Investment Deductions

So Long To The Tax Deduction For Investment Expenses

Under the new tax reform law, investment expenses are no longer deductible as a miscellaneous itemized deduction. This means, for example, that if you have an investment account and are paying fees to have it managed, those fees are no longer deductible. This also means IRA and other types of retirement account fees that are considered investment fees are no longer deductible.

This affects more than just the itemized deduction for investment expenses, as these fees are used in the computation of net investment income (NII). NII is investment income reduced by investment expenses. NII is used in other tax computations as well. Here are two examples, one that is taxpayer beneficial and one that is not:

Investment Interest Deduction – Taxpayers who itemize their deductions can take a deduction for interest paid on debts to acquire investments. However, that deduction is limited to the lesser of the interest expense or NII. The elimination of investment expenses in the determination of NII effectively makes NII larger and in turn allows for a larger investment interest deduction.

Surtax on Net Investment – The Affordable Care Act imposes a 3.8% surtax on NII for higher-income taxpayers. This surtax generally applies to taxpayers filing a joint return with an AGI in excess of $250,000, married filing separate taxpayers with an AGI in excess of $125,000 and other filers with an AGI in excess of $200,000.

Since the tax is based on the NII, not being able to deduct investment expenses in the computation of NII effectively makes the NII larger, and thus the amount subject to the surtax is larger.

In the past, many taxpayers, in an effort to help their IRA or other retirement plans grow, would pay the fees for those accounts out of separate funds and then deduct those fees as investment expenses. Now that investment expenses are no longer deductible, it may be appropriate to reconsider that approach.

If you have questions about how the loss of the deduction for investment expenses might impact your taxes, 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 NW 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

The 10 best tips to prepare for the 2017 tax season

Preparing for Taxes for 2018 and Beyond

Article Highlights:

  • Increase In Standard Deduction
  • Loss of Personal Exemptions
  • Changes to Itemized Deductions
  • Bunching Strategy
  • Employee Business Expenses
  • Business Expensing
  • 20% Flow-through Income Deduction
  • Change in Treatment of Alimony
  • Casualty Losses, Home Equity Interest and Moving No Longer Deductible

Tax reform has changed the way most taxpayers need to think about and plan for their taxes. It is no longer business as usual, and those who think it is are in for a rude awakening come tax time next year. Read more

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You May Not Get a Tax Refund Next Year

Article Highlights: 

  • Payroll Withholding
  • W-4
  • 2018 Tax Projection
  • Adjusting Withholding

With all of the tax reform changes and the corresponding reductions in most taxpayers’ income tax withholding, there are serious concerns that the reduction in withholding, although providing more take-home pay now, could end up resulting in unexpected taxes due at tax time next year. For that reason, taxpayers should be overly cautious about their payroll withholding for 2018. One need only look at the W-4 instructions to realize that an individual without any substantial tax training can quickly become lost when filling out the worksheets. It is not business as usual. Read more

isler northwest, portland

Don’t Toss Those Tax Records Yet!

Article Highlights:

  • Reasons to Keep Records
  • Statute of Limitations
  • Maintaining Record of Asset Basis 

Even though the 2017 tax due date has come and gone, and even though you have filed your 2017 tax return, you may still need to keep your 2017 tax records. Generally, tax records are retained for two reasons: (1) in case the IRS or a state agency decides to question the information on your tax returns or (2) to keep track of the tax basis of your capital assets so that you can minimize your tax liability when you dispose of those assets.

If you are like most taxpayers, you have records from years ago that you are afraid to throw away. With certain exceptions, the statute for assessing additional taxes is three years from the return’s due date or its filling date, whichever is later. However, the statute of limitations in many states is one year longer than that of federal law. In addition, the federal assessment period is extended to six years if more than 25% of a taxpayer’s gross income is omitted from a tax return. In addition, of course, the three-year period doesn’t begin elapsing until a return has been filed. There is no statute of limitations for the filing of false or fraudulent returns to evade tax payments.

If none of the above exceptions applies to you, then for federal purposes, you can probably discard most of your tax records that are more than three years old; you will want to add a year to that time period if you live in a state with a longer statute.

