Tax Guru – Ker$tetter Letter

Helping real people win the tax game.

The least surprising story of the year…

Posted by taxguru on April 1, 2015

IRS’s Lois Lerner won’t be charged with contempt

In fact, odds are that she will be awarded something akin to the Medal of Honor by King Barack Hussein for her tireless work to defeat and harass his critics.

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Posted by taxguru on April 1, 2015

Click on image for full-size version.

bHo-AprilFool

Drudge had links to some interesting tax related stories this morning:

No Joke: April 1st Brings Double Digit Sales Tax To Several East Bay Towns - It used to be a common belief that states with no income taxes made up the revenue by having much higher sales and property tax rates.  That is no longer the case. California has super high income tax rates, as well as high sales tax rates.  It was actually a big surprise to me when we moved down here to Florida, because I was expecting much higher sales and property taxes than we had in Arkansas.  It turned out that both are actually much lower down here.

IRS union calls for $1.9 billion more in funding – The PR campaign for more IRS money is in full swing.

IRS ignoring 60 percent of taxpayers’ calls as deadline looms - Self admitted by the less than truthful (he lied to Congress about Lois Lerner’s emails) IRS Commissioner as he pushes for more money for IRS employees.

IRS chief to GOP: You can’t abolish us – The number one goal of government employees is self perpetuation; so it’s natural to expect IRS employees to fight like crazy against any proposed changes in the system that could possibly reduce the scope of their power. The cruel irony is that they use our own tax dollars to fight any attempts to reduce their ability to confiscate more of our money.

Tax Freedom Day® 2015 is April 24th - The Tax Foundation’s annual calculation of when in the year we move from being slaves of the government to free persons who can keep the fruits of our labors.


TaxCoach Software: Finally! Plain-English Tax Planning That Builds Your Business!


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Does ObamaCare forbid extensions?

Posted by taxguru on March 31, 2015

With all of the discussion over the past few years about what a steaming pile of crap the 2,200 page ObamaCare legislation is, I had never heard of it denying anyone the ability to file for an extension of time to file their income tax returns…until a few days ago.

As has been the case for the past few decades, we only fully complete about five to ten percent of our individual income tax returns by April 15, with most clients opting for the more relaxed pace of filing for a six month extension of time.  Those clients who do insist on having their returns finished by April 15 have been given a deadline of March 1 to submit all of their forms and data.  It thus surprised me to read the following note that a married couple client on the Left Coast sent in with their tax return package almost four weeks after the March 1 cut-off.

I received an email from our Covered California representative reminding us that our tax returns
must be filed by 4/15/15.
I hope this won’t be too big a problem.
Very sorry for the short notice.

While I don’t like the added pressure during Tax Season, I normally try to accommodate client rush jobs, when the reason is legitimate, such as for a loan application or a child’s college financial aid. However. this didn’t feel right; so I sent the clients an email about it.

Your stuff looks complete. The only concern I have is with the new ObamaCare Form 1095-A.  As I covered in my blog a short while ago, it was announced that the Calif healthcare exchange sent out incorrect 1095s to something like 800,000 people.  Have you verified that the ones you sent me are accurate?  Neither one has the “Corrected” box checked.

Which brings me to the due date of your tax return.  Today, as well as the past few days, when clients have told us that they are just now sending in their 2014 info and are assuming that we can get their returns done by April 15, we laugh ourselves silly.

There is something very fishy about what you were told, or you may have misunderstood them.  I have not heard of anyone else anywhere in the country being ordered to file their tax returns by April 15 and not being allowed to file for extensions.  You are the very first person to mention such a demand, and I read a lot of other tax discussion boards.  This should have come up somewhere if it were a legitimate requirement.  That just doesn’t seem fair or legal for them to require that, because there are literally hundreds of reasons people may need more time to assemble all of their tax return data.  In fact, after my recent heart problems, we signed up for ObamaCare and they haven’t mentioned any need to file our 1040 by April 15; which is good because we are going on extension.

However, if you can verify that the 1095s you sent are accurate, we will try our best to get your returns done by April 15.  I don’t want to have to prepare an amended return if it is later discovered that the 1095s are incorrect, because IRS often audits amended returns, and I’m sure you don’t want to have to go through another IRS audit.

I hope this isn’t too confusing for you and I’m not trying to be a troublemaker.  I’m just trying to look out for your best interest and it always bugs me when people are given incorrect tax advice.

Let me know if you have any questions and have verified the accuracy of the 1095 forms.

Thanks for your help with this.

Sherry added this comment to the client:

Please forward Kerry that E mail you got from Obamacare.  He thinks you must be misreading it. This is the first we’re hearing about this! It could be a scam because they were telling people to hold off on doing tax returns by April 15th themselves.

The wife replied with the following

Thanks for the info Kerry.  The 1095-As that he sent are the only one we received.  The numbers match the totals of the checks I wrote so I think the 1095-As are both correct.
Please go ahead and file the extension.

and she also forwarded the email she had been referring to, which included the following regarding the issue of extensions

Can I File an Extension if I Received Subsidies?

