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Deducting Interest On A Home Equity Loan Under The Tax Cuts And Jobs Act

William Rogers - Deducting Interest On

Under prior tax law, taxpayers who itemized deductions could deduct “qualified residence interest” on up to $1 million of debt secured by a qualified residence and used to acquire, build or improve that residence (referred to as “acquisition debt”), plus interest on home equity debt up to $100,000. (The limits were half those amounts for married taxpayers filing separately.) The home equity debt couldn’t exceed the fair market value (FMV) of the home reduced by the debt used to acquire the home.

But the $100,000 limit didn’t apply to the extent the home equity debt qualified as acquisition debt. For example, if the home equity debt was used to improve the home securing that debt, the $100,000 limit didn’t apply.

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North Dakota Business And Tax Climate

Monika Miles - North Dakota Business And Tax Climate

This month we travel to the Great Plains state of North Dakota. It is the 19th largest in area, the 4th smallest by population, and also the 4th most sparely populated of the 50 states. North Dakota is situated near the middle of North America with a stone marker in Rugby, North Dakota marking the “Geographic Center of the North American Continent.”

The western half of the state consists of the hilly Great Plains as well as the northern part of the Badlands, which are to the west of the Missouri River. The region is abundant in fossil fuels including natural gas, crude oil and lignite coal. The Missouri River forms Lake Sakakawea, the third largest artificial lake in the U.S.

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Benefit From These Tax Breaks For College Expenses

Lisa Nason- Benefit From Tax Breaks For College Expenses
If you’re a college student (or the parent of one), you should know about some key tax breaks that are available to you when you do your taxes. There are two tax credits for higher education. They’re targeted at different types of students, so it pays to know the differences.
American Opportunity Credit
This credit is for students who are earning their undergraduate degrees. The credit is specifically limited to those expenses incurred in the first four years of college. The credit is worth $2,500; the really good news is that $1,000 of that is refundable, meaning you could get that back as a refund even if you don’t owe any taxes. There’s an $80,000 income ceiling for single filers to qualify for the credit ($160,000 if you’re married filing jointly). If income is more than those amounts, the credit starts to decrease. The credit is available through the 2017 tax year.

How High-Income Professionals Can Benefit From The Pass-through Deduction

Charles Woodson - Pass-through Deductions

If you are a high-income professional who is excluded from the new pass-through deduction because you are in a specified service trade or business (SSTB), you may be able to use retirement plan contributions as a work-around so that you can benefit from that new 20% deduction.

An SSTB generally includes the following trades or businesses:

  • Health (services by physicians, nurses, dentists, veterinarians, and other similar health care providers, although this does not apply to spas and health clubs)
  • Law
  • Accounting
  • Actuarial science
  • Performing arts (but this does not apply to the services of others in the industry, such as promoters and broadcasters);
  • Consulting
  • Athletics
  • Financial services

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Passport Revocation By The IRS: What You Need To Know

Olivier Wagner, Passport Revocation By The IRS

More than a year ago, Congress passed law HR 22. It resulted in IRC section 7345 “Revocation or denial of passport in case of certain tax delinquencies”

This is a far-reaching law which covers all taxpayers owing more than $50,000 in back taxes. The intent of the taxpayer to leave the country is not a criterion. Nor it is limited to criminal cases, civil penalties are enough.

Before the IRS can revoke your passport, or prevent you from obtaining a new one, these seriously delinquent tax debt needs to be debt for which a:

  • The government has issued a notice of federal tax lien and all administrative remedies under IRC § 6320 have lapsed or been exhausted
  • The government has issued the levy

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A Breakdown Of The Proposed IRS 1040

Charles Woodson, Proposed IRS 1040 Form

Remember the IRS’s promise about being able to file your income tax return using a postcard?

The reality of the new 1040 form is a far cry from a postcard. Although the administration insists that it has simplified the process of preparing your tax return, a few minutes of comparing the old 1040 to the new draft version shows that the redesign did little more than change it from the previous two-page form to two half-size pages – with six schedules provided separately. All but four of the 79 lines from the old version remain on the new one; they’re just divided up differently. Unless all of your income comes from wages, interest, dividends, pensions and Social Security, you will now have more schedules to fill out than you did before, and you still have a lot of work ahead of you.

How much new work does the revised version represent? Here’s a quick rundown of the six new schedules:

Offer In Compromise FAQs

Chuck Woodson, Offer In Compromise

We’re all responsible for paying our fair share of taxes each year. But what happens when the amount that you owe is simply out of reach? What happens if you failed to make payments in a timely manner and your financial circumstances have shifted to the point where your cumulative debt is beyond your ability to pay? In the face of this untenable position, your best option for paying the IRS may be what is known as an Offer in Compromise.

The Goal of the Offer in Compromise

The Offer in Compromise, or OIC, was created to accomplish two goals: it allows American taxpayers who are unable to pay the full amount of their tax debt a way to negotiate a payment that is in keeping with their ability to pay, while at the same time providing the IRS with the ability to collect at least a portion of the amount that is owed to them. The process is neither simple nor fast: it generally takes at least one to two years for both sides to come to an agreement on an amount to be paid.

