Jeff England

In this episode, the discussion is about making the decision to change your financial life.

Direct download: MSC038_You_and_Money.mp3
Category:MSC -- posted at: 9:24pm CDT

In this episode, I discuss investing, experts, and cryptocurrencies

Direct download: MSC037_Investing_Experts_and_Crytos.mp3
Category:MSC -- posted at: 10:03pm CDT

In this episode, I discuss financial scams and fraud when it comes to investing.

Direct download: MSC036_Financial_Scams.mp3
Category:MSC -- posted at: 6:43pm CDT

In this episode, I discuss investing, return on investments, and more.

Direct download: MSC035_Investing_ROI.mp3
Category:MSC -- posted at: 9:45pm CDT

In this episode, I discuss losing money investing in ETNs and the risks involved.

 

Direct download: MSC034_Losing_Money_ETNs.mp3
Category:MSC -- posted at: 4:02pm CDT

A verse one teaser of "She Loves  Her Country"

Direct download: She_Loves_the_Country_Verse_1_Teaser.mp3
Category:music -- posted at: 8:04pm CDT

Direct download: Life_of_the_Party.mp3
Category:music -- posted at: 9:58pm CDT

Direct download: All_the_Crazy_Things.mp3
Category:music -- posted at: 9:56pm CDT

For previous episodes, visit the Millionaire Starter Club website.

Direct download: 033_IPOs.mp3
Category:MSC -- posted at: 7:29am CDT

For more information, visit the Your Tax Teacher website.

Direct download: 272_Restructuring_and_Tax_Consequences.mp3
Category:general -- posted at: 9:04pm CDT

For previous episodes and information for this episode, visit the Millionaire Starter Club website.

Direct download: 032_Changing_Your_Financial_Life.mp3
Category:MSC -- posted at: 9:11pm CDT

For the show notes and previous episodes, visit the Your Tax Teacher website.

Direct download: 271_Worthless_Personal_Bad_Debt.mp3
Category:general -- posted at: 8:47pm CDT

For the show notes and previous episodes, visit the Millionaire Starter Club Website.

Direct download: 031_Mistakes_Investors_Make.mp3
Category:MSC -- posted at: 9:40pm CDT

For the show notes and previous episodes, visit the Millionaire Starter Club website.

Direct download: 030_Taking_Control_of_Your_Financial_Life.mp3
Category:MSC -- posted at: 9:54am CDT

For the show notes and previous episodes, visit the Your Tax Teacher website.

Direct download: 270_What_Happened_to_Form_1040ez.mp3
Category:general -- posted at: 9:40pm CDT

For previous episodes and show notes, visit the Millionaire Starter Club website.

Direct download: 029_Building_Wealth_Building_Dreams.mp3
Category:MSC -- posted at: 10:45pm CDT

For previous episodes and show notes, visit the Your Tax Teacher website.

Direct download: 269_Filing_Your_Tax_Return.mp3
Category:general -- posted at: 8:59pm CDT

For the show notes and previous episodes, visit the Millionaire Starter Club website.

Direct download: 028_MaximizingYour_Goals.mp3
Category:MSC -- posted at: 10:44pm CDT

For previous episodes, vist the Your Tax Teacher website

Direct download: 268_Whjen_WIll_the_IRS_Begin_Processing_Tax_Returns.mp3
Category:general -- posted at: 9:30pm CDT

For past episodes of the Millionaire Starter Club, visit the Millionaire Starter Club website.

Direct download: 027__2019_Millionaire_Starter_Club_Episodes_Update.mp3
Category:MSC -- posted at: 9:46pm CDT

A song that I wrote called "A Love Like Ours"

Direct download: A_Love_Like_Ours.mp3
Category:music -- posted at: 9:23pm CDT

For previous episodes and the show notes, visit the Your Tax Teacher website.

Direct download: 267_Five_Items_that_Came_Out_from_2017_Business_Tax_Reform.mp3
Category:general -- posted at: 10:20pm CDT

For previous episodes of the Millionaire Starter Club and the Earnings Calendar, visit the Millionaire Starter Club website.

Direct download: 026_Did_You_Achieve_Your_2018_Goals.mp3
Category:MSC -- posted at: 9:24pm CDT

For previous episodes of the Your Tax Teacher Podcast (Navigating the Tax Jungle), visit the Your Tax Teacher website.

Direct download: 266_2019_Standard_Deductions_and_Other_Amounts.mp3
Category:general -- posted at: 8:34pm CDT

For previous episodes of the Millionaire Starter Club and the Earnings Calendar, visit the Millionaire Starter Club website.

Direct download: 025_Bear_Market_Investment_Statergies.mp3
Category:MSC -- posted at: 9:02pm CDT

For previous episodes of the Your Tax Teacher Navigating the Tax Jungle episodes, visit the Your Tax Tax Teacher website.

Direct download: 265_Have_You_Done_These_Five_Things_for_Tax_Planning.mp3
Category:general -- posted at: 8:51pm CDT

For previous episodes of the Millionaire Starter Club and the Earnings Calendar, visit the Millionaire Stater Club website.

Direct download: 024_First_Investment.mp3
Category:MSC -- posted at: 8:54pm CDT

For previous episodes of the Millionaire Starter Club and the Earnings Calendar, visit the Millionaire Starter Club website.

 

 

 

Direct download: 023_Creating_an_Investment_Strategy.mp3
Category:MSC -- posted at: 8:37pm CDT

For the show notes and previous episodes, visit the Your Tax Teacher website.

Direct download: 264_Qualified_Business_Deduction.mp3
Category:general -- posted at: 8:48pm CDT

For previous episodes of the Millionaire Starter Club and the Earnings Calendar, visit the Millionaire Stater Club Website.

Direct download: 022_What_Is_It_You_Wanna_Be.mp3
Category:MSC -- posted at: 10:18pm CDT

For the show notes and previous Your Tax Teacher Navigating the Tax Jungle episodes, visit the Your Tax Teacher website.

Direct download: 263_NOLs_Under_Tax_Reform.mp3
Category:general -- posted at: 9:44pm CDT

For the show notes and past episodes, visit the Millionaire Starter Club website.

Direct download: 021_Traits_of_Success.mp3
Category:MSC -- posted at: 10:08pm CDT

Visit the Your Tax Teacher website for the show notes and past episodes.

Direct download: 262_Meals_and_Entertainment__Remote_Sellers_Update.mp3
Category:general -- posted at: 9:48pm CDT

For show notes and past episodes, visit the Millionaire Starter Club website.

Direct download: 020_Investments_too_Good_to_be_True.mp3
Category:MSC -- posted at: 9:17pm CDT

Visit the Your Tax Teacher website for the show notes and past episodes.

Direct download: 261_Top_Tax_Questions.mp3
Category:general -- posted at: 9:26pm CDT

For the show notes and past episodes, visit the Millionaire Starter Club website.

Direct download: 019_What_Do_Successful_People_Have_in_Common.mp3
Category:MSC -- posted at: 9:46pm CDT

For the show notes and past episodes, visit the Your Tax Teacher website.

Direct download: 260_Reporting_Cryptocurrency_Transactions_to_the_IRS.mp3
Category:general -- posted at: 8:32pm CDT

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Direct download: 018_Risks_of_Cryptocurrency_Investing.mp3
Category:MSC -- posted at: 8:27pm CDT

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Direct download: 259_Tax_Reform_and_Withholding.mp3
Category:general -- posted at: 10:36pm CDT

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Direct download: 017_Financial_Success_and_Wealth_Building.mp3
Category:MSC -- posted at: 9:31pm CDT

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Direct download: 258_State_and_Lcoal_Tax_Itemize_Deduction_Update.mp3
Category:general -- posted at: 6:56pm CDT

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Direct download: 016_Hedge_Fund_Top_Stock_Holdings.mp3
Category:MSC -- posted at: 8:06pm CDT

The show notes for this episode and past episodes can be found at the Your Tax Teacher website.

Direct download: 257_Arkansas_Sales_Tax_Issues.mp3
Category:general -- posted at: 8:20pm CDT

Visit the Millionaire Starter Club Website for the show notes and past episodes.

Direct download: 015_Reasons_Stocks_Move_Higher.mp3
Category:MSC -- posted at: 9:28pm CDT

For this episode's show notes and past Navigating the Tax Jungle episodes, visit the Your Tax Teacher website.

Direct download: 256_32_Million_2019_Taxpayers.mp3
Category:general -- posted at: 8:51pm CDT

For this episode's show notes and past episodes, visit the Millionaire Starter Club website

Direct download: 014_Top_5_Most_Active_Stocks.mp3
Category:MSC -- posted at: 8:17pm CDT

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Direct download: 013_Investment_Suitability.mp3
Category:MSC -- posted at: 8:33pm CDT

For the show notes and past episodes, visit the Your Tax Teacher website.

