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TAX TIP OF THE DAY... last minute changes to 2017 tax laws
"Too bad, so sad" if you already filed your taxes. You may have missed newly added deductions for 2017. On 02/09/18 Congress passed new 2017 tax laws that brings back the popular energy credits, PMI mortgage deduction, tuition deduction, and many more. The timing is bizarre. If you missed a deduction, you can amend using form 1040X, but not anytime soon. It is unknown when the IRS will have their computers re-programmed to accept these changes. Most software companies do not have these deductions either, as they await guidance from the IRS on technical specifications. My firm is using work arounds when possible to file most returns NOW. SHARE WITH A FRIEND. If you need tax help... www.baboiancpa.com TAX TIP OF THE DAY... Can a swimming pool be a tax deduction?
If you have a medical condition that would improve with a swimming pool exercise regimen, your swimming pool expenses could qualify as a deductible medical expense. That's what happened in the case of an arthritis patient who was prescribed to swim frequently in order to treat his condition. This also works for hot tubs. SHARE WITH A FRIEND. Bitcoins and tax law... just spending them could trigger a taxable gain.
For example if you bought a bitcoin for $1 in 2010 and used it today to purchase $9k of jewelry, you would have a taxable gain of $8,999. There is no currently no paperwork or 1099 forms that you would receive at year end. But the IRS expects you to voluntarily report this gain on your tax return. TAX TIP OF THE DAY... year end tax planning BEFORE 2018
Sorry America, but you will lose many beloved tax deductions starting in 2018. So it's time to party like it's 1999!!! LAST CALL. You have a few days left to squeeze in some of your favorite tax deductions for possibly the last time ever: 1) farewell charity donations... most taxpayers won't deduct charity donations anymore... LAST CALL. Load up the car with the clothing donations and get a receipt. Pre-pay your church donations by 12/31. 2) farewell home equity loan interest... LAST CALL. If you are in the middle of closing a home equity loan deal, finalize by 12/31. If you were considering a home equity loan in the next 12 months, DO IT NOW by 12/31. 3) farewell employee mileage and expense deductions... LAST CALL. If you need office furniture, tools, equipment, supplies, etc. BUY NOW by 12/31. 4) farewell moving expenses... LAST CALL. If you are in the middle of a move, pay any related expenditures such as truck rentals by 12/31. 5) farewell alimony deduction... LAST CALL. If you are negotiating alimony payments, sign the documents by 12/31 in order to deduct. The ramifications of this tax change alone are staggering and could cost/save many thousands of dollars over the alimony payment period. (Conversely, if you are negotiating alimony income, do not sign the documents until 2018 to have tax free alimonay income.) 6) farewell investment advisor fees... LAST CALL. Pre-pay 2018 fees by 12/31 if possible. 7) farewell deductions for property tax, sales tax, state tax, local tax... most taxpayers won't deduct taxes anymore... LAST CALL. If you have a bill in hand, pay it early by 12/31. But you aren't allowed to pre-pay taxes without a bill or payment voucher. Some good news: Certain of the above have grandfather rules which will still allow deductions for existing home equity loan interest and alimony. The $250 teacher deduction was left intact. The AMT tax will be less. Overall tax rates are lower. Many businesses get a new generous 20% deduction. SHARE WITH A FRIEND. TAX TIP OF THE DAY... deduct your Christmas tree?
These are the different ways that clients have suggested that we deduct their home Christmas trees: 1) Donate the dried out tree as fire wood to a qualified charity. 2) Plant the dried out tree in the backyard to start your tree farm business. Failed business expenses go on schedule D. 3) Burn the dried out tree in the fireplace and deduct as home office "heating utilities". 4) Take photos of yourself with the dried out tree and post on your business web site... deduct as advertising. 5) Invite business associates over Christmas Eve/Day and discuss business around the dried out tree... deduct as business decorations. 6) When all else fails... bury in "Miscellaneous" expense and cross your fingers for 3 years. Bah Humbug! IRS says none of these ideas work... unless you are Jewish. Merry Christmas friends and taxpayers across America!!! SHARE WITH A FRIEND. If you need any help... www.baboiancpa.com TAX UPDATE... Tax notice avalanche hits small businesses
An onslaught of tax notices hitting about 46,000 of Pennsylvania's smallest companies has business owners and tax professionals alike scratching their heads — and, in some cases, digging through massive piles of receipts. These reviews have caused headaches, and sometimes substantial costs, for one-man and mom-and-pop shops as they struggle to figure out how to substantiate what they say are run-of-the-mill business expenses, according to tax practitioners and small business advocacy groups. State officials have acknowledged issues with the reviews and say they have changed their procedures to make the process easier for business owners. Some tax professionals, though, remain skeptical. Source: Central Penn Business Journal 10/27/17 SHARE WITH A FRIEND. TAX TIP OF THE DAY... child's first job, need to file tax returns?
Federal... you should file to get back any tax withholding. However the child may not be required to file if total income is under $6,300 and comprised of only W-2s. PA... REQUIRED if received even the smallest W-2 Local... REQUIRED if received even the smallest W-2 SHARE WITH A FRIEND. If you need a tax appointment... www.baboiancpa.com TAX TIP OF THE DAY... deduct your pet fish?
Now that I have your attention, it's time to organize your personal income tax record keeping system for 2017. You need 5 file folders to toss receipts into throughout the year. If you don't have a receipt... toss a post it in instead with date, amount paid and details. 1) Medical, Dental, Vision 2) Taxes 3) Charity 4) Employee work expenses 5) Ask my CPA SHARE WITH A FRIEND. If you need any help... www.baboiancpa.com TAX TIP OF THE DAY... deduct business credit card costs
1) Deduct credit card CHARGES for work or business expenses. Use the charge date, not the payment date. 2) Deduct INTEREST expense - allowed for business owners, but not allowed for employees. 3) Deduct ANNUAL FEES SHARE WITH A FRIEND. If you need any help... www.baboiancpa.com |
AuthorDavid S. Baboian, CPA Archives
February 2018
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