The Tax Cuts and Jobs Act (TCJA) put some sharper teeth into the "kiddie tax" rules. But with some astute planning, parents can avoid dire tax consequences. Starting this year, the calculation used to tax unearned income above an annual threshold received by a dependent child under age 19 (or a full-time student under age 24) is based on the federal income tax rates for estates and trusts. The resulting kiddie tax is generally greater than it would be under the old rules that said unearned income should be taxed at the top tax rate of the child's parents. Now, the estates and trusts tax brackets are more compressed than the individual brackets for parents, and higher rates kick in sooner. The good news is that you may be able to cut the kiddie tax down to size if you apply one or more of the following strategies: 1. Minimize transfers. Don't go overboard putting money in your child's name. No kiddie tax is due if the child's 2018 investment income stays below $2,100. This kiddie tax threshold stays the same as it was in 2017. 2. Monitor the situation. As the year progresses, you may avoid transactions that would trigger the kiddie tax. For instance, you might defer short-term gains on sales of securities. 3. Invest tax-wisely. Consider investments in growth stocks that produce little or no dividend income, or tax-free municipal bonds or bond funds. Time your investments so that any unearned income is only collected when it falls below the $2,100 threshold. 4. Use other methods of transferring income. One possibility is to have your teenager work for your company during the summer. Because this income is "earned," it doesn't count towards the kiddie tax calculation. Give us a call if you have questions about how the kiddie tax may affect your situation. "Tax Tips" are published weekly to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office. The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance. We are trusted CPA advisors servicing Burr Ridge, Hinsdale, Willowbrook, Darien, Naperville, and all Chicagoland area. Do you need assistance with your business and/or personal tax returns? Would you like to have a trusted source for your accounting, allowing you additional time to focus on increasing your business? Do you use QuickBooks, or plan to in the future, for your accounting? We include these in all our service packages, customized to fit your personal or business needs. We are currently accepting new clients. Your initial consultation is free, so you have nothing to lose and everything to gain. Our experienced staff is available to help you streamline your accounting, giving you more free time for yourself. Set up an appointment today by calling (630) 320-3720 or email us at info@monarchaccountinggroup.com. For more free resources, such as Tax Rates, Tax Organizers, and Record Retention Schedules, access our website www.monarchaccountinggroup.com. Monarch Accounting Group, Inc 145 Tower Drive, Suite 4 Burr Ridge, IL 60527 Phone (630) 320-3720
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The IRS recently issued its annual list of the Dirty Dozen tax scams to watch out for throughout the year. Here are three top scam themes to come out of the list, plus ways to protect yourself from them: 1. Phishing: With phishing, a criminal uses the bait of an email or fake website to lure victims into providing personal information. For instance, the sender may pretend to be from the IRS. In a recent twist, criminals are directing refunds to their victims' bank accounts, and then using lies, threats and intimidation to convince the victims to hand over the money using various methods to collect the refunds. To combat phishing:
Typically, the caller demands that you pay a bogus tax bill in cash, usually through a wire transfer or a prepaid debit or gift card. They may also leave urgent callback requests via robo-calls or phishing emails. The IRS advises the following:
The IRS says it will continue to pursue tax returns that use someone else's Social Security information. But taxpayers can help themselves. Here's how:
"Tax Tips" are published weekly to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office. The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance. We are trusted CPA advisors servicing Burr Ridge, Hinsdale, Willowbrook, Darien, Naperville, and all Chicagoland area. Do you need assistance with your business and/or personal tax returns? Would you like to have a trusted source for your accounting, allowing you additional time to focus on increasing your business? Do you use QuickBooks, or plan to in the future, for your accounting? We include these in all our service packages, customized to fit your personal or business needs. We are currently accepting new clients. Your initial consultation is free, so you have nothing to lose and everything to gain. Our experienced staff is available to help you streamline your accounting, giving you more free time for yourself. Set up an appointment today by calling (630) 320-3720 or email us at info@monarchaccountinggroup.com. For more free resources, such as Tax Rates, Tax Organizers, and Record Retention Schedules, access our website www.monarchaccountinggroup.com. Monarch Accounting Group, Inc 145 Tower Drive, Suite 4 Burr Ridge, IL 60527 Phone (630) 320-3720 The new Tax Cuts and Jobs Act (TCJA) includes numerous provisions designed to stimulate business growth, including changes in depreciation rules. A business entity can now write off the entire cost of qualified property the year it is placed in service. The following four changes may benefit businesses of all shapes and sizes: 1. Section 179's increased expensing limit Under Section 179 of the tax code, a business can expense the cost of qualified property placed in service during the year. The TCJA doubles the expensing limit to $1 million and increases the phaseout threshold to $2.5 million. (Note: The maximum Section 179 deduction can't exceed the amount of business income.) 