by Don Purvis
As the end of the year approaches, it is a good time to think of planning moves that will help lower your tax bill for this year and possibly the next. Year-end planning for 2019 takes place against the backdrop of recent major changes in the rules for individuals and businesses. For individuals, these changes include lower income tax rates, a boosted standard deduction, severely limited itemized deductions, no personal exemptions, an increased child tax credit, and a watered-down alternative minimum tax (AMT). For businesses, the corporate tax rate has been reduced to 21%, there is no corporate AMT, there are limits on business interest deductions, and there are very generous expensing and depreciation rules. And non-corporate taxpayers with qualified business income (QBI) from pass-through entities may be entitled to a special deduction.
Do you have an Individual Taxpayer Identification Number (ITIN)? If so, it may be expiring soon.
All ITINs not used on a federal tax return at least once in the last three years will expire on December 31, 2019. In addition, ITINS issued before 2013 with middle digits of 83, 84, 85, 86, or 87 (Example: 9XX-83-XXXX) will expire at the end of the year.
The Internal Revenue Service (IRS) is encouraging taxpayers to submit their renewal applications early in order to avoid refund and processing delays in 2020. Taxpayers can renew their ITIN by completing a Federal Form W-7 and mailing it to the address listed on the form’s instructions with any required documentation. You can find the form here.
What is an ITIN?
An Individual Taxpayer Identification Number (ITIN) is a tax processing number assigned to individuals who do not have, or are not eligible to obtain, a Social Security number (SSN). Typically, only United States citizens and those non-citizens who are authorized to work in the U.S. receive SSNs.
For more information, visit the IRS’s Individual Taxpayer Identification Number web-page.
In March of this year, Capital One was involved in a data breach which exposed the information of over 100 million U.S. and Canada customers. The hacker found a configuration vulnerability in Capital One’s infrastructure allowing access to typical credit card application data from consumers and small businesses who had applied for credit from 2005 on. Capital One has since fixed the configuration vulnerability and is working with law enforcement. Capital One will contact you via mail if you are a victim of the breach. Capital One has offered to provide free credit monitoring and identity protection to those affected.
What to do if you suspect you are a victim:
Steps to take to prevent your identity and credit info from falling into the wrong hands:
For more tips and information, visit the FTC’s website.
The wait is over! The IRS just released the final 199A Qualified Business Income (QBI) deduction regulations along with safe harbor rules for real estate rentals. Some key take-aways to note are:
Beginning on April 1st of 2019, certain retailers located outside of California that are engaged in business in the state (but with no physical presence in the state) will be required to collect California state and district use tax if their sales of tangible personal property are comprised of either:
Retailers will be required to collect the taxes on any sales taking place on or after April 1st and remit them to the California Department of Tax and Fee Administration (CDTFA) through their sales and use tax return.
by: Tony Pimentel
Wayfair sold products to South Dakota residents, however, it did not collect sales tax as it did not have a physical presence in South Dakota. Under the physical presence test, it did not have to do so. South Dakota could have subpoenaed the required data and collected the use tax from its citizens, but it decided it was much easier to file suit to force Wayfair to collect the tax. The Supreme Court sided with South Dakota and ordered Wayfair to collect the tax based on the enabling statute.
By: Megan Doherty
Should you file-single, joint, or married filing separately-for federal income tax purposes during the pendency of your divorce/separation proceedings? In general, your filing status depends on your marital status, and your marital status depends upon your status under state law.
By: Amber Stevenson
The IRS has issued proposed regulations (Centralized Partnership Audit Rules, also known as “CPAR”) regarding how audit adjustments related to partnership tax returns will be assessed. If you own an interest in a partnership or an entity taxed as a partnership, or even if you used to own an interest in one of these types of entities, this could affect you and it’s important to be aware of the changes so you aren’t surprised by a tax bill down the road.
The City of San Jose has changed the ordinance covering owners of residential and nonresidential rental property located within the City limits. The new ordinance requires owners of one or more rental units to register with the City, obtain a Business Tax Certificate, and pay an annual fee.
The City extended the deadline to register and pay the required tax to December 15, 2017, to allow additional processing time for the increased persons that now are required to register. If the payment of the business tax is made after December 15, 2017, then interest and penalties will accrue retroactive to July 1, 2017.
By: Diane Avila
There are three areas where knowing the ins and outs of the traditional IRA distribution rules can make a big difference in how much you and your family will keep after taxes:
If you maintain your office in your home and your home is your principal place of business, you may be entitled to a special tax break on your commuting costs. Taxpayers can deduct daily costs of travel between their home and another work location in the same business, regardless of whether the other location is regular or temporary. Simply remember to keep adequate records, via a diary or log, of your expenses and mileage during the year and you will be eligible to deduct one or the other at the end of the year.
Aging is a fact of life. One that some of us would rather not recognize in ourselves. Yet, it is inevitable. What may be even more difficult is seeing our parents’ age and become more dependent on us, their children, and qualified professionals. A nursing home might prove to be the best option. There are several tax aspects of a parent entering into a nursing home.
By: Theresa A. Smith
Education costs are on the rise, but you will be happy to know there are education tax deductions and credits that can help offset the costs.
Work related education expenses:
A deduction is available if the education maintains or improves the skills related to your trade or business. Educational costs are also deductible if the education is required to keep your position or job. Work related educational costs are not deductible if the education is required to get into the field or qualifies you for a new trade or business. If your educational costs are deductible under these tests, you can include the transportation costs involved. If you’re away from home for deductible education, you can include the costs of travel, meals (at 50%), and lodging as well. In the case of an employee, education expenses that are deductible under these tests may be claimed as an itemized deduction, but only to the extent the expenses, along with other miscellaneous itemized deductions, exceed 2% of the taxpayer’s adjusted gross income (AGI).
In our hustle and bustle lives, working 40 or more hours a week has become the norm, leaving limited time for taking care of duties at home. This has led to an increased need for a nanny, housekeeper, gardener, or perhaps all three! What many people don’t realize, however, is that while their responsibilities at home may be going down, their tax bill could be going up.