professor and gingerJust sit right back and you’ll hear a tale, a tale of the changing rules. 2018 tax laws get confusing, but we’ve got your back. Yes, we’ve got your back.

July is a time for sun, fun, and vacation. Put stress on the back burner, and know that our barton CPA staff is constantly finding ways to take care of your tax questions. As we all navigate through the unchartered waters of the new 2018 tax laws, we want you to learn a few things along the way. We don’t want you to get lost on a three-hour-tour…that could mean years of confusion! So let’s put ourselves in the trusty Barton Minnow – ala Gilligan’s Island – and let our fearless leader, Professor Greg Barton, guide us through some important facts:

  1. There are still seven tax brackets and tax rates for 2018: 10%, 12%, 22%, 24% 32% and 37%.
  2. Standard Deduction Amounts will increase to $12,000 for individuals, $18,000 for heads of households, and $24,000 for married couples filing jointly.
  3. There is an additional Standard Deduction amount of $1,300 for aged or blind spouses and $1,600 for each elderly or blind person who is unmarried.
  4. Vacationing in the mountains can sometimes lead to spiders, which can then lead to cutting vacation time short. (This might have a little Ginger – aka Dee Dee – written all over it.)spider
  5.  You can gift your child or grandchild $15,000 tax-free.  Did you hear that? TAX-FREE. Get that college fund started off right, or help pay down those student loans. We can help!
  6. Have you seen the new sample tax return? It’s super cute. Meaning super tiny. The Hubble telescope is still trying to find it.
  7. The new tax code makes a big change to the way pass-through income is taxed – including sole proprietorships, LLCs, partnerships, and corporations. In other words, if you own a small business and it generates $100,000 in profit in 2018, you may be able to deduct $20,000 of it before the ordinary income tax rates are applied. Certain businesses that have over $157,500 ($315,000 for a joint return) are subject to special rules that limit this deduction.
  8. Untitled 2If you decide to get a new dog, there’s a 75% chance it will eat all your expensive pillows and patio furniture.
  9. Mortgage interest payments are deductible on acquisition mortgage debt of up to $750,000 – formerly it was $1,000,000. Still waiting for the numbers on stress medication deductibles.
  10. Reminder: if your business is a Partnership, S Corporation, or LLC your taxes are due September 17. If you are a C Corporation, sole proprietorship or SMLLC, your taxes are due October 15. Mark your calendar, and we’re here for you!

tax reform barton CPABe aware… your 2018 tax returns will look very different from previous years! This year has ushered in the United States’ biggest tax reform law in more than thirty years. The team at barton CPA has been studying and delving deep into the new tax reform bill and here is an overview of the areas that might affect you.

TIP: Don’t try to do your taxes alone! These changes are multi-leveled and tricky. Let our team help you through the process for one low rate. Call today and schedule your appointment!

Tax rate changes: Both individual and corporate rates have changed. The maximum individual rate is reduced to 37% and the corporate rate is now a flat 21%. The rate change could benefit you, or in some cases, raise your tax liability.

Standard deduction increases: Personal exemption deductions have been eliminated.

Increased Child Tax Credit and new Dependent Credit: The credit has increased for each child to $2,000, of which $1,400 per child is now refundable. In addition, each non-child dependent can now receive a $500 credit. You, however, will have no exemption credit or deduction for yourself, your spouse, or your dependents.

The phase out thresholds for these credits have drastically increased. Married taxpayers filing a joint return can claim the full credits if their adjusted gross income is $400,000 or less ($200,000 for all others). The credits are fully phased out for married taxpayers filing a joint return when their adjusted gross income reaches $440,000 ($240,000 for all others). This means more taxpayers will be able to claim these credits in 2018.

questioDisappearing deductions: Beginning with the 2018 tax year, you will no longer be able to deduct:

  • State income tax and property taxes above $10,000 per year in total;
  • Moving expenses (with an exception for certain military);
  • Employee business expenses such as mileage, travel, entertainment, home office expenses, union dues, tax preparation fees, and investment fees, among others;
  • Mortgage interest beyond interest on $750,000 of acquisition debt, if you purchase a new home; and
  • Mortgage interest paid on equity debt

Some new benefits for individuals: These new benefits include:

  • The medical expense AGI threshold will temporarily drop to 7.5% of AGI for 2017 and 2018;
  • The AMT threshold is increased, so fewer middle-income taxpayers will be subject to AMT;
  • The estate tax exclusion has nearly doubled to $10 million; and
  • The annual gift tax exclusion remains the same ($14,000 for 2017 and $15,000 for 2018), but the maximum rate on gifts is 35%.

