Lee B

Somethings just don't make any sense

IR-2021-123, June 4, 2021 WASHINGTON — The Internal Revenue Service is sending more than 2.8 million refunds this week to taxpayers who paid taxes on unemployment compensation that new legislation now excludes as income. IRS efforts to correct unemployment compensation overpayments will help most affected taxpayers avoid filing an amended tax return. So far, the IRS has identified 13 million taxpayers that may be eligible for the adjustment. Some will receive refunds, which will be issued periodically, and some will have the overpayment applied to taxes due or other debts. For some there will be no change. The American Rescue Plan Act of 2021 (ARPA) excluded up to $10,200 in unemployment compensation per taxpayer paid in 2020. The $10,200 is the maximum amount that can be excluded when calculating taxable income; it is not the amount of refunds. Earlier this month, the IRS began its programming review of tax returns filed prior to the enactment of ARPA to identify the excludible unemployment compensation. The IRS also is making corrections for the Earned Income Tax Credit, Premium Tax Credit and Recovery Rebate Credit affected by the exclusion. Taxpayers who have qualifying children and who become eligible for EITC after the exclusion is calculated may have to file an amended return to claim any new benefits. The IRS can adjust tax returns for those who are single with no children and who become eligible for EITC. The IRS also can adjust tax returns where EITC was claimed and qualifying children identified. To date, the IRS has reviewed over 3.1 million returns, with more than 2.8 million receiving refunds. The IRS plans to issue the next set of refunds in mid-June. The review of returns and processing corrections will continue during the summer as the IRS continues to review the simplest returns and then turns to more complex returns. Taxpayers will receive letters from the IRS, generally within 30 days of the adjustment, informing them of what kind of adjustment was made (such as refund, payment of IRS debt payment or payment offset for other authorized debts) and the amount of the adjustment.

"BuzzFeed News found President Joe Biden’s Venmo account after less than 10 minutes of looking for it, revealing a network of his private social connections, a national security issue for the United States, and a major privacy concern for everyone who uses the popular peer-to-peer payments app. On Friday, following a passing mention in the New York Times that the president had sent his grandchildren money on Venmo, BuzzFeed News searched for the president’s account using only a combination of the app’s built-in search tool and public friends feature. In the process, BuzzFeed News found nearly a dozen Biden family members and mapped out a social web that encompasses not only the first family, but a wide network of people around them, including the president's children, grandchildren, senior White House officials, and all of their contacts on Venmo." . . . . . . . . . "Privacy Advocates and journalists have warned about Venmo’s privacy problems for years, yet the PayPal-owned app has persisted with features that can place people — including the president of the United States — at risk. While many critics have focused on how the app makes all transactions public by default, Venmo’s friend lists are arguably a larger privacy issue. Even if a Venmo account is set to make payments private, its friend list remains exposed. There is no setting to make this information private, which means it can provide a window into someone’s personal life that could be exploited by anyone — including trolls, stalkers, police, and spies. No other major social network or service has contact-based friend lists that are publicly accessible by default to anyone — and that cannot be made private. People use Venmo to get paid, often using their real names. They often also import their phone contact lists or Facebook friend lists — which the app highly encourages when you sign up — creating networks where people automatically “friend” dozens if not hundreds of other Venmo users to allow them to find people they want to pay more easily. Venmo makes it impossible for users to hide their list of friends. To remove someone as a friend, a user has to unfriend the person manually."

The Wall Street Journal: "The Consumer Financial Protection Bureau is probing the way that Venmo, the digital money-transfer service operated by PayPal Holdings Inc., treats customers who the company says owe it money for transactions that went awry. In a regulatory filing Friday, PayPal said it had received a “Civil Investigative Demand” from the CFPB “related to Venmo’s unauthorized funds transfers and collections processes, and related matters.” The company said the CFPB had requested documents and answers to written questions, and that it was cooperating with the regulators. Venmo’s debt-collection tactics were the subject of articles in The Wall Street Journal in 2019 and 2020. The company has threatened to dispatch debt collectors on users who overdraw their accounts, even when those users are victims of scams, The Journal previously reported. Venmo continued its aggressive collection efforts during the coronavirus pandemic."

