MEDIA/PRESS

TAX TALK: Seniors: Medicare Premiums Could Lower Your Tax Bill

Posted by Hal Zemel, CPA, J.D., LL.M. on Apr 15, 2019 9:20:00 AM

Americans who are 65 and older qualify for basic Medicare insurance, and they may need to pay additional premiums to get the level of coverage they desire. The premiums can be expensive, especially if you’re married and both you and your spouse are paying them. But one aspect of paying premiums might be positive: If you qualify, they may help lower your tax bill.

Medicare Premium Tax Deductions

Premiums for Medicare health insurance can be combined with other qualifying health care expenses for purposes of claiming an itemized deduction for medical expenses on your individual tax return. This includes amounts for “Medigap” insurance and Medicare Advantage plans. Some people buy Medigap policies because Medicare Parts A and B don’t cover all their health care expenses. Coverage gaps include co-payments, co-insurance, deductibles and other costs. Medigap is private supplemental insurance that’s intended to cover some or all gaps.

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Topics: TAX TALK

TAX TALK: Make a Deductible IRA Contribution for 2018. It’s Not Too Late!

Posted by Hal Zemel, CPA, J.D., LL.M. on Apr 8, 2019 9:20:00 AM

Do you want to save more for retirement on a tax-favored basis? If so, and if you qualify, you can make a deductible traditional IRA contribution for the 2018 tax year between now and the tax filing deadline and claim the write-off on your 2018 return. Or you can contribute to a Roth IRA and avoid paying taxes on future withdrawals.

You can potentially make a contribution of up to $5,500 (or $6,500 if you were age 50 or older as of December 31, 2018). If you’re married, your spouse can potentially do the same, thereby doubling your tax benefits.

The deadline for 2018 traditional and Roth contributions for most taxpayers is April 15, 2019 (April 17 for those in Maine and Massachusetts).

There are some ground rules. You must have enough 2018 earned income (from jobs, self-employment or alimony) to equal or exceed your IRA contributions for the tax year. If you’re married, either spouse can provide the necessary earned income. And you can’t make a deductible contribution to a traditional IRA if you were 70½ or older as of December 31, 2018. (But you can make one to a Roth IRA after that age.)

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Topics: TAX TALK

TAX TALK: Still Working at 70½? You May Not Have to Begin 401(k) Withdrawals

Posted by Hal Zemel, CPA, J.D., LL.M. on Apr 1, 2019 9:20:00 AM

If you participate in a qualified retirement plan, such as a 401(k), you must generally begin taking required withdrawals from the plan no later than April 1 of the year after which you turn age 70½. However, there’s an exception that applies to certain plan participants who are still working for the entire year in which they turn 70½.

The Basics of RMDs

Required minimum distributions (RMDs) are the amounts you’re legally required to withdraw from your qualified retirement plans and traditional IRAs after reaching age 70½. Essentially, the tax law requires you to tap into your retirement assets — and begin paying taxes on them — whether you want to or not.

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Topics: TAX TALK

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

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

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

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

TAX TALK: Some Deductions May be Smaller (or Nonexistent) on 2018 Tax Returns

Posted by Hal Zemel, CPA, J.D., LL.M. on Feb 25, 2019 9:20:00 AM

While the Tax Cuts and Jobs Act (TCJA) reduces most income tax rates and expands some tax breaks, it limits or eliminates several itemized deductions that have been valuable to many individual taxpayers. Here are five deductions you may see shrink or disappear when you file your 2018 income tax return:

  1. State and Local Tax Deduction. For 2018 through 2025, your total itemized deduction for all state and local taxes combined — including property tax — is limited to $10,000 ($5,000 if you’re married and filing separately). You still must choose between deducting income and sales tax; you can’t deduct both, even if your total state and local tax deduction wouldn’t exceed $10,000.
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Topics: TAX TALK

TAX TALK: Three Big TCJA Changes Impact Individual Tax Returns for 2018 and Beyond

Posted by Hal Zemel, CPA, J.D., LL.M. on Feb 18, 2019 9:20:00 AM

 

When you file your 2018 income tax return, you’ll likely find that some big tax law changes affect you — besides the much-discussed tax rate cuts and reduced itemized deductions. For 2018 through 2025, the Tax Cuts and Jobs Act (TCJA) makes significant changes to personal exemptions, standard deductions, and the child credit. The degree to which these changes will affect you depends on whether you have dependents and, if so, how many. It also depends on whether you typically itemize deductions.

  1. No More Personal Exemptions. For 2017, taxpayers could claim a personal exemption of $4,050 each for themselves, their spouses, and any dependents. For families with children and/or other dependents, such as elderly parents, these exemptions could really add up.

    For 2018 through 2025, the TCJA suspends personal exemptions. This will substantially increase taxable income for large families. However, enhancements to the standard deduction and child credit, combined with lower tax rates and other changes, might mitigate this increase.
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Topics: TAX TALK

TAX TALK: Filing Early May Be Your Best Defense against Identity Theft

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

The IRS opened the 2018 income tax return filing season on January 28. Even if you typically don’t file until much closer to the April 15 deadline, this year consider filing as soon as you can. Why? You can potentially protect yourself from tax identity theft — and reap other benefits, too.

What is Tax Identity Theft?

In a tax identity theft scheme, a thief uses your personal information to file a fraudulent tax return early in the filing season and claim a bogus refund.

You discover the fraud when you file your return and are informed by the IRS that the return has been rejected because one with your Social Security number has already been filed for the same tax year. While you should ultimately be able to prove that your return is the legitimate one, tax identity theft can cause major headaches to straighten out and significantly delay your refund.

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Topics: TAX TALK

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