The intense presidential election season that seems to never end got turned up a notch this week with the first debate between Donald Trump and Hillary Clinton. No matter how you feel about the candidates or their policies, there is no debating (see what I did there) that their verbal clash came with a greater feeling of importance than any other debate in recent memory.

It did not take long before the candidates got to discussing their tax plans – giving the issue an important slot amongst that general feeling of importance.

It is clear that no matter who wins the election, there will be some tax law changes. This may feel disconcerting, but those changes are not a rare event. There are tax law changes all the time, they just rarely generate the level of notice they currently enjoy.

I feel like lately I have been saying this often (and it promises to continue for the next few weeks), but this is not the spot for me to lay out on which side of the issues I fall. In fact, what I feel more than anything is that no matter how things shake out, we will find adapting to that situation much easier than fearmongers would have us believe. This is not intended to demean the differences between the Trump and Clinton plans, just to say that we will survive, and doing so won’t be as harrowing as that word may seem to imply.

But yes, depending upon who you are and what policies get passed in the next administration, it is possible that your tax picture could undergo a noticeable shift. Just rest assured that we will remain on top of the situation and, as always, are happy to help guide you through it.

This seems a good time to put out a reminder, too, in our never-ending quest to remain helpful. This one goes out to those of you who got an extension to file their tax return this year. Those extra six months that you gained back in April may have seemed like it pushed your deadline far into the future, but that time is now rapidly approaching.

At least you do get a couple of extra days this year, though. A regular extension gets you until October 15^th to file, a date that happens to fall on a Saturday this year. That means you get until the following Monday, October 17, to finish your part.

That still is less than three weeks away, though, so the time for procrastinating has passed.

This also seems like a good place to give a general note about filing extensions. I am certainly not against the act, and do it for multiple clients every year. It also seems that multiples times a year, though, this act comes with a little misunderstanding. Please understand that extending your time to file does not also extend your time to pay. If you haven’t paid taxes owed by the regular April deadline, you immediately are open to penalty and interest charges even after legally filing for an extension.

And the IRS is not one to entertain any debate about that fact.

Taxes are weird.

I know, I am not the person you expect to say this, but it is true.

Taxes are also complicated.

Again, you probably did not expect to read that here either, but it is actually one of the reasons I love doing what I do.

I mean, the different areas that taxes reach into are probably impossible to count. Just think about the Affordable Care Act/Obamacare. Apart from however one feels about its political implications, the fact that much of its reporting and implementation occurs through a tax return is at least mind-stretching and probably mind-boggling.

These weird moments don’t always happen at the federal level, though, for that would be too easy in this complicated world. Only last week, after all, the city of Chicago passed a new tax on water and sewer usage to fund pensions for municipal employees. Again, we will have to leave politics aside – a situation where people are being charged a little extra for water so some people can retire leads to a debate where the arguments of just one side would not even fit in this space.

This new tax is only expected to cost an average household $53 in 2017, not a wild amount, but tracing the where and why of such money movement still helps highlight tax complications.

From the city to the state level, we come to New Jersey governor Chris Christie, who ended a tax reciprocity agreement with Pennsylvania earlier this month.

For those who are affected by this, you probably know too much about this situation already. For those who are not, though, let me go on just a little bit. Essentially, New Jersey and Pennsylvania residents who worked in the other state only had income taxes collected by their home state. Now those in this situation must file two different state tax returns.

New Jersey did not have such an agreement with any other state, most notably New York, so again there are clearly arguments on both side of this issue, but it all comes out again as just further complication.

Before I go, I have one more interesting piece I want to mention that can again make one question just how weird taxes and the way that we think of them can be.

CNN reports that Roberton Williams, a senior fellow at the Tax Policy Center has found that a majority of U.S. tax filers pay less in income taxes than they do in payroll taxes, including Social Security and Medicare.

These findings involve a little bit of mathematical gymnastics, as Williams assumes that employees effectively carry the burden of what they AND their employer pay for these taxes, saying their actual wages would be higher if there was no employer burden in those areas. How that would work out in a real-world situation most likely would vary from employer to employer, but that’s another bit best left aside for now.

