IRS – Hurricane Harvey Relief

From today’s National Association of Tax Professionals TaxPro e-newsletter, and Accounting Today‘s Tax Practice e-newsletter, some important announcements from the IRS:

NATP – Tax Relief for Victims of Hurricane Harvey
Extended filing and payment deadlines

Hurricane Harvey victims in parts of Texas have until January 31, 2018, to file certain individual and business tax returns and make certain tax payments, the IRS announced in IR-2017-135.

This includes an additional filing extension for taxpayers with valid extensions that run out on October 16, and businesses with extensions that run out on September 15. This includes the September 15, 2017 and January 16, 2018deadlines for making quarterly estimated tax payments. The IRS noted, however, that because individual tax payments related to 2016 returns were originally due on April 18, 2017, those payments are not eligible for this relief.

The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. Thus, taxpayers need not contact the IRS to get this relief. However, if an affected taxpayer receives a late filing or late payment penalty notice from the IRS that has an original or extended filing, payment or deposit due date falling within the postponement period, the taxpayer should call the number on the notice to have the penalty abated.

In addition, the IRS will work with any taxpayer who lives outside the disaster area but whose records necessary to meet a deadline occurring during the postponement period are located in the affected area. Taxpayers qualifying for relief who live outside the disaster area need to contact the IRS at 866.562.5227. This also includes workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization.

Individuals and businesses who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2017 return normally filed next year), or the return for the prior year (2016). See Publication 547 for details.


Accounting Today – IRS loosens rules for retirement plans to lend money to Hurricane Harvey victims

The Internal Revenue Service granted additional relief to victims of Hurricane Harvey on Wednesday by allowing 401(k)s and other employer-sponsored retirement plans to give loans and hardship distributions to aid them without incurring penalties.

The IRS said 401(k) plan participants, along with employees of public schools and tax-exempt organizations with 403(b) tax-sheltered annuities, as well as state and local government employees with 457(b) deferred-compensation plans, can be eligible for the streamlined loan procedures and liberalized hardship distribution rules. While IRA participants are barred from taking out loans, they’re also eligible to receive distributions under the looser procedures.

Retirement plans can provide relief to employees and some members of their families who live or work in disaster area localities affected by Hurricane Harvey and designated for individual assistance by the Federal Emergency Management Agency. Currently, parts of Texas qualify for individual assistance, but the storm is spreading Wednesday to parts of Louisiana as well, and those areas may also eventually qualify. For a complete list of eligible counties, visit To qualify for this relief, hardship withdrawals must be made by Jan. 31, 2018.

Under the IRS relief, a retirement plan can allow a victim of Hurricane Harvey to take a hardship distribution or borrow up to the specified statutory limits from a storm victim’s retirement plan. Someone who lives outside the disaster area can also take out a retirement plan loan or hardship distribution if they want to use the money to help a son, daughter, parent, grandparent or other dependent who lived or worked in the disaster area.

More details are available in Announcement 2017-11 on the relief to victims of Hurricane Harvey, which caused damage to parts of Texas. It permits easier access to victims’ funds held in workplace retirement plans and in IRAs, for the period beginning Aug. 23, 2017, and ending Jan. 31, 2018. Additional information about other tax relief related to Hurricane Harvey can be found on the IRS disaster relief page.

Import from QuickBooks Desktop to Online — Items That Do Not Convert

Hector Garcia, one of my favorite QuickBooks trainers and a real guru when it comes to both Desktop and Online versions, recently posted a link to this fantastic list of the items that do not import when you convert a file from QBDT to QBO.

A short list of the most common items is here, but there are many more that can mess up an otherwise perfectly good transfer, creating headaches and wasted time for all involved — so I recommend using the master list as a sort of checklist when 1) deciding whether the client may be a good match for conversion (because there are still a lot of features QBO doesn’t yet have that QBDT does); and then, 2) preparing for the conversion itself.

In my opinion, there are a lot of important items on the comprehensive list that are not listed on the “most common” items list, such as:

