NEW JERSEY HOMESTEAD BENEFIT UPDATE

Here is the latest word on the 2015 New Jersey Homestead Benefit, to be distributed in 2018 -

 

The Division of Taxation will mail 2015 Homestead Benefit packets over a three-week period in September 2017 -

 

Cape May, Mercer, Ocean counties = Saturday, September 16

 

Monmouth, Somerset, Union counties = Tuesday, September 19

 

Hunterdon, Middlesex, Passaic, Sussex counties = Thursday, September 21

 

Camden, Hudson, Morris counties = Saturday, September 23

 

Burlington, Essex, Gloucester, Salem counties =Tuesday, September 26

 

Atlantic, Bergen, Cumberland, Warren counties =Thursday, September 28

 

Using the same delivery schedule, NJDOT will send an email with instructions for downloading the packet to those filers who requested electronic delivery.

 

If you did not receive your application or an email message, wait at least one week after the expected delivery date for your county before contacting the Division. Call the Homestead Benefit Hotline at 1-888-238-1233, 8:30 a.m. to 5:30 p.m., Monday through Friday, except State holidays, or visit a Regional Information Center for help.

 

The filing deadline is November 30, 2017.

 

You may be eligible for a Homestead Benefit if you met these requirements:

 

·        You were a New Jersey resident; and

·        You owned and occupied a home in New Jersey that was your principal     residence on October 1, 2015; and

·        Property Taxes for 2015 were paid on that home; and

·        You met the 2015 income requirements

 

To meet the income requirements your 2015 New Jersey Gross Income – from Line 28 of your 2015 NJ-1040 - cannot be more than –

 

·        $150,000 for homeowners 65 or older or blind or disabled on December 31, 2015; or

·        $75,000 for homeowners under 65 and not blind or disabled on December 31, 2015.

 

If you were not a homeowner on October 1, 2015, you are not eligible for a Homestead Benefit, even if you owned a home for part of the year.

 

You are not eligible unless you are required to pay Property Taxes on your home. For example, you are not eligible if -

 

·        You are completely exempt from paying Property Taxes on your principal residence (such as certain totally and permanently disabled war veterans).

·        You made P.I.L.O.T. (Payments-in-Lieu-of-Tax) payments to your municipality. These payments are not considered Property Taxes for purposes of the Homestead Benefit.

 

If you sold your home, or plan to close on the sale on or before November 30, 2017 - if you no longer own the home that was your principal residence on October 1, 2015, or you plan to close on or before November 30, 2017, you must answer “No” to the question asking whether you still own the property when filing the Homestead Benefit application or you risk losing your benefit.

 

If you sell your home after filing your application - the Homestead Benefit will reduce the tax bill of the person who owns the property on the date the benefit is paid. This means that if you indicated you still own the home when filing your application, and later sell it, the only way to receive your 2015 Homestead Benefit is to take credit for the benefit at the closing of your property sale. If you plan to sell your home, discuss these instructions with your attorney or closing agent so they can negotiate on your behalf.

 

Your 2015 Homestead Benefit is based on your –

 

·        2015 New Jersey Gross Income,

·        2015 filing status (single; married, filing jointly; head of household; etc.),

·        Age/disability status (whether you were 65 or older and/or disabled on December 31, 2015),

·         Property Taxes paid in 2006 on your principal residence.

 

In most cases your 2015 Homestead Benefit as a credit on an installment of your quarterly property tax bill.  Your tax collector issues you a property pax bill or advice copy reflecting the amount of your benefit.

 

You will receive a check or direct deposit only if –

 

·        Your home was a unit in a co-op or a continuing care retirement community; or

·        You indicated that you no longer owned your home. (See Homeowners Who Sold or Plan to Sell Their Homes for more information.)

 

TTFN

 

 

 

TAX REFORM: WHAT THE TAX CODE SHOULD NOT BE USED FOR

Fellow tax blogger Kelly Phillips Erb, aka TaxGirl, put out a call for guest posts on the subject of tax reform for FORBES.COM’s “Tax Reform Week”.  I sent her one. 

 

I just heard from KPE, who emailed me –

 

“Unfortunately my timeline only allowed me to choose a few and I was not able to include your post. I tried to choose posts that represented a range of interests, backgrounds, and perspectives.” 