Direct download: 255_Tax_Levy_Asset_Seizures_and_Liens.mp3
Category:general -- posted at: 10:01pm CDT

For the show notes and past episodes, visit the Your Tax Teacher website.

Direct download: 254_Dont_be_a_Victim.mp3
Category:general -- posted at: 9:43pm CDT

For this episode’s show notes or other episodes, visit the Millionaire Starter Club website.

Direct download: 012_Investing_Getting_Started.mp3
Category:MSC -- posted at: 8:37pm CDT

For the show notes and the all the Your Tax Teacher Navigating the Tax Jungle Episodes, visit the Your Tax Teacher website.

Direct download: 253_Form_8949_and_Schedule_D.mp3
Category:general -- posted at: 8:51pm CDT

For the show notes and past episode, visit the Millionaire Starter Club website.

Direct download: 011_Jumping_into_Mutual_Funds.mp3
Category:MSC -- posted at: 8:35pm CDT

Visit the Your Tax Teacher website for the show notes and past episodes at http://www.YourTaxTeacher.com.

Direct download: 252_2018_Form_1040_Draft.mp3
Category:general -- posted at: 9:46pm CDT

For the show notes and past episodes visit the Millionaire Starter Club.

Direct download: 010_Wealth_Building.mp3
Category:MSC -- posted at: 7:00pm CDT

Visit http://www.YourTaxTeacher.com for the show notes and past episodes.

Direct download: 251_Economic_Nexus.mp3
Category:general -- posted at: 4:00pm CDT

Visit the http://www.MillionaireStarterClub.com for the show notes and all Millionaire Starter Club episodes. 

Direct download: 009_Indexes.mp3
Category:MSC -- posted at: 8:00pm CDT

For information about this episode and other episodes, please visit the Your Tax Teacher Website at http://www.YourTaxTeacher.com

Sign up today for the newsletter and get a copy of the free “How Millionaires Reduce Their Tax Liability”.

Direct download: 250_Basis_in_a_Personal_Residence.mp3
Category:general -- posted at: 9:09pm CDT

Visit the Millionaire Starter Club website for the show notes about this episode.

Direct download: 008_How_Not_to_Invest.mp3
Category:MSC -- posted at: 9:31pm CDT

For information about this episode and other episodes, please visit the Your Tax Teacher Website

 

Direct download: 249_Meals_and_Entertainment_Tax_Reform.mp3
Category:general -- posted at: 8:11pm CDT

For more information about this episode or to download the free guide to creating an investment strategy visit http://www.MillionaireStarterClub.com.

Direct download: 007_Improving_Your_Financial_Health.mp3
Category:MSC -- posted at: 8:15pm CDT

Visit the website http://www.YourTaxTeacher.com website to for information about this episode.

Sign up today for the newsletter and get a copy of the free “How Millionaires Reduce Their Tax Liability”.

Direct download: 248_Lowering_Your_Tax_Liability.mp3
Category:general -- posted at: 9:23pm CDT

Information about this podcast episode can be found at http://www.MillionaireStarterClub.com

Direct download: 006_6_Secrets_of_Money.mp3
Category:MSC -- posted at: 10:54pm CDT

In this episode, I discuss some of the current trends and news regarding domicile and sales taxes on vehicles. 

Lately, it seems that Arkansas has been pursing vehicle purchasers who return their vehicle, total their vehicle, or have their vehicle before the owner’s licenses the vehicle for unpaid sales tax.  Arkansas’s Administrative Judges have been ruling against the taxpayer for the unpaid vehicle sales tax.

In Ohio, a taxpayer purchased a vehicle with the intention of taking the vehicle to Michigan where their second home was located.  Ohio ruled against the vehicle’s owner by ruling that the owner was an Ohio taxpayer based on the taxpayer’s primary residence being in the State of Ohio.

In Utah, a married couple filed a joint tax return that did not include the husband out-of-the country income.  Utah ruled that the taxpayer’s (husband) income should have been included on the Utah tax return finding that the taxpayer main residency was in Utah based on property, bank accounts, address of bills, vehicle, driver’s license, bank account, and voter registration.

Direct download: 247_2018_Sales_Tax_and_Domicle_Issues.mp3
Category:general -- posted at: 10:09pm CDT

For more detail about this week's episode, please visit http://www.MillionaireStarterClub.com/005.

Direct download: 005_Where_Most_People_Invest.mp3
Category:MSC -- posted at: 10:04pm CDT

Information about Casualty Losses under the 2017 tax reform law discussed in this episode can be found at http://www.yourtaxteacher.com/246.

Direct download: 246_2018_Casualty_Loss_Rules.mp3
Category:general -- posted at: 9:14pm CDT

For more information about this episode please visit the Millionaire Starter Club website at http://www.MillionaireStarterClub.com

Direct download: 004_Money_What_You_Wished_You_Knew.mp3
Category:MSC -- posted at: 9:50pm CDT

For this episode's show note, please visit the Millionaire Starter Club website at http://www.MillionaireStarterClub.com/003.

Direct download: 003_Free_is_Not_Free.mp3
Category:MSC -- posted at: 8:52pm CDT

For this episode notes, please visit http://www.YourTaxTeacher.com/245.

 

 

Direct download: 245_Vacation_Homes_Mortgage_Interest_and_Property_Taxes.mp3
Category:general -- posted at: 7:47pm CDT

Please visit the http://www.YourTaxTeacherWebsite/244 for this episode's show notes

Direct download: 244_2018_Medical_Expense_Deduction.mp3
Category:general -- posted at: 9:12pm CDT

In this episode, I discuss market turmoil. Episode information can be found at http://www.MillionaireStarterClub.com.

Direct download: 002_Market_Turmoil_April_29_2018.mp3
Category:MSC -- posted at: 9:49pm CDT

For this week's episode's show notes, please visit the Your Tax Teacher website at http://www.yourtaxteacher.com.

Direct download: 243_Prior_242_Tax_Episodes.mp3
Category:general -- posted at: 9:24pm CDT

In this week’s episode, I discuss upcoming episodes, webinars, and presentations related to the Supreme Court case SD vs. Wayfair.  Visit http://www.yourtaxteacher.com/242 for the show notes.

Direct download: 242_Taxes_There_is_More_to_DIscuss.mp3
Category:general -- posted at: 9:27pm CDT

In this episode, I discuss last minute tax ideas an whether to time to consider whether to file an extension. You can find this episode's show notes at http://www.yourtaxteacher.com/241.

Direct download: 241_Final_Week_Tax_Ideas_and_Tips.mp3
Category:general -- posted at: 9:30pm CDT

In this episode, I discuss creating rules for investing. For the show notes, please visit http://www.millionairestarterclub.com

Direct download: 001_Creating_Rules_for_Investing.mp3
Category:MSC -- posted at: 1:08pm CDT

The American Opportunity Credit was made permanent in 2015. 

The credit is an education credit that can be used if a taxpayer or a dependent of a taxpayer is attending a post-secondary school in pursuit of a certificate or degree.The American Opportunity Credit was made permanent in 2015.  The credit is an education credit that can be used if a taxpayer or a dependent of a taxpayer is attending a post-secondary school in pursuit of a certificate or degree.

A post-secondary school is defined as a college, university, community college, technical school, etc as long as the post-secondary school participates in federal aid.

The $2,500 credit can be claimed for tuition, course-related books, supplies, equipment, course fees, course materials, etc that are required for the first four years of a post-secondary education.

Expenses are not covered under the American Opportunity Credit are Room / Board Transportation Insurance Medical Expenses Student fees (not required) Same Expenses paid with tax-free educational assistance Same Expenses for other tax deductions, credits, or educational benefits

To qualify for the American Opportunity Credit,
1. The student must be at least half time 2. Has not completed a post-secondary education at the beginning of the year 3.  Can not be claimed for more than four (4) years 4.  The taxpayer or dependent can not have been convicted of a Federal / State felony drug conviction at the end of the year.

The credit is 100% of the first $2,000 of qualifying expenses and 25% of the next $2,500.  For example of the taxpayer or dependent had $3,000 of qualifying expenses, the credit would be 100% of the first $2,000 and 25% of the next $1,000 for a total credit of $2,250.   For qualifying expenses $4,000 and over, the credit is $2,500.

There are income limitations where the credit begins phasing out using the modifying gross income.

If the taxpayer is single the credit begins phasing out between $80,000 and $90,000.  The credit completely phases out at $90,000 for a single taxpayer.

