December 29, 2017

Taxes: Can you prepay taxes for an itemized deduction this year? Not so fast there, taxpayer ...

Much hubbub currently exists about the recently signed tax legislation and its changes to itemized deductions (Form 1040 Schedule A of) for individual income taxpayers.  Some taxpayers are rushing to pre-pay various 2018 taxes, having read on the Internet (or a similar source) that doing so will result in an itemized individual income tax deduction for 2017.

Not so fast.

First off, always remember that not ever tax and financial item you read on the Internet, or listen to on an AM radio talk show, is true.  Moreover, even it the information is true, it may not apply to your personal situation.  Financial and tax decisions that are in the best interest of one individual or business may be disadvantageous - and simply the wrong decision - for others.

Secondly, any tax that would ordinarily be deductible on an an itemized Form 1040 individual income tax return is not .. I repeat, no ... deductible if the tax has not yet been assessed.  You can send tax money to government agencies all you want, but if the tax has not yet been assessed, you get no itemized deduction benefit.

Thirdly, even if you do get a current-year itemized deduction for pre-payment of 2018 taxes, that may not be in your best interest.  Too many itemized deductions on Form 1040 Schedule A can trigger the dreaded Alternative Minimum Tax, increasing your federal tax bill.

For any tax matter, know what's best for your situation, with professional analysis and advice as necessary.

About Mary Rae Fouts, EA

Mary Rae Fouts, EA provides tax, insurance consulting, and expert witness services to clients who have technical or complex concerns.  For more information visit

Mary Rae Fouts

December 23, 2017

Merry Christmas and Happy Holidays!

Best wishes to all for a Merry Christmas
and Happy Holiday Season!

Mary Rae Fouts

December 19, 2017

Worker Classification: Is your worker an employee or an independent contractor?

Here is a tax topic that can be vexing to both business owners and workers alike:

Is a worker an employee or an independent contractor?

Good question, particularly with the growth in today's gig economy.  The Internal Revenue Service and the Department of Labor take slightly different approaches in answering this question.  However, the general rule of thumb involves the following "means and method" test:
If an employer has the right to control the worker's work - and the results of such work - as well as the manner and means in which the work is performed, the worker is considered an employee, and not an independent contractor.
For more detailed information, the IRS uses a 20 Factor Test when classifying an employer/worker relationship.  Click here to download the 20 Factor Test and additional worker determination information.

About Mary Rae Fouts, EA

Mary Rae Fouts, EA provides tax, insurance consulting, and expert witness services to clients who have technical or complex concerns.  For more information visit

Mary Rae Fouts

December 15, 2017

Woman Rants About Customers Speaking Korean at a Walnut Creek Starbucks ... Can you guess what happened?

Ranting woman at Walnut Creek Starbucks.
When I moved to Walnut Creek in 1994 (I now live in Pleasant Hill, Walnut Creek's next door neighbor), two of the community components I most enjoyed - and still do - are the melting pot of cultures and languages present in area, as well as the area's overriding acceptance of people.  Being exposed to other cultures, languages, food, traditions, and ways of life has greatly enriched and enhanced my life.

So, I was distressed to learn of the now-gone-viral video of a middle-to-elderly aged white woman in a Walnut Creek Starbucks, caught on video berating 2 Starbucks customers who were speaking in Korean.  This woman - identified by Starbucks' baristas as someone who had caused problems for other Starbucks' customers in the past - rattled on how she hated Oriental, and didn't want to hear the Korean language.   You can read more about the episode, and view the video on this East Bay Times article.

But what turned this negative event into a positive were the actions of the 2 Starbucks' baristas who confronted the ranting woman, as well as the response by Mr. Sean Lee, one of the people speaking Korean to whom the woman's rant was directed.

The two Starbuck baristas confronted the ranting woman and  informed her that Starbucks patrons can speak whatever language they like. When the woman refused to leave, Walnut Creek police were called, and escorted the woman out.

Than then there is Mr. Lee, who could have taken a bitter outlook on the unfortunate experience. Instead, he brilliantly turned it into an inspirational learning tool, as he posted on Facebook after posting the ranting video:
“We shouldn’t blindly hate on this woman, and understand that she grew up in an environment that perpetuates ignorance,” Lee said Wednesday. “Instead of spending our energy on name-calling, let’s use it to push for more constructive dialogue and policies in our community, state and nation.”
--- Sean Lee/Facebook posting after woman customer rants about 'hating Oriental and the Korean language' at a Walnut Creek Starbucks.
In the end, I am once again reminded that most people are ... or at least attempt to be ... kind, generous, thoughtful, and good.  Hopefully we can all focus on these qualities in life, and live each day to the fullest.