 

So it shouldn’t go to waste, here is the guest post I sent KPE -

 

As a 45-year veteran tax preparer I know too well that the current US Tax Code is a complicated “mucking fess”.  It should be shredded and rewritten from scratch.

 

The one and only purpose of the Tax Code is to raise the money necessary to fund the government.  It should not be used for social engineering, to redistribute income or wealth, or to deliver social welfare and other government benefits.

 

One of the biggest problem with the current system, and responsible for a large amount of its complexity and most cases of tax fraud, is the use of the Code, and the 1040, to deliver government benefits, especially through the use of “refundable” credits.  The Internal Revenue Service, and the tax preparer community, should not be required to act as Social Workers and administer and verify government benefit payments.    

 

It is not saying that the government shouldn’t provide financial assistance to the working poor and college students, provide encouragements for purchasing health insurance, making energy-saving purchases and improvements and other ‘worthy’ actions,”  But such assistance and encouragements should not be distributed via Form 1040.

 

The benefits provided by the Earned Income Tax Credit and the refundable Child Tax Credit should be distributed via existing federal welfare programs for Aid to Families with Dependent Children. The benefits provided by the education tax credits and deduction for tuition and fees should be distributed via existing federal programs for providing direct student financial aid. The benefits provided by the Premium Tax Credit, the energy credits, and other such personal and business credits should be distributed via direct discount payments to the appropriate insurance companies and vendors, similar to the successful Cash for Clunkers program of a few years ago, funded by the budget of the appropriate Cabinet department.

 

Distributing the benefits thIs way is much “more better” than the current method for many reasons:

 

1. It would be easier for the government to verify that the recipient of the subsidy, discount or rebate actually qualified for the money, greatly reducing fraud. And tax preparers, and the IRS, would no longer need to take on the added responsibility of having to verify that a person qualifies for government benefits.

 

2. The qualifying individuals would get the money at the “point of purchase,” when it is really needed, and not have to go “out of pocket” up front and wait to be reimbursed when they file their tax return.

 

3. We would be able to calculate the true income tax burden of individuals. Many of the current “47 percent” would still be receiving government benefits, but it would not be done through the income tax system, so they would actually be paying federal income tax.

 

4. We could measure the true cost of education, housing, health, energy and welfare programs in the federal budget because benefit payments would be properly allocated to the appropriate departments.

 

To be honest I do not expect Congress to stop this inappropriate practice.  Congress rarely does what should be done.

 

So, what do you think?

 

TTFN

 

 

 

 

 

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

* I explain “What Tax Reform Should Look Like” in an editorial at TAXPRO TODAY.

 

* Monday’s post at THE TAX PROFESSIONAL discusses “A Controversial Tax Reform Idea”.   

 

* Attention tax pros - Russ Fox has announced “IRS Appeals Steele Decision” at TAXABLE TALK - 

 

“To no one’s surprise, yesterday the IRS appealed the decision to the US Court of Appeals for the District of Columbia. It will likely be sometime next year before the case is heard and a decision rendered.”

 

So I won’t be looking for my refund check for past fees paid in the mail.

 

* At DON’T MESS WITH TAXES Kay Bell has some tips on “Reconstructing tax & other records after a natural disaster”.

 

* And Kay celebrated Grandparents Day with “Tax-advantaged ways grandparents can give to grandchildren”.

 

* FORBES.COM has launched a “Tax Reform Week”, starting off with “GOP Is Making Tax Reform Much Harder Than It Needs To Be” from Stan Collender.

 

* And FORBES.COM’s TaxGirl Kelly Phillips Erb continues “Tax Reform Week” with “Guest Post: Can the Tax Code Really Be Simple?” by Shaun Hunley.

 

Continue to follow Kelly’s week of guest posts – my guest post should be included soon.

 

* Tony Nitti also joins in the fun of “Tax Reform Week” with “The 5 Big Questions Surrounding Tax Reform”.

 

Not only is it Tax Reform Week, but Tony points out -

 

“It also happens to be National Prostatitis Awareness Week, and it's debatable as to which one is tasked with drawing attention to the bigger pain in the ass.”

 

And Tony explains the main reason why we probably will not get true substantive tax reform (highlight is mine) –

 

“You get the idea: for every provision that makes our tax law "complicated" and is targeted for removal, there will be a group willing to fight for its continued existence. And congressmen and women unwilling to ruffle the feathers of either these special interest groups or general constituents.”

