TaxConnections


 

A Helpful Overview Of The 2019 State Sales Tax Ranking

Monika Miles- Overview of 2019 State Sales Tax

Over the past few years we’ve seen how companies have determined where to base operations based on considerations like sales taxcredits and incentives, and overall business climate. When it comes to running a business, which states are friendliest and which are most unfavorable?

The Tax Foundation’s 2019 State Business Tax Climate Index compiles various state details to offer a fascinating comparison for corporate leaders. Keep reading for an overview of how the various states stack up next to each other, especially in regards to sales tax.

2019 State Sales Tax Ranking

The Tax Foundation’s review of this year’s sales tax ranking includes a map with a helpful visual of each state’s placement on the list.

On it you can see the top 10 states are:

  1. New Hampshire
  2. Delaware
  3. Montana
  4. Oregon
  5. Arkansas
  6. Wyoming
  7. Maine
  8. Wisconsin
  9. Nebraska
  10. Virginia

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The Inflation Adjusted Thresholds For Various Tax Levels Announced

Lisa Nason- The Inflation Adjustment

The Social Security Administration (SSA) announced that the maximum earnings subject to the Social Security component of the FICA tax will increase from $128,400 to $132,900 for 2019. This means that for 2019, the maximum Social Security tax that employers and employees will each pay is $8,239.80 ($132,900 x 6.2%). A self-employed person with at least $132,900 in net self-employment earnings will pay $16,479.6 ($132,900 x 12.40%) for the Social Security part of the self-employment tax. The Medicare component remains 1.45% of all earnings, and individuals with earned income of more than $200,000 ($250,000 for married couples filing jointly, $125,000 for married filing separately) will pay an additional 0.9% in Medicare taxes.

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Wonder What A Tax Deduction Is Worth?

Charles Woodson - What Is A Tax Deduction Worth

Individuals are always looking for tax deductions that can reduce their tax liability. But what is the actual tax benefit derived from a tax deduction? There is no straightforward answer because some deductions are above the line, others must be itemized, some must exceed a threshold amount before being deductible, and certain ones are not deductible for alternative minimum tax purposes, while business deductions can offset both income and self-employment tax. In other words, there are many factors to consider, and the tax benefits differ for each individual, depending on his or her particular situation and tax bracket.

For most non-business deductions, the savings are based upon your tax bracket. For example, if you are in the 12% tax bracket, a $1,000 deduction would save you $120 in taxes. On the other hand, if you are in the 32% tax bracket, the $1,000 deduction will save you $320 in taxes. Even so, if your taxable income is close to transitioning into the next-lower tax bracket, the benefit will be lower. You also need to consider whether the particular deduction is allowed on your state return and what your state tax bracket is to determine the total tax savings. Currently, the maximum federal tax bracket is 37%, meaning the most benefit that can be derived from a $1,000 income tax deduction is $370. Some individuals justify making discretionary purchases just because they are tax-deductible. Even in the highest tax bracket, you are still paying $630 out of pocket ($1,000 − $370), so it does not make sense to incur a tax-deductible expense just for the tax deduction.

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ASC 740 – International Impacts Under TCJA -Register Today For December 14th Webinar

Tax Webinar - ASC 740 International Under TCJA

Nick Frank, Tax Prodigy CEO teaches Accounting For Income Taxes at the University of Minnesota – Carlson School of Management. We asked Nick to share his tax provision expertise with our readers on a complimentary basis. Join his last complimentary ASC-740 webinar for the year 2018.

Nick Frank is here to educate and prepare you for the tax provision under tax reform.

Register for ASC 740 – International impacts of the Tax Cuts and Jobs Act on Dec 14, 2018 10:00 AM CST at: 

https://attendee.gotowebinar.com/register/2889836910527624705?source=Tax+Connections

Avoid surprises at year end! This intermediate course explores how Subpart F, GILTI, FDII and Sec. 163(j) interact with one another in the context of ASC 740.

After registering, you will receive a confirmation email containing information about joining the webinar.

If you are unable to make either of these two complimentary webinars, and want information on how to shorten the tax provision process and simplify it for your organization, please register here.

