Thursday, August 22, 2019

Master Index of Posts

I've compiled a Master List of my posts for easy reference. Not every post is included, and I have changed the order to put the most important or timely ones on top, and to group some based on categories (Military, Obamacare, Tax Software). I will try to keep this updated and just below the latest post. Please let me know in the comments if I screw up a link :) Some of the posts are OLD so be careful assuming the information is current.

If you have a Kindle, you can get a copy of my entertaining and useful book, The Short, Cheap Tax Book for Everyone for only 99 cents!

For the new tax law, there's The Short Cheap Tax Book for the Trump/GOP Tax Law

If you like the blog, buy my other books: Kirk Taylor, EA Author Page

Important or Time Sensitive Posts

My Advice on IRA's
2018 Social Security Warning!
Wants and Needs and Kids
Emergency Fund Advice
Solar Credits and Solar Sales
The Dreaded CP2000 Letter from the IRS
The IRS did NOT Call You!
I Got an E-mail from the IRS!
I Want to Lower my Taxes!
10 Simple Pieces of Tax Advice
10 Things Everybody Should Do
Check Your Withholding

Trump/GOP Tax Law

Post 2018 Tax Season Thoughts on the New Law
Quick Thoughts on the New Tax Law (Post 2017 Tax Season Edition)
2018 Tax Bill Changes
What the New Tax Law Didn't Change (2018)

South Carolina

SC Gas Tax Credit Advice
SC Military Retirement Change (2016)
Obamacare in SC - Something's Fishy


Military Spouses Residency Relief Act 2018 Change
Military Spouses Residency Relief Act Details and Matrix
Retiring from the Military? Tax Warnings!
Reenlistment Bonus, Social Security, Compensation Repayment and Taxes
2018 Military State Tax Guide
2017 Military State Tax Guide
2016 Military State Tax Guide
2017 Boomer Deduction Worksheet
2016 Boomer Deduction Worksheet
2015 Military State Tax Guide
2015 Boomer Deduction Worksheet

Tax Software

TurboTax Admits That Easy Is Better Than Accurate
Tax Preparation Software Sucks - An Open Letter to H&R Block

Business Guides

Sole Proprietorships are Bad
Avon, Pampered Chef, Party Lites, Amway, etc. MLM Tax Guide
UBER Driver Tax Guide
Tax Guide for Contractors - or - 1099MISC WTF?
Real Estate Agent Tax Guide
Rental Property Guide for Homeowners
Rental Property Sale Worksheet

General Posts

Getting Married? One Piece of Important Tax Advice.
The Dreaded CP2000 Letter from the IRS
Investing and Taxes - A Primer
How Much does it Cost to File Taxes?
Reenlistment Bonus, Social Security, Compensation Repayment and Taxes
Open a Roth IRA Today! And Not For the Reason You Think
Foreign Earned Income Exclusion Warnings - Update
Charity Made Simple
How Fast Can I Get my Refund?
Make Estimated Tax Payments the Easy Way
Depreciation Recapture - an inaccurate description
Don't Touch that 401K or IRA!!
What do you do with that Big Tax Refund?
It's Okay to Get a Big Refund - Really...
Common Tax Return Errors - Updated
Common Tax Return Errors
Mortgage Tax Credit Information
Lesson from the Government Shutdown - Emergency Fund
Don't Pay Capital Gains Taxes if You Don't Have To!
I got a 1099C - Now What?
Cancelled Debt and Insolvency
The IRS, email and privacy...
IRS Checking Facebook?
>$250 Donation Acknowledgement
Drop Box Donations - US Marines
Tax Scams
Taxes and Divorce
Random Thought about Books
Taking Care of the Client
Warning - Tax Resolution Scams
Foreign Earned Income Exclusion - WARNINGS!
IRS.GOV Website Update

Affordable Care Act (Obamacare) Posts

The Affordable Care Act (Obamacare) and People with Health Insurance
Affordable Care Act (Obamacare) for the 2014 Tax Filing Season
Obamacare, Affordable Care Act and Married Filing Separately - Warning
Affordable Care Act, Obamacare update and advice
Healthcare Law, Obamacare, Affordable Care Act Info
Weird Obamacare Strategies and Incentives - 1
Weird Obamacare Incentives and Strategies - 2
Weird Obamacare Incentives and Strategies - 3
Weird Obamacare Incentives and Strategies - 4
Weird Obamacare Strategies and Incentives - 5
Weird Obamacare Strategies and Incentives - 6

My Advice on IRA's

One of the major changes for the 2019/2020 version of Everyday Taxes was the addition of a "My Advice" portion at the end of most chapters. This is where I tell people what 20 plus years of experience in taxes, 25 years of experience in the military, and 50 years of life experience have taught me.