 

* Hey, check out my “Author Page” at AMAZON.COM.  Several of my tax planning and preparation books are now available in e-book format for reading on Kindle!

 

THE FINAL WORD

 

An IRS tax collector, a reality tv “celebrity” (reality tv does not have “stars” – the description “star” assumes at least some degree of talent) and Donald T Rump are in a row boat in the middle of a lake.  The boat overturns.  Neither of the three can swim.

 

You pass by them in another boat.  You would only be able to save one of the three from drowning.

 

What would you do - read the paper or eat your lunch?

 

To be honest, I would probably at least think about saving the IRS tax collector.

 

TTFN

 

 

 

 

 

 

 

NEVER FORGET

 

 

 Police Officer Maurice Barry - PATH Emergency Service Unit - P.O. Shield #1038

A Port Authority officer for 16 years, Maurice "Moe" Barry, 48, was assigned to the PATH commuter train system. The resident of Rutherford, NJ, upon hearing the reports of the terrorist attacks, was one of the first on scene when he rushed from Jersey City to Lower Manhattan and then into the North Tower to help in the rescue efforts. As thousands fled the searing flames and smoke of the Towers, Officer Barry was attempting to reach trapped and frightened workers on the upper floors. The last time he was seen, he was on his way to the higher floors to get people out.
.
Moe had a history of heroism - he was involved in rescue efforts during an airplane crash at La Guardia airport; he once climbed a bridge to retrieve the body of a person electrocuted there; he was involved in the rescue effort during the 1993 bombing of the World Trade Center; and he rescued a woman from her home, by boat, during Hurricane Floyd. Moe was also a volunteer for the Rutherford Ambulance Corps.

------------------------------------------------------

Most of us can remember exactly where we were and what we were doing on dates of historic importance.

The day President Kennedy was shot I was on a 6th Grade field trip to the Museum of Natural History in New York City. I was sitting in the theatre at the Hayden Planetarium watching a presentation when the show suddenly stopped. The lights went on and it was announced over the PA system that President Kennedy had been shot. We were all told to go home.

The day President Nixon resigned I was at a Crosby, Stills and Nash concert in Roosevelt Stadium on Route 440 in Jersey City (it no longer exists – it has been replaced by condos). CSN announced that Nixon had just resigned and proceeded to break into a rousing version of "Ohio" (“Tin soldiers and Nixon’s coming…).

When the planes crashed into the World Trade Center on September 11, 2001, I was on a Parker Tours escorted bus trip to Ocean City, Maryland. At the time of the attack our group was at the Assateague Island National Seashore. We were not told about it until we had returned to the bus and were driving back to our hotel, where we were supposed to attend a welcome reception. The reception was cancelled and we all went to our individual rooms to watch the tragedy unfold on television.

On September 11, 2001, my client, and fellow Dickinson High School Class of 1971 graduate (although we did not discover this until many, many years later when he happened to notice an award I had received from my high school graduating class that was hanging on the wall of the Newark Avenue office and said that he graduated from DHS in 1971 too), Maurice “Moe” Barry was one of the members of the Port Authority Police Emergency Response Team, among the “first responders” to the initial attack, who were killed when the tower collapsed.

Moe always came in to have his tax return prepared on the very last day of the season, April 15, 16 or 17 of each year, a long-standing tradition he first began as a client of my mentor Jim Gill before I “inherited” the practice. Each year when we saw Moe we knew it was almost over. One year he came in on April 10th and we told him to go away and come back on the 15th. To honor Moe’s memory I no longer work on 1040s on the last day of “the season”. For me the tax filing season ends each year on April 14th (or 15th or 16th). 

 

TTFN

ROBERT FLACH AT AMAZON.COM

I have converted two of my tax planning and preparation reports into e-book format so that they can be read on KINDLE.  These two e-books are available at AMAZON.COM.

 

THE JOY OF AVOIDING NEW JERSEY TAXES is available for $9.99. 

 

 

 

I have been preparing NJ-1040s for as long as there has been a NJ-1040, and federal income tax returns for even longer. I share my knowledge and experience from 45 years as a professional tax preparer to help you to learn how to pay the absolute least amount of NJ Gross Income Tax possible. It includes advice and information on planning for and preparing your NJ-1040. As far as I am aware, this is the only book in existence that deals exclusively with tax planning for and preparation of NJ state income taxes.

