Tax Newsletter ZENO, POCKL, LILLY AND COPELAND, A.C.

Transcription

1 Tax Newsletter ZENO, POCKL, LILLY AND COPELAND, A.C. Certified Public Accuntants & Advisrs 980 Natinal Rad, Wheeling, WV N Furth Street, Steubenville, OH DECEMBER 2018 Happy hlidays! Tis the seasn fr family, friends, fd, and f curse... last secnd tax mves! While time is running shrt, cnsider sme f these mves yu can make t cut yur tax liability. Als, retirement cntributins are rising fr The secnd article lays ut the changes fr yu. Did yu knw that there are billins f dllars f unclaimed prperty each year? Read n t find ut hw t search fr yurs. Finally, there's an article explaining the new qualified business incme deductin and what yu can d t prepare fr it. Call if yu wuld like t discuss hw any f this infrmatin relates t yu. If yu knw smene that can benefit frm this newsletter, feel free t frward it t them. 6 Last-Secnd Mney-Saving Tax Mves As 2018 winds dwn, there is still time t reduce yur ptential tax bligatin. Here are sme ideas t make yur 2018 tax return less f a burden n yur wallet: 1. Accelerate expenses. Individual taxpayers are n the cash basis fr incme tax purpses. This means yur incme is taxable when yu receive it and expenses cunt when yu pay them. Depending n yur situatin, shifting deductins between years can make a big difference n yur tax bill. With this knwledge, making additinal deductible payments prir t the end f the year may be a gd idea. Examples include prperty tax payments, mrtgage interest payments, and charitable dnatins. 2. Make effective use f capital lsses. Up t $3,000 in capital lsses can be claimed each year t reduce yur rdinary incme. This lss limitatin is calculated after netting all yur capital lsses against any capital gains. When yu have mre lsses than gains, up t $3,000 can be used t reduce yur ther incme. With careful planning, yu can take advantage f this lss amunt each year. 3. Fund tax-deferred retirement accunts. An easy way t reduce yur taxable incme is t fully fund retirement accunts that have tax-deferred status. The mst cmmn accunts are 401(k)s, 403(b)s, and varius IRAs (traditinal, SEP, and SIMPLE). 4. Take advantage f the annual gift exclusin. Fr 2018, yu may prvide gifts up t $15,000 t as many individuals as yu wish withut tax cnsequences. This culd include gifts f cash r prperty, including investments. Taking advantage f the annual exclusin is a great way t lwer yur taxable estate.

2 5. Give t charities. Cnsider making end-f-year dnatins t eligible charities. Dnatins f prperty in gd r better cnditin and yur charitable mileage are als deductible. Receiving prper dcumentatin that acknwledges yur cntributins is imprtant t ensure yu btain the full deductin. Have a plan by knwing yur ttal deductins fr the year t help yu decide hw much t dnate. Pulling sme dnatins planned fr 2019 int 2018 may be a gd strategy. 6. Dnate appreciated stck. By dnating appreciated stck wned ne year r lnger t a favrite charity, yu receive tw benefits. First, yu will nt have t claim the capital gain n the appreciatin f yur investment. Secnd, yu can claim the higher market value f the stck as yur cntributin amunt. The prcedure yu need t fllw t qualify yur dnatin f appreciated stck is fairly strict. Ask fr help frm yur brker and the charitable rganizatin t ensure it is dne crrectly. This is a shrt list f sme f the ideas yu can use t lwer yur tax bligatin in If interested, please call fr help with reviewing yur situatin. Retirement Cntributins Get a Bst in 2019 Fr the first time since 2013, the IRS is raising the cntributins limits fr IRAs. The maximum cntributin fr 401(k) accunts and IRAs is increasing by $500 fr If yu have nt already dne s, nw is the time t plan fr cntributins int yur retirement accunts in Check ut the tables belw fr the new cntributin limits and Scial Security increases: Retirement Cntributin Limits Retirement Prgram Change Age 50 r lder catch up 401(k), 403(b), 457 plans $19,000 $18,500 +$500 add: $6,000 IRA: Rth $6,000 $5,500 +$500 add: $1,000 IRA: SIMPLE $13,000 $12,500 +$500 add: $3,000 IRA: Traditinal $6,000 $5,500 +$500 add: $1,000 2 Scial Security Item Change Wages subject t Scial Security $132,900 $128,400 +$4,500 Annual Scial Security emplyee tax: $8, Average estimated mnthly retirement benefit $1,461 $1,422 +$39 Dn't frget t accunt fr any matching prgrams ffered by yur emplyer as yu determine yur varius funding levels fr next year.

