Holiday Gifts with Tax Benefits

Holiday Gifts with Tax Benefits

Some holiday gifts you provide to members of your family, employees and others may also yield tax benefits. Here are some examples:

Read more

S Corporation Stockholders Are You Taking Reasonable Compensation in the Form of Wages

S Corporation Stockholders: Are You Taking Reasonable Compensation in the Form of Wages?

S corporation compensation requirements are often misunderstood and abused by owner-shareholders. An S corporation is a type of business structure in which the business does not pay income tax at the corporate level and instead distributes (passes through) the income, gains, losses, and deductions to the shareholders for inclusion on their income tax returns. If there are gains, these distributions are considered return on investment and therefore are not subject to self-employment taxes.

Read more

When To Claim a Disaster Loss

When To Claim a Disaster Loss

Tax reform eliminated the deduction for casualty losses but did retain a deduction for losses within a disaster area. With the wild fires in the west, hurricanes and flooding in the southeast and eastern seaboard we have had a number of presidentially declared disaster areas this year. If you were an unlucky victim and suffered a loss as a result of a disaster, you may be able to recoup a portion of that loss through a tax deduction. If the casualty occurred within a federally declared disaster area, you can elect to claim the loss in one of two years: the tax year in which the loss occurred or the immediately preceding year.

By taking the deduction for a 2018 disaster area loss on the prior year (2017) return, you may be able to get a refund from the IRS before you even file your tax return for  2018, the loss year. You have until the unextended due date of the 2018 return to file an amended 2017 return to claim the disaster loss. Before making the decision to claim the loss in 2017, you should consider which year’s return would produce the greater tax benefit, as opposed to your desire for a quicker refund.

If you elect to claim the loss on either your 2017 original or amended return, you can generally expect to receive the refund within a matter of weeks, which can help to pay some of your repair costs.

If the casualty loss, net of insurance reimbursement, is extensive enough to offset all of the income on the return, and results in negative income, you may have what is referred to as a net operating loss (NOL). Because tax reform changed how NOLs are treated after 2017 your decision whether to claim the loss in the current year or the prior year will have significant tax ramifications.

  • Claimed in 2017 – If the loss is claimed in 2017 and results in an NOL, that NOL is carried back two years and the forward 20. Meaning if the loss results in a negative 2017 income the NOL can be carried back to your 2015 return before being carried forward.
  • Claimed in 2018 – Tax reform changed the treatment of NOLs and as a result no longer be carried back to prior years. In addition, NOL occurring in 2018 and subsequent years can only offset 80% of a subsequent years taxable income.

Determining the more beneficial year in which to claim the loss requires a careful evaluation of your entire tax picture for both years, including filing status, amount of income and other deductions, and the applicable tax rates. The analysis should also consider the effect of a potential NOL.

Casualty losses are deductible only to the extent they exceed $100 plus 10% of your adjusted gross income (AGI). Thus, a year with a larger amount of AGI will cut into your allowable loss deduction and can be a factor when choosing which year to claim the loss.

For verification purposes, keep copies of local newspaper articles and/or photos that will help prove that your loss was caused by the specific disaster.

As strange as it may seem, a casualty might actually result in a gain. This sometimes occurs when insurance proceeds exceed the tax basis of the destroyed property. When a gain materializes, there are ways to exclude or postpone the tax on the gain.

If you need further information on disaster losses, your particular options for claiming the loss, or if you wish to amend your 2017 return to claim your loss, please give this office a call.


Isler Northwest LLC is a firm of certified public accountants and business advisors based in Portland, Oregon. Our local, regional, and global resources, our expertise, and our emphasis on innovative solutions and continuity create value for our clients. Our service goals at Isler Northwest is to earn our clients trust as their primary business and financial advisors.

Isler Northwest

(503) 224-5321

1300 SW 5th Avenue
Suite 2900
Portland, Oregon 97201

December 2018 Individual Due Dates

December 2018 Individual Due Dates

December 3 – Time for Year-End Tax Planning

December is the month to take final actions that can affect your tax result for 2018. Taxpayers with substantial increases or decreases in income, changes in marital status or dependent status, and those who sold property during 2018 should call for a tax planning consultation appointment.

December 10 – Report Tips to Employer

If you are an employee who works for tips and received more than $20 in tips during November, you are required to report them to your employer on IRS Form 4070 no later than December 10. Your employer is required to withhold FICA taxes and income tax withholding for these tips from your regular wages. If your regular wages are insufficient to cover the FICA and tax withholding, the employer will report the amount of the uncollected withholding in box 12 of your W-2 for the year. You will be required to pay the uncollected withholding when your return for the year is filed.

December 31 – Last Day to Make Mandatory IRA Withdrawals

Last day to withdraw funds from a Traditional IRA Account and avoid a penalty if you turned age 70½ before 2018. If the institution holding your IRA will not be open on December 31, you will need to arrange for withdrawal before that date.