Mary Rae Fouts

December 14, 2017

California Business Owners : January 1, 2018 Brings Yet More Laws for California Employers

Just when you think operating a business is challenging enough in California, 2018 ushers in more new business-related laws, particularly for businesses with employees.

If you are a California business owner, particularly one with  employees, here’s a peek at  a few of the new laws that may impact your business beginning January 1, 2018.   And I suggest that you prepare for the new regulations now, if you have not already done so.

New Laws for California Employers on January 1, 2018

These new laws don’t replace any current California employment-related laws, but rather add to the web of laws California employers must wade through.  Here’s just a sampling of what’s new for y'all on New Year’s Day 2018.

Cannot Ask for Past Salary History (AB 168)

A California employer cannot ask a prospective employee for his or her salary history, including wage and benefit compensation.  The employer, however, if asked must provide the prospective employee with compensation information for the position being applied for.

Cannot Ask for Criminal History Information Until Employer Extends a “Conditional Job Offer” to the Applicant (AB 1008)

A California employer with 5 or more employees may not ask, on a job application, for information pertaining to a prospective employee’s criminal conviction history.  This information may only be asked and investigated after a prospective employee has received a conditional job offer.  (Although no specific definition is provided, or parameters given, for what constitutes a “conditional job offer”.)

There are a few employer exemptions to this new law, including but not limited to government agencies, justice departments, and stock broker/investment management firms.  This law also does not impact the many state licensing boards, for any of those that have prohibitions on granting a license or certification to individuals with criminal backgrounds.

If the employer than decides to rescind the conditional job due to the prospective employee’s prior criminal conviction history, the employer must follow specific procedures for notifying the prospective employee of this decision. Namely, the employer must notify the declined job applicant of the employer’s decision in writing.  This notification must:
  • State the conviction or convictions relied on for rescinding the conditional employment offer;
  • Include any conviction history report obtained by the employer; 
  • Inform the job applicant of his/her right to respond to the notice before the decision becomes final, and the deadline for the applicant’s response; and
  • Inform the job applicant that the applicant’s response may include evidence challenging the accuracy of the conviction history, as well as information about the applicant’s rehabilitation and any mitigating circumstances.
Got all that?

Parental Leave (SB 63)

With certain exemptions and conditions, California employers with at least 20 employees must allow an employee to take up to 12 weeks of parental leave following the birth, adoption, or foster care placement of a new child.  During this 12-week period, the employer is not required to pay the employee’s salary, although the employee may use up accrued vacation or sick leave time during this leave for income.  However, the employer must continue to maintain and pay for the employee’s group health insurance coverage during this leave.

Sexual Harassment Prevention Training:  Gender Identity and Expression, Sexual Orientation (SB 396)

California employees with 50 or more employees must add to the already state-required sexual harassment training curriculum.  The training (required of all supervisory-level employees every 2 years) must now include a component addressing gender identity, gender expression, and sexual orientation.  Employers must also prominently post a Dept. of Fair Employment and Housing poster outlining transgender rights.  

Wanna be a California business owner with employees now?  And the above are just a few of the new state laws affecting California business owners in 2018. 

I guess I’ll just close with Happy New Year!  And may we all ring in more sometimes-hair-pulling California business bureaucracy together. 

Mary Rae Fouts

December 12, 2017

Geography Quiz: Can you name or point out all of the countries in the continent of North America?

Here's a fun geography quiz for you to try ...
Here is a map of the world.  Can you point out or name all of the countries in the continent of North America?  I could not!  😞

The print is small, so you might want to get a larger map on the Internet to better see country names.  But other than that, no cheatin' on the Internet! 😃 


I'll be back in a few days with the answer.   Plus I'll tell you what I missed in my answer.

Mary Rae Fouts

December 11, 2017

Crossword Puzzles: Yes Virginia, more than one letter can appear in a square! It's called a rebus.

Ah, Crossword Puzzles!  The sometimes calming, sometimes hair-pulling-out experience.

But for me ... and avid crossword player ... always fun!

And hey, to make your Crossword Life more perplexing, get this:

Yes, more than one letter can appear in a square.

