Sunday, August 31, 2014

GA GA FOR HARMONY PRESENTS


This post has absolutely nothing to do with taxes of any kind – which is why I am posting it on a Sunday.  I had written it for another venue, but decided against pursuing it, and felt the piece shouldn’t go to waste.

I hadn’t been to the intimate Boiler Room, on “G” level of the Hawley Silk Mill here in northeast Pennsylvania, for a concert from Harmony Presents since the winter.  But the title of the rare Friday night concert on August 15th grabbed me – “Ga Ga for Gershwin”.

Harmony Presents showcases live performances ranging from Americana, Funk, Rock, Comedy, Classics, Theater and more in the Boiler Room on a weekly basis.  Seating is general admission, but if you buy a ticket in advance, either online or at the AMSkier Insurance Agency in “downtown” Hawley, you are guaranteed a seat.  

On my first encounter with Harmony Presents in late September of 2013 I was surprised at just how small the room was.  I had been expecting a more traditional theatre venue.  What I found reminded me of the coffee houses of the 60s and 70s in Greenwich Village and elsewhere.  I actually helped to run such a coffee house in a church building in Jersey City NJ in the early 1970s.    

“Ga Ga for Gershwin” featured two unique talents, Beach Lake resident Dorothy Stone, a cross continental critically acclaimed soprano, and Ori Dagan, "Canada's Next Top Crooner", accompanied by Toronto-based jazz pianist Patrick Hewan in a tribute to the Great American Songbook's composers & lyricists.

In addition to Gershwin the duo also presented selections from Irving Berlin, Hoagie Carmichael, Cole Porter, Jerome Kern, and Rodgers and Hart.

Dorothy and Ori are online at Facebook and Twitter (@Diva_Crooner) as “Diva Meets Crooner”.

The room sits about 60.  This was the first show I had been to that appeared to be sold out, and I was glad I had purchased my ticket online.  There is an outdoor balcony area that overlooks the Ledges Hotel back deck and the waterfall.  Harmony Presents does not have a liquor license, but Cocoon Coffee House, located on the Silk Mill “campus”, sells wine, beer, snacks and coffee in the lobby area before the show and during intermission.

Guests who purchase advance tickets online may use their ticket for 20% off after-show drinks at the Glass Wine Bar & Bistro at Ledges Hotel between 9:30 and 10:00 PM on the day of the show.

Harmony Presents is run by Managing Director Jill Carletti, who is also Director of Social Media at AMSkier.  Before coming to Harmony Presents she was a freelance artist, designer, musician and teacher locally and abroad.  Jill does a great job of booking the talent and serving as greeter and Master of Ceremonies, as well as occasionally working the sound board.  We are “Twitter buddies”.

Harmony has a full schedule of Saturday night concerts, from 7:30 – 9:30, through the end of November.  There is also stand-up comedy on the occasional Friday, and Jill has promised magic acts are coming. 

I am looking forward to a theatrical reading of Bill Donnelly's new comedy "Silverstein" at the Boiler Room on Friday evening September 19th.  Hope to see you there.

TTFN

Friday, August 29, 2014

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


* Did you see the “Message from My Cat” yet?

* Nicholas Pell, my colleague at the MAINSTREET.COM Tax Center, gives some good suggestions in “What You Can Do About Your Taxes Mid-Year”.

* Kay Bell, the yellow rose of taxes, tells us that the “IRS, Betting That Expired State and Local Sales Tax Deduction Will Be Renewed, Hires Firm to Calculate Schedule A Tables” (now there is a mouthful) at DON’T MESS WITH TAXES.

The IRS joins most tax professionals who expect that the idiots in Congress will once again temporarily extend this option at the very last minute.

“ . . . CCH has announced that for the 10th consecutive year, the IRS has selected the company {tax publisher and software company Wolters Kluwer, that is – rdf} to provide the data for the comprehensive sales tax rate and taxability tables that filers will use for their 2014 returns ... if Congress renews the tax deduction.”

