Berdon Blogs

T&E TALK: TCJA Expands Appeal of 529 Plans in Estate Planning

Posted by Scott T. Ditman, CPA/PFS on Feb 5, 2018 7:00:00 AM

It’s common for grandparents to want to help ensure their grandchildren will get a high quality education. And they also want the peace of mind that their wealth will be preserved for their children and grandchildren after they’re gone. If you’re facing these challenges, one option that can help you conquer both is a 529 plan. And it’s become even more attractive under the Tax Cuts and Jobs Act (TCJA).

529 in Action

In a nutshell, a 529 plan is one of the most flexible tools available for funding college expenses and it can provide significant estate planning benefits. 529 plans are sponsored by states, state agencies, and certain educational institutions. You can choose a prepaid tuition plan to secure current tuition rates or a tax-advantaged savings plan to fund college expenses. The savings plan version allows you to make cash contributions to a tax-advantaged investment account and to withdraw both contributions and earnings free of federal — and, in most cases, state — income taxes for “qualified education expenses.”

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Topics: T&E TALK

SALT TALK:  Sticks, Stones and Why Did the Accountant Cross the Road?

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Jan 29, 2018 11:40:00 AM

Because that's what she did last year.  Yes lawyers, accountants get insulted too, and the worst insult that can ever be hurled at us is to be called a business historian.  Or at least that's what I used to think. Cutting edge ideas are great.  But who is going to help you decide when you've gone over the edge? That's right, it's us.

Based on my historical observations, tax cases often end up in court for one of two reasons:  Either someone had a cutting edge idea the taxing authorities didn't like, or someone took a bleeding edge position (knowingly or not) and is now backed into a corner.  Sometimes the taxpayer is lucky enough to get out of the corner, but as most lawyers know (I'm one as well so I get twice the insults), bad facts make bad law, sometimes overturned on appeal, but always making headlines (not of the NY Times variety but more along the lines of State Tax Notes).

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TAX TALK: Can You Deduct Home Office Expenses?

Posted by Michael Eagan, J.D., LL.M. on Jan 29, 2018 9:20:00 AM

Working from home has become commonplace. But just because you have a home office space doesn’t mean you can deduct expenses associated with it. And for 2018, even fewer taxpayers will be eligible for a home office deduction.

Changes under the TCJA

For employees, home office expenses are a miscellaneous itemized deduction. For 2017, this means you’ll enjoy a tax benefit only if these expenses plus your other miscellaneous itemized expenses (such as unreimbursed work-related travel, certain professional fees, and investment expenses) exceed 2% of your adjusted gross income.

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Topics: TAX TALK

T&E TALK: Preserve Your Wealth with Asset Protection Strategies

Posted by Scott T. Ditman, CPA/PFS on Jan 29, 2018 8:27:37 AM

There are many techniques to protect your assets, from giving them to loved ones to placing them in offshore trusts. It’s important to understand that asset protection isn’t about evading legitimate debts, hiding assets, or defrauding creditors. Rather, it’s about preserving your hard-earned wealth in the face of unreasonable creditors’ claims, frivolous lawsuits, or financial predators.

Assess Your Risk

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Topics: T&E TALK

TAX TALK: TCJA and Personal Exemptions, Standard Deductions, and the Child Credit

Posted by Michael Eagan, J.D., LL.M. on Jan 22, 2018 11:40:00 AM

Under the Tax Cuts and Jobs Act (TCJA), individual income tax rates generally go down for 2018 through 2025. But that doesn’t necessarily mean your income tax liability will go down. The TCJA also makes a lot of changes to tax breaks for individuals, reducing or eliminating some while expanding others. The total impact of all of these changes is what will ultimately determine whether you see reduced taxes. One interrelated group of changes affecting many taxpayers are those to personal exemptions, standard deductions and the child credit.

Personal Exemptions

For 2017, taxpayers can claim a personal exemption of $4,050 each for themselves, their spouses, and any dependents. For families with children and/or other dependents, such as elderly parents, these exemptions can really add up.

