Berdon Blogs

SALT TALK: Use Caution Navigating State Tax Credits

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on May 7, 2018 11:30:00 AM

Just like the beautiful Sirens luring nearby sailors to a rocky shipwreck, those aimlessly navigating the waters of state tax credits can end up with a similar fate. The Sirens, in this case, are certain purveyors of state tax credit services. They will sing you songs of promises to provide you free money that your accountant doesn’t know about. And best of all, at no cost to you.

While state tax credits are a great resource as are a handful of practitioners that specialize in securing them, many have a rudimentary understanding of federal and state tax planning in general, let alone your specific circumstances. While a taxpayer may be able to secure a tax credit from a particular state, surprisingly this may have little or no impact on your overall tax burden. In fact, it may end up costing you.

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Topics: SALT TALK

TAX TALK: 2018 Tax Planning - Start Now in Light of the TCJA

Posted by Michael Eagan, J.D., LL.M. on May 7, 2018 9:20:00 AM

With the April 17 individual income tax filing deadline behind you (or with your 2017 tax return on the back burner if you filed for an extension), you may not want to think about taxes for the next several months. But for maximum tax savings, now is the time to start tax planning for 2018.  It’s especially critical to get an early start this year because the Tax Cuts and Jobs Act (TCJA) has substantially changed the tax environment.

Many Variables

A tremendous number of variables affect your overall tax liability for the year. Looking at these variables early in the year can give you more opportunities to reduce your 2018 tax bill.

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Topics: TAX TALK

T&E TALK: Blended Family? Here are Four Estate Planning Techniques

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

Today, it’s not unusual for a family to include children from prior marriages. These “blended” families can create estate planning complications that may lead to challenges in the courts after your death.

Fortunately, you can reduce the chances of family squabbles by using techniques designed to preserve wealth for your heirs in the manner you want, with a minimum of estate tax erosion, if any. Here are four examples:

  1. Will. Your will generally determines who gets what, when, where, and how. It may be combined with “inter vivos trusts” established during your lifetime or be used to create testamentary trusts, or both. While you can include a few tweaks for your blended family through a codicil to the will, if the intended changes are substantive — such as removing an ex-spouse and adding a new spouse — you should meet with your estate planning attorney to have a new will prepared.
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Topics: T&E TALK

TAX TALK: Tax Document Retention Guidelines for Small Businesses

Posted by Michael Eagan, J.D., LL.M. on Apr 30, 2018 11:10:20 AM

You may have breathed a sigh of relief after filing your 2017 income tax return (or requesting an extension). But if your office is strewn with reams of paper consisting of years’ worth of tax returns, receipts, canceled checks and other financial records (or your computer desktop is filled with a multitude of digital tax-related files), you probably want to get rid of what you can. Follow these retention guidelines as you clean up.

General Rules

Retain records that support items shown on your tax return at least until the statute of limitations runs out — generally three years from the due date of the return or the date you filed, whichever is later. That means you can now potentially throw out records for the 2014 tax year if you filed the return for that year by the regular filing deadline. But some records should be kept longer.

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SALT TALK: Where You Rest Your Weary Bones May Have No Impact on Tax Residency

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Apr 30, 2018 9:20:00 AM

As avid readers of my blog already know, most states have a two-pronged approach to pulling you in as a resident and consequently taxing you on worldwide income. The first way is domicile, the test that generally looks to your intentions. The second and the focus of this post is statutory residence.

If you have a permanent place of abode and are in the jurisdiction for more than 183 days, with limited exceptions, you will be held in the same regard as a domiciliary of the jurisdiction. You will be taxed as a resident. What many taxpayers fail to appreciate is that you don’t ever need to sleep, visit, drive by, look at or be within 500 miles of the so called living quarters that may constitute a permanent place of abode.

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Topics: SALT TALK

T&E TALK: Estate Planning Strategies for Non-U.S. Citizens

Posted by Scott T. Ditman, CPA/PFS on Apr 30, 2018 7:01:00 AM

Non-U.S. citizens face some estate planning challenges when it comes to taxes. If you’re a U.S. resident, but not a citizen, the IRS treats you similarly to a U.S. citizen, with a few exceptions. But, if you’re a nonresident alien, the tax treatment of your estate will be significantly different.

Understanding Residency

IRS regulations define a U.S. resident for federal estate tax purposes as someone who had his or her domicile in the United States at the time of death. One acquires a domicile in a place by living there, even briefly, with a present intention of making that place a permanent home.

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Topics: T&E TALK

SALT TALK: Take My Tax … Please (California)

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Apr 23, 2018 11:30:00 AM

I’ve addressed real estate transfer tax traps before (February 21, 2017, July 11, 2016, October 12, 2015, October 5, 2015) and the concept of the controlling interest transfer. Simply put, state real property transfer taxes used to be simple; if you transferred title to the property, the tax applied. Life got more complicated and taxpayers got smarter. What about the sale of a business that owns real property? If the buyer were to purchase the existing business entity, the deed stays in the name of the existing business and no transfer tax would apply. Clever property owners came up with the idea to put the property in a special purpose entity specifically to hold title to the property they wished to sell. The buyer would purchase the entity, real property and all. Under the old simplistic transfer tax statutes, the tax wouldn’t apply.

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Topics: SALT TALK

TAX TALK: Individual Tax Calendar: Important Deadlines for the Remainder of 2018

Posted by Michael Eagan, J.D., LL.M. on Apr 23, 2018 9:30:00 AM

With April 17 behind us, to help you make sure you don’t miss any important 2018 deadlines, here’s a look at when some key tax-related forms, payments, and other actions are due. Keep in mind that this list isn’t all-inclusive, so there may be additional deadlines that apply to you.

Please review the calendar and let us know if you have any questions about the deadlines or would like assistance in meeting them.

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Topics: TAX TALK

T&E TALK: A Total Return Unitrust (TRU) May Help Maintain Family Harmony

Posted by Scott T. Ditman, CPA/PFS on Apr 23, 2018 7:00:00 AM

A traditional trust can sometimes create a conflict between the lifetime and remainder beneficiaries. For example, investment strategies that provide growth that benefits remainder beneficiaries can leave lifetime beneficiaries with little or no annual payouts. This makes it more difficult for your estate plan to achieve your objectives and places your trustee in a difficult position. A total return unitrust (TRU) may offer a solution.

A TRU frees the trustee to employ investment strategies that maximize growth (total return) for the remainder beneficiaries without depriving lifetime beneficiaries of income. Rather than pay out its income to the lifetime beneficiary, a TRU pays out a fixed percentage (typically between 3% and 5%) of the trust’s value, recalculated annually, regardless of the trust’s earnings.

Considerations when Creating a TRU

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Topics: T&E TALK

SALT TALK: The Day We Have Been Waiting For

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Apr 16, 2018 12:29:56 PM

It is April 16th, a day that most accountants hate but gleefully look forward to, nonetheless.  Since April 15th, “Tax D-Day” fell on a Sunday, midnight tonight is when it all comes to a screeching halt.  But if you are a state and local tax geek, this is certainly the week we have been waiting for our entire careers.

The Supreme Court of the United States is going to hear the potentially landmark case of South Dakota v. Wayfair, which may in fact overturn the physical presence standard established by the Court over 25 years ago in Quill.  With that introduction and my full attention required to assist with last minute tax filings (mainly, my own) and the need (as well as the desire) to monitor every possible development regarding Wayfair, I leave you with a very relevant blog “rerun” that sums up the problem. 

Readers should note, Amazon now collects sales tax in every state that imposes one.

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Topics: SALT 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.

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