party oversaw the RTRP, what would the strategy be to make the RTRP more useful than the existing ATA/ATP designations?”

Joe Kristan of the ROTH AND COMPANY TAX UPDATE BLOG and the editors of TAXPRO TODAY “re-tweeted” Jason, indicating that they were also interested in my answer.

Here is my answer -

All past attempts at a non-EA tax preparer designation have been created and administered by individual membership organizations, like the NSA created the ATA and ATP designations.  The National Society of Tax Professionals had tried to initiate a credential many, many years ago, and I have come across various other attempts over the years.

To be effective the organization that administers the independent voluntary RTRP credential must have the backing, support, and recognition of the entire industry, and not just one component or organization.  NATP, NSTP, NSA, perhaps NAEA, and any other legitimate membership organization must be directly involved in the ongoing administration.  And the IRS must recognize and acknowledge the legitimacy of the credential.

As I had said in an earlier post, the current ACAT, which administers the ATA/ATP credentials, could become the independent organization to run the voluntary credential -

“The ACAT could be this organization by severing its direct ties to NSA to become a truly independent organization and expanding its affiliations to include, along with NSA, the National Association of Tax Professionals, the National Society of Tax Professionals, and any other existing legitimate non-profit tax preparer membership organizations, with representatives of these organizations given seats on its Board of Directors.”

Jason adjusted his original post to include the following –

“In response to his question to me at the end of his post:

(D)oes this post change your opinion in any way? And what about my idea for a 2-tiered program?

I am opposed to the 2-tiered program. Any government-sponsored RTRP program — even a voluntary one — would harm EAs.

But I have no opposition to a third party taking over a voluntary RTRP designation. In his post, Robert addresses what would need to be done to make sure a voluntary RTRP overseen by a third party would actually have name recognition (as opposed to the ATA and ATP designations that already exist and that no one has heard of). I agree with him on how to achieve recognition.

But I think it would be a tough sell. How much demand is there, really, for the RTRP designation? Very few unenrolled preparers bothered to become RTRPs when it was required by the IRS. How many would become RTRPs if it was voluntary and overseen by a third party? Probably about as many as those who become ATAs and ATPs.”

I do not see how my 2-tier IRS program – combining RTRP and EA – would hurt the Enrolled Agent credential.  There is no change to the EA credential, except for a better name.  RTRPs would NOT be allowed to represent taxpayers before the IRS without a POA.

I think that the reason unenrolled preparers who had not become RTRPs prior to the court decision was because it was required.  I personally did not sit for the test because I was waiting until the last minute to see if the IRS gave in on grandfathering for experienced tax pros.  Other “unenrolleds” might have been waiting to see how the court would decide Loving, or just been waiting until after the tax filing season to sit for the exam.

Also, when every preparer was required to become an RTRP there was no real value to the credential.  It did not set the holder apart or distinguish him/her from any other preparer.  Everyone had to be a RTRP, so it meant nothing.  It was basically a license.

If there is a voluntary RTRP designation, with a more extensive initial exam (of course with a grandfathering exemption for the veteran preparers) than the original basic RTRP competency exam, then achieving the credential will have real value, and mean something to the taxpayer public.

Of course any credential must be accompanied by aggressive and effective advertising and promotion so that the taxpayer public truly understands the value of the credential. 

“Abraham Lincoln” posted the following comment to my post –

“Regulations like the proposed RTRP rarely achieve their goals. I'd rather not deal with any of the regulation - which isn't going to protect anyone from anything - and save everyone another layer of bureaucracy.”

My response to Abe –

“I agree when it comes to mandatory government regulation.  But the beneficiaries of a voluntary credential are the tax preparers themselves and the taxpayer public.”

On the topic of a voluntary RTRP, in the Taxpayer Advocate’s recently issued “2013 Annual Report to Congress” Nina Olsen says this about a voluntary RTRP designation -

“In the event that the courts decide that the IRS does not have authority to impose testing and continuing education requirements on preparers, the National Taxpayer Advocate urges the IRS to implement the following six-part strategy to protect taxpayers from preparer incompetence and misconduct:

1. Offer unenrolled preparers the opportunity to earn a voluntary examination and continuing education certificate.

2. Restrict the ability of unenrolled preparers to represent taxpayers in audits of returns they prepared unless they earn the voluntary examination and continuing education certificate.

