December 28, 2018
Year End Tax Steps!
Take an inventory of your product. If there is product which is expired, damaged or no longer sell-able for whatever reason, take it out of your inventory and mark your total cost as “spoiled”. This is a deductible expense.
If you have the ability to sell your excess inventory at a slightly discounted rate do so. Holding large amounts of inventory at year end is not a Tax Advantageous strategy.
Speaking of inventory, many companies are trying desperately to get rid of theirs. Now is the time for some smoking deals on computers, tablets, and those big screen monitors you’ve wanted. You will be able to deduct the cost of this business equipment 100% up to one million dollars.
Car expenses, don’t forget that your car is a tax-deductible expense. Keep track of your miles! Business miles are not just to see a customer. Trips to events, the post office and to pick up inventory are deductible! Keep clear records. I use a phone app called Mile IQ which runs silently in the background. You can then classify your drives as business or personal at the end of the day. You will also want to track actual expenses to see whether the mileage or an actual expense deduction is the most Tax Advantageous strategy.
Don’t forget your home office! A portion of your home is deductible. This is an often-overlooked tax strategy.
As many of you may know, the Tax Code received its biggest overhaul in history on November 2, 2017, effective January 1, 2018. While many people will no longer have to itemize due to the larger standard deduction, it is imperative that business owners get the appropriate tax advice to take advantage of a new and largely misunderstood deduction called the Section 199A deduction, also known as a 20% Qualified Business Pass-Through Deduction. Many will be eligible for this potentially huge tax savings.
Feel free to contact me offices if you have any questions.
or send an email to:
Wednesday, August 8, 2018
12pm - 130 pm
LUNCH & LEARN
Tax Cuts & Job Act
Changes For Individuals and
Businesses for 2018
Call 702-949-2409 or email
Rhonda A. Mannes is a Las Vegas Certified Public Accountant and Accredited Retirement Adviser serving owner-managed businesses and individuals throughout the nation.
With over 25 years of experience dealing with IRS audits, collection activity, tax planning and preparation, she is a strong proponent of face-to-face involvement with clients in order to provide proactive planning and to take advantage of new developments in tax laws.
Call or email to make your reservation. Seating is limited so call today.
EXIT Realty Number One
316 S. Jones Blvd.
Las Vegas, NV 89107
Call 702-949-2409 or email
One per year rollover rule also applies to ESA's!
Who will be in charge of your assets after you’re gone? This is an important decision that comes with planning your estate. No one can tell who to trust but here are some guidance tips to help you break down the process of choosing a successor trustee.
Consider if the person you have in mind to choose is financially responsible, stable, capable and trustworthy.
2. Consider a Co-Personal Trustee
Maybe you want two people as trustees which is fine but when choosing make sure these two can work together. Having more than one person gives checks and balance. Not to mention having a co-trustee serves as a back up in the even the first one dies.
If you have several beneficiaries who don’t get along you may consider a personal representative who is independent of all parties. Where there is little chance of a contest many people choose a family member.
4. They Don’t Have To Live Near
People sometimes get scared if there trustee needs to live near them or in the same state. Well that isn’t the case. Whomever you choose can live in another state to fill that role.
5. Someone with Time
Handling an estate or trust takes up a lot of time and work. So who ever you’re considering make sure they are capable of handling all the work that comes along.
Source: Elder Law News Photo: Pexels
Crowdfunding has grown in the last 20 years raising billions of dollars from hundreds of projects being launched on a daily basis. Crowdfunding is the practice of soliciting financial contributions from a large number of people over the internet. These contributions can be used for a verity of projects. By doing this individuals and organizations can gain access to funds outside of the traditional sources like banks.
Lets say you were involved in a terrible crash and needed to raise money to cover expenses so your sister opens a GoFundMe account online. You raise enough money thinking its a tax free gift. You don’t report the income on your tax return. Later on the IRS says you owe money in taxes, consisting of back taxes, penalties and interest.
So is the money you receive from a GoFundMe fundraising campaign taxable income or tax free as a gift? Money raised in a GoFundMe account for the benefit of someone in need isn’t deductible as a charitable contribution. That shouldn’t effect whether the funds raised are taxable to the recipient. For another example think of a parent, parents aren’t a tax exempt charity. Yet there is no question that cash gifts from a parent to a child are tax free to the child. A GoFundMe account meets the definition of gifts under the Internal Revenue Code and would not be taxable to the recipient. But that doesn’t mean every donation qualifies as a gift. This is seen differently depending on what the donations are for. Money raised to support a profit motive, such as business are taxable to the recipient. But donations made to support disadvantaged individual would be considered a tax-free gift.
Source: The Tax Book Photo: Pexels
Don’t be surprised when your employer withholds taxes from your paychecks. That’s how you pay your taxes when you’re an employee. If you’re self employed you may have to pay estimated taxes directly to the IRS on certain dates during the year. This is how a you pay as you go tax system works
New employees need to fill out a W-4 form. An employee’s withholding allowance certificate is used to figure out how much federal income tax to withhold from your pay. The IRS withholding calculator tool on IRS.gov can help you fill out the form.