Copied below is the that section from the IRA chapter.
The main reason I wanted to include it here is the Roth versus Traditional debate. Math often says one thing, but life doesn't always play well with the math...

My Advice:

1. Tax people and investment advisors will argue endlessly over the Roth versus Traditional debate. There is a lot of math that can help you figure out which one is best from a tax perspective, but I want to add my 2 cents. After 20 years, and thousands of clients, I have literally ZERO clients who regret investing in Roth IRA’s and MANY who wish (or should wish) that they had picked Roth over Traditional. There are a ton of things going on in retirement that make the amount of taxes paid lifetime insignificant compared to real life in retirement. Here’s my point: Talk to your financial advisor and tax person about YOUR situation, go over the numbers, your financial desires and the implications and make the best decision for you, BUT, if you are still unsure, or it’s a close call, go Roth.
2. Open a Roth IRA and put some money into it as early in life as you can. Parents should open a Roth IRA for their children as soon as they get their first job and encourage them to invest in it. Money saved in a Roth before age 18 is MAGICAL due to the long time horizon for it to grow.
3. If you make too much money to invest in a Roth IRA, you can make non-deductible contributions to a traditional IRA and then convert them to a Roth with no tax implications. This is called a “back-door Roth”. Your financial advisor can assist you in doing this.
4. Start taking required minimum distributions out of traditional IRA accounts in the year you turn 70 and a half vice waiting. Making two withdrawals in a single year can really mess your taxes up.
5. Totally personal advice: You invested in these accounts so you could enjoy your retirement. SPEND THE MONEY! Obviously make sure you don’t run out, but enjoy life – don’t leave it to your kids!

Common Law Marriage is Dead in South Carolina...

The long-standing existence of common law marriage in SC has been overturned by the courts.

No more tax desk marriages...

Sunday, May 12, 2019

If You Had a Great Tax Professional...

It's obviously no secret that I favor the use of tax professionals over software. With that said, having a great tax pro matters, and it costs money. This post is about a few of the things that might or might not occur to the average person that a great tax pro can provide. Some of these became especially important with the advent of the new tax law and its effect on tax return results.

Here's the list:

1. If you had a great tax pro, you wouldn't have been surprised that refunds in general were going to be down, but you also would have known that actual taxes paid would also be down. More importantly, a great tax pro would have taken your 2017 tax information and analyzed it under the new law so you would know the EXACT effects on your tax situation.

2. A great tax pro would also have anticipated, through asking great questions, what changes would occur in your life and how they would affect your tax situation. It is amazing to me how many people with okay tax pros end up surprised by simple things that are easily anticipated such as a child turning 17.

3. Expanding on the above, a great tax pro will tell you what you can do to mitigate the effects of tax law or life situation changes. Unlike tax software, a tax pro can make changes to your return, see the results and then make more changes so that you can make informed decisions about what to do.

4. A great tax pro can show you how to use the tools the IRS provides such as withholding calculators, installment agreements and many others.

5. A great tax pro knows state tax laws or where to find them. Software sucks at state taxes. There are numerous state tax deductions that you basically need to know about ahead of time to take advantage of. Software just draws numbers from the Federal with occasionally a few questions. If you use software, ask yourself how many times the state tax return magically occurs without ONE SINGLE QUESTION about state taxes.

6. If you have to file more than one state, your software is going to mess it up. An average tax pro might have difficulty with a state other than the one they work in and maybe a neighboring state. A great tax pro understands how to file multiple states intimately.

7. A great tax pro will save you a ton of time, frustration and worry. If your tax pro is really good, the time and effort you save should make every penny worth it.

