Are Charitable Deductions Going To Be Wiped Out Under Trump?

For many American families who prepare for year end tax planning, no discussion is complete without talking about charitable contributions.   Many families make charitable contributions by tithing a percentage of their family income, giving cash to local charities, or they end up taking non-cash items from their household and donating them to a worthy charity.  With the potential shake up in the tax law under a Trump regime, will you have your charitable contributions completely wiped out in 2017? First things first.   You don’t really need to worry about charitable contributions if you don’t itemize your deductions at all.  Today, a single filer has a $6,300 standard deduction and a married couple has $12,600 for a standard deduction. In addition, you get to deduct you, your spouse, and your children as personal exemptions on your tax return.  The suggested policy going forward would be to wipe out the personal exemptions and offer a larger standard deduction of $15,000 for a ...

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IRS Rules: .9% Additional Medicare Tax In 2013

With Obamacare kicking into to full speed here in 2013, last week I blogged about the 0% long-term capital gains tax. With so many different tax law changes happening, my fear is some tax-payers aren’t planning correctly and will get stung with an extra bill come tax time. For those individual filers who make more than $200,000 modified adjusted gross income (MAGI) and married couples making more than $250,000 MAGI, it is really important to understand how the additional .9% Medicare Tax will be collected here in 2013. Will your payroll company do this for you? Will you have to do it yourself? Is there a special form to fill out this year? Here it is straight from the IRS Website- BTW, this was about 46 different questions and answers, but I trimmed down the key items for you. (Source for all questions: www.irs.gov) When does Additional Medicare Tax start? Additional Medicare Tax applies to wages and compensation above a ...

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Why Are You Mad At Your Accountant?

Here is a question to ask yourself after tax season is over.  What really happens during a typical tax season for a family or business? I have been doing this for over 20 years, and so let me describe to you the typical outcomes. The first thing that we see is that most people cross their fingers and say three Hail Mary’s hoping for a refund.  Does this sound like you?  You gather all of these documents that you get from your employer, your investment companies, and real estate you own, then you hand them over to somebody (an accountant or CPA) and pray that they’re going to get you some money back so you can go on that vacation or remodel your house.  Most individuals that we meet who get a federal refund during tax time think that their CPA is the bomb.  They are assumed to be the smartest, brightest, and most unbelievable individuals in the world.  It’s ...

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Ten Common Mistakes Tax Filers Make

Don’t you hate that thought of getting your taxes done only to realize later that you make a common mistake that could cost you time or money? The tax code seems to be getting more and more complicated every year (500 changes alone in 2008), and we all seem to be strapped for time these days. Here are 10 mistakes we see taxpayers make all the time which could put a few dollars in your pocket this tax season. 1) If you are single and are caring for an elderly parent, you should investigate seeing if you qualify for ‘head of household’ for your filing status. As a general rule of thumb, you should be paying for 50% or more of the elderly parent’s expenses. 2) You should make sure you have kept track of your charitable mileage that you drove during the year. Eligible miles will have a .14 cents on the mile write off on your tax return ...

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What Tax Deductions Can I Take For Using My Car?

As the tax year ends and you scramble to pull together your year end tax deductions, people often ask us whether they can get  a deduction for using their automobile.  It’s important to understand these rules for both employees and business owners alike as this could mean big bucks in your pocket come tax time. According to the IRS Topic 510 business use of a car (http://www.irs.gov/taxtopics/tc510.html), you can generally figure the amount of your deductible car expense using one of two methods: the standard mileage rate method or the actual expense method. If you qualify to use both methods, before choosing a method, you may want to figure your deduction both ways to see which gives you a larger deduction. Please refer to Publication 463, Travel, Entertainment, Gift and Car Expenses, for the current standard mileage rate. If you use the standard mileage rate, you can add to your deduction any parking fees and tolls incurred for business purposes. ...

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What If I Do Not File My Taxes?

I am still amazed about how many people call us or come into our office having not filed their taxes for multiple prior years.   Some people file for an extension ever year at tax time, while others work feverishly to get them done by April 15th.  What happens if you don’t file your taxes? Obviously, we don’t ever recommend using this as a strategy.  As the famous saying goes, the only thing you can count on in life are death and taxes.  Beyond the interest you will owe for failure to file/failure to pay/underpayment issues, there could also be a number of penalties that you could face as well. Criminal Fraud – Unless you want the old Wesley Snipes issue, evading pay taxes is illegal anyway that you slice it up.   It’s my opinion that the IRS is going to get even tougher on these non-taxpayers, and if you are found guilty you could be subject to massive court determined ...

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I like April 15th!

Within a few weeks, we will be approaching one of my favorite days of the year April 15th.   This is the last day of the official tax season unless you are filing an extension.   If you ever want to see something truly funny, park your car around 10 p.m. outside of a U.S. Post Office on the last day of tax season and watch the masses flock with their tax returns. The thing I like about April 15th is asking the question, “Did you learn anything different this tax year than the year before this one?” Each year, people seem to spend more time watching Dancing With The Starts or some other reality show than figuring out ways to save money in taxes.   By the time the 2009 tax season ends on April 15th, we are almost a trimester into the 2010 tax year.   This is the time to reflect and ask yourself what you will do differently in 2010 ...

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Is it smart to get tax refund?

Around tax time, we often hear the question, “Is it smart to get a tax refund?”  The answer really falls into the ‘it depends’ category. In general, I am not a big fan of getting refunds.  Anytime in today’s world that you give the Government an interest free loan of your money for a year is probably not a good idea.  When you get a refund, you withheld too much money out of your paycheck over the course of the year.  When your actual tax calculation is done at year end, you will receive the excess withholding back in the form of a refund.   This means that you should really sit with your accountant, CPA, or financial advisor and adjust that withholding number for the current tax year.   If you are going to put more money back into your paycheck, make sure you have those dollars systematically saved into some type of savings or investment vehicle so you don’t spend ...

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Great Small Business Tax Deductions

Don’t miss these fourteen tax deductions for your small business. It’s simple: The more tax deductions your business can legitimately take, the lower its taxable profit will be. Also, in addition to putting more money into your pocket at the end of the year, the tax code provisions that govern deductions can also yield a personal benefit: a nice car to drive at a small cost, or a combination business trip and vacation. It all depends on paying careful attention to IRS rules on just what is — and isn’t — deductible. When you’re totaling up your business’s expenses at the end of the year, don’t overlook these 14 common business deductions. 1. Auto Expenses If you use your car for business, or your business owns its own vehicle, you can deduct some of the costs of keeping it on the road. Mastering the rules of car expense deductions can be tricky, but well worth your while. There are two ...

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