WALK IN OUR DOOR AND WALK OUT WITH A CHECK!

When I returned to my car after visiting a business client in Jersey City on Sunday I found an ad from LIBERTY TAX on my windshield. 

The ad merely said “Get Up To $1,300 FAST!” in big print and “If you’re approved for Easy Advance*” in smaller print.

There was absolutely no mention that LIBERTY TAX preparers are knowledgeable and experienced in preparing 1040s and will be able to properly prepare your 1040 so that you will pay the absolute least amount of federal and state income tax legally allowable.

There was actually no mention of tax returns at all – just the picture of a much younger and more attractive Statue of Liberty wearing a LIBERTY TAX banner and holding a large dollar sign.  The ad just said, in effect, “Walk in our door and walk out with a check”.

The really small print referenced by the * after Easy Advance did say –

“An Easy Advance (EA) {as opposed to an Enrolled Agent EA - rdf} is a loan secured by your tax refund”.

And also stated –

“There are no fees or interest associated with the EA.”

But (highlight is mine) –

“Loan amount options are determined by your expected tax refund less authorized fees.”

It doesn’t say whether the “authorized fees” are limited to the tax preparation fee.

Clearly LIBERTY TAX is preying on low income individuals who need fast cash and are more interested in the cash than preparing a correct return.

My advice to all taxpayers – never use Henry & Richard or LIBERTY TAX or JACKSON HEWITT or any fast food tax commercial chain to prepare your federal and state income tax returns.  You will pay less money, get more personal service, and actually get a properly prepared return by using an independent tax professional. 

You can look for an independent tax pro at FIND A TAX PROFESSIONAL.

 

 

 

 

 

 

 

 

 

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

I didn’t think Henry and Richard’s tv ads could get any more stupid than the ones they ran last year – with the buffoon in the bow-tie jumping out of a plane.  But I was wrong.  This year’s ads are even dumber!

Be aware that Henry and Richard ain’t cheap.  Another reason why H&R needs to overcharge for its services – it is paying John Hamm to appear in the ads!

Obviously I do not believe anyone should use Henry and Richard to prepare their tax return.  You will get more and better personal service from an independent tax professional – and may actually pay less.

* Once again “Taxpayer Advocate Urges Congress To Reform The IRS And Overhaul The Tax Code”, according to Ashlea Ebeling at FORBES.COM.

Nina Olsen, in her annual report to Congress, explained her “#1 legislative priority is for Congress to overhaul the tax code”

Ashlea tells us –

“Olson recommends that Congress start with a tax code without any tax expenditures, and then add a provision back in only if lawmakers decide that the public policy benefits of running the provision through the tax code outweigh the tax complexity burden the provision creates for taxpayers and the IRS.”

It sounds like Nina has visited my website “A Tax Professional for Tax Reform” or read my frequent posts on tax reform.  I have been saying exactly the same thing for years.

Some of Nina’s recommendations for tax reform include –

“• Repeal the Alternative Minimum Tax for individuals

• Consolidate the family status provisions in the tax code

• Consolidate at least 12 incentives to save or spend for education

• Consolidate at least 15 incentives to save for retirement

• Simplify worker classification determinations to minimize employee-versus-independent-contract disputes

• Eliminate incentives to enact tax laws that expire or sunset

• Eliminate phase-outs of tax benefits as income rises

• Streamline the more than 170 civil penalties in the tax code”

Good recommendations all.  I have also called for the elimination of phase-outs of tax benefits as income rises for years now.

From Nina’s mouth, via her report, to God’s ears!

 * Kay Bell, the yellow rose of taxes, talks about the importance of “Keeping track of tax deductible miles” at DON’T MESS WITH TAXES.

Excellent advice in the bottom line to the post –

“ . . . keep up with your miles as you travel. It's easier than trying to recreate them months later at tax-filing time.

Plus, your contemporaneous mileage records will be much more convincing if the IRS ever questions your driving deductions.”