 

 

 

CPA Firms Of The Future – Learn Who Will Get The Best Talent!

Kat Jennings- CPA Firms Of The Future

While many firms search to find talent at the 3-7 year level, a better solution is being provided to accommodate a firms’ growth today. We have been studying this phenomenon carefully for a few years now. It is a real problem when stakeholders in CPA firms do not have the expertise available to get the job done. With tax reform creating more work for everyone, the stakes are about to get higher this season and beyond. We have a real solution we have developed for a limited number of CPA firms.  What we do… we do for a limited number of firms because we rather do an extraordinary job for a small number CPA firms than making a promise to the majority. In this post I will first explain why firms are having such great difficulty attracting tax and accounting professionals with 3-10 years of experience and the smartest solution to the fast changing phenomenon in hiring and retention.

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Year End Tax Planning For Individuals – Why It Is So Important This Year!

John Dundon- Tax Planning

Year End Tax Planning For Individuals

If you happen to be like me – desperately seeking any distraction from this holiday season – there is no better time than the present to start some year-end tax planning. Why is tax planning particularly important this year for almost EVERYONE? Basically the Tax Cuts and Jobs Act brought generational changes to the tax rules. The last time the tax code changed this dramatically was in under President Reagan in 1986.

  • People who thought the reporting under Obama Care was onerous are in for a surprise, a BIG surprise. Tax professionals and taxpayers alike are challenged with understanding these new laws and regulations. With the average age of the tax professional in Colorado being 68 years old, many are simply closing up shop. When it is time to engage you may find yourself out in the cold without adequate representation. Little is more disenfranchising than the discovery you handed over hard earned money to our esteemed authorities because your head was in the sand.

Yes – it might be the driest stuff you read all day. Yes -it will be worth the 3 minutes of your time to peruse.  Not all considerations below may apply specifically to you but they are worth knowing about and sharing with friends or family.

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Holiday Shopping And Online Sales Tax: What You Need To Know

Monika Miles - Holiday Shopping And sales And Use Tax Online

Now that we’re in the midst of the holiday shopping season, businesses and states are starting to see the effects of the Wayfair online sales tax decision. Looking back specifically at Cyber Monday, there are a lot of fascinating results regarding how states and businesses fared. Are states projecting an accurate amount of revenue?

It’s also worth noting how the new online sales tax laws will affect small internet retailers as they struggle to comply with various states’ laws during this busy holiday shopping time. How will they fare given the new regulations?

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Holiday Gifts With Tax Benefits

Charles Woodson - Holiday Gifts With Tax Benefits

Some holiday gifts you provide to members of your family, employees and others may also yield tax benefits. Here are some examples:

Electric Car Credit – If you purchase an electric car as a holiday gift for your spouse or even yourself, you will find that most come with a tax credit of up to $7,500. To qualify to claim the credit on your 2018 tax return, the car will have to be “placed in service” by December 31, 2018. So merely ordering the vehicle, even if payment for it is made at the time when the order is placed, won’t be enough – you will need to receive the car and start using it before New Year’s Day. But before you leap, you should know that the credit is non-refundable, meaning it can only offset your actual tax liability and that any excess credit over your tax liability will be lost. There is, however, an exception when the electric vehicle is used partially for business, in which case the portion of the credit allocated to the business use will become a general business credit that is carried back one year and then carried forward.

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1031 Exchange Overview

Kazim Qasim - 1031 Exchange

It used to be that the term “Section 1031 Exchange” or even “Like-Kind Exchange” was uncommon except in certain circles.  But as the idea of tax strategies have reached more and more taxpayers coupled with the housing market’s fluctuation in recent years, 1031s have become increasingly commonplace.

