HAPPY THANKSGIVING!
Thursday, November 22, 2007
Friday, November 16, 2007
BREAKFAST SEMINAR ON ETHICS
I was just notified that the New Jersey chapter of the National Association of Tax Professionals will present a special Breakfast Seminar on Thursday, December 6, 2007. Attendees can earn 2 CPE Credits.
Kathryn Keane, EA will discuss -
* General 230 Issues and how they affect your tax practice.
* Office procedures to implement in your tax practice.
* Ethics and how to implement safeguards in your tax practice.
Registration is from 8:00 - 8:25 am and the presentation will be 8:30 - 10:10 am.
The cost of the seminar is $35.00 for members and $50.00 for non-members for registrations postmarked before 12/1/07. For registrations postmarked on or after 12/1/07 the cost is $65.00 for both members and non-members.
Click here to view, print or download registration form.
Unfortunately I will not be able to attend as I will be on the bus to Atlantic City where I will be attending the NSTP year-end tax update seminar on December 7th.
TAFN
Kathryn Keane, EA will discuss -
* General 230 Issues and how they affect your tax practice.
* Office procedures to implement in your tax practice.
* Ethics and how to implement safeguards in your tax practice.
Registration is from 8:00 - 8:25 am and the presentation will be 8:30 - 10:10 am.
The cost of the seminar is $35.00 for members and $50.00 for non-members for registrations postmarked before 12/1/07. For registrations postmarked on or after 12/1/07 the cost is $65.00 for both members and non-members.
Click here to view, print or download registration form.
Unfortunately I will not be able to attend as I will be on the bus to Atlantic City where I will be attending the NSTP year-end tax update seminar on December 7th.
TAFN
Friday, November 9, 2007
HERE’S SOMETHING NEW
A client received a letter from the NJ Division of Taxation yesterday, which he, correctly so, immediately faxed to me.
The letter read:
“Dear Taxpayer(s):
Our records indicate that you claimed a property tax deduction of $10,000.00 on your 2004 Gross Income Tax Return. However, information we received from your Local Property Tax Assessor’s office indicates that you only paid $X,XXX.XX in property taxes on your principal residence for the tax year 2004.
There, the Division has adjusted your 2004 property tax deduction to $X,XXX.XX which resulted in a balance due on your account in the amount of $XX.XX.
The above amount due should be forwarded to this office within thirty (30) days to avoid the imposition of additional penalty and interest charges.
If our records are not correct and you paid more than the amount indicated above in property taxes for the tax year 2004 please forward a photocopy of your 2004 final tax bill, assessment notice or 1098 Mortgage Statement showing the amount of your property taxes.
Please remember that you may only claim the deduction for property taxes paid on your principal residence. If you lived at more than one location for the year, along with above documentation, please indicate the time period during 2004 that you occupied each address as your principal residence.
If you have any additional questions about your account, information may be obtained by contacting our Customer Service Center at (609) 292-6400.”
This is the first time I have ever seen such a letter. Actually, kudos to the NJDOT for attempting to match NJ-1040s to Property Tax Assessor information. The letter was for tax year 2004, as 2004 will only still be an “open” year (available for audit or review) until April 15, 2008. I expect that once the 2004 letters have been completed NJDOT will send out similar ones for 2005, if they have not already done so.
In my case the taxpayers actually “lived at more than one location for the year”, and I will need to send them documentation of the taxes paid at each location for the period of residence. This should not be a problem.
Have any of you also received such letters from your clients?
TAFN
The letter read:
“Dear Taxpayer(s):
Our records indicate that you claimed a property tax deduction of $10,000.00 on your 2004 Gross Income Tax Return. However, information we received from your Local Property Tax Assessor’s office indicates that you only paid $X,XXX.XX in property taxes on your principal residence for the tax year 2004.
There, the Division has adjusted your 2004 property tax deduction to $X,XXX.XX which resulted in a balance due on your account in the amount of $XX.XX.
The above amount due should be forwarded to this office within thirty (30) days to avoid the imposition of additional penalty and interest charges.
If our records are not correct and you paid more than the amount indicated above in property taxes for the tax year 2004 please forward a photocopy of your 2004 final tax bill, assessment notice or 1098 Mortgage Statement showing the amount of your property taxes.
