L&H Insights

How to Ensure You Receive Your Charitable Tax Deductions

Posted by L&H CPAs on Feb 22, 2018 6:00:00 AM
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Tags: Estate Planning

What's the Best Higher-Education Break to Claim on Your 2017 Return?

Posted by L&H CPAs on Feb 21, 2018 6:00:00 AM

 

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Tags: Taxes

Small Business Owners: a SEP IRA May Be Your Last 2017 Tax & Retirement Saving Opportunity

Posted by L&H CPAs on Feb 20, 2018 10:12:26 AM
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Tags: Business Owners & Entrepreneurs

Only Certain Trusts Can Own S Corporation Stock

Posted by L&H CPAs on Feb 15, 2018 6:01:00 AM
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Tags: Estate Planning

TCJA Temporarily Lowers Medical Expense Deduction Threshold

Posted by L&H CPAs on Feb 14, 2018 6:00:00 AM
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Tags: Taxes

Claiming Bonus Depreciation on Your 2017 Tax Return May Be Particularly Beneficial

Posted by L&H CPAs on Feb 13, 2018 4:57:45 PM
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Tags: Business Owners & Entrepreneurs

Gifted Assets to Loved Ones? File a Gift Tax Return? Only if You Have To

Posted by L&H CPAs on Feb 7, 2018 11:00:00 AM
Gifting assets to loved ones is one of the most satifying, generous, and simplest ways of reducing your taxable estate while taking care of the people you've worked so hard to provide for. However, what may not be as simple is determining whether you need to file a gift tax return (Form 709). With the April 17 filing deadline approaching, now is the time to find out an answer.

Return required

A federal gift tax return (Form 709)  is  required if you:
  • Made gifts of present interests — such as an outright gift of cash, marketable securities, real estate or payment of expenses other than qualifying educational or medical expenses (see below) — if the total of all gifts to any one person exceeded the $14,000 annual exclusion amount (for 2017),
  • Made split gifts with your spouse,
  • Made gifts of present interests to a noncitizen spouse who otherwise would qualify for the marital deduction, if the total exceeded the $149,000 noncitizen spouse annual exclusion amount (for 2017),
  • Made gifts of future interests — such as certain gifts in trust and certain unmarketable securities — in any amount, or
  • Contributed to a 529 plan and elected to accelerate future annual exclusion amounts (up to five years’ worth) into the current year.
Return not required


No  gift tax return is required if you:
  • Paid qualifying educational or medical expenses on behalf of someone else directly to an educational institution or health care provider,
  • Made gifts of present interests that fell within the annual exclusion amount,
  • Made outright gifts to a spouse who’s a U.S. citizen, in any amount, including gifts to marital trusts that meet certain requirements, or
  • Made charitable gifts and aren’t otherwise required to file Form 709 — if a return is otherwise required, charitable gifts should also be reported.
If you transferred hard-to-value property, such as artwork or interests in a family-owned business, consider filing a gift tax return even if you’re not required to. Adequate disclosure of the transfer in a return triggers the statute of limitations, generally preventing the IRS from challenging your valuation more than three years after you file. 

In some cases it’s even advisable to file Form 709 to report  nongifts . For example, suppose you sold assets to a family member or a trust. Again, filing a return triggers the statute of limitations and prevents the IRS from claiming, more than three years after you file the return, that the assets were undervalued and, therefore, partially taxable. 

Contact us if you made gifts last year and are unsure if you should file a gift tax return.
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Tags: Estate Planning

How to Benefit from Sales Tax Deduction in 2017 & 2018

Posted by L&H CPAs on Feb 6, 2018 6:00:00 AM
If you've itemized your deductions, you (or your CPA) knows you can deduct either state and local  income  taxes or state and local  sales  taxes. In Texas, the choice is clear, deduct sales tax since we don't have state tax. Then again, a lot of our clients don't have their principal residence in our home state. Either way, the ability to deduct state and local taxes — including income or sales taxes, as well as  property  taxes — had been on the tax reform chopping block, but it ultimately survived. However, for 2018 through 2025, the Tax Cuts and Jobs Act imposes a new limit on the state and local tax deduction. Will you benefit from the sales tax deduction on your 2017 or 2018 tax return?

Your 2017 Return

The sales tax deduction can be valuable if you reside in a state with no or low income tax or purchased a major item in 2017, such as a car or boat. How do you determine whether you can save more by deducting sales tax on your 2017 return? Compare your potential deduction for state and local income tax to your potential deduction for state and local sales tax. 

This isn’t as difficult as you might think: You don’t have to have receipts documenting all of the sales tax you actually paid during the year to take full advantage of the deduction. Your deduction can be determined by using an IRS sales tax calculator that will base the deduction on your income and the sales tax rates in your locale plus the tax you actually paid on certain major purchases (for which you will need substantiation).

Your 2018 Return

Under the TCJA, for 2018 through 2025, your total deduction for  all  state and local taxes combined — including  property  tax — is limited to $10,000. You still must choose between deducting income and sales tax; you can’t deduct both, even if your total state and local tax deduction wouldn’t exceed $10,000.

Also keep in mind that the TCJA nearly doubles the standard deduction. So even if itemizing has typically benefited you in the past, you could end up being better off taking the standard deduction when you file your 2018 return.

So if you’re considering making a large purchase in 2018, you shouldn’t necessarily count on the sales tax deduction providing you significant tax savings. You need to look at what your total state and local tax liability likely will be, as well as whether your total itemized deductions are likely to exceed the standard deduction.

Questions?

We can answer your questions about how to benefit from the sales tax deduction on your 2017 return and the impact of the TCJA on your 2018 tax planning. Spend more time doing what you love to do by leveraging our passion - tax stragies to protect and increase your personal wealth.

© 2018
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2 Small Business Tax Credits to Reduce 2017 & 2018 Taxes

Posted by L&H CPAs on Feb 5, 2018 11:30:00 AM

tax credits

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Tags: Business Owners & Entrepreneurs

Looking for a Powerful Estate Planning Tool for Nontaxable Estates?

Posted by L&H CPAs on Feb 1, 2018 6:30:00 AM

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Tags: Estate Planning

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