I survived my 47th tax season . . . .and I’m here!
This season I got an answer to the question posed by the Beatles decades ago (at least for me) – you still need me, and some of you still feed me, now that I am 64!
Once again, a successful year. I ended the season with only 26 GDEs (by now I expect you know what this stands for) – similar to the previous 2 years. And once again not a single GDE was due to my workload! Every single return received in my hands by March 18th, with all the necessary information, was completed and returned to the client, as were quite a few received after that date.
Also again, no auto, computer, equipment, or weather issues. And no word of any IRS or state refund or processing delays or FUs - so far.
I was truly “locked behind closed doors” for the entire season. I was up at my desk each morning between 4 and 5 AM during this time, and when February 1st came around I forgot to plug my phone in at 9 AM each morning. After about a week I got spoiled – I enjoyed working through the day without the interruption of the phone (even though I have always screened calls) – and never plugged the phone in (unless I was expecting a specific call). I did, however, constantly check my email accounts, and responded promptly when appropriate. I found that, from my point of view, not having the phone on did not adversely affect the preparation of returns.
After preparing each tax return this season I also calculated the tax on 2017 income and deductions using the new tax law and rates of the GOP Tax Act, to see how clients would have fared if the Act had been effective for 2017. I found that most would have paid less – ranging from $2.00 to several thousand – but a handful would have paid more. I included the result of my calculation in my “The Word” explanatory memo that accompanied finished returns. One thing I learned from this exercise is that many returns will be much simpler next season and beyond, because I found many clients would no longer be able to itemize under the new law. I am NOT complaining.
Obviously, I will still need to report gains and losses from investment sales on Schedule D and deal with the special qualified dividends and capital gains tax rates, report rental income and expenses on Schedule E, and calculate credits for college tuition. But there will be a lot less Schedule As, and many clients will be filing the equivalent of a short form.
The one change from the GOP Tax Act that was effective for 2017 – returning the AGI exclusion threshold for medical expense to 7½% - did indeed benefit quite a few of my clients.
Taxpayers could no longer remain silent on full-year health insurance coverage, as they could last year, and I actually had to calculate a pro-rated Obamacare individual responsibility penalty for 2 clients (my first time using this procedure). A handful of clients had to reconcile advance premium credits, and I was able to save a married couple $1,500 by having them make a $1,000 deductible IRA contribution (to be explained in a future post).
I continued to do absolutely nothing more or different for returns claiming the American Opportunity Credit and the Child Tax Credit, other than include IRS Form 8867. As the season progressed I considered, to save time, creating a pro-forma Form 8867 with my name and PTIN and the questions on Page 1, and the last question, all answered ‘appropriately”, so I would just have to enter the client name and number and answers to the credit specific questions when the form was needed. I will definitely do this next season. As you probably know by now, I strongly oppose and denounce (as I do arrogant arsehole Donald T Rump) the additional excessive due-diligence requirements for these credits.
The ridiculous retroactive one-year only extension of several expired tax benefits that the idiots in Congress included in the “Bipartisan Budget Act of 2018” signed by Trump on February 9th did not cause any problems for me. I did not, and will not, have to amend any 2017 returns to include these extended benefits.
On the state side, I used NJWebFile to electronically submit NJ returns whenever possible, and permitted by the client, and used the state’s somewhat enhanced fill-in form when needed, and took advantage of the excellent NY state truly enhanced fill-in Forms IT-201 and IT-203. Of course, all my federal returns were prepared manually.
Like last year there was a delay in the beginning of Processing Returns by the IRS – the Service began processing returns on January 29th, later than last year’s January 23rd start date. But, of course, I did not begin to prepare returns until February 1st. And for the first time in history the April 17th filing deadline (once again the 15th fell on a week-end and the 16thwas Emancipation Day, a legal holiday in Washington, DC) was extended to April 18th when, as fellow taxblogger Kelly Phillips Erb explained in her post “Don't Panic: After IRS Problems, Taxpayers Get An Extra Day To File” –
“Following computer system issues which appeared early on the April 17 tax deadline, the Internal Revenue Service (IRS) has announced that taxpayers will have an additional day to file and pay their taxes. . . . The system issues were discovered early in the morning on Tax Day. Despite these problems, some taxpayers were able to file and pay their taxes online. However, since millions of taxpayers were expected to file at the last minute, out of an abundance of caution, the IRS has extended the deadline.”
As usual the season ended for me the day before the original deadline – on Monday, April 16th– with the mailing of the GDEs. I actually prepared my last Form 1040 of the season on Saturday. The additional day meant nothing to me – I left for my annual post-season recuperation at the Jersey shore on the morning of April 18th.
It seems that I prepared about 20 less sets of returns during the season this year. A couple of clients, aware of my announced retirement after 3 more seasons, did seek out a new more local preparer, telling me so, and I lost some clients due to death. And I expect I did not hear from a couple because they no longer need to file a return (although I do invite clients in this situation to continue to send me their “stuff” anyway and I would verify that they did not need to file, which I did for a handful). I did not accept any new clients – keeping true to my policy – although I did do a first return for one or two dependent children of existing clients.
So, there you have my commentary on the 2018 tax filing season. I end with my usual question for fellow tax pros – did I miss anything?
(I am truly showing my age with the title of this annual post. I remember as a child in the mid-1960s watching the American version of the popular British satire THAT WAS THE WEEK THAT WAS – aka TWTWTW – the grandfather of Comedy Central’s THE DAILY SHOW. It was hosted by David Frost and featured Phyllis Newman, Henry Morgan. Buck Henry and Alan Alda. The first line of this post is a hat tip to Stephen Sondheim, adapting a lyric from an iconic FOLLIES song.)