THERE IS ABSOLUTELY NO LEGITIMATE OR ACCEPTABLE REASON FOR ANY INDIVIDUAL TO OWN AN ASSAULT WEAPON.  

PERIOD!

 

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

Let me begin with a message to every 1040 client from every tax preparer –

“Dear Client -
 
DO NOT email me to ask about your 2021, or 2020, federal refund.  There is absolutely nothing I, or you, can do to expedite the processing of your 2021 federal return or the issuance of your 2021 federal refund.  The word is it will take 5 – 6 months from the date the return was received by the IRS to get your refund.  You just need patience.  FYI – the IRS will pay you interest on your late refund, recently increased from 4% to 5%.”
 
* It’s the least they can do.  THE HILL reports, as I stated above, “IRS to pay 5 percent interest to individuals with delayed tax refunds”.
 
Of course, this interest is taxable income and must be reported on your 2022 federal and state income tax returns.
 
* Let me help you to experience THE JOY OF AVOIDING TAXES.
 
* A warning from Sarah Brenner at THE SLOTT REPORT – “Watch Out For The Once-Per-Year Rollover Rule”.
 
* Check out the new format of my BOBSERVATIONS blog – now a monthly online “magazine”.  Please share this with friends, family, colleagues, and co-workers.  Your thoughts and comments are welcomed and solicited.
 
* Michael Cohn reports “IRS sent over $800M in potentially improper recovery rebate payments” at ACCOUNTING TODAY.
 
I have no doubt this is true.  I am personally aware of many taxpayers who got a 3^rd stimulus payment but should not have.
 
TTFN

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

FYI - According to the IRS, As of April 29 there were 6.2 MILLION paper returns awaiting review and processing.   The word is it will take 5 to 6 months to process a return and issue a refund.

There is absolutely nothing your tax preparer can do to expedite the processing of your federal return or the issuance of your federal refund – so DO NOT call or email him or her to ask about your refund!

 

* Back in March KIPLINGER.COM listed the “10 Least Tax-Friendly States for Retirees”.  Once again, like Oliver Twist, NJ is last on the list, despite the recently expanded Retirement Income Exclusion -  
 
“Sorry, New Jersey, but you're the least tax-friendly state in the country for retirees. And, once again, it's the property taxes that are crushing retirees. The Garden State has the highest median property tax rate in the country.”
 
KIPLINGER also more recently listed the “10 Most Tax-Friendly States for Retirees.

 

* Kay Bell celebrated Friday the 13^th with “Don't fear, or fall for, these 13 scary, but wrong, tax myths” at DON’T MESS WITH TAXES.

 

Here is one tax myth she forgot – All CPAs are 1040 experts.  An individual CPA may be a 1040 expert, but it has absolutely nothing to do with the initials after his or her name.

 

*  Congratulations to Professor Annette Nellen on the “15th Anniversary of the 21st Century Taxation Blog”.

 

THE LAST WORD

I very sincerely believe anyone who actually listens to, believes, defends, and supports Trump is either a moron, a racist, has no conscience, or, like Trump himself, all three.

There is absolutely no intelligent or acceptable reason for anyone to listen to, believe, defend, or support Trump.

If you support Trump and today’s Trump-embracing Republican Party you truly are an enemy of America, American democracy and true American values.

TTFN

THE TRUTH ABOUT THE SECOND AMENDMENT

 

NOT A CONSERVATIVE ISSUE!

 BANNING ABORTION IS NOT A CONSERVATIVE ISSUE!  

IT IS CONTRARY TO TRUE CONSERVATIVE POLICY.

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

 * In the Eide Bailly “Tax News & Views” blog’s recent “Calling Santa Roundup” Jay Heflin quotes an item from Bloomberg Tax (unable to provide a link here as it is a restricted paid subscription site) with the sad news about the IRS processing of manual returns (highlight is mine) -

“’Taxpayers will have to wait at least six months to get refunds on paper tax returns filed this year’, National Taxpayer Advocate Erin Collins said.”

 

And –

 

“Even if returns were filed in January, refunds for paper-filed returns may arrive in June’, she said, speaking Thursday at a D.C. Bar conference.

 

Collins also said amended returns, even if they were filed electronically, are being processed as if they were paper. Amended returns, she said, are 'just as backlogged as the original return.'”

