Nothing to do with taxes here but a decision that affects my office. I am going Mac. With the release of the Intel Macs and Parallel and some other software, I can get my tax software to run on a Mac.
I have always been an Apple/Mac fan. My first major computer purchase was an Apple IIe. The first was a little Texas Instruments console you plugged into the TV and the software was in a cartridge you plugged in like an 8-track (the day I bought it, they discontinued not just that model but all small computers.) The only reason I am using PCs in the office is because I need to run my Drake software. My home and graphics computer has been a Mac. But with the new Intel duo chips, I can start moving the office over.
It won't happen immediately. I just bought a new PC in November that should last several years and I have a couple more years on my printer/copier contract (won't work with Mac.) But as I replace equipment and software, the new will be Mac or Mac compatible.
I don't foresee any problems. Several Drake users are running a Mac with Parallel and haven't reported any problems. The two non-Drake accounting programs I have been using are both available for the Mac. As are the all of the production software.
I just finished explaining to a potential client how a Form 4684, Casualties and Thefts worked and the information I would need from her to fill it out. After she left, I felt as if I had explained playing the children's game Chutes and Ladders.
The game, targeted at the very young player in all of us, goes by the different names but the game is the same. The players move there playing piece along the rows of tiles that zig zag from the bottom to the top of the board. At various points there are ladders and chutes on the tiles. Land on a tile with a ladder and you get to climb the ladder and skip tiles. But land on a chute tile and you go down and re-do tiles.
With Form 4684, you follow the form along. Occasionally you get a short ladder but at any time you can hit a long chute that takes you out of the game or worse. Lets assume a flood takes your home and contents. You start by figuring the basis in the property and the difference in Fair Market Value (FMV) before and after the incident. Then you take the lessor of the basis or FMV. Was there insurance on the house. If you got less insurance that what you have in the house you get a short ladder to the next step. If you received more insurance than you had in the house, BIG chute off to the 1040 by way of the Schedule D. While you have to finish the form, the extra money you received is taxable. At this stage of the game, you have what is left of your basis/FMV after insurance. Now take $100 off. (IRS deductible.) Then take 10% of you Adjusted Gross Income off. Is there anything left? If not, a chute will take you out of the form. If there is still a loss, you land on a ladder to the Schedule A. Can you itemize without the casualty loss? If yes, a ladder will take you a lower tax and the win. If you generally can't itemize, you will have to gather your state and local taxes, mortgage interest, charitable contributions and other itemize deductions and add them what you carried from Form 4684. Does that total more than your standard deduction? If not, you have hit a big chute that will take you out to the 1040(1040A) past all the time and energy your have wasted for no tax benefit. If you itemized deductions are more than your standard deduction you get a ladder to climb to lower tax. Of course, the benefit won't be as great as you envisioned but at least a chute didn't slide you out of the game.
This is a very simplified version of the 4684 Chutes and Ladders Game. Add several items going in the flood or add another casualty and the chutes and ladders pop up even more. And the business version has a different set of rules. Form 4684 is not the only example of Chutes and Ladders taxes but it is a great example. Taxpayers are targeted with everyone telling them they can "deduct a casualty or theft loss", "deduct mortgage interest", "claim a dependent", etc. But the reality is first they have to play the game and get pass the chutes.
With the the first round of Economic Stimulus Rebates just finishing up, it seems that there is now talk about issuing a second set. According to this AP story, Democrats are proposing a new round of economic stimulus program. Under consideration this time are more checks to taxpayers but also heating/cooling subsidies, food stamps, infrastructure investments.
The first set of rebates was not as successful are lawmakers hoped it would be. Only about 20% of the rebates were actually spent as hoped. So the increase in product demand which would lead to more jobs didn't happen. The rebates actually just covered the decrease in buying power from inflation. And surprisingly many taxpayers opted to save the money instead of spending it. The savings rate for May (when the rebates started) jumped from0.4% to 5%.
The economy is going to be a major factor in the elections and for many years to come thanks to irresponsible governing and lawmaking from both parties. It seems to me that before they mess with anything more, they need to listen to all the experts (not just the ones saying what they want to hear) and create a plan that will solve problems not just paint over them.
It is time for a little tough love. I don't care if you prepare your own return, have a friend or relative do it, use a national chain, CPA, or other tax professional. If you are not keeping and safeguarding a copy of your tax return and supporting documents, you are making a very stupid tax mistake and you will get no sympathy from me. Why? You will need a copy of your return for:
Responding to a IRS or state revenue office notice.
Amending a return.
Tax or financial planning.
Buying a house.
Applying for college financial aid.
So you would think taxpayers would take a little care with their return. But it has actually gotten worse the last few years. Returns are being self-prepared and filed by computer but the taxpayers don't think to print a copy or save the file or even save the password to access the file. Some assume their paid preparer will be around to give them a new copy. Boy, are they surprised when the preparer quits the business or has a computer crash and loses files. You can get a copy of the Federal return but it will cost you and take 6 weeks. A return transcript is quicker but it will still take a couple of weeks. And what about the state return? That could be even harder to get. So, no matter how you get your return prepared, please put a copy away safely and keep it for at least 5 years from the time it was filed. It's not hard to do and it could make your, and my, life easier down the road.
Lizzy, my office greeter dog is missing. She went out for a quick walk last night and hasn't come back. And that is not like her. If you see her, please leave a message in the comments or call the office at 620.442.6227.
I just started posting on HubPages. If you haven't heard about it before, HubPages is a collection of informative articles on a wide variety of topics. There will be some duplication between what I will post on HubPages and what I have and will blog about. The difference will be in the tone of the articles. There are also topics that I might vent about on the blog which wouldn't be appropriate for HubPages. I plan to focus on basic common sense to and education on income taxes. It is my goal to prevent problems before the taxpayers make the mistake.
I talked to several people today who received an IRS notices. One helped a friend out in that friend's business and was paid "under the table." Which wasn't reported because by the time she took her expenses out, she didn't make any money. Someone else didn't report a 1099MISC because they hadn't sent it by the time he wanted to do his return. Lots of problems here. All seeming to want me to validate their mistake and tell them the IRS is a big meanie. Not much sympathy from me.
A reader should seek advice from an independent tax adviser with respect to the information on this blog based on the reader’s particular circumstances. This advice is intended to be general information and cannot be used for the purpose of avoiding penalties that may be imposed by the IRS regarding the transaction or matters discussed here.