Tax Season

THE TAX ATTIC with Jerry Coon

April 19, 2012 // 0 Comments

Emancipation Day extends tax deadline This is always one of the more enjoyable articles that I write. The tax season has just ended. That sentence says it all for people like me, who make a living in the world of preparing tax returns. We all get a chance to take a deep breath and see exactly what has happened in the surrounding world in the last three-and-one-half months. While it’s true that Action Tax Service does more than prepare tax returns, a good percentage of our business for the year occurs in the period of January 1 through April 17. We did get three bonus days this year. First, it was a leap year so we received February 29 as our first extra day. Second, April 15 fell on Sunday so that was our second extra day. Finally, our third extra day occurred because April 16 is Emancipation Day in Washington, D.C. Since the IRS’ national headquarters is located in Washington, D.C., they are closed. And if they are closed, all IRS offices are closed. Emancipation Day occurred on April 16, 1862. It’s easy to confuse Emancipation Proclamation Day with D.C.’s Emancipation Day. President Lincoln issued an Executive Order, the Emancipation Proclamation, on September 22, 1861. Throughout history, it appears that many presidents have issued controversial Executive Orders and not just presidents Bush and Obama. Lincoln ordered the 10 states of the Confederacy to cease rebelling by January 1, 1863 or their slaves would be set free. Of course, they didn’t quit rebelling for another two years or so, but their slaves were technically set free on January 1, 1863. However, on April 16, 1862, slaves in D.C. were set free. Actually, their owners were paid the value of the slaves in exchange for their freedom. Lincoln’s Proclamation, by contrast, did not provide compensation to the owners of the slaves, it didn’t outlaw slavery, and it didn’t make the ex-slaves citizens of the USA. Those items did not occur until the 13th Constitutional Amendment was passed in December, 1865. It seems that in 1862, Washington, D.C. was on the cutting edge of things. We might even go as far as to say they were progressive back then. When we look at Washington today, another word, […]

THE TAX ATTIC with Jerry Coon

January 19, 2012 // 0 Comments

Tax season is here, winter is not Winter had to get here sooner or later. Usually, we get some of it, snow at least, during the deer season, but it didn’t happen this year. For the gun hunters, that lack of snow helped to make it a bit of a rough season. I think the Michigan Department of Natural Resources will conclude that about 20% less deer were harvested this year as compared to last year. That’s a lot of car-deer accidents waiting to happen over the next year. The spring fishing might be real good this coming spring. Since there isn’t any ice so far, no fish are getting caught through the ice. If I remember right, the best ice fishing occurs during the first ice. There might not be any first ice this year, so that will leave lots of fish for us non-ice fishermen to catch later. For the downhill snow skiers, the tubers, and the cross-country skiers, it has also been a bit of a tough season. Tough is not exactly the word the owners of various ski lodges might use. It has been a brutal season for them, and some of them might not make it until next year. I think, weather-wise, we are becoming Indiana. I have family down there. They take great fun in rubbing in to me the fact that they can golf year around. Over the span of the winter, the golf courses down there close for a few days now and then due to snow and cold weather. Last week the Grand Rapids Press reported that Maple Hill Golf Course in Grandville has been open this winter except for a few days. I wouldn’t claim to expertly know if this is a part of a pattern of global weather change, but it definitely looks like to me our weather is becoming more Indiana-like. The weather guys argue about the data collected, if it is technically correct, and if the conclusions made are correct. I’m not that sophisticated. What I look at is the items I discussed earlier. There is less snow during the deer hunting season. The only ice I see is being made by my refrigerator. Outdoor enthusiasts have less snow, and there is less […]

The Tax Attic — with Jerry Coon

April 22, 2010 // 0 Comments

What now? The tax season ended on April 15. The question I now get to answer is what exactly tax professionals like me do for the rest of the year. No, we don’t take the next eight months off, although that does sound good. We do continue to prepare tax returns and we answer lots of questions. Last week, I discussed the fact that nationwide approximately 80% of all taxpayers file their returns by April 15. That leaves about 20% still in need of getting their returns filed. We prepare those returns all year around. Personally, I’m not sure about that 20% figure as it pertains to West Michigan. In our market, it seems like it’s more about 90% file on time and 10% file later. In any event, that means we are working on and filing quite a few returns between now and next January. The other factor that comes into play today is the complexity of our tax system. Back in 1978, when I started in the tax business, it seemed like taxpayers filed their tax returns and we didn’t really have any contact with those taxpayers until the next tax season. An exception would be the time that a letter was received from our friends at the Internal Revenue Service or from the state of Michigan. In that event, we got a pretty fast call. That seemed to change in the late 1980s. Oh, we still got calls based on letters, but our tax system itself began to change. It started to become more complicated with phase-ins and phase-outs to almost all credits and deductions. Congress began tinkering more frequently with the system and frequently passing major tax legislation. This bend toward complication coincided with the emergence of computers. The first software preparation programs were developed to help tax professionals prepare returns. Now, of course, there are many tax programs that also help taxpayers file their returns. Action Tax Service has used Drake Professional Software since 1992. Without software, it would be darned near impossible to prepare many returns. All of that complication leads to more questions being asked by taxpayers. Being open year round is not an option today. Congress passes laws daily, it seems, that affect all taxpayers. We prefer […]

The Tax Attic with Jerry Coon — January 7, 2009

January 7, 2010 // 0 Comments

New tax season presents common situations It’s finally the beginning of the tax season. I say “finally” because those of us in the tax business have been building toward this date since September. That’s when we started going to seminars and learning how all of the new laws would interact with the tax returns we will be preparing in the next few months. That’s also when we started ordering the supplies and the various software packages that we use to prepare not only the many types of tax returns we file but also the various business reports we file such as W-2s and 1099s. A tax preparation firm like Action Tax Service uses technology to the fullest extent possible in an attempt to ensure that clients get the absolute best product that we can give them. However, all of the technology in the world won’t help us prepare a return if we don’t have the needed information at our fingertips. For the most part, employed taxpayers can’t file a tax return until a W-2 is received. Most retired taxpayers can’t file a tax return until a 1099-R or a Social Security SSA-GOV is received. We can use a last check stub to create an estimated tax return, but we are not able to finalize and actually file a return without those official documents. Let’s look at three common but troublesome situations. First, the majority of all W-2s and 1099s will be received by January 31, but what happens if a taxpayer does not receive that statement by January 31 or February 10 or even February 28? Second, what happens if the statement received is wrong? Third, and even worse, what can be done if the wrong type of statement, such as a 1099, is received instead of a W-2? What’s a taxpayer to do in these situations? Let’s discuss the first situation in which the W-2 or 1099 is not received. The reporting procedures for W-2s are different than those that regulate the reporting of 1099s. It is important to remember that even though employees are required to have their W-2s available by January 31, the employer is not required to submit these documents to the Social Security Administration (SSA) until February 28. Note that I […]