Examples – Sue filed her 2014 tax return before the due date of
April 15, 2015. She will be able to safely dispose of most of her 2014 records after April 15, 2018. On the other hand, Don filed his 2014 return on June 2, 2015. He needs to keep his records at least until June 2, 2018. In both cases, the taxpayers should keep their records for a year or two longer if their states have statutes of limitations longer than three years. Note: If a due date falls on a Saturday, Sunday, or holiday, the actual due date is the next business day.

The problem with discarding all the records for a particular year once the statute of limitations has expired is that many taxpayers combine their normal tax records with the records that substantiate the basis of their capital assets. The basis records need to be separated and should not be discarded until after the statute has expired for the year when a given asset was disposed of. Thus, it makes more sense to keep separate records for each asset. The following are examples of records that fall into the basis category:

  • Stock-acquisition data – If you own stock in a corporation, keep the purchase records until at least four years after the year when you sell the stock. This data is necessary for proving the amount of profit (or loss) from the sale. If your sales for a given year result in a net loss of more than $3,000, you may need to keep your purchase and sale records for an even longer period. This is because $3,000 is the maximum capital loss that can be deducted in any one year, so the excess loss must be carried over to the following year(s) until it is used up. If the IRS audits a return that includes a carryover loss, it will ask to see the records from the original purchase even if it was more than three years in the past. Thus, don’t dispose of such records until the statute of limitations has passed for the last year when you claimed a carryover loss.
  • Stock and mutual fund statements (if you reinvest dividends) – Many taxpayers use the dividends that they receive from stocks or mutual funds to buy more shares of the same stock or fund. These reinvested amounts add to the basis of the property and reduce the gain when it is eventually sold. Keep all such dividend statements for at least four years after the final sale.
  • Tangible property purchase and improvement records – Keep records of home, investment, rental-property, or business-property acquisitions, of the related capital improvements, and of the final settlement statements from the sale for at least four years after the underlying property is sold.

For example, when Congress instituted the large $250,000 home-sale-gain exclusion (which is $500,000 for married couples filing jointly) many years ago, homeowners began to be more lax in maintaining their home-improvement records, thinking that the large exclusions would cover any potential appreciation in their homes’ value. Now, that exclusion may not always be enough to cover the gains from a sale, particularly for markets where property values have steadily risen; thus, keeping records of all such home improvements is vital.

What about the tax returns themselves? Although the backup documents that you use to prepare your returns can usually be disposed of after the statutory period has expired, you may want to consider indefinitely keeping a copy of the tax returns themselves (the 1040, the attached schedules/statements, and the state return). If you just don’t have room to keep copies of your paper returns, digitizing them is an option.

If you have questions about whether to retain certain records, give this office a call; before discarding any records, it is a good idea to make sure that they will not be needed down the road.


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 NW 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

isler northwest, cpa firm, portland

How to Understand Common IRS Tax Terms

Article Highlights

  • Filing status
  • Adjusted gross income (AGI)
  • Taxable income
  • Marginal tax rate.
  • Alternative minimum tax (AMT)
  • Tax Credits
  • Underpayment of estimated tax penalty

When discussing taxes, reading tax related articles or instructions one needs to understand the lingo and acronyms used by tax professionals and authors to be able to grasp what they are saying. It can be difficult to understand tax strategies if you are not familiar with the basic terminologies used in taxation. The following provides you with the basic details associated with the most frequently encountered tax terms.

  • Filing Status – Generally, if you are married at the end of the tax year, you have three possible filing status options: married filing jointly, married filing separately, or, if you qualify, head of household. If you were unmarried at the end of the year, you would file as single, unless you qualify for the more beneficial head of household status. A special status applies for some widows and widowers.

Head of household is the most complicated filing status to qualify for and is frequently overlooked as well as incorrectly claimed. Generally, the taxpayer must be unmarried AND:

    • pay more than one half of the cost of maintaining his or her home, a household that was the principal place of abode for more than one half of the year of a qualifying child or certain dependent relatives, or
    • pay more than half the cost of maintaining a separate household that was the main home for a dependent parent for the entire year.

A married taxpayer may be considered unmarried for the purpose of qualifying for head of household status if the spouses were separated for at least the last six months of the year, provided the taxpayer maintained a home for a dependent child for over half the year.

Surviving spouse (also referred to as qualifying widow or widower) is a rarely used status for a taxpayer whose spouse died in one of the prior two years and who has a dependent child at home. Joint rates are used. In the year the spouse passed away, the surviving spouse may file jointly with the deceased spouse if not remarried by the end of the year. In rare circumstances, for the year of a spouse’s death, the executor of the decedent’s estate may determine that it is better to use the married separate status on the decedent’s final return, which would then also require the surviving spouse to use the married separate status for that year.

