FORM 1098-T WILL BE REQUIRED FOR CLAIMING EDUCATION BENEFITS

While the idiots in Congress have not passed any actual tax bills so far this year there have been some procedural changes tacked on to some non-tax bills.  Like the business tax return filing deadline changes in the “Surface Transportation and Veterans Health Care Choice Improvement Act of 2015”.

The “Bipartisan Congressional Trade Priorities and Accountability Act of 2015” includes a change in the documentation of education tax benefits.

Kay Bell explains in “Form 1098-T Will be Needed to Claim Education Tax Breaks” at DON’T MESS WITH TAXES -

“Under the new trade preferences act, 1098-T information will have to match up with American Opportunity or Lifetime Learning tax credits claims.

Similarly, a Form 1098-T {“Tuition Statement” – rdf}  “will be required to claim the above-the-line tuition and fees deduction, which actually expired at the end of 2014, but is expected to be renewed under pending extenders legislation.

Basically, if you don't have a valid 1098-T with the info you're putting on your return, the IRS will not accept your education claims. This effectively means that folks claiming education tax breaks will have to wait to file until they (and the IRS) get their Form 1098-T copies, delaying filing by folks who submit their returns early because they're getting big refunds.”

This change is effective for tax year 2016 – for tax returns filed in 2017.

My initial response to this new matching requirement concerns the fact that most Form 1098-Ts that I see during the tax season are as useful as tits on a bull.

I said as much in my 2012 post “Bull Tit”.

To quote from that post –

“Box 1 of the 1098-T is for payments received ‘from any source’ for qualified tuition and related expenses.  This is the information I need.  However in the years that this form has been in use I have only seen an entry in this box once – and it was incorrect.  It showed only the payments received directly from the student (actually the student’s parents).

Box 2 is for amounts billed for qualified tuition and related expenses.  This is the box that is always filled in.  To be honest, I don’t care a rat’s hind quarters how much was ‘billed’.  My clients are cash-basis taxpayers – I need to know what was paid during the calendar year, not what was billed.

Colleges will generally bill students for the semester beginning in January of the following year at the end of the current year.  So the amount in Box 2 usually includes this amount.  But parents or students do not always pay this amount until the following year.”

As I point out in the post –

“Thankfully some colleges and universities will provide a supplement to the Form 1098-T mailing that itemizes the various charges and payments made for the year by date, which is extremely helpful.  But unfortunately not all.”

I do not rely on the 1098-T for claiming education credits or deductions.  I instruct clients with children in college that “I need all Form 1098-Ts received and all the ‘Burser’s Reports’ for the year that show tuition and other payments.  You may be able to print-out a financial report from the college’s website.” 

Several years ago I was given a Form 1098-T for a student who had graduated in the tax year.  Box 1 and Box 2 were both empty.  Upon questioning the taxpayer I discovered that there were indeed payments made for qualified tuition and fees during the year.  These payments had been billed in the previous year, and were included in Box 2 of the previous year’s Form 1098-T.    

 

If the IRS is now going to match all Form 8863 and Form 8917 claims to the information reported on Form 1098-T is the IRS also going to require all educational institutions to properly complete Box 1?

TTFN

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

* The JOURNAL OF ACCOUNTANCY reports that there is some good news in the short-term highway funding extension bill – “Return Due Dates Changed in Highway Funding Bill”.

“For partnership returns, the new due date is March 15 (for calendar-year partnerships) and the 15th day of the third month following the close of the fiscal year (for fiscal-year partnerships). (Currently, these returns are due on April 15, for calendar-year partnerships.) The act directs the IRS to allow a maximum extension of six months for Forms 1065, U.S. Return of Partnership Income.

For C corporations, the new due date is the 15th day of the fourth month following the close of the corporation’s year. (Currently, these returns are due on the 15th day of the third month following the close of the corporation’s year.)

Corporations will be allowed a six-month (instead of the current three-month) extension, except that calendar-year corporations would get a five-month extension until 2026 and corporations with a June 30 year end would get a seven-month extension until 2026.

The new due dates will apply to returns for tax years beginning after Dec. 31, 2015.

The due date for FinCEN Form 114 is changed from June 30 to April 15, and for the first time taxpayers will be allowed a six-month extension.”  

This is truly good news for taxpayers, and especially for tax preparers.  Hopefully the earlier partnership filing deadline will reduce the number of late K-1s.  And I am also pleased about the extended filing deadline for C corporations.

The Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 (H.R. 3236).was signed into law by BO last Friday.   The changes will take place for tax years beginning after December 31, 2015.