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Topics: TAX TALK

SALT TALK: NY Tax Department Fights Back – Comprehensive Report Offers Alternatives to Make New Yorkers Whole

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Jan 22, 2018 9:25:00 AM

A lot of things I thought would never happen, have. While some of this might be attributable to a lack of foresight, I’m convinced most of it has to do with the natural process of just getting older. I never wanted to believe that federal tax reform would severely restrict the deductibility of state and local taxes and was waiting for some heroic legislator to swoop in at the last minute and eliminate this provision from the final legislation. But it never happened.

Fortunately, the New York State Tax Department, in its “Preliminary Report of the Federal Tax Cuts and Jobs Act[1]” has proposed some courageous and creative solutions to Governor Cuomo. 

Listening to news radio was the first I heard of the Preliminary Report. And I have to admit, I had a good laugh at the expense of the Tax Department and the Governor. After all, who is going to make a charitable contribution to the State of New York? But after delving into all thirty seven pages, I have to admit that while the three pillars of the proposal push the envelope, this is exactly what is needed to keep New York taxpayers on an even keel with the rest of the nation. 

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T&E TALK: How the Tax Cuts and Jobs Act Impacts Estate Planning

Posted by Scott T. Ditman, CPA/PFS on Jan 22, 2018 7:00:00 AM

The Tax Cuts and Jobs Act of 2017 (TCJA) made sweeping revisions to the tax code that altered federal law affecting individuals, businesses and, estates. Focusing specifically on estate tax law, the TCJA doesn’t repeal the federal gift and estate tax. It does, however, temporarily double the combined gift and estate tax exemption and the generation-skipping transfer (GST) tax exemption.

Beginning after December 31, 2017, and before January 1, 2026, the combined gift and estate tax exemption and the generation-skipping transfer (GST) tax exemption amounts double from an inflation-adjusted $5 million to $10 million. For 2018, the exemption amount is $11.2 million ($22.4 million for married couples). Absent further congressional action, the exemptions will revert to their 2017 levels (adjusted for inflation) beginning January 1, 2026. The marginal federal tax rate for all three taxes remains at 40%.

Estate Planning Remains a Necessity

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Topics: T&E TALK

SALT TALK: New York Enacts Incentive for Home Savings (I Think)

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Jan 15, 2018 11:40:00 AM

The music metaphor of the week takes me back to my high school swim team days. For Saturday practice only, our coach would let us bring in a record album of our choosing, which he would play over the public address system while we swam laps. The only catch, and it was a big one, was that if he didn’t like the music, the album would be dropped into the pool and its owner would have to retrieve the soggy vinyl from the deep end. I’ll never forget when the Cars first album was released in 1978 and “All Mixed Up” was blaring over the PA system. Shortly thereafter, one of my teammates was descending to retrieve his record.

So, I couldn’t help being all mixed up on the enactment of New York State’s brand new home savings incentive. You see, apparently the legislation was signed, sealed, and delivered in December of 2017, only to be postponed by another piece of legislation earlier this month requiring that “The Division of Housing and Community Renewal shall issue a report with detailed recommendations and findings to the governor . . .” 

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TAX TALK: 401(k) Contribution Limit Increases for 2018; Most Others Remain Stagnant

Posted by Michael Eagan, J.D., LL.M. on Jan 15, 2018 9:20:00 AM

Retirement plan contribution limits are indexed for inflation, but with inflation remaining low, most of the limits remain unchanged for 2018.  One piece of good news for taxpayers who’re already maxing out their contributions is that the 401(k) limit has gone up by $500. The only other limit that has increased from the 2017 level is for contributions to defined contribution plans, which has gone up by $1,000.

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Topics: TAX TALK

T&E TALK: Include Potential Incapacity in Your Estate Planning Strategies

Posted by Scott T. Ditman, CPA/PFS on Jan 15, 2018 7:00:00 AM

Most estate plans focus on what happens after you die. But without arrangements for what will happen in the event you become mentally incapacitated, your plan is incomplete. If an accident, illness, or other circumstances render you unable to make financial or health care decisions — and you don’t have documents in place to specify how these decisions will be made, and by whom — a court-appointed guardian will have to act on your behalf.

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Topics: T&E TALK

About Berdon Blogs

Our experts examine the latest trends, economics, business conditions and industry issues to provide timely information you need to maximize your tax advantages and meet your financial goals.

SALT TALK: Hear an insider’s perspective on the business issues, legislative updates in state and local tax, and tax aspects behind today’s headlines.

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