2. Increased bonus depreciation The TCJA also authorizes a 100 percent bonus depreciation write-off for the cost of qualified property, doubled from 50 percent. This change is effective for property placed in service after Sept. 27, 2017. In addition, the new law expands the definition of qualified property to include used property acquired and placed into service at your company. However, the 100 percent bonus depreciation deduction is temporary. It begins to phase out after five years and vanishes completely after 2026. 3. Shortened real estate depreciation period Generally, building improvements must be depreciated over a lengthy 39-year period. However, a faster 15-year write-off was previously permitted for qualified leasehold improvement property, qualified restaurant improvement property and qualified retail improvement property. The TCJA consolidates these provisions with the intent of providing a 15-year depreciation period for qualified improvement property. 4. Better business vehicle tax breaks Luxury car rules limit the annual deductions a business can claim for business vehicles. Fortunately, the TCJA increases the business vehicle tax deduction limits for 2018 and thereafter. For instance, the maximum first-year deduction limit for a passenger car is multiplied by more than three, to $10,000 from $3,160. Plus, the vehicle may be eligible for an $8,000 bonus depreciation allowance. We can help you learn more about these depreciation tax breaks and how they affect your situation. Give us a call today. "Tax Tips" are published weekly to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office. The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance. We are trusted CPA advisors servicing Burr Ridge, Hinsdale, Willowbrook, Darien, Naperville, and all Chicagoland area. Do you need assistance with your business and/or personal tax returns? Would you like to have a trusted source for your accounting, allowing you additional time to focus on increasing your business? Do you use QuickBooks, or plan to in the future, for your accounting? We include these in all our service packages, customized to fit your personal or business needs. We are currently accepting new clients. Your initial consultation is free, so you have nothing to lose and everything to gain. Our experienced staff is available to help you streamline your accounting, giving you more free time for yourself. Set up an appointment today by calling (630) 320-3720 or email us at info@monarchaccountinggroup.com. For more free resources, such as Tax Rates, Tax Organizers, and Record Retention Schedules, access our website www.monarchaccountinggroup.com. Monarch Accounting Group, Inc 145 Tower Drive, Suite 4 Burr Ridge, IL 60527 Phone (630) 320-3720 The new Tax Cuts and Jobs Act (TCJA) includes significant changes for individuals and businesses alike, enhancing some tax breaks and eliminating or reducing others. One new provision creates a new tax credit for employers who pay wages for family and medical leaves. Currently, the new credit has a short shelf life, taking effect in 2018 and only lasting through 2019. However, there's a chance it will be extended by future legislation. Eligible employers can claim a credit equal to a percentage of wages paid to qualifying employees on leave under the Family and Medical Leave Act (FMLA). Here's how it works The IRS has yet to issue official guidance, but here are some of the basics:
Finally, if the employer claims the credit, they can't also deduct the wages as regular business expenses. Usually, the credit will be more valuable to employers than the deduction. If you have questions about how this credit affects your situation, give us a call. "Tax Tips" are published weekly to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office. The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance. We are trusted CPA advisors servicing Burr Ridge, Hinsdale, Willowbrook, Darien, Naperville, and all Chicagoland area. Do you need assistance with your business and/or personal tax returns? Would you like to have a trusted source for your accounting, allowing you additional time to focus on increasing your business? Do you use QuickBooks, or plan to in the future, for your accounting? We include these in all our service packages, customized to fit your personal or business needs. We are currently accepting new clients. Your initial consultation is free, so you have nothing to lose and everything to gain. Our experienced staff is available to help you streamline your accounting, giving you more free time for yourself. Set up an appointment today by calling (630) 320-3720 or email us at info@monarchaccountinggroup.com. For more free resources, such as Tax Rates, Tax Organizers, and Record Retention Schedules, access our website www.monarchaccountinggroup.com. Monarch Accounting Group, Inc 145 Tower Drive, Suite 4 Burr Ridge, IL 60527 Phone (630) 320-3720 Tick, tick, tick … the deadline for filing your 2017 tax return is rapidly approaching. The traditional due date is April 15, but you technically have until April 17 to file your 2017 return. Why? April 15 is a Sunday and April 16 is Emancipation Day (a holiday in Washington D.C.). Luckily, if you know you won't have time to file by April 17, you still have options. Simply file an extension (using Form 4868) by the April 17 deadline to get an automatic six-month filing extension to Oct. 15. Of course, this is a lifesaver if you're behind, but a filing extension may also provide the following benefits:
If you think you'll owe money after filing, make a good-faith estimated payment of your tax bill by April 17. To avoid an underpayment penalty, pay at least 90 percent of your 2017 tax liability or 100 percent of your 2016 tax liability (110 percent if your adjusted gross income exceeded $150,000). "Tax Tips" are published weekly to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office. The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance. We are trusted CPA advisors servicing Burr Ridge, Hinsdale, Willowbrook, Darien, Naperville, and all Chicagoland area. Do you need assistance with your business and/or personal tax returns? Would you like to have a trusted source for your accounting, allowing you additional time to focus on increasing your business? Do you use QuickBooks, or plan to in the future, for your accounting? We include these in all our service packages, customized to fit your personal or business needs. We are currently accepting new clients. Your initial consultation is free, so you have nothing to lose and everything to gain. Our experienced staff is available to help you streamline your accounting, giving you more free time for yourself. Set up an appointment today by calling (630) 320-3720 or email us at info@monarchaccountinggroup.com. For more free resources, such as Tax Rates, Tax Organizers, and Record Retention Schedules, access our website www.monarchaccountinggroup.com. Monarch Accounting Group, Inc 145 Tower Drive, Suite 4 Burr Ridge, IL 60527 Phone (630) 320-3720 A new spending measure signed on Feb. 9 (the Bipartisan Budget Act of 2018) did more than avoid a government shutdown. It also extended about 30 tax breaks that had expired after 2016. Most of the extensions are retroactive to 2017, but last just one year, including these four: 1. Tuition and fees deduction: This deduction for tuition and related fees is claimed above the line in lieu of a higher education credit. The deduction is capped at $4,000 for single filers with adjusted gross income (AGI) of $65,000 or less ($130,000 or less for married joint filers) and at $2,000 for single filers with AGI of $80,000 or less ($160,000 or less for married joint filers). Here's what to know: There are two credits that may be more valuable than the tuition and fees deduction: the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC). The maximum annual AOTC is $2,500 per student and the maximum LLC is $2,000 per tax return. Credits are generally more valuable than deductions because they directly reduce your taxes, rather than just lowering your taxable income. 2. Mortgage forgiveness deduction: Usually, debt forgiveness creates taxable income, but the act reinstates a special exclusion for the cancellation of qualified mortgage debts of up to $2 million. Here's what to know: This exclusion only applies to debt on a principal residence. It isn't available for a second home. 3. Mortgage insurance deduction: Homeowners can now deduct mortgage insurance premiums paid or accrued in 2017, subject to a phaseout above $100,000 AGI. Here's what to know: Unlike mortgage debt forgiveness, this tax break can be claimed on one other home beside your principal residence. 4. Residential energy credit: This tax credit, which expired and has been revived many times in the past, is equal to 10 percent of the cost of energy-saving improvements installed in a home, such as a new furnace or central air conditioning. Here's what to know: There's a lifetime credit cap of $500 (plus limits of $200 for windows and skylights). The $500 cap is reduced by credits claimed in prior years. These tax breaks may be claimed on your 2017 tax return if you haven't filed it yet. If you've already filed, you'll need to file an amended return to benefit from them. Call us if you have questions. "Tax Tips" are published weekly to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office. The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance. We are trusted CPA advisors servicing Burr Ridge, Hinsdale, Willowbrook, Darien, Naperville, and all Chicagoland area. Do you need assistance with your business and/or personal tax returns? Would you like to have a trusted source for your accounting, allowing you additional time to focus on increasing your business? Do you use QuickBooks, or plan to in the future, for your accounting? We include these in all our service packages, customized to fit your personal or business needs. We are currently accepting new clients. Your initial consultation is free, so you have nothing to lose and everything to gain. Our experienced staff is available to help you streamline your accounting, giving you more free time for yourself. Set up an appointment today by calling (630) 320-3720 or email us at info@monarchaccountinggroup.com. For more free resources, such as Tax Rates, Tax Organizers, and Record Retention Schedules, access our website www.monarchaccountinggroup.com. Monarch Accounting Group, Inc 145 Tower Drive, Suite 4 Burr Ridge, IL 60527 Phone (630) 320-3720 The Tax Cuts and Jobs Act has grabbed the headlines in 2018. However, if you still have to file your 2017 tax return, it will generally be based on prior law. For example, you may itemize deductions under the old rules on your 2017 return, even though you expect to claim the standard deduction in 2018. Here's a checklist of common errors for filers to avoid:
We can help you maximize the available benefits, while minimizing potential problems like those above. To help with the process, organize your records, receipts and other tax return information so you'll have everything we need when you come in to our office. Give us a call if you have questions. And don't forget: The tax return filing deadline is April 17. Make your appointment now, and let us know if you need more time to file your return. "Tax Tips" are published weekly to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office. The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance. We are trusted CPA advisors servicing Burr Ridge, Hinsdale, Willowbrook, Darien, Naperville, and all Chicagoland area. Do you need assistance with your business and/or personal tax returns? Would you like to have a trusted source for your accounting, allowing you additional time to focus on increasing your business? Do you use QuickBooks, or plan to in the future, for your accounting? We include these in all our service packages, customized to fit your personal or business needs. We are currently accepting new clients. Your initial consultation is free, so you have nothing to lose and everything to gain. Our experienced staff is available to help you streamline your accounting, giving you more free time for yourself. Set up an appointment today by calling (630) 320-3720 or email us at info@monarchaccountinggroup.com. For more free resources, such as Tax Rates, Tax Organizers, and Record Retention Schedules, access our website www.monarchaccountinggroup.com. Monarch Accounting Group, Inc 145 Tower Drive, Suite 4 Burr Ridge, IL 60527 Phone (630) 320-3720 The historic Tax Cuts and Jobs Act (TCJA) provides tax breaks to individuals, but also repeals or reduces certain cherished deductions. As a result, the 2017 return you file this year may be your last chance to claim these five write-offs: 1. Mortgage interest: Currently, you can deduct mortgage interest paid on a qualified residence for acquisition debt of up to $1 million and home equity debt of up to $100,000. The new law reduces the acquisition debt level to $750,000 on new loans and eliminates the deduction for home equity debt after 2017, except if the home equity loan is used to buy, build or substantially improve the taxpayer’s home that secures the loan. 2. Miscellaneous expenses: On your 2017 return, you can deduct miscellaneous expenses above 2 percent of your adjusted gross income (AGI). This includes unreimbursed employee business expenses and income-production expenses like investment and tax advisory fees. The TCJA eliminates all itemized miscellaneous deductions for 2018 and subsequent years. 3. State and local taxes: You can still deduct the full amount of your property taxes on your 2017 return, in addition to either your sales taxes or state and local income taxes. The new TCJA law effective in 2018 limits the annual deduction for state and local taxes (SALT) to $10,000. 4. Casualty and theft losses: For 2017 returns, you may deduct unreimbursed casualty and theft losses above 10 percent of your AGI, after subtracting $100 per event. The TCJA repeals this deduction, except for losses in federally declared disaster areas, beginning in 2018. 5. Moving expenses: If you moved in 2017 for job-related reasons, you may be able to deduct your moving expenses (special rules apply). However, this deduction is repealed by the new law beginning in 2018, except for expenses of active duty military personnel. Other tax deductions have been modified or repealed. Schedule an appointment with us to learn how the TCJA affects you situation. "Tax Tips" are published weekly to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office. The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance. We are trusted CPA advisors servicing Burr Ridge, Hinsdale, Willowbrook, Darien, Naperville, and all Chicagoland area. Do you need assistance with your business and/or personal tax returns? Would you like to have a trusted source for your accounting, allowing you additional time to focus on increasing your business? Do you use QuickBooks, or plan to in the future, for your accounting? We include these in all our service packages, customized to fit your personal or business needs. We are currently accepting new clients. Your initial consultation is free, so you have nothing to lose and everything to gain. Our experienced staff is available to help you streamline your accounting, giving you more free time for yourself. Set up an appointment today by calling (630) 320-3720 or email us at info@monarchaccountinggroup.com. For more free resources, such as Tax Rates, Tax Organizers, and Record Retention Schedules, access our website www.monarchaccountinggroup.com. Monarch Accounting Group, Inc 145 Tower Drive, Suite 4 Burr Ridge, IL 60527 Phone (630) 320-3720 It's 2018, so it's too late to cut your 2017 tax bill…right? Wrong. If you qualify, you can deduct all or part of a contribution to a traditional IRA made before April 17, 2018 on your 2017 tax return. If you don't qualify for a deduction you may contribute to a Roth IRA instead. In that case, the contribution is nondeductible. With either type of IRA, you can contribute up to $5,500 ($6,500 if you're age 50 or older) for the 2017 tax year. 1. Traditional IRAs: The deduction for contributions phases out if your income exceeds certain levels and you participate in a 401(k) or other employer-provided retirement plan (or your spouse participates). Distributions are generally taxable, and a 10 percent penalty usually applies to distributions before age 59½. Contribution tip: If you file your 2017 return early enough, you can use your tax refund to fund a deductible contribution. The IRS doesn't mind as long as the IRA money is deposited by April 17. 