Please remember that you may only claim the deduction for property taxes paid on your principal residence. If you lived at more than one location for the year, along with above documentation, please indicate the time period during 2004 that you occupied each address as your principal residence.
If you have any additional questions about your account, information may be obtained by contacting our Customer Service Center at (609) 292-6400.”
This is the first time I have ever seen such a letter. Actually, kudos to the NJDOT for attempting to match NJ-1040s to Property Tax Assessor information. The letter was for tax year 2004, as 2004 will only still be an “open” year (available for audit or review) until April 15, 2008. I expect that once the 2004 letters have been completed NJDOT will send out similar ones for 2005, if they have not already done so.
In my case the taxpayers actually “lived at more than one location for the year”, and I will need to send them documentation of the taxes paid at each location for the period of residence. This should not be a problem.
Have any of you also received such letters from your clients?
TAFN
Thursday, November 8, 2007
2007 TAX FORM UPDATE
The 2007 Form 1040 and corresponding instructions have been posted online at the IRS website, as are 2007 Schedules A and B, C, C-EZ, D, E, EIC, F, and SE and many of the 2007 forms that relate to the 1040.
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There are only minimal changes to the 2007 Form 1040. On Page 1 Line 23 is now for Educator Expenses, replacing the Archer MSA, and Line 34 is now for the Tuition and Fees deduction, replacing repaid Jury Duty pay. On Page 2 there is some shuffling of the credits on Lines 47 through 53, and Line 71, used last year for the telephone excise tax refund, is now for the refundable prior year minimum tax credit.
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The Schedule A expands Line 5 under the “Taxes” category to include (a) for state and local income taxes and (b) for state and local sales taxes.
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For the most part finished returns are sent to the same addresses as last year. The only exception is that returns are no longer sent to the Philadelphia Service Center. Pennsylvania taxpayers will send their 1040s to Kansas City and Kentucky filers will use the Austin Service Center.
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The 2007 Form 1040 Instruction booklet clarified a question I had concerning a change in the law for retired “public safety officers” that became effective for 2007.
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An eligible retired public safety officer (i.e. law enforcement officer, firefighter, chaplain, or rescue squad or ambulance crew member) can elect to exclude from taxable income up to $3,000.00 in withdrawals from his/her retirement check to pay for the premiums for accident and health insurance coverage for the retiree, spouse and dependents, similar in the way health insurance premiums deducted from an employee’s paycheck can be treated as “pre-tax” under a Section 125 cafeteria plan.
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I was not sure if this election had to be made to the appropriate state Division of Pensions, or if this exclusion would be reflected in the “taxable amount” reported on the Form 1099-R. The instructions indicate that “the amount shown in box 2a of Form 1099-R does not reflect the exclusion”. You make the election on your Form 1040 (or 1040A) by reducing the taxable amount of the pension that is reported on Line 16b (or Line 12b on the 1040A) by the amount of the excluded premiums, up to $3,000.00, and writing “PSO” in the margin next to Line 16b (or Line 12b) on the return.
.
Let’s say a retired firefighter receives a fully taxable pension of $12,000.00 in 2007. $275.00 is withheld from each monthly check for health insurance premiums. The taxpayer would report $12,000.00 on Line 16a of his 2007 Form 1040 and $9,000.00 on Line 16b. He would write “PSO” next to Line 16b. While a total of $3,300.00 was withheld from his retirement check for premiums, the exclusion is limited to $3,000.00. If the monthly premium deduction had been $225.00 instead the amount reported on Line 16b would be $9,300.00.
The 2007 New Jersey and New York individual income tax returns have not yet been published online.
The Fall 2007 issue of the New Jersey State Tax News is available to download. The main item of note concerns the federal provision that allows a taxpayer age 70½ or older to transfer up to $100,000 from an IRA to a qualified charity tax-free. The newsletter states, “For New Jersey gross income tax purposes, no similar legislation has been enacted, and there is no change to the New Jersey income tax treatment of distributions from an IRA account that corresponds to the Federal income tax treatment. Any amounts considered taxable income for New Jersey gross income tax purposes received as a distributions from an IRA must be reported as pension and annuity income on the New Jersey income tax return.”
