Russell M. Khederian

Certified Public Accountant

OUR 40TH ANNIVERSARY 1978-2018

26 Brighton Street
Belmont, MA 02478
ph: 617-484-1816
fax: 617-484-3467
russ@russkcpa.com

New Developments

January 12, 2018

The IRS has just announced that this year’s filing season will begin Jan. 29, 2018 which is about a week later than last year. The delay was related to the IRS delay in updating its systems for the 2018 filing season (of 2017 returns). The IRS also announced that individual tax returns will be due on April 17, 2018 because April 15 is a Sunday and April 16 is a holiday in the District of Columbia (Emancipation Day) Thank you President Lincoln !!

December 30, 2017

The The Tax Cuts and Jobs Act of 2017 is massive (almost 1100 pages) Here are some of the important areas of the newly enacted law:

Corporate tax rate The House and Senate Conference Committee settled on a top Corporate (C-Corporation) tax rate of 21 percent to begin on January 1, 2018. This is a huge reduction from the current 35 percent and obviously tells you who the biggest winner in the tax bill is.

Individual tax rates Most of us will see small reductions in the rate they pay. There will be 7 new tax brackets with the lowest rate rate staying at 10 percent. Brackets rise to 12 percent, 22 percent, 24 percent, 32 percent, 35 percent, and finally 37 percent for income above $500,000 for individuals and $600,000 for couples (compared to the old top bracket of 39.6%) The biggest change was the 37% top bracket which was LOWER than either the House or Senate originally proposed. These brackets will all expire at the end of 2025 unless Congress extends them.

Qualified Business Income Deduction (QBID) I could spend 5 days writing about how complicated this portion of the bill is. The final, conference version of the Tax Cuts and Jobs Act adds the new business deduction to tax law. The new IRS Sec 199A (Qualified Business Income Deduction) will give the owners of pass-through businesses like sole proprietors, partnerships, S corporations and real estate investors a deduction equal to 20% of qualified business income.This deduction will produce big savings for many pass-through entities and real estate investors, however the deduction comes with some ridiculous calculations and very complicated limitations. Stay tuned because this part of the TCAJA will surely be a nightmare fraught with IRS rulings and different interpretations of the law by CPA's and Tax Attorney's.

Standard deduction The standard deduction will nearly double, from $6,500 for individuals and $13,000 for families to $12,000 and $24,000, respectively. For many people, this will represent the biggest tax cut in the plan, and for some in high-tax states, it will offset the reduction in the state-and-local tax deduction.The effect of doubling the standard deduction will be limited, however, by the elimination of the personal exemption. This change is the biggest example of simplifying the tax-filing process for individuals, since it will prompt more people to take the standard deduction rather than itemizing. Like the reduced tax rates this provision also expires at the end of 2025.

Individual Alternative Minimum Tax The Alternative Minimum Tax (or AMT) is a parallel tax system with a separate set of rules that some taxpayers must follow when calculating their tax liability. It is a ridiculous computation that continues to be a burden on higher earning taxpayers. Enacted in 1970 it affected just 155 high income filers that paid no taxes. Today it affects millions of taxpayers. In plain english the AMT requires taxpayers earning above a certain amount to calculate their taxes another way. This calculation disallows some tax preferences (such as state and local tax deductions and dependent exemptions) but provides for a larger AMT exemption amount. For the 2017 tax year, the AMT exemption amount for single filers is $54,300 and begins to phase out at $120,700, and for joint filers, it is $84,500 and begins to phase out at $160,900, Under the new law the AMT exemption amounts will increase to $70,300 for single filers and $109,400 for joint filers and will phase out for those taxpayers at $500,000 and $1 million, respectively, This higher AMT exemption paired with the drastic limitation of SALT and real estate tax deductions should mean many will now avoid the AMT.

Individual mandate Republicans pushed and received the elimination of the penalty for people who go without health insurance. This is the first step in Trump's promise of repealing the Affordable Care Act. This change doesn’t take effect until 2019, so people will still be on the hook for the penalty in 2018.

Child tax credit Republicans had always wanted to expand the current $1,000 child tax credit, but the provision got progressively more generous as the process went along. The new credit will be $2,000 per kid, with $1,400 of that refundable following a late push by Senator Marco Rubio of Florida.

State-and-local tax deduction Without a doubt the elimination of this tax break, known as SALT, was the biggest and most controversial part of the Republican plan from the beginning. House members representing high-tax, largely Democratic states rebelled, and GOP leaders ultimately settled on a compromise: People will be able to deduct $10,000 in state and local property, sales, and income taxes on their Federal Schedule A. This set up a mad dash this past week as taxpayer's rushed to prepay a portion of 2018 real estate tax bills.

