AN ORGANIZATION TIP FOR MY FELLOW TAX PROS

I am always seeing fancy looking organizers on home improvement shows and in the aisles at STAPLES.  It appears that some are rather expensive.

I get all my business and personal organizers absolutely free!

I have found that the various containers that food and household products come in are perfect organizers for holding different sized paper and binder clips, various sizes of sticky pads and smaller lined paper pads, stamps, pens and pencils, erasers, and other office and household supplies.

For one, there is the plastic containers that many “tv dinners” come in (the aluminum ones are no good).  And the brown container that holds three crème-filled cupcakes in a package.  They provide multiple sections for organizing clips.

The green, blue, and black containers that hold the Swiffer wet pads, or the generic alternative, come in several sizes and have many uses in the kitchen, bedroom, and office.

The round plastic containers that contain potato or macaroni salad from the supermarket or sandwich shops like “Blimpie” are also good for holding small supplies.

I even make use of the metal Altoids containers.

Not only am I saving money, but I am recycling as well!

BEFORE I GO 

Last week’s post on the NJ-NATP state tax seminar mentioned New Jersey’s new “BAIT” deduction and credit. 

I discussed my thoughts on this new “scam” (my opinion) in “’Bait’ and Switch” at THE WANDERING TAX PRO.

TAFN

THE FAMOUS NEW JERSEY STATE TAX WEBINAR

 

For the first time in many, many years I was not on the road before sunrise heading to what used to be the Woodbridge Hilton in Iselin, New Jersey on the second Saturday in January (this past Saturday) for the truly “Famous NJ State Tax Seminar”.  I do believe I have only missed 2 of these seminars since they began, both times due to snow.  
 
And it was the only “Famous NJ State Tax Seminar” that I have “attended” wearing nothing but a bathrobe.
 
This was the first, and hopefully last, year that this “must-attend” seminar for tax pros who prepare NJ state income, corporate, payroll, sales, estate, or inheritance tax returns and/or NJ property tax relief applications was offered “virtually”.
 
Let me begin with my usual “disclaimer”.  My main interest in this seminar, or any CPE offering, is individual income tax return issues – here the NJ-1040 and IT-201 and IT-203, and the NJ property tax relief programs.  I have only a basic interest in business or sales tax issues and none whatsoever in estate and inheritance tax issues – and often pay little attention to discussions of these topics at any offering.  However, I do feel these topics should be covered in this seminar, as they are important for many NJ tax preparers.
 
I most definitely prefer live CPE events to online “webinars”.  I like the ability for direct questions and comments from the audience during presentations.  But I had no problems “attending” this webinar under the circumstances.  It went relatively smoothly, despite a few technical “hiccups” resulting mostly from the presenters’ unfamiliarity to the process being used.
 
This year’s event was a bit shorter than past years – ending at 2:50 instead of 4:50. There was a shorter lunch period and there was no “peripheral” session, such as redundant estate and inheritance tax overviewss in past years.  I have always said this seminar should be limited specifically to New Jersey and New York state tax, and property tax relief program, updates and changes.
 
One interesting new item, due to the “virtual” nature of the presentation.  There was actually a “commercial” that ran several times during the day for the event sponsor.  This was in lieu of the vendor tables and presentations at past "in-person" offerings.  The presentations were also interrupted occasionally for audience “polls”, which, I believe, was necessary to verify the actual participation in the event by “attendees” for purposes of issuing CPE credit.
 
The morning involved NJ taxes and the sessions were presented by NJ Division of Taxation’s “Taxation University”, which conducts tax seminars and workshops for tax professionals, tax volunteers and small businesses.  {As an aside, Alexis Reid, still with NJDOT but no longer a member of TU “faculty”, was missed on the “podium” – she continues to be a great ongoing help to me personally and other NJ-NATP members.}  The afternoon was devoted to Kathryn Keane’s annual NY State Update, although she did not touch on federal changes this year as she has done in the past (apparently because NATP prohibits state chapters from discussing federal issues on webinars). 
 
