Friday, November 30, 2012
THE NATP YEAR-END TAX UPDATE SEMINAR
As mentioned in Wednesday’s BUZZ, this week I attended the National Association of Tax Professionals’ annual year-end tax update seminar “The Essential 1040” (it was formerly “Famous”, but is now “Essential”) in New Jersey.
While the day was basically an update of what is new for 2012 tax returns, with nothing really new for me, there were a few items of interest.
(1) The draft version of the 2012 Form 1040 (and 1040A) is available for viewing. They are the same as their 2011 counterparts, with the same number of lines. However certain Lines are marked “Reserved” – for the popular tax extenders that expired on December 31, 2011, and have not yet been extended for 2012 by the idiots in Congress, but which the IRS is thinking probably will be.
They include Lines 23 and 34 on Page 1 of the 2012 Form 1040, and Lines 16 and 18 on the 1040A, are “reserved” for the deductions for educator expenses and tuition and fees respectively.
On Page 2 of the 2012 Form 1040 Line 67 and item b. on Line 71 is also “Reserved”. Line 67 on the 2011 form was used for the First-Time Homebuyer Creditfrom Form 5405, and item b on Line 71 referenced Form 8839, used for Qualified Adoption Expenses (which was refundable).
The draft of the 2012 Schedule A, for Itemized Deductions, is also available. Item b of Line 5 (under “Taxes You Paid”) is “Reserved” for the possible extension of the option to deduct state and local sales taxes instead of state and local income taxes.
(2) The IRS has said that because of the delay by the idiots in Congress in dealing with the extenders, including the annual AMT patch, and more detailed checking to prevent fraudulent returns, refunds from electronically filed 2012 income tax returns will no longer be issued in 2 weeks. It will not take 4 to 6 weeks to process the refunds.
This sounds like the processing time we had been used to with manually filed returns. So it looks like filing electronically will not get your refund to you any faster than filing manually.
(3) FYI – the “incidental only” (no meals) per diem allowance for business travel is $5.00. It is the same as 2011.
This covers fees and tips to airport, train station, and hotel personnel. It is generally used by business travelers who do not incur meal expenses while “on the road” – i.e. they stay with relatives who feed them, or all meals are included in the price of an event or activity.
And the special Meals and Incidental Expenses per diem for transportation workers (like over-the-road truck drivers) also remains the same as 2011 - $59.00 per day for travel within CONUS (continental US) and $65.00 per day for OCONUS (outside the continental US) travel.
(4) The IRS is getting better at matching 1099 information returns to amounts reported on the Form 1040 (or 1040A), and will continue to issue CP-2000 notices when discrepancies are identified – so be sure to report all 1099 items somewhere on your return.
And, of course, just because you do not receive a Form 1099 in the mail does not mean that one was not issued and sent to the IRS.
(5) This, I will admit, was new to me. The interest that has accrued on US Savings Bonds is taxable in the year that the individual bond matures, and not necessarily in the year the bond is cashed in (i.e. a bond matures in 2010, but is not cashed in until 2012).
I verified this via TREASURY DIRECT -
“The interest earned on your savings bonds is subject to federal income tax, which can be deferred until redemption, final maturity, or other taxable disposition, whichever occurs first.”
(6) Another FYI, especially for tax pros - 43 inmates on death row were issued PTINs (Preparer Tax Identification Numbers) - the number issued by the Internal Revenue Service to paid tax return preparers who have registered with the IRS.
(7) The seminar leaders, both very good (while some are obviously more better than others -my buddy Beanna Whitlock will have you in stitches while learning something important about tax law – I do not recall ever coming across a bad or unsatisfactory NATP seminar leader), both discussed the “back-ended ROTH” strategy.
A taxpayer wants to contribute to a ROTH IRA for 2012, but has too much income to be able to do so (MAGI of more than $183,000 if married filing joint, $10,000 if married filing separately, or $125,000 for all others).
So the taxpayer puts the maximum $5,000 or $6,000 (depending on age) in a non-deductible “traditional” IRA. Once this contribution has been processed the taxpayer converts the $5,000 or $6,000 in the traditional IRA account to a ROTH account. There is no longer an income threshold for converting a traditional IRA to a ROTH IRA.
As the taxpayer’s basis in the IRA is $5,000 or $6,000, his 2012 non-deductible contribution, there is no taxable income to report. If the money deposited in the non-deductible traditional IRA account earns $5.00 in interest prior to the conversion, then the taxpayer reports $5.00 as taxable income.
(8) Be sure to read my THE TAX PROFESSIONAL post for my commentary on items discussed at the seminar that apply to taxpros.
I have now completed my CPE for the year. While the IRS requires 15 hours per year, in 2012 I took 24 hours in federal taxation and 8 hours in state taxation (actually all NATP or NJ-NATP classes). And there were some federal courses offered recently that I would have taken if not for cash flow issues. First up in 2013 is the excellent NJ-NATP famous State Tax Seminar in mid-January.