Mortgage-interest deduction Interest on mortgages up to $750,000 will be deductible under the new law, a change from the $1.1 million current cap. This was a compromise between the Senate and the House, which had called for lowering the cap to $500,000. In my opinion this will be very bad for those in states (like MA, NY, CA) that have high value homes with are highly leveraged.

Estate tax The Estate tax lives but it will apply only to those with multi million dollar estates. Republicans wanted full repeal but couldn’t get through the Senate, so they settled on lifting the exemption from the 40 percent tax to $11.2 million from $5.6 million per individual.

Business-capital expensing Businesses get full and immediate expensing (sec 179 depreciation) on all tangible property. The provision will begin to phase out after five years.

Medical expenses People who itemize their taxes will actually see a more generous deduction for medical expenses than under current law, despite an initial House proposal to kill the break entirely. The new bill allows the medical deduction for expenses totaling 7.5 percent of income (instead of 10 percent for those under the age of 65).

Higher-education tax breaks Republicans abandoned plans to scrap the deduction for student-loan interest and a waiver for graduate-student tuition after howls of protest from the academic community. Both provisions are unchanged in the final bill.

December 22, 2017

The Tax Cuts and Jobs Act of 2017 was signed by President Trump today. We will see sweeping tax reform beginning in 2018. Updates to follow.

December 14, 2017

Republican leaders on Wednesday reached an agreement on their final tax bill.and are aiming to hold a vote on the compromise bill early next week so that they could get the bill to Trump's desk before Christmas.

Let me be perfectly clear about this tax bill.......this does very little for most of us hard working Americans with or without kids paying thousands of dollars a year in state, local and real estate taxes. This bill benefits the rich with large earned and unearned income, major Corporations that make millions of dollars and those fortunate to die with multi million dollar estates.

As I have said in the past I do not support this bill. If it passes it should not be enacted until January 1, 2019 at the earliest.

Here are some parts of the final bill the Conference Committee is prepared to vote on:

The compromise bill now drops the maximum individual tax for the wealthiest to 37% (instead of the 38.5% proposed in the Senate bill. It would still be down from the current top rate of 39.6%.

The rate of tax for major Corporations (C-Corporations) like Microsoft, GM and Apple Computer drops from 35% to 21%.

The GOP bill would eliminate the personal exemption you take for you, your spouse and your kids and replace it with a larger standard deduction for 2018 of $12,000 for single filers and $24,000 for joint filers.

If you itemize deductions The GOP revised bill will allow you to now deduct $10,000 in either property tax or state and local income tax.

The mortgage interest deduction would be changed to limit the benefit to interest paid on $750,000 in home loans, down from the $1 million limit currently in place This is very bad news for people in places like Greater Boston and other high end real estate cities where housing costs are very high. While current homeowners are exempt from the new cap potential buyers are not making it more expensive for potential buyers to secure new mortgages.

The rate for pass-through income business entities (like S-Corporations and LLC's) that pay taxes through the individual side -- would be determined by a 20% deduction. This deduction is eliminated for profession service providers with high incomes.

The individual Alternative Minimum Tax (AMT) will remain but with a higher "standard deduction"

The estate tax exemption would be doubled to $22M.....so the tax would not be repealed entirely.

The Obamacare individual mandate to have health insurance would be repealed.

These controversial deductions in the House Bill will remain untouched in the final Committee bill: The medical expense deduction......The student loan interest deduction.....The teacher spending deduction.

December 3, 2017

So we now have a House and a Senate version of The Tax and Jobs Act of 2017. There are a number of significant differences that must be resolved before a final version can be sent to the President for his signature. These issues will be resolved by the House and Senate conference committee. I am not addressing the entire tax bill here....just the major differences that need to be resolved in Committee.

Individual tax rates.….The House bill reduces the number of brackets to four (top bracket 39.6%). The Senate bill retains the current seven brackets (top bracket of 38.5%)

Child tax credit…..The child tax credit is increased to $1,600 in the House bill and $2,000 in the Senate bill.

Mortgage interest deduction…..The House bill caps the interest deduction on $500K for new purchases. The Senate bill keeps it at $1M

State and Local Income Tax, Sales Tax and Real Estate Tax Deductions.....Both bills eliminate the deduction for state and local income tax and sales tax deductions. Both bills cap the real estate tax deduction at $10,000 per year. The Senate bill originally wanted to scrap the real estate tax deduction but amended their bill to preserve the deduction at $10,000 per year.

Medical expenses…..The House bill repeals the medical deduction. The Senate bill maintains the deduction and drops the current 10% threshold to 7.5% of adjusted gross income.

Affordable Care Act's Individual Mandate.....The House bill preserves the individual mandate. The Senate bill repeals the individual mandate.