TaxdogBartonSmall business benefit: Beginning in 2018, there will be up to a 20% deduction from net business income for a sole proprietorship, LLC (excluding those taxed as a C corporation), partnership, S corporation, and rental activity. The new rules are complex and barton CPA is prepared to help you maximize this deduction.

Barton CPA is staying current and up-to-date on all changing tax laws. Set up your appointment today.

Contact us via email at This email address is being protected from spambots. You need JavaScript enabled to view it. or call 760.969.6499 so we can help you navigate these complex changes.

 

While many people have their concerns when it comes to filing tax returns, women can be especially leery of covering all the areas that warrant a deduction. There are also certain instances for women that can be challenging when having to navigate unchartered territory, such as those who have recently divorced or the death of a partner who always managed the taxes.  

A basic overview and education by a qualified CPA on what the IRS expects to see in a return can be tremendously helpful in grasping and understanding how this system works. Some of the areas covered in such a session would include the following:

  • Statement of income, which includes salaries, IRA distributions and dividends; whereby the bottom of this page totals up adjusted gross income
  • The summary of deductions as well as any credits a taxpayer is entitled to, determined by subtracting deductions and credits from AGI results in an item called taxable income.
  • Schedule A, the “itemized deductions” page that sums up interest deduction on a home mortgage, property tax, charitable contributions and medical expenses above a certain level, including long-term-care insurance.
  • Schedule B, the “interest and ordinary dividends” page that totals income from investments such as CDs, stock dividends and bond interest.
  • Schedule D, “capital gains and losses.” This form–one of the most complicated schedules in the IRS’ broad array of schedules–indicates whether the taxpayer must pay taxes on long-term and short-term gains from the sales of assets. Sales on losses listed here reduce taxable income.

Once understanding the five basic components of the return, there are various deductions that are often overlooked. Forgetting to take these itemized deductions can add up! Here are a few that qualify:

  • Child care expenses:  Your child care provided needs to provide a statement on how much you paid, and in order to take the credit you will need their federal ID number or social security number and address.
  • Tuition, books, computers, and fees: If you have a dependent child in which you pay on behalf of them you may be able to claim an education credit or deduction for the amounts you pay. And remember, if the child goes away to school, and you are providing more than 50 percent support, you may still claim head of household status even during the absence of the child.
  • Major life changes: Understand your tax ramifications if you have married, divorced, purchased a residence, had loss of a residence, changed jobs, or have become self-employed.
  • Max out retirement account contributions: According to the U.S. Department of Labor, 39 percent of female workers are covered by private pension plans, compared with 46 percent of male workers. And when retirement time comes, 32 percent of female retirees get pension benefits, compared with 55 percent of men. Add to that the sad fact that a woman still earns only 76 cents for every dollar a man earns. Get the best tax benefits by contributing as much is allowed.
  • Do not rely on tax money: If you are expecting a large return, hold off on spending that amount before it is confirmed how much you will receive back. Many people will expect a large return and buy new furniture, a car, and other spendy items before receiving their refund. The amount you are expecting back can change, so be wise and wait.
  • Consider your filing status: Eligible single women can get a sizable tax break by filing as Head of Household. Head of Household status requires that you paid more than 50 percent of all expenses associated with keeping up a home and have supported at least one dependent for at least six months out of the year. In addition, single women who have no children, but whom have cared for a dependent family member, can also qualify for Head of Household status.

It can be timely and make one weary in trying to keep up with the many tax laws, but by better understanding the various deductions you will be in the best position to keep those dollars in your pocket as appropriate!  Qualified professionals can be invaluable while many times proving a return on investment for their services, since they are well-versed in all areas of tax law and can identify appropriate candidates for different deductions.