So your balance in a Venmo account is just an electronic number. It's not a bank account, it's not FDIC Insured,it's not real money.

There is no logical reason for interest income on a 1 year or longer Certificate of Deposit to be taxed at a different tax rate than capital gains. There is not a single serious economic study that supports the "Trickle Down" economics that you are espousing.

Since fintech is all about gathering as much information about you and your clients as possible and using that information to make more money, I will continue to limit my use and involvement to the extent possible! Equifax anyone?

Many of these proposals will not be in the final bill that passes

I accept checks and cash

I already have a question from a client who wants to whether they will be eligible to receive the advance payments, beginning July 15th for their 3 year old. Their 2020 Income without the Unemployment Exclusion exceeded 150 k,but with the exclusion was below 150 k. Their projected income for 2021 is below 150 k. I told them based on the information released so far they will qualify for the enhanced ACTC on their 2021 tax return, but it was too soon to know whether they will receive any advance payments beginning in July?

It's good to hear TaxAct is working for you.

Don't pat yourself on the back too hard. Perhaps you have forgotten about the $ 150k exclusion reversal?

Multiple news sources are reporting: It will take the IRS until the end of this summer before everyone gets their return recalculated and their refund issued. None of the IRS's online tools will show the status of these refunds, so we will get a number of client calls. The IRS does not want any amended returns submitted until they have finished this process.

Unfortunately your clients don't have any assets which qualify for installment sale capital gains treatment, even though the sales contract payments may be multiyear. Therefore you are going to end up trying to balance capital gains on the sale of intangibles in the year of the sale against ordinary income spread over the years of the non compete agreement payments.

The times I did try the Drake forms option, it seemed to me to be a pale imitation.

Sara I am really impressed, I couldn't even decide what the questions were?

Yeah, the best friend of my nephew obtained a Minister's License Online so he could perform the wedding ceremony for them. Only wedding ceremony he ever performed. Perfectly legal in my state.

One more time, I am sooo glad I am not in a community property state

Because people don't really look at things, they just assume it's right. Back in 2012, while changing payroll programs I transposed 2 digits in a longtime client's SSN which ended up being filed with the SSA incorrectly for 2 years before I caught it. My client never noticed. At that time I was using ATX and the correct SSN carried forward in my tax program so it wasn't a tax return issue. My client never received any letters either.

Getting faster is not a top priority for me, since I have a niche practice mostly doing Business Entity Returns plus personal returns for the owners and their family. I will only do between 50 and 60 tax returns this year and only 5 of those were non business related 1040s.

While I switched from ATX to Drake 3 tax seasons ago, if the choice was between ATX pre 2012 and Drake , I would choose ATX pre 2012. For me, preparing returns on Drake takes a little longer because their entry screens have so much stuff squeezed into them, it's hard to find things sometimes. In addition there are several annoying entry screens, that I have no idea where they are, the only way I find them is with their search function which works well. In addition there is the extra time spent between going back and forth between entry screens and looking at form screens. Just to be clear I am satisfied with my decision to switch to Drake. However Drake is not a perfect program, it has it's pros and cons.

I don't see the quandry! The only thing to do is to paper file MFJ along with an ITIN application to Austin if that is where they still go. Any other approach would be ignoring the rules and regulations. In addition not doing this blocks eventually getting a green card and ultimately citizenship. I have some longtime clients who are in this exact situation, which has worked out just fine. He has renewed his ITIN multiple times with no issues.

My all time favorite was "Stuck inside of Mobile with the Memphis Blues Again"

Since the 3115 fixes the skeletons in the closet, I don't think there is anything to worry about. You have some fixed asset allocation issues and depreciation errors to fix. You're aware of the problems, it's your responsibility to bring them to your client's attention and to fix them. Not to do so, would be a huge problem! I have never had any problems as a result of filing a 3115.

Robert Zimmerman is 80 years old today. "The answer my friend is blowing in the wind"