Even though the IRS expects the “extenders” to be extended, when the idiots in Congress once again wait until the very last minute to do so it will still cause delays in IRS’s ability to begin processing 2014 tax returns.

* Kay has been attending the final IRS Nationwide Tax Forum in Orlando this week, and has been posting about the experience.  In “IRS Orlando Tax Forum Day 2: Health Care, Humor and Tunes” she talks about the new Obamacare rules for 2015 –

The first audience ‘question’ for the Internal Revenue Service ACA office representative after the taxpayer shared responsibility session was, ‘You know this is going to be a disaster, don't you?’"

And (highlight is mine) -

Based on the walk-through of the many steps and calculations necessary to comply with just this tax component of the health care law, it's true that the 2015 filing season won't be easy for taxpayers, tax preparers or the IRS.”

Just another example of why non-tax social welfare “stuff” does not belong in the Tax Code, and why tax preparers need representation with teeth in Washington to say to Congress and the IRS, “We ain’t going to do that!”  (see “Who Speaks for the Tax Preparer?”)

And she references one of the seminars titled "Is This Deductible? My Barber Seems to Think So!" which I would have liked to have attended (perhaps I will order the CD of the session).  The seminar title recalls my best tax advice – don’t accept tax advice from anyone other than a competent tax professional.

I have not attended the IRS Forums since the northeast location was moved from New York City to Maryland.  I will be attending the NATP’s replacement Forum in Atlantic City next month.


Budget pressures at the Internal Revenue Service's Criminal Investigation Division are cutting the number of investigators there to the lowest level in four decades, and officials say the changes are forcing the division to scale back its fight of financial crime.”

* Jim Blankenship addresses “10 Questions: Social Security Spousal Benefits” at GETTING YOUR FINANCIAL DUCKS IN A ROW.

* And, along the same lines, Kristine McKinley warns “What You Don’t Know About Social Security Spousal Benefits Can Hurt You” at SOCIAL SECURITY COACH.

* Jeffrey Levine and Jared Trexler answer “5 Questions Commonly Asked by 401(k) Participants” at THE SLOTT REPORT.

* A timely guest post at MODEST MONEY lists “10 Things A Parent Should Know About 529 Plans”.

THE FINAL WORD –

What in the name of common sense was a 9-year old doing learning how to shoot an uzi????? 

Why was a 9-year old legally allowed to take shooting lessons period?????

No individual, regardless of age, should ever be allowed to own an uzi!!!!  You do not need an uzi to shoot a deer in the woods.

In most states we do not allow the sale of cigarettes or alcohol to anyone under 21 and do not allow a person to drive until age 16 or 17.  There is absolutely no reason whatsoever, under any circumstances, why we should ever put any gun, let alone an uzi, in the hands of a 9-year old.

Fuck the 2nd Amendment.  The right to bear arms does not translate under any interpretation to putting an uzi in the hands of a 9-year old.

I would like to hear the NRA justify teaching a 9-year old how to shoot an uzi.  It seems that the Association’s reaction to this tragedy was a “tweet” referencing "7 Ways Children Can Have Fun at the Shooting Range".  The height of stupidity and insensitivity. 

Any parent that would teach their 9-year old how to shoot a gun should have their children taken away from them for child endangerment.  9-year olds should be taught to never touch a gun!

TTFN

Tuesday, August 26, 2014

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


* Did you see the “Message from My Cat” yet?

* Barbara Weltman’s BARBARA’S BLOG post “Small Business and Politics” brings us some good news.

According to a recent Manta survey of small business owners –

81% plan to vote out sitting incumbents.”   

Barbara reminds us (highlight is mine) –

November 4 is Election Day, which is less than 3 months away. On this day, all members of the House of Representatives and one-third of the Senate are up for election.”

