Tax preparers Feed

If the changes to Form 1040 this filing season frustrated you, there's some good news and some bad news. The good news is that the Internal Revenue Service is revising the Form 1040 to be used for 2019 tax filings. No, it's still not quite a postcard. But there will be fewer schedules to file — three instead of six — if your taxes are a bit more complicated. The bad news is that many of us still have to fill out those schedules (and the accompanying forms for additional tax break claims that remained) instead of having things on... Read more →


The Earned Income Tax Credit (EITC) was created more than 40 years ago as a way to give lower-earning workers a tax break. But from the get-go, the EITC has been problematic. Now, just weeks before the National Taxpayer Advocate retires, her office has offered Congress some suggestions on how to improve the tax credit, as well as how it can be more effectively administered. Some tax credit history: The way we got to today's EITC is almost as complicated and intricate as the tax break itself. When created in 1975, the EITC was supposed to be a temporary tax... Read more →


Things that are never good: an unexpected envelope from the Internal Revenue Service. That's the assessment of one of my personal finance writer pals. Today, she's working to clear things up in connection with one of those mailing she got from Uncle Sam's tax man. It's not a fun exercise, but it's definitely one you should undertake if you disagree with an IRS decision. In fact, the IRS own Taxpayer Bill of Rights covers this situation in several of its tenets. Specifically, I'm looking at every taxpayer's right to: Pay no more than the correct amount of tax, Challenge the... Read more →


At least one state, Texas, joins the Internal Revenue Service in making filing accommodations for those affected by software company's malware troubles. Watch the full classic Roseanne Roseannadana skit at NBC's Saturday Night Live video page. As the wonderful Gilda Radner character Roseanne Roseannadana used to say, "It's always something." That's particularly true in the tax world. Just when we thought we had made it relatively unscathed through the 2019 tax season, which already was crazy since it was the first one in which most of the Tax Cuts and Jobs Act (TCJA) changes took real life effect for taxpayers,... Read more →


High tax filing season is over and the numbers have been tallied. Unfortunately for Republicans who still are fighting the public relations war over their major tax reform law, the figures aren't good. Yes, fractionally more money has been delivered to taxpayers through April 21, almost a week after the filing deadline for most U.S taxpayers. But the average refund check remains smaller than it was last year. In 2018, the average refund was $2,780. This year, it came to $2,725. In case you're not good at math in your head (I'm not) and don't have a calculator handy, that's... Read more →


Photo by Will Keightley via Flickr CC Afraid you'll face an Internal Revenue Service audit? Don't bet on it, says a veteran oddsmaker. The tax audit odds for 2019 will be approximately 1 in 172, says SportsInsider.com's James Murphy, a sportsbook consultant and specialist in novelty betting odds. 25% of filers worry about audits: That slim audit possibility, however, didn't seem to affect folks who participated in a LexingtonLaw survey conducted before this tax season started. The Salt Lake City-based law firm found that a quarter of Americans are afraid they'll be audited. Older filers are more worried. Thirty-three percent... Read more →


UPDATE, Thursday, March 28: Well, I'm not the new Powerball multimillionaire. The lottery jackpot, which hit $768.4 million before the drawing last night, is going to the lucky person who bought the winning ticket in New Berlin, Wisconsin. But save this post. There will be other chances to win! Yes, I bought a ticket for the March 27 drawing of the $750 million and counting Powerball lottery. Yes, I know the odds of winning the jackpot, which is the fourth largest Powerball prize in U.S. history, are about 1 in 292 million. I know many of my hardcore personal financial... Read more →


The King by Kevin Pluck via Flickr We thought we wanted you March, but your "in like lion" approach this year is way too fierce. Severe weather roared through the south today, with a rash of tornadoes claiming lives and destroying property. Meanwhile, a serious winter storm is heading to the northeast, making March's appearance more like a snow leopard than a lion. The only good thing about this early spate of destructive weather is that it reminds us all to be ready for natural disasters. They happen year-round. And under the new tax law, you can claim any damages... Read more →


Prior year tax returns serve many purposes. This filing season, a check of last year's return will show you what your tax liability for 2017 was. You can compare that to your final 2018 tax bill to see if the Tax Cuts and Jobs Act (TCJA) did indeed lower your taxes even though your refund this year was smaller. You'll also need past year tax data if you're applying for a major loan, such as a mortgage. And if you're electronically filing your tax return this year, you'll need data from your previous year's taxes to complete that task. Record... Read more →


The National Taxpayer Advocate this year selected 21 major problems that taxpayers encounter in their dealings with the Internal Revenue Service. I found five of those issues particularly troublesome. Every year, the National Taxpayer Advocate issue a report to Congress. The 2018 version released this week included a look at, not surprising, how the recent government shutdown affected not only Internal Revenue Service operations, but also the taxpayers who, particularly at this time of year, are relying on IRS services. Part of that annual report also includes at least 20 tax matters that the Taxpayer Advocate identifies as the most... Read more →