  • Adjusted Gross Income (AGI) – AGI is the acronym for adjusted gross income. AGI is generally the sum of a taxpayer’s income less specific subtractions called adjustments (but before the standard or itemized deductions). The most common adjustments are penalties paid for early withdrawal from a savings account, and deductions for contributing to a traditional IRA or self-employment retirement plan. Many tax benefits and allowances, such as credits, certain adjustments, and some deductions are limited by a taxpayer’s AGI.
  • Modified AGI (MAGI) – Modified AGI is AGI (described above) adjusted (generally up) by tax-exempt and tax-excludable income. MAGI is a significant term when income thresholds apply to limit various deductions, adjustments, and credits. The definition of MAGI will vary depending on the item that is being limited.
  • Taxable Income – Taxable income is AGI less deductions (either standard or itemized). Your taxable income is what your regular tax is based upon using a tax rate schedule specific to your filing status. The IRS publishes tax tables that are based on the tax rate schedules and that simplify the tax calculation, but the tables can only be used to look up the tax on taxable income up to $99,999.
  • Marginal Tax Rate (Tax Bracket) – Not all of your income is taxed at the same rate. The amount equal to your standard or itemized deductions is not taxed at all. The next increment is taxed at 10%, then 12%, 22%, etc., until you reach the maximum tax rate, which is currently 37%. When you hear people discussing tax brackets, they are referring to the marginal tax rate. Knowing your marginal rate is important because any increase or decrease in your taxable income will affect your tax at the marginal rate. For example, suppose your marginal rate is 24% and you are able to reduce your income $1,000 by contributing to a deductible retirement plan. You would save $240 in federal tax ($1,000 x 24%). Your marginal tax bracket depends upon your filing status and taxable income. You can find your marginal tax rate using the table below.
  • Keep in mind when using this table that the marginal rates are step functions and that the taxable incomes shown in the filing-status column are the top value for that marginal rate range.
2018 MARGINAL TAX RATES
TAXABLE INCOME BY FILING STATUS
Marginal
Tax Rate
Single Head of Household Joint* Married Filing Separately
10% 9,525 13,600 19,050 9,525
12% 38,700 51,800 77,400 38,700
22% 82,500 82,500 165,000 82,500
24% 157,500 157,500 315,000 157,500
32% 200,000 200,000 400,000 200,000
35% 500,000 500,000 600,000 500,000
37% Over 500,000 Over 500,000 Over 600,000            Over 500,000

     * Also used by taxpayers filing as surviving spouse

  • Taxpayer & Dependent Exemptions—Prior to the changes made by tax reform you were allowed to claim a personal exemption for yourself, your spouse (if filing jointly), and each individual who qualifies as your dependent. The deductible exemption amount was adjusted for inflation annually; the amount for 2018 was supposed to be $4,150. However, the tax reform that became law in late 2017 didn’t quite repeal the exemption deduction – it just suspended the deduction for exemptions for 2018 through 2025.
  • Dependents—To qualify as a dependent, an individual must be the taxpayer’s qualified child or pass all five dependency qualifications: the (1) member of the household or relationship test, (2) gross income test, (3) joint return test, (4) citizenship or residency test, and (5) support test. The gross income test limits the amount a dependent can make if he or she is over 18 and does not qualify for an exception for certain full-time students. The support test generally requires that you pay over half of the dependent’s support, although there are special rules for divorced parents and situations where several individuals together provide over half of the support.
  • Qualified Child—A qualified child is one who meets the following tests:

(1) Has the same principal place of abode as the taxpayer for more than half of the tax year except for temporary absences;

(2) Is the taxpayer’s son, daughter, stepson, stepdaughter, brother, sister, stepbrother, stepsister, or a descendant of any such individual;

(3) Is younger than the taxpayer;

(4) Did not provide over half of his or her own support for the tax year;

(5) Is under age 19, or under age 24 in the case of a full-time student, or is permanently and totally disabled (at any age); and

(6) Was unmarried (or if married, either did not file a joint return or filed jointly only as a claim for refund).

  • Deductions – A taxpayer generally can choose to itemize deductions or use the standard deduction. The standard deductions, which are adjusted for inflation annually, are illustrated below for 2018.