 Click here for more information.

 

AN INTRODUCTION TO SELF-EMPLOYMENT: The Basics of Schedule C is available for $8.99

 

 

Are you thinking about starting a business – either full-time or part-time? Or will you be starting a business in the near future? This book is an extensive “must-have” guide for the newly self-employed sole proprietor who will be reporting business income and expenses on Schedule C, and also a good source of information and advice for the already existing business. It covers a wide range of topics related to tax planning and preparation for Schedule C filers.

 

Click here for more information. 

 

In both of these e-books the forms, schedules and worksheets compilations from the original pdf and print versions are not included.  However if you email me with proof of purchase I will send you the applicable compilation.  Email rdftaxpro@yahoo.com with KINDLE FORMS REQUEST in the subject line.

 

I will be converting more of my tax planning and preparation books to e-book format in the future, and will keep you up-to-date here.

 

TTFN

 

 

 

 

 

 

TRUMP AND TAX REFORM

Arrogant demagogue Donald T Rump, or Tronald Dump as he is appropriately called in the unique “pig latin” of the comedy troupe CAPITAL STEPS, wants “tax reform”.

 

But he really doesn’t give a rodent’s hind quarters, or an airborne sex act, about the actual details of this “reform” – other than how it will save him and his business activities taxes, if he actually pays any taxes at all.

 

The Dumpster wants Congress to pass tax reform legislation – any tax reform legislation – only so he can claim a victory and say, “Look what I have done,” regardless of what, if anything, he actually does.

 

Hopefully Ryan and McConnell will provide real and substantive tax reform legislation and not just a token bill aimed solely at giving the Party, and the idiot in the White House, a victory.

 

I have identified “What Tax Reform Should Look Like” in an editorial at TAXPRO TODAY.

 

TTFN

 

 

 

 

 

 

 

 

OOPS! MORE BUZZ

* I forgot to include this great editorial on “Tax Reform Conservatives Can Get Behind” by Professor Aaron Hedlund from THE NATIONAL REVIEW.

 

This item proves that great minds do think alike.  Professor Hedlund echoes my thoughts on tax reform - click here.  

 

* And as long as I have your attention, check out this excellent, spot-on description of arrogant idiot Donald T Rump’s pathology titled “The Fake President” by none other than Barbra Streisand over at THE HUFFINGTON POST.

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

FYI- I am off to Cape Cod and Martha’s Vineyard tomorrow, so no more posts this week.

* Monday’s post at THE TAX PROFESSIONAL was “Continuing the Ethics Discussion”.    

* Jim Wang’s post “Are You a PTA Parent? That Volunteering May Just Pay Off” at the TURBO TAX BLOG isn’t just for PTA members.  It applies to all who volunteer for a church or charity, including volunteer work related to Hurricane Harvey.

* TaxGirl Kelly Phillips Erb is putting out a call for volunteers to “Write For Forbes During Tax Reform Week”.  I have sent her my submission. 

* Also at FORBES.COM Tony Nitti reports “Robert Mueller Employs Powerful Weapon In Trump-Russia Investigation: The IRS”.

Remember, it was the IRS that finally brought down Al Capone.  And Capone was smarter than Trump (not too many people aren’t – except perhaps for Trump’s cult of ignorami).   

* Speaking of the idiot in the White House, check out the September “issue” of THE LIBERTY TIMES.

* As with Henry and Richard, while I would never recommend that a taxpayer use Liberty Tax Service, or any “fast-food” commercial chain, to prepare their returns, I do believe its TAX LOUNGE BLOG can offer good advice, as it does in dealing with the question “Why You Need to Withhold Taxes From Unemployment” –

“Believe it or not, unemployment compensation is taxable income. Too few people seem to know this — or maybe it’s just that too few people want to know this. Nevertheless, this oversight could lead to taxpayers who didn’t withhold taxes from unemployment benefits owing on their federal and state income tax returns.”

And –

“Instead of worrying about how much you have to pay at the end of the year, contact your state unemployment office, either by phone or online. Have them withhold the 10 percent required for federal taxes and whatever percentage is required for state income taxes in your state. If it turns out you don't owe taxes, you may get it back as a refund. Better to have taxes taken out initially than to worry about how to pay a significant debt at the end of the year.”

