Edsel

Gail, I hope you can make it. Gatlinburg is about 2.5 hours if you can navigate around Pigeon Forge. Pigeon Forge is on the way out of Gatlinburg, and during most days it is jammed with tourists and you had best plan for at least an hour to drive as little as 3 miles. (I am not exaggerating) BUT - you can avoid Pigeon Forge. Ask someone in Gatlinburg for the backroad to Townsend. It's not far, and you make a leisurely drive alongside a small cascading river until you reach the community of Townsend, the "back door" to the Smoky Mountains because it is so much less commercialized than Gatlinburg/Pigeon Forge. From Townsend take big highway (four lanes) U S 321 westbound. You will go through Maryville and cross the Tennessee River at Lenoir City. These are towns with a little traffic but nothing as time-consuming as Pigeon Forge. Continue on Hwy 321 all the way to Interstate 40 where you will travel west and be in Crossville in about 45 minutes. This is about the best I can do - use Mapquest for more explicit instructions. Hope to see you - Edsel

Other attractions for those of you who might be in TN Friday and looking for something else to do. If you are around during the day on Friday, you might try whitewater rafting on the Ocoee River. Especially for anyone in the Cleveland, Tennessee area, it is very, very close (less than 30 miles). It is a good 1.5 hours or so from Crossville, certainly no less than that. Whitewater rafting is safe because of the skill of the guides, but I would not recommend anyone under 10 years to raft in this river. Allow about 4 hours at the river - you will be in the water only 2.5 hours but you have to gear up and ride a bus. The river is 30 miles east of Cleveland on Hwy 64 and there are any number of commercial outfitters willing to take your money. In planning, just remember the Ocoee is in the Eastern Time Zone - Rita is in the Central Zone. On Friday evening around 5-6 o'clock there is genuine southern bluegrass at Nine Mile community, a few miles north of Pikeville, TN. Nine Mile is only 45 minutes south of Rita's farm on US Hwy 127. Remember, polished, trained voices are not welcomed at bluegrass venues - you won't even get TV quality bluegrass voices. Expect voices with kinda a rough edge and soulful singing. Just tell 'em you "ain't furm here" and you will be treated royally. Come when you can, leave when you want - probably no admission but they will ask you for a contribution to meet expenses. I am planning on being there and trying to talk my wife into coming. If she comes, those who talk with her are in for a treat. She is from Dalton, GA and a career in the cotton and carpet mills. People in Tennessee call her the "Georgia Peach."

I have a very crude manner of dealing with govt authorities who make it impossible to comply with anything except online or on their websites (many of which don't always work). I just don't give them anything. I also have a form letter to the state representative when they try to assess a penalty. Tennessee is trying to cram their online filing and paying such that it cannot be done in any other fashion except online. If I am doing the filing, I don't have signature authority to give them any money. Tennessee has removed such things as payment vouchers whereby you could send a check with a coupon. They think this will stop paper checks. It will. You betcha! In fact, what it does is stop any kind of payment at all. Serves them right. They think it is all their money by divine right, and don't have a mindset to think of where it comes from. Over time, the savings they hope to achieve will happen, as more and more people use online faculties. They shouldn't expect to pull the rug out from people who have no usable computer and expect not to have problems.

Form 966 is a transmittal-type form required when a corporation dissolves. If a LLC, opting to file as a C corp, shuts down, is a 966 required? There is no stock, no formal organization, and no identification with the state as a real corporation. If a 966 is required, some of the information on the form is not relevant.

Thanks Judy - interesting to know that the leadership in more states other than NJ believe the individual mandate is so wonderful that they will impose it after the Feds let people off the hook in 2019. The ACA is so politically explosive, it's hard to discuss it without getting into partisan politics. From your information above, however, I am amazed that it has been successful in covering 97% of people in Massachusetts with some kind of insurance, and wonder what differences exist such that the Federal version failed to do so. For what it's worth, I believe the Fortune 500 companies had a lot to do with the Federal law. Hard to discuss without getting political. Delete what you wish.

Crank, do you have any information as to whether the NJ additional revenue will be used to shore up or perhaps subsidize medical insurance? The Federal tax penalty (plus the additional Investment and Compensation taxes that came with the ACA) went into the general fund. Absolutely nothing to help provide subsidize insurance to those whom they desperately claimed needed to buy it.