 

There is absolutely nothing your tax preparer can do to expedite the processing of your 2021 tax return – so don’t email him or her if you haven’t received your federal refund yet!

 

* TaxGirl Kelly Phillips Erb discusses “Many Unhappy Returns: How to Deal With a Bad Tax Relationship” at her BLOOMBERG.COM blog.

 

One good point she makes that is important for taxpayers/clients to understand (highlights are mine) –

 

“. . . your tax professional isn’t a miracle worker. If you haven’t done any tax planning all year, checked up on your withholding, or paid attention to cryptocurrency and other transactions, your tax professional can’t simply wave a magic wand to make things different.”

 

* Russ Fox continues his series on “2022 Tax Season: The Tax Season From Hell” at TAXABLE TALK with “Part 2”, which looks at what should be done by Congress and the IRS to fix the mess he described in Part 1.

 

His first item hits the nail on the head, echoing what I have been saying for years – “(a) pass simplification . . . and (b) stop making the IRS a benefits agency (which it isn’t).”

 

But, as Russ correctly points out, “Unfortunately, there is no chance of anything like this coming from this Administration.”

 

Russ also recommends we “Change the Tax Filing Deadline to May or June 15th.”  While I have always opposed extending the mid-April initial deadline, I would actually not object to extending it to April 30 – but no later.

 

THE LAST WORD

I wonder how many of the 1 Million Americans who died of COVID would still be alive today if Trump was not the President in 2020.

TTFN

2022 TAX RETURN RECORD KEEPING

 

So, how hard was it to gather together all of your 2021 tax “stuff” to give to your tax preparer? 

It is important that you have documentation for all of the income, deductions and credits reported and claimed on your federal and state tax return.  And, of course, you do not want to forget or miss a qualified deduction or credit.  You must keep good records throughout the year.

I have created a 2022 GUIDE TO TAX RETURN RECORDKEEPING to help you in gathering and organizing your 2022 tax “stuff” and help you to pay the absolute least federal income tax possible for 2022.

My guide contains detailed text covering what is taxable and deductible and what information and documentation you will need to properly prepare your 2022 tax return, and forms, schedules and worksheets for compiling and identifying the documentation you will need to provide to your professional tax preparer in 2023.  It discusses in detail –

·         MY BEST TAX ADVICE

·         WHAT TO GIVE YOUR PREPARER

·         WHO MUST FILE A 2022 TAX RETURN

·         FILING STATUS

·         DEPENDENTS AND EXEMPTIONS

·         INFORMATION RETURNS

·         INVESTMENT SALES

·         2022 CONTRIBUTION LIMITS FOR RETIREMENT PLANS

·         REPORTING GAMBLING INCOME

·         ADJUSTMENTS TO INCOME

·         ITEMIZED DEDUCTIONS

·         DEDUCTIBLE RENTAL EXPENSES

·         CHILD CARE EXPENSES

·         ESTIMATED TAXES

·         HOW LONG MUST I KEEP MY TAX RECORDS

·         YEAR-END TAX PLANNING

The cost of the Guide is only $16.45 - postage included.

Send your check or money order for $16.45 payable to Taxes and Accounting, Inc. and your postal mailing address to -

TAXES AND ACCOUNTING, INC
2022 GUIDE TO TAX RETURN RECORDKEEPING
POST OFFICE BOX A
HAWLEY PA 18428

TTFN

LEARN HOW TO AVOID NEW JERSEY TAXES LEGALLY

As I say at the beginning of a new special report I have just completed – AVOID NEW JERSEY TAXES LEGALLY – “I have been preparing NJ-1040s for as long as there has been a NJ-1040.”

This new report explains in detail a tax strategy a NJ married couple can use to legally save up to $300+ in NJ state income taxes.  And perhaps save some federal income tax as well.

And it also identifies a special, I expect unintended, loophole in NJ state tax law that older married couples can use of to save as much as $2,500 in state income taxes.

The people who enact federal and state tax law – the members of Congress and state legislatures – have absolutely no concept of the practical application of the tax laws they pass.  In most cases they do not even read the legislation – they just do what the Party leadership tells them to do.  In this report I show you how to take advantage of the ignorance and laziness of the NJ legislature to put hundreds or thousands of dollars in your pocket.

This report includes several real-life examples of how I used this strategy and loophole to save my clients hundreds to thousands of dollars in NJ state income tax over the past few years and a special worksheet for your personal use.  It also briefly discusses other ways to legally avoid NJ state income taxes.

If you have not yet filed your 2021 NJ-1040 – you have requested an extension – you can use this strategy and loophole to reduce your 2021 state tax liability.  If you have already filed your 2021 return you can use this report to save for 2022 and beyond.

I will send you this special report for $6.99 plus $1.80 postage and mailing – a total of only $8.79.

Send your check or money order (payable to TAXES AND ACCOUNTING, INC) for $8.79 and your postal mailing address to –

AVOID NJ TAXES LEGALLY

TAXES AND ACCOUNTING INC
POST OFFICE BOX A
HAWLEY PA 18428

TTFN

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

 BUZZ, BUZZ.  The BUZZ is back!

* The National Society of Tax Professionals (NSTP) lists “Seven Common Myths About Tax Refunds”.

 

It is very important that you pay attention to Myth 6 (highlight is mine)–

 

“Myth 6: Calling a tax professional will provide a better refund date:

 

Contacting a tax professional will not speed up a refund. Tax professionals cannot move up a refund date nor do they have access to any "special" information that will provide a more accurate refund date.”

 

* Another return to normalcy in the White House – a President releases his tax return to the public, as reported by Kay Bell in “Tax tradition return redux: Biden and Harris again release their tax returns” at DON’T MESS WITH TAXES.

 

* Russ Fox begins a 4-part series on “2022 Tax Season: The Tax Season From Hell” at TAXABLE TALK.

It looks like I picked a good time to retire.

 

Part 1 deals with IRS and government issues.

 

* Attention fellow tax pros - the IRS has announced “The 2022 IRS Nationwide Tax Forum Will Be Held Virtually”.

 

TTFN

FYI

 

VERY VERY VERY IMPORTANT!

If you haven’t prepared or submitted your 2021 federal tax return yet and think, or know, you will owe your Uncle Sam IT IS VITALLY IMPORTANT THAT YOU GET A FORM 4868 EXTENSION REQUEST IN THE MAIL BEFORE MONDAY – EVEN IF YOU CANNOT PAY ANYTHING WITH THE EXTENSION.

The penalty for late payment of tax is .5% (1/2 of 1%) of what you owe per month.  The penalty for late filing – which is what you are doing without having submitted a Form 4868 – is 5% of what you owe per month.

TTFN

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

 

Long time no BUZZ.

* A timely tip for clients of tax pros from a “tweet” by Jan Roberg (@RobergTax)

“Tax Tip for Investors:  if you have an investment account and you receive a tax document, you need to send your accountant ALL of the pages.  As annoying as it seems, and some of them are really long, I get it, but we need to see the whole thing.” 

FYI - Fidelity does not mail clients the entire statement.  The dividend income detail and other important information is missing.  You must go online and print out the complete statement.

And, of course, tax pros need the separate statements of USGO percentages for mutual fund dividends and the state breakdown for tax-exempt mutual fund dividends - which are not part of the "official" Consolidated 1099 Year-End Statement.

* Chris Gaetano reports on a study in the American Accounting Association’s “Accounting Horizons” journal finds that showed what motivates taxpayers to use either DIY tax software or a paid prepare in “DIY vs. tax pro: How taxpayers choose” at ACCOUNTING TODAY (highlight is mine) -

“While both factors were cited as very important by study participants, those who prefer using DIY software found minimizing costs more valuable, while those who prefer a paid preparer said accuracy was their main priority.”

The moral – if you want a cheap return buy software, but if you want an accurate return use a tax professional.

* Some good advice from Kay Bell, the yellow rose of taxes, at DON’T MESS WITH TAXES – “Owe the IRS? Got a big refund? Adjust your withholding”.

* And Kay warns us “Don't fall for these 10 tax myths on April Fools' (or any) day”.

Pay attention to #10 -

“My tax preparer is liable for any errors.

Sorry, but you are still ultimately responsible for any mistakes on your tax return. If it's a joint filing, both spouses are jointly and severally liable, which is legalese for the IRS will come after you both for any due taxes. You should have paid better attention to the statement on your Form 1040 just above the line for your signature. The one that talks about ‘under penalties of perjury’”

TTFN

DOUBLE CHECK YOUR RETURN BEFORE SUBMITTING IT TO AVOID DELAYS

 

Here are s few things to double-check before submitting your tax returns (electronic or paper) to avoid delays and errors –

 

1) There has been a new question on Page 1 of the federal Form 1040 (and Form 1040-SR) the past few years.  It is under the name and address and before the Standard Deduction, Age and Blindness questions and list of Dependents.  It reads - “At any time during 2021, did you receive, sell, exchange, or otherwise dispose of any financial interest in any virtual currency?”  Be sure to check this box.  I expect for most taxpayers the answer is “no”.

