Tax reform is here and 2018 brings many changes to the tax code. One of the major changes is a near doubling of the standard deduction. What is a standard deduction? Every taxpayer gets to deduct from income a certain amount of money which lowers their tax bill. Taxpayers can subtract a flat "standard" deduction, OR "itemized" deductions. Examples of itemized deductions in 2017 include medical expenses (subject to a 7.5% of income threshold), state income taxes, real estate taxes, auto excise taxes, mortgage interest, charitable contributions and certain miscellaneous deductions (subject to a 2% of income threshold). Taxpayers subtract whichever is LARGER, a standard …
Taxes
Donor Advised Funds – a Tax Efficient Way to Give to Charity.
What is a Donor Advised Fund? (DAF) A Donor Advised Fund is like a charitable investment account, for the sole purpose of supporting charitable organizations you care about. Step 1: Contribute to a Donor Advised Fund You can contribute cash, shares of stocks or mutual funds, or other kinds of assets to a DAF and get an immediate tax deduction for the whole amount. Under the new tax law, far fewer people will be itemizing their deductions. But if you contribute a large amount (say several years of your usual charitable donations) to a Donor Advised Fund you might still itemize your deductions in the year you contribute. A Donor Advised Fund can be an especially useful tool if …
A Tale of Two Tax Returns
This year I will spend a lot of time with my clients analyzing their individual tax situation under the new law. New withholding tables go into effect in February 2018 and wage earners may have to adjust to make sure they don't have either a huge refund or a huge bill at tax time. No, you do not want a big refund! One of the big changes in this law is the doubling of the standard deduction. Each year you are allowed to subtract from income a deduction. You subtract whichever is larger for you, the standard deduction or itemized deductions. Many people who used to itemize will now take the standard deduction. But it's difficult to make blanket statements about who will and won't itemize …
How Does Your Income and Tax Bill Stack Up?
Tax reform is the topic of the day especially for those of us in the biz. As of this writing, November 2017, we have seen the first draft of the House legislation. What the final bill will look like (assuming there is a final bill) is still a question mark. In the meantime you may be interested to learn where YOUR income and tax bill stacks up compared to everyone else in the United States. Kiplinger has created a tax burden calculator that will tell you just that based on IRS data from 2015, the most recently available year. Find it HERE. It's easy to use. Enter your AGI (Adjusted Gross Income) in the box. Your AGI is on Line 37 of the 1040 Form on your tax …
Supporting your adult child or elderly parent? You could save on taxes!
Hello! Has your adult child boomeranged back to the nest and having trouble finding work? Are you helping out your parents or other people financially? You may be able to claim them as dependents on your tax return and/or deduct the medical expenses you pay for them. Read on to learn more. Best, Michelle Morris, CFP®, EA BRIO Financial Planning Recently I helped two clients amend prior year taxes to claim two adult children as dependents in one case and an elderly father in another case. The combined savings was thousands. These scenarios are increasingly common and many people aren't aware of the dependent rules or that claiming someone other …