  • The bank account number and notes are not converted.
  • For accounts where the “detail type” is obvious (for example, Undeposited Funds), the conversion process assigns that detail type. For accounts where it isn’t clear what the detail type should be (the majority of accounts are like this), the conversion process assigns a generic detail type within the type, such as Other Miscellaneous Income which must be edited later. Run the Account Listing report (Reports/All Reports/Accountant Reports) post-conversion to review the Detail Types assigned. Drilling into the report brings you to the edit account window, where you can update the Detail type.
  • The audit trail in QuickBooks Desktop is not converted to QuickBooks Online. This has been an issue for clients of mine before, so make sure not to get rid of the old file, just in case.
  • All the vendors in the QuickBooks Desktop data file are converted to QuickBooks Online but not all of their detail/information converts. The address on the bill payment check is replaced by Vendor address in Vendor list; again, clients have had problems with this — if they’re not expecting it, then all-of-a-sudden, checks are going to the wrong place.
  • Only Profit & Loss budget types convert to QuickBooks Online — no Balance Sheet budgets, which can put you out of compliance with some grants and agencies that require it.
  • Your QuickBooks Desktop closing date is converted, but the password is not. This is a big one.
  • After conversion, the Exceptions to Closing Date report in QuickBooks Online will no longer show the exceptions that you had accumulated — only new exceptions will be tracked.
  • QuickBooks Online does not support custom fields on customers, vendors, employees, or items.
  • Not all of the customer detail and job information for costing purposes is converted.
  • Attachments on transactions are not converted. Another big one for some clients — make sure you keep the final Desktop file for future reference.
  • QuickBooks Online currently doesn’t have group items.  If you have group items in your Desktop data file, they are not converted to the products & services list.
  • If you have accounts, customers or vendors marked as inactive in your QuickBooks Desktop data file that have an open balance, they are converted to QuickBooks Online Plus as regular, “active” elements.
  • You can’t export inventory from QuickBooks for Mac. Only QuickBooks Desktop for Windows can export inventory to QuickBooks Online.
  • QuickBooks Online Plus tracks inventory using the First-in-First-out (FIFO) method in accrual only. When you select the option to import inventory it will ask you to choose a date, which we will use to recalculate your inventory based on FIFO calculations (Desktop uses average cost). Again, this can be a huge adjustment for some (even though it’s a more acceptable method of costing from an accounting perspective).
  • You can’t make a journal entry billable in QuickBooks Online.
  • None of the memorized reports are converted.
  • You have to un-link and re-link your existing QuickBooks Merchant Service account to QuickBooks Online.
  • User names and passwords from Quickbooks Desktop do not convert.  Existing users do not automatically have access to QuickBooks Online, instead they will need to be re-invited from QuickBooks Online to gain access. Furthermore, QuickBooks Online has access permissions that limit the user’s ability to see and use different parts of the application but they don’t allow you to control access at the level of transactions like Desktop can.
  • Imported Purchase Orders that are closed will not be linked to their corresponding Bill.
  • Past reconciliation reports are not converted to QuickBooks Online — yet another reason to keep a final copy of the old Desktop file.
  • If you import to anything other than a Plus account you will not be able to see your recurring transactions; they’re there… but you can’t see them unless you upgrade to “Plus”. (Though for some reason, if you’re importing to QBO Simple Start, you actually have to delete all recurring transactions and templates from within Quickbooks Desktop before importing to avoid errors after importing.)
  • Reminders do not convert to QuickBooks Online.
  • Although your Accrual Basis reports will match in both products, your Cash Basis reports may not match (search the article for this phrase for examples) — it’s best practice to run an “all dates” accrual report in Desktop before converting and then the same report in QBO afterwards to make sure things are all good.
  • After the conversion, there will be at least two sales tax payable accounts on the Chart of Accounts: one for each old Sales Tax Payable account from QuickBooks Desktop and one for each Sales Tax Agency Payable account in the new QuickBooks Online (set up automatically for each jurisdiction during the conversion). Moving forward, QuickBooks Online will only use the new Sales Tax Agency Payable account, and all sales tax will be managed from the Sales Tax Center.

There’s more, but those are the ones I’ve found can cause issues most often. Make sure to read the whole list — What doesn’t come over during an import from QuickBooks Desktop … – QuickBooks Learn & Support — and consider using it as a checklist before and after conversion.

IDES IL Unemployment “TaxNet” Switches to IDOR MyTaxIllinois

Happy news! If you have ever gone through the tiring process of registering a new business with both the Illinois Department of Revenue and the Illinois Department of Employment Security, then you know what this fabulous step toward modernization means. Starting September 11, IDES processes (registering, filing returns and paying taxes and fees) will all be available as part of the IDOR MyTaxIllinois website instead of the old IDES “TaxNet”.

The old IDES process was long and cumbersome, involving many steps, whereas some years ago IDOR simplified their processes using this excellent website. It allows you to see all your tax correspondence and account balances online, you receive confirmation that reports and payments have been received/processed, and you can access copies of tax letters and correspondence. (It’s especially excellent for accountant relationships with clients who may have challenges opening or losing mail.)

Soon, IDES will also offer these features on the MyTaxIllinois website:

  • Request refunds online
  • Submit tax appeals electronically
  • Request penalty/interest waivers
  • Set up a deferred payment plan
  • Submit Power of Attorney relationships
  • Report zero quarterly wages
  • View your rates

For those of you who have struggled with their system before, and for those who know how well the MyTaxIllinois system is organized by comparison — then you’re aware of what a treat this is. For the rest of you… trust me.

If you already have a MyTax Illinois account, starting in September 2017, you will have access to your unemployment insurance account to begin your third quarter processing. If you have any questions, please contact the IDES Employer Hotline at 1-800-247-4984.

Source: IDES – Unemployment_Taxes_and_Reporting

DIY Tax Software Not Always a Good Option

I have a dear friend who used to work as a developer for TurboTax, and I can say from many interviews with him and testing of the software that it technically works fine. There’s no major bug in it as far as I can tell (though it’s a crime that they won’t let you review your forms as you go through the interview, or before submitting them).

The big, glaring issue in my opinion is their marketing, as well as their tax prep interview language, which makes it sound like anyone can do their own taxes. This simply isn’t true.

If you have a non-complex tax situation and your life has not changed significantly from prior years, then by all means, use a DIY program. Side note: I used to like TaxAct best, when Kiplinger owned it, but now H&R Block does, and it’s filled with advertising, promo and pressure to pay more to contact them for extra bells & whistles (review, advice, audit protection, etc.).

But if you have a complex situation or things have changed since the prior year, you really should consult a professional. And when I say a “professional”, I mean make sure that an EA or a CPA is doing your taxes, not just having a high school kid prepare them and have the professional “sign off”.

There have been so many situations — including an unfortunate major audit — where I’ve reviewed client tax returns they prepared themselves using TurboTax and found glaring mistakes. They come to me to figure out what went wrong… and the obvious answer is that they shouldn’t have been doing their own taxes in the first place.

This isn’t an advertisement for my own services — I’m not even accepting new tax clients. This is a serious warning for your own good. Not everyone can do their own taxes. This court case is a great example of why — the defendant blamed the software for “luring him” into claiming deductions. So if you DO decide to do your own taxes and you mess up, keep in mind that the court won’t take “the software made me do it” as a defense.

Source: Why DIY Tax Software is Not a Good Option | AccountingWEB

2017 Professional Tax Software Survey Results

Yet again, Journal of Accountancy has issued results of its annual tax software survey, doing an always-stellar job of breaking down the results into easily-digestible charts and summaries, and going beyond the numbers into what they might mean. No matter what professional tax software package you use, it’s worth a read, and if you’re just starting out as a tax preparer, it’s required material.

They also published a related article on individual product survey responses… you can access the detailed survey responses on each product by clicking that product’s blue-highlighted heading in the article. This is especially helpful to see certain questions that only had a few respondents, so you can take the percentages with a grain of salt.

Source: 2017 tax software survey – Journal of Accountancy

IRS Webinar – Electronic FBAR Reporting

The dreaded Foreign Bank and Financial Accounts Reporting — a mystery to so many! Well, the IRS is offering a webinar to help:

August 30, 2017
2 p.m. Eastern Time
1 p.m. Central Time
12 p.m. Mountain Time
11 a.m. Pacific Time

This webinar features the latest information on how to properly report foreign financial accounts on the Report of Foreign Bank and Financial Accounts, commonly called the FBAR. You’ll learn:

  1. Who must file the FBAR
  2. What accounts must be reported on the FBAR
  3. When the FBAR must be filed
  4. How to file the FBAR

Plus, it’s eligible for CPE credit in Federal Tax. Check it out: Internal Revenue Service Webinar Registration Page

The Most Common Misconceptions About Tax Preparers

Accounting Today just released a great little slideshow/article called “The Most Common Misconceptions About Tax Preparers”… and I have to say, while I was surprised by a couple of them, most of them represent the frustrations that make me sometimes want to sell my practice (when I’m deep into tax season and feel like I can’t get a break, and one of the misconceptions on the list rears its ugly head):

1) The computer does all the work.
2) Anyone can do it.
3) Preparers work for the IRS.
4) All preparers are equal.
5) All tax returns are the same.
6) Their fees are too high.
7) Not being audited means their preparer is doing a good job.
8) Preparers only work during tax season.

Fact of the matter is, when you pay for a CPA, EA, or other tax preparation professional to do your return, you’re paying not for the hours it takes to complete the forms: but rather for the lifetime of education, experience, and knowledge that comes with what it means to be a dedicated tax geek who loves what they do and has the ethics required to do it well. For example, I personally attend more than three times the state’s required amount of continuing education each year (40 are required, and I take about 130).

Lest this sound like a marketing ploy, let me make it clear that I’m not accepting new clients. I simply want to ask you to a) choose your tax preparer carefully, b) once you’ve found a dedicated and educated professional, give them the benefit of the doubt where the above misconceptions are concerned, and c) write them a nice thank-you note  or email once-in-a-while.

As for the original article, it’s a quick read — go for it: The most common misconceptions about tax preparers | Accounting Today