Many people believe that the 113th Congress is the worst Congress in history, and certainly the least productive.

Since the current batch of idiots in Congress have not been doing the job they were elected to do we should “vote the bastards out” in November by getting a “GRIP” – Get Rid of Incumbent Politicians.

An important reminder – whatever you do, DO NOT replace incumbent Congresscritters with candidates who belong or pander to the Tea Party Movement!  I realize it is hard to believe that Congress could be worse than it is now, but with more Tea Party voices in the mix it certainly would.

* Laura Saunders provides an example of “Tax-Smart Philanthropy Made Easy” at THE WALL STREET JOURNAL.  She tells us “Many Donors Should Consider a 'Charitable Gift Trust' or 'Donor Advised Fund'” -

Charitable-gift funds enable investors to earmark funds for gifts and get an immediate tax deduction, while allowing them to postpone making decisions about specific recipients. Meanwhile, the money is invested and grows tax-free until it's disbursed.”

This is great for those who need a bigger current tax deduction, but do not want to make a direct gift to a charity or charities this year.  You can contribute $5,000 to a “Donor Advised Fund” today, or in December, and get a 2014 tax deduction, but you do not have to identify the specific charities until 2015.  

* Kay Bells tells us about the “Coverdell Education Savings Account's Pre-College Options” at DON’T MESS WITH TAXES –

That's right. Unlike many Internal Revenue Code education tax breaks, the use of Coverdell funds also includes qualified costs incurred from kindergarten classes and through high school diploma day.”

* In my annual warning about not using fast-food tax preparation chains to prepare your 1040 (DON'T ASSUME) I say –

 “With commercial preparation chains I expect that the actual cost of preparing the return - salaries paid to the seasonal preparers and the training of these preparers - is one of the smallest items in the budget.”

I recently came across a post from EDUCATION CAREER ARTICLES – “Salary Information for Tax Professionals” – from November 2013 that apparently confirms this -

The leading tax preparation companies, H&R Block, Liberty Tax and Jackson Hewitt pay an average wage of $9.50 an hour.”


On average, H&R Block pays its temporary employees about $12 per hour.”

And it also says –

. . . and may also pay commissions on sales of certain non-essential products.”

And MONSTER.COM says in “Seasonal Tax-Preparation Jobs” –

H&R Block tax professionals are paid based on a commission formula. In addition to an hourly rate (average starting rate is $9 per hour), consideration is given to such factors as the number and complexity of the tax returns you prepare . . .”

So the base wage of the average tax season employee of Henry and Richard is pitifully low (based on the level of education and training that should be required to properly do the job of correctly preparing 1040s), but they can increase their earnings based on the fees they charge to clients (the more they charge a taxpayer for a return the more they put in their pocket) and by forcing unnecessary and “non-essential” products on clients.

“Nuff said.

* Tax pros – still waiting to hear your comments on “THE SOLUTION TO THE QUESTION OF A VOLUNTARY TAXPREPARER CREDENTIAL”!

TTFN

Monday, August 25, 2014

OOPS! THEY DID IT AGAIN


The State of New Jersey wants its residents to submit their NJ-1040 state income tax returns electronically.  Those taxpayers, and tax preparers (like me), who do not use flawed and expensive tax preparation software can do so via NJWebFile, which allows taxpayers to submit their returns directly to the NJ Division of Taxation without going through a third-party commercial preparation or software company. 

The advantage to the taxpayer is that if your NJWebFile generated NJ-1040 results in a refund you can have the money directly deposited to your bank account instead of waiting for a paper check, which you must do with a paper return.  And, as with any electronically submitted return, the preparer of the return is entering the information directly into the State’s system.  There is no middle-man data entry person who could make an error in entering the information, as is the case with a paper filed return.

If the NJWebFile generated return results in a balance due, the system creates a payment voucher that the taxpayer prints out to accompany the check payment.  On the bottom of this computer-generated voucher is a numerical code that is scanned in Trenton to process the payment.