3 3 It's Yur Mney. Get it Back NOW! Accrding t Credit Karma, ver $40 BILLION f unclaimed prperty is currently being held by state gvernments. That's a staggering amunt f mney - enugh t buy half f the Natinal Ftball League franchises. Nt included in that figure is prperty sitting with federal agencies and ther rganizatins. S, what exactly is unclaimed prperty and hw d yu find ut if yu have any? Here is what yu need t knw: What is cnsidered unclaimed prperty? There are tw main types f unclaimed prperty: (1) IOUs. Mney that is wed t yu that yu haven't claimed. (2) Frgtten funds. Mney sitting untuched in an accunt fr an extended amunt f time. Specific types f unclaimed prperty include back wages, life insurance, pensins, tax refunds, bank accunts, mney rders, gift certificates, and security depsits. Fr example, many states require banks t turn ver funds frm checking accunts that have been drmant fr ver three years. Tips fr managing unclaimed prperty 1. Search state and federal databases. Unfrtunately, there is n master database t search fr unclaimed prperty. There is a website called Missing Mney endrsed by the Natinal Assciatin f Unclaimed Prperty Administratrs (NAUPA) that can search mst states at nce, but each state maintains their wn database. Be sure t check all states where yu have been a resident. Mre infrmatin is prvided nline by the US gvernment t help track dwn additinal types f unclaimed prperty. 2. Dn't pay a cmpany t search fr yu. Cmpanies are willing t search fr unclaimed prperty fr yu, but will charge a fee. All unclaimed prperty data is public infrmatin, s anything a search cmpany can find, yu can find as well. In mst cases, it's best t cnduct the search yurself. 3. Watch ut fr scams. Be wary f any ntices alerting yu t unclaimed prperty that can be yurs fr a fee. Often times these scams will ask yu t send them mney with the prmise f mre mney in return. The Federal Trade Cmmissin (FTC) has sme tips t help yu spt an impster. 4. Take steps t avid having yur prperty becme unclaimed. The best way t keep yur prperty is t prevent it frm becming unclaimed in the first place. Sme ways t d this is t actively manage bank accunts, ntify cmpanies when yu mve, clse ld accunts, and read all f yur mail s yu dn't miss a claim ntice. 5. File yur tax returns. Cnsider filing a tax return even if yur incme is belw the requirements t file. Unclaimed refunds with the IRS usually happen when a tax return isn't filed with ne f tw situatins: yur emplyer withheld incme tax frm yur wages r yu qualify fr a refundable prtin f the Earned Incme Tax Credit. The nly way t knw fr sure is by filing a tax return fr the year in questin. If yu have past tax returns t file, dn't wait verdue tax returns need t be filed within three years.

4 4 Any unclaimed prperty due t yu is rightfully yurs and shuld already be in yur pcket. Perfrm regular searches t ensure that yur funds aren't sitting in a gvernment accunt. Early Warning Signs f a Tax Prblem There are many factrs that can cause an unfavrable tax swing leaving yu with a surprising tax bill in the spring. Here are six warning signs that yu might have sme unexpected taxes waiting fr yu. 1. Yu didn't update yur W-4 Yu may have nticed a change in yur tax withhldings earlier this year. These changes are based n withhlding tables rlled ut by the IRS t emplyers in early February. Nw, accrding t the U.S. Gvernment Accuntability Office (GAO), as many as 30 millin taxpayers may nt have adequate withhldings fr If yu have nt already dne s, review yur withhldings in light f the new tax laws. 2. Yu withdraw funds frm an IRA befre yu're 59½ Situatins arise where yu need t dip int yur retirement savings t address an immediate need. When this happens, it might have majr tax implicatins. This includes: The withdrawal may be subject t a 10 percent early withdrawal penalty. The funds withdrawn will be taxed at yur highest (marginal) tax rate. The additinal incme may push yu t a higher tax bracket r bump yu ver taxbenefit phaseut threshlds. 3. Yu receive a large raise early in the year While the raise means mre incme fr yu, it als means mre taxes due t the IRS. Depending n hw much mre incme, it might be taxed at a higher rate than yur incme in previus years. The tax brackets are built-in t the IRS withhlding tables, but they dn't take yur entire situatin int accunt. 4. Yu have a secnd jb Making sme mney n the side is a great thing but can be a majr tax prblem if yu dn't plan prperly. In additin t being taxed as rdinary incme, it might be subject t selfemplyment tax f 15.3 percent! Plus, withhlding rules start ver fr each jb and d nt accunt fr any ther incme yu receive. 5. Yur child turns 17 One f the biggest tax benefits that cme by having dependent children is the Child Tax Credit. In the year yur child turns 17, they are n lnger eligible fr this ptential $2,000 credit. What's mre, persnal exemptins are suspended fr the next few years. S, yu may nt nly lse an exemptin fr this child, yu nw will nt receive a Child Tax Credit. 6. Yur standard r itemized deductin is lwer While the standard deductin is nearly duble t $12,000 ($24,000 fr married filing jintly) fr 2018, persnal exemptins are suspended. In additin, many itemized deductins are either limited r eliminated! This can create a vastly different amunt f taxable incme versus last year. While tax rates are generally lwer, there will be mre than ne surprised taxpayer that sees an expected tax refund turn int a tax bill.