CCH has a Tax Briefing on this new law.  Click here to download in pdf format.

While I am pleased with the changes in due dates, Joe Kristan, returning to his daily Tax Round-up posts after a European vacation, makes a good point in “Tax Roundup, 8/3/15: Due date scramble edition, with extendable FBARs!’ –

“The bill is an empty gesture to 1040 filers who get frustrated waiting on K-1s. They won’t get issued any faster. K-1s aren’t delayed because people are sitting around waiting for the due date. They are delayed because the tax law is hard, businesses can be complex, and it takes time to get the work done. On top of that, everybody is on a calendar year, thanks to Congress, so the professionals are trying to get all the returns completed at the same time.

All this means is that more partnership returns will be extended. It won’t get the K-1s out any sooner. The only way to change that is to simplify the tax law and to once again enable pass-throughs to have tax years ending on dates other than December 31.”

* I agree with Kathleen King, managing director of Alvarez & Marshall Taxand’s Washington, D.C., office.  In “Mid-Year Tax Planning Hampered by Extenders' Fate” from Roger Russell at ACCOUNTING TODAY she correctly observes –

“It will be August next week. Washington will clear out, and there will really be only a month until those who are running have to go back home and campaign until after the elections, so we’re looking at mid-November for something to get through.”

It is August already!

So it looks like it will be déjà vu all over again.

Making tax breaks - that are not in response to a specific event (a natural disaster like Katrina) – temporary is just plain stupid.  But then again, the members of Congress who did this are idiots. 

* For those who are interested ABC NEWS tells us “Clinton Releases Tax, Health Records on Busy Friday”.

* Jason Dinesen continues to keep us up-to-date on state same-sex couple filing issues with “New Nebraska Guidance on Same-Sex Marriage and Taxes”.

* BTW, my thoughts on Trump’s Presidential candidacy recently appeared in my local paper – “Homer Simpson – 1, Donald Trump – 0”.

TTFN

AN IMPORTANT MESSAGE WORTH REPEATING

The IRS phone scams have been ongoing for over a year now. 

According to “Phone Scams Continue to be Serious Threat, Remain on IRS ‘Dirty Dozen’ Listof Tax Scams for the 2015 Filing Season” from the IRS website -

“The Treasury Inspector General for Tax Administration (TIGTA) has received reports of roughly 290,000 contacts since October 2013 and has become aware of nearly 3,000 victims who have collectively paid over $14 million as a result of the scam, in which individuals make unsolicited calls to taxpayers fraudulently claiming to be IRS officials and demanding that they send them cash via prepaid debit cards.”

Here is an important message worth constant repeating –

THE INTERNAL REVENUE SERVICE WILL NEVER INITIATE CONTACT WITH A TAXPAYER BY TELEPHONE OR EMAIL.  THEY WILL ALWAYS SEND A WRITTEN LETTER OR NOTICE VIA POSTAL MAIL.

A long-time friend and client recently received a phone call with this pre-recorded message - "We have tried to reach you many times.  This is the IRS.  Please call this number.  We are preparing a case against you."  The message then provided a phone number to call.

My friend correctly immediately emailed me.  I explained that is was a scam and told her to ignore it - and if they call again to hang-up. 

IF YOU RECEIVE A PHONE CALL CLAIMING TO BE FROM THE HANG UP.  

TTFN

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

* I realize it is early in the Presidential race – but the TAX FOUNDATION is already “Comparing the 2016 Presidential Tax Reform Proposals”.

The couple of tax proposals from Hillary Clinton, one involving the taxation of capital gains, are disappointing but not surprising.  They continue to further complicate the Tax Code, already a mucking fess.  Hillary and the Democrats, including BO, have absolutely no interest in serious and substantive tax reform.  They want to continue to complicate the Code and use it for social engineering.

Those Republicans who have provided tax reform proposals tend toward a more simplified Tax Code and a flat tax.  While many of the Republican candidates may be off on other important issues, and unacceptable due to Tea Party leanings, simply from a tax reform standpoint it is clear that the Republican position is truly the better one.

* A recent TAX FOUNDATION map answers the question “How High Are Gas Taxes in Your State?”

For once my situation is reversed.  My new home state of Pennsylvania has the highest rate at 51.60 cents per gallon – but my former home state of New Jersey has the second lowest at 14.50 cpg.  It is perhaps the only time where NJ actually does not have the highest, or almost highest, tax in the nation.

* More disturbing news on the sad state of IRS taxpayer service.  Robert W Wood tells us “Report Says IRS Mishandled 24,000 IRS Tax Lien Notices---Just Ask Robert De Niro” at FORBES.COM.