It is indeed ridiculous to hear of so many states requiring proof of state tax withholding, even when the state itself is doing the withholding. Lazy and unaccountable. We are spared this misery in TN where there is no such income tax. So we don't have to deal with state idiots, right? Wrong. Just talked to guy at the state, who asked me to file an amended return for a business tax just because the state changed their database. Rita, let's welcome people to our intelligent state where everyone is smart, lives in fashionable houses, has honest politicians and well-manicured lawns.

Yes, the ugly letters from the IRS have already started. Have three of them already. The first two don't speak well of the IRS administrative prowess: CP2000 attempting to tax client for 1099-R which was an IRA rollover. Betcha y'all have a bunch of these. This one is particularly interesting, since the CP2000 reports the 1099-R and discloses distribution code "G". Collection letter attempting to collect $975 when the assessment has never yet been made. If an assessment was made, it was never communicated to the taxpayer. Cannot remedy this without a POA since the collection division does not involve itself with the audit division making the assessment. Have not got to the bottom of the 3rd one yet. This may be the taxpayer's fault, or possibly mine. Has anyone found a way to make these IRS people accountable for their bungling? It won't stop until this happens.

Thank you Judy - and enjoy the Holiday. Hope wherever you are - you escaped the flooding in your area.

Can someone supply a link to the new tax tables (percentage method)? It's probably somewhere on irs.gov but would take me considerable time to navigate.

Abnormal, thanks for taking the time to respond. Your response would not normally need the scrutiny I'm going to give to it but there are broad myths and misconceptions about employee status. If AMT applies, they weren't deducting the 2% items anyway. The statement is true, but AMT does not always apply, and under the new law doesn't quite have the same punch that it did prior to 2018. Part of the reason it loses its punch is because of the eradication of the 2% Plus you can't arbitrarily go to your employer and tell them you want to be a 1099 contractor. You'd be surprised how many of today's employers will gladly rid themselves of employees as long as they get the work done. They not only rid themselves of 40 hours cost plus fringes, but many managements are under pressure to cut labor costs at every opportunity. I do a great deal of work for two former employers whose departure was amicable. The difference is they know they can no longer order me around like I have no alternatives other than putting up with them. And do you really want to give up health insurance. No. This is the strongest factor you present. It is virtually impossible to find health insurance as cheap as that which the employer can provide. That assumes that the employer is not trying to bail out of providing insurance to begin with, as thousands have done so. Unemployment insurance. Yes. The is the weakest factor you present because you are not employed under either scenario. Consulting income virtually eclipses unemployment benefits. I can't give credence to sitting around collecting unemployment or working under the table. 401k match. The key word is "match", and that is a true benefit, and another strong factor. However custodial fees are so high with a 401k that I have seen many of my clients convert large balances to an IRA and then re-enroll in the employers 401k. employers half of Social Security and Medicare? The consultant has to pay both ends of SS/Med, but does so only on the net income after allowable expenses. Allowable expenses for an employee are no longer deductible for anything, but with a consultant they are deductible "above the line." Given sufficient expenses, a taxpayer's net income tax plus self-employment tax is less than would be the case under an employment arrangement. Tax rate decreases and increased credits offset the loss of these deductions in most cases, so at least in that sense, it was a simplification. Besides, there were a lot of made up expenses in the 2% category. I hope as a preparer, I am diligent enough to stop excessive made-up expenses. I have to depend on the taxpayer, but my best estimate is they lost more as a result of the 2% than they were gaining by misrepresentation. Abby Normal - I have been following your many posts for my duration here. I have a great appreciation for your tax knowledge, and the fact that you can even forge a dialogue such as you have above is to your credit as a great analytical thinker. Best regards, "Edsel"