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Federal Tax Deduction Allowed For Gluten Free Diet With Physicians Prescription

John Dundon, Gluten Free Diet Tax Deduction

Many people suffer from Celiac’s disease.  To be eligible to deduct the excess costs of a gluten-free diet under Internal Revenue Code Section 213, you must have a documented reason to require the observance of a gluten-free diet, along with a physician’s prescription to follow a gluten-free diet. This should provide sufficient documentation of eligibility.

The excess cost of gluten-free food can be deducted if you can deduct expenses paid for medical care for yourself, a spouse, or a dependent, to the extent the aggregate expenses exceed 10 percent of adjusted gross income.

If you meet both criteria above and choose to itemize deductions start collecting receipts and record them regularly. Download a spreadsheet from the Celiac Sprue Association for calculating the deductible expense.

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Clergy Tax Benefits Under Fire

Chuck Woodson, Clergy Benefits Under Fire

Section 107 of the Internal Revenue Code provides that a minister of the gospel’s gross income doesn’t include the rental value of a home (parsonage) provided; if the home itself isn’t provided, a rental allowance paid as part of compensation for ministerial services is excludable. The benefit is generally referred to as a parsonage allowance. Thus, a minister can exclude the fair rental value (FRV) of the parsonage from income under IRC Sec. 107(1), or the rental allowance under Sec. 107(2), for income tax purposes. The Sec. 107(2) rental allowance is excludable only to the extent that it is for expenses such as rent, mortgage payments, utilities, repairs, etc., used in providing the minister’s main home, and only up to the amount of the FRV of the home.

However, either type of parsonage allowance is only excludable for income tax purposes and is subject to self-employment taxes, although for years before 2018 and after 2025, the amount subject to self-employment tax can be reduced by the minister of the gospel’s employee business expenses.

Back in October 6, 2017, in the US District Court for the Western District of Wisconsin, Judge Barbara B. Crabb, in Gaylor v. Mnuchin (the treasury secretary), concluded that Section 107(2) of the Internal Revenue Code is unconstitutional. Specifically, she concluded that this code section violates the Establishment Clause of the First Amendment because it does not have a secular purpose or effect and because a reasonable observer would view the statute as being an endorsement of religion.

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College Education Tax Credits: Did You Know About These?

Charles Woodson, College Education Tax Credits

There are actually two higher-education tax credits. The American Opportunity Tax Credit (AOTC) provides up to $2,500 worth of credit for each student, 40% of which is refundable. The credit is equal to 100% of the first $2,000 of college tuition and qualified expenses and 25% of the next $2,000. The AOTC only applies to the first 4 years of post-secondary education.

The other credit is the Lifetime Learning Credit (LLC), which only provides a maximum $2,000 of credit (20% of up to $10,000 of eligible expenses) per family. None of it is refundable, meaning it can only be used to offset the taxpayer’s tax liability, and any additional credit amount is lost.

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Relocation To A New Employer: Moving Expense Deductions No Longer Allowed

Charles Woodson, Tax Advisor, Relocation Expense Deductions

Prior to the passage of tax reform, individuals who moved as the result of a job change or job relocation could deduct their unreimbursed moving expenses if the driving distance from their home to the new job location was at least 50 miles more than the driving distance from home to the old job location. There was also a requirement that the individual work in the new location for a specified minimum period of time after the move.

Unfortunately, tax reform effectively repealed that deduction after 2017, except for members of the Armed Forces on active duty who move pursuant to a military order. On top of that, if an employer reimburses the employee for the expenses—whether by paying a moving van company, airline, or other vendor directly, or by reimbursing the employee for their moving expenses—the reimbursement will be treated as taxable wages subject to withholding of income, Medicare, and Social Security taxes.

If a move is required by an employer, there is a possible workaround by having the employer include enough in the

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New Lease Accounting Standards – Steps For Compliance

Jim Marshall, Lease Accounting Standards

The new lease accounting standards will require some extra time and work for many companies as they race to satisfy the new requirements.

In these new rules, two leases (finance and operating) will be required on the balance sheets.

CFO sums it up this way:

Under the new guidance, an arrangement contains a lease only when the arrangement conveys the right to control the use of an identified asset. That’s a change from legacy guidance, under which an arrangement can contain a lease even without such a right if the customer takes substantially all of the output from the lease over the term of the arrangement.

In addition to the lack of bright lines used under legacy guidance, FASB added a new criterion that focuses on assets that have a specialized nature with no alternative use at the expiration of a lease. That’s important, as it may modify the lease’s legacy classification.

As 2018 progresses, your business will want to develop procedures for gathering and documenting the wide array of leases kept by your company. These procedures will need to be efficient, as technologically advanced as possible, and centralized in order to be sustainable and accurate.

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