2. Roth IRAs: The ability to contribute to a Roth IRA phases out if your income exceeds certain levels, depending on your filing status. Unlike traditional IRAs, you can never deduct Roth contributions, but distributions after age 59½ are generally exempt from tax and the 10 percent penalty. Although there are numerous other factors to consider, you may contribute to a traditional IRA if your goal is to reduce your 2017 tax liability, while you may prefer a Roth IRA if your goal is to secure tax-exempt payouts in retirement. No matter which approach you take, the due date for contributions for the 2017 tax year is April 17, even if you obtain a filing extension. "Tax Tips" are published weekly to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office. The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance. We are trusted CPA advisors servicing Burr Ridge, Hinsdale, Willowbrook, Darien, Naperville, and all Chicagoland area. Do you need assistance with your business and/or personal tax returns? Would you like to have a trusted source for your accounting, allowing you additional time to focus on increasing your business? Do you use QuickBooks, or plan to in the future, for your accounting? We include these in all our service packages, customized to fit your personal or business needs. We are currently accepting new clients. Your initial consultation is free, so you have nothing to lose and everything to gain. Our experienced staff is available to help you streamline your accounting, giving you more free time for yourself. Set up an appointment today by calling (630) 320-3720 or email us at info@monarchaccountinggroup.com. For more free resources, such as Tax Rates, Tax Organizers, and Record Retention Schedules, access our website www.monarchaccountinggroup.com. Monarch Accounting Group, Inc 145 Tower Drive, Suite 4 Burr Ridge, IL 60527 Phone (630) 320-3720 If you contributed to charity in 2017, you can generally deduct the full amount on your tax return with one caveat: You must have the records to back up your claims in case the IRS comes calling. If you donated money, the documentation is fairly simple. But special rules apply if you donated property or you received benefits in return for your gift. Monetary contributions For monetary contributions, such as gifts by check or credit and debit card, you must have a bank record or written communication from a qualified charitable organization showing the:
Property contributions Gifts of property often require extra tax return work. If the property increased in value from the day you purchased it and you've owned it for longer than a year, you can deduct the fair market value of the property on the date of the donation. Otherwise, your deduction is generally limited to what you paid for the item. Donations of property valued above $500 require a description of the donated property attached to your return. If the gift is valued at more than $5,000, you'll need to provide an independent appraiser's summary. If you received benefits in return for your gift Sometimes you may make a contribution and receive a benefit in return. With these "quid quo pro" contributions, you can deduct only the difference between the contribution amount and the value of the benefit. Suppose that you and your spouse attended a fundraising dinner that cost you $200 in total. The charity states that the meals were valued at $80, so your deduction is limited to $120 ($200 - $80 = $120). Don't miss out on claiming the charitable donations you're entitled to deduct on your 2017 return — but be sure you have the proof you need. Give us a call if you have questions. "Tax Tips" are published weekly to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office. The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance. We are trusted CPA advisors servicing Burr Ridge, Hinsdale, Willowbrook, Darien, Naperville, and all Chicagoland area. Do you need assistance with your business and/or personal tax returns? Would you like to have a trusted source for your accounting, allowing you additional time to focus on increasing your business? Do you use QuickBooks, or plan to in the future, for your accounting? We include these in all our service packages, customized to fit your personal or business needs. We are currently accepting new clients. Your initial consultation is free, so you have nothing to lose and everything to gain. Our experienced staff is available to help you streamline your accounting, giving you more free time for yourself. Set up an appointment today by calling (630) 320-3720 or email us at info@monarchaccountinggroup.com. For more free resources, such as Tax Rates, Tax Organizers, and Record Retention Schedules, access our website www.monarchaccountinggroup.com. Monarch Accounting Group, Inc 145 Tower Drive, Suite 4 Burr Ridge, IL 60527 Phone (630) 320-3720 |
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