Remember tip income is taxable. If you get tips, you must keep a daily log as you can report them . You must report $20 or more in cash tips in any one month to your employer. You must report all of your yearly tips on your tax return. A deduction may help lower your tax return.
Money you earn doing work for others is taxable. Some work you do can count as self employment, like babysitting or mowing the lawn. Keep accurate records of expenses related to work. You may be able to deduct those costs from your income on your tax return. A deduction may help lower your taxes.
If you’re in ROTC, your active duty pay, such as pay you get for summer camp, is taxable. A subsistence allowance you get while in advanced training isn’t taxable.
You may not earn enough from a summer job to owe income tax. But your employer usually must withhold social security and medicare taxes from your pay. If you’re self employed you must pay them yourself. They count toward your coverage under the social security system.
If you’re a newspaper carrier or distributor, special rules apply. If you meet certain conditions you’re considered self employed. If you don’t meet those conditions and are under the age of 18 you are usually exempt from social security and medicare taxes.
You may not earn enough money from your summer job to be required to file a tax return. Even if that’s true you may still want to file. For example, if your employer withheld income tax from your pay you’ll have to file a return to get your taxes refunded.
Source: IRS.gov Photo:Pexels
Social Security benefits can begin for an eligible worker at age 62. The current full retirement age, which is the age at which benefits are not reduced, is 66. The full retirement age will reach 67 for those born in 1960 and later. If benefits are delayed past full retirement age, additional credits can be earned to age 70. Spouses, divorced spouses, and widow(er)s may be eligible to collect on a worker’s benefits at an earlier age. Regardless of the age at which benefits commerce, the same tax rules apply.
For federal income tax purposes, Social Security benefits may be tax free or includible in gross income at 50% or 85% (Code Sec. 86). High income taxpayers can assume they are subject to the 85% inclusion amount. Others may to do calculations to determine whether benefits are tax free or their applicable percentage.
If “income” is no more than a base amount, benefits are tax free. Income for this purpose is income that is taxed, such as wages, interest, ordinary dividends, capital gain distributions and pensions, tax exempt interest and one half of Social Security benefits. The base amount is $25,000 if single, head of household, qualifying widow(er), or married person filing jointly and zero if married filing separately who lived apart from his or her spouse for the entire year; $32,000 if married filing jointly, and zero if married filing separately but lived with the spouse for any part of the year. If “income” is more than the base amount but not more than $34,000 if single, head of household, qualifying widow(er), or married person filing separately who lived apart from his or her spouse for the entire year ($44,000 for joint filers), then 50% of benefits are includible in gross income. If income is more than $34,000, then 85% of benefits are includible in gross income.
Source: Top 5 Tax Issues for Retirement Photo: Pexel
Who is Eligible?
You must have eligible income/ compensation to contribute to a Roth IRA. The current maximum contributions is the same as traditional IRA, $5,500 OR $6,500 if you are at least 50 years old by December 31, 2016. 154am
Are There Other Contributions Limits?
Yes. If your MAGI is over a certain amount for your filing status, your ability to contribute to your Roth IRA will be reduced. Your retirement distribution expert can help you determine your allowable contribution.
Can I Still Contribute to my Roth even though i’m over 70?
Yes if you are meeting other qualifications. Unlike traditional IRA’s, eligible contributions may be made to your Roth IRA regardless of your age.
May I Still Contribute to My Roth IRA as an Active Participant in My Workplace Plan?
Yes. Being an active participant in your workplace retirement plan doesn’t impact your ability to contribute to your Roth IRA.
Are My Roth Contributions Deductible?
No. Roth IRA contributions are never deductible on your tax return.
May I make Contributions to the Roth IRA I Inherited From My Sister?
No. Non- spouse beneficiaries are not permitted to make contributions to an inherited Roth IRA.
Source: Tax Tips America’s Tax Solution Photo: Pexel
Do you know what a Prohibited Transaction is? Its an impermissible transaction under the Internal Revenue Code that happens between an IRA and a disqualified person. A disqualified person could be an IRA owner, spouse, or owners lineal descendants. Some examples of IRA prohibited transactions are borrowing money from or lending money to your IRA, using your IRA as collateral for a loan, the sale, exchange or leasing of property involving your IRA.
Its ruled under the IRS that your entire IRA will lose its status as an IRA, if engaged with a prohibited transaction. This happens your tax-deferred IRA will then be treated as if assets were distributed to you on the first day of the year the prohibited transaction occurred. Income tax will be due on the distributed amount and if under fifty-nine you will also be subject to a 10% early distribution penalty.
Many people face the common problem of making prohibited transactions, here’s a quick tip that could help.
Tip: If you’re not certain the transaction you want to make is IRA prohibited, consider splitting your IRA prior to transaction. The idea is to cut out the amount you want to use from your original IRA, making a separate IRA only for the questionable transaction. By doing this you won’t destroy your entire IRA if the transaction was prohibited and only impact the IRA with the prohibited transaction.
Source: America’s Tax Solutions Photo: Pexels
You could be subject to a gift tax if you give a non-spouse a gift valued in excess of the annual exclusion amount.
