Archive for Tax Planning

Saver’s Credit Can Help You Save For Retirement

Low- and moderate-income workers can take steps to save for retirement and earn a special tax credit.

The saver’s credit, also called the retirement savings credit, helps offset part of the first $2,000 workers voluntarily contribute to traditional or Roth Individual Retirement Arrangements (IRAs), SIMPLE-IRAs, SEPs, 401(k) plans, 403(b) plans for employees of public schools and certain tax-exempt organizations, 457 plans for state or local government employees, and the Thrift Savings Plan for federal employees. Also known as the retirement savings contributions credit, the saver’s credit is available in addition to any other tax savings that apply as a result of contributing to retirement plans. Read More

Written by | Posted in Individual • Retirement • Tax Planning

Paying Taxes on Household Helpers

If you employ someone to work for you around your house, it is important to consider the tax implications of this arrangement. While many people disregard the need to pay taxes on household employees, they do so at the risk of paying stiff tax penalties down the road.

As you will see, the rules for hiring household help are quite complex, even for a relatively minor employee, and a mistake can bring on a tax headache that most of us would prefer to avoid.

Commonly referred to as the “nanny tax”, these rules apply to you only if (1) you pay someone for household work and (2) that worker is your employee.

Household work is work that is performed in or around your home by baby-sitters, Read More

Written by | Posted in Individual • IRS • Tax Planning • Tax Tips

June 2015 Individual Due Dates

June 1 – Final Due Date for IRA Trustees to Issue Form 5498

Final due date for IRA trustees to issue Form 5498, providing IRA owners with the fair market value (FMV) of their IRA accounts as of December 31, 2014. The FMV of an IRA on the last day of the prior year (Dec 31, 2014) is used to determine the required minimum distribution (RMD) that must be taken from the IRA if you are age 70½ or older during 2015. If you are age 70½ or older during 2015 and need assistance determining your RMD for the year, please give this office a call. Otherwise, no other action is required and the Form 5498 can be filed away with your other tax documents for the year.

June 10 – Report Tips to Employer

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Written by | Posted in Individual • Tax Planning • Tax Tips

Using The Home Sale Gain Exclusion For More Than Just Your Home

With careful planning, and provided the rules are followed, the tax code allows the home sale gain exclusion every two years.

Let’s assume you own a home, perhaps a second (vacation) home, or maybe are even thinking about buying a fixer-upper and flipping it. With careful planning, it is possible to apply the full home sale exclusion to all three of the properties.

Here is how it works. The tax code allows you to exclude up to $250,000 ($500,000 for married couples) of gain from the sale of your primary residence if you have lived in it and owned it for two of the five years immediately preceding Read More

Written by | Posted in Capital Gains • Real Estate • Tax Planning • Tax Provision/Tax Reporting

Start 2015 Tax Planning Now! Part 4 (Final)

Tax Code Changes Create Challenges

How do you work and coordinate with attorneys and financial planners?

We make it a point to communicate with the client’s attorney and financial planner anytime we see anything of financial or legal significance that has happened or is likely to happen. For example, in some cases, by combining the estate and gift tax exemption with the proper use of certain irrevocable trust, millions of dollars in estate and gift taxes may be avoided. If we see that a client may potentially benefit from this type of strategy, we will work closely with his/her attorney and financial planner to implement a plan.

 

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Written by | Posted in Estate Planning Tax • Gift Tax • Individual • Tax Planning

Start 2015 Tax Planning Now! Part 3

Tax Code Changes Create Challenges

Inheritance taxes and estate planning are a growing concern for affluent baby boomers. What are some of the major issues?

In addition to the double step-up in basis on community property discussed above, the baby boom generation will benefit from some of the most generous estate tax loopholes in history. For example, married couples have complete spousal exemption from estate and gift tax when transferring property to each other. This has not always been the case.

For 2015, every person has a lifetime net gift and estate tax exemption up to $5.43 million. Considering that the top gift and estate tax rate is 40%, this exemption represents an Read More

Written by | Posted in Estate Planning Tax • Gift Tax • Tax Planning

Start 2015 Tax Planning Now! Part 2

Tax Code Changes Create Challenges

What should partners who married under California’s Equal Marriage Law be concerned about or plan for in terms of taxes?

Same sex marriage is now recognized in California. This means, from a tax perspective, same sex married couples face the same issues as opposite sex couples. They are also eligible to take advantage of what we call the “biggest tax loophole of all time” – the double step-up in basis on community property.

This is a section of the tax code that stipulates when property is held as community property and one spouse dies, the appreciation on the property is not taxed to the Read More

Written by | Posted in Same Sex Couples • Tax Planning

Start 2015 Tax Planning Now! Part 1

Tax Code Changes Create Challenges

What should small business owners focus on for 2015 tax planning?

An  important,  yet  often  overlooked,  issue  for small business owners is the choice of the form of entity under which they operate. For 2015, this will become critical as Congress contemplates major changes to  the  tax  code.  Currently, the maximum   corporate federal tax  rate  is  generally  less  than the maximum individual tax rate. This has led many business owners to consider converting their sole proprietorships and pass through entities (such as S corporations and LLCs) into C corporations, which are taxed at the lower corporate rate. Caution must be exercised before making this change, Read More

Written by | Posted in Small Business • Tax Planning

Should You Keep Home Improvement Records?

Article Highlights:

• Keeping home improvement records
• Home gain exclusion amounts
• Records may be required to avoid tax

Many taxpayers don’t feel the need to keep home improvement records, thinking the potential gain will never exceed the amount of the exclusion for home gains ($250,000 or $500,000 if both filer and spouse qualify) if they meet the 2-out-of-5-year use and ownership tests. Here are some situations when having home improvement records could save taxes: Read More

Written by | Posted in Capital Gains • Tax Planning

How To Claim The Adoption Credit

The adoption tax credit provides an incentive for individuals or families to adopt a child. You may qualify for the adoption credit if you adopted or attempted to adopt a child in 2014, and paid qualified expenses relating to the adoption. The credit is valued at up to $13,190 for each effort to adopt an eligible child. The effort ends when the child is adopted. For 2014, the adoption credit is a nonrefundable credit

A credit for adoption is available for persons who:

• Adopt a domestic (US) child under the age of 18
• Adopt a domestic special needs child (certified by a state agency)
• Adopt a foreign child whose adoption became final in the current tax year Read More

Written by | Posted in Individual • Specialty Tax Incentives • Tax Planning

Do I Have To File A Tax Return?

Article Highlights:

• When You Are Required to File
• Self-Employed Taxpayers
• Filing Thresholds
• Benefits of Filing Even When Not Required to File
• Refundable Tax Credits

This is a question many taxpayers ask during this time of year, and the question is far more complicated than people believe. To fully understand, we need to consider that there are times when individuals are REQUIRED to file a tax return, and then there are times Read More

Written by | Posted in Income Tax • Tax Planning

Individual Estimated Tax Payments 2015 Start Soon

Article Highlights:

• Pay-as-you-go tax system
• Tax law changes affecting estimates
• Underpayment penalties
• Safe harbor estimates

Our tax system is a “pay-as-you-go” system, and if your pre-paid amount is not enough, you become liable for non-deductible interest penalties. To facilitate that concept, the government has provided several means of assisting taxpayers in meeting the “pay-as-you-go” requirement. The primary among these include: Read More

Written by | Posted in Tax Planning • Tax Tips
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