Big Beautiful Stupid bill is the last straw

[Sara EA]

Today I put my EA status into inactive (still cost $140). Looking over my shelves of reference material and law books, I realized most of them are now obsolete.  Prior big changes in the tax code have made us adaptable and fast learners.  The year the ACA went into effect, coupled with new rules on expensing vs capitalization, all passed in December, sent us rushing into the classrooms and seminars, but learn we did.  We now have so much to unlearn.

The bits and pieces I've read of specific provisions of the BBB struck me by their complexity.  You can deduct car payment interest if this, that and another thing. Seniors get a bigger deduction but being married may take it away. Energy Star certification meant to go into effect this year is gone, and taking energy credits is now a labyrinth of rules soon to expire anyway. I doubt that the new above-the-line charitable deduction will be as simple as it sounds.  With the exodus of expertise at the IRS, I doubt the agency will be of much use helping us navigate these changes.

On top of all that complexity, I personally don't agree with the majority of the changes. I don't want to invest any time into learning the detailed details. I am a lifelong academic who spent most of my career in the Ivy League, doing taxes on weekends. Once I retired from academia, I couldn't stay out of the classroom--got a Master's in Taxation and usually took way over the required number of CPEs. It truly pains me to say for the first time in my life that I just don't want to learn about something, but this awful bill is it.  I tried to semi-retire this year but the office needed my help. Now I feel that my over three decades of experience are of no use in this new, morbid tax environment.

[Lee B]

Sara, I have always enjoyed your thoughtful posts and wish you a well desired retirement.

I understand how you feel.  If most of my time was spent on taxes I would retire too.

Fortunately for me, the majority of my time is spent on monthly write up work and payroll for my business clients, which I still enjoy ,so I will keep working.

 

[Corduroy Frog]

Sara, I agree with Lee B that you have been very astute and helpful to all of us.

Yes, the "Big Beautiful Bill [sic]" has so many phaseouts that we are almost entirely dependent on software, and the software providers will no doubt be charging us for the massive programming development.  I hate that because tax practitioners have been keypunch operators instead of tax analysts.

To make it even worse, not only will we depend on massive changes in software, SO WILL THE  I R S.  Can you taste the foulness in the air?

I wish our politicians would announce how much more it will cost to prepare taxes and quit talking about how wonderful these tax cuts may be.

 

[Randall]

At least they got it passed in mid-year.  Regardless of the pros and cons.  The IRS and software companies will have plenty of time to get it all done before next tax season.  I get Parker subscription so they should be sending a summary soon.  I usually just rely on the software doing it's thing.  I'll take some continuing ed on it of course and get ready.

[Lee B]

It's like an amoral three dimensional crossword puzzle where the rules keep changing

[kathyc2]

I think a lot of people feel that way.

I can't see how it could be any worse than after the 2017 bill.  It wasn't so much the changes to law, but the mandated changes to forms without any purpose than a photo op to hold up the "postcard".  It took me a good two years to get back up to speed of not having to look as to where they moved a line item.

[BTS]

After 40 plus years in the business, I have seen it all.  Remember the headaches when efile went live ?  Remember the stimulus bull crap ?  Too many questions will drive you nuts.  I just wait for the IRS regulations.  And we all know software vendors will not have the crap ironed out till mid season (if then).    So just relax.  Stress kills.

[Randall]

One question I have is the interchangeable use of deficit and debt.  One article I read:

He said the deficit will increase by $3t over 10 years. Does he mean deficit or debt? If deficit, does that mean in year 10 the deficit will be $5t? Current $2t plus $3t? If deficit, does that mean the debt will increase approximately $23t over 10 years?

Sheesh.  

[Lee B]

The current US National Debt is approaching $ 37 Trillion .

The OBBB is estimated to increase the National Debt by more than $ 3 Trillion

It's now so large that many economists say that it's affecting our ability to refinance our debt as it matures, forcing the U S Treasury to pay higher interest rates.