If you need assistance in filing your 2016 taxes, or strategizing your 2017 tax planning and financial goals, barton CPA is a reputable Coachella Valley firm and offers a complimentary consultation.

barton CPA
Phone (760) 969-6499

www.bartoncpa.com

Unfortunately the IRS notes in Publication 502, that medical expense deductions “do not include…..vitamins or a vacation." So, what can be deducted?

One of the most important major changes impacting taxpayers beginning in 2017 is the allowance of medical deductions which exceed 10 percent of one’s adjusted gross income. In 2016, people 65 years and older were allowed to deduct medical costs that exceeded 7.5 percent of their adjusted gross income. Now everyone is on a level playing field with the 10 percent requirement.

Keeping track of medical related costs such as co-pays, prescriptions, and often forgotten, mileage for driving to medical appointments. These miles can add up and might push you over the 10 percent limit. You can also deduct costs for eyeglasses, chiropractic services, acupuncture, travel expenses, home renovations, reclining chairs, therapeutic swimming, whirlpool baths, wigs, artificial teeth and various other qualifying items. There are certain rules in which some of these qualify and a professional tax consultant can evaluate your medical status to make sure you are not overlooking any of these possibilities if they apply to you.

Another hot topic for healthcare when it comes to taxes is of course, Obamacare, or Patient Protection and Affordable Care Act. The battle over repealing Obamacare is getting very real. However, it is still in effect for now through 2017. If you did not have health coverage in 2016 and don't qualify for a health coverage exemption, the penalty fee is 2.5% of your household income or $695 per adult ($347.50 per child), whichever is higher. And, the same will hold true for 2017.

There are also special rules often overlooked for medical deductions for children of separated parents. Even if a child is claimed as a dependent by one of the parent’s, the other parent can still deduct any medical fees associated with the same child. Keeping track of any medical fees you are paying or splitting can add up on top of yours, to reach that 10 percent limit.

You might also consider shifting out-of-pocket medical expenses into flexible spending accounts, health savings accounts or health reimbursement arrangements so that you can deduct the full amount of your medical expenses. Using a flexible spending account through an employer, or through a health savings account, you can set aside pre-tax dollars from your wages, and then use those pre-tax dollars to pay for medical and dental expenses.

The IRS has a list of close to 100 possible medical deductions. Sifting through all of the details can be cumbersome, so you might consider meeting with a CPA who works with these tax laws ongoing and can cover all the bases when evaluating your tax situation and medical expenditures. If you need assistance in filing your 2016 taxes, or strategizing your 2017 tax planning and financial goals, barton CPA is a reputable Coachella Valley firm and offers a complimentary consultation.

barton CPA
Phone (760) 969-6499

Unfortunately, the IRS notes in Publication 502, that medical expense deductions “do not include…..vitamins or a vacation." So, what can be deducted?

  • Co-pays and prescriptions
  • Medical mileage and medical travel expenses
  • Eyeglasses, chiropractic services and acupuncture
  • Home renovations, therapeutic swimming, whirlpool baths, and more.

A professional tax consultant can make sure you are not overlooking anything that may help you hurdle the new 10 percent allowance for medical deductions beginning in 2017.  For instance, if a child is claimed as a dependent by one parent, the other parent can still deduct any medical fees associated with the same child.

 

The Patient Protection and Affordable Care Act (Obamacare) is still in effect through 2017. If you did not have health coverage in 2016 and don't qualify for a health coverage exemption, the penalty fee is 2.5% of your household income or $695 per adult ($347.50 per child), whichever is higher. And, the same will hold true for 2017.

 

You might also consider shifting out-of-pocket medical expenses into flexible spending accounts, health savings accounts or health reimbursement arrangements so that you can deduct the full amount of your medical expenses. Using a flexible spending account through an employer, or through a health savings account, you can set aside pre-tax dollars from your wages, and then use those pre-tax dollars to pay for medical and dental expenses.

If you need assistance strategizing your 2017 tax planning and financial goals, barton CPA is a reputable Coachella Valley firm and offers a complimentary consultation.

barton CPA

Phone (760) 969-6499

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