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Archives for February 2018

2018 – 02/20 – Tax deduction for moving costs: 2017 vs. 2018

If you moved for work-related reasons in 2017, you might be able to deduct some of the costs on your 2017 return. But if you move in 2018, the costs likely won’t be deductible. The Tax Cuts and Jobs Act suspends the moving expense deduction for 2018–2025, except for military members in certain situations. To deduct 2017 work-related moving expenses, you must pass a distance test and a time test. Deductible expenses generally include such costs as move-related travel (but not meals) and packing and transporting your personal property. For more details, contact us.

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2018 – 02/12 – Small business owners: A SEP may give you one last 2017 tax and retirement saving opportunity

Business owners: A Simplified Employee Pension (SEP) may give you one last 2017 tax and retirement saving opportunity. You can establish a SEP IRA for 2017 and make 2017 contributions as late as the 2018 due date (including extensions) of your income tax return. Contributions are discretionary and may be as large as $54,000 for 2017. Generally, other types of retirement plans must have been established by Dec. 31, 2017, for 2017 contributions to be made (though many also allow 2017 contributions in 2018). Additional rules and limits apply. Contact us for details.

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2018 – 02/05 – Claiming bonus depreciation on your 2017 tax return may be particularly beneficial

Bonus depreciation allows businesses to offset the costs of investing in equipment and other qualified assets more quickly. Claiming bonus depreciation on your 2017 tax return may be particularly beneficial. Why? Deductions save more tax when rates are higher, and most businesses’ tax rates will go down in 2018 under the Tax Cuts and Jobs Act. How much can you save? The break allows additional first-year depreciation of 50% or 100% for 2017, depending on when the asset was acquired and placed in service. Contact us for details.

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2018 – 02/06 – TCJA temporarily lowers medical expense deduction threshold

With rising health care costs, claiming whatever tax breaks related to health care that you can is more important than ever. But there’s a threshold for deducting medical expenses that may be hard to meet. Fortunately, the Tax Cuts and Jobs Act has reduced the threshold from 10% of adjusted gross income to 7.5% for 2017 and 2018. Contact us if you have questions about what expenses are eligible and whether you can qualify for this itemized deduction on your 2017 tax return. We can also share tips for maximizing your 2018 medical expense deduction.

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2017 FBAR Ffiling Deadline Announced

The Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 changed the due date for filing FinCEN Form 114 [Report of Foreign Bank and Financial Accounts (FBARs)] to April 15 of the following calendar year, with a six-month extension to October 15 allowed. (Previously, the due date was June 30 of the following calendar year, with no extension allowed.) Recently, FinCEN announced that 2017 FBARs will be due on 4/17/18, which is the same date 2017 federal income tax returns are due. However, taxpayers who fail to file their FBARs by that date will be granted an automatic extension to 10/15/18—a specific request for extension will not be required. The announcement can be found at www.fincen.gov/sites/default/files/shared/FBAR_Due_Date_Clarification_PD02-02-2018.pdf .

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2018 – 01/30 – State and local sales tax deduction remains, but subject to a new limit

If you itemize, you can deduct either state and local income taxes or state and local sales taxes. Deducting sales tax can be valuable if you reside in a state with no or low income tax or purchased a major item, such as a car. The deduction for state and local taxes (including income or sales tax, as well as property tax) had been on the tax reform chopping block. It survived, but, for 2018 through 2025, the Tax Cuts and Jobs Act imposes a new limit: Your total deduction for all state and local taxes combined can’t exceed $10,000. Contact us to learn more.

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2018 – 02/05 – Claiming bonus depreciation on your 2017 tax return may be particularly beneficial

Bonus depreciation allows businesses to offset the costs of investing in equipment and other qualified assets more quickly. Claiming bonus depreciation on your 2017 tax return may be particularly beneficial. Why? Deductions save more tax when rates are higher, and most businesses’ tax rates will go down in 2018 under the Tax Cuts and Jobs Act. How much can you save? The break allows additional first-year depreciation of 50% or 100% for 2017, depending on when the asset was acquired and placed in service. Contact us for details.

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2018 – 02/02 – Auditing work in progress

Auditors closely evaluate how you report work in progress (WIP) inventory. Why? WIP relies on management’s estimates. Inexperienced or dishonest managers sometimes inflate these estimates, which makes the company appear healthier than it really is. Auditors consider whether allocations of materials, labor and overhead cost appear reasonable. They also monitor how revenue is being recognized based on product sales or the completion level of outstanding work. We can help you make reliable estimates and understand how to report WIP and revenue with confidence.

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2018 – 01/29 – 2 tax credits just for small businesses may reduce your 2017 and 2018 tax billsv

Providing employee benefits can help businesses attract and retain the best workers. But the cost can be out of reach for some small businesses. Two tax credits can help make benefits more affordable for eligible small employers: 1) a credit equal to as much as 50% of health coverage premiums paid, and 2) a credit of up to $500 for creating a retirement plan. Contact us to learn if you can take these or other credits on your 2017 tax return and to plan for credits you might be able to claim on your 2018 return if you take appropriate actions this year.

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2018 – 01/23 – Can you deduct home office expenses?

For 2018, fewer taxpayers will be eligible for a home office deduction. Employees claim home office expenses as a miscellaneous itemized deduction. For 2017, this means there’s a tax benefit only if these expenses plus other miscellaneous itemized expenses exceed 2% of adjusted gross income. For 2018, the Tax Cuts and Jobs Act suspends miscellaneous itemized deductions subject to the 2% floor. But if you’re self-employed, you can deduct eligible home office expenses against self-employment income. Additional rules and limits apply; contact us for details.

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