The value of the US Dollar when compared to the value of other countries currencies has declined significantly this year

which means that our companies which import have pay more for the same merchandise, which creates an inflationary spiral.

Frankly, I am very concerned about the long range trends.

 

 

[kathyc2]

24 minutes ago, Randall said:

One question I have is the interchangeable use of deficit and debt.  One article I read:

He said the deficit will increase by $3t over 10 years. Does he mean deficit or debt? If deficit, does that mean in year 10 the deficit will be $5t? Current $2t plus $3t? If deficit, does that mean the debt will increase approximately $23t over 10 years?

Sheesh.  

As a general rule, when they talk about deficits they are talking about total over a 10 year period.  

As the reduced rates from 2017 were to sunset in 2026, extending them is adding to deficit as to what they would have been in 2026 rather than the add'l over 2025 reduced rates.

The combo of 6K for seniors, OT, tips and vehicle interest amounts to 90B or so a year.  Since the law has them sunset at the end of 2028 only 4 years of the increased deficit is included in total.  We all know that once a group is given a tax break, it won't be taken back.  So, add another 500B for that. 

They also use what they call "dynamic scoring" meaning since more borrowed money is forced into economy, the economy will grow. 

No one knows what the debt will be in 10 years.  There will be changes of add'l spending, more tax cuts, potential recession and any number of other unknowns.

2024FY tax revenues outside of trust funds was 3.2T.  Gross interest was 1.2T broken down between .9T to public debt and .3T to money borrowed from trust funds.  1.2T is 40% of 3.2T going to pay interest on past debt.  Estimates that this bill will add 900B more interest over 10 years.  For comparison 10 years ago in 2015FY non trust fund revenue was 2.2T and gross interest was .4T, or 18%.  The path we are on is not sustainable. If we continue to add an additional 10% of revenue to pay interest on debt, in 50 years or so all tax collected will go to interest. 

GDP is pumped by by gov't borrowing and trying to get to a balanced budget all at once would mean close to 10% reduction of GDP meaning a recession.

A balanced budget is not going to happen by taxing alone or reduced spending alone.  It needs to be a combination over several years.  Not one of the idiots in charge have the guts to do that.  All they care about is their next election.  

[Patti in Upstate NY]

@Sara EA  Your words made me both happy and sad.  It's good to know someone else feels the same as me but I hate the idea that they're making it so hard to keep going.     

I've never fully recovered from doing taxes in my driveway during Covid and have been debating how much longer I wanted to do this.  My tentative plan was to do one more year, then either give it up or downsize dramatically.   

Not sure I can make it.  I have until October to renew my software but is it worth it?  The questions, the confusion, the inability to help my clients resolve issues...

I'm dreading it.  I think I'm probably done too.

[kathyc2]

Just for giggles.....  In 1983 I made 15,086 and paid 1,819 in FIT which is 12%.  In todays dollars that would be 49,000 and the tax would be 3,842 or 7.8%

[mcb39]

4 minutes ago, Patti in Upstate NY said:

@Sara EA  Your words made me both happy and sad.  It's good to know someone else feels the same as me but I hate the idea that they're making it so hard to keep going.     

 

Not sure I can make it.  I have until October to renew my software but is it worth it?  The questions, the confusion, the inability to help my clients resolve issues...

I'm dreading it.  I think I'm probably done too.

Unfortunately, I have already renewed and committed after sitting on the fence for several months.  I intend to give it my best shot.  I have really never depended on the software.  I always wanted to know where a number went and why.  If not, why not?  Right now, I feel panic and uncertainty and will try not to let it ruin the rest of the year for me.  My clients need me now,  more than ever, but I will not take on any new clients and will try to cut back sharply.  Most of the dire agony of change over the past several years has been cited in the above posts.  This, however, takes the cake.  I am pretty certain that 2025 could be my last year even though I have always loved this work.