There has got to be a better way

It's not even the end of February, and already it's turning into the tax season from — as my dad used to say — H-E-double-toothpicks.

  • Is PPP loan forgiveness excludable COD income? Yes, federal. Yes, California.
  • Are EIDL advance grants excludable COD income? Yes, federal. No, California ... but wait, this may be changing.
  • What about those SBA subsidy payments? Are they excludable? Yes, federal. No, California.
  • Are expenses paid with PPP/EIDL/SBA subsidies deductible? Yes, federal. No, California, but that may be changing too, at least partially?
  • Are wages reduced for the Employee Retention Credit? Yes, federal. No, California.
  • Are wages reduced for the Families First Coronavirus Response Act (FFCRA) credits? No for federal (you increase income by the amount of the credit claimed). No for California (but you reduce income for any income increased on the federal return).
  • Can I deduct contributions made to an IRA after I'm 70½ years old? Yes, federal. No, California, but California is not going to make it easy to make this adjustment (see the March issue of Spidell's California Taxletter®).
  • What's the new Form 7702? The FTB Form 3849?
  • What do you report on Schedule 1 that's attached to the federal "postcard" sized return? Oh, that's right, the postcard-sized return only lasted one year.

Feeling like things are a bit out of control?

The other day when I was complaining about the next 591-page proposed federal law that's coming our way and how it always feels like I'm playing a game of darts when I'm trying to analyze California's conformity/nonconformity issues, my wise-beyond-her-years 19-year-old daughter asked how folks in other countries compute their taxes.

We took a look, and I've decided we're definitely moving to the Netherlands ... or possibly Japan. From a PBS Newshour interview with J.R. Reid, an economist who wrote "A Fine Mess":1

"I was in the Netherlands on March 31, the day before their taxes are due.

I was with an executive who makes $200,000 a year, two mortgages, a lot of investments. He'd have to fill out 12 forms in America. I said, Michael, how do you pay your taxes? He pops a beer. He goes online. The government's filled in every line. If the numbers look right, he clicks OK. It takes five minutes.

And, in Japan, you get a postcard from the IRS that says, we think you made this much. We withheld this much. We owe you a refund of that much. We will put it in your bank on April 1. It takes one minute, if you think the numbers are right."

True, this would put a lot of us out of work, but think of how less stressful our lives would be! I for one have always had fantasies of starting an organic farm ... ohmmmmmm.


Fellow arachnophobes, be warned

The Shapiro Undergraduate Library (aka "the UGLi") at the University of Michigan was recently closed for two days after three Mediterranean recluse spiders were found in the basement.1 Personally, I think finding one spider of any variety should prompt a closure, but apparently where spiders are concerned they like to play things fast and loose in Ann Arbor.2

After finding the third venomous spider in a glue trap, the staff closed down the building. A library spokesperson later said this action was taken based on "a misunderstanding and an abundance of caution" and apologized for the inconvenience to the university community.

I applaud these brave, unsung library workers. In the event of another infestation, I am recommending also closing the adjacent Harlan Hatcher Graduate Library, Tappan Hall, and West Hall ... out of "an abundance of caution."

Three's company ... 100 is a crowd

Allegedly, there were only three extremely poisonous, potentially deadly spiders at the UGLi. Only three? I have a feeling this video is closer to the truth (and I agree with her solution: Burn down the house!):

2 DO NOT click on the link to the story in the above footnote. There is a giant (and I mean giant) image of one such spider at the top of the story

EZ mistake

The other day while EAK, I clearly wasn't focused and confused EIP with ERC. In my defense, they're both three-letter acronyms, they start with "E," and they originated with the CARES Act. But that's where the similarities end.

EIPs (economic impact payments) are stimulus checks that were sent to taxpayers beginning in April 2020 under the CARES Act. A second round of EIPs has also been issued under the Consolidated Appropriations Act of 2021.

The ERC (Employee Retention Credit), on the other hand, is a fully refundable tax credit for employers equal to 50% of qualified wages paid to employees after March 12, 2020, and before January 1, 2021.

I never got past the "E." Bottom line and note to self: EIE. Focus and no EAK. EOS.

EAK: Eating at keyboard — not recommended by your computer guru

EIE: Enough is enough — don't tear your hair out

EOS: End of story — I'm tired: going to get a glass of wine

Alternate acronyms

We received a few more reader submissions with suggestions for alternate acronym meanings:

SECURE = Staff Experts Continue Unravelling Regulatory Exceptions

CPA = Cocktail Preparation Appreciated

NOL = Nonsense Often Legalized

Thanks, Charles T.!

A few fun facts about this week's writers:

Sandy Weiner, J.D.Sandy Weiner, J.D., has been surviving the pandemic by climbing every nearby mountain, learning to play the cello, and binge watching old episodes of West Wing with her daughter.

Kathryn Zdan, EAKathryn Zdan, EA, spends her non-Spidell hours on photography and watching horror films (and then sleeping with the light on). She also enjoys hiking, biking, and walks with her ancient Jindo, Mango.

Diane FullerDiane Fuller loves to read, cook, and go to Ketchum/Sun Valley, Idaho, as many times as possible during the year with her family including grandkids and dogs.

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