Standard Deduction

[dyne]

The standard deduction is scheduled to increase substantially over the next three or four
years to reduce the marriage penalty. I PREDICT that the standard deduction will
GREATLY increase in coming years to perhaps $20,000 or $30,000 for a joint return.
This would eliminate or greatly reduce the number of taxpayers who would be able to
itemize and thereby reduce the number of returns which IRS needs to examine and will
also raise tax revenue. It will also simplify more tax returns, perhaps reducing
the need for as many tax preparers. Some credits may have to be eliminated
such as the child tax credit or perhaps the education credits or the tax rates may
have to be changed. This is conjecture on my part.Fred EA

[Uncle Sam]

Standard Deduction

Dyne-
I've got a suggestion.
In your retirement, why don't you publish a "Do-It-Yourself Tax Preparation" course - that way there won't be a need for tax preparers at all - since in your mind, all there is to this business is process of data entry and calculations - no need for use of brains for planning, thinking, analyzing, explaining. After all, the great standard deduction will eliminate all of that.

[dyne]

Tax Planning

I have written probably 100 tax newsletters for my clients virtually ALL
of which deal with tax planning and tax education. Yesterday ALONE
I faxed eight of my tax newsletters to 3 other tax preparers who rely
upon me EACH of whom has been in the tax business for more than 40 years.

[Uncle Sam]

Standard Deduction

You should be getting a gold medal for that work.
Once the standard deduction is raised, according to you, there won't be a need for that anymore-that's called tax simplification.

[dyne]

Standard Deduction

I did NOT say that. IF the standard deduction is greatly increased there will be
far fewer tax returns which itemize. That alone will reduce the need for as many
tax preparers. Many more taxpayers will prepare their own tax returns. I did not say
I am in favor of it, but I believe it is coming. Tax simplification will never eliminate the
need for tax preparers. And the tax laws have been "simplified" to the point that even
the best tax experts have difficulty understanding them. True tax simplification will never
come, in my opinion. I rely heavily upon my tax software to do the calculations, I do the
tax plannng and understanding or attempt to understand. I wrote my original post with the
hope of starting a discussion but I believe that you missed my point completely.

[Uncle Sam]

Standard Deduction

Yes Dyne, I know what you said:
It will also simplify more tax returns, reducing the need for as
many tax preparers.

The mere increase in the standard deduction will eliminate the need for us because tax returns will be simplified.
It's also a way of you boasting that just as you'll retire, they'll be less of a need for us, so "thank God I'll be retiring".

[jainen]

an excellent question

>>a way of you boasting<<

Dyne posed an excellent question with a perfectly decent opinion. I happen to agree that as the IRS provides more "standard" deductions, safe harbors, and the like, the function of tax preparer will shift from data entry to planning. However, I think this will lead to MORE audits and more work in taxpayer representation before the IRS.

[Jan]

Itemize deduction has never been a big problem with my clients, most of them are over 65 and don’t have any mortgage interest. However, the part that takes time is figuring out the brokerage statement from so many difference financial institutions. I which they could make that simpler.

[dyne]

Standard Deduction

No, Uncle Sam, I was NOT boasting, simply looking into my admittedly cloudy crystal
ball and GUESSING what is to come. Many of my clients do NOT itemize now so IF
I guessed correctly, it will NOT affect me much if the standard deduction is greatly
increased. I have 100 small business clients, 100 multi-state (clients who lived in
SC and work in NC) and about 100 older clients and most of the tax returns I prepared
are farily complicated. Still I do not pretend to know it all. I believe that anyone who thinks
he knows it all on ANY subject is a fool. I have learned several interesting points on this
forum and other forums and I THANK ALL for that, especially Jainen and Bees Knees
and others I cannot remember offhand.Best wishes.
Fred, EA
retired IRS Agent

[Bees Knees]

I think the intended purpose and reality are always two different things. In 1986 when Congress got the President to compromise, the idea was to lower tax rates while at the same time reduce deductions. That was around the time we lost the sales tax deduction, credit card interest, and employee business expenses on the front of the 1040. The 50% meal and entertainment limitation came into existence around then also.

The idea was to simplify things, so that not as many would need to itemize deductions.

Anyone out there think taxes are simpler today than they were in 1986?

The only thing raising the standard deduction will do is give politicians more excuses to mess with the tax code. Something else would have to be added to offset the lost revenue from the increased standard deduction. Maybe we could mess with quarterly estimated tax installments and require taxpayers to pay 102.734% of last year's liability instead of 100%...or make corporate estimates that are normally due on September 15th in the year 2015, due August 27th of that same year....or maybe we could add a new e-file requirement for people who smoke, reducing the number of allergic reactions of IRS employees who have to smell that paper return when they open the envelopes....

[Uncle Sam]

Standard Deduction

Bees Knees - I can't agree with you more. That's exactly what I was trying to express this morning.
Raising the standard deduction isn't going to result in our extinction - despite with the OP said. Taxpayers will have MORE of a mess, not less. Just like with the elimination of the estate tax - no more filing 706s or 1041s - but it will create havoc regarding valuation issues of inherited property upon dispositions thereafter.

[sea-tax]

I heard the same thing when Turbo tax and Quickbooks came out. " we are all going to loose our jobs" . Well I am still here and guess what I have more work now than I did then.

In fact at that time some preparers were so scared they sold off their practices and I bought them on the cheap.