If the taxpayer’s filing status is married filing jointly the credit begins phasing out between $160,000 and $180,000.  The credit completely phases out at $180,000 for taxpayers filing as married filing jointly.

For most taxpayers, the adjusted gross income (AGI) will be the modified gross income.   For taxpayers who have foreign income exclusion, foreign housing exclusion, foreign housing deduction, and exclusion of income by bonafide residents of American Samoa or Puerto Rico, taxpayers will add these exclusions and deductions to their adjusted gross income.

Taxpayers claiming the American Opportunity Credit will use Form 8863 to claim the educational credit.   The student (taxpayer or dependent) will receive a form 1098-T from the post-secondary school to claim the educational credit.

Direct download: 240_American_Opportunity_Tax_Credit.mp3
Category:general -- posted at: 9:20pm CDT

With tax reform, as tax preparers we expected that home equity loan interest was no longer going to be deductible after Congress passed the Tax Cuts and Jobs Act of 2017 that became law on December 22, 2018.

However, the IRS has advised taxpayers and taxpayers that they will look at what the home equity loan is being used for.

Is it being used for home improvements, purchase a home, remodeling, adding an addition on to the home. If so, the IRS said the interest for the home equity loan and home equity line of credit will still be deductible on schedule A.

If the home equity loan is being used to pay personal expenses, go to college, purchase a vehicle, then the interest for the home equity loan and the home equity line of credit will be deductible.

Of course, the deductibility of the home equity loan and the home equity line of credit is still limited to amount of the mortgage / loan. For most loans that closed after December 14, 2018, the mortgage limitation was $750,000. For loans that closed before December 14, 2018, the mortgage limitation was $1.1 million ($1 million mortgage and $100,000 home equity loan or home equity line of credit).

The IRS also provided insight and advice on how the mortgage for mortgage and home equity loans were secured by property to determine interest deductibility.

IRS provided three examples on their website to determine whether the home equity loan (home equity line of credit) was deductible. (Source: https://www.irs.gov/newsroom/interest-on-home-equity-loans-often-still-deductible-under-new-law)

Example 1: In January 2018, a taxpayer takes out a $500,000 mortgage to purchase a main home with a fair market value of $800,000. In February 2018, the taxpayer takes out a $250,000 home equity loan to put an addition on the main home. Both loans are secured by the main home and the total does not exceed the cost of the home. Because the total amount of both loans does not exceed $750,000, all of the interest paid on the loans is deductible. However, if the taxpayer used the home equity loan proceeds for personal expenses, such as paying off student loans and credit cards, then the interest on the home equity loan would not be deductible.

Example 2: In January 2018, a taxpayer takes out a $500,000 mortgage to purchase a main home. The loan is secured by the main home. In February 2018, the taxpayer takes out a $250,000 loan to purchase a vacation home. The loan is secured by the vacation home. Because the total amount of both mortgages does not exceed $750,000, all of the interest paid on both mortgages is deductible. However, if the taxpayer took out a $250,000 home equity loan on the main home to purchase the vacation home, then the interest on the home equity loan would not be deductible.

Example 3: In January 2018, a taxpayer takes out a $500,000 mortgage to purchase a main home. The loan is secured by the main home. In February 2018, the taxpayer takes out a $500,000 loan to purchase a vacation home. The loan is secured by the vacation home. Because the total amount of both mortgages exceeds $750,000, not all of the interest paid on the mortgages is deductible. A percentage of the total interest paid is deductible (see Publication 936).

Direct download: 239_2018_Home_Equity_Loans_and_HELOC_Interest.mp3
Category:general -- posted at: 9:43pm CDT

Medical expenses are still deductible on your tax return even after tax reform as an itemized deduction. Of course, the amount of your medical expense itemized deduction depends on the amount of your medical expenses and your adjusted gross income.

In order to take a medical expenses as an itemized deduction, your medical expenses have to be more than 7.5% of your adjusted gross income (AGI) on the Form 1040. For example, if your AGI is $100,000, your medical expenses would need to be more than $7,500 before you could take the medical expenses as an itemized deduction.

Types of medical expenses that can be deducted are health insurance, doctor, surgeons, hospital care, eye care, opticians, prescriptions, nursing home care, service animals, and dental care.

Other medical expenses that can be deducted are: weight loss programs diagnosed for a specific disease or medical condition by a physician.

Transportation expenses including mileage for medical purposes are deductible. Costs to attend a conference related to chronic disease is deductible. However, the lodging and food while you are attending the conference is not deductible.

Self-employed health insurance may be deductible on the first page of Form 1040 or on Schedule A depending on the taxpayer’s self-employment net income.

The deductibility cost for a long term care policy is limited based on age. For 2018, the limitations for long-term care insurance policy is

Age attained before the close of the taxable year Maximum deduction for year
40 or less $420

More than 40 but not more than 50 $780

More than 50 but not more than 60 $1,560

More than 60 but not more than 70 $4,160

More than 70 $5,200

Per diem long-term care policies are limited to long-term care expenses of $360 per day.

Over the counter drugs, nicotine patches, supplements, etc are not deductible.

Direct download: 238_Medical_Expense_Deductions.mp3
Category:general -- posted at: 12:00pm CDT

Interest income is taxable income unless it is non-taxable income..

Depending on whether it’s taxable or non-taxable income is how it gets reported on the Form 1040. While both types of interest is reported on the Form 1040, taxable interest income gets added to a taxpayer’s taxable income while non-taxable income does get added to taxable income.

U.S. Treasury Notes and Bonds and Municipal Bonds (Munis) are types of non-taxable interest income.

However, Series EE U.S. Savings Bonds is taxable income along with bank interest (Checking, Savings, CDs, Money Markets, etc...) and corporate bond interest (OID, Bond Discount and Bond Premium Amortization, Accrued Bond Interest).

Other types of interest income are seller finance installment sales and notes receivable.

For seller finance through an installment sale, the seller should provide the buyer with an amortization schedule and get the buyer’s name and their social security number to report on Schedule B.

Schedule B is the tax form used to report interest and dividend income to report total interest and dividend income over $1,500. The amount reported on Schedule B will flow onto Form 1040. Taxpayers who have total dividend and interest income under $1,500 will the interest and dividend income on Form 1040 without using the Schedule B.

Direct download: 237_Interest_Income.mp3
Category:general -- posted at: 9:19pm CDT

When it comes to the tax year rolling over to the new year, most taxpayers will ask me if there are any deductions that can still take once the tax year rolls past December 31st.

While the answer is normally no, taxpayers can still contribute to a traditional IRA contributing up to $5,500 for both themselves and their spouse (if married). If the taxpayer(s) is or are over the age 50, the taxpayers can contribute up to $6,500 to a traditional IRA.

In order to qualify for a prior year tax deduction, the traditional IRA contribution must be made before April 15th.

Taxpayers who contribute to a traditional IRA before April 15th has the choice of taking the deduction for the IRA in the current year or the previous year.

 

Direct download: 236_The_One_Deduction_You_Can_Still_Take_for_2017.mp3
Category:general -- posted at: 10:30pm CDT

When it comes to home ownership deductions, there are three primary deductions that you can deduct against your adjusted gross income for homeowners on Schedule A (Itemized Deductions).

Property taxes can be deducted on property for which you pay taxes under the State and Local Taxes section on Schedule A. For 2017, there is no limitation of the amount of state and local taxes you can deduct against your adjusted gross income. Beginning on January 1, 2018, there is a $10,000 cap on the amount of state and local tax deduction when you file your taxes next year.

Mortgage interest is another itemized deduction that homeowners pay be able to take against their adjusted gross income. The mortgage interest deduction begins phasing out for mortgage debt over $1,000,000. Beginning after December 14, 2017, mortgage interest begins phasing out for mortgage debt over $750,000.

For 2017, home equity interest is deductible on the Schedule A for home equity less than $100,000. Beginning with 2018, home equity loan interest will not be deductible against your adjusted gross income.

Modifications or improvements to your home for medical purposes is deductible as a medical expense for medical expenses in excess of 7.5% of your adjusted gross income. The modifications must be for a medical purpose.

Direct download: 235_Home_Owner_Deductions.mp3
Category:general -- posted at: 9:43pm CDT

As taxpayers and tax preparers are preparing for the January 29, 2018 kickoff of the 2017 tax return tax preparation season, taxpayers and tax preparers will notice some changes to the final Form 1040.

Line 34 in prior years was the “Tuition and Fees” deduction against taxable income. This year taxpayers and tax preparers will notice that the line now is “Reserve for future use” after Congress didn’t extended the Tuition and Fees deduction that expired on December 31, 2016.