Continued word on how budget cuts and mismanagement have wreaked havoc at the IRS, with taxpayers as the victims.

* Also at FORBES.COM “Taxgirl” Kelly Phillips Erb reports “Back To School Sales Tax Holidays For 2015 Starting Soon”.

Her post lists the states, dates, and specific exemptions.

* Jason Dinesen is up to Part 14 in his series on “Marriage in the Tax Code” – “The Marriage Penalty Gets Worse Through the 1970s”.

* The BALTIMORE SUN gives us the word that “Maryland to Have 'Amnesty' for Delinquent Taxpayers this Fall”.

“Those who are behind on their taxes will have a relatively short window — Sept. 1 to Oct. 30 — to apply and be enrolled in the program. It applies to a variety of overdue taxes, including personal and fiduciary income tax, corporate income tax, sales and use tax, employer withholding tax, and admissions and amusement tax.”

Click here for the 2015 Amnesty page of the Comptroller of Maryland website.

THE FINAL WORD –

It is one thing to speak your mind and call a spade a shovel.  But the contents of idiot Donald Trump’s mind are limited to thoughts of himself, and when he speaks only nonsense comes out.

TTFN

CAN I CLAIM MY SON (OR DAUGHTER)?

As a veteran tax professional with 44 filing seasons under my belt and tax blogger one question I am often asked by clients, readers, and cocktail party guests is “can I claim my son, or daughter?”.

In order to be claim someone as a dependent on your tax return that person must be either a “qualifying child” or a “qualifying relative”. 

A qualifying child includes your child by birth, stepchild, or a foster child who is placed with you by an authorized agency or by judgment, decree, or other court order.  A child you have legally adopted is treated as your child by birth.

He or she must be either under age 19 at the end of the year or under age 24 at the end of the year and a full-time student for any part, even 1 day, of 5 months during the year.  A child is enrolled in an online or correspondence school does not qualify as a full-time student.  

The child must live with you as a member of your household for at least 6 months of the year.  If the child is temporarily at another location for a specific reason, such as in a dorm at college or in military service, he or she is still considered to be living with you.

A child who was born or who died during the year is considered to have lived with you for the entire year.  There is no limitation on the number of days – a child who passes on January 1, 2014, or is born on December 31, 2014, can be claimed as a dependent.

And you must provide more than 50% the child’s support for the year.  

A qualifying child who is married can only be claimed as a dependent if he or she does not file a joint tax return with their spouse, unless the only reason for filing a joint return is to claim a tax refund.

If a child is the “qualifying child” of both parents, who are separated, divorced or unmarried, there are “tie-breaking” rules for determining who can claim the child as a dependent.  Generally the child is the dependent of the “custodial parent”, which is the parent with whom the child lives with for the greater part of the year.  What is comes down to is the number of nights during the calendar year that the child sleeps at a parent’s home. 

You may also be able to claim your son or daughter as a dependent as a “qualifying relative”.  This happens if the child is over age 19, or 24, and has gross taxable income of less than the amount of the personal exemption deduction, which for 2014 was $3,950 and for 2015 is $4,000.  Non-taxable income, such as SSI or non-taxable Social Security or Railroad Retirement benefits, do not count toward the $3,950 or $4,000. 

In this situation the child does not have to live in your home as a member of your household, but you must provide more than 50% of his or her support.

Here are some examples, all assuming you provide more than half of the son or daughter’s support –

Your son, age 20, is a junior in college who lives away at school most of the year.  He has a summer job and earns $6,000 in W-2 wages.  You can claim him as your dependent.

Your 25 year-old daughter is in medical school.  She does not work and has no taxable income other than interest, dividends, and capital gains that total less than $1,000 for the year.  You can claim her as a dependent.

Here is a real-life example from my mentor’s practice.  Your 40+ year old son lives with you.  He does not work and has no income.  He basically lives off you.  You can claim him as a dependent.

How much tax will you save by claiming your child as a dependent?  Depending on your situation the savings can be substantial.

In addition to claiming an additional personal exemption – a $4,000 exemption will save $1,000 in federal tax for taxpayers in the 25% bracket – based on your level of income and the child’s age you may also be able to take advantage of the Child Tax Credit, Child and Dependent Care Credit or exclusion of child care benefits paid through a flexible spending account (FSA), and the Earned Income Tax Credit. 

The tax savings for having a dependent child, or the tax cost of losing a dependent, is much more substantial for a single parent with one child.