It's called a rebus.

A rebus sometimes appears in the grandam of all crossword puzzles, the New York Times Crossword Puzzle, usually in the Thursday or Sunday puzzle.  Any rebus entries remain constant in the puzzle.

And you don't get a warning or hint that the rebus appears ... sorry!

Here's and example of a rebus crossword in a New York Times Mini Crossword Puzzle, where the word "car" is the rebus:

And to add to your rebus frustration, a rebus entry is not limited to a word.  According to New York Times Crossword Columnist Deb Amlen (how cool of a career is that?!):
"A rebus can be a letter, number or symbol that represents a word, but in many crosswords, the rebus will be a word or group of letters that need to be written inside a single square."
But wait, there's more!  The crossword rebus does not have to be the same word throughout the crossword puzzle. Rebuses can appear made of entirely different words long as the rebuses relate to the them of the puzzle.  Crazy, huh?  And for me, the multi-rebus crossword puzzles are the most difficult to solve.

To learn more about puzzle rebuses, visit this New York Times Wordplay column.  Visit Ms. Almen's Wordplay page (which is the New York Times crossword column) for detailed information and insight into New York Times crossword puzzles, as well as crossword player comments.  Always an interesting and fun read.

Now sharpen your pencil and get to puzzlin'!

Mary Rae Fouts

December 8, 2017

Business Tax Returns: More Hoops to Jump Through in 2018

Business Tax Returns ... Prepare for increased tax preparation time in 2018.  And get ready to fork over more personal and business-related information to the IRS.

Yes, the IRS thinks it does not posses enough of your personal and business information for tax purposes.  So, beginning in 2018, the IRS will require yet more information about businesses and business owners, including drivers licenses numbers from business owners with sole proprietor and partnership structure businesses.

Why?  Ostensibly to help prevent identify theft, and to help identify a "suspicious" business tax return.  However, as an Enrolled Agent licensed by the United States Department of the Treasury, I have not a clue as to what the IRS is targeting as "suspicious", because the IRS fails to disclose what would trigger a business tax return to be deemed "suspicious".

Doesn't the IRS already have enough information about tax payers without needing yet more?  One would think so.

According to the recent IRS News Bulletin IR-207-198 (read the entire bulletin here),  here's what tax professionals and their business tax clients are in for in 2018:
"For 2018, these “know your customer” procedures are being put in place that include the following questions:
  • The name and SSN of the company executive authorized to sign the corporate tax return. Is this person authorized to sign the return?
  • Payment history – Were estimated tax payments made? If yes, when were they made, how were they made, and how much was paid?
  • Parent company information – Is there a parent company? If yes, who?
  • Additional information based on deductions claimed
  • Filing history – Has the business filed Form(s) 940, 941 or other business-related tax forms?
Sole proprietorships that file Schedule C and partnerships filing Schedule K-1 with Form 1040 also will be asked to provide additional information items, such as a driver’s license number. Providing this information will help the IRS and states identify suspicious business-related returns."
One thing's for certain:  There is never a dull moment in tax land!

Tax Concerns?  

As a federally licensed Enrolled Agent, I provide tax preparation, tax planning, and taxpayer representation services to clients with technical or complex tax concerns.  For more information visit

Mary Rae Fouts

December 4, 2017

Truffle the dog experiences snow for the first time. Reaction? Pure joy!

Truffle the dog
And since we're on the topic of dogs, let's talk about Truffle.Truffle is a cocker spaniel who resides in York, England, and just experienced snow for the first time.  Truffle's reaction?  Well let's say that Truffle may think snow is one of the best things ever!

Check out Truffle's snowfall reaction in the video below ... And prepare to smile!  😁

Enjoy your week and make everyday great!   

Mary Rae Fouts

December 1, 2017

Sorry Cats! Vanderbilt study proves dogs are, in fact, smarter than you!

This just in from Vanderbilt University ...

Vanderbilt study proves dogs are smarter than cats!

Sorry, kitties!

But then again, we dog lovers (myself included)
already knew that!

Lexi and Sid settle in for an afternoon snooze on a gorgeous November day.
I think they kinda like one another!  💕💙💚💕

Learn more about these findings by clicking on Vanderbilt University's fun and interesting video post below, which also includes some really cute raccoon and other animal antics.  The video will make you smile, for sure.  Woof!  Woof! 

  Mary Rae Fouts