 

Filing Status Standard Deduction
Single $12,000
Head of Household $18,000
Married Filing Jointly $24,000
Married Filing Separately $12,000

The standard deduction is increased by multiples of $1,600 for unmarried taxpayers who are over age 64 and/or blind. For married taxpayers, the additional amount is $1,300. The extra standard deduction amount is not allowed for elderly or blind dependents. Those with large deductible expenses can itemize their deductions in lieu of claiming the standard deduction. The standard deduction of a dependent filing his or her own return will oftentimes be less than the single amount shown above.

Itemized deductions generally include:

(1) Medical expenses, limited to those that exceed 7.5% of your AGI for 2018. The reduction percentage will increase to 10% after 2018.

(2) Taxes consisting primarily of real property taxes, state income (or sales) tax, and personal property taxes, but limited to a total of $10,000 for the year.

(3) Interest on qualified home acquisition debt and investments; the latter is limited to net investment income (i.e., the deductible interest cannot exceed your investment income after deducting investment expenses).

(4) Charitable contributions, generally limited to 60% of your AGI, but in certain circumstances the limit can be as little as 20% or 30% of AGI.

(5) Gambling losses to the extent of gambling income, and certain other rarely encountered deductions.

  • Alternative Minimum Tax (AMT) – The Alternative Minimum Tax is another way of being taxed that has often taken taxpayers by surprise, even though prior to the 2017 tax reform legislation an ever-increasing number of taxpayers were being hit with AMT. The Alternative Minimum Tax (AMT) is a tax that was originally intended to ensure that wealthier taxpayers with large write-offs and tax-sheltered investments pay at least a minimum tax. However, even taxpayers whose only “tax shelter” is having a large number of dependents or paying high state income or property taxes were being affected by the AMT. Your tax must be computed by the regular method and also by the alternative method. The tax that is higher must be paid. The following are some of the more frequently encountered factors and differences that contribute to making the AMT greater than the regular tax.
    • The standard deduction is not allowed for the AMT, and a person subject to the AMT cannot itemize for AMT purposes unless he or she also itemizes for regular tax purposes. Therefore, it is important to make every effort to itemize if subject to the AMT.
    • Itemized deductions:
      • Medical deductions for regular tax purposes are allowed in excess of 7.5% of the taxpayer’s AGI and 10% of AGI for AMT in 2018. After that they both will be 10%. Taxes are not allowed at all for the AMT.
      • Interest in the form of home equity debt interest and interest on debt for non-conventional homes such as motor homes and boats are not allowed as AMT deductions. For years 2018–2025, interest paid on home equity debt is also not allowed for regular tax purposes.
      • Nontaxable interest from private activity bonds is tax free for regular tax purposes, but some is taxable for the AMT.
      • Statutory stock options (incentive stock options) when exercised produce no income for regular tax purposes. However, the bargain element (difference between grant price and exercise price) is income for AMT purposes in the year the option is exercised.
      • Depletion allowance in excess of a taxpayer’s basis in the property is not allowed for AMT purposes.

A certain amount of income is exempt from the AMT, but the AMT exemptions are phased out for higher-income taxpayers.

AMT EXEMPTIONS & PHASE OUT – 2018
Filing Status Exemption Amount Income Where Exemption Is
Totally Phased Out
Married Filing Jointly $109,400 $1 Million
Married Filing Separate $54,700 $500,000
Unmarried $70,300 $500,000
AMT TAX RATES—2018
AMT Taxable Income Tax Rate
0 – $191,100 (1) 26%
Over $191,100 (1) 28%

(1) $95,550 for married taxpayers filing separately

Your tax will be whichever is the higher of the tax computed the regular way and by the Alternative Minimum Tax. Anticipating when the AMT will affect you is difficult, because it is usually the result of a combination of circumstances. In addition to those items listed above, watch out for transactions involving limited partnerships, depreciation, and business tax credits only allowed against the regular tax. All of these can strongly impact your bottom-line tax and raise a question of possible AMT. Fortunately, due to tax reform that the increased AMT exemption amounts and set higher thresholds before the exemption is phased out, fewer taxpayers are expected to be paying AMT after 2017. Tax Tip: If you were subject to the AMT in the prior year, you itemized your deductions on your federal return for the prior year, and had a state tax refund for that year, part or all of your state income tax refund from that year may not be taxable in the regular tax computation. To the extent that you received no tax benefit from the state tax deduction because of the AMT, that portion of the refund is not included in the subsequent year’s income.

