It’s smart to look at ways you might minimize your tax liability. That’s especially true for 2019, the second year the sweeping new tax legislation (commonly known as the Tax Cuts and Jobs Act) generally applies. In light of the new income tax rates and significant changes to traditional deductions, it’s particularly important to speak with your tax advisor. Speak with them about some or all of the following ideas.
Category: Uncategorized
What is new for 2018 US Income Taxes?
Standard deduction amount increased. For 2018, the standard deduction amount has been increased for all filers, and the amounts are as follows.
Single or Married Filing Separately—$12,000.
Married Filing Jointly or Qualifying Widow(er)—$24,000.
Head of Household—$18,000.
Due to the increase in the standard deduction and reduced usage of itemized deductions, you may want to consider filing a new Form W-4.
Deduction for personal exemptions suspended. For 2018, you can’t claim a personal exemption deduction for yourself, your spouse, or your dependents.
Changes to itemized deductions. For 2018, the following changes have been made to itemized deductions that can be claimed on Schedule A.
Your itemized deductions are no longer limited if your adjusted gross income is over a certain amount.
You can deduct the part of your medical and dental expenses that is more than 7.5 percent of your adjusted gross income.
Your deduction of state and local income, sales, and property taxes is limited to a combined, total deduction of $10,000 ($5,000 if married filing separately).
You can no longer deduct job-related expenses or other miscellaneous itemized deductions that were subject to the 2 percent of AGI floor. You may still deduct certain other items on Schedule A, such as gambling losses.
For indebtedness incurred after December 15, 2017, the deduction for home mortgage interest is limited to interest on up to $750,000 of home acquisition indebtedness. This new limit doesn’t apply if you had a binding contract to close on a home after December 15, 2017, and closed on or before April 1, 2018, and the prior limit would apply.
You can no longer deduct interest on home equity indebtedness, which means indebtedness not incurred for the purpose of buying, building, or substantially improving the qualified residence secured by the indebtedness.
The limit on charitable contributions of cash has increased from 50 percent to 60 percent of your adjusted gross income.
Moving expenses no longer deductible. For 2018, you can no longer deduct your moving expenses unless you are a member of the Armed Forces on active duty.
Child tax credit and additional child tax credit. For 2018, the maximum credit increased to $2,000 per qualifying child. The maximum additional child tax credit increased to $1,400. In addition, the income threshold at which the credit begins to phase out is increased to $200,000 ($400,000 if married filing jointly).
Credit for other dependents. A new credit of up to $500 is available for each of your dependents who does not qualify for the child tax credit. In addition, the maximum income threshold at which the credit begins to phase out is increased to $200,000 ($400,000 if married filing jointly).
Social security number (SSN) required for child tax credit. Your child must have an SSN issued before the due date of your 2018 return (including extensions) to be claimed as a qualifying child for the child tax credit or additional child tax credit. If your dependent child has an ITIN, but not an SSN, issued before the due date of your 2018 return (including extensions), you may be able to claim the new credit for other dependents for that child.
ITINs Expiring in 2018
Tax Preparedness Series: Make a Wise Choice when Selecting a Tax Preparer
IR-2015-124, Nov. 5, 2015 Español
WASHINGTON — While there is still time before the next tax filing season, choosing a return preparer now allows more time for taxpayers to consider appropriate options and to find and talk with prospective tax preparers rather than during tax season when they’re most busy. Furthermore, it enables taxpayers to do some wise tax planning for the rest of the year. If a taxpayer prefers to pay someone to prepare their return, the Internal Revenue Service encourages them to choose that person wisely as the taxpayer is legally responsible for all the information included on the return.
This is the third in a series of weekly tax preparedness releases designed to help taxpayers begin planning to file their 2015 return.
Below are some tips taxpayers can keep in mind when selecting a tax professional:
Select an ethical preparer. Taxpayers entrust some of their most vital personal data with the person preparing their tax return, including income, investments and Social Security numbers.
Ask about service fees. Avoid preparers who base their fee on a percentage of the refund or those who say they can get larger refunds than others. Taxpayers need to ensure that any refund due is sent to them or deposited into their bank account, not into a preparer’s account.
Be sure to use a preparer with a preparer tax identification number (PTIN).
2016 Tax Season
The Internal Revenue Service will begin accepting individual tax returns on Tuesday, Jan. 19, 2016, it announced today.
Have a Small Business. Should I Give My Kids a Salary?
Paying your kids can be a very legitimate move for small business owners.
There is no minimum age someone has to be before they can earn a salary. Think about all those baby commercials on TV – those babies are getting paid for looking cute — or mischievous.
Your child needs to be able to perform work duties and be paid the appropriate rate for the job they are doing, Hook said. Depending upon their age, certain clerical functions can be done, but it’s key to have proper documentation and that you pay the appropriate taxes. The child will also need to file a tax return.
The operative term here is “comparable wage”. Payments shouldn’t be too high, but be commensurate with what you would pay others to do the same work. Considering the current minimum wage, what you can pay could come out to quite a bit.
For example, as an accountant I create a large volume of paper waste that needs to be shredded,” he said. ” I pay an outside person about $10 per box. I paid my children the same amount to provide the same service.”