 

2) Obviously double-check all math on the return – and all the carryforward of numbers to other lines, schedules and forms.  Beware of transpositions.

 

3) Double-check all the name and Social Security number entries on all pages.  The name and Social Security number must match exactly the records of the Social Security Administration – the name must appear as it does on your current Social Security card.

4) Double-check the bank routing and account numbers you enter when requesting direct deposit (and, considering how FU-ed the IRS is, you should request direct deposit). 

5) Don’t forget to attach COPY B of all W-2s and all 1099s that indicate tax withheld.

6) And, if filing a paper return be sure to sign it – both spouses if a joint return.

TTFN

WHAT TO DO WHEN YOU MAKE A GIFT OF STOCK

Here is some important advice for parents, grandparents or others who give their children, grandchildren or others gifts of stock shares – advice that will save the recipient of the gift, or more likely their tax professional, agita and aggravation when they sell the stock 10, 20, 30 years down the road – tell the recipient, in writing, when you purchased the shares and what you paid for them.

You should also tell the recipient, in writing, the “fair market value” of the shares at the time of the gift. 

When reporting the cost basis of an investment you sell that was received as a gift you need to know the cost basis of the person who made the gift, the fair market value of the investments on the day the gift was given, and when the person making the gift purchased the investments.  Generally, the “holding period” for determining long or short term begins on the date the person making the gift purchased the investment.

You should give the recipient of the stock, or his or her parents if a minor child, a copy of the “confirm” or a highlighted entry in a brokerage account statement, that shows the date of purchase and purchase price and a note that indicates the date of the gift and the stock’s value on that date – easily acquired via an online price quote.

In some cases, the gifted stock is purchased currently and given to the recipient.  Grandpa buys 75 shares of stock for his grandson on Monday and gives the stock to him on Wednesday.  But this is not always true.  The father of one of my clients had invested in PSEG regularly over the years, and participated in the company’s dividend reinvestment program.  Years after his initial investment he gifted 75 shares of his PSEG stock to his adult son.  And the son sold some of the shares 26 years later.

If you made a gift of stock in the past you should gather the information and give it to the recipient now.  You can use Big Charts to get a historical price quote for the fair market value on the date of the gift.   

TTFN

TAXES CHANGE WHEN A SPOUSE PASSES AWAY

 

When a spouse passes away there are many things of a financial nature that the surviving partner needs to address.  One important thing that the survivor needs to do is review and revise their income tax withholding.

The death of a spouse is one of the life-changing events when you need to contact your tax professional

The tax and withholding tables for a Single filer are different than those for married taxpayers filing a joint return.  And, most important, the Standard Deduction, which most taxpayers now claim, for a Single filer is half the amount allowed for a joint filer. 

While income may go down the first year a surviving spouse files as a Single taxpayer, if he or she claims the Standard Deduction, and also claimed it when filing jointly, using 2021 as an example, deductions will be reduced by at least $12,550.  

One possible mitigation to the reduced deductions does exist.  For most of my clients reaching the $10,000 SALT limit was not a problem whether filing as Single or married.  So, if mortgage interest and excessive medical expenses or contributions are a factor, the now Single filer may be able to itemize.

You need to do, or have your tax professional do, a projection of income and deductions for the first year as a Single filer and compare the resulting tax liability to current withholding.  You will probably need to file new Form W-4s (or, if applicable, W-4Vs) with your employer, pension provider or the Social Security Administration.  Or you may need to begin making quarterly estimated tax payments.

This applies to both your federal and state withholding.

TTFN

BUT THEY CASHED MY CHECK!

 

Clients who have received the IRS CP80 Notice telling them they have an outstanding credit for 2020 but they have not filed their 2020 return ask me, “How can the IRS say I haven’t filed my return when they cashed my check?”

Here is the story as I understand it (fellow tax pros – correct me if I am wrong) -

When you request a refund on a paper return you mail your tax return directly to the IRS.  Millions and millions of unprocessed 2020 paper-filed tax returns are currently sitting in piles in IRS offices.

