Alpha’s Tax Tips

Secure Tax Protection for Business Insurance

Every business should have adequate insurance in the event of fire, flood or other catastrophe.  To this end, you may acquire “business interruption insurance” to compensate the company for lost profits while you’re closed.

5 Ways to Juice Charity Write-Offs

The new Tax cuts and Jobs Act (TCJA) casts a long shadow over charitable gift-giving in 2018.  Due to several changes in the TCJA, there is less tax incentive to give to charity.  Because many taxpayers are no longer itemizing deductions, they will get zero tax benefit from their contributions.

4 Ways to cut down kiddie tax

The new Tax Cuts and Jobs Act (TCJA) changes the way that the kiddie tax is calculated, beginning in 2018.  The revised rules will frequently produce a bigger tax than the amount that would have been owed under prior law.

Take full advantage

If you’re like many other small business owners, you may wait until the end of the year to buy property like equipment and computers. Strategy:  Don’t fall into a depreciation tax trap for property placed in service in the last quarter of the year.  This little-noticed tax provision might catch you by surprise if you’re not careful.

Take back door home office

If your main place of business is a downtown office, you may not be able to claim home office deductions.  Strategy:  Go through the “back door.”  There are three key ways you can deduct home office expenses even though they don’t otherwise qualify.

Legal settlements

Taxes may be the last thing on your mind when you are embroiled in a messy law-suit.  However, depending on the way that a settlement agreement is worded, thousands of extra tax dollars may possibly wind up going to Uncle Sam.

Donating your car may make sense

Ads soliciting charitable donations of cares are all over. You might go along with one of these pitches or donate a vehicle to another worthy cause.

Personal Taxes – Dependency Exemption

Preserve a dependency exemption. Did your under-age-24 child graduate from college in 2017? Usually, you can still claim a dependency exemption in 2017 for the child if you provide more than half of their annual support. Unlike other qualifying relatives, there’s no limit on the taxable income the child can receive. To ensure you clear the half-support mark, be extra generous this holiday season with your support.

Personal Taxes – Capital Gains or Losses

Harvest capital gains or losses. Traditionally, this is the time of year when investors realize capital losses from sales of stocks and other securities. The losses can offset capital gains realized earlier in the year plus up to #3,000 of high-taxed ordinary income. Any excess loss is carried over to the following year. On the other hand, depending on your situation, you might harvest capital gains that will be absorbed by previous losses. The maximum tax rat4e on long-term gains of securities owned longer than a year is only 15% or 20% for investors in the top ordinary income bracket of 39.6%

Personal Taxes – Give to a good cause

Give to a good cause. Generally, you can write off the full amount of the monetary donations made to qualified charitable organizations in 2016 if you meet strict substantiation requirements. Step up donations between now and the end of the year to incr4ease your deduction for 2017. (
But be aware of the Pease rule.) If you donate property you’ve owned longer than one year, you may deduct its fair market value instead of your basis. Any appreciation remains untaxed-forever.

Personal Taxes – Itemized Deductions

Pile up itemized deductions. Because most itemized deductions, other than those for mortgage interest and charitable donations, could be eliminated by tax reform, you may choose to maximize available deductions for 2018. For instance, you might accelerate deductions for state and local taxes by paying amounts due on January 1, 2018, by December 31, 2017. Be aware, however, that other special rules may apply to itemized deductions, such as floors based on your adjusted gross income (AGI) for the year.

Section 179

Max out on Section 179. Under Section 179 of the tax code, a business can currently deduct, or “expense,” the cost of qualified new or used property placed in service during the year, up to a stated limit. The Protecting Americans for Tax Hikes (PATH) Act permanently preserved a maximum of $500.000 allowance, subject to inflation indexing. But the deduction is limited to your taxable business income and reduced dollar-for-dollar for acquisitions above a $2 million threshold, also indexed for inflation.

Spruce up the Premises

Spruce up business premises. Generally, amounts paid to improve tangible property must be capitalized and depreciated over time, but recent regulation provide a unique opportunity. Under a safe-harbor election in the regs, your small business may currently deduct certain building costs above and beyond the maximum Section 179 allowance. Among other requirements spelled out in the regs, the election is limited to $500 for specific item or $5,000 if you have an “applicable financial statement: audited by a CPA.