Even before 2017's Tax Cuts and Jobs Act (TCJA) greatly increased the standard deduction amounts, most people chose to use the standard deduction amount. But one thing that the latest tax reform law didn't change is the ability for many to get some added deductions without itemizing. These used to be called, at least by the tax community, above-the-line deductions. They got that moniker because pre-TCJA they appeared in the last section of the old long Form 1040, just above the last line of that form's first page where your adjusted gross income (AGI) was entered. (A handful also were... Read more →


Still working through the retirement changes that were part of 2019's SECURE Act? Get ready. SECURE 2.0 is on its way. The Ways and Means Committee (W&M) today, May 5, unanimously — yes, Republicans and Democratic representatives agreed on something! — to send this latest set of retirement (and tax) law changes to the House floor. First round retirement law review: Provisions in the first SECURE, or Setting Every Community Up for Retirement Enhancement, Act took effect Jan. 1, 2020. It was the largest retirement reform bill since the Pension Protection Act back in 2006. Among the major changes in... Read more →


You need to follow your doctors' practice of keeping track of your medical records. Your documentation of your health care treatments and costs could pay off as valuable tax deductions. Most taxpayers used the standard deduction even before 2017's Tax Cuts and Jobs Act made it even more appealing by essentially doubling the amounts. Still, millions of filers every year find that claiming itemized deductions gives them a better tax result. And medical expenses tend to be a big reason why they opt to itemize, especially when they know and claim all the possible health-related expenses. Annual deduction choice: You're... Read more →


Feeling adrift as the May 17 tax filing deadline approaches? Here are some tax moves to make this month that could serve as lifelines. May Day arrived over the weekend, but millions of taxpayers today are sending out filing mayday distress signals. The delayed May 17 Tax Day is just two weeks away. Two weeks, however, is plenty of time to get your taxes done. Or postpone them — at least the form filing part — for five more months. Those are the top two tasks on the following list of seven tax moves to make this month. Since time... Read more →


The Biden Administration's proposal to up the Internal Revenue Service budget so it could go after more rich tax cheats got a lot of attention. But the White House also wants to cut down on some audits. That, according to the president's American Families Plan, can be accomplished by giving the IRS more oversight of unregulated tax preparers. The audit/tax pro regulation connection is noted in a White House fact sheet hyping the proposal: These Tax returns prepared by certain types of preparers have high error rates. These preparers charge taxpayers large fees while exposing them to costly audits. As... Read more →


Severe storms in late February produced flooding in Franklin County, Kentucky, shown here, as well as other parts of the Bluegrass State. That led to a major disaster declaration and associated tax relief. (Photo by National Weather Service) We Texans, especially here in the usually more temperate central-to-southern part of the state, learned a hard lesson in February from Mother Nature. She can be as bad as she wants, whenever and wherever she wants. We Lone Star Staters are not alone in dealing with the weather truth. Since our devastating winter storm, severe weather has raged across much of the... Read more →


Remember last summer when we all suddenly learned that the letter from Donald Trump about the first COVID-19 economic impact payment was an official Internal Revenue Service notice? Many of us thought it was a thinly disguised campaign mailer and tossed it. Others didn't even receive it. And many of those who held on to the document did so because they viewed it as a political artifact. But the letter, officially known IRS Notice 1444, Your Economic Impact Payment, had details on how much money you received in connection with the Coronavirus Aid, Relief, and Economic Security (CARES) Act that... Read more →


One of the many reasons that people hate taxes is that after the hassle of filing, then comes the fear that a Form 1040 mistake will mean an audit. The sort-of good news for taxpayers is that the Internal Revenue Service hasn't been auditing as many people in recent years. The agency has had other things to worry about, like doing its myriad jobs with fewer staff and less money. Then there's COVID-19, with added pandemic payments that the IRS is tasked with distributing. Things could be changing, though. More people are getting vaccinated, meaning the end of the coronavirus... Read more →


President Joe Biden's proposal to give the Internal Revenue Service an extra $80 billion to go after tax cheats — which the ol' blog talked about earlier this month in this post — is getting a lot of attention in advance of his nationally televised speech night. I suspect the current IRS hierarchy is pleased, despite the comments to The New York Times by a former commissioner that an extra $25 billion over a decade would be sufficient. "I'm not sure you'd be able to efficiently use that much money. That's a lot of money," said John Koskinen, whose term... Read more →


Princess Bride impatience via Giphy.com Aside from having to fill out a tax return, the most annoying thing for most people each year is waiting for their tax refunds. The complaint is continually atop the list of taxpayer complaints. The frustration of waiting for the Internal Revenue Service to deliver their tax cash probably is why so many folks fall for tax refund myths. Don't! These fabrications, six of which are listed below, won't help you get your money any sooner, and some could actually cost you more. Myth 1: Calling my tax professional or the Internal Revenue Service will... Read more →