2017 Schedule A’s medical deduction floor is 7.5% for all taxpayers. For example, if a taxpayer is earning $50,000 and has $5,000 in medical expenses, then $1,250 is the medical expense itemized deduction ($50,000 x .075 = $3,750, $5,000 - $3,750 = $1,250).

The 2017 personal exemption is $4,050 for each dependent.

The passthrough deduction is available for 2017.

Taxpayers will still need to report their healthcare coverage on their 2017 tax return.

The W-2 box 9 includes a sixteen (16) digit verification code to combat identity theft. Taxpayers will need to include the verification code on the tax return if it listed in box 9.

The standard deduction is $6,350 (single taxpayers and married filing separately), $12,700 (married and surviving spouse), $9,350 (head of household). There is an $1,250 additional deduction if the taxpayer(s) is blind or aged. An additional $1,500 if the taxpayer is aged, blind, and single and not a surviving spouse.

Direct download: 234_2017_Tax_Season_Kicks_Off_and_the_Tax_Return_Looks_Different.mp3
Category:general -- posted at: 9:41pm CDT

With income taxes, it comes down to income. Taxable income to specific. Of course, deductions plays a major role in determining taxable income.

Income on a tax return is broken down into taxable income and non-taxable income. What isn’t non-taxable income is taxable income.

Municipal bond interest, treasury notes and bond interest, child support, inheritances, gifts, and bequests, welfare payments, healthcare benefits and cash rebates are examples of non-taxable income.

Salaries, wages, dividends, non-municipal bond and treasury note interest, commissions unemployment income, strike pay, rental income, business income, alimony, royalty income, stock options, rental income, capital gains are examples of taxable income.

Social security income may be taxable up to 85% depending on the total of your other combined taxable income. If you’re single and your total other combined income is more than $25,000 than 85% of your social security income may be taxable. If you’re married and your total other combined income is more than $32,000 than 85% of your social security income may be taxable.

Retirement income from traditional IRAs, SEP, 401ks, Simple IRA, etc is taxable income. Retirement income from a Roth IRA is generally non-taxable income.

States tax refunds may be taxable if you itemize your deductions.

Direct download: 233_Taxable_Income.mp3
Category:general -- posted at: 9:32pm CDT

Overturning the North Dakota vs Quill case has been the goal of all the states since the case was decided in 1992 by the U.S. Supreme Court. South Dakota is the latest state to try to get the overturned either by the U.S. Congress or the court systems.

Since Congress didn’t act on the Marketplace Tax Act that would have required out-of-state vendors to collect and remit sales taxes to the states in which they don’t have a physical presence or employees.

Under North Dakota vs Quill, the U.S. Supreme Court set up a physical presence where the out-of-state seller (vendor) had to have sales, employees, and physical presence in a state before the seller would be liable to collect and remit sales taxes to the state.

States have argued for years that sales alone should be significance for enough for creating a economic nexus instead of a physical nexus.

States were rejoicing this week when the U.S. Supreme Court agreed to hear a case called South Dakota vs Wayfair. Wayfair is an out-of-state seller selling and shipping products into South Dakota using a third party shipping company (ie UPS, FedEx, or United State Postal Service).

South Dakota sued Wayfair for not registering to collect and remit sales tax to South Dakota. South Dakota actually sued four companies (WayFair, Overstock.com, Newegg, and Systemax.

Systemax registered with South Dakota to collect and remit sales tax after receiving the lawsuit. However, the other three companies (WayFair, Overstock.com, Newegg) did not register with the state.

The case will be heard before the Justices on the Supreme Cout in April with a decision expected by June.

As tax preparers, businesses, and individuals, we need to prepare for an Court Decision that will either find in favor of South Dakota or WayFair. Either way, the landscape of internet sales taxes is changing as the states begin aggressively pursuing internet sales and the companies.

Direct download: 232_SD_vs_Wayfair.mp3
Category:general -- posted at: 7:53pm CDT

Happy New Year. 2018 is here which means that tax filing is around the corner when it comes to filing the 2017 tax return.

Important dates to remember this year are:

January 29, 2018 - IRS will begin accepting and processing individual tax returns.

Refunds that includes earned income tax credits, additional tax credit, and other refundable credits will be issued in later February according to the IRS.

April 17, 2018 - The date the Form 1040 tax return is due or extended.

October 15, 2018 - The due date of the extended Form 1040 tax return.

As taxpayers and tax preparers are preparing to face another tax year, it/s best to wait until you have all the tax supporting documents which includes W-2s, 1099s, 1098s, property taxes,, charitable contributions, and other tax supporting documents before you file your tax return. I have seen taxpayers who are in a rush to file a tax return only to receive another tax document a couple of days later after the return has been filed leaving them to file an amended tax return,

An tax organizer can help taxpayers with organizing their tax supporting documents. The Your Tax Teacher website contains a tax organizer that can be downloaded for free.

Taxpayers usually have an idea early in the tax season whether they intend to prepare and file their own tax return using software, filing on paper forms, or using a tax preparer.

Did you have any major changes in 2017 compared to 2016 including:

1. Martial Status (Married, Divorced, Widow, Widower)

2. Did you have any major capital gain and losses from sales of investments and other property?

3. Did you buy a home? Did you sell a home

4. Did your dependents change in 2017? Did you have adoption expenses?

5. Did you invest in IRA or another retirement plan in 2017?

6. Did you have changes in your income in 2017?

7. Did you have moving expenses when you changed jobs?

8. Did you make an estimated payments?

9. Are you planing to itemize or use standard deductions?

Direct download: 231_Are_You_Ready_to_File_Your_2017_Tax_Return.mp3
Category:general -- posted at: 10:42pm CDT

There are no show notes for this episode as it just a quick episode to wish each of you a Happy New Year 2018 and a discussion on the upcoming episodes on tax preparation and tax reform.

Direct download: 230a_Happy_New_Year_2018.mp3
Category:general -- posted at: 9:31pm CDT

2017 was a year of many tax changes at the local, state, and federal levels. In this episode, I discuss some of the major 2017 tax stories.

7. In 2017, IRS begin contracting with third party collection agencies to collect outstanding tax debt. In episode 198, I discuss the collection agencies and the procedures they follow to attempt to collect the outstanding tax debt.

6. Portland, Oregon’s Arts and Music Fee (tax) is ruled constitutional by the Oregon Supreme Court. The tax is $35 per person for individuals making more than $1,000 per year. Taxpayers are exempt for wage earners under the age of 18, taxpayers whose income is from social security or Oregon Public Employee Pension, and taxpayers making less than $1,000 per year.

5. State Budgets made the news in 2017. Many states did not have a budget in place when the state’s new fiscal year started.

4. Seattle, Washington city council passed an income tax for wealthy taxpayers ($250,000 (single) and $500,000 (married taxpayers) was later found to be unconstitutional.

3. Soft (sugar) tax made the headlines in Philadelphia and Chicago where a tax placed on sugary or soft drinks by the ounce. Chicago later nullified their soda (sugar) tax.

2. Amazon third party sellers sales and use tax on Amazon Marketplace platform made the headlines when the Multi-State Tax Commission and many states begin offering sales and use tax amnesty programs. I discuss the Multi-State Tax Amnesty Program in episode 216.

1. Congress passed tax reform just in time for year-end. The majority of the tax law starts in 2018 and 2019.

Direct download: 230_Top_2017_Tax_Headlines.mp3
Category:general -- posted at: 10:03pm CDT

In previous episodes, I have mentioned that it is difficult to bankrupt taxes or you can’t bankrupt federal and state tax liabilities because there of the restrictions placed on taxpayers needed to declare bankruptcy taxes.   

There are some things you need to know when it comes to taxes and bankruptcy.  

1. You must file all required tax returns for tax periods ending within four years of your bankruptcy filing.

2. During your bankruptcy you must continue to file, or get an extension of time (120 day extension) to file, all required returns.

3. During your bankruptcy case you should pay all current taxes as they come due.

4. Failure to file returns and/or pay current taxes during your bankruptcy may result in your case being dismissed.

The bankruptcy trustee may require you to submit copies of your returns and transcripts as proof of filing.  

If you are unable to prepare to your tax returns for lack of tax documents, you can request transcripts of your W-2s, 1099s, and other document from the IRS by contacting them or completing Form 4506-T.   Form 4506 is the form needed to request copies of your tax returns (a fee is required).

Direct download: 229_Bankruptcy_Taxes_and_More_Part_1.mp3
Category:general -- posted at: 9:51pm CDT

When it comes to taxes, nothing in life is constant. It’s always changing and evolving as the federal, state, and local governments are always looking for additional tax revenue.