Regardless, the piece gives an interesting look at where those mysterious numbers on your paychecks come from and what they mean.

All the situations, though, show that those numbers, how the government comes to them, and how it collects them never come with easy answers. Aren’t you glad then that you have someone you can come to when they just cause more questions?

Now that Labor Day has passed, the big national tax preparation chains are starting to amp up for tax season.

(Well we are, too. But our marketing budget is much lower, so you may not notice nearly as much.)

Those large companies are not yet casting their large nets as they fish for schools of new clients. They remain active, though, and are now looking for their next batch of tax professionals to prepare tax returns.

That’s right, someone who is only now starting to learn about tax law could be preparing your taxes in four months. And I even came across a program where they can learn all they need in a single week!

I do not want to degrade these companies or their workers, as I never begrudge anyone how they make their living. I do, however, believe that this system should not engender the most customer confidence.

In my opinion, taxes (and maybe all businesses) are best done with a bit of a personal connection. We have clients who come back to us year after year and this allows us to understand their situations and appreciate who they are beyond the numbers on their tax returns. We want to help them, and we want to help them so much that we see them again next year (and with the best clients, that next meeting won’t even take a year).

I believe there is a level of comfort and confidence bred in those types of relationships that cannot be matched in a situation where you walk in and wait for the next available representative. And to imagine that that representative may only be a few months into the job, well, we can also provide more experience than that. Our commitment to taxes is yearlong and has run for many years.

All of these thoughts come with a clear bias. When it comes to my finances, though, I know which situation I would rather embrace. And when clients make the same decision, we are committed to making them realize they made the right choice.

                                             *                                           *                                           *

As a little bit of an addendum to the above, here is a slight story about how confusing the IRS can be, and how navigating their rules can be difficult:

News came out last week that the IRS was going to make information about Offers in Compromise available online. You know, that newfangled place where information is starting to be put a lot.

A little background may be necessary for those who are not familiar with the subject. Offer in Compromise is a program through which those with outstanding tax bills can work out a deal to settle the debt for a lower amount.

Those OICs that were accepted have been public record for decades, but were only accessible to those who were willing to put in some effort. This is because the IRS would create a hard copy and then ship it to one of seven locations around the country. If someone then wants to view the file, they still have to make an advance appointment.

Yes, this is not an agency that makes things easy. We, however, like to make things easy for you when it comes to your dealings with it.

Quite often - or maybe it is just quite often to those of us in the accounting profession - one hears jokes about the tax incentives behind marriage. And yes, like all good humor, there is some truth behind it.

Never - and this is because it’s rarely a joking matter - does one hear about the tax ramifications of a divorce, though. I do not want to be a downer (contrary to how other stereotypical jokes portray accountants), but wanted to spend a little time giving a few things to think about it if you or anyone you know find yourselves in this situation.

SOCIAL SECURITY NUMBER

This is crucial even beyond your tax picture. When any life event leads to you changing your name, be sure to notify the Social Security Administration. If the name on your tax return doesn’t match the name that the SSA has for you, there could be problems processing your return.

HEALTH CARE CONSIDERATIONS

As most are already aware, the Affordable Care Act (Obamacare) requires people to have health insurance coverage or face tax penalties. Most people have taken care of this, but most people also don’t foresee situations where they will lose that coverage. This can happen during a divorce. That situation, though, qualifies as a life event that allows one to get coverage during a special enrollment period without waiting until the end of the year.

Apart from the potential losing of coverage, keeping your health insurer notified of name changes, life events, social security number changes, etc., is also something that should be done.

CHILD SUPPORT

Any child-support payments are not deductible and any child support received is not taxable.

ALIMONY

Alimony, however, works in the opposite manner. If you are paying alimony, that money can be deductible whether or not you itemize deductions. Not surprisingly then, alimony received is taxable.

IRA CONTRIBUTIONS

Here things start to get a little more complicated. If a divorce is completed by the end of a year, you will not be able to deduct contributions that you made to your former spouse’s traditional IRA. If you have your own, though, then you still may be able to deduct those contributions.

