Berdon Blogs

TAX TALK: 2017 Tax Breaks for Families with College Students

Posted by Michael Eagan, J.D., LL.M. on Feb 19, 2018 10:49:55 AM

Whether you had a child in college or graduate school last year or were a student yourself, you may be eligible for some valuable tax breaks on your 2017 return. One such break that had expired December 31, 2016, was just extended under the recently passed Bipartisan Budget Act of 2018: the tuition and fees deduction.

But a couple of tax credits are also available. Tax credits can be especially valuable because they reduce taxes dollar-for-dollar; deductions reduce only the amount of income that’s taxed.

Higher Education Breaks 101

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Topics: TAX TALK

T&E TALK: Life Insurance is a Powerful Tool for Nontaxable Estates

Posted by Scott T. Ditman, CPA/PFS on Feb 19, 2018 7:00:00 AM

For years, life insurance has played a critical role in estate planning, providing a source of liquidity to pay estate taxes and other expenses. It’s been particularly valuable for business owners, whose families might not have the liquid assets they need to pay estate taxes without selling the business.

Under the Tax Cuts and Jobs Act, the estate tax exemption has climbed to an inflation-adjusted $10 million through 2025 (projected to be just over $11 million for 2018). Even before the increase, federal estate taxes weren’t a concern for the vast majority of families, and now even fewer families are at risk. But even for nontaxable estates, life insurance continues to offer significant estate planning benefits.

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Topics: T&E TALK

SALT TALK: Sales Tax Planning Allows Building Boxes More Efficiently

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Feb 12, 2018 11:24:34 AM

Ask any accountant and they will tell you how tired they are of the stereotype that we are math geniuses. You don’t need to be a geometry expert to help a client make his/her idea a reality.   You do need the ability to listen carefully to the plan and use your knowledge and experience to implement it in the most efficient way.

Case in point: a client came to us looking to achieve the maximum benefit from the sales tax exemption that virtually all states grant to the construction of a capital improvement.

While most are aware that capital improvement projects are generally “exempt” from sales tax, most don’t understand that in virtually all circumstances, someone still pays the tax on the materials incorporated into the project. Contractors should almost never buy materials for resale. They pay tax on their purchases and build it into the price they charge the customer.

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TAX TALK: TCJA Temporarily Lowers Medical Expense Deduction Threshold

Posted by Michael Eagan, J.D., LL.M. on Feb 12, 2018 9:14:00 AM

With rising health care costs, claiming whatever tax breaks related to health care that you can is more important than ever. But there’s a threshold for deducting medical expenses that may be hard to meet. Fortunately, the Tax Cuts and Jobs Act (TCJA) has temporarily reduced the threshold.

Eligible Expenses

Medical expenses may be deductible if they’re “qualified.” Qualified medical expenses involve the costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and the costs for treatments affecting any part or function of the body. Examples include payments to physicians, dentists and other medical practitioners, as well as equipment, supplies, diagnostic devices, and prescription drugs.

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Topics: TAX TALK

T&E TALK: Have You Taken State Estate Taxes into Account?

Posted by Scott T. Ditman, CPA/PFS on Feb 12, 2018 7:00:00 AM

The Tax Cuts and Jobs Act has doubled the federal gift and estate tax exemption, with inflation-adjustments projected to raise it to $11.18 million for 2018. This means federal estate taxes are a concern for fewer families, at least in the short term. (The doubled exemption expires December 31, 2025.) But it’s important to consider how state estate or inheritance taxes may affect your estate plan.

There’s uncertainty about how states will respond to the increased federal estate tax exemption. One line of thought is that many states will continue to “decouple” from the federal exemption and impose their own estate tax exemptions at a lower amount.

Establishing Residency in a New State

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Topics: T&E TALK

TAX TALK: Two Small Business Tax Credits May Reduce Your 2017 and 2018 Tax Bills

Posted by Michael Eagan, J.D., LL.M. on Feb 5, 2018 11:44:00 AM

Tax credits reduce tax liability dollar-for-dollar, potentially making them more valuable than deductions, which reduce only the amount of income subject to tax. Maximizing available credits is especially important now that the Tax Cuts and Jobs Act has reduced or eliminated some tax breaks for businesses. Two still-available tax credits are especially for small businesses that provide certain employee benefits.

1. Credit for Paying Health Care Coverage Premiums

The Affordable Care Act (ACA) offers a credit to certain small employers that provide employees with health coverage. Despite various congressional attempts to repeal the ACA in 2017, nearly all of its provisions remain intact, including this potentially valuable tax credit.

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Topics: TAX TALK

SALT TALK:  They’re Here! – New York Governor Releases Fiscal Year 2019 Budget Proposals

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Feb 5, 2018 9:18:00 AM

Anyone who has seen the 1982 supernatural horror film Poltergeist certainly remembers four-year-old Carol Anne sitting up in bed and staring at the static filled TV screen acknowledging the arrival of her supernatural visitors by uttering the most well-known phrase from the movie, “They’re here!”  While no one would ever accuse our lawmakers of being supernatural beings, Governor Cuomo’s 2019 Budget Proposals are certainly responsible for “physical disturbances such as loud noises and objects thrown around the room.”

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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

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.

T&E TALK: Gain insights into how changes in tax laws, shifts in the financial markets, and regulatory concerns will impact assets and affect preserving and transferring wealth.

TAX TALK: Get an all-inclusive perspective on regulatory changes, industry issues, and trends from our team of multidisciplinary tax professionals – many of whom also hold J.D. and LL.M degrees.

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