Within the past few weeks, the U.S. House and U.S. Senate chambers both have introduced bills to reform the tax laws with major changes on how taxes are incorporated.

Under the House Bill, there are four tax brackets at 12%, 25%, 35%, and 39.6% for single and married filing jointly. The House Bill contains a 46% bracket on the next $200,000 greater $1 million. The Senate Bill has seven tax brackets (10%, 12%, 22%, 24%, 32%, 35%, and 38.5%) for single and married filing jointly.

The Senate Bill would eliminate the Affordable Health Care individual mandate starting in 2019.

The Senate and House Bill would repeal the state and local tax itemized while keeping the property tax deduction capped at $10,000.

The House Bill would repeal the medical itemized deduction while the senate bill would temporary lower the threshold to 7.5% of AGI down from 10%.

The Senate Bill would keep the current itemized deduction while the House Bill would limit the deduction to mortgages less than $500k and the principal residence

Both bills would limit the carried interest deduction to gain on assets held at least three years.

For the standard deduction, the deduction would increase to $24,000 (married) and $12,000 (single). The senate’s proposal would sunset in 2026.

The Child Tax Credit for dependents 17 and under would increase to $1,600 (House Bill) and $2,000 (Senate Bill), The House Bill contains a $300 credit for each parent as part of a family consolidated family tax credit that would expire in 2023. The senate proposal would sunset in 2026.

The Senate and House Bill both double the estate tax exclusion. The house bill would fully repeal the estate tax in 2025 while the senate bill would sunset 2026.

For business owners using the pass-through entities (S-Corp, Partnerships, LLCs), the pass through rate is 25% (house plan). The house plan creates a 9% rate on the first $75k (married) and $37.5k (single) of net income The senate plan allows for a 23% deduction for passthrough owners. After the 23% deduction, individuals would be taxed at their individual tax rates. Restrictions would be in place limiting the deduction for pass-through owners with taxable income above certain levels. The proposal under the senate plan would sunset in 2026.

For corporations, the tax rate under the house and senate plans is 20%. The senate plan delays implementation until 2019.

Both the senate and house bill allow companies to fully and immediately deduct the cost of their spending on new equipment for a period of five years,

The adoption credit remains at $13,750 per child under the house and senate bills.

Direct download: 228_Tax_Reform_Proposals.mp3
Category:general -- posted at: 8:30pm CDT

When it comes to tax fraud and abuse, the IRS and taxpreparers have seen it all. In today’s episode, I am discussing some of the tax abuses and fraud.

1. Identity Theft - When someone steals your identity and prepares a tax return in hopes they get your refund before your do by filing your tax return first.

2. Telephone Scam - When someone pretends to the IRS or State Revenue officer to persuade you to give them bank account, credit card, itunes or other prepaid debit card by pretending that you have an outstanding balance that needs to be paid.

3. Phishing - An email that sends you to a website or a webiste that spoofs an authentic website in hopes that the person committing the fraud can get personal and account information to commit fraud against you.

4. Free Money - An offer to persuade you that you can have a large refund awaiting you without knowing your income and deductions. All you have to do is sign here.

5. Return Preparer Fraud - Similar to free money, this were a tax preparer commits tax fraud by inflating your deductions or income on a tax return.

6. Hiding Income Offshore - Where a taxpayer attempts to hide income overseas which under reports the income on their tax return.

7. Impersonating a charitable organization - Where an organization or individual pretends to be a charitable organization in hopes that you will donate. After you donate, they disappear and your are unable to take the charitable contribution. The IRS and Guidestar has list of non-profit organizations that have previously filed their 990 reports with the IRS.

8. False Income / Expenses - Preparing false income, exemptions, and expenses on tax returns that do not match tax return supporting documents filed with the IRS and States.

9. Frivolous Arguments - Telling the IRS and the courts that the tax code wasn’t ratified by the states or you’re not a citizen subject to U.S. tax law doesn’t work. The IRS and the courts have heard it all when it comes frivolous arguments.

10. Zero Wages and 1099s - Changing your W-2 or 1099 tax support documents to under report your income to the IRS and states while unaware that the IRS and States get a copy o your tax support documents.

11. Abusive Tax Structures or Shelters - Using tax structures and overseas tax shelters where its only purpose is to evade paying taxes.

12. Misuse Trust - Using trusts that the taxpayer controls to move money and income into to evade paying taxes on the income.

 

Direct download: 227_Tax_Fraud.mp3
Category:general -- posted at: 8:00pm CDT

Continuing with changes to the 2017 Form 1040, this week’s episode focuses on the draft changes to the Form 1040 Schedules (Schedule A, B, C, E, and F).

Schedule A (Itemized Deductions)

Line 1 - Medical and dental mileage - The 2017 standard mileage rate for medically-related use of an auto is 17¢ per mile.

Line 3 - Medical expense limitation. - In prior years, the amount that a taxpayer subtracted from eligible medical and dental expenses was 7.5% of AGI (adjusted gross income) and 10% of AGI if the taxpayer or his spouse was age 65 are older by the end of the year. For 2017, the amount subtracted, if the taxpayer or his spouse was age 65 and older by the end of the year or under the age of 65, is 10% of AGI is the amount that has to be subtracted for taxpayers eligible medical and dental expenses.

Line 13 - Reserved - Prior to 2017, line 13 was entitled “Mortgage insurance premiums.” For years prior to 2017, amounts paid for premiums for mortgage insurance in connection with acquisition indebtedness with respect to a qualified residence of the taxpayer, were deductible as interest, subject to a phaseout based on AGI. The deduction is no longer allowed for amounts paid or accrued after Dec. 31, 2016.

Line 17 - Gifts to charity, other than by cash or check - The standard mileage rate is 14¢ per mile for use of an auto in rendering gratuitous services to a charitable organization.

Line 21 - Unreimbursed employee expenses - The 2017 standard mileage rate for business travel is 53.5¢ per mile.

Line 29 - Limit on itemized deductions - Itemized deductions for taxpayers with adjusted gross incomes in excess of $313,800 (joint filers or surviving spouse), $287,650 (head of household), $261,500 (single), and $156,900 (married filing separately) may be reduced.

Schedule B (Interest and Dividends)

Line 1 - Interest - Accrued interest on Series EE U.S. savings bonds issued in '87 is taxable.

Line 3 -Excludable interest on Series EE or Series I U.S. savings bonds - The exclusion for education-related savings bond interest phases out at higher income levels. For 2017, the phaseout begins at modified AGI above $78,150 ($117,250 on a joint return).

Schedule C (Profit or Loss from Business)

Line A - Principal business or profession - Principal business activity codes have been added or changed.

Part II - Expenses. Line 9. Car and truck expenses - The 2017 standard mileage rate for business travel is 53.5¢ per mile.

Part II - Expenses. Line 13 - Depreciation and section 179 expense. See Form 4562, below.

Part II - Expenses - Line 27a. Other expenses. The rule under which taxpayers may elect to deduct costs of certain qualified film, television and live theatrical productions only applies to productions that began before Jan. 1, 2017 unless Congress extends the rule.

Schedule E (Supplemental Income and Loss)

Standard mileage rate - The 2017 standard mileage rate for miles driven in connection with the taxpayer's rental activities is 53.5¢ per mile.

Schedule F (Profit or Loss from Farming)

Part II. Farm Expenses - Cash and Accrual Method - Line 10. Car and truck expenses - The 2017 standard mileage rate for business travel is 53.5¢ per mile.

Form 4562 (Depreciation and Amortization)

Part I - Election to expense certain tangible property under Sec. 179 - For tax years beginning January 1, 2017, the maximum section 179 expense deduction is $510,000. The $35,000 increase that applied to qualified enterprise zone property expired on Dec. 31, 2016. This limit is reduced by the amount by which the cost of section 179 property placed in service during the tax year exceeds $2,030,000.

Part V - Listed property - First-year luxury auto depreciation limits for vehicles first placed in service in 2017 are $3,160 for autos and $3,560 for light trucks or vans.

Direct download: 226_2017_Form_1040_Draft_Changes_to_Schedules.mp3
Category:general -- posted at: 8:00pm CDT

When it comes to taxes nothing is constant. Tax law is always changing whether it state, local, or federal laws and regulations. The IRS recently updated the 2017 draft Form 1040.

Beginning with the due date, the 2017 tax return due date is April 17, 2017.

Taxpayers filing a Form 1040 paper return who reside in Connecticut, District of Columbia, Maryland, Pennsylvania, Rhode Island, and West Virginia will mail their return to a different address this year. The updated mailing address will be listed at “Where Do You File” in the Form 1040 instructions.