* KB had a post titled “Where to find your perfect tax preparer”.  If you want to find the perfect tax preparer for your situation begin your search at FIND A TAX PROFESSIONAL.

* A post on Spacebook from a NY state tax professional explains –

“New York residents: If your tax professional asks you for your DRIVER'S LICENSE as part of your tax return filing this year, they are not crazy.

NY now requires the taxpayer and spouse to include their driver's license on all e-filed resident and non-resident income tax returns.”

Part of new regulations to protect taxpayers from identity theft.  NJ also asks for a driver’s license, but I do believe this is still voluntary.

Thanks, John Sheeley EA, for the word!

* At STIKKS TALT TAXES “Stikks” (aka Jamaal Soloman) continues his series of “Quick Tax Tips For The Tax Season” with Tip #5 – “Tax Credit for Saving Money!!!”.

The post tells you how to “Plan Now to Get Full Benefit of Saver’s Credit; Tax Credit Helps Low- and Moderate-Income Workers Save for Retirement”.

* TaxGirl Kelly Phillips Erb reports “New Taxes Send The Price Of Gas Soaring In Some States” at FORBES.COM.

My home state of PA is on the list of the most expensive states for gas, actually slightly more expensive than New York.  Luckily I live close to NJ border and travel into the “Garden State” at least every-other week, so I usually fill-up there.  However, thanks to a state gas tax increase at the end of 2016, NJ is no longer on the list of the least expensive states for gas – although still much better than PA and NY.

* And KPE brings back her popular series “Getting To Know You Tuesday” by introducing us to Enrolled Agent “Stuart Hack”.

An interesting personal anecdote from Stuart provides some good advice –

“When my daughter was born 19 years ago, I read in Money Magazine that if I invested $200 a month in an index fund, I would have $100,000 by the time she's ready for College. I did, the account had over $100,000 and since she goes to a Public State University not only is College paid for, but she will have money left over to invest once she graduates.”

* Attention fellow tax pros - the IRS has announced the dates for the 2017 Nationwide Tax Forums:

Orlando, FL = July 11-13

Dallas, TX = July 25-27

National Harbor, MD = August 22-24

Las Vegas, NV = August 29-31

San Diego, CA = September 12-14

* Ever wonder “Why Does the IRS Care So Much About Employee vs. Contractor?”  Jason Dinesen provides the answers, including a cynical one, at DINESEN TAX TIMES.

* A good reminder from Professor Jim Maule at MAULED AGAIN – “Don’t Forget to Sign the Return”!  

* From the CCH weekday-daily news headlines e-letter – “Ryan Says Repeal and Replacement of ACA to be Concurrent; Democrats Question Components”.

Let us hope that is true and that both repeal and replacement are included in the same legislation.

* The NSTP BLOG provides a “quick primer on medical account options” in “Comparing Tax-Favored HAS, HRA & FSA Medical Options”. 

The Last Word –

Trump’s plan to supposedly avoid conflict of interests while in office is totally unacceptable.

Blogger Daniel Shaviro has identified three ways a President can make money through his businesses, absent a blind trust –

“One is to shape government policies, procurement decisions, etcetera, to favor his businesses. A second is to get business from others who seek to curry favor (the emoluments issue). A third is to have the businesses act on inside information about impending news before it becomes public.”

You can be sure Trump knows about, and will take full advantage of, all three if he can.

Write to your Congresscritters and tell them to support the bill discussed in “Elizabeth Warren and Democrats introduce bill to push Trump to divest businesses”.

Nothing less than what this legislation calls for should be acceptable for any President of any party.  It had been standard practice by Presidents in the past, who acted out of ethical responsibility.  The law now becomes a necessity because of Trump’s arrogance and greed.

“The legislation looks to require ‘the president, vice president, their spouses and minor or dependent children to divest all interests that create financial conflicts of interest placing those assets in a true blind trust,’ according to a fact sheet from Warren's office. It ‘will be managed by an independent trustee who will oversee the sale of assets and place the proceeds in conflict-free holdings.’