Most tax preparers are honest and work to help their clients. Some, however, use shady methods to make money off unsuspecting filers. Don't be one of them! More of us every tax-filing season are turning to tax professions. The 2019 filing season in particular has underscored the value that tax professionals add. This is the first year taxpayers have had to deal with the real-life effects of the many Tax Cuts and Jobs Act (TCJA) change. A knowledgeable tax preparer can help you navigate this new maze. But you need to be careful in picking the person to be your... Read more →


Hello, February! If we ever were in need of your hearts and flowers, it is now. January was tough tax-wise. We had to worry about whether the Internal Revenue Service actually would get filing season open as the longest federal government shutdown in U.S. history dragged on. It opened as promised on Jan. 28, but be patient. Plus, we're dealing with our first filing season under the many, many changes brought about by the Tax Cuts and Jobs Act (TCJA). Yep, we definitely need some tax love. And some tax guidance, whether we're earlier filers awaiting refunds or procrastinators taking... Read more →


Even if you've been filling out Form 1040 and any other associated forms and schedules for years, things will be different this filing season. This is the first year we taxpayers (and tax pros) will be filing under the extensive new Tax Cuts and Jobs Act (TCJA) changes. In addition to new tax rates and deduction amounts, there are a variety of other tax law tweaks that could affect what goes on — or now doesn't — your Form 1040, which itself is new. So before you start working with your tax preparer or open up your tax software, either... Read more →


We're almost 13 months into the largest tax reform measure enacted in more than 30 years and one thing is clear. The Tax Cuts and Jobs Act (TCJA) is in no way tax simplification. In fact, taxpayers and the professionals they pay to help make filing less taxing in every sense of the word have been struggling with just what Congress meant in way too many of the tax bill's hastily drafted provisions. Big business bill, with small biz break and confusion: Although the TCJA contains many changes that will make filing returns this year interesting for individual taxpayers, it... Read more →


Longest U.S. federal government shutdown in history be damned! That's apparently the Internal Revenue Service's motto this year. It announced last week that it will start working on our 2018 tax returns — and issue any related refunds — this filing season, which is set to start on Monday, Jan. 28, even if it's technically still operating in modified shutdown mode. The IRS underscored that commitment on Friday, Jan. 11, when it announced that taxpayers who qualify to use Free File can now access the online no-cost tax preparation and e-filing option. Yep. Free File 2019 is now open for... Read more →


Hello 2019! I'm not sure we're ready for you, particularly when it comes to the major tax code changes under the Tax Cuts and Jobs Act (TCJA). We'll deal with the real-life effects of the new tax laws for the first time when we file our 2018 returns. When that will be is still up in the air and depends on a resolution to the partial government shutdown. But even though Capitol Hill and many of Uncle Sam's offices remain in limbo, we taxpayers need to start now taking an up close and personal look at what the TCJA will... Read more →


Welcome to Part 9 of the ol' blog's 2019 series on tax inflation adjustments. Today we look at tax penalties. You can find links to all 2019 inflation posts in the series' first item: income tax brackets and rates. Note: The 2019 figures apply to 2019 returns that are due in April 2020. For comparison purposes, you'll also find 2018 amounts to be used in filing this year's 2018 tax return due April 15, 2019. IRS agents don't throw flags like football referees, but the tax agency keeps a close eye out for violation of tax rules and laws and... Read more →


Another lingering tax deduction concern created by the Tax Cuts and Jobs Act (TCJA) is finally clearer. The Internal Revenue Service says that half the cost of business meals is still tax deductible as an allowable work-related expense. That's what the pre-TCJA tax law said. But because the Republican tax reform bill was cobbled together so hurriedly at the end of 2017, its legislative language left many confused. And the new law's interpretation created a division among tax professionals (and semantics geeks) as to what exactly is entertainment. Meals or entertainment vs. meals and entertainment: A great number of tax... Read more →


Old-school passbook savings accounts are safe, but have been paying minuscule interest over the last few years. The White House might be unhappy, but all of us with money in safer assets like certificates of deposit (CDs) or plain-old savings accounts are sending the Federal Reserve Board of Governors, aka the Fed, a big fat thank you. The Fed's decision yesterday (Wednesday, Sept. 26) to raise rates to a range between 2 percent and 2.25 percent means we'll be seeing few more pennies of earnings in our accounts. And it is just pennies. Those of us old enough to remember... Read more →


After years of being lambasted for efforts to regulate tax preparers, the Internal Revenue Service is on a roll in its efforts to oversee certain tax professionals. A recently introduced bipartisan Senate bill would give the IRS the authority that many argue it doesn't have to set standards for tax professionals who aren't subject to other professional guidelines. This is not the first time such legislation has been introduced. But those previous bills never went anywhere. However, the tide now seems to be shifting a bit in the tax agency's favor. Influential tax professional groups are among this latest legislative... Read more →