3. Restrict the ability to name an unenrolled preparer as a Third Party Designee on Form 1040, U.S. Individual Income Tax Return.

4. Mount a consumer protection campaign to educate taxpayers about the need to select competent preparers who can demonstrate competency.

 

5. Develop a research-driven, Service-wide preparer compliance strategy similar in nature to the Earned Income Tax Credit (EITC) preparer compliance strategy.

6. Recommend that Congress revise 31 U.S.C. § 330(a)(2) to clarify that the IRS has the authority to regulate unenrolled preparers.”

I certainly support parts 1 and 4.  I have no idea what exactly she means by part 5, and I strongly oppose parts 2, 3, and especially 6.

Fellow tax blogger Russ Fox puts his more than 2 cents in the discussion with his post "The IRS Has Better Things To Do than the RTRP Designation" at TAXABLE TALK.

Let’s not end the conversation here.  I welcome and solicit comments and tweets from fellow tax pros and the taxpayer public.  And look forward to hearing more from Jason, Joe, etc.

TTFN

WHAT’S THE BUZZ, TELL ME WHAT’S A HAPPENNIN’ - TUESDAY EDITION

The latest on the saga of my enrollment in Obamacare.  I received a letter from my new provider stating – “This letter is to confirm your enrollment effective 01/01/2014” and “Your identification card(s) will be mailed to you separately within the next 7-10 business days”.  Yesterday I received my insurance card.  Finally!

                                               

* My Tax Tip series continues at MAINSTREET.COM with “Same Sex Marriage and 2013 Tax Returns”.

* The MainStreet.com TAX CENTER also tells us that the “Top 1% Pay More in Federal Income Taxes than Bottom 90%”.

“A recent report by the non-partisan research group reveals that in 1980, the bottom 90% of taxpayers paid a little more than half (50.72%) of all income taxes. In 2011 (the most recent year the data are available), the bottom 90% paid just under a third (31.74%) of taxes. In contrast, the top 1% paid 19% of taxes in 1980 and now pays just over 35% of federal income taxes.

‘An interesting piece of information is that after the [2003] Bush tax cuts, often claimed to be a tax cut for the rich, the tax burden of the top 1% actually increased significantly,’ the Tax Foundation says. ‘One reason for the decline in the bottom 90%'s tax share is likely the proliferation of tax credits. In the last 30 years, the number of tax credits has increased -- specifically refundable tax credits. The combined cost of refundable and standard tax credits has gone from around $20 billion in 1990 to $176 billion in 2010, with refundable credits accounting for about $100 billion of that growth’."

* ACCOUNTING TODAY gives us the good news (from our point of view) that “IRS Tax Audits of Individuals Hit Lowest Rate Since 2005” -

“The Internal Revenue Service audited 0.96 percent of individual tax returns in fiscal 2013, declining for the second straight year and reaching the lowest rate since 2005.”

* And ACCOUNTING TODAY reports on the Taxpayer Advocate’s recently released 2013 Report to Congress in “Taxpayer Advocate Calls for Taxpayer Bill of Rights”.

FYI, Nina Olsen continues to call for the death of the dreaded Alternative Minimum Tax

* TaxGirl Kelly Phillips Erb talks about Nina’s report in “Report To Congress: IRS Is Increasingly Unable To Meet Taxpayer Needs”.

* William Perez reminds us that the “Fourth Estimated Tax Payment for 2013 Due on January 15”.

* Jamaal Solomon of THE TAX FACTOR has a new YouTube tax video on “Phase-Outs”.

* Andrea of TAKE A SMART STEP provides a lesson in “How to Keep Your Tax Money Information Organized”, telling us what she does.

* At the YAHOO FINANCE CENTER Kay Bell warns us to “Beware These 5 Terrible Tax Surprises”.

Kay identifies “five terrible tax surprises that you might encounter during tax season and how to deal with the consequences”.