In order to be able to claim the tax-advantaged Head of Household filing status you must pay more than half of the cost of keeping up your home, which is the principal residence for more than 6 months of your qualifying child or qualifying relative.  A qualifying child does not have to be claimed as a dependent – a custodial parent can “release” the dependency exemption to the non-custodial parent – but a qualifying relative must be claimed a dependent.

So, as with just about every tax question, the answer to “can I claim my son, or daughter?” is “it depends”.

TTFN

HOW TO ENJOY A TAX DEDUCTIBLE VACATION

Here is a summer-appropriate post taken from my THE NEW SCHEDULE C NOTEBOOK.

One of the reasons I am called the “Wandering” Tax Pro is because once the tax filing season ends I enjoy travel via all methods – car, bus, plane, ship and train (not necessarily in that order).

Over the past 30 years my annual travel itinerary has often included two totally tax-deductible domestic vacations. I would attend the National Conference of the National Association of Tax Professionals (NATP) and the Annual Convention of the National Society of Tax Professionals (NSTP), held each year in a different US city. I have visited Alexandria, Anaheim, Arlington, Atlanta, Austin, Boston, Corpus Christi, Las Vegas, Minneapolis, New Orleans, Orlando, Reno, Sans Antonio, Diego, Francisco, and Juan, Washington DC, and other locations as a registrant of these two annual events, and deducted my travel expenses.

You can deduct expenses that are “ordinary and necessary” for your business. An “ordinary” expense is one that is common and accepted in your specific trade or profession and a “necessary” expense is one that is helpful and appropriate.

One “ordinary and necessary” business expense for which you can claim a tax deduction is the cost of education that is (1) expressly required by an employer, by law, or by government regulation, or (2) maintains or improves skills required in your current trade or business. If a conference falls under this category the associated registration and travel expenses are deductible.

You must show that your attendance at the conference or convention benefits your business. The convention agenda or program generally shows the purpose of the convention.

Deductible expenses include –

• The registration fee and any related books or materials.

• Round-trip airfare, train fare, or bus fare at cost, or the standard mileage allowance for business travel if you drive (or, as an alternative, a percentage of the total actual costs of operating your car) and related red cap tips.

• Taxi fares to and from the airport, train or bus station, to and from your hotel, and to and from other business locations while away.

• Hotel or motel lodging expenses, including tips to bellman and maids and the cost of laundry services.

• 50% of meals.

After I deduct all my travel expenses, I often save enough in taxes to cover the registration fee and some of the travel expenses! I get a free quality education, which benefits my practice, and I save on the actual cost of the trip.

If you are travelling with your family, only your expenses are deductible. However airlines often offer discounts for accompanying family members, and a hotel room is generally the same price whether regardless of the number of people in the room. You can deduct what it would cost if you were travelling alone. There are special rules if your spouse also works for your business.

You cannot deduct auxiliary sightseeing expenses while at the conference or convention, such as guided tours or travel to and from attractions, museums, sporting events, theatres, etc (unless you were attending with a client or colleague and the activity qualified as deductible business entertaining).

As with any business expense you must keep detailed records and receipts. Use a credit card for all meals, get receipts from taxi drivers, and keep a copy of the detailed hotel bill in addition to the charge card receipt. And be sure to save the conference or convention agenda/schedule to prove its relevance to your business.

Just as with business use of your automobile and the standard mileage allowance, the IRS allows you to deduct either actual out of pocket expenses or claim a federal “per diem allowance” that is determined by the General Services Administration each year based the location of the trip. If you claim the per diem allowance you do not have to save receipts for actual expenses. There is a per diem rate for lodging and one for meals and “incidental” expenses. However sole proprietors cannot use the per diem rate for lodging; they must deduct actual lodging expenses.

The per diem rate for meals and incidental expenses includes tips given to porters, baggage carriers, bellhops, hotel maids (the “incidental” expenses) – so the actual out of pocket for these incidentals are not deductible if you claim the per diem. On the first and last day of a business trip you claim 75% of the per diem amount, unless you can show you leave before breakfast on the first day and return after dinner on the last.

The per diem rates are based on the city where you “lay your head” at night. If your business meetings are in New York City, but you stay overnight at a hotel in New Jersey to get a lower room rate, you would use the New Jersey location to determine the appropriate per diem amount.

If you do not incur meal experiences while traveling you can still use a per diem amount for incidental expenses, which is currently $5.00 per day regardless of the location.

You can decide whether to deduct the GSA meals and incidental per diem rate or actual expenses on a trip by trip basis, but you must use the same method for all days within any single business trip. You can use the actual expenses when attending a conference in New York City in May and the per diem rate for an August convention in Las Vegas.