For 2016 the annual federal gift tax exclusion amount for gifts to a non-spouse is still $14,000 per person, per year. If you are married, you and your spouse may give up to $28,000 per person, per year, free from federal gift tax. Although there are no immediate tax concerns for the recipient of a gift tax because federal gift tax is imposed upon the donor, the recipient could be liable for capital gains tax in the cash to computerfuture.
Highly appreciated gifts such as real estate or stocks will render the recipient liable for capital gains tax when he or she decides to sell the gift at a later date.
The general rule is that the recipient’s basis in the gifted property is the same as the basis of the donor. For example, if you were given stock that the donor had purchased for $10 per share and you later sold it for $100 per share, you would pay tax on a gain of $90 per share.
Source:Tax Tips America’s Tax Solutions Photo Credits : Google
Lets say you’re around 73 years old and still work full time, could you still contribute to your IRA?
No you cannot. Contributions can’t be made to an IRA beginning the year you turn 70. There is no exception.
What if you participated in a work place 401(k) could you contribute to an IRA then?
Yes you could! the deductibility of your IRA contribution may be affected depending on your filing status and earned income for the year. Now lets say you aren’t eligible to contribute to a Roth IRA because of your income. Is it preventing you from converting your traditional IRA to Roth IRA? No it isn’t, Anyone can convert a traditional IRA to a Roth IRA regardless of their income level in the year of conversion. What if last December you pulled out your IRA so really you didn’t have an IRA balance on December 31,2015 to calculate your RMD. Does this exempt an RMD for 2015? No it doesn’t exempt, for purposes of RMD calculations all IRA assets “in transit” must be considered.
How are distributions received from an IRA taxed?
Inherited IRA will be taxed at your ordinary income tax rate for the year in which you received it. Lastly what is the deadline for making a 2015 IRA contribution? It will be April 15, 2016, its the same deadline for filing your tax return without extensions.
That’s all for IRA scenarios thanks to America’s Tax Solutions.
Source: America’s Tax Solutions Photo: Pexels
Charitable contributions are donations or a gift to or for the use by a qualified organization. It is voluntary and made without getting or expecting to get anything of equal value.
Qualified organizations are nonprofit groups that are religious, charitable, educational, scientific or literary in purpose or that work to prevent cruelty to children or animals. In order for donations to be tax deductible the organization has to be qualified. Note: Gifts to individuals are never deductible as charitable contributions even if the individual is associated with a charitable organization.
If the receipient of funds received uses the money for medical expenses, the receipient can deduct the cost of medical expenses within IRS tax guidelines. Fund used to help pay for other personal expenses are not deductible. There is no tracing rule under the IRC section 213 that requires tracing the source of the funds to some taxable source before being able to deduct the expense as a medical expense.
Source: The Tax Book Photo:Pexels
Failure to review your retirement planning documents can be a DISASTER. It can really hurt your beneficiaries, this is a common mistake.
Recently a client discovered that her new husband hadn’t updated his beneficiary forms for his retirement plans. Unfortunately the client didn’t find out until he passed away unexpectedly and a quick review of his important documents revealed this mistake.
The good thing is that her deceased husband’s beneficiaries were to leave those assets to his wife and all the beneficiaries plan to honor his wishes the best way they can. But not all stories end this way, in fact loved ones are often caught in the middle of family battles and mired in litigation lasting several years.
Marriage, divorce, birth or death can occur at any time. Tax laws change or are updated on a routine basis. Even though you cannot predict what will happen, you can update your retirement plans as needed when any life changing event occurs or new legislation goes into effect that impact you or your loved ones.
Review your beneficiary forms, custodial agreements and anything else you may have in place to provide for and protect your loved ones at least once a year. An annual review will help ensure your assets will still flow the way you want them to and in the most tax efficient manner. Your retirement distribution expert and tax professional can help you with these types of reviews. These reviews should be FREE services so don’t hesitate to schedule an appointment with your personal advisor(s) if you need guidance or assistance.
Source: America’s Tax Solutions Photo Credits: Pexels
The IRS has announced initial plans for processing tax returns involving the Earned Income Tax Credit and Additional Child Tax Credit during the opening weeks of the 2017 filing season. The IRS is sharing information now to help the tax community prepare for the 2017 season, and plans are being made for a wider communication effort later in the summer and fall to alert taxpayers about the changes that will affect some early filers.
This action is driven by the Protecting Americans from Tax Hikes Act of 2015 that was enacted into law on December 18, 2015. Section 201 of this new law mandates that no credit or refund for an over payment for a taxable year shall be made to a taxpayer before February 15 if the taxpayer claimed the earned income tax credit or additional child tax credit on the return.
Source:The Tax Book Photo:Pexels
If you own or are the beneficiary of an IRA, 401(K) or other retirement plan, review this to avoid an RMD ( required minimum distribution) error. Failure to take at least the RMD amount each year results in a 50% penalty by the IRS !
Photo : https://www.flickr.com/photos/stevendepolo/5437288053 Source: www.irs.gov
Rhonda A. Mannes,