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Archive for Individual

Tax Reform’s Impact On Individual’s Taxes

Haik Chilingaryan, Tax Reform And Individual Taxes

During this post, we discuss how the new changes in the tax laws may have an overall positive effect on individual rates and deductions. However, a crucial component of the Tax Cuts and Jobs Act is that the rates and other provisions of the new tax code have a sunset provision, which means that on December 31, 2025, all of the rates are likely to be reinstated unless some legislation is introduced that will retain these rates or lower them even further.


The Tax Cuts and Jobs Act of 2017, otherwise known as GOP tax reform bill, largely went into effect on January 1, 2018. A crucial component of TCJA is that the rates and other provisions of the new tax code have a sunset provision. This means that on December 31, 2025, all of the rates are likely to be reinstated unless some legislation is introduced that will retain these rates or lower them even further.

The following are the list of major changes under the new tax code:

  1. Brackets Lowered (rates sunset on December 31, 2025)
  2. Personal Exemptions Repealed
  3. Standard Deduction Nearly Doubled
  4. State and Local Tax Deduction limited to $10,000
  5. 21% flat rate for C-corporations
  6. Qualified Business Income Deduction for Pass-Through Businesses
  7. Estate Tax Exemption More Than Doubled

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What Entities Qualify For The New Section 199A Business Write-off?

In 2018, a new tax write-off has been created for qualifying businesses – the Section 199A Business Deduction.

This deduction equates to 20% of Qualified Business Income assuming you meet income and salary limitations.  Also, shareholder reasonable compensation, interest, dividends and capital gains and losses don’t qualify. But if you meet these requirements, exactly what entities and businesses have Qualified Business Income?  Based on my research, here are the qualifying businesses:

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Inflation-Adjusted Amounts for 2018 Taxes

Certain tax items are adjusted annually for inflation each year. The numbers that follow are not official releases by the IRS, but reflect the probable amounts that will be in effect for tax year 2018, based on the formulas used by the IRS.

The standard deduction for couples filing a joint return is anticipated to increase to $13,000, an increase of $300 from 2017. Single and married filing separately is half that amount. Head of Household will be $9,550, a $200 increase. Taxpayers 65 years or older or blind will get an additional $1,300 standard deduction, a $50 increase. Personal and dependency exemptions will be the same as for 2017, $1,050. These increases will result in an increase in the minimum income requiring taxpayers to file a return.

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Gig Workforce and Portable Benefits

Annette Nellen

On May 25, 2017, Senator Warner (D-VA) and Congresswoman DelBene (D-WA) introduced H. 1251 and H.R. 2685, Portable Benefits for Independent Workers Pilot Program Act. It calls for $20 million of grant dollars for states to study and pursue innovative ways to provide portable benefits to “the growing independent workforce.”

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Fighting Tax Identity Theft

Annette Nellen

Our tax filing systems are not perfect! How does the IRS or a state tax agency really know if the person filing a return is the true owner of the taxpayer identification number used? In IRS Publication 1345, on procedures for authorized e-file providers, the IRS states that if the preparer/e-filer does not know the client, they should get two forms of verification (ideally picture IDs that include the client’s name and address (page 11 of Pub 1345)). That should help. What else is needed?

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Running A Gig Or Two? What You Need to Know!

Manasa Nadig

A Gig, I thought, always had a kind of 1950’s/ 1960’s hipster vibe. This was something you did on the side while waiting for real life to catch up! The Gig is gaining more legitimacy these days, I believe. It means a free-lance or a side job you hold down out of interest or necessity. It is also called a “Gig Economy,” or a “Shared Economy,” and sometimes people hold down more than one or two gigs.

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What Is Your Business Really Worth?

Ron Oddo

For many owners, the answer to one question determines their ability to leave their companies: “How much money will I get when I sell?” This question is indeed critical. Realistically, you can’t exit your business unless you achieve financial independence, and the primary source of that independence is likely to be the funds you receive for your business when you leave.

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Does Small Revenue Loss Justify Bad Tax Law? No

Annette Nellen

More on legislative efforts to give a tax break to winning Olympians(!) …

See my post, “Olympic Medal Taxation Craziness“, for background. This post got a lot of comments both here and on Tax Connections.

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Put Your Objectives In The Driver’s Seat

Ron Oddo

“You’ve got to be very careful if you don’t know where you’re going, because you might not get there.” —Yogi Berra

It is not always easy to interpret Yogi. In this case, perhaps he is advising you to figure out just where you are headed in your business. As you near the time when you will leave behind the daily worries and stresses of business ownership, have you defined your successful exit? Do you know where “there” is, much less how to get there? Unless you set and prioritize your exit goals or objectives, you may have too many, or they might conflict, but in either case you may not make much headway.

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You Don’t Need To Shoot For The Top Credit Score

Barry Fowler

In last month’s blog entitled “Become and Remain Credit Worthy”, I wrote about the importance of getting and maintaining a good credit score.

With kids getting ready to go back to school, and some maybe heading off to college, this is a time of year when some people tend to overspend and do damage to their credit. Going back to school is second only to the holidays when this kind of overspending happens in families.

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USCIS Proposes New Alternative To Attract International Entrepreneurs To Stay In The US

Neeraj Bhatia

International entrepreneurs, who find it difficult to satisfy the EB5 criteria as they are unable to raise overseas investment, may soon be provided an alternative route. U.S. Citizenship and Immigration Services (USCIS) is proposing a new rule which is aimed at expanding immigration options for foreign entrepreneurs who meet certain criteria for creating jobs, attracting investment and generating revenue in the U.S. This rule would allow certain international entrepreneurs to be considered for parole (temporary permission to be in the United States) so that they may start or scale their businesses here in the United States.

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Reverse Mortgages—Part Four Of Four

John Stancil

This is the fourth in a series of four articles on the mortgage interest deduction. (Read Part I, Part II, and Part III) Reverse mortgages have become increasingly popular as a vehicle for retired taxpayers to help fund their retirement. It’s hard to watch TV very long without seeing a pitch for reverse mortgages. What are the characteristics of a reverse mortgage, what are the tax implications, and what do taxpayers need to be aware of in regard to these loans? These are sometimes referred to as lifetime mortgages or home equity conversion mortgages (HECM).

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