As mentioned in Wednesday’s BUZZ,this week I attended the National Association of Tax Professionals’ annualyear-end tax update seminar “The Essential 1040” (it was formerly “Famous”, butis now “Essential”) in New Jersey.
While the day was basically anupdate of what is new for 2012 tax returns, with nothing really new for me,there were a few items of interest.
(1) The draft version of the 2012 Form 1040 (and 1040A) is available for viewing. They are the same as their 2011 counterparts, with the same number oflines. However certain Lines are marked“Reserved” – for the popular tax extenders that expired on December 31, 2011,and have not yet been extended for 2012 by the idiots in Congress, but whichthe IRS is thinking probably will be.
They include Lines 23 and 34 on Page1 of the 2012 Form 1040, and Lines 16 and 18 on the 1040A, are “reserved” forthe deductions for educator expenses and tuition and fees respectively.
On Page 2 of the 2012 Form 1040 Line67 and item b. on Line 71 is also “Reserved”. Line 67 on the 2011 form was used for the First-Time HomebuyerCreditfrom Form 5405, and item b on Line 71 referenced Form 8839, used forQualified Adoption Expenses (which was refundable).
The draft of the 2012 Schedule A,for Itemized Deductions, is also available. Item b of Line 5 (under “Taxes You Paid”) is “Reserved” for the possibleextension of the option to deduct state and local sales taxes instead of stateand local income taxes.
(2) The IRS has said that because of thedelay by the idiots in Congress in dealing with the extenders, including theannual AMT patch, and more detailed checking to prevent fraudulent returns,refunds from electronically filed 2012 income tax returns will no longer beissued in 2 weeks. It will not take 4 to6 weeks to process the refunds.
Thissounds like the processing time we had been used to with manually filedreturns. So it looks like filingelectronically will not get your refund to you any faster than filing manually.
(3) FYI – the “incidental only” (nomeals) per diem allowance for business travel is $5.00. It is the same as 2011.
Thiscovers fees and tips to airport, train station, and hotel personnel. It is generally used by business travelerswho do not incur meal expenses while “on the road” – i.e. they stay withrelatives who feed them, or all meals are included in the price of an event oractivity.
Andthe special Meals and Incidental Expenses per diem for transportation workers(like over-the-road truck drivers) also remains the same as 2011 - $59.00 perday for travel within CONUS (continental US) and $65.00 per day for OCONUS(outside the continental US) travel.
(4) The IRS is getting better atmatching 1099 information returns to amounts reported on the Form 1040 (or1040A), and will continue to issue CP-2000 notices when discrepancies areidentified – so be sure to report all 1099 items somewhere on your return.
And,of course, just because you do not receive a Form 1099 in the mail does notmean that one was not issued and sent to the IRS.
(5) This, I will admit, was new tome. The interest that has accrued on USSavings Bonds is taxable in the year that the individual bond matures, and notnecessarily in the year the bond is cashed in (i.e. a bond matures in 2010, butis not cashed in until 2012).
Iverified this via TREASURY DIRECT -
“Theinterest earned on your savings bonds is subject to federal income tax, whichcan be deferred until redemption, finalmaturity, or other taxable disposition, whichever occurs first.”
(6) Another FYI, especially for tax pros- 43 inmates on death row were issued PTINs (Preparer Tax IdentificationNumbers) - the number issued by the Internal Revenue Service to paid tax returnpreparers who have registered with the IRS.
(7) The seminar leaders, both very good(while some are obviously more better than others -my buddy Beanna Whitlockwill have you in stitches while learning something important about tax law – Ido not recall ever coming across a bad or unsatisfactory NATP seminar leader),both discussed the “back-ended ROTH” strategy.
Ataxpayer wants to contribute to a ROTH IRA for 2012, but has too much income tobe able to do so (MAGI of more than $183,000 if married filing joint, $10,000if married filing separately, or $125,000 for all others).
Sothe taxpayer puts the maximum $5,000 or $6,000 (depending on age) in anon-deductible “traditional” IRA. Oncethis contribution has been processed the taxpayer converts the $5,000 or $6,000in the traditional IRA account to a ROTH account. There is no longer an income threshold forconverting a traditional IRA to a ROTH IRA.
Asthe taxpayer’s basis in the IRA is $5,000 or $6,000, his 2012 non-deductiblecontribution, there is no taxable income to report. If the money deposited in the non-deductibletraditional IRA account earns $5.00 in interest prior to the conversion, thenthe taxpayer reports $5.00 as taxable income.
(8) Be sure to read my THE TAX PROFESSIONAL post for my commentary on items discussed at the seminar thatapply to taxpros.
Ihave now completed my CPE for the year. While the IRS requires 15 hours per year, in 2012 I took 24 hours infederal taxation and 8 hours in state taxation (actually all NATP or NJ-NATPclasses). And there were some federalcourses offered recently that I would have taken if not for cash flow issues. First up in 2013 is the excellent NJ-NATPfamous State Tax Seminar in mid-January.
TTFN
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