Posted: 23 Mar 2015 03:33 PM PDT

Question: If you have already been getting the credit, is the 4/15 2014 tax filing deadline firm that covered ca makes you agree to, or is an extension allowed until 10/15/15? what is the final consensus? thanks
Answer: You will meet that requirement when you file a tax return on 4/15/15 along with your application for an extension. In other words, even though you are filing for an extension, you still have to file a return on April 15th.

My response:

Thanks for sending me a copy of the Covered Calif Q&A.  I now understand the source of your confusion about needing to file the actual tax return by April 15.

The response to the question about extensions makes absolutely no sense and must have been written by a bureaucrat who had been  partaking of a little bit too much medical marijuana.  Nobody files both an extension and a tax return on April 15.  It’s one or the other.

We will send you a copy of the April 15 extension and will prepare the actual returns as soon as we can after the April 15 crunch.

Thanks for your help with this.

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Posted by taxguru on March 25, 2015

From Conan O’Brien via NewsMax:

Tea party candidate Ted Cruz announced he’s running for president. He says he wants to abolish the IRS. So today Cruz was endorsed by Nicolas Cage, Wesley Snipes, and Willie Nelson.

From Argus Hamilton:

Mitt Romney said Friday that the biggest mistake he made in the last presidential election was not connectiong with minorities. His wealth was never an issue. People say that money is not the key to happiness, but Americans have always believed that with enough money, you can have a key made.

Hillary Clinton appeared at a forum in Washington sponsored by the liberal-leaning Center for American Progress Monday where she apoke about the problem of income inequality. She gets three hundred grand per speech. Democrats believe it’s okay to be rich as long as you just feel awful about it.

Israel spied on the U.S.-Iran nuclear talks and gave the intel to House Republicans. The White House learned of Israel’s spying on the U.S.-Iran talks by spying on Israel. The White House wouldn’t spy on Israel but they’re registered as a conservative non-profit so the NSA and IRS are all over them.

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Decreasing Tax Privacy…

Posted by taxguru on March 24, 2015

For decades, one of the methods IRS had to encourage everyone to disclose all of their financial data and pay taxes on all types of income was that such data would be held in the strictest of confidence and kept 100% completely private. This is even in the IRS’s so-called Taxpayer Bill of Rights.

The Right To Privacy

The Right to Confidentiality

With the recent disclosures that personal tax return info has been shared with various members of the bHo Regime for political retribution, it’s been obvious that what is shown on tax returns is no longer private or confidential and IRS has failed to honor its own promises to the tax paying public.  How much this decreases the willingness of taxpayers to fully disclose their financial details, we’ll have to see.

I don’t know how IRS intends to bounce back from their failure to honor their promises of privacy and confidentiality, but stories such as this one from Forbes are just digging them into a deeper hole.

Report Says Former IRS Employees–Think Lois Lerner–Can Still Peruse Your Tax Returns

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Wisdom from Dilbert

Posted by taxguru on March 23, 2015

I’m not a fan of following celebrities’ Twitter feeds, but I couldn’t resist checking out what Dilbert creator Scott Adams claimed was a collection of his best tweets.  He had some good ones regarding topics I like to include in this blog, such as these.

I knew a guy with passion to be a pro golfer and the brain to be a great accountant. He followed his passion. He’s homeless now.

Bank said by phone it takes ten days to issue new credit card. I said it is 2015 where I am and asked what decade I had called.

My grandfather used to give me a quarter whenever I visited him on the farm. It taught me a valuable lesson about being underpaid.

Time is money. Money is power. Power corrupts. So don’t give anyone your time because it will corrupt them.

I tell people that money can’t buy happiness just to reduce the odds of being robbed.

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Beware of Scammers

Posted by taxguru on March 13, 2015

IRS warns of tax scams involving health care law

Fake IRS agents target more than 366,000 in huge tax scam

It’s hard enough dealing with real IRS agents, much less imposters.  The lesson from these scams is that it is crucial to always work with a professional tax advisor who knows the proper procedures for dealing with IRS issues and isn’t afraid to stand up to overly aggressive IRS employees, real or fake.  This is also vital when actual IRS agents are the ones hassling you.

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Sickening Tax Season

Posted by taxguru on March 11, 2015

Luckily, we haven’t yet had any tax returns that involved the new ObamaCare 1095 tax forms.  I had taken some webinars over the past several months on how to deal with them; but those all assumed that the 1095s that clients would be receiving would be accurate.  They didn’t take into account the learning curve (aka incompetence) of this new government involvement in our health care, as described by Michelle Malkin in this article.

 Obamacare’s 1095-A Nightmare

2dsfo8h

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Celebrity Tax Troubles

Posted by taxguru on March 10, 2015

A funny observation from today’s episode of NewsBusted.

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Will anyone stop our King?

Posted by taxguru on March 3, 2015

If only we had a system of government where there were checks and balances against an out of control monarch/dictator.

Obama “Very Interested” In Raising Taxes Through Executive Action

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