It also includes a symbolic statement that the president skirting ethics rules constitutes ‘a high crime or misdemeanor under the impeachment clause of the U.S. Constitution.’"

TTFN

 

 NO tax software package, or online filing service, is a substitute for knowledge of the Tax Code, and NO tax software package, or online filing service, is a substitute for a competent, experienced tax professional.

 

Do you need to find a qualified and competent tax professional?

Begin your search at http://www.findataxprofessional.com.

 

WHO MUST FILE A 2016 TAX RETURN?

Do you have to file a 2016 tax return?  Let’s review.

 

Generally, you do not have to file a federal 2016 Form 1040, or 1040A, unless your “gross income” is at least -

 

Single = 10,350

 

Single, Age 65 or Older = 11,900 

 

Head of Household (with one dependent) = 17,400

 

Married Couple = 20,700

 

Family of 4 = 28,800

 

Married Couple, Both 65 or Older = 23,200

 

“Gross income” means –

 

“All income you received in the form of money, goods, property, and services that is not exempt from tax, including any income from sources outside the United States or from the sale of your main home (even if you can exclude part or all of it). Do not include any social security benefits unless (a) you are married filing a separate return and you lived with your spouse at any time in 2014 or (b) one-half of your social security benefits plus your other gross income and any tax-exempt interest is more than $25,000 ($32,000 if married filing jointly).” 

 

Gross income includes gains, but not losses, reported on Form 8949 or Schedule D.  If you are a sole proprietor filing a Schedule C, gross income is the amount reported on Line 7 of Part 1 – gross receipts less returns and allowances and cost of goods sold plus “other income”.  And if you are a landlord gross income includes the gross rents reported on Schedule E.

 

So you see that the filing requirements are not based on actual "net" taxable income.  For any type of business income or capital gains the income before deducting any expenses or deducting the cost basis of investments sold is counted.  You must file a return to identify the expenses and cost basis.

 

You must file a tax return for a dependent if any of the following applies –

* unearned income is more than $1,050

* earned income is more than $6,300, or

* gross income is more than the greater of $1,050 or the sum of $350 and the individual's earned income (total not more than $6,300).

 

Regardless of your gross income, you generally must file an income tax return if

 

* you had net self-employment income of $400 or more,

* you owe household employment taxes,

* you owe additional taxes on premature retirement plan distributions

* you failed to take a required minimum distribution from a retirement plan,

* you must repay the 2008 Homebuyer Credit,

* you owe Social Security and Medicare taxes on unreported tip income, or

* you received an advance payment on the Premium Tax Credit.

 

And, whether or not you are required to do so, you should file a tax return to get a refund of tax withheld or to take advantage of a refundable tax credit like the Earned Income Credit or the Additional Child Tax Credit.

 

Another reason to file a tax return, even if you are not legally required to do so, is to start the clock running on the normally 3-year statute of limitations for IRS audit or review of a return. 

 

The numbers for individual state income tax returns differ.  You may not have to file a federal return, but you must, or should, file a state return.  For example, the State of Pennsylvania is a gross income tax with no personal exemptions or standard, or itemized, deductions.  You must file a PA-40 and pay the 3.07% flat state income tax if “you received total PA gross taxable income in excess of $33”. 

 

Any questions?  Ask your, or a, tax professional.  To find a qualified tax professional in your area go to FIND A TAX PROFESSIONAL.

 

Would you like to know “What’s New In Taxes for 2016”?  Click here.  

 

TTFN

 

 

 

 

 

 

 

 

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

It is very important that anyone who voted for Trump watch this video!!!  Please click here.

* OOPS! I forgot to mention last week that I made TaxGirl Kelly Phillips Erb’s list of “100 Must-Follow Tax Twitter Accounts For 2017” at FORBES.COM   .

So, please, do follow me on Twitter.

* KPE also told us “The First Thing Taxpayers Should Do In 2017”.

