Tag: Taxation

California Middle Class Tax Refunds

Posted on | by Steve M. Windham, LLM, MBA, EA

The Internal Revenue Service, on February 10, 2023, has issued guidance on state tax payments to help taxpayers:

WASHINGTON — The Internal Revenue Service provided details today clarifying the federal tax status involving special payments made by 21 states in 2022.

The IRS has determined that in the interest of sound tax administration and other factors, taxpayers in many states will not need to report these payments on their 2022 tax returns.

During a review, the IRS determined it will not challenge the taxability of payments related to general welfare and disaster relief. This means that people in the following states do not need to report these state payments on their 2022 tax return: California, Colorado, Connecticut, Delaware, Florida, Hawaii, Idaho, Illinois, Indiana, Maine, New Jersey, New Mexico, New York, Oregon, Pennsylvania and Rhode Island. Alaska is in this group as well, but please see below for more nuanced information.

Click here to view the complete News Release on the IRS website.

The California Franchise Tax Board has issues significant guidance on the California Middle Class Tax Refunds.

Concerning offsets/withholding:

  • The Middle Class Tax Refund payment is not taxable for California state income tax purposes.
  • The Middle Class Tax Refund payment will not be subject to offset for debts owed to Franchise Tax Board or other government agencies.
  • The Middle Class Tax Refund payments are not subject to garnishment orders, with the exception of orders in connection with child support, spousal support, family support, or a criminal restitution payable to victims. If you believe your Middle Class Tax Refund payment that was deposited with your financial institution has been levied/frozen in error, please contact the phone number provided by your financial institution.

Click here to view the California Franchise Tax Board, Public Service Bulletin on the California Middle Class Tax Refund payments.

Click here to view General Information on the California Franchise Tax Board Middle Class Tax Refund.

Enrolled Agent Study Materials

Posted on | by Steve M. Windham, LLM, MBA, EA

An Enrolled Agent is a credential awarded by the US Treasury/Internal Revenue Service that allows the credential holder to represent taxpayers before the Internal Revenue Service.  The Enrolled Agent credential is the highest credential that the Internal Revenue Service Awards.  For more information about the Enrolled Agent credential, please click here: https://www.irs.gov/tax-professionals/enrolled-agents

I strongly urge all of my accounting students to obtain their Enrolled Agent credentials.  While the exam is rigorous, it is manageable.  The exam is divided into three parts: 1) Individuals, 2) Businesses, and 3) Representation, Practices and Procedure.  Section 2--Businesses, is by far the most difficult section.

My recommendation is to use the Gleim Enrolled Agent Review Course.  This is the study course that I used for my Enrolled Agent exam, and I also plan to use Gleim for the CPA and CMA exams.  Here is a link to the Gleim Enrolled Agent Review Courses:  https://www.gleim.com/enrolled-agent-review/courses/

My recommendation is to purchase either the Traditional or Premium review systems.
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Introducing the IRS Form 1040-SR, U.S. Tax Return for Seniors

Posted on | by Steve M. Windham, LLM, MBA, EA

For tax year 2018, the Internal Revenue Service introduced the "postcard" 1040, along with six new schedules (to make up for chopping the Form 1040 in half).  Forms 1040-A and 1040-EZ were also eliminated.

For tax year 2019, the Internal Revenue Service is introducing the Form 1040-SR, U.S. Tax Return for Seniors.

Interestingly, the old Form 1040 was largely able to accommodate everything the 1040-A, 1040-EZ, the new "postcard" 1040, and the 1040-SR could accommodate without the six additional schedules.

So while these curious new forms are somewhat interesting, they have done little, if anything, to streamline tax filing.  This seems to be another case of the government fixing something that is not broken, as the Form 1040 was a finely-honed and efficient form that did an exemplary job of reporting individual income to the Internal Revenue Service.

2017 Tax Software Survey

Posted on | by Steve M. Windham, LLM, MBA, EA

The Tax Adviser conducts an annual survey on tax software.  The link can be found here: http://www.thetaxadviser.com/issues/2017/aug/2017-tax-software-survey.html?utm_source=mnl:cpald&utm_medium=email&utm_campaign=01Aug2017

Personally, I have used four of these tax software packages, having used three of them for a significant amount of time.  These are: 1) Lacerte, 2) CCH Prosystem fx, 3) Drake, and 4) ProSeries.  My experience with ProSeries is very limited, so I have little to say about it.  Between Lacerte, CCH Prosystem fx, and Drake, each has its’ benefits and drawbacks.

Lacerte is very robust (there are only a handful of tax forms it does not handle), fairly easy to use, good customer support, and has many options that tax practitioners may find useful (such as printing out all of the input data in all of the input fields–something not found on all tax software).  The downside to Lacerte, and why I quit using it was the price.

CCH Prosystem fx is slightly more robust than Lacerte (it handles more of the international tax forms than Lacerte),  has good customer support, and it comes in a cloud-based version, CCH Global Prosystem fx.  The cloud-based version allows multiple users to access from anywhere in the world where there is a high-speed Internet connection.  The downside of CCH Prosystem fx is that it is cumbersome, glitchy, not very intuitive, and expensive.  Having worked with CCH Global Prosystem fx and CCH Prosystem fx for several years, I would not recommend it.

Drake is easy to use, inexpensive, and has great customer support.  There are drawbacks; it is not as robust as Lacerte or CCH Prosystem fx, and data input cannot be printed out the way it can be in Lacerte.  I switched to Drake from Lacerte for Windham Solutions in 2013, and I have no plans on going back to Lacerte.

San Francisco Bay Area Chinese Food Buffet Wage and Tax Law Violators Sentenced

Posted on | by Steve M. Windham, LLM, MBA, EA

Owners and managers of a San Francisco Bay Area Chinese restaurant chain have been convicted and sentenced to prison for violating California wage laws and failure to pay California taxes.

For more on this story, please visit:
http://www.mercurynews.com/2017/06/20/former-restaurant-owners-hit-with-6-1-million-restitution-prison-sentence-in-massive-wage-theft-case/