Line 21 - Other Income - Qualified principal residence indebtedness is discharge only applies to discharges that took place before January 1, 2017 or where the discharge was subject to arrangement that entered into and evidence in writing before January 1, 2017.

Line 26 - Moving Expenses - The 2017 standard mileage rate for moving expenses is .17 (seventeen cents) per mile.

Line 34 - Reserve for future use - Prior to 2017, line 34 was “Tuition and Fees.” Unless Congress acts to extend “Tuition and Fees”, the deduction for “Tuition and Fees” expired on December 31, 2016.

Line 35 - Domestic Production Activities deduction - Prior to 2017, the domestic production activity allowed for Puerto Rico to be considered part of the US for purposes of the domestic production activity. The provision for Puerto Rico to considered part of the U.S. for purposes of the domestic production activity expired on December 31, 2016.

Line 40 - Itemized Deduction or Standard Deduction - For 2017, the standard deduction is $6,350 (singles taxpayers and married filing separately), ($12,700) married filing jointly and surviving spouse, ($9,350) head of household.

Line 45 - Alternative Minimum Tax - The alternative minimum tax exemption is $54,300 (single), $84,500 (married filing jointly and surviving spouse), and $42,250 (married filing separately)

Line 50 - Education Credits from Form 8963 - Taxpayers will to provide the educational institution’s employer identification number (EIN) on the Form 8863.

Line 53 - Residential Energy Credit - The non-business energy property credit expired on December 31, 2016.

Line 54 - Other credits - The maximum adoption credit is $13,570 per eligible child for both special and non-special needs adoption. The amount begins to phase out if modified adjusted gross income is excess of $203,540 and completely phases out if the modified gross income is $243,540 or more.

Self-employment tax - The maximum amount of self-employment income subject to the social security portion of the FICA tax is $127,200. There is no ceiling on Medicare wage base.

Individuals may use the farm optional method only if (a) their gross farm income was not more than $7,600 or (b) their net farm profits were less than $5,631. Using this method, the farm self-employment earnings equal the smaller of (1) two-thirds of gross income or (2) $5,200.

A self-employed taxpayer with both farm and non-farm income is allowed to use both optional computation methods if the farm income qualifies for the farm option optional method and non-farm income qualifies for the non-farm optional method. If both optional methods are used to calculate the net earnings form self-employment, the maximum combined total earnings from self-employment for any tax year can not exceed $5,200.

Line 61 - Health Care Individual Responsibility - For 2017, the payment (penalty) amount is the lesser of the (I) the sum of the monthly penalty amounts for months in the tax year during which one or more failures occurs, or (ii) the sum of the monthly national average bronze plan premiums for the plan. The monthly penalty amount is equal to 1/12 of the greater of $695 per family member (up to $2,085) or 2.5% of the amount by which the taxpayer household income exceeds the threshold.

Line 66 - Earned Income Credit (EIC) - The maximum credit for the Earned Income Credit is higher, and the Adjusted Gross Income (AGI) phase out are revised.

Line 73 - Credits - Line 73 Box “B” is labeled as “Reserved.” The draft instructions provided by the IRS contains no instructions for this box. The final version of 2016 Form 1040 also had this box labeled as “Reserved.”

Line 78 - Amount you owe - The Form 1040 draft instructions informs the taxpayer(s) that they can access the “Direct Pay” or “Pay By Card” using the IRS mobile application “IRS2GO”.

“Cash” is a new in-person payment option for individuals. This option is provided through retail partners of IRS and has a maximum of $1,000 per day per transaction. To use the cash payment option, a taxpayer must be registered online at www.officialpayments.com/fed. There is an additional fee associated using this payment method.

Direct download: 225_2017_Form_1040_Draft_Changes.mp3
Category:general -- posted at: 9:28pm CDT

It’s never to late to start thinking about tax planning until the tax year has rolled over into next year. Also, it’s never to early to be thinking about next year’s taxes.

For 2018 without any congressional tax reform, the IRS has released several changes to the standard deduction, personal exemption, and other tax changes.

The 2018 standard deduction is $13,000 (married filing jointly and surviving spouse), $6,500 (married filing separated and single), and $9.550 (head of household).

For 2018, if you are dependent who can be claimed as a dependent on another taxpayer’s return, the basic standard deduction is $1,050 or $350 plus individual’s earned income up to a maximum of regular standard deduction.

The 2018 additional standard deduction or blind and taxpayers over the age of 65 is $1.300 (married). The additional standard deduction or blind and taxpayers over the age of 65 is $1.600 (single and head of household).

The 2018 kiddie tax exemption is $2,100. A parent can elect to include a child’s income on the parent’s tax return if the child’s income is more than $1,050 and less than $10,500.

The 2018 personal exemption is $4,150.

The 2018 AMT exemption is $86,200 (married filing jointly and surviving spouse), $55,400 (single / unmarried), $43,100 (married filing separately), and $24,600 (estates and trusts).

The 2018 phaseout amounts or personal exemptions and itemized deductions are $320,000 (married filing jointly and surviving spouse), $293,350 (head of household), $266,700 (single), and $160,000 (married filing separately).

For 2018, the interest on U.S. Savings bonds begin the phase-out above $79,700 (119,000 on a joint return).

The 2018 adoption credit is $13,840 for a child with non-special needs and special needs.

if the amount changes due to tax  reform, I will update the information.

Direct download: 224_2018_Standard_Deductions_Changes_and_Phaseouts.mp3
Category:general -- posted at: 7:37pm CDT

When it comes to business tax planning, there’s not as many options as there are with individual tax planning.

But, business owners still have options. Some of the options are related to tax depreciation.

Section 179 and the 50% bonus depreciation are available for business owners and Schedule E.

With section 179 depreciation, assets can be fully depreciated under Section 179 up to a maximum amount of $510,000. This maximum is reduced if the cost of assets purchased in 2017 exceeds $2,030,000. The maximum amount of Section 179 that can be taken for passenger vehicles is $3,160. Addback of Section 179 may be required if the asset is disposed.

Bonus depreciation of 50% can be taken on assets with a class life of 15 years and less The maximum amount of bonus depreciation that can be taken for passenger vehicles is $3,160.

Consider current NOLs (Net Operating Losses) and prior year NOLs carryover that can be used to reduce your tax liability.

Accelerate the payment of 2018 expenses into the 2017 tax year to reduce your current tax liability.

Defer 2017 income revenue until 2018.

Are you on a cash or accrual basis? Depending on your basis you may have some adjustments to income and expenses.

Determine book and tax differences for income and expenses under FAS 109 and ASC 740 provisions.

Review estimated tax payments that were made.

Direct download: 223_Year_End_Business_Tax_Planning.mp3
Category:general -- posted at: 7:41pm CDT

As it gets closer to December 31, 2017, it’s time to begin thinking about some year-end tax planning. What are some tax planning ideas is what is being discussed in this episode of the Your Tax Podcast Navigating the Tax Jungle.

1. Net Investment Tax and Additional Medicare Tax

The net investment tax is a 3.8% surtax on certain unearned income. The surtax is based on the lesser of (1) net investment tax or the excess of modiied adjusted gross income over a threshold of amount ($250,000 for joint filers or surviving spouses, $125,000 for a married filing separately return, and $200,000 for singles and head of house (all others)).

The .9% additional Medicare tax applies to idividuals for whom the sum of all their wages from employment and self-employment income is in excess of $250,000 for joint filers or surviving spouses, $125,000 for a married filing separately return, and $200,000 for singles and head of house (all others).

2. Realize losses on stocks while preserving your investment position. Consider meeting with your investment adviser to discuss your investment strategy and portfolio.

3. Postpone (defer) income until 2018 and accelerate your deductions into 2017. Given the current of the tax form being discussed in the U.S. Congress, tax reform may happen in 2017. Accelerating deductions (student loan, child care credit, higher education credits, and student loan interest could offset adjusted gross income (AGI).

4. Contribute to a traditional IRA or Roth IRA ($5,500 if the taxpayer is under 50 and $6,500 if the taxpayer is over 50). Consider the pros and cons of converting a Traditional IRA to a Roth IRA. Converting a Traditional IRA to a Roth IRA will result in a higher current AGI.

5. Defer a bonus until 2018 especially if the U.S. Congress lowers the 2018 tax rates.

6. Considering using a credit card to pay deductible expenses (medical, state and local taxes, etc) before year-end to increase your 2017 deductions.

7. Considering having additional state and local taxes withheld or make additional estimated tax payments on state and local taxes.

8. If you contesting an audit or a property tax bill, consider paying the contested amount as the audit is going through the review process.