* Jean Murray’s “The Absolute Best Way to Save Money on Business Tax Preparation” at ABOUT.COM also applies to 1040 preparation -  Start early and be prepared.

TTFN

THE ANNUAL NJ-NATP FAMOUS STATE TAX SEMINAR

This past Saturday I attended the NJ chapter of NATP’s annual “Famous State Tax Seminar” at the Woodbridge Hilton in Iselin.  I try to get to this seminar every year, and have only missed a handful in it’s, I expect, 20+ year history.

The day’s schedule is limited to state tax updates – New Jersey, New York, and sometimes Pennsylvania.  As I was sitting there on Saturday it occurred to me that one of the reasons it is so consistently good is that we are not forced to sit through yet another 2 hours of redundant and unnecessary Ethics preaching.  

As has been a custom, the first presentation of the morning was the “keynote” address by the Director of the NJ Division of Taxation.  The current Director is Michael Bryan.  This year’s all-too-brief “keynote” presentation was a total waste of time.

While I do like the fact that the Director is on the agenda, I wish he would say something of value and not just quote uninteresting economic statistics and merely touch on some items that are presented more thoroughly and effectively later in the day by one of his DOT employees.  I want him to address real issues, or take serious questions from the floor on systemic and other problems we tax pros face in dealing with the often incompetent DOT.

The only NJDOT Director that has ever given a presentation of value has been Bobby Thompson years ago (I believe he left office under a cloud concerning, again I believe, having received too many “gifts” from DOT vendors).  The head of the Division of Revenue also gave a good and insightful presentation several years ago, but has never returned.

Here’s a thought - a “Q+A” instead of a formal presentation.  Expand the Director’s allotted time.  Give those who sign up for the seminar the opportunity to email the Education Committee a question they would like the Director to answer or an issue they would like him to address.  The Committee would review the submissions and select what to put to the Director.  Members of the audience would be allowed to comment or ask for clarification on the Director’s responses.

The rest of the morning was taken up by an excellent presentation on the NJ Estate and Inheritance Tax by the best actual “presenter” of the day – attorney Michael Feinberg, who has appeared on the “bill” before (his presentation style is perfect, and he was certainly intimately knowledgeable on his topic; while I do not, and do not want to, prepare estate or inheritance returns, I found the talk interesting as a potential beneficiary and Executor, and close friend of potential beneficiaries and Executors), and a workmanlike presentation on NJ Sales and Use Tax issues and updates by another attorney (and returning speaker), Susan Feeney, who was also very knowledgeable on her topic.

After a buffet lunch, this time in a private room (it is usually in one of the hotel’s restaurants), we returned for the real meat of the day – New Jersey and New York state tax updates.  

Alexis DeRosa from the NJDOT is a fine successor to the wonderful “Jim and Jake Show” NJ updates of the past, which were always the highlight of the day.  And witty EA Katherine Keane has become a fixture of the event providing New York State income tax updates.

As a point of information, Michael Feinberg was the only speaker who definitively addressed the issue of same-sex marriage and NJ taxes.

Here are some of the items of interest from the day’s presentations –

* The NJDOT will begin to actively enforce the tax preparer e-file mandate in the future.  Since I do not use flawed and expensive tax preparation software, and never will, I cannot e-file NJ returns the traditional way.  I use NJWebFile whenever I can, and the client permits, but it has too many restrictions, and I am forced to file a paper return.

* To be able to take advantage of the “portability” of the federal estate tax exemption available to married couples the estate of the first spouse MUST file a federal estate tax return (Form 706) regardless of the amount of the gross or taxable estate.  There is no “portability” for the NJ estate tax.

* There is NEVER an income tax consequence for the recipient of a gift.

* The however legitimate attempts by NJDOT to verify NJ Earned Income Tax Credit eligibility often make the NJ-EITC more of a PITA for tax preparers than the federal due diligence requirements.  All the more reason why the EITC does not belong on any tax return.

Once again kudos to NJ-NATP for a great seminar.

TTFN

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

I was without a computer from last Friday through Monday afternoon.  Like a NJ politician, my Windows program was “corrupted”.  Hence the lateness of this BUZZ installment.  My web “wanderings” were also limited – so I might have missed some good “stuff”.

