Zinner & Co. Blog and Newsroom

Groundbreaking Sales & Use Tax Case Decided by the Supreme Court

Posted by Matt Szydlowski, CPA on Jun 29, 2018 8:38:52 AM

By Matt Szydlowski, CPA

On June 21, the Supreme Court handed down a landmark decision in South Dakota vs. Wayfair (“Wayfair”).   The fallout of this decision will significantly change the way online vendors handle sales and use (“S&U”) tax for out-of-state consumers going forward.  It will, therefore, also affect online consumers.  Are you impacted!?

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Topics: Taxes - Corporate & Business, Taxes - Planning, Rules and Returns, Taxes - Individual, taxes

Rethinking retirement contributions

Posted by Zinner & Co. Tax Team on Jun 11, 2018 3:47:00 PM

The Tax Cuts and Jobs Act of 2017 generally lowered federal income tax rates, with some exceptions. Among the ways in which lower rates impact tax planning, they make unmatched contributions to traditional employer retirement plans less attractive.

Example 1: Chet Taylor has around $100,000 in taxable income a year. Chet contributed $12,000 to his company’s traditional 401(k) in 2017, reducing his taxable income. He was in the 28 percent tax bracket last year, so his federal tax savings were $3,360 (28 percent of $12,000). An identical contribution this year will save Chet only $2,880, because the same income would put him in a lower 24 percent bracket.

Not everyone will be in this situation.

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Topics: Taxes - Planning, Rules and Returns, Retirement Planning & IRAs, Tax Cuts and Jobs Act of 2017

IRS Okays home equity deductions

Posted by Zinner & Co. Tax Department on Jun 7, 2018 12:30:00 PM

The Tax Cuts and Jobs Act of 2017 affected the tax deduction for interest paid on home equity debt as of 2018.

Under prior law, you could deduct interest on up to $100,000 of home equity debt, no matter how you used the money. The old rule is scheduled to return in 2026.

The bad news is that you now cannot deduct interest on home equity loans or home equity lines of credit if you use the money for college bills, medical expenses, paying down credit card debt, etc.

The good news is that the IRS has announced “Interest on Home Equity Loans Often Still Deductible Under New Law.”

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Topics: real estate, financing, Taxes - Planning, Rules and Returns, Taxes - Individual, home, Tax Cuts and Jobs Act of 2017

The new tax law will change divorce tactics

Posted by Zinner & Co. Tax Team on May 7, 2018 2:55:00 PM

When couples divorce, financial negotiations often involve alimony. The tax rules regarding alimony were dramatically changed by the Tax Cuts and Jobs Act (TCJA) of 2017, but existing agreements have been grandfathered. In addition, the old rules remain in effect for divorce and separation agreements executed during 2018. Next year, the rules will change, and the roles will be reversed.

Under divorce or separation agreements executed in 2018, and for many years in the past, alimony payments have been tax deductible. Moreover, these deductions reduce adjusted gross income, so they may have benefits elsewhere on a tax return. While the spouse or former spouse paying the alimony gets a tax deduction, the recipient reports alimony as taxable income.

Shifting into reverse

Beginning with agreements executed in 2019, there will be no tax deduction for alimony. As an offset, alimony recipients will not include the payments in income.

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Topics: alimony, divorce, Taxes - Planning, Rules and Returns, Taxes - Individual, taxes, tax avoidance, Tax Cuts and Jobs Act of 2017

“Kiddie Tax” impacted by Tax Cuts and Jobs Act

Posted by Zinner & Co. Tax Team on Apr 18, 2018 12:39:00 PM

Many higher income taxpayers have long made it a practice to open investment accounts for their children, hoping to take advantage of their lower tax rates.  Many years ago, Congress imposed, what is colloquially known as the “kiddie tax” to place strict limits on the amount of investment income that can be taxed at those lower rates. 

One of the changes made by the recently enacted Tax Cuts and Jobs Act of 2017 made some significant changes to how the “kiddie tax” is administered, impacting the way adults pass investment income on to their minor children. 

The "kiddie tax" is a provision that taxes the unearned income of children under the age of 19 and of full-time students younger than 24 at a special rate. Under both the new law and the old, the first $1,050 of a child's income is tax-free and the next $1,050 is taxed at a rate of 10 percent.

