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The 2019 Gift Tax Return Deadline Is Coming Up

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If you made large gifts to your children, grandchildren or other heirs last year, it’s important to determine whether you’re required to file a 2019 gift tax return. And in some cases, even if it’s not required to file one, it may be beneficial to do so anyway.

Who must file?

Generally, you must file a gift tax return for 2019 if, during the tax year, you made gifts:

  • That exceeded the $15,000-per-recipient gift tax annual exclusion (other than to your U.S. citizen spouse),
  • That you wish to split with your spouse to take advantage of your combined $30,000 annual exclusion,
  • That exceeded the $155,000 annual exclusion for gifts to a noncitizen spouse,
  • To a Section 529 college savings plan and wish to accelerate up to five years’ worth of annual exclusions ($75,000) into 2019,
  • Of future interests — such as remainder interests in a trust — regardless of the amount, or
  • Of jointly held or community property.

Keep in mind that you’ll owe gift tax only to the extent that an exclusion doesn’t apply and you’ve used up your lifetime gift and estate tax exemption ($11.4 million for 2019). As you can see, some transfers require a return even […]

By |March 14th, 2020|gift tax|0 Comments

Getting Help With a Business Interruption Insurance Claim

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To guard against natural disasters and other calamities, many companies buy business interruption insurance. These policies provide cash flow to cover revenues lost and expenses incurred while normal operations are limited or suspended.

But buying coverage is one thing — making a claim and receiving the funds is quite another. Depending on the scope of your loss, the insurer may enlist its own specialists to audit and reduce your claim. Fortunately, you can enlist a CPA to help you prepare a claim, quantify business interruption losses and anticipate your insurer’s challenges.

Major roles

There are two major roles your accountant can play in managing the claims process:

1. Point person. He or she can be the primary contact with the insurer, dealing with the typical onslaught of document requests. This leaves you free to run your business and bring it back up to speed.

By |March 9th, 2020|business, disaster|0 Comments

Answers To Your Questions About 2020 Individual Tax Limits

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Right now, you may be more concerned about your 2019 tax bill than you are about your 2020 tax situation. That’s understandable because your 2019 individual tax return is due to be filed in less than three months.

However, it’s a good idea to familiarize yourself with tax-related amounts that may have changed for 2020. For example, the amount of money you can put into a 401(k) plan has increased and you may want to start making contributions as early in the year as possible because retirement plan contributions will lower your taxable income.

Note: Not all tax figures are adjusted for inflation and even if they are, they may be unchanged or change only slightly each year due to low inflation. In addition, some tax amounts can only change with new tax legislation.

So below are some Q&As about tax-related figures for this year.

How much can I contribute to an IRA […]

Numerous Tax Limits Affecting Businesses Have Increased For 2020

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An array of tax-related limits that affect businesses are annually indexed for inflation, and many have increased for 2020. Here are some that may be important to you and your business.

Social Security tax

The amount of employees’ earnings that are subject to Social Security tax is capped for 2020 at $137,700 (up from $132,900 for 2019).

Deductions

  • Section 179 expensing:
    • Limit: $1.04 million (up from $1.02 million for 2019)
    • Phaseout: $2.59 million (up from $2.55 million)
  • Income-based phase-out for certain limits on the Sec. 199A qualified business income deduction begins at:
    • Married filing jointly: $326,600 (up from $321,400)
    • Married filing separately: $163,300 (up from $160,725)
    • Other filers: $163,300 (up from $160,700)

Retirement plans

  • Employee contributions to 401(k) plans: $19,500 (up from $19,000)
  • Catch-up contributions to 401(k) plans: $6,500 (up from $6,000)
  • Employee contributions to SIMPLEs: $13,500 (up from $13,000)
  • Catch-up contributions to SIMPLEs: $3,000 (no change)
  • Combined employer/employee contributions to defined contribution plans (not including catch-ups): $57,000 (up from $56,000)
  • Maximum compensation used to determine contributions: $285,000 (up from $280,000)
  • Annual benefit for defined benefit plans: $230,000 (up from $225,000)
  • Compensation defining a highly compensated employee: $130,000 (up from $125,000)
  • Compensation defining a “key” employee: $185,000 (up from $180,000)

Other employee benefits

  • Qualified transportation fringe-benefits employee income exclusion: $270 per month (up […]

Can You Deduct Charitable Gifts On Your Tax Return?

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Many taxpayers make charitable gifts — because they’re generous and they want to save money on their federal tax bills. But with the tax law changes that went into effect a couple years ago and the many rules that apply to charitable deductions, you may no longer get a tax break for your generosity.

Are you going to itemize?

The Tax Cuts and Jobs Act (TCJA), signed into law in 2017, didn’t put new limits on or suspend the charitable deduction, like it did with many other itemized deductions. Nevertheless, it reduces or eliminates the tax benefits of charitable giving for many taxpayers.

