Saturday, September 29, 2007

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

Another “buzz-y” week!

* Jeremy Vohwinkle of ABOUT.COM: FINANCIAL PLANNING provides help if you “worked for a company that entitled you to a pension benefit that has since gone out of business and wonder how to collect your money” in his posting “Finding a Lost Pension”.
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* St Louis-based accountant Kirk Walsh discusses “Rangel’s Tax ‘Reform’ Proposal” in his blog at KIRKWALSH.COM. As one would expect, we must beware when a politician uses the terms “reform” or “fix”.
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* Linda Beale reports on the status of fraud by H+R and Jackson Hewitt employees in her posting “Jackson Hewitt Pays $1.5 Million” at A TAXING MATTER.
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* THE TAX GIRL, Kelly Phillips Erg, lists “9 Ways to Get Your Tax Return Noticed by the IRS (and that’s not a good thing)”. All are excellent points, especially item #8 and especially beginning with tax year 2007.
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I was surprised at #7 – I have never seen a return claiming Form 2106 expenses on Schedule C. Nor have I ever seen a return where more than one filing status has been checked (Item #5).
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Regarding #3 – you may be using the correct Social Security number but the wrong name. If you changed your name due to marriage or divorce you should promptly contact the Social Security Administration to get a new SS card with your new name. Sam will match numbers to names on tax returns and a problem will arise if a Social Security number listed on the return does not match exactly the name in the SSA files.
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Similarly, re: Item #4, you may not necessarily have claimed an ineligible dependent. It may be that someone else has. You may be entitled to the dependency deduction under the law, but an ex-spouse or other relative may think they are too and erroneously claim the person on their return. So you do not actually have to make a mistake yourself for Sam to notice your tax return.
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Many of the mistakes on Kelly’s list can be avoided by having your return prepared by a competent tax professional.
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* Find out who won Kristine McKinley’s “$15 for your BEST grocery money saving tips" contest at FINANCIAL TIPS FOR WAHMs. And while you are there you can check out all the other tips for saving money when shopping for groceries.
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* I am aware that the various state Divisions of Motor Vehicles will not issue vanity license plates using words or phrases that are “suggestive”. Many years ago a long-time client named Richard was denied vanity plates that read DICK1, DICK2, etc for his several autos and had to settle for RICK1, RICK2, etc.
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An AP story I read at iwon.com reports that recently the state of Oregon ordered a family to turn in the vanity license plates on its cars because their Dutch last name, written on the plates, is similar to an offensive word. The plates, UDINK1, UDINK2, and UDINK3 are on the vehicles of Mike and Shelly Udink and their son Kalei.
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UDINK? I could see not allowing USUCK, but UDINK does not “suggest” anything to me personally. Isn’t a DINK a married yuppie couple with Dual Income No Kids?
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Apparently, according to an Oregon DMV spokesperson, the word can be treated as a verb, which gives it a sexual reference, and also can be a racial slur targeted at the Vietnamese.
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I have often toyed with the idea of getting vanity plates that read “1040” – but I am sure they are already taken. Perhaps TAXPRO.
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* A newly married taxpayer asks Kathy Howell, an IRS employee who writes a tax Q+A blog at OregonLive.com, “What should I file on my W-4?
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My advice to newly-married taxpayers is that for at least the first year both should claim “Married, but withheld at higher Single rate-0” (basically the same thing as Single-0) to cover their arses. When the 2007 return is filed and the tax calculated they can make adjustments for future years. As a general rule, the spouse with the lower salary should always claim “Married, but withheld at higher Single rate-0” while the higher-earning spouse can claim “Married-0” or “Married-1”.
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Married couples have to be concerned with not only the “marriage penalty” but the under-withholding that will occur because both spouses work.
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* The Small Business Taxes and Management website has added a new special report to answer the question “Expenses of Dormant Business Deductible?
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* Tuesday’s daily email Tax Newsletter from CCH reported on a new “phishing scam” in “New E-Mail Scam Mimics IRS 'Where's my Refund'". Check out the details and be on the look-out.
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Over the past few days I have received several emails allegedly from “Internal Revenue Service” with a Subject Line message that makes reference to a refund. I have deleted all these emails unopened.
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I have said it before and I will say it again – the IRS will never initiate any contact with a taxpayer via email.
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* I read in an accounting email newsletter Iowa is conducting its first state tax amnesty program in more than 20 years. The program will run through October 31. This amnesty program covers all state taxes and fees administered by the Iowa Department of Revenue. For more information on the amnesty program go to www.iowataxamnesty.gov.
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These tax amnesty programs are a wonderful way to raise funds and collect past due taxes. Congress, which has been so concerned with the tax gap of late, should seriously consider instituting a federal tax amnesty program. The IRS wouldn’t have to pay a private collection agency a % of the tax collected. If done right the costs of such a program would be minimal.
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* MarketWatch reports on some of the actions the IRS is considering in an attempt to close the “tax gap” in “Closing the 'Tax Gap'". This includes (1) having credit-card companies report the total gross receipts on all merchant accounts, (2) making the failure to file an income tax return an “aggravated felony”, and (3) mandatory reporting of stock basis by brokerages. Thumbs way up on item #3 (I have been a long-time supporter of requiring brokers to report cost basis on Form 1099-B – it would make my life much, much easier at tax time), thumbs down on #2 (unless it requires a willful disregard of filing requirements – as with tax protesters), and no real objection to #1.

* The Yellow Rose of Taxes, Kay Bell, provides us with a “Toyota Tax Time Reminder” - “The tax credit for fuel-efficient Toyota and Lexus vehicles expires on Sunday, Sept. 30.”
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TTFN

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