9. Determine whether you will be be affected by the alternative minium tax.

10. Bring 2018 itemized deductions that would normally be deducted in 2018 into 2017 to increase your 2017 itemized deductions and lower your AGI.

11. Review if there are any 2017 casualty loss deductions to consider.

12. Consider any required minium distributions that you may need to take from your IRA, 401(k), 403(b) retirement plan.

13. Increase the amount you are contributing to your employer sponsored Flexible Spending Account (FSA).

14. Increase your contribution or make a contribution to your Health Savings Account.

15. Considering the $14,000 annual gift tax exclusion. Unused gift tax exclusion can not be carried over from one tax year to another.

16. Consider the Kiddie Tax effect on your children’s tax returns.

Direct download: 222_Year_End_Tax_Planning_Ideas.mp3
Category:general -- posted at: 9:19pm CDT

With twelve weeks left in 2017, now is the time to begin thinking about whether there were major career, life, or career changes in 2017 that would affect the tax liability.

1. Beginning with life changes, did you get married or divorce during the tax year? If you were divorced at the end of the year, you were divorce for the entire year. The filing status would be single or head of household (if there dependents).

If you were married at the end of the year, then you were considered married for the entire year. The filing status for married is married filing jointly or married filing separate.

2. Were there any changes to your dependents? Did you adopt, have a baby, or did your child get out of school and get married during the tax year?

3. Did you have any significant job changes? Did you make significant more money during the ta year? Did you move to a new location further than 50 miles from your previous job? Did you retire? Did you get laid off?

4. Did you purchase a new home? If so, was it financed? Did you sell your previous home? Did you buy a vacation home (including an RV)?

5. Did you start a new business? Did you purchase rental property? Did you convert a primary residence into a rental property? Did you close a business?

6. Did you have any significant gains or losses from the sale from investments?

7. Were there any other significant changes that would affect your income and tax liability?

Direct download: 221_Year_End_Tax_Considerations.mp3
Category:general -- posted at: 9:41pm CDT

For some taxpayers, they will need sometimes need to produce a tax return. But, due to unforeseen circumstances they are unable to find a tax return when it comes to providing documentation for a student loan, mortgage because of a flood, fire, earthquake, hurricane, tornado, or some other disaster.

CPA and other tax preparers will have copies of your tax returns and supporting documentation that was used to prepare the taxpayer’s tax return. But, what happens if your tax preparer retired and can’t be found or you didn’t use a tax preparer.

The IRS provides copies (transcripts) of your tax returns and the supporting documentation. The IRS will send you a copy of your tax return that was filed for a fee. Currently, the fee to receive a copy (not a transcript) of your tax return is $50.

If you don’t want a physical copy of your tax return, the IRS provides transcripts of your tax return and your tax forms that were used to prepare your tax return.

You can receive a transcript of your tax return or tax supporting documents by contacting the IRS at 1-800-908-9946. To request a copy of your transcript by mail by completing and mailing the Form 4506-T (Request for Transcript of Tax Returns).

You can request a transcript online at "https://www.irs.gov/individuals/get-transcript"

There are several types of tax transcripts.

Tax Return Transcript - Shows line items including your adjusted gross income (AGI) from your tax return (1040, 1040A, 1040-Ez). This transcript doesn’t show any changes that you made from filing an amended return after the original return was filed. Taxpayers can request this transcript for the current tax year and the prior three years.

If you are secondary spouse on the joint return requesting a tax transcript, you must file Form 4506-T. Primary taxpayers listed on the joint return can contact the IRS via phone or by mail.

Tax Account Transcript - Shows return type, marital status, AGI, taxable income, and all the payment types. It shows changes made with an amended tax return after the original tax return was filed. For transcript requests made online, you can receive the current year’s transcript and the prior ten years. For transcripts request made via phone or mail, taxpayers can request the current year and the prior three years.

Record of Account Transcript - Combines the Tax Return Transcript and the Tax Account Transcript. This transcript is available for the current year and the prior three years.

Wage and Income Transcript - Shows the information from information forms (W-2, 1099s, 1098, 5498, etc. This transcript is available for the current year and the previous ten years.

Verification of Non-Filing Letter - The letter provides proof that the IRS has no record of receiving a tax return (Form 1040, 1040A, 1040-Ez) from a taxpayer for the year requested. This letter doesn’t indicated whether the taxpayer should have filed a tax return. This letter is available for the current year and the prior three years.

The form need to request a physical copy of a return is Form 4506 (Request for Copy of Tax Return)

Direct download: 221_Tax_Year_End_Considerations.mp3
Category:general -- posted at: 10:05pm CDT

Having a hardship can be difficult. Whether it a hardship due to a disaster (flood, earthquake, fire, hurricane, etc...) or a financial hardship, the tax code allows for hardship distributions in addition to casualty losses.

Companies may offer hardship distributions from the companies 401(k) and 403(b) retirement. What do you need to know about hardship distributions?

IRAs (both Traditional IRAs and Roth IRAs) can not offer hardship distributions.

Before requesting a hardship distribution you need to know several things.

1. Does your retirement plan offer a hardship distribution?
2. What are the procedures to request a hardship distribution?
3. What is the plans definition of a hardship?
4. Are there any amount limits and types of funds that can be distributed for a hardship from the employee’s retirement account?
5. Is there a immediate financial need by the employee for a hardship distribution?
6. The amount requested for the hardship as to meet the immediate financial need?

The plan administrator must....

1. Obtain a statement or verification of the employee’s hardship as required by the terms 401(k) and 403(b) plan.

2. Determine the exact nature of the employee’s hardship and does it qualify as defined by the plan’s definition of a hardship?

3. Does the plan’s terms state the hardship distribution is not necessary if the employee has other resources (spouse and minor children’s assets). If the employee does not have other resources, document the lack of resources.

4. Document whether the employee has exhausted loans or other types of distributions that may be available other than hardship distribution though the plan or any other plan in which the employee participates.

5. Verify that the hardship distribution will meet and does not exceed the financial needs of the employee. Tax and penalties may be included in the hardship distribution.

6. Determine that the hardship distribution does not exceed the limits under the plan and consists of only the amounts eligible as defined by the plan. The plan could limit the amount of the distribution to a specific amount and require that the hardship distribution be made from salary reductions contributions.

7. Whether the plan suspends the employee from contributing to the plan and all other employer plans for at least six months after the employee receives a hardship distribution after informing the employee and enforcing the contribution suspension.

8. If a plan does not properly make a hardship distribution, the plan may be able to correct the mistake.

Direct download: 219_Hardship_Distribtuions.mp3
Category:general -- posted at: 10:13pm CDT

It tough enough getting an IRS or state tax notice. But, understanding the notice can take phone calls and discussions with your tax preparer.

Is there something missing from my return? Why was there an additional tax liability? Why did the return not match the information that the IRS had on file? Not every question; but, these are just a few of the questions that taxpayers have for their tax preparers?

When it comes to IRS letters, every IRS letter has a Letter ID that normally begins with CP. From the letters, the IRS will inform taxpayers what changes were made and why there may be an additional tax liability in addition to the tax year and the due date for the information to be received or when a tax payment is due.


CP501 / CP502

IRS sends CP501 and CP502 to let taxpayers know they have a past due obligation.

CP71C

IRS sends CP71C to let you know that you have overlooked a tax debt for several years.

CP503

IRS sends CP503 to inform the taxpayer that a tax payment is due in full within ten (10) days.

CP504

IRS sends CP504 to inform the taxpayer that this a last notice and they are preparing to garnish your wages and/or tax refund to pay towards your past due tax liability.

CP521

IRS sends CP521 to inform the taxpayer that they have defaulted on their installment agreement and that payment is due in full.

CP523

IRS sends CP521 to inform the taxpayer that they are in the process of garnishing and seizing assets and wages to pay towards the tax liability after the taxpayer broke the installment agreement.

CP90/CP297 (sent simultaneously)

These letters sent simultaneously (CP90/CP297) alerts the taxpayer to an impending garnishments and seizures including levies. The taxpayer may be given a thirty (30) day to pay the tax liability in full period.

Letter 3172

With letter 3172, the letter informs the taxpayer that the IRS is moving forward with seizing property and assets to pay towards the taxpayer’s tax liability.

CP12

The IRS sends letter CP12 to inform the taxpayer that there changes to the tax return because of math miscalculations.

CP14

CP14 is used to inform the taxpayer that the taxpayer has an outstanding tax liability.

CP49

CP49 informs the taxpayer the that an overpayment was used to pay an outstanding tax liability.

CP91 / CP298 (sent simultaneously)

CP91 and CP298 are sent simultaneously to inform the taxpayer that the IRS is preparing to levy a garnishment against the taxpayer’s social security benefits.