Her excellent bottom line -

“Keeping accurate, contemporaneous records is your best bet.”

I also discuss “Starting the Year Off Right” tax-wise in my new quarterly newsletter ROBERT D FLACH’S TAX INSIGHTS.

* For a KPE trifecta – ICYMI “The Complete List For 12 Days Of Charitable Giving 2016”.

*What’s this – a 4^th BUZZ-worth post from KPW – making it a “hambone” in professional bowling parlance? 

“The Top Tax Posts You Did - And Didn't -Read In 2016” lists the most, and least, popular of Kelly’s 2016 blog posts based on actual views.

* ACCOUNTING TODAY brings us the word that “Senate Democrats unveil bill requiring Trump to release tax returns” -

“Senator Ron Wyden, D-Ore., the ranking Democrat on the Senate Finance Committee, introduced legislation Wednesday requiring President-elect Donald Trump to release the three most recent years of his tax returns.

Several other Senate Democrats joined Wyden in introducing the bill, known as the Presidential Tax Transparency Act, which would also require future presidential nominees to release three years of tax returns.”

Unfortunately, with the Republicans in control of Congress, there is doubt this can pass – although we can hope there are some Republicans in Congress with integrity and a conscience. 

I doubt idiot Trump will ever release any tax returns unless under penalty of impeachment. 

* The NSTP BLOG reminds small business owners of the new “Increase in Information Return Penalties”.  

* Have you read the January 1, 2017 issue of LIBERTY TIMES yet?  I explain how the Republican Party, by pandering to the religious right, has perverted true conservative philosophy, and identify the “theme song” of the upcoming disastrous Trump administration.  

* Jamaal “Stikks” Solomon begins a post series of “Quick Tax Tips for the Tax Season” with “Dude, Where is My Refund?!!!” at STIKKS TALKS TAXES.

For those who use a tax pro to prepare their returns, here is what my January letter to clients says about refunds-

“Clients often email me to tell me they have not received their refund and ask me to find out what happened.  I cannot do this!  Do not contact me if your refund is late – there is nothing I can do that you cannot do yourself.  Once I have returned your finished return to you, and you have mailed it to the appropriate “uncle” (Sam, Chris, Andy), its fate is out of my hands.  You can check on the status of your refund online.”  

* And “Stikks” advises taxpayers to “Fight Back Against Fraudulent Tax Return Preparers #1: The Power of Your Signature”.

Important points made by JS.  First, be sure to read completely the return before signing, and do not sign if you do not recognize deductions or understand something on the return.  And second, make sure the preparer signs the return and includes his or her PTIN before accepting and paying for it.

Stikks will continue to deal with fraudulent tax professionals in future posts.

* The EMPOWERED TAX LAW LLC BLOG has some advice for S-corporation owners in a discussion of a recent Tax Court case in “S Corporation Owner Subject to Self-Employment Tax”

* Kay Bell looks both back and forward in “Top 10 tax topics of 2016 and what to expect in 2017” at DON’T MESS WITH TAXES.

* And Kay also reports “Tax pros are target of new e-services phishing scam”.

* An FYI from Jeff Stimpson at ACCOUNTING TODAY – “IRS processed 150mn returns in 2016" -

“The IRS reports that it processed 150,018,266 returns from last season through Nov. 23. Income tax collected after credits was $1,416,834,888.”

* Robert W Wood warns “IRS Forms 1099 Are Coming, Packing A Tax Punch” at FORBES.COM.

RWW’s bottom line is very important -

“Forms 1099 are a vital part of IRS matching. Take these forms seriously. The IRS sure does.”

* I agree with Jason Dinesen’s post “From the Archives” – “The IRS’s Preparer Directory Will Be Bad News for Enrolled Agents”.

I specifically agree that “the directory provides little useful information for taxpayers”.