If you are claiming actual meal costs you must have documentary evidence, such as a credit card receipt or an itemized hotel bill (if a meal is charged to your room), for any expense that is $75 or more.

For business meals and entertaining, whether away from home overnight for a conference or convention or any other business purpose or during the course of your normal business day, you also must record the time and place, the name(s) and “relationship” (1040 client, business owner or “CFO of XYZ”) of any person(s) you are entertaining or with whom you are dining, and the business purpose or business discussion (“NATP Annual Conference”, “business proposal”, “tax planning”, “audit preparation”). The back of your credit card receipt for the meal or drinks is a good place to record this information.

Make sure to schedule your trip so that it remains 100% business. If registration begins on Sunday, with activities that begin on Monday and end Thursday, you would want to arrive on Saturday or Sunday and leave on Friday. This way you have no “personal days”. Schedule your time so you spend at least four hours each day participating in a conference event or activity. Keep time logs or sign-in information to prove your participation in conference activities.

Travel that is extended to get a reduced airfare (such as a Saturday or Sunday night stay-over for domestic travel) is allowed, even though there is no business activity on the extra day, if the extra cost of the stay-over is less than or equal to your airfare savings (IRS Private Letter Ruling 9237014).

So you have always wanted to visit San Francisco. Find a conference or convention related to your business that is being held there and take a tax-deductible vacation!

The cost of THE NEW SCHEDULE C NOTEBOOK is normally $7.95.  I am offering a special summer discount – for all orders postmarked by August 31^st the cost is only $5.30 – a 1/3 discount!

Send your check or money order for $5.30, payable to Taxes and Accounting, Inc, to –

SUMMER SPECIAL OFFER

TAXES AND ACCOUNTING, INC

POST OFFICE BOX A

HAWLEY NJ 18428

TTFN

WHAT’S THE BUZZ, TELL ME WHAT’S A HAPPENNIN’ – SPECIAL MONDAY EDITION

I’m back!

Due to a FU resulting from my reaction to a serious hack to my gmail account I was unable to access any of my Google.com accounts, including, blogger, for almost a month.  So I was unable to post anything here at TWTP.  I had tried to change my host to wordpress.com – but it was truly a PITA and I gave up.  Things are back to normal now – hopefully for good.

There really was not much BUZZ about taxes to report during my period of absence.  Below are a few items worth mentioning.

* Jeremy Diamond of CNN reported “Jeb Bush to Release 33 Years of Tax Returns” -

“Former Florida Gov. Jeb Bush will release 33 years of tax returns online Tuesday, giving voters a clearer picture of Bush's wealth and business dealings over the years.”

I actually have 33 and more years of 1040 copies for some of my long-term clients.

I tell my clients and readers to keep the copy of their 1040 (or 1040A), with W-2s and all included schedules and forms (A, B, C, D, 2106, etc) forever.  This provides a permanent record of your financial history.  You never know when the information on a prior year’s tax return will come in handy for a variety of tax or financial related reasons, or just to satisfy personal curiosity.  Maybe Jeb read one of my blog posts about this.

* Jason continued his class on “Marriage in the Tax Code” at DINESEN TAX TIMES with “Part 12:Meet the Marriage Penalty” and “Part 13: Examples of the Marriage Penalty in the Early 1970s”.

* And Jason asked the question “Who Claims the Kids When a Single Parent Dies Mid-Year?” in “Part1” and provided the answer in “Part 2”.

* Robert W Wood of FORBES.COM gave us another blog list – “10 Things to Know About Taxes On Legal Settlements”. -

* Professor Jim Maule reminded us to “Be Careful With Divorce Tax Planning” at MAULED AGAIN.

Regardless of how good your divorce lawyer is, it is very, very important to have a potential divorce agreement reviewed by a tax professional before signing anything.

As I said in a guest post at FORBES – “while you would certainly want Arnie Becker as your divorce attorney, you should have the divorce agreement reviewed and approved by Stuart Markowitz before signing it.”

The cultural reference shows my age.  A more current reference would replace Arnie Becker with David Lee and Stuart Markowitz with Will Gardner.

* Another reminder was given by Russ Fox at TAXABLE TALK – “Yes, Illegal Income Is Taxable”.

THE FINAL WORD –

Perhaps the most disturbing development in American politics in my lifetime (and I am 61) is the fact that self-absorbed boob Donald Trump is taken seriously as a Presidential candidate.  His past flirtations with Presidential politics have always rightfully been treated as the joke that it was., and is. 