  • Tax Credits – Once your tax is computed, tax credits can reduce the tax further. Credits reduce your tax dollar for dollar and are divided into two categories: those that are nonrefundable and can only offset the tax, and those that are refundable. In addition, some credits are not deductible against the AMT, and some credits, when not fully used in a specific tax year, can carry over to succeeding years. Although most credits are a result of some action taken by the taxpayer, there are some commonly encountered credits that are based simply on the number or type of your dependents or your income. These and another popular credit are outlined below.
    • Child Tax Credit – Thanks to tax reform the child tax credit has been increased to $2,000 per child (up from $1,000 in 2017). If the credit is not entirely used to offset tax, the excess portion of the credit, up to the amount that the taxpayer’s earned income exceeds a threshold ($2,500 for 2018), but not more than $1,400, is refundable. The credit begins to phase out at incomes (MAGI) of $400,000 for married joint filers and $200,000 for other filing status. The credit is reduced by $50 for each $1,000 (or fraction of $1,000) of modified AGI over the threshold.
    • Dependent Credit – A new, nonrefundable credit will be available to taxpayers with a dependent who isn’t a qualifying child starting with 2018 returns, and like the increased child tax credit is designed to offset the loss of the exemption deduction as a result of tax reform. The dependent credit is $500. A qualifying child, the taxpayer, and if married, the spouse are not eligible for this credit. A child who isn’t a qualifying child but who qualifies as a dependent under the dependent relative rules would qualify the taxpayer to claim this credit.
    • Earned Income Credit – This is a refundable credit for a low-income taxpayer with income from working either as an employee or a self-employed individual. The credit is based on earned income, the taxpayer’s AGI, and the number of qualifying children. A taxpayer who has investment income such as interest and dividends in excess of $3,500 (for 2018) is ineligible for this credit. The credit was established as an incentive for individuals to obtain employment. It increases with the amount of earned income until the maximum credit is achieved and then begins to phase out at higher incomes. The table below illustrates the phase-out ranges for the various combinations of filing status and earned income and the maximum credit available.

 

2018 EIC PHASE-OUT RANGE
Number of
Children
Joint Return Others Maximum
Credit
None $14,170 – $20,950 $8,490 – $15,270 $519
1 $24,350 – $46,010 $18,660 – $40,320 $3,461
2

 

3

$24,350 – $51,492

$24,350 – $54,884

$18,660 – $45,802

 

$18,660 – $49,194

$5,716

 

$6,431

 

  • Residential Energy-Efficient Property Credit – This credit is generally for energy-producing systems that harness solar, wind, or geothermal energy, including solar-electric, solar water-heating, fuel-cell, small wind-energy, and geothermal heat-pump systems. These items qualify for a 30% credit with no annual credit limit. Unused residential energy-efficient property credit is generally carried over through 2021.The credit rate reduces to 26% in 2020 and 22% in 2021. The credit expires after 2021.
  • Withholding and Estimated Taxes – Our “pay-as-you-go” tax system requires that you make payments of your tax liability evenly throughout the year. If you don’t, it’s possible that you could owe an underpayment penalty. Some taxpayers meet the “pay-as-you-go” requirements by making quarterly estimated payments. However, when your income is primarily from wages, you usually meet the requirements through wage withholding and rely on your employer’s payroll department to take out the right amount of tax, based on the withholding allowances shown on the Form W-4 that you filed with your employer. To avoid potential underpayment penalties, you are required to deposit by payroll withholding or estimated tax payments an amount equal to the lesser of:
  • 90% of the current year’s tax liability; or
  • 100% of the prior year’s tax liability or, if your AGI exceeds $150,000 ($75,000 for taxpayers filing as married separate), 110% of the prior year’s tax liability.

If you had a significant change in income during the year, we can assist you in projecting your tax liability to maximize the tax benefit and delay paying as much tax as possible before the filing due date.

Please call if this office can be of assistance with your tax planning needs.