As is the custom, the program begins, after introductory remarks by chapter Board members, with a brief “keynote” presentation by the Director of NJDOT – this year still “Acting” (no idea why) Director John Ficara.  Saturday’s keynote was a bit more worthwhile than past years (I have generally found this presentation a waste of time), due to the discussion of the Division’s response to the pandemic.  Unlike the IRS, NJDOT did not totally shut down for over 3 months, and as a result the NJ returns of my clients, and their requested refunds, were relatively promptly processed.  Of course, there is obviously no comparison between the volume handled by the IRS and that handled by NJDOT.
 
Individual taxes were discussed first.  As I always say the value of update seminars like this depends on the extent of tax law changes and developments.  There was not much new for any NJ tax for 2020.  I outlined the changes to the 2020 NJ-1040 in my post “What’s New for the 2020 New Jersey State Tax Return” at THE WANDERING TAX PRO. 
 
The individual tax presentation began by reminding us that no COVID-related relief payment is reported as taxable income on the NJ-1040, or NJ-1040NR.  This includes the stimulus payment, supplemental unemployment benefits (NJ has never taxed unemployment benefits) or any “EBT” (Electronics Benefits Transfer) welfare payments.
 
One thing worth repeating here – while the final phase-in of the increase in the Pension/Retirement Income Exclusion is in effect for 2020, the “NJ Gross Income” threshold for claiming this exclusion remains at $100,000, regardless of filing status.  As I said in my TWTP post this means “as little of $1.00 in additional income can cause a NJ taxpayer to pay hundreds or more in NJ state income tax.”  Clearly the NJ state legislature is at fault here.
 
And a reminder – while the federal government no longer penalizes a taxpayer for not having “adequate” health insurance coverage for all members of the household, NJ still requires coverage and charges a penalty that is assessed on the NJ-1040.
 
As in past years, refunds requested on 2020 NJ-1040 and NJ-1040NR returns will not be issued until March 1^st, regardless of when or how the return was filed.
 
The biggest issue in the individual category concerned the state tax treatment of employee “telecommuting” required by the pandemic.  NJ, and NY (as we learned in the afternoon), has not made any change to its policy of taxing employees who occasionally or temporarily “work at home”.  A NJ employee working for a company located in New York will not be allowed to “allocate” days worked at home as days worked outside of New York State for purposes of calculating non-resident NY state taxable wages.  Days worked at home in New Jersey are considered days worked in New York State.  As Kathryn explained in her presentation, NY has very strict and specific rules regarding employee out-of-state home offices.
 
The business tax presentation that followed pointed out that telecommuting does not create a “nexus” for business taxes.
 
There was one item in the individual presentation that was truly new to me, and I expect to most if not all of the “attendees”.  When I downloaded and skimmed through the “handout” material for the seminar on Friday I noticed a reference to an “Income Tax Rebate” (nothing to do with the Homestead Rebate) in a slide.  I had never heard about this rebate before.  There is nothing I saw in the 2020 Instructions for the NJ-1040 about this rebate nor anything anywhere on the NJDOT website.  And I could not even find anything via a Google search.
 
During the presentations “attendees” could enter questions in a special box that were answered either in this box or addressed by the speaker at the end of their presentation.  I typed in a request for more detailed information on the income tax rebate, but my request was totally ignored.  Perhaps I did not enter the question properly.
 
It appears that this rebate is not part of the actual NJ-1040 filing, although the amount is based on a taxpayer's NJ state tax liability.  And it appears that the issuance of any rebate for 2020 depends on the fiscal year 2021 budget that will be passed by the NJ state legislature at the end of June (much as we have to wait each year for the budget to pass to find out if Property Tax Reimbursements - “senior freeze” payments – are further limited).  The rebates, if allowed by the budget, will be issued separately from NJ-1040 refunds and not until after June 2021.
 
If any of you reading this post know of any link to specific information and details explaining this new rebate please email me at rdftaxpro@yahoo.com with “NJ Income Tax Rebate” in the subject line.
 
The business tax presentation reminded us that ALL 2020 NJ-W-3 forms and corresponding state copies of W-2s and ALL state copies of 2020 Form 1099s MUST be submitted electronically.   This can be done free of charge on the NJDOT website.
 