For the third time during a tax filing season the NJWebFile generated payment voucher code apparently identifies the year for which the payment is being made as the prior year and not the current year.  Although the voucher itself clearly says “2013 Payment Voucher” the payment is applied to 2012 and not 2013.

As a result, taxpayers who made a full and timely payment of the balance due on their NJWebFile submitted 2013 NJ-1040 are now erroneously receiving underpayment notices for the previously paid balance due on their 2013 return plus interest.  I have heard from 5 clients already.

Applying the 2013 payment to 2012 would create an overpayment on the taxpayer’s 2012 tax account.  If there was an overpayment on a federal return tax year account the Internal Revenue Service would promptly send the taxpayer a notice identifying the overpayment and asking for an explanation of the payment or if the taxpayer wants the amount refunded.  One would think that the NJ Division of Taxation would do the same thing.  It certainly has a fiduciary responsibility to do so.  But, of course, the NJDOT remains silent and just gladly accepts the overpayment.

I realize I am cynical when it comes to government and politics, having grown up in Hudson County NJ.  But my take is that NJDOT is purposefully silent, hoping that the taxpayer does not discover the overpayment, thus allowing the State of New Jersey to keep the money for its legislators to waste on pork and entitlements.  But that is just me.  I expect that the excuse that would be given is that the software system is at fault because it does not include an internal “prompt” to create an overpayment notice the same as it automatically generates an underpayment notice.

Well if the reason for the silence lies in the limitations of the software then fix the software so that it does automatically generate an overpayment notice.

The NJ Division of Taxation does fix the FU and properly apply the payment when it is told of the error.

This is not a new problem.  It has happened before during two prior tax filing seasons – in 2009 for 2008 NJ-1040s and in 2006 for 2005 NJ-1040s.

So if you have received an underpayment notice for your 2013 NJ-1040 DO NOT PAY IT.  Send it to your tax professional ASAP.  You should do this any time you receive a balance due notice from the IRS, the NJDOT, or any other state tax agency.  In my experience more than 2/3 of all balance due notices from tax agencies are wrong (and that is a conservative estimate).

If you “self-prepared” the 2013 NJ-1040 check to see if the “Balance of Tax” indicated on the notice is the same as the balance due on the 2013 NJ-1040 that you paid back in March or April.  If it is write to the NJDOT to tell them they FU-ed and include a copy of your cancelled check for the original payment.

The “management” of the NJ Division of Taxation is well aware of the existence of this systemic problem – I have made them so aware.  Let us hope that they fix the system so that –

(1)  this error does not happen again two or three years from now, and

(2)  their system automatically identifies and generates a notice to the taxpayer when an overpayment on a tax year account is made.

The State wants taxpayers, and preparers, to submit income tax returns electronically – but when they do the returns and payments therefor are not properly processed.

The NJWebFile is a great system – yet it is seriously limited.  There are too many situations where a taxpayer cannot submit a NJ-1040 via this system.  For example, you can reduce 1000 individual investment trades to one entry under the online schedule for “Net gains or income from the disposition of property” with NJWebFile, but you cannot use this method if you have Schedule C income or income from a K-1 for a partnership or sub-S corporation.  The NJDOT should restructure the system to reduce these limitations.

TTFN

Friday, August 22, 2014

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


* Did you see the “Message from My Cat” yet?

* My post on keeping W-2s forever is included in ACCOUNTING TODAY’s weekly BUZZ-like “In the Blogs” post, this one titled “Maybe They Should Tax Doritos”.

* It’s time for FORBES.COM’s TaxGirl Kelly Phillips Erb annual “Call For Guest Posts About Hot Tax Issues” -

This year, I’m offering readers the chance to answer one of six tax-related questions:

• To combat inversions and other tax planning techniques for corporations, do you think Congress should lower corporate tax rates?

