Archive for the ‘Oklahoma’ Category

Oklahoma Limits Itemized Deductions; Big Hit for Amateur Gamblers

Saturday, March 30th, 2019

Suppose you’re an Oklahoma resident and enjoy gambling one of the many casinos in the Sooner State. You have $100,000 of gambling winnings and $100,000 of gambling losses. You itemize on your federal return anyway (you have mortgage interest, state taxes, and charitable donations), and the wash is just fine. On your Oklahoma return, you’re surprised to find your Oklahoma charitable donations are limited to $17,000 (plus the amount of medical and charitable donations).

Yes, Oklahoma has joined the states that are bad for gamblers. In my hypothetical, an amateur gambler would pay tax on $83,000 of phantom income. This change is the result of a law passed in April 2018.

Third Party Transcript Requests Reportedly Will No Longer be Processed by the IRS

Wednesday, December 2nd, 2015

Form 4506-T allows a third-party to obtain a transcript with your signed permission. One use of the form has been to obtain a tax return transcript when obtaining a mortgage. There have been reports that some individuals who completed this form didn’t have the transcripts sent on. Well, it appears that the IRS is no longer honoring this form unless there’s a Tax Information Authorization (Form 8821) or a Power of Attorney (Form 2848) on file. (Of course, either a Form 8821 or a Form 2848 allows a transcript to be generated.)

This news came out today via individuals calling the IRS’s Practitioner Priority Service. This policy has not been officially published anywhere by the IRS, but based on IRS actions it appears that this policy was put in place because of identity theft concerns.

I do not know what mortgage companies will do in the future, but I would assume they will add a Form 8821 to their requests. I’m not sure how a mortgage company sending over two pieces of paper to the IRS rather than one lowers the risk of identity theft, but whatever.

In related news, the Oklahoma Tax Commission is no longer accepting Oklahoma Power of Attorney forms via fax; they must be mailed to the tax agency. It’s not clear what prompted this change but I’m guessing it’s also identity theft concerns.