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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 |January 9th, 2018|CA tax, income tax, New Tax Laws, property tax, state income|0 Comments
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Child Tax Credit Increased

Under pre-Act law, a taxpayer could claim a child tax credit of up to $1,000 per qualifying child under the age of 17. The aggregate amount of the credit that could be claimed phased out by $50 for each $1,000 of AGI over $75,000 for single filers, $110,000 for married filers, and $55,000 for married individuals filing separately. To the extent that the credit exceeded a taxpayer’s liability, a taxpayer was eligible for a refundable credit (i.e., the additional child tax credit) equal to 15% of earned income in excess of $3,000 (the “earned income threshold”). A taxpayer claiming the credit had to include a valid Taxpayer Identification Number (TIN) for each qualifying child on their return. In most cases, the TIN is the child’s Social Security Number (SSN), although Individual Taxpayer Identification Numbers (ITINs) were also accepted.

New law. For tax years beginning after Dec. 31, 2017 and before Jan. 1, 2026, the child tax credit is increased to $2,000, and other changes are made to phase-outs and refund-ability during this same period, as outlined below. (Code Sec. 24(h)(2), as added by Act Sec. 11022(a))

Phase-out. The income levels at which the credit phases out are increased to $400,000 for married taxpayers filing jointly ($200,000 […]

By |January 9th, 2018|New Tax Laws, tax credit|0 Comments
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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 |January 5th, 2018|income tax, New Tax Laws, tax, tax planning|0 Comments
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Don’t Fall for the IRS Scams Out There

Scammers, claiming to be IRS agents, threatening arrest and jail time if you don’t pay them immediately for overdue “balances” are on the rise. If you haven’t received a call yourself, chances are you will at some point or you know someone who has. and unfortunately, these scams will probably continue and increase over time. Now, it might be daunting to receive a phone call from John Smith at the IRS office, claiming the cops are on your way to your house to arrest you if you don’t make an immediate payment over the phone to them, but rest easy knowing that a) the IRS isn’t going to call you (they are old school), you’ll get a letter in the mail or maybe a fax, and b) they aren’t going to send you an email demanding payment (see https://www.irs.gov/uac/irs-and-security-summit-partners-warn-of-fake-tax-bill-emails ).

To read an interesting story about one person, who worked his way through the cycle of the IRS phone scams to get answers: http://www.vox.com/first-person/2016/10/18/13276464/irs-scam-phone-cartoon

See what the IRS has to say on the continuing issue of phone and email scams:

https://www.irs.gov/uac/newsroom/phone-scams-continue-to-be-a-serious-threat-remain-on-irs-dirty-dozen-list-of-tax-scams-for-the-2016-filing-season

Stay vigilant and if you ever have questions about an email or phone call you’ve received, feel free […]

By |November 15th, 2016|irs|0 Comments
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E-file and E-pay Mandate for Employers (Assembly Bill 1245)

New state law mandates electronic submission of tax returns, wage reports, and payroll tax deposits for all employers.

Beginning January 1, 2017, employers with 10 or more employees will be required to electronically submit employment tax returns, wage reports, and payroll tax deposits to the Employment Development Department (EDD). All remaining employers will be subject to this requirement beginning January 1, 2018. Any employer required under existing law to electronically submit wage reports and/or electronic funds transfer to the EDD will remain subject to those requirements.  For more information, visit FAQs – E-file and E-pay Mandate for Employers.

Benefits of Electronic Filing and Payments

  • Increases data accuracy.
  • Protects data through encryption, which is safer and more secure than paper forms.
  • Reduces paper and mailing costs.
  • Eliminates lost mail.
  • Faster processing of returns and payments.

File and Pay Electronically with e-Services for Business

Employers can use e-Services for Business to comply with the e-file and e-pay mandate. e-Services for Business is a fast, easy, and secure way to manage your employer payroll tax accounts online. With e-Services for Business, you can:

  • Register for an employer payroll tax account number.
  • File returns and reports.
  • Make payroll tax deposits and pay other liabilities.
  • View and update account information.
  • And […]
By |July 26th, 2016|employer|0 Comments
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Reminder Regarding Filing Statement of Information

Just a reminder for our business clients: California law requires corporations, limited liability companies and common interest development associations to update the records of the California Secretary of State on an annual or biennial basis by filing a statement, as described below.

Please refer to the instructions included with the form for complete filing information, applicable filing periods/due dates, fees required to file the statement, penalties for not timely filing the required statement, and statutory provisions.

Statement of Information:

By |December 18th, 2014|business, ca|0 Comments
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