The IRS and the inefficiency of government bureaucracy

Willie99 · Feb 22, 2018

On February 9, 2018, both houses and President Trump passed their version of an extender bill. Extender bills extend expiring tax deductions and credits another year, they're usually passed in December but this year they were busy with Tax Reform and ignored extender provisions.

Anyhow, tomorrow is two weeks, and the IRS still has NOT told software companies how to proceed. What does this mean? for people like me who are paying attention and want our clients to benefit from as many deductions as possible, like the recently extended mortgage insurance premium (PMI) deduction, it means scores of returns are in the hold pile

For some, who just want to get work off their desk, it means a deduction people are entitled to is not being taken.

I'm thinking many people are not even aware of the extender bill being passed, so they're just preparing returns not even knowing their clients are getting fucked.

Anyhow, if your income is below $ 110,000 and you're paying PMI, the PMI is still deductible but tax professionals and software companies can't deduct such just yet

skins85 · Feb 22, 2018

this is my last year paying pmi until it falls off next year. i sure as shit want the deduction. i want every deduction i can get as im sure most others do. thanks for the heads up. we were planning on going to see the accountant next week to do our taxes but i assume its best to wait a little longer

Knightrofins · Feb 22, 2018

Don’t worry willie. I’m sure this rule will pass on April 5 (just about the same time brokerage statements come in) and clients will expect you to be finished by the 17th!!

Willie99 · Feb 22, 2018

skins85 said:
this is my last year paying pmi until it falls off next year. i sure as shit want the deduction. i want every deduction i can get as im sure most others do. thanks for the heads up. we were planning on going to see the accountant next week to do our taxes but i assume its best to wait a little longer

Means you can test the knowledge and / or the professionalism of your accountant,

The IRS should issue guidance any day now, but I've been saying that for 10 days. Since PMI has been deductible for several years, implementation shouldn't be difficult, but it does mean they have to change the software processing on their end, and that's what's time consuming. I'm thinking my software provider only needs to flip a switch once they're given the go ahead.

Willie99 · Feb 22, 2018

Knightrofins said:
Don’t worry willie. I’m sure this rule will pass on April 5 (just about the same time brokerage statements come in) and clients will expect you to be finished by the 17th!!

and if you miss the deadline because of them, the IRS will still charge penalties too

Knightrofins · Feb 22, 2018

Which software do you use Willie?

Willie99 · Feb 22, 2018

Ultra Tax CS, part of the Thomson Reuters Professional Suite, one of the best and most comprehensive services out there

Fully integrated tax services, accounting products, payroll products............ web based, instantaneous updates for every type of entity and every state, perpetual backups........ and as fast as it gets

it's what makes me practicing as I do possible

Dante · Feb 22, 2018

Some state tax commission also suck .. I can get my fed refund in 10 days via direct deposit but my state takes 12 weeks for DD. Just an excuse to use the money and gain interest

Willie99 · Feb 22, 2018

Dante said:
Some state tax commission also suck .. I can get my fed refund in 10 days via direct deposit but my state takes 12 weeks for DD. Just an excuse to use the money and gain interest

states are all over the board, CT issues a refund in 3 days if you file electronically but will make you wait 3 months if you file a paper return

some states want the taxpayers to provide drivers licenses in order to file

kidman232 · Feb 22, 2018

hey willie- i did my federal return and forgot about pmi being in limbo, I haven't filed my state yet (bc i owe), any chance the pmi helps lower my state burden

Dante · Feb 22, 2018

Willie99 said:
states are all over the board, CT issues a refund in 3 days if you file electronically but will make you wait 3 months if you file a paper return

some states want the taxpayers to provide drivers licenses in order to file

Willie.. yep I had to send mine in .. I only lived here 20yrs... They sayfor fraud protection ..who really knows

Willie99 · Feb 23, 2018

kidman232 said:
hey willie- i did my federal return and forgot about pmi being in limbo, I haven't filed my state yet (bc i owe), any chance the pmi helps lower my state burden

That depends on how your state calculates taxable income, some states allow itemized deductions, some states allow some adjusted version of itemized deductions, and some states don't allow any itemized deductions. Connecticut is the later, taxing AGI

Willie99 · Feb 23, 2018

kidman232 said:
hey willie- i did my federal return and forgot about pmi being in limbo, I haven't filed my state yet (bc i owe), any chance the pmi helps lower my state burden

Willie99 said:
That depends on how your state calculates taxable income, some states allow itemized deductions, some states allow some adjusted version of itemized deductions, and some states don't allow any itemized deductions. Connecticut is the later, taxing AGI

And this raises more questions for states beginning with tax returns next year (for 2018). For those states that allow some itemized deductions, what will they do when people stop itemizing because their tax deductions have been capped and / or they're using the higher standard deduction? My guess is people may still have to enter itemized deductions for state tax purposes, somewhat mitigating the tax simplification intent of the tax reform bill.

wilbur · Feb 23, 2018

What is pmi?

Willie99 · Feb 23, 2018

I will let y'all know when I can process returns taking the PMI deduction. Then you can probably do such as well

For those of you that already filed your return and didn't take the deduction, you can always file an amended return using Form 1040x. Amended returns cannot be filed electronically, must be a paper filing.

Willie99 · Feb 23, 2018

wilbur said:
What is pmi?

Private Mortgage Insurance

Insurance the lender requires you to purchase if your down payment was less than 20% of the purchase price. A lot of people pay for this initially, eventually they attain 20% equity and the need for PMI goes away.

Knightrofins · Feb 23, 2018

Move down to Florida. No state tax returns!!

wilbur · Feb 23, 2018

Willie99 said:
Private Mortgage Insurance

Insurance the lender requires you to purchase if your down payment was less than 20% of the purchase price. A lot of people pay for this initially, eventually they attain 20% equity and the need for PMI goes away.

Thanks Willie, was just curious.

Happy to be mortgage free.

Willie99 · Feb 23, 2018

Knightrofins said:
Move down to Florida. No state tax returns!!

All my clients that can live there 6 months and a day do just that. At least the retired ones do, become FL residents that is

Willie99 · Feb 23, 2018

wilbur said:
Thanks Willie, was just curious.

Happy to be mortgage free.

that's a much better option if you can afford it, be mortgage free

The IRS and the inefficiency of government bureaucracy

Conservatives, Patriots & Huskies return to glory

Member

Member

Conservatives, Patriots & Huskies return to glory

Conservatives, Patriots & Huskies return to glory

Member

Conservatives, Patriots & Huskies return to glory

Active member

Conservatives, Patriots & Huskies return to glory

Member

Active member

Conservatives, Patriots & Huskies return to glory

Conservatives, Patriots & Huskies return to glory

Member

Conservatives, Patriots & Huskies return to glory

Conservatives, Patriots & Huskies return to glory

Member

Member

Conservatives, Patriots & Huskies return to glory

Conservatives, Patriots & Huskies return to glory

Forum statistics

Share this page