When you have a balance due and are sending the IRS a check you mail your return and check to a Post Office Box which is maintained as part of a bank “lock box” service.  The bank promptly processes and deposits the check, based on the information provided on the accompanying Form 1040-V payment coupon, and sends the paper tax return to the IRS, where it joins the millions and millions of unprocessed returns in the pile.  The bank also electronically reports to the IRS that you made a payment for 2020.

The IRS system is aware of your payment but has not processed the return that corresponds to that payment - so the payment is not matched to a specific tax liability.  The Service system has a record of your payment but no record of your return.

TTFN

INCALCULABLE

 

The damage done to our country and our society by the Trump presidency is incalculable - and ongoing.

I continue to say without fear of contradiction that in our history no one single individual has done more damage to America, American values and American democracy than Trump.

Trump, as President, being openly ignorant and racist gave erroneous legitimacy and credibility to the ignorance and racism of too many Americans.

I love the play, and movie, “Inherit the Wind”.  It is not inconceivable that today, thanks in a large part to Trump, some districts in the south could once again mandate teaching the Biblical interpretation of creation in schools and ban the teaching of evolution and actual science.

I very seriously and sincerely believe that any person who listens to, believes, defends, and supports Trump is either a moron, a racist, has no conscience, or, like Trump himself, all three. 

There is very literally no rational, intelligent or acceptable reason for anyone to listen to, believe, defend and support Trump.

And I also very seriously and sincerely believe that today’s Republican Party is without a doubt the Party of Ignorance and Racism. 

It is vital in 2022 that all intelligent and patriotic Americans vote AGAINST all Republican candidates at all levels – unless the candidate vocally opposes, denounces and disavows Trump, his lies and the current leadership of the Republican Party, state and national, and has consistently done so.

TTFN

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

 

* It’s worse than we were told.  Russ Fox explains “That 6 Million Return Backlog? Oops, We Mad a Math Error: It’s Really 24 Million” at TAXABLE TALK.

He also tells us why calling the IRS is not a good idea.  Even in “normal times” I never call the IRS.  1. I want a written record of all dealings with the Service and 2. I have been lied to by the IRS person to whom I spoke when I called decades ago.

And he has some ideas on what the IRS should do.

BTW – Russ, my hair has been prematurely grey for years.

* Some good news from Kay Bell at DON’T MESS WITH TAXES - “IRS suspends issuance of 14 more taxpayer notices” - 

“After pressure from members of Congress, the National Taxpayer Advocate, and the Tax Professionals United for Taxpayer Relief Coalition, a group of organizations formed the to help make this third Covid-affected tax season a bit smoother, the Internal Revenue Service has decided to suspend sending of most taxpayer notices.”

Kay provides a detailed chart of the suspended notices.

* Michael Cohn tells us the “IRS posts special tax season info page for tax pros and taxpayers” at ACCOUNTING TODAY -

“The Internal Revenue Service has set up a dedicated page on its website to provide the latest information about the current tax season and the agency’s efforts to deal with the backlog of millions of previously filed returns.”

Click here to go to the new page.

* Back to Kay Bell, she reminds us “All unemployment benefits are again fully taxable”.

FYI – several states, erroneously, no longer actually mail out the Form 1099-G that reports unemployment income and withholding – you have to go online to the website of the state unemployment department to get it.  That is the case in New Jersey. 

And in most cases even if you had some federal withholding on unemployment benefits it is usually not enough to cover the actual tax cost.

* Once again Kay makes the trifecta with a reminder – “IRS sending 1099-INTs to taxpayers who got interest added to tax refunds”.

Thankfully the IRS has been paying interest on the late refunds of the past two years - which is, of course, taxable income.  The good thing about IRS interest is that it is substantially higher than what any bank or brokerage pays.

* Here is some good advice from Maryann Vognild, CFP at THE STREET – “Dreading Income Tax Season? Try Income Tax Planning Instead” –

“Do you feel Uncle Sam looming over you, waiting to cause devastating damage as soon as tax season hits? Well, there are ways to plan for taxes that can reduce your overall, lifetime tax burden... and to get Uncle Sam to stop being so frightening.”

I have been saying for decades – you don’t have to wait for Congress to pass a tax cut bill. You can enact your own personal tax cut with careful tax planning.

TTFN