SALT TALK: Let’s Chart a Course

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Sep 23, 2019 11:30:00 AM

As a kid, I always loved to look at maps and still do. GPS devices of all kinds have eliminated the need to consult with the paper monsters thereby eliminating the required graduate degree in Origami[1] to return the map to its original neatly folded state.  The need to consult a map to get from here to anywhere is gone.

Map lovers do not fret. The paper might be gone from the equation, but the internet provides us with the ability to look at anywhere in the world at any time.

What does any of this have to do with state and local tax, other than this author indulging his sense of humor?

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TAX TALK: Some Relief from College Costs on Your Tax Return

Posted by Hal Zemel, CPA, J.D., LL.M. on Sep 23, 2019 9:20:00 AM

We all know the cost of college is expensive. The latest figures from the College Board show that the average annual cost of tuition and fees was $10,230 for in-state students at public four-year universities — and $35,830 for students at private not-for-profit four-year institutions. These amounts don’t include room and board, books, supplies, transportation and other expenses that a student may incur.

Two Tax Credits

Fortunately, the federal government offers two sizable tax credits for higher education costs that you may be able to claim:

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Topics: TAX TALK

T&E TALK: The “Crummey” is Still Relevant

Posted by Scott T. Ditman, CPA/PFS on Sep 23, 2019 7:00:00 AM

Traditionally, trusts used in estate planning contain “Crummey” withdrawal powers to ensure that contributions qualify for the annual gift tax exclusion. Today, the exclusion allows you to give up to $15,000 per year ($30,000 for married couples) to any number of recipients.

Now that the gift and estate tax exemption has reached an inflation-adjusted $11.4 million, fewer people have to worry about gift and estate taxes. But, for many affluent people, the annual exclusion continues to be an important estate planning strategy. Thus, Crummey powers continue to be relevant.

Reasons to Make Annual Exclusion Gifts

Despite the record-high exemption, there are two important reasons to make annual exclusion gifts. First, if your wealth exceeds the exemption amount, an annual gifting program can reduce or even eliminate your liability for gift and estate taxes.

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Topics: T&E TALK

SALT TALK: Should I Stay or Should I Go?

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Sep 16, 2019 11:35:00 AM

The year was 1971 and it made sense that Robert Plant and Jimmy Page were “Going to California.” Although the highest individual tax rate in California that year was somewhere around ten percent, the decision was much easier since the federal government picked up a large part of the bill. The top marginal federal tax rate was seventy percent. With the benefit of the itemized deduction for state and local taxes, a $10,000 California tax bill now only cost you $3,000. A small price to pay for experiencing the wonders of Hollywood Boulevard.

Ten years later, in 1981, the Clash having the foresight to realize the sacred deduction of residents living in high income tax states may come to an end some thirty or so years in to the future, asked us to consider whether we should start thinking about leaving. Once the feds stop subsidizing the deduction, they so clairvoyantly forecast, it might be time to consider whether you should stay or go.

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TAX TALK: 2019 Q4 Tax Deadlines for Businesses and Other Employers

Posted by Hal Zemel, CPA, J.D., LL.M. on Sep 16, 2019 9:20:00 AM

Here are some of the key tax-related deadlines affecting businesses and other employers during the fourth quarter of 2019. Keep in mind that this list isn’t all-inclusive, so there may be additional deadlines that apply to you. Contact us to ensure you’re meeting all applicable deadlines and to learn more about the filing requirements.

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Topics: TAX TALK

T&E TALK: You Can Control How Your Charitable Gifts Are Used

Posted by Scott T. Ditman, CPA/PFS on Sep 16, 2019 7:00:00 AM

If philanthropy is important to your estate planning legacy, consider taking steps to ensure that your donations are used to fulfill your intended charitable purposes. Outright gifts can be risky, especially large donations that will benefit a charity over a long period of time.

Even if a charity is financially sound when you make a gift, there are no guarantees it won’t suffer financial distress, file for bankruptcy protection, or even cease operations down the road. The last thing you probably want is for a charity to use your gifts to pay off its creditors or for some other purpose unrelated to the mission that inspired you to give in the first place.

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Topics: T&E TALK

SALT TALK: Golf and a Little Bit of Residency Planning, Anyone?

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Sep 10, 2019 9:32:54 AM

At Berdon, we do our best to educate our clients about the tax ramifications of their decisions. They know that in most states there are two ways to be considered a resident (and thereby taxed on worldwide income) for income tax purposes. First, the domicile test. It’s the “touchy-feely” test of what your intentions are and where you intend your home to be. Then there is the arguably more objective statutory resident test. If you have a “permanent place of abode” (a term of art to be discussed some other time) and are “present” (also a term of art to be further explored) in the jurisdiction for more than 183 days, you are a resident.

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TAX TALK: Next Estimated Tax Deadline is 9.16: Do You Have to Make a Payment?

Posted by Hal Zemel, CPA, J.D., LL.M. on Sep 9, 2019 9:20:00 AM

If you’re self-employed and don’t have withholding from paychecks, you probably have to make estimated tax payments. These payments must be sent to the IRS on a quarterly basis. The third 2019 estimated tax payment deadline for individuals is Monday, September 16. Even if you do have some withholding from paychecks or payments you receive, you may still have to make estimated payments if you receive other types of income such as Social Security, prizes, rent, interest, and dividends.

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Topics: TAX TALK

T&E TALK: Take Intrafamily Lending to the Next Level - Establish a Family Bank

Posted by Scott T. Ditman, CPA/PFS on Sep 9, 2019 7:00:00 AM

One of the primary goals of estate planning is to put in writing how you want your wealth distributed to loved ones after your death. But what if you’d like to use that wealth to help a family member in need while you’re still alive? One way to do so is through intrafamily lending. If you’re considering making an intrafamily loan to your children or other family members, it’s worth a look at establishing a “family bank.”

Loan Structure is Important

Lending can be an effective way to provide your family financial assistance without triggering unwanted gift taxes. So long as a loan is structured in a manner similar to an arm’s-length loan between unrelated parties, it won’t be treated as a taxable gift.

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Topics: T&E TALK

SALT TALK: Online Retailers – You’re Not in Kansas Any More

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Sep 3, 2019 11:30:00 AM

Based on the calendar and the devastation of Hurricane Dorian, there is no doubt that we are at the height of hurricane season. Tornado season, I’m told, peaks from about May to July. While prepared, I was surprised that the Kansas Department of Revenue waited until August 1, 2019 to issue Notice 19-04, “Sales Tax Requirements for Retailers Doing Business in Kansas.” 

Virtually every state that has a sales tax has by this time asserted some type of “Wayfair” nexus and sales tax obligation on remote sellers. By overturning the physical presence requirement to impose a sales tax obligation, the U.S. Supreme Court invited the states to impose a sales tax collection obligation on sellers never setting one foot within their borders.

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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.

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