NY has issued a summary of “Personal Income Tax Changes Enacted in 2007”. The only item of interest is the increase in the increase in the New York City school tax refund amounts.
TAFN
The 2007 New Jersey and New York individual income tax returns have not yet been published online.
The Fall 2007 issue of the New Jersey State Tax News is available to download. The main item of note concerns the federal provision that allows a taxpayer age 70½ or older to transfer up to $100,000 from an IRA to a qualified charity tax-free. The newsletter states, “For New Jersey gross income tax purposes, no similar legislation has been enacted, and there is no change to the New Jersey income tax treatment of distributions from an IRA account that corresponds to the Federal income tax treatment. Any amounts considered taxable income for New Jersey gross income tax purposes received as a distributions from an IRA must be reported as pension and annuity income on the New Jersey income tax return.”
NY has issued a summary of “Personal Income Tax Changes Enacted in 2007”. The only item of interest is the increase in the increase in the New York City school tax refund amounts.
TAFN
Thursday, November 1, 2007
TRI-STATE TAX UPDATE SEMINAR
Today I attended the first Tri-State Tax Update for New Jersey, New York and Pennsylvania sponsored by the New Jersey Institute for Continuing Legal Education, and co-sponsored by the NJ State Bar Association’s Taxation Law Section, the National Society of Tax Professionals and the Central Jersey Chapter of the Society of Enrolled Agents.
I signed up for the half-day seminar out of curiosity. I heard about it from a bulk emailing to NJ, NY and PA NSTP members.
The seminar was held at the New Jersey Law Center in New Brunswick, just off Route 1. It was a good facility for such an event, with an excellent and easy to get to central location. There was a basic “continental breakfast” set-up, coffee or tea and bagels and muffins - nothing fancy, but adequate.
My first reaction was surprise at the extremely poor turn-out. The annual state tax seminar run by the NJ chapter of NATP is always “chock-a-block” full, and the national NATP and NSTP sponsored year-end federal tax updates are also usually well attended. I first thought that traffic had delayed attendees, but there were only 2 or 3 late arrivals.
When I first heard about this seminar I thought that half a day is not enough to properly cover the three states. I had attended a similar half-day multi-state update offered by the local Society of Enrolled Agents or Accountants (I forget whom) several years ago, and indeed 4 hours was not enough time for the topics on the agenda.
As it turned out, the time frame worked out perfectly. Two lawyers from the Newark office of McCarter and English spoke on NJ – one on sales tax and one on corporate tax. To my great disappointment there was absolutely no discussion of the NJ Gross Income Tax for individuals or the NJ Homestead Property Tax Rebate program.
The sales tax presentation reviewed the new items subject to the tax effective last year. It was pointed out that NJ, in a truly rare case of giving the taxpayer a break, does not charge sales tax on limousine services for funerals.
The corporate tax speaker pointed out that there were no new legislative changes to the NJ corporate business tax (the DFBs in Trenton didn’t dare increase the minimum tax any more). The only items of note were the fact that there was no more Alternative Minimum Assessment (AMA) effective with tax years beginning after June 30, 2006, or corporate level tax on Sub-S corporations for tax year 2007, as these items have expired based on prior legislation and had not been extended. He spent most of his presentation on the issues of “nexus” and the “throw-away” provision for allocating tax to New Jersey.
There were apparently no changes to individual state income taxes for New York State and City and Pennsylvania – or at least none of any consequence mentioned. The New York speaker, a lawyer from a NYC based CPA firm, briefly discussed the “convenience of employer” rules for allocating W-2 income earned outside of New York for nonresidents, but concentrated on corporate topics. Two more representatives of McCarter and English, this time from the Philadelphia office, spoke on PA issues.
The speakers were all good, and well-informed on their particular topics, with the NJ sales tax presenter and the main PA speaker standing out.
FYI, I have limited my practice to 1040s. I no longer accept corporate clients, although I do have a few remaining corporation returns to do each year for long-time clients and personal friends to whom I cannot say “no”, so I still need to keep abreast of at least NJ corporate tax issues. My main area of interest in attending a tri-state update seminar such as this lies with individual income tax changes and issues. I do several non-resident and resident NY returns, although not as many as in the past, and a couple of PA state returns. As today’s event was geared toward lawyers, despite the NSTP and NJSEA co-sponsorship, it concentrated on corporate and sales tax issues. For that reason I will not be attending this particular update in the future.