The American Rescue Plan Act (ARPA) that became law in March gets most attention for creating a third round of COVID-19 economic impact payments. But it also made changes to some tax laws to help put more money into families' hands. One of those changes was bulking up the Earned Income Tax Credit, or EITC, for tax year 2021. Quick EITC history: The EITC has been in the tax code since 1975. It was created as an outgrowth of President Lyndon B. Johnson's War on Poverty as a way to help middle- and lower-income workers. Even though the EITC can... Read more →


Every tax season is challenging. Often, it's because Congress has fiddled with tax laws, presenting new learning curves for both taxpayers and the preparers they hire to lead them through the Internal Revenue Code. Problems during the last two years, however, can be blamed on COVID-19. Not only did the pandemic produce new laws, there have been delayed deadlines and health-related closures that created processing problems for the Internal Revenue Service. The latest 2021 filing season hurdle, for both taxpayers and the IRS, is the amount of tax returns the agency says must be processed by hand. The IRS is... Read more →


Spring has come and gone here in Central Texas. We're heading into a stretch when afternoon high temperatures are going to push 90 degrees. But it's still a good time for some spring cleaning, especially since it's going to too hot to be outdoors. And especially if you decided to get your taxes done well ahead of the May 17 Tax Day 2021 deadline. Over the years, I've posted my post-filing record retention recommendations. My tax document record keeping suggestions following last year's also-delayed Tax Day still are good, even if I say so myself. True, if you need but... Read more →


I know tax season still has a little more than three weeks until this year's May 17 filing deadline. But everyone, even tax geeks, need a break now and then. And although I'm not a gamer, I've found a diversion in that area. Turnip Boy Commits Tax Evasion. Game offshoot of a real issue: The game from Snoozy Kazoo was released yesterday, April 22. It is, per one tagline, where vegetables get serious about tax evasion because, as Mayor Onion of Veggieville informs Turnip Boy, it is real. From a player's perspective, according to the reviews like Joey Ferris' for... Read more →


Helping hand photo by Lalesh Aldarwish via Pexels.com I'm a big fan of the Taxpayer Advocate Service. Part of that, as long-time readers know, is because I was fortunate enough to serve on the Taxpayer Advocacy Panel (TAP), a volunteer group created to help the Internal Revenue Service meet and improve on the promise of the final word in the agency's name. My years with TAP let me see how TAS and the IRS work to help solve taxpayer problems. And yes, the people committed to this process really do care and do all they can to help taxpayers within... Read more →


We lost all our ornamental rosemary bushes in February's devastating winter storm. This debris pile is all that's left of them. (Kay Bell photo) February's surprisingly harsh winter storm has done a number on our yard. We are not alone. Major federal disaster areas were declared for parts of frozen Louisiana, Oklahoma and Texas. I've heard the same stories from my Austin neighbors, as well as friends in the Sooner and Pelican States. While some of our exterior flora made it through the subfreezing temperatures, quite a few of our plants succumbed. Our line of ornamental rosemary bushes in the... Read more →


Every tax-filing season is different. One thing is constant, though. Taxpayers, and sometimes even the tax preparers they hire, make mistakes on 1040 forms. Hey, we're only human. But there are some common tax filing errors that we all need to be aware of and do our best to avoid. Here are 12, collected from my personal experience, talks with tax professionals and the Internal Revenue Service. They're in no particular order. Some might seem insignificant. Others obviously are huge. Either way, each and every one could, at best, slow down the processing of your tax return and subsequent refund.... Read more →


Shawn Campbell via Flickr Creative Commons Last year was difficult for lots of people. Millions lost their jobs due to coronavirus pandemic protocols. For many, that also meant losing their workplace provided healthcare coverage. Finally, though, there is a bit of good news for folks in this situation. The American Rescue Plan Act (ARPA), which was enacted in March, contains provisions to help individuals deal with COVID created health insurance issues. Plus, the Internal Revenue Service recently announced that taxpayers who received more federal advance subsidy than needed to help buy health coverage through the Affordable Care Act (ACA) exchange... Read more →


Rather than heavy equipment, the IRS needs legislative and fiscal help to close its $1 trillion Tax Gap. If you've thought the $441 million figure that the Internal Revenue Service has for years cited as the Tax Gap is too low, you are not alone. None other than the IRS commissioner agrees that there is more tax money that's owed than the agency has been able to collect. A whole lot more. At an April 13 hearing before the Senate Finance Committee, IRS Commissioner Charles Rettig estimated that the actual Tax Gap could be as much as $1 trillion. That's... Read more →


While those who work in the tax world must be precise, taxes are full of a particular type of shortcut. I'm talking about those sometimes creative, other times eye-roll inducing abbreviations or acronyms for tax terms. Tax terminology is full of them. AGI, AMT, EIN, EITC, EFTPS, GAAP, FATCA, IRA, NOL, PTIN, and VAT just to name a few. Good, bad and ugly acronyms: Tax bills themselves also usually are shortened, with the verbal results sometimes fine and even fun, most times meh and other time invariably ugh. The historic 1986 tax reform bill got the basic moniker Tax Reform... Read more →