5 5 S, what can yu d? If any f these situatins apply t yu, nw is the time frecast yur incme and deductins fr the year and estimate yur tax liability. If yur withhldings are falling shrt, there is still a little time t update yur paycheck allwances fr a pay perid r tw r make an estimated tax payment. 5 Tips t Keep Yur Custmers Cming Back Happy, satisfied custmers are essential t the health f every business. Increasing cmpetitin, nline review pprtunities, and unlimited access t infrmatin up the ante n the imprtance f quality custmer service. Here are sme tips t help yur business thrive by meeting and exceeding yur custmers' expectatins: 1. Truly understand yur custmer and their needs. As best yu can, put yurself in yur custmers' shes and hne in n the need they are trying t meet with yur prduct r service. Understanding their cre need will help yu with delivery timelines and prvide a clear picture f what it will take t ensure they are satisfied enugh t cme back. 2. Set clear gals and expectatins. Once yu understand their needs, be clear and transparent regarding the prcess t deliver yur prduct r service. Set realistic gals and discuss ptential delays and pitfalls. Yur custmers will appreciate the hnesty and may even be mre understanding if things dn't g accrding t plan. 3. Cmmunicate, cmmunicate, cmmunicate. Keeping yur custmers frm feeling in the dark is imperative t their satisfactin. Be practive in yur cmmunicatin. The mre frms f cmmunicatin, the better - phne calls, text messages, s, and scial media messages. Even if everything is ging t schedule, regular "prgress" messages will help them feel at ease. 4. G the extra mile. Put in the extra effrt t g abve and beynd what yur custmers are expecting. At the end f the day, yu want yur custmers t feel like they get what they pay fr, and mre. If a prblem arises with the prduct r service, shw them yu care by priritizing and rectifying the situatin. If at all pssible, cnsider adding smething f value t leave a psitive impressin. 5. Add a persnal tuch and be authentic. In a wrld f scial media bts, augmented reality, and alternative facts, authenticity ges a lng way. Shwing yur custmer yu care builds trust and lyalty that leads t repeat business and referrals. Birthday greetings, hliday cards, and custmer appreciatin events can shw yur custmers they mean mre t yu than just revenue. When times are busy, it can be easy t fcus n the wrk and nt the custmers. Hld n t these tips as a reminder t keep yur custmers' needs a tp pririty. The New Business Deductin Stp wrrying and start preparing A new deductin is available t businesses with qualified business incme (QBI). While that's great news, new deductins (especially nes with lts f rules) can bring anxiety and cnfusin. Never fear! Ensuring yu receive a maximum deductin will cme dwn t prviding the prper infrmatin. Here is sme knwledge t help yu cut thrugh the cnfusin:

6 6 What is the QBI deductin? In shrt, it's a 20 percent deductin against rdinary incme, taken n yur persnal tax return, that reduces qualified business incme earned fr mst pass-thrugh businesses (sle prprietrships, partnerships, and S-crpratins). It's nt an itemized deductin, s yu can take it in additin t the standard deductin. T qualify withut limitatins, yur ttal taxable incme needs t be belw $157,500 ($315,000 fr married cuples) fr If yur incme exceeds the threshld, it gets cmplicated. What yu need t knw: If yur ttal taxable incme is abve the incme threshld, yur deductin may be limited r nullified. If yur incme is belw the threshld, the calculatin is pretty straightfrward. If nt, additinal phaseuts, limitatins, and calculatins cme int play. The first limitatin t cnsider is whether r nt yur business is qualified. Certain specified service trades r businesses (SSTBs) are excluded frm the deductin altgether if taxable incme is ver the threshld. If yur business is nt an SSTB, ther calculatins related t W-2 wages and basis in qualified business prperty may be required. Schedule K-1s fr S-crpratins and partnerships have new cdes. Businesses with partners and sharehlders are nw required t reprt infrmatin related t the QBI deductin n each Schedule K-1 they issue. Based n the draft versins f the frms, the new cdes will be in Bx 17 fr S-crpratins (V thrugh Z) and Bx 20 fr partnerships (Z thrugh AD). If yu receive a Schedule K-1, check t see if the new cdes have values assciated with them. If nt, cntact the issuing business t crrect the mistake. Schedule K-1s withut the required data will delay yur tax-return filing. Certain data needs t be cllected. Fr the mst part, the data required t calculate yur deductin will be included n the nrmal frms needed t file yur taxes. Here is list f cmmn dcumentatin t watch fr that may be required t calculate yur QBI deductin: Business financial statements Frms W-2 and W-3 issued by yur business Purchase infrmatin related t business assets Schedule K-1s Frms 1099-B with cst/basis infrmatin The sner yu clse yur bks, the better. The new deductin means mre wrk. Knwing yur final business net incme as sn as pssible gives yu extra time t wrk thrugh the additinal necessary calculatins. If yur business is required t issue Schedule K-1s, even mre time may be required. Mre guidance is expected frm the IRS. In August, the IRS published guidance t clear up sme f the cnfusin regarding the deductin, but it didn't cver everything. The American Institute f CPAs (AICPA) respnded with 11 specific items that still need t be addressed. With prper planning and preparatin, yu can rest easy knwing that btaining yur shiny, new QBI deductin is in gd hands. This newsletter prvides business, financial, and tax infrmatin t clients and friends f ur firm. This general infrmatin shuld nt be acted upn withut first determining its applicatin t yur specific situatin. Fr further details n any article, please cntact us at