FYI, my check for January health insurance coverage under Obamacare has been cashed, but I have not received any insurance card or other coverage information from the provider. 

* My tax season Tax Tips series has begun at the TAX CENTER over at MainStreet.com.  So far my tips have included –

       ·         Your Small Assignment for Today

·         Starting the Year Off Right

·         Who Should Prepare Your 2013 Tax Return

* It appears that John Koskinen actually read my letter!  ACCOUNTING TODAY reports that “IRS’s New Commissioner Favors Voluntary Tax Preparer Certification” -

“The newly approved commissioner of the Internal Revenue Service, John Koskinen, said Monday that he would support voluntary certification for tax preparers if the Internal Revenue Service fails to win an appeal of a judge’s decision striking down the IRS’s Registered Tax Return Preparer regulatory regime.”

It is more likely “when” the IRS fails to win an appeal.

I first suggested this in my editorial “What the IRS Should Do About the RTRP” at TAXPRO TODAY.  I also sent a letter to Mr Koskinen recommending this once his appointment was approved.

I am curious to see if he just makes the previous RTRP requirements voluntary, or creates the 2-tiered program that encompasses the EA designation as I proposed.

* Kay Bell brings us “Tax Carnival #124: Happy New Tax Year 2014” at DON’T MESS WITH TAXES.

* William Perez of ABOUT.COM provides links to “Resources for Preparing and Filing Form W-2 for Small Businesses”.

* And Russ Fox reminds us that it is “1099 Time” at TAXABLE TALK.

* Over at EQUIFAX Tax Mama Eva Rosenberg reviews “What You Need to Know About the Child Tax Credit”.

 

* Jim Blankenship explains the “Types of Annuities” at GETTING YOUR FINANCIAL DUCKS IN A ROW.

* CCH has published a Tax Briefing on “2013 Tax Year In Review”.  Click here to download.

* Jeffrey Levine and Jared Trexler list “3 Tips for Tax Time Preparation” at THE SLOTT REPORT.  And 3 excellent tips they are!

THE FINAL WORD-

The donkey, or “ass”, should not be the “mascot” of only one of the political parties.  Our elected officials of both parties, at least in Washington, are truly all asses.

However I prefer to use a very different definition of the word “ass” in describing the Congresscritters, considering the multitude of excrement they spew regularly.

And, after thinking about it, the donkey and elephant are really not appropriate “mascots” for the members of Congress.  Historically the donkey and the elephant have been very hard working animals – true beasts of burden.  One can hardly “accuse” the members of Congress of doing any real work.  And it is the American citizen/taxpayer who must suffer the burden of their inaction and incompetence.

TTFN

SPECIAL OFFER FOR TAX PROS!

As you know, I have been preparing 1040s since 1972. Over the years I have developed a collection of forms, schedules and worksheets that have proven very helpful in my practice.  I usually offer this compilation to you for $6.00 – but if your order is postmarked in January 2014 you can have this compilation for only $3.00 – 50% off!

Some of my “homemade” forms are given to clients to help them provide me with the information I need to properly prepare their returns. Some are used as “memos” to the client’s copy and my office file copy to back-up items reported on the returns. Others are used as attachments to the returns.

Please be aware that this is copyrighted material and is for your internal use only.

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Here is a partial listing of what is included in the package.

1.  Supplement to Schedule A
2.  Medical Expense Worksheet
3.  Medical Expenses – Out of Pocket Analysis
4.  Charitable Contribution Listing – for non-cash contributions
5.  Charitable Contribution Record – for cash contributions (2 pages)
6.  Charitable Mileage Record
7.  Contribution Worksheet
8.  Employee Business Expenses – generic format, can be customized
9.  Employee Business Expenses – Police Officer – example of customized
10.  Conventions, Conference and Education
11.  Miscellaneous Expenses #1
12.  Miscellaneous Expenses #2
13.  Statement of Dividend Income
14.  Allocation of Expenses
15.  Automobile Expense Worksheet
16.  Auto Mileage Log
17.  Business Expenses of a Freelance Writer
18.  Business Travel Record
19.  Computer Use Log
20.  Election to Deduct Organization Expenses
21.  Employee Expense Report
22.  Employee Time Card
23.  Home Office Deduction Worksheet
24.  Cell Phone Log
25.  Cost Basis Worksheet
26.  Owner-Occupied Multi-Unit Rental Property Expense
27.  Statement of Rental Income and Expense
28.  Statement of Rental Income and Expenses – Vacation Property
29.  Multi Family Building
30.  Alternative Minimum Tax Worksheet
31.  Does Not Have To File
32.  Statement of Pension Income