Itemizing saves tax only if itemized deductions exceed the standard deduction. Through 2025, the TCJA significantly increases the standard deduction. For 2020, it is $24,800 for married couples filing jointly (up from $24,400 for 2019), $18,650 for heads of households (up from $18,350 for 2019), and $12,400 for singles and married couples filing separately (up from $12,200 […]

By |March 3rd, 2020|charity, deduction, deductions, New Tax Laws, tax planning|0 Comments

Age-Related Tax and Financial Milestones

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In an era filled with uncertainty, you can count on one thing: time marches on! This article covers some important age-related tax and financial planning milestones that you should keep in mind for yourself and loved ones.

Ages 0–23

The so-called “Kiddie Tax” rules can potentially apply to your child’s (or grandchild’s) investment income until the year he or she reaches age 24. Specifically, a child’s investment income in excess of the applicable annual threshold is taxed at the parent’s marginal tax rate.

Note: For 2018 and 2019, the unfavorable income tax rates for trusts and estates were used to calculate the Kiddie Tax. Recent legislation changed this for 2020 by once again linking the child’s tax rate to the parent’s marginal tax rate. However, you may elect to apply this change to your 2018 and 2019 tax years. If we feel an election would be beneficial for 2018, we will recommend amending your return.

For 2020, the investment income threshold is $2,200. A child’s investment income below the threshold is usually taxed at benign rates (typically 0% for long-term capital gains and dividends and 0%, 10%, or 12% for ordinary investment income and short-term gains). Note […]

By |February 28th, 2020|estate, irs, New Tax Laws, tax implications|0 Comments

Cents-Per-Mile Rate for Business Miles Decreases Slightly for 2020

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This year, the optional standard mileage rate used to calculate the deductible costs of operating an automobile for business decreased by one-half cent, to 57.5 cents per mile. As a result, you might claim a lower deduction for vehicle-related expense for 2020 than you can for 2019.

Calculating your deduction

Businesses can generally deduct the actual expenses attributable to business use of vehicles. This includes gas, oil, tires, insurance, repairs, licenses and vehicle registration fees. In addition, you can claim a depreciation allowance for the vehicle. However, in many cases depreciation write-offs on vehicles are subject to certain limits that don’t apply to other types of business assets.

The cents-per-mile rate comes into play if you don’t want to keep track of actual vehicle-related expenses. With this approach, you don’t have to account for all your actual expenses, although you still must record certain information, such as the mileage for each business trip, the date and the destination.

By |February 21st, 2020|deduction, deductions, New Tax Laws, vehicles|0 Comments

Linkenheimer Team’s Eye Care Service Project to Nicaragua in January of 2020

We departed the night of January 14, 2020 on a graveyard flight from SFO to Houston to Managua. The intrepid travelers included first timers – Dana Breaux, Ernie Ceja, Charla Balkin, Jan Coulter, Gino Scurini and Kelly McGlinchy. Experienced missionaries included Carli Ortiz, Kerri Berry, Nina Shaposhnikov, Joshua Warren, Andy Vedder and John Jones. Our objective was to provide eye care (exams and prescription eye glasses for free) to the people of Las Azucena. This is a small village south of San Carlos Nicaragua and upriver from our home base at the Sabalos Lodge.

Nicaragua is the 2nd poorest country in the western hemisphere behind Haiti. The area of Sabalos and the Rio San Juan is the poorest of all Nicaragua. Average per capita income for the country is about $400 and likely in the Rio San Juan it is closer to $200 per year. Few paying jobs exist with most people surviving on subsistence farming. The people though are very content and gracious. There are no eye care teams (or brigades) that make it to this part of the country. The work we do through the firm, Santa Rosa Sunrise Rotary and St Mark Lutheran Church is the total eye […]

By |February 14th, 2020|Community, Nicaragua|0 Comments

Help Protect Your Personal Information By Filing Your 2019 Tax Return Early

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The IRS announced it is opening the 2019 individual income tax return filing season on January 27. Even if you typically don’t file until much closer to the April 15 deadline (or you file for an extension), consider filing as soon as you can this year. The reason: You can potentially protect yourself from tax identity theft — and you may obtain other benefits, too.

Tax identity theft explained

In a tax identity theft scam, a thief uses another individual’s personal information to file a fraudulent tax return early in the filing season and claim a bogus refund.

The legitimate taxpayer discovers the fraud when he or she files a return and is informed by the IRS that the return has been rejected because one with the same Social Security number has already been filed for the tax year. While the taxpayer should ultimately be able to prove that his or her return is the valid one, tax identity theft […]

By |February 6th, 2020|individuals, irs, tax deadlines, tax planning, w2|0 Comments

IRS Launches New Identity Theft Website

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The IRS has launched “Identity Theft Central,” a new website devoted to identity theft and data security for taxpayers, tax professionals, and businesses. Available 24/7, the site provides resources on reporting identity theft and guarding against phishing, online scams, and more. Specifically, the site (1) lists steps to take if you become a victim of identity theft; (2) summarizes the responsibilities of tax professionals under the law; and (3) instructs businesses on how to recognize the signs of identity theft. Also, the page features videos on key topics that can be used by taxpayers or partner groups. The IRS encourages tax professionals to bookmark the site and periodically check the guidance for updates. Identity Theft Central can be accessed at www.irs.gov/identity-theft-central .

By |February 6th, 2020|irs|0 Comments