More casualties of the 2% category: People with extremely high work-related expenses. It is now better for most of these people to create a proprietorship, and deduct ALL ordinary and necessary expenses. There are some proprietorships which cannot be supported (only one customer, no control over workplace decisions, etc.) but whether or not they can meet the litmus test, there's no question that the math works out better for them. Expect a rash of suddenly-formed consulting proprietorships and LLCs in the next 2-3 years. And then expect the IRS to react by mass employee reclassifications like they did in the late 1990s. I was fortunate to leave the corporate workforce in 2006, with enough large customers to justify a proprietorship. Even better than the tax savings was the end of having to work in the corporate environment. People are very sick of working for managements that require the selling of their souls. Pressure to bail out management for their own screw-ups, pressure to work overtime with a smile for nothing, pressure to hide information embarrassing to your superiors yet but of their own making. And for a job well done, the rewards go to someone else. During my corporate career, I have worked for employers with only a handful of people, and for Fortune 500 companies with workforces of thousands. If you can work for yourself, be your own person, and handle the unique challenges that come with it, your persona will be richly rewarded.

The following discussion is based on my understanding of the new tax law, and therefore subject to correction. The IRS treatment of "hobby losses" has never been fair, but with the new law, it is bound to be even worse. If you take the trouble to report correctly, you must claim the Revenue as fully taxable on line 21, but cannot deduct the expenses except under limited arrangements. The expenses are first limited to revenue reported on line 21, then are ushered onto the 2% itemized deduction category. This means if your miscellaneous deductions do not exceed 2%, you can't take ANY expenses. In addition to exceeding the 2%, you must then itemized deductions. If you are limited to the standard deduction, you can't take any expenses either. As if this wasn't bad enough, the new law apparently is doing away with the 2% category entirely. So now we must report revenue from hobbies on line 21, and that's the end of it. From my narrow-minded moral perspective, it suffices that the intent of tax law should be simply to disallow losses from hobbies. It is a distorted and confiscatory intent to try to make "income" out of hobby losses. Part of my interviewing process is to determine whether there is unreported income and to stop taxpayers from taking losses on activities that are obviously not-for-profit and have no hope of ever making a profit. From my perspective if I see evidence of hobby activities it is fair for me to simply not even ask.

My wife watched this grandiose thing on TV. I woke up at 4:00 AM CDT and it had already been on and she was watching it. How anyone in the rural south, especially my wife from Georgia, can identify with these smiling faces I'll never know. Come 7:30 the thing was still on and she was glued to the set. My reaction? I left at 8:30 and went to Virginia to play bluegrass. Black Bart, in all of his colloquialism, is very much like myself, I'm afraid to admit.

Does the new s.199 deduction apply to rental income? Rental income is not considered a "business" for some purposes - like self-employment tax, some believe for issuance of 1099s for services, etc. I've heard the original bill made no mention of rental income, and a decision may come from a "technical correction." Technical corrections come with every major tax legislation. They can't think of everything when it's drafted.

The biggest question at this time is whether this new deduction will apply to rental income or not. For many purposes, rents are not considered a "business". Each "entity" is limited to $20,000? Is this correct? Controls are placed on co-ownership to keep the limit from proliferating, correct? No more than $20,000 can roll "downhill". Individuals are the targets of pass-throughs, and are limited to the lesser of what is passed through to them or $20,000 whichever is less. Sch C proprietorships qualify for the s.199 deduction as well. I'm really fuzzy on this stuff. All of the above are questions, and not statements.

Very recently, the city of Seattle (no income tax in that state) passed a new tax on companies with $25 million or more in revenue. The tax is $275 per employee. Amazon alone has 40,000 employees. The revenue threshold is so large than only a handful of employers will pay. I'm told from a radio source that originally the tax was to be $500 per employee with a lower revenue threshold but the city yielded to pressure from various employers. I don't know that many people on this forum will have any interest in this whatsoever, unless we have members from Washington. But the problem in all locations with a new tax, no matter how forlorn or strange, is: Almost never goes away, even if proposed to be temporary. Can be increased.

You might have just hit on the problem - an attorney filed it. There are so many elements in your original post that I can't jump in and offer anything without further information. And the further information is likely to be horribly complicated. Sorry.

What would happen if you did this bizarre solution? File an original return as MFJ for the year in question, as if nothing had to be amended. Then file an amended return for BOTH parties, negating everything on their original return, resulting in zeros in the 3rd column. This usually results in money showing to be refunded, but as long as the original is filed taking credit for all money, everything should wash out except the net refund/payment for the joint return which would have been the case had the MFJ been timely filed. Interesting that this client came back to you after totally messing up his return last year and filing with unsupported filing statuses (or is it stati - plural).