The main discussion topic in this section was the new “Business Alternative Income Tax” (BAIT) for NJ pass-through entities (i.e partnerships, sub-S corporations and LLCs filing as partnerships or S-corps).  This was first mentioned by AD Ficara and also briefly discussed in the individual presentation, as this payment is claimed as a withholding credit on the NJ-1040.
 
There seemed to be confusion regarding the federal tax treatment/benefit of NJ’s BAIT.  The TU speakers knew all the details on how BAIT is elected and treated under NJ state tax law, but could not properly address the federal implications. 
 
The BAIT was clearly another attempt by NJ to “work-around” the $10,000 federal SALT deduction limit to help NJ residents legally cheat on their federal return.  Based on what we are hearing from the IRS the BAIT scam is so far successful.  Here is how the BAIT election has been explained in an item I found online (not the NJDPT website) -
 
“The significance of this election is that the business taxes paid by an eligible entity can be deducted in determining federal income that passes-through to the owners, resulting in less federal tax paid by the owners on their share of the PTE income.”    
 
There has been no change to the rules for the NJ Property Tax Reimbursement (aka “Senior Freeze”) program, other than the increase of the income threshold for 2020 to $92,969.  The deadline for filing the 2019 PTR application had been extended to February 1, 2021.  Those who have not yet filed a 2019 application can still do so.  The deadline for filing the 2020 PTR application is November 1, 2021.
 
The was no discussion of the NJ Homestead Benefit.  A slide in the Property Tax Relief presentation stated “No information available at this time.”
 
Before the lunch break there was a new presentation – a “COVID-19 Panel”.  Three high-level NJDOT representatives fielded questions on how the pandemic has affected the processing of returns, applications, audits, and collection activity, presented to them by panel mediator, and NJ-NATP’s old friend, Jake Foy.  It truly was good to see Jake participating in this event again, although we could not actually “see” him.  While we could hear Jake’s familiar voice, some glitch in the system did not allow him to appear on screen.
 
A panel of this type is something that should have been made a regular feature of this seminar years ago.  I hope it continues in future seminars going forward – with perhaps some different types of panels (such as a panel of tax professionals).
 
After lunch we learned there was really not much new for NY state income tax returns either.  The only real item of interest was the fact that NY State has “decoupled” from – does not accept the tax law enacted by – the federal CARES Act, with a few exceptions.  There is a new Form IT-558 to identify required adjustments on the IT-201 or IT-203 resulting from the “decoupling”. 
 
New York does accept the 3-year reporting of COVID-related qualified pension account withdrawals.  New York does not allow the “above-the-line” deduction of up to $300 for charitable contributions made by taxpayers who do not itemize.  But remember, if you do not itemize on the federal return you may still be able to itemize on the NY state return.  New York does allow the increased AGI limitation on itemized deductions for charitable contributions.  
 
Once again NJ-NATP did a good job with this event.  New NJ-NATP Board President Josh Mellum and Seminar Chair Ethan Hundley deserve kudos.  Being virtual apparently did not hurt “attendance”.  It was mentioned that there were 164 participants in this year’s event vs 163 in attendance at last year’s in-person seminar. 
 
Next year’s “Famous NJ State Tax Seminar” is scheduled for January 8, 2022.  Hopefully I will be on the road to Iselin NJ, or somewhere in NJ, next January 8^th.
 
TAFN

I'M BACK!

I’m baaaaaaack!

THE TAX PROFESSIONAL – a blog of advice, information, resources, and commentary on preparing 1040s and the tax preparation industry – is back.
 
UPCOMING CPE
 
The NJ chapter of NATP’s annual “Famous NJ State Tax Seminar” is virtual this year.
 
It will be held at the usual time – Saturday January 9^th from 8AM to 3PM – only online. 
 
I have been attending this annual seminar – which provides updates on New Jersey and New York state income, payroll and taxes and the NJ property tax relief programs - for as long as it has been offered.  I have always maintained that this is a “must attend” event for anyone who prepares NJ state tax returns for individuals and/or businesses.
 
All materials for the seminar will be provided electronically via a secure link sent to registrants up to 3 days in advance of the event.  A copy of the materials will also be available for download during the event.  Registrants will earn 6 CPE credits.
 