If the IRS is going to provide a directory of tax preparers it should be a state-by-state alphabetical listing of all PTIN holders – everyone who is authorized by the IRS to prepare 1040s (and 1040As) for compensation – without exception.  It may list a person’s recognized credentials, including the ACAT ATA and ATP, after one’s name, but it should not indicate in any way that a PTIN-holder without an official credential is not an “IRS-approved” tax preparer.

* While repeal of Obamacare, and hopefully replacement, is eminent, it is important to know that, as per the CCH weekday daily email newsletter, “Some ACA Provisions Could Continue Temporarily Post-Repeal”.

Obviously it would be best if the replacement of good Obamcare provisions were included in the legislation that repeals ACA.  But remember that we are dealing with Congress, and Congress is still made up, for the most part, of idiots.

* Let me end on a non-1040 item – although state taxes certainly do play a big part in the issue.

It came as no surprise to me that, as per 101.5 FM, “More people leave NJ than any other state, study shows”.

“For the fourth straight year, New Jersey finished dead last in the 39th annual United Van Lines’ National Movers Study.”

There are lots of reasons to leave New Jersey and many benefits of living elsewhere – I should know, having moved from NJ to North East PA in 2012 after living my entire life (except for a summer in NY) in the “Garden State”.

I am curious if the recent state tax law changes – increased retirement income exclusion and end of state Estate Tax - will affect the migration from NJ going forward.

The Last Word –

We must not “normalize” Trump now that he is the President-elect.

Trump is not a “normal” or “legitimate” politician.  He must not be viewed and treated in the same context as a Bush or Romney or McCain, or a Clinton or Obama or Saunders, or a Ryan or Cruz or Kasich.

Trump is a totally self-absorbed narcissist, a pathological liar, and possibly a sociopath, without any true political beliefs or convictions, whose mental disorders make him incapable of intelligent and rational thought and action.

He must not be accepted or supported or respected as President by the American people.  He should be denounced and opposed as the dangerous and mentally unstable person that he is.

TTFN

 

 

 

 

 

 

MY ANNUAL POST FOR JOURNALISTS AND BLOGGERS

This post, which I issue every year at this time, is for all of the journalists and bloggers out there.

 

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

 

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

 

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

 

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

 

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

 

Got it?

 

TTFN

 

 

 

 

 

 

 

 

REPEAL AND REPLACE

Professor Annette Nellen posts about “Repealing Obamacare - Costs and Issues!” at 21^st CENTURY TAXATION.

Annette correctly observes –

“Repeal won’t be easy and likely won’t be popular.”

I wrote about Obamacare in my post “Donald Trump for President is a Lot Like Obamacare” –

“The basic concept of Obamacare – universal substantive health insurance coverage – is a good one.

But Obamacare as hastily written, without taking the time to properly and completely think it through – i.e. the Affordable Care Act (ACA) - is a convoluted mess.  Its many flaws outweigh its benefits.”

In the post I also said –

“The Affordable Care Act as written, like the US Tax Code, should be totally shredded and rewritten from scratch.”

There are good things about Obamacare –

·      Financial assistance to reduce out-of-pocket premium costs for individuals who otherwise cannot afford health insurance – currently in the form of the Premium Tax Credit.

·      Required acceptance of “pre-existing conditions”.

But there are many bad things, among them –

·      Financial penalties for not having coverage or not providing coverage to employees.

·      Premium costs based on age (the older you are the more expensive the premiums).

·      Requiring individuals to purchase insurance through a state-based federal Marketplace in order to get financial assistance via the Premium Tax Credit.  Actually the state-based federal Marketplace in general.

·      Requiring the IRS to administer yet another federal social welfare program.

·      The NIIT and Medicare surtaxes, and other restrictions and "nickel and dime" taxes and fees.

And, of course, as with anything written by the idiots in Congress, as I said in my post it is a complicated and inequitable mucking fess.

The Republicans have to be careful to actually adequately and properly replace and not just repeal Obamacare in its legislation so those currently covered are not screwed, as Americans too often are by the idiots in Congress.

TTFN