2018

Happy Holidays from the Linkenheimer Team

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It’s the time of the year, where we reflect on all that is important to us: family, friends, health and hobbies. From everyone at Linkenheimer, we’d like to say thank you for your continued loyalty and faith in us. Put your feet up and have a well-deserved rest this Christmas and let every day of the holiday season be filled with joy. We look forward to serving you and our community in 2019!

Wishing Everyone a Merry Christmas and a Happy, Healthy and Prosperous New Year!

Does Prepaying Property Taxes Make Sense Anymore?

Prepaying property taxes related to the current year but due the following year has long been one of the most popular and effective year-end tax-planning strategies. But does it still make sense in 2018?

The answer, for some people, is yes — accelerating this expense will increase their itemized deductions, reducing their tax bills. But for many, particularly those in high-tax states, changes made by the Tax Cuts and Jobs Act (TCJA) eliminate the benefits.

What’s changed?

The TCJA made two changes that affect the viability of this strategy. First, it nearly doubled the standard deduction to $24,000 for married couples filing jointly, $18,000 for heads of household, and $12,000 for singles and married couples filing separately, so fewer taxpayers will itemize. Second, it placed a $10,000 cap on state and local tax (SALT) deductions, including property taxes plus income or sales taxes.

For property tax prepayment to make sense, two things must happen:

  1. You must itemize (that is, your itemized deductions must exceed the standard deduction), and
  2. Your other SALT expenses for the year must be less than $10,000.

If you don’t itemize, or you’ve already used up your $10,000 limit (on income or sales taxes or on previous property […]

By |December 7th, 2018|New Tax Laws, property tax|0 Comments

Estimates vs. Actuals: Was Your 2018 Budget Reasonable?

As the year winds down, business owners can be thankful for the gift of perspective (among other things, we hope). Assuming you created a budget for the calendar year, you should now be able to accurately assess that budget by comparing its estimates to actual results. Your objective is to determine whether your budget was reasonable, and, if not, how to adjust it to be more accurate for 2019.

Identify notable changes

Your estimates, like those of many companies, probably start with historical financial statements. From there, you may simply apply an expected growth rate to annual revenues and let it flow through the remaining income statement and balance sheet items. For some businesses, this simplified approach works well. But future performance can’t always be expected to mirror historical results.

For example, suppose you renegotiated a contract with a major supplier during the year. The new contract may have affected direct costs and profit margins. So, what was reasonable at the beginning of the year may be less so now and require adjustments when you draft your 2019 budget.

Often, a business can’t maintain its current growth rate indefinitely without investing in additional assets or incurring further fixed […]

By |November 29th, 2018|business|0 Comments

Catch-Up Retirement Plan Contributions Can be Particularly Advantageous Post-TCJA

Will you be age 50 or older on December 31? Are you still working? Are you already contributing to your 401(k) plan or Savings Incentive Match Plan for Employees (SIMPLE) up to the regular annual limit? Then you may want to make “catch-up” contributions by the end of the year. Increasing your retirement plan contributions can be particularly advantageous if your itemized deductions for 2018 will be smaller than in the past because of changes under the Tax Cuts and Jobs Act (TCJA).

Catching up

Catch-up contributions are additional contributions beyond the regular annual limits that can be made to certain retirement accounts. They were designed to help taxpayers who didn’t save much for retirement earlier in their careers to “catch up.” But there’s no rule that limits catch-up contributions to such taxpayers.

So catch-up contributions can be a great option for anyone who is old enough to be eligible, has been maxing out their regular contribution limit and has sufficient earned income […]

By |November 27th, 2018|contributions, New Tax Laws, retirement, tax planning, year-end|0 Comments

Tax Reform Expands Availability of Cash Accounting

Under the Tax Cuts and Jobs Act (TCJA), many more businesses are now eligible to use the cash method of accounting for federal tax purposes. The cash method offers greater tax-planning flexibility, allowing some businesses to defer taxable income. Newly eligible businesses should determine whether the cash method would be advantageous and, if so, consider switching methods.

What’s changed?

Previously, the cash method was unavailable to certain businesses, including:

  • C corporations — as well as partnerships (or limited liability companies taxed as partnerships) with C corporation partners — whose average annual gross receipts for the previous three tax years exceeded $5 million, and
  • Businesses required to account for inventories, whose average annual gross receipts for the previous three tax years exceeded $1 million ($10 million for certain industries).

In addition, construction companies whose average annual gross receipts for the previous three tax years exceeded $10 million were required to use the percentage-of-completion method (PCM) to account for taxable income from long-term contracts (except for certain home construction contracts). Generally, the PCM method is less favorable, from a tax perspective, than the completed-contract method.

The TCJA raised all of these thresholds to $25 million, beginning with the 2018 tax year. In […]

By |November 27th, 2018|accounting, business, New Tax Laws, tax planning|0 Comments

It’s Not Too Late: You Can Still Set Up a Retirement Plan for 2018

If most of your money is tied up in your business, retirement can be a challenge. So if you haven’t already set up a tax-advantaged retirement plan, consider doing so this year. There’s still time to set one up and make contributions that will be deductible on your 2018 tax return!

