The Latest (but definitely not the greatest) news from the IRS and the FTB (and me) about Tax year 2016 (Calendar year 2017)
Last Updated January 15th, 2017

1) The IRS is scheduled to accept returns starting Jan 23rd, 2017.  If you get your paperwork early, please do send it to me ASAP and I will schedule appointments starting with that date.  It is also possible to come in earlier, sign off, and I will transmit your return on the 23rd.  Be SURE you have ALL of your tax forms if you file early.

1A) If part of your refund is generated by the Earned Income Credit or Additional Child Tax Credit, your refund will not be processed until (at least) February 15th.  The IRS is delaying refunds from these types of returns as a fraud prevention measure.

2) The State of California has introduced its own version of the Earned Income Tax Credit.  The credit is refundable  The largest credit is around $2600 (based on income of $7000 and three qualifying children).  It has a fairly narrow range and gets much smaller if your income is substantially above or below that amount.  The maximum qualifying income is $13,870 with 3 kids but is much lower with fewer or no qualifying children.  I will charge $20 for this form (same as the federal EITC form).  I have looked at the EIC tables for both the IRS and the FTB and it looks like the state credit is calculated as approximately 43.2% of the federal credit (who comes up with these numbers?).  Anyway, if you want all of the technical details, go

3) I am accept a limited number of new clients this year as I am almost at capacity.  Please have potential new clients visit the web site first - as it tends to answer 90% of most questions - and then contact me after they have done that.  They must be relatively organized and not have any current outstanding issues with the IRS or FTB.  I prefer to get everything right the first time as opposed to spending lots of effort cleaning up a big mess.

4) if you need an extension, I am 100% OK with that.  I do not charge to file extensions because I don't want people rushing in (unprepared) just to avoid a small fee.  Some forms (such as K-1's) tend to be sent out very late so some folks can't file on time even if they want to.  I also like moving some work to the off-season.  If you want an extension, just send me an e-mail with your name & SSN and I will get it done.  I will also mail you a copy to confirm it have been filed.

HOWEVER - I do not like doing anything at the last possible minute.  Being needlessly rushed by an arbitrary (and avoidable) deadline is pointless.  I coach my kid's U19G soccer team starting in August, games start in September, and I devote a LOT of time to that.  So - after we file an extension, plan on seeing me in May. June, July or early August.  I have PLENTY of time during those months.  If you are looking for a preparer to file your taxes at the last minute in September or October, please go elsewhere.  I am not the best person for you if that is your timetable.

Making Payments to the IRS

5) Starting last year (in 2015) - The IRS has set up their own service to accept payments for taxes, but only from checking or savings accounts (they will not accept credit cards).  It is called IRS Direct Pay.  The link to the new service is 2 and they do not charge any fees.  If you need to use a credit card, go
here to  Keep in mind this site will charge a fee of around 2% for this service.  With credit card interest rates around 20% and the IRS charging "only" around 4% on overdue taxes at this time, do the math first and make sure this is your best option.


6) Tax increases due to Obamacare - Singles making $200K+ or Marrieds making $250K+ will be subject to a higher federal tax rate (39.6%) and phaseout of their itemized deductions and personal exemptions.  The threshold for deducting medical expenses increases from 7.5% of AGI (already a tough standard to meet) to 10% of AGI.  Also, the maximum capital gains rate increases from 15% to 20%.  All this in addition to the top state tax rate of 12.3%.  And a sales tax rate of almost 10% on whatever you have left to spend.  Does anybody really think we are paying the government too little?

Here are the three possible scenarios under Obamacare at present:

      a) If you had ACA-compliant health coverage, no effect on your tax return.  No new forms.  You should receive a form 1095 (A, B or C) as evidence of your coverage.

     b) If you purchased health insurance through an exchange, you will receive a form 1095-A and must file form 8962 with your tax return.  When you applied for coverage, credits were calculated based on your estimated income.  If the estimated credit is too high or too low, you may owe tax or entitled to a refund depending on your situation.

     c) If you did not have ACA-compliant coverage, you will need to complete for 8965 and calculate the penalties.  For tax year 2016, that's $695 per adult and $347.50 per child OR 2.5% of househol dincome, whichever is HIGHER.  That's more than six times the 2014 fines and double the 2015 penalty levels.

7) The following tax provisions were extended under the PATH Act (Protecting Americans from Tax Hikes, if you are a fan of anacronyms) -  but mostly for 2016 only.  Obama said he would veto attempts to make these deductions or credits permanent.

a) Teacher classroom supply deduction of $250   e) Tuition and Fees Deduction (not the 8863 credit)
b) State and local sales tax deduction                  f) Accelerated first-year depreciation deduction
c) Mortgage Insurance Premiums                         g) Tax-free donations from retirement plans
d) Forgiveness of Cancelled Debt

8) FYI only - out of the 50 states, California ranks 48th for states with high tax rates and complex tax codes.  Only New Jersey and New York rank worse.  What is it that the tax writers in the legislatures of these three states have in common?  I think it starts with a "D"....