The cost is $95 for members and $145 for non-members.  Go here to register.
 
I will miss seeing my NJNATP friends and colleagues – and look forward to NJNATP, and national NATP, returning to in-person seminars and workshops hopefully later this year.
 
TAXPRO BUZZ
 
+ I invite you to read my “The Year In Taxes 2020” post at THE WANDERING TAX PRO and let me know if I forgot anything.
 
+ Tax pro Joe Kristen has returned to blogging with the “EideBailley Tax News and Views Blog”.  Similar to my “What’s the Buzz” at “The Wandering Tax Pro”, it is a week-day daily blog of online posts and articles to “help you stay informed with what's happening in the tax world. Whether it's a new tax law tacked on to a spending bill, a new court case that reminds us of venerable tax lessons, or a surprising approach by states to tax non-residents, it's fair game.”  Check it out and subscribe.
 
+ Did you know that the National Association of Tax Professionals now has a blog.  Go here to check it out.
 
+ And one more tax blog you may find helpful – “Current Federal Tax Developments”.
 
MY 1040 CLIENT HANDBOOK – REPRINT RIGHTS
 
Over a dozen years ago I sat down and compiled a “handbook” or “manual” for my 1040 clients.  It provided details on the policies and practices of my firm, identified my responsibilities and the responsibilities of the client, listed what I would need each year to properly prepare the client’s tax returns, and explained how long the client should save the return and supporting records.  I sent a copy to all my existing clients at the time and gave it to each new client going forward at the beginning of the “engagement”.
 
I recently revised and updated this handbook and offer “reprint rights” of it to you, my fellow tax professionals, for use in your practice.
 
You can use the 28 pages of text as intended – a free client handbook for current and new clients – or you can use various components of the text separately in free client newsletters or as free client handouts.   None of the contents and components of the handbook may be used in any product or publication for sale to clients or the public for a fee without written permission from me.
 
The handbook includes -
 
·         ABOUT ME
·         MY SERVICES AND RESPONSIBILITIES
·         MY FEES
·         YOUR RESPONSIBILITIES
·         WHAT I DO NOT DO
·         TAX RETURN COPIES
·         WHEN TO CONTACT ME
·         MY PRIVACY POLICY
·         WHAT I NEED TO PREPARE YOUR TAX RETURNS
·         RECORDKEEPING
·         DEDUCTIONS
·         HOW LONG SHOULD I KEEP COPIES OF MY TAX RETURNS
·         APPENDIX A – KEEPING TRACK OF INVESTMENT COST BASIS
·         APPENDIX B – KEEPING TRACK OF GAMBLING ACTIVITY
·         APPENDIX C – THE NEW MORTGAGE INTEREST DEDUCTION
 
The DEDUCTION section contains charts of Adjustments to Income, Itemized Deductions, Rental Expenses, Business Expenses.  And THE NEW MORTGAGE INTEREST DEDUCTION appendix includes worksheets for keeping separate track of acquisition debt and home equity debt with a detailed example.
 
The text is sent as a word doc email attachment so you can customize part – such as composing the section that identifies you, your firm and any other preparers in the firm and customizing the explanation of services, practices and policies to your individual tax practice.  It is written as a one-person practice, so the “I” and “me” can be changed to “we” and “us” as applicable.  And it is written as a NJ tax preparer, so you can add your applicable state tax requirements under WHAT I NEED TO PREPARE YOUR TAX RETURNS.
 
A signed reprint rights license agreement will be sent via postal mail.
 
BTW – a thank you to Marc Standig EA, my former editor at “NJ Taxing Times” and long-time Board member and volunteer with the NJ chapter of NATP for his help in reviewing and “proofing” this handbook.
 
The cost of the reprint rights license for this handbook is only $49.95.  Members of the National Association of Tax Professionals receive a 20% - or $10.00 – discount.  Please provide your membership number when ordering.
 
Send your check or money order for $49.95 or $39.95, payable to “Taxes and Accounting, Inc”, and your email address and postal address to –
 
TAXES AND ACCOUNTING, INC
1040 CLIENT HANDBOOK
POST OFFICE BOX A
HAWLEY PA 18428
 
TAFN