That final bit is not the only potential difficulty, though. I do not think this is the place to get too deep into too many of those issues, but just be aware they exist. As quick examples, any tax credits that were involved with a shared qualified health plan will have to be allocated between both you and your former spouse’s returns. And since alimony received is taxable, that might mean that the tax you paid during the year may no longer cover you obligations.

Overall, a divorce may result in the most complicated tax return you have ever submit. Yes, I know it is already a disconcerting, life-altering experience and no one wants to be reminded of it or continue to feel its ramifications. You also don’t want to ignore it, however, for if you do the effects will just linger longer. That means it is best to put someone on your side who knows how to handle these situations, makes sure they are correctly addressed, and can help you move beyond them.

As always, we would be very happy to be the helpers who assist you in getting there. 

I sometimes feel funny when I post these blogs. By their nature, they involve me talking myself up a bit and I try to keep that to a minimum.

This one, however, is not going to look like it is anywhere near that minimum level. I swear it’s not my fault, though, for most of the words are coming from others.

I mean, first there is this recent article from al.com that speaks to how every business, no matter their size, needs to know they will need legal and accounting help. These are areas where if you go at them yourself, you may succeed and have everything go along fine, but if you make a mistake it could prove a very costly one.

Then I came across a piece from Accounting Today that goes through five of its reasons why a small business needs an accountant. These are both short pieces, but both do a good job of showing some of the potential benefits of working with an accountant.

They both are also written with an eye toward a business that could use an accountant’s services. At the risk of letting you see behind the curtain, I want to mention one more piece that is aimed more toward the accountants themselves.

That article comes from theprogressiveaccountant.com, and speaks more of how accountants can serve clients with whom they are already working. It discusses how accountants need to not just be crunching numbers, but letting clients know what those numbers mean.

This is a viewpoint I agree with, for I believe my clients are not getting enough value out of my fee if they do not understand what I am doing. I should not only be giving numbers, I want to help clients see what actions they should be taking because of those numbers.

Now let me try to synthesize these ideas a bit ….

Although that last article I spoke about was urging accountants to be a trusted advisor, I think some of the reason this relationship does not always blossom comes from the client end as well. This is not to say that clients would not like this type of service, but they often do not even know it exists.

Take a look at the other two articles, too. They speak of situations where a business owner could benefit from working together with an accountant. But would one’s first response in those situations be “Let me discuss this matter with my accountant?”

So this then is my plea for you to realize that, yes, you can AND SHOULD bring such matters to your accountant. We do want to help. I trust that if you are already one of our clients, you feel we are providing you with solid service. Do not ever think we cannot do more, though. We never have to be only bookkeeping, payroll, taxes or advisors, we can be all those things depending upon what is called for by your finances.

Think of these articles then, and then think about how your business runs and how it could run better. Then know that we would love to help you get there.

Moreover, if you know other business owners or individuals who could benefit from services, do not be afraid to point them toward professional help. One thing these articles show is that there is a need to not be afraid to accept the service and guidance of those that can provide it. So we would love to help those people get to their goals, as well.

No matter how self-serving that is. 

Last week, I wrote about some of the tax issues surrounding education. Little did I know that at the same time, taxes and education were again mixing together into the latest tax scam.

The IRS recently released a warning about telephone scammers calling and making demands for the payment of non-existent taxes, like the “Federal Student Tax.” This isn’t a new tactic, but seems to play a little stronger this time of year (and the scammers apparently know this).

I can’t believe how often I get to write about the latest potential tax scam. Because of that I don’t want to get too in depth here, but remember the biggest key in every attempted scam:

The IRS will NEVER contact you via phone first. You will first receive a notice in the mail of taxes owed before the agency chooses to contact you in another manner. If the first you hear of a tax bill owed is over the phone, hang up, it is not real.

This does give me a little chance to talk about survey results released earlier this month by the Journal of Accountancy and The Tax Adviser about tax-related identity theft.