• Do you support repeal of the federal estate tax?

• Would you be willing to give up your citizenship if it meant you would save money in taxes?

• Should our Social Security system be privatized?

• Would you support a commuter tax by the mile if it meant the elimination or reduction of excise taxes on gas?

• If you could make one significant change to the existing Tax Code (change a rate, eliminate a deduction or something else), what would it be and why?

* In light of the recent fascination with “tax inversions” Kay Bell answers the question “How Does the U.S. Corporate Tax Rate Compare to Other Countries?” at DON’T MESS WITH TAXES.

Kay’s “tweet” promoting the post tells us –

Of the 163 nations it surveyed, the Tax Foundation found the United States has the third highest corporate tax rate.”

And the post itself tells us -

“Topping the tax list is the United Arab Emirates at 55 percent, with Chad in second place at 40 percent.

Overall, the Tax Foundation found that the U.S. tax rate is 16.5 percentage points higher than the worldwide average of 22.6 percent.”

* The TAX FOUNDATION has a map of “The Real Value of $100 in Each State” -

Using data from the Bureau of Economic Analysis that we’ve written about previously, we adjust the value of $100 to reflect how prices are different in each state.”

My former home state of NJ is the 4th worst state on the list.  $100 is worth only $87.64 (better than New York but worse than California).  I do much better in my new home state of PA at $101.32.

* An FYI – check out some “Historical Highlights of the IRS”.

THE FINAL WORD –

Looting and destruction of property is NEVER an acceptable response to an alleged or real injustice.  It is a selfish criminal act.

And opportunists like Al Sharpton should stay home and shut up.  Their “involvement” in situations like Ferguson only make things worse.  Taking advantage of a family tragedy for personal publicity or gain is despicable.
 
TTFN

Tuesday, August 19, 2014

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


* Did you see the “Message from My Cat” yet?

* Eva Rosenberg of EQUIFAX explains “What You Need to Know About Inheritance Taxes”, specifically dealing with whether or not an inheritance is taxable.

* At FORBES.COM David Brunori tells us “Congress Shouldn't Make State Tax Systems Worse”.  Easier said then done!

I like, and agree wholeheartedly with, David’s introductory statements –

Our national legislature, whether the Democratically controlled Senate or the GOP-led House, is a joke.

Congress certainly doesn’t do taxes well, or at least it hasn’t since 1986. The federal corporate tax needs to be reformed. The personal income tax could stand some good tax policy revisions as well. Members of Congress have very little knowledge about good tax policy . . .”

* Did you know “The IRS Has a Tax Cheat Sheet for Small Business Owners”?  So we are told by FOX BUSINESS.

Think what you will of the IRS and its past and current management, the Service’s website has some great resources.

* Kay Bell asks “Would You Trust Your Taxes to a Robot?” at DON’T MESS WITH TAXES.

She tells us –

Most of the folks who participated in Pew Research Center's 2014 Future of the Internet canvass said they expect robotics and artificial intelligence, or AI, will permeate much of our daily lives by 2025.”

And also refers to “the September 2013 paper "The Future of Employment: How Susceptible Are Jobs to Comptuterisation?" by Carl Benedikt Frey and Michael A. Osborne”.

Tax preparers have a 99 percent potential for computerizationon on the Frey/Osborne list.  However, this certainly will not happen in my lifetime.

Kay correctly observes –

While on paper, tax preparation with all its forms and math calculations looks to be a good fit for total computerization, we know that won't happen. Trained people always will be needed to decipher the laws that govern the required paperwork.

More importantly, we'll need people to help work out strategies for the best, most money-saving application of the tax laws.”

Hey, aren’t many returns already being prepared by “robots” – or at least computers?  Most employees of Henry and Richard and other fast food preparation chains are nothing more than data entry clerks – with the return actually being prepared, often erroneously and always expensively, by computerized tax preparation software.  And unfortunately this situation is not limited to fast food chains.