More benefits

Not only are contributions tax deductible, but retirement plan funds can grow tax-deferred. If you might be subject to the 3.8% net investment income tax (NIIT), setting up and contributing to a retirement plan may be particularly beneficial because retirement plan contributions can reduce your modified adjusted gross income and thus help you reduce or avoid the NIIT.

If you have employees, they generally must be allowed to participate in the plan, provided they meet the qualification requirements. But this can help you attract and retain good employees.

And if you have 100 or fewer employees, you may be eligible for a credit […]

By |November 27th, 2018|retirement, tax planning|0 Comments

Buy Business Assets Before Year End to Reduce Your 2018 Tax Liability

The Tax Cuts and Jobs Act (TCJA) has enhanced two depreciation-related breaks that are popular year-end tax planning tools for businesses. To take advantage of these breaks, you must purchase qualifying assets and place them in service by the end of the tax year. That means there’s still time to reduce your 2018 tax liability with these breaks, but you need to act soon.

Section 179 expensing

Sec. 179 expensing is valuable because it allows businesses to deduct up to 100% of the cost of qualifying assets in Year 1 instead of depreciating the cost over a number of years. Sec. 179 expensing can be used for assets such as equipment, furniture and software. Beginning in 2018, the TCJA expanded the list of qualifying assets to include qualified improvement property, certain property used primarily to furnish lodging and the following improvements to nonresidential real property: roofs, HVAC equipment, fire protection and alarm systems, and security systems.

The maximum Sec. 179 deduction for […]

By |November 16th, 2018|business, liability, New Tax Laws, year-end|0 Comments

Voted Best Place to Work by the North Bay Business Journal for 2018

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Once again, we are honored to be recognized as one of the Best Places to Work in the North Bay for 2018. This is the 8th year in a row that Linkenheimer has been voted Best Place to Work in the North Bay and it is truly a testimony to the amazing, hard working team we have here and the community and clients that have supported us all these years. We are grateful to call Sonoma County home and it’s also why we feel the importance of giving back. Over the past year, we’ve volunteered over 1,000 hours as a firm to community projects locally and abroad, including Rotary, Redwood Empire Food Bank, Nicaraguan Eye Care Projects, Elsie Allen High School Foundation and many other incredible organizations focused on making our great community better for everyone.

From the North Bay Business Journal Press Release:

Along with our co-presenters, Nelson Family of Companies, Exchange Bank; Kaiser Permanente and underwriter Trope Group, we are pleased to inform you that Linkenheimer LLP CPAs & Advisors has been selected as one of the Best Places to Work in the North Bay in the thirteenth-annual […]

By |October 2nd, 2018|award, best, best place to work, Community|0 Comments

IRS Releases Updated Withholdings Calculator and 2018 W-4 Form

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The IRS has completed updating its online withholding calculator that individual taxpayers can use to determine how many withholding allowances they should claim for 2018. The IRS also issued a new 2018 Form W-4Employee’s Withholding Allowance Certificate. The IRS had previously announced that taxpayers could use the old 2017 Form W-4, as modified in Notice 2018-14, until 30 days after the new form was issued.

The calculator and new Form W-4 are designed to implement changes made by the Tax Cuts and Jobs Act (passed earlier this year), which increased the standard deduction, removed personal exemptions, increased the child tax credit, limited or discontinued certain deductions, and changed the tax rates and brackets, among many other changes.

To use the calculator, taxpayers should have certain information available, including an estimate of their 2018 income and other items that affect their taxes, including the number of children claimed for the child tax credit and the earned income tax credit. The IRS emphasized that the calculator is used to compute the amount of tax to be withheld in 2018, not for 2017. […]

By |March 2nd, 2018|irs, New Tax Laws, withhold|0 Comments

Tax Extenders Reinstated

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In the massive budget deal passed last week, Congress has bestowed surprise tax breaks on homeowners, students and the climate conscious. There are tax breaks for mortgage insurance premiums, higher-education expenses, energy-efficient home-improvement projects and more. These were tax breaks that expired at the end of 2016, but are now back on for 2017, now that Trump has signed them into law.

The immediate good news for taxpayers: You could see additional tax savings on the tax return you’re filing now—for the 2017 tax year. Below are some highlights. For a complete list, click here. 

Tax Relief for Families and Individuals

Extension and modification of exclusion from gross income of discharge of qualified principal residence indebtedness. The provision extends through 2017 the exclusion from gross income of a discharge of qualified principal residence indebtedness. The provision also modifies the exclusion to apply to qualified principal residence indebtedness that is discharged pursuant to a binding written agreement entered into in 2017.

Extension of mortgage insurance premiums treated as qualified residence interest. The provision extends through 2017 the treatment of qualified mortgage insurance premiums as interest for purposes of the […]

By |February 13th, 2018|deduction, deductions, New Tax Laws, tax, tax implications|0 Comments