So, what is a 1031 Exchange?  In its broadest terms, a 1031 Exchange is the trade of one investment property for another.  When most people think of trading one property for another, we think in terms of selling one property, paying any applicable taxes and then buying a new property in a separate transaction.  With the 1031, this is not the case.  If your transaction meets the 1031 requirements, you will have limited to no tax due at the time of the exchange.  In other words, you are changing your investment without cashing out or recognizing capital gains.  This is a good strategy for someone that wants to remain an investor but may no longer have an interest in their current property portfolio.  As there is no limit on the number of times you can perform a 1031 exchange, the investment you originally had will continue to grow tax deferred until such time as you eventually sell.  This can provide time to create a sound plan and tax strategy for paying the long-term capital gain rate at the time of sale.

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Send Fun New Tax Form 10-A SANTA To Clients And Colleagues

SANTA Form 10-A SANTA

TaxConnections has a series of fun tax forms that we provide our paid subscription members along with a license to distribute to clients and friends. These fun tax forms are a great way to keep clients remembering you have a sense of humor all year long. All of TaxConnections fun tax forms are family friendly and you will have access to many more fun tax forms throughout 2019.  We will continue to provide fun and professional content for our members to download to use for marketing purposes.

TaxConnections is also working with tax writers, tax lawyers, and tax advisors and consultants to develop professional content with  permissions to download and distribute. The professional content provided encourages a referral business network for TaxConnections Members.  We support our members relationships within our community to cross-sell business. The first group of professional content articles are released.

You can view all the fun tax forms and professional content below:

View Fun Tax Forms Available For The Holidays:

https://www.taxconnections.com/licensed-resources

Join TaxConnections to download content “without a watermark” and distribute to clients and friends.

Happy Holidays,

Kat Jennings, CEO

www.taxconnections.com

La Jolla, CA 92038 USA

858-999-0053

 

 

No Estate Plan Is The Same: Part 1 – Families

Haik Chilingaryan - Estate Planning- Families

For all of our existence, one common misconception among the general public was that estate planning was only for rich people and “Trust Fund Babies”. However, this notion could not be farther away from the truth, especially when considering the recent changes we have seen in family dynamics and financial opportunities.

Families have historically been composed of one male parent, one female parent, and a child (or children). While traditional families are still very much in existence, there are now compositions of family structures of virtually every imaginable scenario. This includes families with children raised by single mothers or single fathers, cohabiting couples with or without children, and people who neither have children nor domestic partners. By no means is this an exhaustive list. Therefore, the internal makeup of virtually every household is unique, which in turn requires carefully crafted planning techniques to be implemented for each individual family.

The first part of this two-part article analyzes planning considerations for families with young children, families with adult children, married couples, unmarried cohabiting couples, and people who neither have children nor cohabiting partners.

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Guidance Related To The Foreign Tax Credit, Including Guidance Implementing Changes Made By The Tax Cuts And Jobs Act

IRS - Foreign Tax Credit Guidance

Background

The Act made several significant changes to the Internal Revenue Code with respect to the foreign tax credit rules and related rules for allocating and apportioning expenses for purposes of determining the foreign tax credit limitation. In particular, the Act repealed the fair market value method of asset valuation for purposes of allocating and apportioning interest expense under section 864(e)(2), added section 904(b)(4), added two foreign tax credit limitation categories in section 904(d), amended section 960(a) through (c), added section 960(d) through (f), and repealed section 902 along with making other conforming changes. The Act also added section 951A, which requires a United States shareholder of a controlled foreign corporation (“CFC”) to include certain amounts in income (a “global intangible low-taxed income inclusion” or “GILTI inclusion”).

This document contains proposed regulations (the “proposed regulations”) addressing (1) the allocation and apportionment of deductions under sections 861 through 865 and adjustments to the foreign tax credit limitation under section 904(b)(4); (2) transition rules for overall foreign loss, separate limitation loss, and overall domestic loss accounts under section 904(f) and (g), and for the carryover and carryback of unused foreign taxes under section 904(c); (3) the addition of separate categories under section 904(d) and other necessary updates to the regulations under section 904 including revisions to the look-through rules and other updates to reflect pre-Act statutory amendments; (4) the calculation of the exception from subpart F income for high-taxed income under section 954(b)(4); (5) the determination of deemed paid credits under section 960 and the gross up under section 78; and (6) the application of the election under section 965(n).

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