In a potentially scary number, 59 percent of CPAs reported that they had a client who experienced tax identity theft. The more one gets into those numbers, though, the less frightening they are.

First, most respondents said that only a small amount of clients were affected. There were also a significant portion of clients who were aware of the problem before they filed, so it was not necessarily an issue with tax filing itself, but their information being obtained elsewhere and then used in a scam.

Finally, the amount of people who found it very difficult to deal with this problem through the IRS was very small. 

So let this be a warning that a bit of caution is always good when it comes to protecting your personal information. Don’t think that you can just be lazy when it comes to such measures.

Let it also be a warning about how it could pay to be vigilant about your finances. By staying on top of things, you can know when problems arise, end them quickly, and be in the group that finds it easy to move on. No one wants to be that constant when it comes to mundane tasks like bookkeeping, but there are clear benefits to it.

And if it is REALLY something you can’t imagine doing, well you know who would love to help. Contact us today if there is anything we could do to help ease this burden.

                              *                                           *                                           *            

Also from the recent IRS file, comes news that user fees taxpayers must pay to enter installment agreements to pay off tax bills could be going up starting in the new year.

First, if you have an old tax bill that needs to be paid, it is ALWAYS better to get to work on paying it off than putting it off. The less penalties and interest you are charged, the less you have to pay overall and the sooner the stress of it starts to wane.

But if you do have a bill lingering over you, let this be serve as an even greater impetus to get to work on taking care of it. Nothing good comes from ignoring it and a (legitimate) bill from the IRS WILL NOT go away. 

You see it in every department store and upon the countdown calendars gracing the walls of every parent – it is back-to-school time.

From a personal standpoint, whether your kids are already back in the classroom or are dreading their return there, I hope you had a good summer and made some lasting memories with that extra time together. From a professional standpoint, there are always tax questions that arise during this time.

This is far from a complete breakdown of some of the things you may now be thinking about, but consider it a primer and a push to think about some of these issues. To get a better feel for your personal situation, though, please contact us and let this be one of the ways we can point your finances in the right direction over the last few months of the year.

But until then, some general notes:

TUITION

Many are aware that college tuition can be a deduction on your tax return. Be aware, however, that private and parochial school tuition for those not yet in college is not deductible. For those with children under 13, though, there could be some tax credit involved with private school and its child care component cost.

Also remember that deductible tuition is not only for those in their teens and early 20s. Graduate, post-graduate and other continuing education at eligible institutions could also qualify.

BEFORE- AND AFTER-SCHOOL CARE

If you have any of those under-13 children (no matter what type of school they attend) those tax credits may again be involved if the child receives this type of care on either end of the school day.

These only apply, however, if the child is there so a parent can go to work, look for work or attend school themselves.

DONATIONS

This is a tricky area, but worth keeping in mind. For example, if you make a donation to a public school, it could qualify as a charitable donation if it is the benefit of all the students; if it is only for your child, however, then it would not be.

Throughout the year, you are bound to take place in many fundraisers and raffles, too. A raffle is never tax-deductible, but a fundraister could be if you receive nothing in return. Again, please talk with us to help better determine where things lie in your personal situation.

TAX-DEFFERED ACCOUNTS

There are some accounts that are slated for educational expenses and are tax-deferred. Money in those accounts could be used for different expenses over different ages - let’s say a computer for your son in high school – and avoid extra taxes.

STUDENT LOAN INTEREST

Much of this takes place after (and sometimes MANY years after) our schooling ends, but don’t forget that the interest paid on those seemingly ubiquitous student loans is deductible.

DON’T FORGET THE TEACHERS

Going back to school doesn’t only involve students, as teachers also get back to work. For those of you who spend time at the front of the classroom, keep your receipts when you buy materials for your classroom. There is an Educator’s Expense deduction that allows a deduction of up to $250 without itemizing deductions.

Beyond that, more can be deducted with itemizations. There are also considerations to be made for charitable contribution if you purchase something for the classroom that is more than general supplies and will remain with the school into the future.

Again, we will be happy to consider anyone’s personal situation, just contact us!