Charitable Donations and Your Tax Return

As explained in the article, “Standard or Itemized Deduction,” more taxpayers are likely to take the standard deduction for 2018, rather than claim itemized deductions. Therefore, they’ll lose the tax benefits from their charitable contributions. Example 1: Art and Beth Dean are in their 40s and have paid off their home mortgage. They seldom have substantial unreimbursed medical expenses and typically contribute around $7,000 a year to charity. In prior years, they have itemized deductions because of large payments for state income tax and local…

Standard or Itemized Deduction

Which shall it be? Under the new, as well as prior, tax law, taxpayers can either take a standard deduction or itemize deductions on Schedule A of IRS Form 1040. Typically, tax preparation involves comparing the total of itemized deductions with the standard deduction and choosing the larger amount. Most people have used the standard deduction and that probably will continue to be true, even more so for 2018 returns. If you plan to use the standard deduction, you can bypass planning for items on…

Standard Deduction Increases While Others Are Trimmed

The Tax Cuts and Jobs Act generally took effect in 2018. Therefore, the fourth quarter of this year provides the first, real opportunity for year-end planning under what has been called the most important tax law passed in more than 30 years. Broadly, the TCJA lowered income tax rates for individuals and for businesses. As you’ll read in the November Client Bulletin, the standard deduction has been substantially increased, but many deductions have been trimmed or eliminated, and some innovative tax benefits have been introduced. Still,…

Sales Tax and the Out-of-State Buyer

If your company makes sales to out-of-state buyers, do you need to collect state sales tax? Until recently, Supreme Court decisions from the 20th-century declared that would not necessarily be the case. Example 1: ABC Corp., based in Alabama, sends a catalog to customers and prospects. A consumer who lives in Wyoming places a $100 order. Assume that ABC has neither employees nor property in Wyoming. ABC would not be required to collect Wyoming sales tax on the $100 purchase price and remit to Wyoming…

Funding Company’s Buy-Sell With Life Insurance Can Be Tricky

Among the trigger events of a small company buy-sell agreement, death of a co-owner typically is included. Example 1: Wendy Young and Victor Thomas both own 50% of YT Corp. They have a buy-sell, which calls for Wendy to buy Victor’s interest in YT if he dies. Similarly, Victor will buy Wendy’s interest in YT from her estate if she is the first to die. Small company buy-sells such as the one for YT Corp. often fall into one of two categories: Cross purchase. Wendy…