White House Bends on Tax Cut

Fighting for tax cuts

Work pays! – Good analysis by Thomas Sowell of the evil rich and why they are so rich; they work for their money.  They are considered to be evil by so many in our society because they actually believe they should be able to keep some of the fruits of their labor, rather than send it all to our rulers in DC to redistribute.   

E-Filing Clarification

After my comments a few days ago about people having their e-filed tax returns rejected because they were claiming a dependent that had already been reported on someone else’s tax return, I received some inquiries from other tax pros wondering what was wrong with that. Finding out about that kind of problem early on should be a good thing. 

That really isn’t how I see it.  As I have consistently said in my discussion of e-filing, I don’t like it because we can’t attach additional info to the tax returns to explain unusual things.  In almost all of the cases that I have seen where e-filed returns were rejected due to disallowed dependents, the person who had claimed the dependent wasn’t legally entitled to do so.  However, the e-file program with IRS has become a first come, first served game.  The earliest filed return is automatically given the dependency exemption by IRS, even though that person may not be legally entitled to do so.  Then, when the person who should be legally claiming the exemption tries to file his/her 1040, IRS kicks back the entire tax return and forces the person to go through a very lengthy and messy process to resolve the discrepancy.

I have had clients where they received notices and reduced refunds based on similar problems, with dependents who had been claimed on the other parent’s tax return.  We were able to resolve those issues rather quickly with IRS by sending them copies of the divorce decree or other documentation of my client’s legal right to claim the dependent.  IRS then nailed the other parent who took the improper exemption.  In subsequent years, and in other cases where we suspected such a situation, I attached the documentation to the 1040 to prove to IRS that we were entitle to claim the dependency exemption.  IRS allowed them with no more problems.  This kind of additional documentation is not possible with an electronically filed tax return; so that problem will just happen year after year, unless the client can beat the other parent to the H&R Block office.  Rushing to file a tax return just to beat someone else to the punch is not a good thing.  Taking your time and making sure everything is as accurate as possible is still the best way to go.  

KMK

Networks Mischaracterize Greenspan as Opposed to Bush Tax Cuts – Why anyone would trust the leftist media for anything after their completely discredited coverage of the Iraq war is beyond me.  ABC and CNN have especially proven that their anti-American philosophy colors everything they report on. 

Dividend Tax Down, but Not Out, in House’s $550-Billion Plan

House Republicans Retreat From Plan to End Dividend Tax

Compromise floated on dividend tax-cut plan – As always, our rulers are looking for more ways to complicate the tax system and make more work for those of us in the professional tax practitioner community.  Having a variety of different tax rates for different kinds of income makes it impossible to calculate the taxes without a sophisticated computer program and creativity for classifying income and expenses in order to minimize the tax damage.