I like Kay’s tax preparation scenario with Hal, “the implacable, and lip-reading space craft controller in 2001: A Space Odyssey”.

* USA TODAY brings us some disturbing news – “A Third of People Have Nothing Saved for Retirement”.

A lot of folk have empty nest eggs. A third of people (36%) in this country have nothing saved for retirement, a new survey shows.

In fact, 14% of people 65 and older have no retirement savings; 26% of those 50 to 64 have nothing saved; 33%, 30 to 49; and 69%, 18 to 29, according to the survey of 1,003 adults, conducted for Bankrate.com.”

What about you?

THE FINAL WORD

This past week-end was the 45th Anniversary of the Woodstock Music and Arts Fair at Max Yasgur’s farm in Bethel Woods NY.

I was in the area, spending summer vacation in Beach Lake PA, during the original festival – but was only 15 and too young to attend.  I do remember seeing overhead shots of the crowds in the Sunday News.

My family had driven to Lake Huntington NY, less than ten miles from Yasgur’s farm, (where my mother grew up; she told me that she knew Max Yasgur in her youth), and we stopped at a local general store.  The proprietor told my father he had nothing to sell him because the “hippies” had bought everything in the store!  

Earlier this summer I went to the Bethel Woods Center for the Arts, on the site of the original festival, to see Crosby, Stills and Nash, who had performed at Woodstock.

TTFN

Monday, August 18, 2014

KEEP COPIES OF YOUR W-2s FOREVER!


For years now, when asked by clients or readers, “How long should I keep my tax records?” I have recommended that you keep the copy of your actual Form 1040 (or 1040A) with all attached forms and schedules forever. 
 
My reasons - your 1040s provide a permanent record of your financial history, and 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.

I now add to this advice also keep copies of all your W-2s forever.

Just the other day a long-time client asked me if I had copies of his wife’s 1998 and 1999 Form W-2s.  He had not saved them, and needed the forms for an issue with his wife’s employer, who had lost their records for past years in a flood and did not have back-up copies stored elsewhere.  While I have copies of his 1040s back to the mid-70s, I did not have a copy of the needed W-2s.  Back then I was not keeping copies of W-2s and other information returns. 

FYI, I did start making copies of at least W-2s and 1099-Rs to attach to my copy of client returns in the early 2000’s.

During the tax filing season I came across a situation where a client, a retired municipal police officer, took a distribution from his deferred compensation account.  The distribution was fully taxable on the federal return, as employee contributions were “pre-tax”.  But for NJ state income tax purposes employee contributions were not “pre-tax”, so he had a “basis” in the account and at least some of the distribution would be considered a tax-free return of contributions.

I told the client to call the account trustee and ask for the total amount of employee contributions to the plan over the term of his employment.  However, because the trustee had changed several times over the years, information was only available for contributions made since 2000.  The client, who first came to me in the early 2000’s, had joined the police force in the 1980s. 

The trustee told my client to get the information for the years before 2000 from his W-2s.  Client contributions to retirement plans are usually reported in Box 12 or Box 14 of Form W-2.  Of course the client did not have copies of all his W-2s going back that far, nor had he kept copies of all of the year-end account statements.

So you see, you never know when you will need the information reported on a Form W-2. 
 
I provided the client looking for his wife's W-2s with the information I found on the IRS website -
 
"The IRS does not retain actual copies of Form W-2 except as an attachment to your tax return, for prior years. However, the IRS maintains (and will provide free of charge) Form W-2 information for any purpose for the past ten processing years. Use Form 4506-T (PDF), Request for Transcript of Tax Return, to request Form W-2 information. The only way to get an actual copy of your Form W-2 from the IRS is to order a copy of the entire return on Form 4506 (PDF), Request for Copy of Tax Return, and pay a fee of $50.00 for each return requested."
 
So the bottom line - keep copies of all your W-2s forever.

TTFN