There are many advantages to paying your children, especially if you are unincorporated and the children are under 18.
If they are under 18, neither you nor your child have to pay FICA, Medicare or FUTA tax, and in many states, there is no need to pay unemployment or disability to the state department of labor, Matheson said.
And because wages are earned income, the child can put money in an IRA or Roth IRA and the funds would benefit from compound growth for many years. And under certain circumstances, those funds can be used to pay for college.
Example: If your child invested $5,000 in an Roth IRA when he was say 10, by age 65, the Roth would have grown to $119,200 at a 5% rate.
Remember Roth IRAs are tax-free. Not bad. A Roth IRA versus a regular IRA would likely be the best vehicle since the child’s tax bracket will likely be very low. The kiddie tax does not apply to earned income such as wages. It applies only to unearned income such as interest and dividends.
The child will have to file a tax return, and they’d get the standard deduction, which is the larger of $1,050 or their earned income plus $350, with the maximum equal to $6,300. If the child earns $5,000, the standard deduction is $5,350. If the child earns $6,300, they receive a standard deduction of $6,300.
When they are over 18 years old, the benefits are not quite as good since you have to pay all the taxes — FICA, FUTA, Medicare, State UI and DI — on them, but if you are going to pay someone else anyway. It might as well be your children.
There is no minimum age someone has to be before they can earn a salary. Think about all those baby commercials on TV – those babies are getting paid for looking cute — or mischievous.
Your child needs to be able to perform work duties and be paid the appropriate rate for the job they are doing, Hook said. Depending upon their age, certain clerical functions can be done, but it’s key to have proper documentation and that you pay the appropriate taxes. The child will also need to file a tax return.
The operative term here is “comparable wage”. Payments shouldn’t be too high, but be commensurate with what you would pay others to do the same work. Considering the current minimum wage, what you can pay could come out to quite a bit.
For example, as an accountant I create a large volume of paper waste that needs to be shredded,” he said. ” I pay an outside person about $10 per box. I paid my children the same amount to provide the same service.”
There are many advantages to paying your children, especially if you are unincorporated and the children are under 18.
If they are under 18, neither you nor your child have to pay FICA, Medicare or FUTA tax, and in many states, there is no need to pay unemployment or disability to the state department of labor, Matheson said.
And because wages are earned income, the child can put money in an IRA or Roth IRA and the funds would benefit from compound growth for many years. And under certain circumstances, those funds can be used to pay for college.
Example: If your child invested $5,000 in an Roth IRA when he was say 10, by age 65, the Roth would have grown to $119,200 at a 5% rate.
Remember Roth IRAs are tax-free. Not bad. A Roth IRA versus a regular IRA would likely be the best vehicle since the child’s tax bracket will likely be very low. The kiddie tax does not apply to earned income such as wages. It applies only to unearned income such as interest and dividends.
The child will have to file a tax return, and they’d get the standard deduction, which is the larger of $1,050 or their earned income plus $350, with the maximum equal to $6,300. If the child earns $5,000, the standard deduction is $5,350. If the child earns $6,300, they receive a standard deduction of $6,300.
When they are over 18 years old, the benefits are not quite as good since you have to pay all the taxes — FICA, FUTA, Medicare, State UI and DI — on them, but if you are going to pay someone else anyway. It might as well be your children.
Tax Deductions With Some of the Biggest Payouts
A $5,000 or $6,000 deduction for IRA contributions, a $4,000 deduction for college tuition and fees, a $1,000 child tax credit — these are hefty tax breaks for which a taxpayer may understandably yearn. But they’re small beans when compared with the tens of thousands of dollars in savings some reap through deductions and credits.
Welcome
Welcome and get ready for new tax year season. We prepare both United States and Canadian Taxes. We have more than fifteen years experience and provide professional, courteous, friendly service to United States and Canadian residents. We help commuters to prepare their United States and Canadian’s resident and non-resident returns
Refund with tax fees withheld (charge applies)
Refund anticipation loan with tax fees withheld (charge applies)
. We have option to efile US federal and Canadian returns.
TAX PLANNING:
Make sure you notify me if your address, phone number, or any other personal information has changed. Don’t forget to have required documents available on any new children (or other family members). If you have any changes in employment status, income level, investing practices, etc. don’t hesitate to contact me to discuss tax consequences and preparation for the next year.
UPDATES:
As we approach January, Please keep in mind how my appointment schedule works. I prepare tax returns while you wait in order to ensure the highest quality and quickest turnaround for all of my clients. You may schedule a brief consultation for drop-off if your situation requires it Feel free to contact me with questions or concerns. I am working to make available a secure upload feature on my website for the safe and secure transaction of all documents.
TAX LAW UPDATES:
I have been monitoring the legislative changes and how they affect the tax laws. While I don’t have any specific information to provide you with at this time, as things settle into place, I will write about it on my website blog, so make sure you keep an eye out for those articles!
BANK PRODUCTS:
This tax season, I am trying to partner with a Bank to provide bank products that are standards in today’s market. As a client of mine, you could select from a number of refund options
including: