We are nearing the end of the first tax season post Tax Reform, formally known as the "Tax Cuts and Jobs Act". The majority of filers saw a reduction in their tax liability this year as noted by my colleague Bill Starnes. Many people, however, got lower refunds. This is because their tax withheld during the year was less. Your tax refund is not your tax liability. Your tax liability is the amount of tax you owe. Your tax liability in 2018 compared to 2017 depends on a lot of things. Whether you itemized or took the standard deduction Whether you are self-employed and got the new Qualified Business Income Deduction Whether you have children and how old they are …
Taxes
Gift Taxes – the short and long of it.
The gift tax short version: You can give up to $15,000 per year of cash or property (in 2019) to as many people as you wish without filing a gift tax return. The gift is not taxable to the recipient. Now the gift tax long version: 1. Gift tax, if due, is generally paid by the DONOR, not the recipient. 2. There is an annual gift exclusion in 2019 of $15,000. You can give $15,000/year to as many people as you want without having to file a gift tax return. This amount is adjusted each year for inflation 3. Under current law you can give away $11,400,000 during life and at death without owing any gift or estate taxes. Yes, that is over 11 million dollars Think …
Standard Deduction or Itemized- Which is better for YOU in 2018?
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 …
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 …
