TAX TALK: Stretch Your College Student’s Dollars with the Dependent Tax Credit

Posted by Hal Zemel, CPA, J.D., LL.M. on Mar 25, 2019 9:19:00 AM

If you’re the parent of a child age 17 to 23, and you pay all (or most) of his or her expenses, you may be surprised to learn you’re not eligible for the child tax credit. But there’s a dependent tax credit that may be available to you. It’s not as valuable as the child tax credit, but when you’re saving for college or paying tuition, every dollar counts!

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Topics: TAX TALK

T&E TALK: Create a “Road Map” to Guide Those Executing Your Estate Plan

Posted by Scott T. Ditman, CPA/PFS on Mar 25, 2019 7:00:00 AM

No matter how much effort you’ve invested in designing your estate plan, your will, trusts, and other official documents may not be enough. Consider creating a “road map” — an informal letter or other document that guides your family in understanding and executing your plan and ensuring that your wishes are carried out.

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Topics: T&E TALK

T&E TALK: Moving a Trust over State Lines can offer Tax Savings and Other Benefits

Posted by Scott T. Ditman, CPA/PFS on Mar 18, 2019 9:58:10 AM

Residents of states with high income taxes sometimes relocate to a state with a more favorable tax climate. A similar strategy can be available for trusts. If a trust is subject to high state income taxes, you may be able to change its residence — or “situs” — to a state with low or no income taxes.

What Can a “Trust-Friendly” State Offer?

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Topics: T&E TALK

SALT TALK: Helen Shapiro Claims She’s Not Responsible–Why Are You?

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Mar 18, 2019 9:53:38 AM

Steadfast readers of my blog have likely realized at least one thing about me by now: I am a dedicated music fan and will listen to anything once.1 Sometimes I’ll love something the first time I hear it (rarely); sometimes I’ll hate something the first time I hear it (fairly common); and other times, a second listen is all it takes.

So I was really stumped by Helen Shapiro. I had no idea who she was before I decided what this week’s blog would cover. But apparently Helen had some big hits in the early sixties and in 1963 the Beatles toured as her supporting act. The reason Helen is important to this week’s post is the fact that she has been crooning (not to the state tax authorities) since 1963, that she is “Not Responsible.”

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TAX TALK: Deadline Approaching for 2018 Gift Tax Return

Posted by Hal Zemel, CPA, J.D., LL.M. on Mar 18, 2019 7:00:00 AM

Did you make large gifts to your children, grandchildren, or other heirs last year? If so, it’s important to determine whether you’re required to file a 2018 gift tax return — or whether filing one would be beneficial even if it isn’t required.

Filing Requirements

Generally, you must file a gift tax return for 2018 if, during the tax year, you made gifts:

  • That exceeded the $15,000-per-recipient gift tax annual exclusion (other than to your U.S. citizen spouse),
  • That you wish to split with your spouse to take advantage of your combined $30,000 annual exclusion,
  • That exceeded the $152,000 annual exclusion for gifts to a noncitizen spouse,
  • To a Section 529 college savings plan and wish to accelerate up to five years’ worth of annual exclusions ($75,000) into 2018,
  • Of future interests — such as remainder interests in a trust — regardless of the amount, or
  • Of jointly held or community property.
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Topics: TAX TALK

SALT TALK: State Tax Auditors are People Too?

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Mar 11, 2019 11:54:45 AM

Those responsible for posting my blog into the outreaches of cyberspace are well aware that rarely do I know what the topic will be till I sit down to write. Whether it be a current news item (I am somewhat restrained and need to keep the Firm politically neutral) or something I am working on at that moment in time, I just never seem to run out of material.

My office phone rings. Glancing over at the caller id, I can see it is one of the many state tax departments calling me. As I’m not trying to avoid any auditors at the moment, I decide to answer the call.

Mr. Berkowitz, I’m Mr. X from the State of Y Department of Revenue. I see you are going to be representing ABC LLC in their upcoming audit. There is a problem with the Power of Attorney authorizing you to represent ABC. The period you indicated on the Power doesn’t coincide with the audit period.

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TAX TALK: Vehicle-Expense Deduction Ins and Outs

Posted by Hal Zemel, CPA, J.D., LL.M. on Mar 11, 2019 9:20:00 AM

It’s not just businesses that can deduct vehicle-related expenses. Individuals also can deduct them in certain circumstances. Unfortunately, the Tax Cuts and Jobs Act (TCJA) might reduce your deduction compared to what you claimed on your 2017 return.

For 2017, miles driven for business, moving, medical and charitable purposes were potentially deductible. For 2018 through 2025, business and moving miles are deductible only in much more limited circumstances. TCJA changes could also affect your tax benefit from medical and charitable miles.

Current Limits vs. 2017

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Topics: TAX TALK

T&E TALK: It’s Not Unusual to include your Pet in your Estate Plan

Posted by Scott T. Ditman, CPA/PFS on Mar 11, 2019 7:00:00 AM

An unexpected outcome of the recent death of designer Karl Lagerfeld is that the topic of estate planning for pets has been highlighted. Lagerfeld’s beloved cat, Choupette, played a major role in his brand. The feline was the subject of a coffee table book and has a large Instagram following. Before his death, Lagerfeld publicly expressed his wishes to have his ashes, and those of his cat if she had died before him, to be scattered with those of his mother’s. It’s unknown if Lagerfeld accounted for his beloved Choupette in his estate plan, but one vehicle he could have used to do so is a pet trust.

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Topics: T&E TALK

SALT TALK: California Minimum Franchise Tax – May the Swart [1] Be With You

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Mar 4, 2019 11:40:00 AM

Here is how the conversation usually goes at Berdon: 

Berdon Person Other Than Me (“BPOTM”): Wayne, I have a client whose only connection to California is a 0.001% non-managing membership interest in manager-managed LLC. The LLC is doing business in California. Do I have to pay the $800 minimum franchise tax?

Me: Well, there is a case with a limited partnership and similar facts that says you don’t have to. But the Franchise Tax Board (“FTB”) has been interpreting it very narrowly and only applies the case to LPs and not LLCs.

BPOTM: Wayne, that’s crazy. The facts and circumstances are exactly the same. Why should my client have to pay $800 and why should we go to the expense of filing the return?

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TAX TALK: If you Own a Pass-Through Entity — Beware the Ides of March

Posted by Hal Zemel, CPA, J.D., LL.M. on Mar 4, 2019 9:20:00 AM

Shakespeare’s words don’t apply just to Julius Caesar; they also apply to calendar-year partnerships, S corporations and limited liability companies (LLCs) treated as partnerships or S corporations for tax purposes. Why? The Ides of March, more commonly known as March 15, is the federal income tax filing deadline for these “pass-through” entities.

Not-so-Ancient History

Until the 2016 tax year, the filing deadline for partnerships was the same as that for individual taxpayers: April 15 (or shortly thereafter if April 15 fell on a weekend or holiday). One of the primary reasons for moving up the partnership filing deadline was to make it easier for owners to file their personal returns by the April filing deadline. After all, partnership (and S corporation) income passes through to the owners. The earlier date allows owners to use the information contained in the pass-through entity forms to file their personal returns.

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Topics: TAX TALK

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