 


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 NW 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

isler northwest, cpa

Not-Being-Insured Penalty Eliminated

Article Highlights:

  • Shared-Responsibility Payment
  • Originated in 2014
  • Fully Effective in 2016
  • How It Is Calculated
  • Eliminated in 2019

Note: This one of a series of articles that explain how the various tax changes in the GOP’s Tax Cuts & Jobs Act (referred to as “the Act” in this article), which passed in late December of 2017, could affect you and your family—both in 2018 and in future years. This series offers strategies that you can employ to reduce your tax liability under the new law.

Beginning in 2014, the Affordable Care Act, also known as Obamacare, imposed what a “share-responsibility payment” on taxpayers who did not sign up for minimum essential health coverage. This payment is essentially a penalty for not being insured.

The penalty was phased in during 2014 and 2015, and it became fully effective in 2016. The penalty also began to be inflation adjusted after 2017.

The penalty for 2018 is the greater of the sum of the family’s flat dollar amounts or 2.5% of the amount by which the household’s income exceeds the income-tax filing threshold.

For 2018, the flat dollar amounts are $700 per year ($58.33 per month) for each adult and $350 per year ($29.17 per month) for each child; the maximum family penalty using this method is $2,100 per year ($175 per month).

As an example, say that a family of four (2 adults and 2 children) has a household income that exceeds the income-tax filing threshold by $100,000. This family would have a maximum penalty equal to the greater of the flat dollar amount ($700 + $700 + $350 + $350 = $2100) or 2.5% of the income amount (2.5% × $100,000 = $2,500). Thus, the maximum penalty would be $2,500. However, the penalties are applied separately in each month, and they do not apply in a given month if certain exceptions are met.

Because of the Act, in 2019, the shared responsibility payment will no longer exist, thus allowing taxpayers the discretion of choosing to not have any coverage without the fear of being subject to a substantial penalty. However, the penalty still applies for 2018.

This does not impact the health care subsidy for low-income families, which is known as the premium tax credit and which is available for policies that are acquired through a government insurance marketplace. It also does not affect the penalties assessed on employers that do not offer affordable insurance to employees and that have 50 or more full-time-equivalent employees.

For questions or additional information, please call this office.


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 NW 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

accountants, isler northwest, portland

Tax Filing Deadline Rapidly Approaching

Highlights:

  • 2017 balance due payments
  • IRA contributions for 2017
  • Estimated tax payments for first quarter 2018
  • Statute of limitation 2018 refunds

Just a reminder that the due date for 2017 tax returns is April 17, 2018! There is no penalty for filing late if you are receiving a refund. However, it is quite a different story if you have a balance due. There are two types of penalties. Late filing and late payment penalties are quite severe. Filing an extension gives you until October 15th to file and avoid the late filing penalties. However, there is no extension for paying your tax liability even if you have a valid extension to file. Read more

portland, accounting firm, northwest

Got student loans? Don’t make this major tax mistake

Article by Anna Bahney | Found on CNN

If you’ve been paying off student loans, don’t make the mistake of filing your taxes without getting a deduction on the interest you’ve paid on your loans.

“If you’re paying 4% [interest] on your loans and not getting the deduction,” says Michael Chen a CPA and founder of Henry.tax, “it is expensive and you’re not getting the full benefit.” Read more

isler, cpa, business advisors, portland

Estate Tax Exemption Doubled under Tax Reform

Article Highlights

  • Estate Tax Exemption
  • Unused Exemption Portability
  • Annual Gift Tax Exemption
  • Check Your Beneficiaries

Note: This is one of a series of articles explaining how the various tax changes made by the GOP’s Tax Cuts & Jobs Act (referred to as “the Act” in the article), passed late in December 2017, might affect you and your family in 2018 and future years, and offering strategies you might employ to reduce your tax liability under the new tax laws.

Leading up to the passage of the Act, there was considerable discussion about repealing the estate and gift tax. That didn’t happen! But Congress did double the value of an estate that is excluded from being taxed, and as a result, fewer estates will be subject to the 40% estate tax, and even those in excess of the excluded amount will pay less tax. Read more

Living Abroad? Here Is How Tax Reform May Affect You

Living Abroad? Here Is How Tax Reform May Affect You

If you are an expatriate living abroad, you may be wondering how the provisions of the Tax Cuts and Jobs Act (TCJA) will impact you. This is the most extensive tax change in over 30 years, and although it was touted as tax simplification when it was in the planning stages, nothing was simplified related to U.S. citizens and resident aliens working abroad. The following is an overview of how things will play out for you beginning in 2018.

Read more