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Topics: tax services, Taxes - Planning, Rules and Returns, Taxes - Individual, Retirement Planning & IRAs, withdrawls, tuition, tax avoidance, Tax Cuts and Jobs Act of 2017

Fraudulent Filers Keep Tax-return Identity Theft as One of the IRS' "Dirty Dozen" Scams

Posted by Zinner & Co. Tax Department on Mar 8, 2018 12:10:45 PM

Even though reports of tax-related identity theft have declined markedly in recent years, the Internal Revenue Service warns that this practice is still widespread and remains serious enough to earn a spot on the agency’s annual “Dirty Dozen” list of tax scams.

The Dirty Dozen is compiled each year by the IRS and outlines a variety of common scams taxpayers may encounter any time during the year. Many of these cons peak during filing season as people prepare their tax returns.

Tax-related identity theft occurs when someone uses a stolen Social Security number or Individual Taxpayer Identification Number (ITIN) to file a fraudulent tax return claiming a refund.

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Topics: fraud, Howard Kass, Brett W. Neate, Taxes - Corporate & Business, Taxes - Planning, Rules and Returns, Taxes - Individual

Do You Apply the Five-year Test for Your Roth IRA? Here’s why you should

Posted by Zinner & Co. Tax Department on Feb 27, 2018 7:03:00 PM

The pros and cons of Roth IRAs, which were introduced 20 years ago, are well understood. All money flowing into Roth IRAs is after-tax, so there is no upfront tax benefit.

As a tradeoff, all qualified Roth IRA distributions can be tax-free, including the parts of the distributions that are payouts of investment earnings.

To be a qualified distribution, the distribution must meet two basic requirements:

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Topics: Gary Sigman, Taxes - Planning, Rules and Returns, Retirement Planning & IRAs

IRS Requires Taxpayers to Validate ID

Posted by Zinner & Co. Tax Department on Feb 17, 2018 8:34:00 AM

The IRS recently announced additional requirements for taxpayers and tax professionals to verify their identities when they call as part of security efforts.

Taxpayers and professionals should have the following documents ready when they call:

  • Social Security numbers and birth dates for those who were named on the tax return in question
  • An Individual Taxpayer Identification Number (ITIN) letter if the taxpayer has one in lieu of a Social Security number (SSN)
  • Filing status – Single, Head of Household, Married Filing Joint or Married Filing Separate
  • The prior-year tax return. Telephone assistors may need to verify taxpayer identity with information from the return before answering certain questions
  • A copy of the tax return in question
  • Any IRS letters or notices received by the taxpayer
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Topics: fraud, Brett W. Neate, Taxes - Corporate & Business, Taxes - Planning, Rules and Returns, Taxes - Individual, IRS

Scam Alert: Fraudsters Posing as Taxpayer Advocacy Panel

Posted by Zinner & Co. Tax Department on Feb 15, 2018 10:46:42 AM

Some taxpayers receive emails that appear to be from the Taxpayer Advocacy Panel (TAP) about a tax refund. These emails are a phishing scam, trying to trick victims into providing personal and financial information.

 Do not respond or click any link. If you receive this scam, forward it to phishing@irs.gov and note that it seems to be a scam phishing for your information.

TAP is a volunteer board that advises the IRS on systemic issues affecting taxpayers. It never requests, and does not have access to, any taxpayer’s personal and financial information.

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Topics: Brett W. Neate, Taxes - Corporate & Business, Taxes - Planning, Rules and Returns, Business - Management, Issues & Concerns, Taxes - Individual, tax, cybersecurity, IRS

Working in the Gig Economy: What you need to know about potential tax consequences

Posted by Zinner & Co. Tax Department on Jan 23, 2018 3:59:36 PM

If you use one of the many online platforms available to rent a spare bedroom, provide car rides, or to connect and provide a number of other goods or services, you’re involved in what is sometimes called the sharing or gig economy.

An emerging area of activity in the past few years, the sharing economy has changed how people commute, travel, rent vacation accommodations and perform many other activities.

Also referred to as the on-demand, gig or access economy, the sharing economy allows individuals and groups to utilize technology advancements to arrange transactions to generate revenue from assets they possess - (such as cars and homes) - or services they provide - (such as household chores or technology services).

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Topics: electronic filing, Brett W. Neate, Taxes - Corporate & Business, Taxes - Planning, Rules and Returns, Taxes - Individual

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