Tax Guru – Ker$tetter Letter

Helping real people win the tax game.

Archive for January, 2016

Do you feel patriotic?

Posted by taxguru on January 26, 2016

Common memes from fans of Big Government is that the most patriotic thing we can all do is to pay in as much of our wealth in taxes as we can and that taxes are necessary to pay for the roads, bridges and other items for the “common good.” 

That may be the case in the fantasy world our exalted rulers reside in.  Anyone who pays attention to how things are in the real world in which we mere mortals dwell knows that Jodi Miller has it right in this excerpt from this week’s episode of NewsBusted.

 

The truth of the matter is that every penny we send to our ruling masters is pissed away.  On top of that, they continue to “borrow” trillions more to piss away and never repay.  

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Confusion over 1099/W-2 Due Dates

Posted by taxguru on January 25, 2016

For as long as I can remember, there have been two different deadlines for information returns, such as 1099s and W-2s.  For decades, I have been writing about the importance of these different dates.  This year, I have seen more misinformation going around about this issue than any time I can recall.

1.  First is the date that they should be given to the payees or employees.  That has always been the end of January.  Because that is on a Sunday this year, the deadline is February 1 for reporting 2015 payments.  A little known fact is that this is really a courtesy for the payees and there is no official late penalty from IRS or anyone else for not providing the 1099s or W-2s by January 31. 

Likewise, any workers who claim they can’t do their tax returns until they receive their 1099s are full of beans.  1099s are not required to be attached to tax returns and all small business owners should have their own records of how much money they received.  1099s are just a second level income reporting mechanism that is required to keep taxpayers “honest” in the eyes of of our overlords at the IRS. 

2.  Next is the date that the W-2s and 1099s are to be filed or submitted to the Federal and State governmental tax agencies.  There has always been an extra month for this to be done, meaning February 28 or 29.  Practically every year, I have written about how it’s a wise move not to send in the governmental copies in too soon in order to give the employees and payees time to catch any mistakes in the figures on the forms.  Filing Corrected forms with IRS and SSA creates a lot of problems for everyone down the road, so making sure that the original forms are accurate is critical.  Filing with the government agencies late can incur some penalties.

Over the past few weeks, I have seen a lot of supposed tax authorities claim that the 1099s and W-2s are to be filed with the government by the end of January.  I took a live online CPE class a few weeks ago, where the instructor and his PowerPoint slides were claiming that all 1099s and W-2s were due to IRS by Feb 1.  I just received an email this morning from a software vendor that made that same claim.

Knowing that there is a lot of confusion all over the place with the constantly changing reporting requirements related to ObamaCare, I wondered if the deadlines for 1099s and W-2s had been moved up a month.  What I found when I checked with IRS and SSA websites and the official instructions for their forms was that the deadlines have not changed since prior years.  All of these “authorities” who are trying to scare people about an upcoming deadline a week from today are wrong.  The CPE instructor who claimed that W-2s are to be filed with IRS was also wrong about that fact.  They are still to be submitted to the Social Security Administration (SSA), just as they always have.

TaxCoach Software: Are you giving your clients what they really want?

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Phony IRS Scams

Posted by taxguru on January 24, 2016

I’ve discussed the frequent scams with crooks calling on the telephone pretending to be from the IRS.

Snopes has some tips on avoiding email based scams of the same kind.

Tax season in 2016 triggered a number of novel riffs on common Internal Revenue Service-based scams.

The moral of the story is to always check with your own professional tax advisor before making any response to any type of communication from the IRS, including legitimate ones via snail mail.

Posted in Crooks, IRS | Comments Off on Phony IRS Scams

Only we little people need to obey the law…

Posted by taxguru on January 20, 2016

Certainly not the IRS, whose employees continue to flaunt their law-breaking with complete impunity.

IRS Erases Hard Drive Despite Court Order

Senators press the IRS for information about erased hard drive

It’s impossible to not wonder what would happen to any taxpayers who took this approach to an investigation by the IRS of their records.  The repercussions against those taxpayers would be severe for daring to impede the IRS in any way. 

Posted in Crooks, IRS | Comments Off on Only we little people need to obey the law…

Tax Day is April 18 this year

Posted by taxguru on January 15, 2016

Once again, DC’s special Emancipation Day holiday results in a little extra time for individuals to file their 1040s.

IRS chief Koskinen sets April 18 filing date; promises better service on information lines

We do need to remember Commissioner Koskinen’s poor record for truthfulness with his congressional testimony (aka Perjury).  I do believe him with the April 18 filing deadline, but have serious doubt about his claims of better taxpayer service.

Posted in IRS, TaxDay | Comments Off on Tax Day is April 18 this year

Stating the Obvious

Posted by taxguru on January 14, 2016

IRS May Still Be Targeting Conservative Groups

Why wouldn’t they?  Nothing happened to them for their previous illegal attacks on opponents of the bHo Regime.  The IRS Commissioner even committed blatant perjury when testifying before Congress and he still has his job and will most likely be getting some kind of loyalty bonus.

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IRS scaling back customer service even more

Posted by taxguru on January 8, 2016

Unless you have a question about problems with your own specific account, asking IRS for tax advice on how to handle things on tax returns has always been a bad idea.  By their own admission, they answer more questions incorrectly than properly.  Their phone advice has never been admissible as a defense against penalties. 

Consulting with a professional tax practitioner has always been the more prudent way to go and well worth the cost.  Our information is usually more accurate than what IRS employees dispense.  More important, if a tax pro gives bad advice, you have recourse against him/her, unlike with IRS employees who can’t be held accountable for improper advice.

I bring this up because of a recent news story about IRS plans to make it even more difficult to get in touch with them.  Last year, they admitted to not answering or hanging up on a majority of phone calls from confused taxpayers. Now, they want to get everyone away from phones altogether and force them to use the internet.  Folks with no internet access will be SOL.

Report warns IRS’s online plans could hurt taxpayers

IRS Web Move May Leave Older, Poorer Filers Behind

IRS watchdog says agency may dramatically scale back certain services

 

IRSNoService(16-01-06)

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Alaskans need to beware of the history of income taxes

Posted by taxguru on January 2, 2016

There have long been a handful of states that have no income taxes on individuals.  However, for a number of decades now, Alaska has been the only state that has had what I have been calling a “negative income tax,” where the State government actually gives the citizens money each year, as a share of the royalties received from oil companies.

Now, with oil prices dropping, those revenues are dropping.  The oil dividends to the citizens will obviously need to be reduced as well.  That makes sense. 

Oil’s Decline Threatens to Revive Alaska’s Income Tax After 35 Years

Drop in oil prices rocks producer states, triggers historic tax hike plan in Alaska

However, what doesn’t make sense and could lead to a mess is the fact that the governor and others in power are seriously considering bringing back the individual income tax to that State.  In typical flimflam style, they are trying to sell it to the public as nothing to be worried about.  They claim it will only be one percent of their gross income.  Anyone with the slightest bit of historical perspective should remain skeptical of that claim. 

Just as with the Federal income tax in this country, that began in 1913 with rates from one to seven percent, we all know what happens next.  Once the tax is in place, it will be an easy step for Alaska’s rulers to make adjustments to the rates, deductions and exemptions.  I doubt that it will ever reach the extent of the millions of pages of rules and regulations that the Federal Internal Revenue Code has morphed into, but it will most definitely become more complicated and expensive for taxpayers over the coming years.  It always does. 

This is as classic an example as you will ever see of the camel’s nose under the tent warning sign.

CamelNoseTent

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