CP161

CP161 is used to inform the taxpayer that there is a balance due and there was no math error.

CP501 

CP501 is a remainder notice that informs the taxpayer of a balance due.

CP2000

CP2000 is used to alert the taxpayer that the information on the tax return did not match the IRS’s information on file

When it comes to tax notices, it’s best to deal with the notices early before there are garnishments, asset seizures, and levies.

That’s why it is important to contact a tax professional should you have questions regarding the notice from either the state or IRS.

The information above was complied from experience or came from internet sites like Top Tax Defender and Bankrate

Direct download: 218_IRS_Most_Popular_Tax_Notices_and_IDs.mp3
Category:general -- posted at: 9:11pm CDT

When it comes to real and personal property losses, insurance doesn’t always cover the loss.   The IRS and tax rules and regulations provide some relief if you qualify under the casualty losses.

According to the IRS Publication 547, casualty losses is the damage, destruction, or loss of property resulting from an identifiable event that is sudden, unexpected, or unusual.

1. A sudden event is one that is swift, not gradual or progressive.

2. An unexpected event is one that is ordinarily, unanticipated, and unintended.

3. An unusual event is one that isn't a day-to-day occurrence and that isn't typical of the activity in which you were engaged. 

Examples of casualty losses are car accidents, earthquakes, fires, floods, government ordered demolition or relocation of a home that is unsafe to use because of a disaster, mine cave-ins.shipwrecks, sonic booms, storms (including hurricanes and tornadoes), terrorist attacks, vandalism, and volcanic eruptions.

Examples of non-casualty losses, according to the IRS Publication 547 are accidentally breaking articles such as glassware or china under normal conditions, a family pet, a fire if you willfully set it, or pay someone else to set it, a car accident if your willful negligence or willful act caused it (the same is true if the willful act or willful negligence of someone acting for you caused the accident, and progressive deterioration.

What you will need to know to prepare the Casualty Loss IRS Form 4684 is:

Cost or Adjusted Basis of property

Insurance or other reimbursements

Fair Market Value of the property before the loss

Fair Market Value of the property after the loss

10% of your AGI (adjusted gross income) for calculation purposes

If you have a gain on the insurance on Form 4684 after applying the insurance or other reimbursements to your casualty loss on your primary residence, you may be able to include the gain up to $250,000 (single) or $500,000 (married filing jointly) if meet the two out of the previous five years requirement for living in the home as you primary residence.

As always, contact your taxpreparer or a tax professional (CPA, Tax Attorney) for tax assistance if you have tax questions or need tax assistance.

Direct download: 217_Casulty_Losses.mp3
Category:general -- posted at: 8:39pm CDT

When it comes to takes to sales and use tax not everything is so clear when it comes to nexus. States for quite some time have been complaining that they are not collecting enough sales tax from interest to meet their budget needs.

States have been working to narrow the gap between brick and mortal companies located in their states and internet retail companies.

For some time, states have created new nexus rules that include click-through nexus, affiliated nexus in addition to new taxes based on gross sales into the state as they attempt to move away from the Quill Corp v. North Dakota Supreme Court Ruling (504 U.S. 298 (1992)) that created the rules for physical nexus.

Physical nexus under Quill Corp v. North Dakota included sales, property, and payroll. More and more states have begun moving away from the property and payroll to define physical nexus as simply as sales into and within their state.

For what seems like years, the states have waiting on Congress to pass a new law called the Marketplace Fairness Tax where companies would be forced to collect sales and use tax and remit it the states regardless if the company had a physical within the state.

After several years, the Amazon has finally been collecting and remitting sales and use tax to the states. However, the states have begun looking at the Amazon structure that includes Fulfillment by Amazon.

Under Fulfillment by Amazon, sellers contract through Amazon to sell their products through Amazon’s marketplace using Amazon to fulfill and ship their orders to the customers.
The majority of these sellers are small so most do not have complex order and tax systems and rely on Amazon to fulfill their orders.

However, that has not stopped the states and the Multi-state tax commission from going after the sellers using the Fulfillment by Amazon sellers.

The Multi-state Tax Commission has proposed a sales and use tax amnesty program which runs from August 17 to October 17, 2017 targeting the Fulfillment by Amazon sellers to come forward and pay and remit sales and use tax.

States participating in the Multi-state Tax Commission are Alabama, Arkansas, Colorado, Connecticut, District of Columbia, Florida, Idaho, Iowa, Kansas, Kentucky, Louisiana, Massachusetts, Minnesota, Missouri, Nebraska, New Jersey, North Carolina, Oklahoma, South Dakota, Tennessee, Texas, Utah, Vermont, Wisconsin.

In order to be consider and qualify for tax amnesty under the voluntary disclosure program, the taxpayer must meet certain criteria according to the Multi-state Tax Commission.

“The taxpayer has not yet registered with the state taxing authority, filed returns with such state for the tax type that the taxpayer is seeking voluntary disclosure relief for (sales/use tax, income/franchise tax, or both), made payments of such taxes to, or had any other prior contact with the state concerning liability or potential liability for such tax type.

Note: North Carolina will consider an application by an online marketplace seller to participate in the initiative that has received prior contact concerning tax liability or potential tax liability.

The taxpayer is an online marketplace seller using a marketplace provider/facilitator (such as the Amazon FBA program or similar platform or program) to facilitate retail sales into the state and represents that it does not have any nexus-creating contacts in the state, except for the online marketplace seller’s inventory stored in a third-party warehouse or fulfillment center located in the state or other nexus-creating activities performed by the marketplace provider/facilitator on behalf of the online marketplace seller in the state. A “marketplace provider/facilitator” is a person who facilitates a retail sale by an online marketplace seller by (1) listing or advertising for sale by the online marketplace seller on a website, tangible personal property, services, or digital goods that are subject to sales/use tax; (2) either directly or indirectly through agreements or arrangements with third parties collecting payment from the customer and transmitting that payment to the online marketplace seller; and provides fulfillment services (including sortation services) to the online marketplace seller.

The taxpayer has timely applied electronically (using either the online application or PDF application form and emailed to MTC staff at email address nexus@mtc.gov) to the state for voluntary disclosure relief through the MTC Multistate Voluntary Disclosure Program (MVDP), in accordance with the process set forth. The taxpayer will need to state in the application that the taxpayer is applying for voluntary disclosure relief under this initiative and provide complete and accurate disclosure of the information requested, which will be used to establish eligibility.

Note: The application form requests that the applicant provide an estimate of back tax liability to the state for the prior 4 years and contains the statement: “National Nexus Program staff will not process an application when the good-faith estimate for all tax-types for the look-back period is less than $500 in this state.” Please be advised that applications received under this special time-limited online marketplace seller voluntary disclosure initiative will be processed, even when estimated back tax liability is less than $500. Also, response times permitted in this initiative may be shorter than those provided in the MTC Procedures for Voluntary Disclosure, in order to ensure that the taxpayer timely complies with Paragraph 4 below.

The taxpayer is seeking relief from any past due sales/use tax, including interest and penalties, and if applicable, income/franchise tax liability, including interest and penalties, in connection with its online retail sales activity in the state, except for sales/use tax collected but not remitted, with the taxpayer agreeing to register as a seller or retailer with the state and timely collect, report and remit sales/use tax and file returns on all taxable retail sales to customers in the state prospectively as of the effective date (not later than December 1, 2017—taxpayers are encouraged to commence collection and remittance of sales/use tax prior to that date) of the voluntary disclosure agreement. If subject to income/franchise tax, the taxpayer further agrees to timely file income/franchise returns and pay such taxes due, commencing with the tax year including the effective date (not later than December 1, 2017) of the voluntary disclosure agreement. If the taxpayer has any collected but unremitted sales/use tax, then the taxpayer agrees to remit such tax to the state, including penalties and interest.

Note: States will not waive tax, penalties or interest on collected but unremitted taxes.”

Source: Multi-state Tax Commission - http://www.mtc.gov/Nexus-Program/Online-Marketplace-Seller-Initiative

In order to participate in the Multi-state Tax Commission tax amnesty program, sellers (taxpayers) need to determine their potential state(s) tax liability they may have under Fulfillment by Amazon Tax Amnesty Program (Voluntary Disclosure).

Rumors circulating from the states is that the states will petition Amazon to turn over it’s sellers list who use the Fulfillment by Amazon Program.

You should contact a CPA or tax professional should you have questions or need assistant with voluntary disclosures, tax amnesty programs, on any potential tax liability.

 

Direct download: 216_Fulfillment_by_Amazon_Sales_Tax_Amensty.mp3
Category:general -- posted at: 8:41pm CDT