income tax - Linkenheimer LLP CPAs & Advisors

Factor in State and Local Taxes When Deciding Where to Live in Retirement

Many Americans relocate to another state when they retire. If you’re thinking about such a move, state and local taxes should factor into your decision.

Income, property and sales tax

Choosing a state that has no personal income tax may appear to be the best option. But that might not be the case once you consider property taxes and sales taxes.

For example, suppose you’ve narrowed your decision down to two states: State 1 has no individual income tax, and State 2 has a flat 5% individual income tax rate. At first glance, State 1 might appear to be much less expensive from a tax perspective. What happens when you factor in other state and local taxes?

Let’s say the property tax rate in your preferred locality in State 1 is 5%, while it’s only 1% in your preferred locality in State 2. That difference could potentially cancel out any savings in state income taxes in State 1, depending on your annual income and the assessed value of the home.

Also keep in mind that home values can vary dramatically from location to location. So if home values are higher in State 1, there’s an even greater chance that […]

By Linkenheimer LLP|2020-09-03T20:04:39+00:00June 6th, 2018|income tax, retirement, tax|0 Comments

State and Local Tax Deduction Limited

Under pre-Act law, taxpayers could deduct from their taxable income as an itemized deduction several types of taxes paid at the state and local level, including real and personal property taxes, income taxes, and/or sales taxes.

New law. For tax years beginning after Dec. 31, 2017 and before Jan. 1, 2026, subject to the exception described below, State, local, and foreign property taxes, and State and local sales taxes, are deductible only when paid or accrued in carrying on a trade or business or an activity described in Code Sec. 212 (generally, for the production of income). State and local income, war profits, and excess profits are not allowable as a deduction.

However, a taxpayer may claim an itemized deduction of up to $10,000 ($5,000 for a married taxpayer filing a separate return) for the aggregate of (i) State and local property taxes not paid or accrued in carrying on a trade or business or activity described in Code Sec. 212; and (ii) State and local income, war profits, and excess profits taxes (or sales taxes in lieu of income, etc. taxes) paid or accrued in the tax year. Foreign real property taxes may not be deducted. (Code Sec. 164(b)(6), as amended by Act Sec. […]

By Linkenheimer LLP|2020-09-03T20:04:47+00:00January 9th, 2018|CA tax, income tax, New Tax Laws, property tax, state income|0 Comments

New Individual, Estate and Trust Rate Schedules

With the new tax law changes, we will be posting a series of of updates outlining all the changes that will take place. If you have any questions, please contact your Linkenheimer CPA.

FOR MARRIED INDIVIDUALS FILING JOINT RETURNS AND SURVIVING SPOUSES:

If taxable income is: The tax is:

Not over $19,050 10% of taxable income

Over $19,050 but not over $77,400 $1,905 plus 12% of the excess over $19,050

Over $77,400 but not over $165,000 $8,907 plus 22% of the excess over $77,400

Over $165,000 but not over $315,000 $28,179 plus 24% of the excess over $165,000

Over $315,000 but not over $400,000 $64,179 plus 32% of the excess over $315,000

Over $400,000 but not over $600,000 $91,379 plus 35% of the excess over $400,000

Over $600,000 $161,379 plus 37% of the excess over $600,000

FOR SINGLE INDIVIDUALS (OTHER THAN HEADS OF HOUSEHOLDS AND SURVIVING SPOUSES):

If taxable income is: The tax is:

Not over $9,525 10% of taxable income

Over $9,525 but not over $38,700 $952.50 plus 12% of the excess over $9,525

Over $38,700 but not over $82,500 $4,453.50 plus 22% of the excess over $38,700

Over $82,500 but not over $157,500 $14,089.50 plus 24% of the excess over $82,500

Over $157,500 but not over $200,000 $32,089.50 […]

By Linkenheimer LLP|2020-09-03T20:04:48+00:00January 5th, 2018|income tax, New Tax Laws, tax, tax planning|0 Comments

Loss of Income Due to Business Interruption

The North Bay fires have caused unprecedented losses and hardship for so many fellow Sonoma County residents and business owners. While the priority is to assess physical damages and rebuild, there is an element of the overall losses that can be overlooked: Loss of Income due to business interruption. This is defined as “A type of insurance that covers the loss of income that a business suffers after a disaster.” The income loss covered may be due to disaster-related closing of the business facility or due to the rebuilding process after a disaster.

At Linkenheimer LLP, we have many years of experience in assessing circumstances that have resulted in a Loss of Income. Our expertise in this area encompass: research, analysis, report writing, and when needed, testimony to support the positions taken.

If you or anyone you know who has been affected by the fires, and have experienced a Loss of Income, please contact Linkenheimer and we will be […]

By Linkenheimer LLP|2021-02-17T18:11:03+00:00December 1st, 2017|casualty loss, disaster, income tax|0 Comments

March Madness News- How Do I Report Fantasy Sports Winnings?

It’s that time of year again- March Madness is upon us, as is the time to file your taxes. A pressing question on the minds of many Americans this time of year is how to report fantasy sports income on their tax returns. The answer is relatively simple. Assuming your involvement in fantasy sports does not rise to the level of a trade or business, this income is reported as hobby income. You claim the winnings (net of any entry fees) as other income on line 21 of your Form 1040, and if you are able to take advantage of itemized deductions, you can write off related expenses (i.e. entry fees which did not result in any winnings) on Schedule A, subject to a few important limitations: First, your expenses are deductible only to the extent of the related income you report on line 21. Second, like investment adviser fees, any related expenses are reported as miscellaneous itemized deductions, and you only benefit to the extent your total miscellaneous itemized deductions exceed 2% of your adjusted gross income. Additionally, these deductions may be eliminated completely if you are subject to alternative minimum tax. Also […]

By Linkenheimer LLP|2016-03-30T21:46:38+00:00April 1st, 2016|income tax, report|0 Comments