I believe everything you state is correct. Often, interest/dividends during the estate probate period are so scant that for the sake of simplicity I will report everything under the deceased SS #. This is technically incorrect, but even the IRS would prefer this to a 1041 with a paltry amount insufficient to exceed the estate tax deduction ($600). Assuming the income is significant enough to desire correct treatment. You are correct, especially in reporting estate-taxable amounts as nominee dividends on the deceased's return. It's difficult to get the banks to change FEINs in a timely fashion, much easier to report dividends as nominee-received. Some banks go overboard, and insist on a new FEIN even if no effect. Obvious difference: The amounts received after death will be taxable to the beneficiaries in the estate year received (if taxation is not erased by the estate tax deduction), whereas if no separation is made, they will be taxed to the deceased in the calendar year reported.

Ah yes, since I am the list maker, I wonder what all is being said about me this time. Maybe some are, but my guess is most readers have better things to do. I do agree that the lists are faulty depending on selection parameters and weighting factors. However, if a sufficiently large sampling were taken, there would be a tendency to cluster a reasonably consistent group of states at the top, and at the bottom as well. It had nothing to do with my selection, but I don't think it is an accident that my perception of the "best" states are sparsely populated, and the worst have very large population centers. You do get a broad-based idea of who you're dealing with if your experience is not limited to personal returns. Payroll can bring on an entirely different perspective if you have a multi-state payroll. One particularly memorable event for me was a discussion with a Rhode Island tax assistant. I have always heard horror stories about "Taxachusetts." I found it strange that in the cluster of small northeastern states, that Rhode Island did not have reciprocity with MA. When I asked the RI lady, she said "Not just no, but _ _ _ _ no!!" "No way is THAT going to happen!!" I guess neighboring states up there don't really like each other. When I started comparing the states, I found that RI is much, much more onerous than MA. In fact, MA is reasonably well-run except for high rates and some degree of complexity. State taxation issues can be fascinating. I wondered why Minnesota ceased reciprocity with Wisconsin. This actually hurt Wisconsin more because the larger population centers on the border (Minneapolis, St Paul, Duluth) were all on the MN side. I found out that MN was sending Wisconsin reciprocity money every month, and WI delayed their payments by a full year. No wonder.

Yes, indeed it does. Thank you for the cite. You are nearly always correct when someone holds your feet to the fire. But if you follow the instruction to its logical conclusion, this means you cannot tell anyone who your customers are. I wonder how many of us never violate that one. Having said that it may bring results if someone's reputation is smeared, (and this certainly sounds deserving in the Wisconsin case) I will submit that there are some people so passive and well-disciplined in morality that they would never speak an ill word about anyone, no matter how prodigious the abuse. I have the utmost respect for people like that, and wish I could be more like them. But I'm not. I wonder if there is a regulation that prevents us from speaking ill about taxing authorities - reference my recent post about Good and Bad States.

I don't know whether the features of this board allow it, but I would like for many of us to rank the 5 best states to work with, as well as the 5 worst. Factors to be considered are favorable/unfavorable tax rates, access to state taxation personnel, complexity of work, efficiency of operation, and length of time required to correct problems. I don't have intimate experience in all areas with every state mentioned below, but from what I know, here are my 5 best, in descending order: Nevada Alaska Wyoming N Dakota Montana and my 5 worst, in ascending order: New Jersey California Illinois Rhode Island Pennsylvania Many of you have extensive experience in other states - would love to hear from you.

C'mon Judy. I can't believe beauty shop discussions about some schmuck not paying their bill is the same as revealing information about subject's tax information. Even I am not stupid enough to discuss anyone's tax situation, irrespective of moral turpitude. I don't know these codes as well as most, but to honor your implication, I went back and read it. Most of what I see involves the unsupported sharing of tax information and circumstantial sharing with third party requests. If I have missed something, please enlighten me.

Wisconsin lady - I don't know whether you practice in a metropolitan area like Milwaukee or Madison, or whether you practice in tiny Westby or Stevens' Point. If you are in a small area, casual mention of this dead-beat in certain circles could bring results. A tad unprofessional maybe, but meet the perpetrator on familiar turf.