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A VOLUNTARY RTRP DESIGNATION!

Fellow tax blogger and (not fellow) Enrolled Agent Jason Dinesen has replied to my earlier request for his opinion on the issue of a voluntary RTRP designation, which has been made a current topic as a result of the recent comments by new IRS Commissioner John Koskinen (click here for the ACCOUNTING TODAY article), in “A Voluntary RTRP Designation?” at the DINESEN TAX TIMES.

Jason opposes the idea, whether it is administered by the IRS or a “private overseer”.

He makes the following comments within the post –

“What purpose would it serve?  It would be a useless designation no matter who oversees it.

If administered by the IRS, it would harm Enrolled Agents.

If you can prepare tax returns without being an RTRP, and if the RTRP designation doesn’t allow a person to represent clients, what exactly would people who achieve a voluntary RTRP designation do with it?????  What’s the point?????”

Under the current system any Tom, Dick, or Harriet can hang out a shingle as a “tax preparer”.  It has been this way for 100 years.  There are many educated, competent, and current “unenrolled” Toms, Dicks, and Harriets.  I am one of them.  I never wanted to represent non-client taxpayers before the IRS, so I never became an Enrolled Agent.  I can represent my own 1040 clients at an IRS audit as preparer without an EA credential.

But what about the person who simply buys a tax preparation software program and holds himself/herself out to the public as a “tax preparer” with no training or experience in tax preparation?  Or the guy or gal who has been preparing his/her own return and those of family and friends for years and now wants to make some extra part-time money at tax time by taking on “strangers”?  Or, worst of all, the person who adds tax preparation to his business solely so that he/she can sell “Refund Anticipation Loans” and profit from usurious interest rates and processing fees?

As a knowledgeable, experienced, competent, ethical, and current “unenrolled” preparer I, like Rodney Dangerfield, “get no respect”.  The point of a recognized designation is to set me, and those like me, apart from the “casual”, unethical, or uneducated preparer, and recognize my knowledge, experience, competence, and currency in preparing 1040s.

And the point is to provide the taxpayer public with a way to identify that a person claiming to be a “tax professional” is truly knowledgeable, experienced, competent, ethical, and current in 1040 preparation.

Jason is correct when discussing the already existing voluntary ATA and ATP credential, which I addressed in my December 2013 TWTP post “Here’s A Thought - A Few More Cents on a Voluntary Credential for Tax Pros”.  These credentials have little meaning because “1) no one has ever heard of them and 2) they have no legal backing”.

To be of value a non-IRS administered voluntary RTRP-like designation must be overseen by an independent organization with industry-wide support and recognition and at least “acknowledgement” by the Internal Revenue Service.  And it must be heavily promoted by the overseeing independent organization.

I also agree with Jason that, unfortunately, “no one’s heard of the EA designation either”.  The fault lies with both the IRS and the NAEA.  And with the actual designation itself.  A large percentage of the public erroneously thinks an EA is actually an “agent” or employee of the IRS.

And I do agree that the mandatory IRS RTRP credential, when it was in force, did indeed “dilute” the EA credential.  Many Enrolled Agents sat for and passed the IRS competency exam to get the RTRP designation solely for public relations purposes.  As one EA told me, it is easier to tell a potential client that one is a “Registered Tax Return Preparer”, which is self-explanatory, than to have to explain what an Enrolled Agent is.

If there is to be an IRS-administered RTRP designation I have suggested that it be part of a two-tiered program that includes the current EA designation, which I would change to ETRP (Enrolled Tax Return Preparer).