December 31 – Last Day to Pay Deductible Expenses for 2018

Last day to pay deductible expenses for the 2018 return (doesn’t apply to IRA, SEP or Keogh contributions, all of which can be made after December 31, 2018).

December 31 – Caution! Last Day of the Year

If the actions you wish to take cannot be completed on the 31st or a single day, you should consider taking action earlier than December 31st.

December 2018 Business Due Date

December 3 – Employers

During December, ask employees whose withholding allowances will be different in 2019 to fill out a new Form W4 or Form W4(SP).

December 17 – Social Security, Medicare and Withheld Income Tax

If the monthly deposit rule applies, deposit the tax for payments in November.

December 17 – Nonpayroll Withholding

If the monthly deposit rule applies, deposit the tax for payments in November.

December 17 – Corporations

The fourth installment of estimated tax for 2018 calendar year corporations is due.

December 31 – Last Day to Set Up a Keogh Account for 2018

If you are self-employed, December 31 is the last day to set up a Keogh Retirement Account if you plan to make a 2018 Contribution. If the institution where you plan to set up the account will not be open for business on the 31st, you will need to establish the plan before the 31st. Note: there are other options such as SEP plans that can be set up after the close of the year. Please call the office to discuss your options.

December 31 – Caution! Last Day of the Year

If the actions you wish to take cannot be completed on the 31st or a single day, you should consider taking action earlier than December 31st.


Isler Northwest LLC is a firm of certified public accountants and business advisors based in Portland, Oregon. Our local, regional, and global resources, our expertise, and our emphasis on innovative solutions and continuity create value for our clients. Our service goals at Isler Northwest is to earn our clients trust as their primary business and financial advisors.

Isler Northwest

(503) 224-5321

1300 SW 5th Avenue
Suite 2900
Portland, Oregon 97201

Mitigating the Effects of Employee Burnout: What You Need to Know

Mitigating the Effects of Employee Burnout: What You Need to Know

Make absolutely no mistake about it: Not only is employee burnout very real, it’s probably costing your business a lot more money than you realize. It’s also not a problem that you’re necessarily going to be able to buy your way out of, either.

Read more

isler northwest, cpa, portland

Expecting Your Taxable Income to Be Low This Year? You Can Take Advantage of It

If your taxable income is exceptionally low this year, or even if you expect not to be required to file a tax return this year, a number of tax opportunities may be available to you. But time is running short, since these opportunities will require action on your part before year’s end.

However, before we consider actual strategies, let’s look at key elements that govern tax rates and taxable income.

Read more

Thinking of Tapping Your Retirement Funds Early What You Need to Know

Thinking of Tapping Your Retirement Funds Early? What You Need to Know

If you are suddenly in need of a substantial amount of cash, probably the last thing you should do is tap your retirement funds. They are the key to a financially comfortable retirement. The younger you are, the less likely you are to think about saving for retirement, but you certainly don’t want to end up living off of only Social Security. However, there are times when there might not be any other alternative than dipping into your 401(k), IRA or other retirement plan. In that case, you have to be concerned not only with any tax liability, but also early withdrawal penalties if the funds are withdrawn before reaching age 59½. Plus, some distributions may only be partially taxable and some not taxable at all, while others are fully taxable.

Read more

IRS Clergy Tax Changes

Don’t Overlook Tax Credits

Don’t Overlook Tax Credits

Tax credits are a tax benefit that offsets your actual tax liability, as opposed to a tax deduction, which reduces your income. Congress provides tax credits to individual taxpayers for a number of reasons, including as a form of assistance for lower-income taxpayers, to stimulate employment, and to stimulate certain investments, among other things.

Tax credits come in two types: non-refundable and refundable. A non-refundable credit can only reduce your tax liability to zero; any excess is either carried forward or is simply lost. In the case of a refundable credit, if there is excess after reducing your tax liability to zero, the excess is refundable. The following is a summary of some of the tax credits available to individual taxpayers:

Read more

Legitimate Tax-Deductible Charity or Scam?

With the holiday season approaching, and with the great need for aid in the wake of the recent hurricanes and wildfires, you no doubt are being solicited for donations. However, do not be fooled by the scammers who come out from hiding whenever there is a disaster and during the holiday season. The last thing you want to do is get ripped off; not only will your charitable dollars go to waste, but you will also lose your tax deduction, as contributions are only tax-deductible if they are to qualified charities.

Read more

Medical Insurance and Taxes

Medical Insurance and Taxes

The Affordable Care Act (ACA) imposed significant penalties on taxpayers and their families who do not have ACA-compliant health insurance. Even though the tax reform removed these penalties after 2018, they still apply for this year and can be as high as the greater of $2,085 or 2.5% of the family’s household income. So, just about everyone is being forced to carry medical insurance, and it is probably one of your largest expenses. Even though the penalty is going away in 2019, it is important to understand how the health insurance expense is handled for tax purposes so you can get the most tax benefits possible.

Read more