TTFN

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

ALERT - MY GMAIL ACCOUNT HAS BEEN HACKED.  DO NOT OPEN ANY ATTACHMENT ALLEGEDLY SENT FROM MY GMAIL ACCOUNT.  IN THE FUTURE PLEASE VERIFY WITH ME AT MY YAH00 EMAIL ACCOUNT BEFORE OPENING ANYTHING.

* The Obamacare decision was not the only one with 1040 preparation consequences handed down by the Supreme Court last week.  Kay Bell reports “Same-Sex Marriage Now Law of the Land” at her BANKRATE.COM blog –

“In a 5-4 decision, the country's highest court ruled on Friday that no state can ban same-sex marriages or ignore such legal ceremonies performed elsewhere.”

Well, not exactly.  Kay points out –

“Technically, the Supreme Court's decision only applies to the four states where the cases before the court originated, Adam Romero, senior counsel at UCLA's Williams Institute, told NPR. That's Ohio, Kentucky, Tennessee and Michigan.

Further court action is necessary for the Supreme Court ruling to apply to the other states with bans, but most same-sex marriage advocates expect the judicial system to move relatively quickly.”

The tax angle –

“But thanks to today's Supreme Court ruling, now states that collect income taxes must offer federally recognized same-sex married filers the joint filing option at that level, too.”

Or, as Desmond Hudson, aka ‏@MrIdotaxes, tweeted –

“Now I don't have to ask what state were you married in for tax purposes.”

* As if the IRS wasn’t in enough trouble, over at her DON’T MESS WITH TAXES blog Kay reports “IRS Gave Tax-Owing Companies Contracts Worth $19 Million” -

“. . . according to the Treasury Inspector General for Tax Administration (TIGTA), the IRS has violated the federal law that prevents it from doing business with businesses that haven't paid their taxes. The IRS also ignored the other portion of that law, enacted in 2012, that prohibits agency contracts with companies that have been convicted of felonies.

In total, during fiscal years 2012 and 2013 the IRS awarded 57 contracts to 17 corporations that weren't eligible because of their tax debts or prior legal sanctions.”

* John Koskinen was appointed as Commissioner of the IRS to fix the agency after the Tea Party scandal became public.  He was described at the time as “an executive who has built his reputation on turning around troubled enterprises”.  However things have actually gotten worse at the IRS since his appointment. 

Granted the idiots in Congress bare some responsibility for continually cutting the budget – but Koskinen has not proven himself to be an effective administrator.

It has gotten so bad that, according to FOX NEWS, “Republicans Weigh Impeachment for IRS Commissioner”.

My colleague Joe Kristan, author of THE ROTH AND COMPANY TAX UPDATE BLOG, gave Koskinen’s predecessor Doug Shulman the title of “the Worst IRS Commissioner Ever”.  The current Commissioner is certainly a close second, if he has not already taken over the title.

* Kelly Phillips Erb lists “8 Signs That It's Time To Get A New Tax Professional”.

 

If you are looking for a new tax professional don't ask me - I no longer accept any new clients (I am actually trying to "thin the herd").  You can start your search at FIND A TAX PROFESSIONAL.

#2 is a no-brainer.  No PTIN – out the door.  Without a PTIN this person should have never been your tax pro in the first place!

* The TAX POLICY BLOG of the Tax Foundation provides us with “A Quick Primer on Personal Income Taxes (with gifs!)”

THE FINAL WORD –

One of my clients is on the list of “N.J.'s Best Burger: 3 Great Spots in Jersey City and Hoboken”!

The Park Tavern on West Side Avenue in Jersey City opened, and became a client of my mentor Jim Gill, in 1972 – the same year that I began as an “apprentice” tax preparer with Jim.

TTFN

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

* The big tax news this week - Eric Reed explains “What Obamacare Supreme Court Decision Means for Consumers” at THE STREET –

“The lawsuit focused on specific language from the Affordable Care Act's Definitions section, which says that subsidies shall be made available to individuals who enroll in exchanges “established by the state.” Under the plaintiff’s plain-meaning argument, this word choice should preclude subsidies for anyone except those enrolled on state-based insurance exchanges, specifically the federal exchange Healthcare.gov.

The Court rejected this interpretation, along with the plaintiff’s argument that this language was built into the law intentionally to coerce states into setting up their own exchanges at the risk of losing access to federal subsidies.”

The piece also explains –

“Today’s ruling for the government will leave the system more or less in place, allowing subsidies to continue uninterrupted for enrollees on the federal exchange.”