Another issue with taxable unemployment benefits – some states, like New Jersey, have stopped mailing out paper copies of Form 1099-G to report unemployment benefits and withholding therefrom, just like many states have stopped sending out paper copies of Form 1099-G for state tax refunds, I guess to save money.  As a result I have seen several clients fail to report unemployment benefits on their 1040, and get hit with penalties and interest when the oversight is uncovered during the IRS matching process. 

 

It is very important that anyone who receives unemployment benefits during the year go to the appropriate state website in January 2018, usually the same website that they used to request or maintain benefits, print-out the Form 1099-G, and give this form to their tax preparer.

TTFN

 

 

 

 

 

 

 

DEDUCTING CASUALTY LOSSES

A brief review of the rules for deducting casualty losses.

 

You may be able to deduct a loss from a casualty or theft on Schedule A.

 

A casualty is damage, destruction or loss of property that results from an identifiable sudden, unexpected or unusual event – such as a car accident, earthquake, fire, flood, hurricane, storm, tornado, and the like.

 

Your loss is the lessor of –

 

• the adjusted basis of the property before the casualty or theft, or

 

• the decrease in fair market value of the property as a result of the casualty or theft.

 

In the case of a theft there is generally no remaining fair market value, so your loss would be the adjusted basis of the property stolen.

 

When calculating the deductible loss you cannot use the market value of the property damaged - you must use the adjusted cost basis.  The property may have been worth $500,000 before the casualty, but if the cost basis is only $200,000 your loss is limited to $200,000.

 

You first reduce the loss by any insurance or other reimbursement you receive, or expect to receive. 

 

If your reimbursement is more than your allowable loss you may have taxable income.  If you receive an unexpected reimbursement in a subsequent year, or if a reimbursement received after your return claiming the loss has been filed is not what you had expected when calculating the allowable deduction, you may need to make an adjustment on a subsequent Form 1040.

 

Next you reduce the resulting net amount by $100.00.  This $100.00 reduction is per incident.  If there is only one casualty or theft during the year the reduction is $100.00.  If there are two separate incidents, one casualty and one theft, the total reduction is $200.00.

 

The total amount of all net casualty and theft losses for the year, after subtracting actual or anticipated reimbursements and the $100.00 per incident, is then reduced by 10% of your Adjusted Gross Income (AGI).  The remaining amount is what can be deducted.

 

If the total amount of net casualty and theft losses for 2017 is $9,500.00 and your AGI is $105,000.00 you get no deduction ($9,500 - $10,500 = $0).  

 

If you have a deductible casualty loss in a disaster area, such as Hurricane Harvey, you have the option of claiming the loss on the return for the year in which the casualty occurs – your 2017 Form 1040 - or the previous year.  This means that you do not have to wait until next year to get the refund generated by the casualty loss – you can amend your 2016 Form 1040 and get a refund now, when you need the money to replace and repair.

 

TTFN

 

 

 

 

A SPECIAL FRIDAY HARVEY-THEMED BUZZ

* Let me begin with the repeat of an item from Tuesday’s BUZZ - Kelly Philips Erb, FORBES.COM’s TaxGril, was the first to give us the word that “IRS Announces Tax Relief For Taxpayers Affected By Hurricane Harvey”.

 

* Kay Bell warns us to “Beware of fake charities in the wake of Hurricane Harvey” at DON’T MESS WITH TAXES.

 

Click here for tips from the Department of Justice.

 

* And Kay reminds us that “Home basis, not market value, key amount in calculating disaster loss tax claim” –

 

When claiming a casualty loss on your home it is treated as if you sold your home for its market value on the day after the casualty.  You home may have been worth $500,000 before the casualty, but if your “basis” in the home is only $200,000 your loss deduction is limited to $200,000, plus any insurance payments and less the statutory $100 and 10% of AGI deductions.

 

Your basis is the purchase price of the home plus the applicable closing costs (legal fees, title insurance, etc) paid at the purchase plus the cost of any capital improvements made to the home over the years.

 

It is actually possible to have a taxable gain from a casualty loss if the insurance and other payments exceed your basis.

 

* Kelly Phillips Erb also posts on this topic, explaining the process of “Claiming A Loss After A Disaster Like Hurricane Harvey” at FORBES.COM.

 

* Also at FORBES.COM Ashlea Ebeling reports “Tax Relief For Hurricane Harvey Victims: Retirement Account Withdrawal Rules Loosened”.

 

TTFN