8. A great tax pro can answer your questions in the off-season, BEFORE you make a mistake.

9. A great tax pro can help you understand IRS and state tax letters and (often for a fee) help you respond or (if you get their extended guarantee) handle the letters for you and/or go to audits for you. A tax pro who is an Enrolled Agent or CPA is critical for this.

10. A great tax pro will tell you about deductions you've never heard of.

11. A great tax pro can give you interesting non income tax advice you might not think of. The perfect example in South Carolina is when people are paying WAY to much real estate tax because they don't realize they need to inform the county that they are living in the home they just bought. We will also give you a redacted copy of your tax return that you need to file the paper work, and often provide a copy of the form and instructions.

12. A great tax pro can tell you some interesting military stuff, like the 6 states that give military bonus money of various types, the extended period you get to sell a rental property and avoid a lot of taxes, and how to manage tax free combat pay.

13. Really great tax pros have a bunch of worksheets, spreadsheets and calculators that you can use for tax planning or record keeping.

14. Great tax pros see a lot of life occurring and can give great advice based on what we've seen work and not work in people's lives.

15. A great tax pro will check your prior year tax returns for free and make sure you didn't miss anything.

16. A great tax pro can counsel you on the appropriate level of aggression based on the position you want to take and your tolerance for risk.

17. A great tax pro will be up on every tax law change, every IRS ruling and every court case result that affects taxes.

We cost a lot of money. We're worth it. Just make sure your tax pro is great. Okay is not okay.

Friday, April 26, 2019

The IRS Needs Color Codes for their Envelopes

I'm an Enrolled Agent.

I could tell by the thickness of the letter that it wasn't a big deal.

I knew my taxes were completely defensible.

I still couldn't help the moment of panic that comes from getting a letter from the IRS.

Letters like this should come in green envelopes. Maybe orange for CP2000 letters (the ones that suggest changes) and red for payment demands.

Seriously...I'll bet people have had heart attacks as a result of these letters.

At least they don't have the payment voucher on the bottom of all of them like they used to.

Of course, I still can't figure out how to rotate the picture once I inserted it...or I'm too lazy...

Wednesday, April 24, 2019

SC Gas Tax Credit Made Easy

The SC Gas Tax was essentially a waste of effort for 2018, and for 2019 it will be mostly the same. But the credit gets better every year, and you should think of 2019 as your practice year for 2020, and start getting into the habit of tracking your required expenses in a simple, easy to keep up with manner. Your reward will be a few dollars in 2019, and hopefully a few more in 2020, more in 2021, and even more in 2022.

Here's what you need (do this for each car):
1. The Year, Make, Model, Plate #, and Registered Owner Name
2. The number of gallons of gas bought IN SOUTH CAROLINA
3. The cost of routine or preventative maintenance

The stuff in 1 is easy, and number 3 doesn't have to be a big number, because you get the credit (around 4 cents a gallon in 2019) or the maintenance cost whichever is LOWER. So you only need an oil change or two to cover the gas tax credit amount.

Here's how to make 2 and 3 easy:

What you are looking at is an envelope that will go in the glove compartment of the car in question with a gas receipt and an oil change receipt. On the outside of the envelope, there are 2 columns, one for gallons of gas, and one for cost of maintenance. Just write the numbers on the envelope right after you fill-up or have maintenance done, and then slip the receipts into the envelope. At the end of the year, add the numbers on the envelope up and put the envelope with your tax documents for when you file.

Make sure to grab the envelope and put it somewhere safe if you sell the car!

When you file, just put the information into the I385 form in the appropriate spots (or where the software asks for it).

Bonus hint: We keep our gas rewards card from Lowe's Foods in the envelope so we never forget it!

Tuesday, April 23, 2019

Image may contain: 1 person, text

Just to be clear...

This is not how it works.

Me: "What if I get it wrong?"

Gov't: "We will send you a letter explaining what you did wrong, suggesting changes and giving you 30 days to respond."

Gov't: "Actually, we probably won't even notice. We're understaffed and incompetent and rely almost completely on poorly programmed computers to send letters automatically. Unless you miss an important document that we already know about you probably won't hear from us."

Gov't: "Hell, even in that case your odds are pretty good."

Gov't: "Oh, and you pretty much have to try to get thrown in jail. That isn't even close to a planned part of enforcement and is used only as a last resort, and usually not even then...but we WILL take your shit..."