While I support this SCOTUS decision, the law that is Obamacare is such a mucking fess that it truly needs to be drastically revised and rewritten.  If it is, I hope this time the idiots in Congress will actually read it.

* William Perez covers the issue of the “Premium Assistance Tax Credit”, and the Court decision, in detail at ABOUT.COM.

* Fellow tax pros – Have you reviewed, and commented on, my discussion of the proposed “Tax Practitioners Bill of Rights” at THE TAX PROFESSIONAL yet?  And have you checked out the MAILBAG Page lately? 

* Check out my article “Claiming Dependents: What Happens When Your Kids Fly the Coop?” at HOW MONEY WALKS.

* So long, farewell, auf wiedersehen, good night.  Another blog bites the dust.  I say good-bye to BOB’S BABBLINGS, but not without providing the answer to my Trivia Challenge.

* MARKET WATCH provides a slide show of “The 10 Most Tax-Friendly States for Retirees”.

My current home state of Pennsylvania is #10.  I doubt I would want to live in any of the other 9 (except maybe New Hampshire).  Nevada is #1 on the list (enjoy visiting every 4 or 5 years, but wouldn’t want to live there).

* Now here’s an appropriate item for a BUZZ post (as Joe Kristan has suggested) – William Perez gives “Tax Advice for Cannabis Entrepreneurs” at ABOUT.COM

* Don‘t know what to get your child as a graduation present.  Here’s an idea from Beverly DeVeny of THE SLOTT REPORT – “Give the Graduate a Gift of a Roth IRA”.

Of course the graduate must have earned income - and at least $5,500 to make the maximum contribution.   

* And the beat goes on.  Jason Dinesen gives us “Part 11: Meet the ‘Single Penalty’” in his series on “Marriage in the Tax Code” at DINESEN TAX TIMES.

 

If you ask me there should be neither a Single Penalty or a Marriage Penalty in the Tax Code!

* The IRS posts a “Last-Minute Reminder: Report Certain Foreign Bank and Financial Accounts to Treasury byJune 30".

* In case you were wondering, “Yes, Your 529 Plan will Affect Financial Aid”.  So says Kathryn Flynn at SAVING FOR COLLEGE.

* I can’t believe that anyone takes self-important fool Donald Trump seriously.  But it seem that he will be included in the first Republican debate!  I guess they figured the debate needed some comic relief. 

THE FINAL WORD –

I recently saw an excellent production of DAMN YANKEES at the Forestburgh Playhouse in (where else?) Forestburgh NY.

The number that opens the second act, THE GAME, could only be sung in the context of the 1950s.  Individual members of the Washington Senators sing about how they fought temptation – women, liquor, etc - because they “thought about the game”.  Do any of today’s players actually think about the game?  Doing so certainly has not helped them fight off temptation?  Basically they just think about themselves, as do most professional team athletes today.

The concept of a player selling his soul to the devil, however, would certainly play today.

TTFN

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

Right on Ellen Degeneres.  She recently celebrated the date March 20, 1820 as the date Congress voted on the Missouri Compromise.  Why is this date important?

“It was the last time the words Congress and compromise were used in the same sentence.”

Not really.  The inability to compromise began when Newt Gingrich was Speaker of the House.

* Fellow tax pros – Have you reviewed, and commented on, my discussion of the proposed “Tax Practitioners Bill of Rights” at THE TAX PROFESSIONAL yet? 

* BTW – you can click here to sign a petition in support of the National Society of Accountants created “Tax Practitioner Bill of Rights”.

* No new post up yet at BOB’S BABBLINGS.  If you missed it, check out last Monday’s post and enter my Trivia Challenge.

* Caleb Newquist suggests “Donald Trump's Accountants Should Quit” at GOING CONCERN.

I love Caleb’s spot-on descriptions of the pompous idiot –

“shaved orangutan”

“gold-dusted self-orgy of narcissism, Trump talked about his wealth at length because that's all he likes to talk about.”

“scary orange oaf”

I can’t imagine anyone in their right mind even thinking about voting for this fool.  How clueless is the Trumpster to think that anyone takes him seriously.

Need I remind you – he was chastised by Rosie O’Donnell for screwing his stockholders and his response to her criticism was “you’re fat”.

* Kay Bell tells us “Uber Ruling Underscores Contractor vs. Employee Conflict” (Uber is the name of a company, and not an adjective) at DON’T MESS WITH TAXES and advises “Make sure you are classified correctly, since it affects your taxes”.

* Kansas taxpayers be warned.  Trish McIntire reports on “The Largest Tax Increase" in the history of the state of Kansas at OUR TAXING TIMES.    

