Berdon Blogs

TAX TALK: Investors - Beware of the Wash Sale Rule

Posted by Hal Zemel, CPA, J.D., LL.M. on Oct 2, 2017 9:18:00 AM

A tried-and-true tax-saving strategy for investors is to sell assets at a loss to offset gains that have been realized during the year. If you have cashed in some big gains this year, consider looking for unrealized losses in your portfolio and selling those investments before year end to offset your gains. This can reduce your 2017 tax liability.

But what if you expect an investment that would produce a loss if sold now to not only recover but thrive in the future? Or perhaps you simply want to minimize the impact on your asset allocation. You might think you can simply sell the investment at a loss and then immediately buy it back. Not so fast: You need to beware of the wash sale rule.

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Topics: TAX TALK

TAX TALK: Consider Boosting Your 401(k) Contribution Rate Between Now and Year End

Posted by Hal Zemel, CPA, J.D., LL.M. on Sep 25, 2017 9:18:00 AM

One important step to both reducing taxes and saving for retirement is to contribute to a tax-advantaged retirement plan. If your employer offers a 401(k) plan, contributing to that is likely your best first step.

If you’re not already contributing the maximum allowed, consider increasing your contribution rate between now and year end. Because of tax-deferred compounding (tax-free in the case of Roth accounts), boosting contributions sooner rather than later can have a significant impact on the size of your nest egg at retirement.

Traditional 401(k)

A traditional 401(k) offers many benefits:

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Topics: TAX TALK

TAX TALK: Key 4th Quarter Tax Deadlines for Businesses and Other Employers

Posted by Hal Zemel, CPA, J.D., LL.M. on Sep 18, 2017 10:20:00 AM

Here are some of the key tax-related deadlines affecting businesses and other employers during the fourth quarter of 2017. This list isn’t all-inclusive, so there may be additional deadlines that apply to you. Contact us to learn if you’re meeting all applicable deadlines and for more details about the filing requirements.

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Topics: TAX TALK

TAX TALK: Donating Real Estate to Charity can have Tax Pitfalls

Posted by Hal Zemel, CPA, J.D., LL.M. on Sep 11, 2017 9:36:55 AM

Charitable giving allows you to help an organization you care about and, in most cases, enjoy a valuable income tax deduction. If you’re considering a large gift, a noncash donation such as appreciated real estate can provide additional benefits. For example, if you’ve held the property for more than one year, you generally will be able to deduct its full fair market value and avoid any capital gains tax you’d owe if you sold the property.

However, there are potential tax pitfalls to watch for:

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Topics: TAX TALK

TAX TALK: The ABCs of the Tax Deduction for Educator Expenses

Posted by Hal Zemel, CPA, J.D., LL.M. on Sep 5, 2017 11:27:48 AM

At back-to-school time, much of the focus is on the students returning to the classroom — and on their parents buying them school supplies, backpacks, clothes, etc., for the new school year. But let’s not forget about the teachers. It’s common for teachers to pay for some classroom supplies out of pocket, and the tax code provides a special break that makes it a little easier for these educators to deduct some of their expenses.

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Topics: TAX TALK

TAX TALK: Undoing a Roth IRA Conversion

Posted by Hal Zemel, CPA, J.D., LL.M. on Aug 28, 2017 11:40:00 AM

Converting a traditional IRA to a Roth IRA can provide tax-free growth and the ability to withdraw funds tax-free in retirement. However, when you convert to the Roth IRA, all of the deductible contributions and earnings in the traditional IRA are included in taxable income. Therefore, you will have to pay tax on the balance converted. If after you convert a traditional IRA you discover that you would have been better off not converting to a Roth IRA, it’s possible to undo a Roth IRA conversion, using a “recharacterization.”

Reasons to Recharacterize

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Topics: TAX TALK

TAX TALK: Put your Audit in Reverse to Save Sales and Use Tax

Posted by Terence Avella, J.D., LL.M. Guest Blogger on Aug 21, 2017 11:42:00 AM

It’s a safe bet that state tax authorities will let you know if you haven’t paid enough sales and use taxes, but what are the odds that you’ll be notified if you’ve paid too much? The chances are slim — so slim that many businesses use reverse audits to find overpayments so they can seek refunds.

Claim your Exemptions

In most states, businesses are exempt from sales tax on equipment used in manufacturing or recycling, and many states don’t require them to pay taxes on the utilities and chemicals used in these processes, either. Additionally, in some states, custom software, computers and peripherals are exempt if they’re used for research and development projects.

This is just a sampling of sales and use tax exemptions that might be available but unless you’re diligent about claiming exemptions, you may be missing out on some to which you’re entitled.

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Topics: TAX TALK

TAX TALK: Will Congress Extend Expired Tax Breaks?

Posted by Hal Zemel, CPA, J.D., LL.M. on Aug 14, 2017 9:31:00 AM

Most of the talk about possible tax legislation this year has focused on either wide-sweeping tax reform or taxes that are part of the Affordable Care Act. But there are a few other potential tax developments for individuals to keep an eye on.

Back in December of 2015, Congress passed the PATH Act, which made a multitude of tax breaks permanent. However, there were a few valuable breaks for individuals that it extended only through 2016. The question now is whether Congress will extend them for 2017.

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Topics: TAX TALK

TAX TALK: A Refresher on the ACA’s Tax Penalty on Individuals without Health Insurance

Posted by Hal Zemel, CPA, J.D., LL.M. on Aug 7, 2017 11:45:00 AM

Now that Affordable Care Act (ACA) repeal and replacement efforts appear to have collapsed, at least for the time being, it’s a good time for a refresher on the tax penalty the ACA imposes on individuals who fail to have “minimum essential” health insurance coverage for any month of the year. This requirement is commonly called the “individual mandate.”

Penalty Exemptions

Before we review how the penalty is calculated, let’s take a quick look at exceptions to the penalty. Taxpayers may be exempt if they fit into one of these categories for 2017:

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Topics: TAX TALK

TAX TALK: Don’t Wait for Year-End — Here are some Mid-Year Tax Planning Strategies

Posted by Thea Kruger, J.D., LL.M. on Jul 31, 2017 11:40:00 AM

In the quest to reduce your tax bill, year-end planning can only go so far. Tax-saving strategies take time to implement, so review your options now. Even though uncertainty hangs over the timing and content of potential tax reform legislation, you can still take steps now to minimize your tax burden. Here are three strategies that can be more effective if you begin executing them mid-year:

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Topics: TAX TALK

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