As I suggest in my ACCOUNTING TODAY editorial “What the IRS Should Do About the RTRP” –

“A preparer, again including CPAs and attorneys, would first apply for and be granted the RTRP designation by way of a test that is limited to tax preparation (more involved than the original basic open-book basic test). Minimum annual CPE in federal tax topics would be required once the RTRP designation was granted. Those who had been designated an RTRP under the former regulation regime would be “grandfathered” into the new voluntary program, so the time and money they spent under the former mandatory RTRP program would not have been wasted.

After a year, an RTRP could elect to take a second test, with emphasis on taxpayer representation issues and other advanced topics, to become an ETRP (Enrolled Tax Return Preparer -- a new title for the current Enrolled Agent) and be permitted to “practice” before the IRS.”

The IRS would need to educate the public on the differences between the RTRP and the ERTP.

Regardless of who oversees the voluntary designation any competency test needs to be more extensive than the truly basic exam that was in effect under the mandatory regulation regime.  And there must be grandfathering for experienced preparers who demonstrate they maintain annual CPE in taxation.

If there is a voluntary RTRP program I personally will not take advantage of it.  I do not accept new 1040 clients, and am actually trying to “thin the herd” in anticipation of retirement, so I no longer have a need to be “recognized”.

So, Jason, does this post change your opinion in any way?  And what about my idea for a 2-tiered program?

TTFN

SAME-SEX MARRIAGE AND THE 2013 NJ-1040

The “What’s New” page in the NJ-1040 instruction booklet, which I referenced yesterday, does not make specific mention of the tax treatment of same-sex married couples.

The only mention I could find of “same-sex marriage” in a quick review of the booklet was in the section explaining Filing Status -

“Any reference in this booklet to a spouse also refers to a spouse that entered into a valid same-sex marriage in another state or foreign nation and a partner in a civil union (CU) recognized under New Jersey law.”

The wording is a bit odd, and I expect that it also applies to a “valid same-sex marriage in New Jersey”, since NJ now apparently allows same-sex marriage - due to a state court's September 27 order that the state must allow same-sex couples to marry and the New Jersey Supreme Court’s denial of the Christie Administration’s request to temporarily prevent same-sex marriages.

So it appears that for the 2013 NJ-1040 legally married same sex couples must file their state tax return as married – either filing joint or separate.

I will be attending the NJ chapter of NATP’s annual “Famous State Tax Seminar” this coming Saturday, and I expect this issue will be addressed at the seminar.  I will report on the event here at TWTP on Monday.

TTFN

WHAT’S NEW FOR NJ STATE TAXES FOR 2013

The 2013 NJ-1040, supplemental forms and schedules (except for the NJ-BUS forms), and instruction booklet are now available at the NJ Division of Taxation website.  Click here.

The NJ-1040 available on the website has a new look.  For one – it is no longer red.  However the format is the same, and there is no change to the tax rates or tax rate schedules.

Here, according to the instruction booklet, is what is new for 2013 -

• Excludable Pensions, Annuities, and IRA Withdrawals (Line 19b). You must enter on this new line the excludable portion of any distribution from a pension, annuity, or IRA to which you made contributions.

• Alternative Business Calculation Adjustment. The percentage used to calculate the Alternative Business Calculation Adjustment on Schedule NJ-BUS-2 increases to 20 percent for 2013 as part of a five-year phase-in. If you have losses in certain business-related income categories, you will use this percentage to calculate an adjustment to your taxable income.

• Girl Scouts Councils in New Jersey Fund. This fund joins the list of charitable funds to which you can contribute when filing your New Jersey return.  

• Change of Address Oval. If you are filing a paper return and your address has changed since you last filed, or if any of the address information on your preprinted mailing label is incorrect, fill in the new “Change of Address” oval on Form NJ-1040 or NJ-1040NR.

• Check Amount Boxes. If you owe tax and are enclosing a check or money order with your paper return, enter your payment amount in the boxes below the signature line on the first page of Form NJ-1040.  

As I no longer live in NJ I no longer get the NJ-1040 package in the mail.  I will need to wait until a client gives me the 2013 package.

TTFN