For my money the NJ chapter of NATP does an excellent job, for the most part, with its annual January state tax update – although I wish it would skip federal issues and present at least a NY update each year.
Years ago I attended a two-day true multi-state update seminar (it not only had NJ, NY and PA presentations but heard from other northeast states as well) in Rockland County, a joint effort of several NATP state chapters. This event provided actual examples of state returns for non-resident and part-year individuals with line by line explanations. I wish one of the various tax preparation organizations would revive this seminar.
TAFN
I signed up for the half-day seminar out of curiosity. I heard about it from a bulk emailing to NJ, NY and PA NSTP members.
The seminar was held at the New Jersey Law Center in New Brunswick, just off Route 1. It was a good facility for such an event, with an excellent and easy to get to central location. There was a basic “continental breakfast” set-up, coffee or tea and bagels and muffins - nothing fancy, but adequate.
My first reaction was surprise at the extremely poor turn-out. The annual state tax seminar run by the NJ chapter of NATP is always “chock-a-block” full, and the national NATP and NSTP sponsored year-end federal tax updates are also usually well attended. I first thought that traffic had delayed attendees, but there were only 2 or 3 late arrivals.
When I first heard about this seminar I thought that half a day is not enough to properly cover the three states. I had attended a similar half-day multi-state update offered by the local Society of Enrolled Agents or Accountants (I forget whom) several years ago, and indeed 4 hours was not enough time for the topics on the agenda.
As it turned out, the time frame worked out perfectly. Two lawyers from the Newark office of McCarter and English spoke on NJ – one on sales tax and one on corporate tax. To my great disappointment there was absolutely no discussion of the NJ Gross Income Tax for individuals or the NJ Homestead Property Tax Rebate program.
The sales tax presentation reviewed the new items subject to the tax effective last year. It was pointed out that NJ, in a truly rare case of giving the taxpayer a break, does not charge sales tax on limousine services for funerals.
The corporate tax speaker pointed out that there were no new legislative changes to the NJ corporate business tax (the DFBs in Trenton didn’t dare increase the minimum tax any more). The only items of note were the fact that there was no more Alternative Minimum Assessment (AMA) effective with tax years beginning after June 30, 2006, or corporate level tax on Sub-S corporations for tax year 2007, as these items have expired based on prior legislation and had not been extended. He spent most of his presentation on the issues of “nexus” and the “throw-away” provision for allocating tax to New Jersey.
There were apparently no changes to individual state income taxes for New York State and City and Pennsylvania – or at least none of any consequence mentioned. The New York speaker, a lawyer from a NYC based CPA firm, briefly discussed the “convenience of employer” rules for allocating W-2 income earned outside of New York for nonresidents, but concentrated on corporate topics. Two more representatives of McCarter and English, this time from the Philadelphia office, spoke on PA issues.
The speakers were all good, and well-informed on their particular topics, with the NJ sales tax presenter and the main PA speaker standing out.
FYI, I have limited my practice to 1040s. I no longer accept corporate clients, although I do have a few remaining corporation returns to do each year for long-time clients and personal friends to whom I cannot say “no”, so I still need to keep abreast of at least NJ corporate tax issues. My main area of interest in attending a tri-state update seminar such as this lies with individual income tax changes and issues. I do several non-resident and resident NY returns, although not as many as in the past, and a couple of PA state returns. As today’s event was geared toward lawyers, despite the NSTP and NJSEA co-sponsorship, it concentrated on corporate and sales tax issues. For that reason I will not be attending this particular update in the future.
For my money the NJ chapter of NATP does an excellent job, for the most part, with its annual January state tax update – although I wish it would skip federal issues and present at least a NY update each year.
Years ago I attended a two-day true multi-state update seminar (it not only had NJ, NY and PA presentations but heard from other northeast states as well) in Rockland County, a joint effort of several NATP state chapters. This event provided actual examples of state returns for non-resident and part-year individuals with line by line explanations. I wish one of the various tax preparation organizations would revive this seminar.
TAFN
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