* CCH reports “Proposed Regulations Issued on ABLE Act Program Requirements (IR-2015-91; NPRMREG-102837-15)”.

FYI, ABLE is the “Achieving a Better Life Experience Act of 2014”.  CCH explains –

“The ABLE Act permits states and state agencies or instrumentalities to establish and maintain a new type of tax-favored savings program through which contributions may be made to the account of an eligible disabled individual to meet qualified disability expenses. These accounts also receive favorable treatment for certain means-tested federal programs.”  

TTFN

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

* Fellow tax pros - I have a new post at THE TAX PROFESSIONAL that discusses the proposed “Tax Practitioner’s Bill of Rights”.  What do you think? 

If you haven’t seen last week’s post yet do so now! 

* On a similar topic – Michael Cohn reports at ACCOUNTING TODAY that “Senators Introduce Bill to Enhance Taxpayer Bill of Rights”.

Senators Chuck Grassley, R-Iowa, and John Thune, R-S.D. have introduced the Taxpayer Bill of Rights Enhancement Act of 2015.  Apparently the act is more a reaction to the “IRS Scandal”, which Prof Paul Caron posts is now in its 771^st day (can you say “obsession”).  It doesn’t look like it addresses the rights identified in my TAX PROFESSIONAL piece.

* Have you entered by Trivia Challenge at BOB’S BABBLINGS yet?  Why not?    

* The CCH TAX NEWS HEADLINES tells us “House Appropriations Panel Approves $10.1-Billion FY 2016 Budget for IRS” (highlight is mine) –

“The measure, which passed by a vote of 30 to 20, includes $10.1-billion to fund the IRS for FY 2016, which represents a cut of approximately $838 million, compared to FY 2015.”

This appropriation, which comes on top of FY 2014 cuts to the IRS budget of $526 million, would “would fund the IRS at 2004 levels”.

The FY 2014 budget cuts have caused IRS taxpayer service to be abysmal.  Cutting another $838 Million would make it almost non-existent.

This is another reason (as if I needed one) why I will never refer to the members of Congress without identifying them as idiots.  These fools continue to force additional inappropriate tasks on the Service, as in the case of Obamacare, but do not provide the proper funding for these tasks. 

When the idiots in Congress give the IRS additional tasks it should provide additional specific earmarked funding to pay for them. 

I believe that fiscal mismanagement of the budget cuts have added to the drastic reduction in taxpayer service.  I think that IRS management purposefully applied much of the budget cuts to taxpayer service to anger the public into complaining to Congress – but that is just my opinion.

* Jeff Stimpson quoted me in his TAXPRO TODAY piece “Retro Grade: What Went Right and Wrong This Tax Season”.

* Jason Dinesen is up to “Part 10: Filing Statuses Arrive in 1948” in his series on “Marriage in the Tax Code” at DINESEN TAX TIMES.

* And Jason begins a new series of blog posts on “Choosing a Business Entity” by defining some “Basic Terminology”.

* Jason gives us a BUZZ trifecta with “Same-sex Marriage and Paycheck Withholdings – An Unpleasant Surprise on 2014 Tax Returns”.

Jason correctly observes –

“Contrary to what the H&R Block and TurboTax commercials imply, there’s no magic that a preparer can work to give people a bigger refund — tax refunds are almost always determined by how much tax was withheld from wages during the year.”

The examples, and the solution, in Jason’s post apply to “traditional” married couples as well as same-sex married couples.

* Thankfully I will not have to deal with this aspect of Obamacare, but in case you do Barbara Weltman asks “How Many Employees Do You Have?" At BARBARA’S BLOG.

What am I talking about?  As Barbara explains –

“Under the Affordable Care Act, you can’t rely on a head count. You need to determine an average each month throughout the year for purposes to know whether you’re subject to the employer mandate.”

* That tonsorially-challenged fool is at it again.  Political cartoonists and comics everywhere are giving thanks to God.  Tony Nitti tell us “Donald Trump Announces Bid For Presidency”.

As I “tweeted” to Kay Bell, I would vote for Homer Simpson for President before I would vote for “noted gasbag” (as Tony aptly describes him) Tronald Dump.

THE FINAL WORD –

Despite the sentiments of the popular song, back in the day when MTV was a legitimate cable station that actually provided legitimate entertainment, the musicians who appeared in the videos did really earn their money (although what they did with some of the money earned can be called into question).

Today it is truly the “featured participants” (I refuse to call them “stars”) of reality tv excrement that get “money for nothing”, and, with nonsense like THE BACHELOR, “chicks for free”

TTFN