Individual tax on Pass Through entities (S-Corps or LLC’s) and for sole proprietors…..The House bill drops the top rate to 25% while also phasing in a lower rate of 9% for businesses that earn under $75K. The House bill prohibits anyone providing personal services (e.g. Lawyers, Accountants, Architects, Consultants, etc) from taking advantage of the lower rate. The Senate bill lowers taxes by allowing pass through entities and sole proprietors to deduct 23% of their income. The 23% deduction is prohibited for anyone in the service business except those with taxable incomes under $500K (married) and $250K (Single)

Corporate tax rate reduction start date…..Both bills cut the Corporate tax rate to 20% yet the House bill cuts begin on January 1, 2018 while the Senate bill cuts begin in 2019.

Estate tax…..The House bill repeals the estate tax. The Senate bill essentially doubles the Federal estate tax exemption.

Student loan interest…..The House bill repeals the deduction. The Senate bill maintains the deduction.

Alternative Minimum Tax…..The House bill eliminates the AMT. The Senate bill maintains the AMT but raises the amount of income exempt from it.

Teacher out of pocket expenses…..The House bill eliminates the current $250 deduction. The Senate bill maintains the deduction and raises it to $500.

So stay tuned because the fun has just begun.

September 10, 2017

Many clients have asked about options they have in light of the Equifax security breach. Here is a quick summary of your options in plain English. Doing "nothing" should not be an option. Protect yourself !!

1. Place a "Fraud Alert" on your credit file..............One of the first steps you should consider taking if you suspect you are a victim of identity theft is to place a fraud alert with one of the three credit reporting bureaus. You only have to do this with one of the bureaus. A fraud alert is a notice on your credit file that lets lenders know that they should contact you and verify your identity before approving you for new credit. There is no cost to place a fraud alert on your report however it only lasts for 90 days and must continually be renewed. There is also the option to apply for an extended fraud alert that will last for 7 years.

2. Place a "Security or Credit Freeze" on your credit file.............This is the next step in providing more protection . A great idea especially if you believe you have had information stolen and are at high risk of fraud. A security freeze will stop creditors from looking at or accessing your credit file entirely. Only those you authorize to view your credit report will be able to access it, You can pick and choose specific creditors to look at your credit report. There may be charges for a security freeze depending on your state of residence and whether or not you were a victim of identity theft. Some states also have a fee for lifting the security freeze . In Massachusetts a Security or Credit Freeze will stay on your report until you remove it . This varies by state. Be careful when you institute a credit freeze as once it is placed, it may delay approval for new credit as creditors may not be able to see your report to evaluate your financial standing.

3. Place a "Credit Lock" on your credit report...............A credit lock is a service offered by credit reporting company Equifax that is similar to a security freeze with some exceptions. A credit lock gives you the power to block access to your Equifax credit file like a security freeze. However, the difference is that this credit lock allows you to lock and unlock your account online easily rather than having to verify your identity every time you want to lift or place a security freeze.There is an annual fee associated with the credit lock service and will last until you stop paying the annual fee. The credit lock only works for Equifax and not the other two credit reporting companies. Equifax has waived the credit lock fee through November 21, 2017.

I hope this helps

Russ

December 28, 2016

Happy New Year to everyone !!

If you want to view and/or print my January 2, 2017 client letter or my 2016 Income Tax Questionnaire just click on the "Income Tax Questionnaire" above.

December 26, 2016 

On Friday, January 20th Donald Trump will be sworn in as our 45th President. Like him or not, here are some major changes we can expect him to propose in the next twelve months:

1. Repeal of Obamacare and the Medicare surtax of 0.9% on earned income and 3.8% on unearned income.

2. Consolidation of income tax brackets (currently seven) into three brackets with a top rate of 33% (currently 39.6%).

3. Elimination of the Alternative Minimum Tax (AMT) . This is estimated to cost $30 billion to accomplish. See below regarding the history of the AMT and the permanent fix to protect millions of middle class taxpayers from this tax.

4. Retaining the maximum capital gains tax of 20% (up from 15% prior to 2014).

5. Cut business taxes for C-Corporations, LLC Partnerships, S-Corporations and for self employed individuals to just 15%.

6. Elimination of the Estate Tax, but not without a cost. The “stepped up basis” for inherited assets will be repealed as well.

Much of the criticism of Trump's tax plans are that he would give the biggest breaks to the highest earners. Yet Trump firmly believes that loosening of capital at the top will encourage investment, create jobs and fuel economic growth. Trump hopes to eliminate the Alternative Minimum Tax (see number 3 above). The AMT is an unfair tax that continues to be a burden on higher earning taxpayers. Enacted in 1970 it affected just 155 high income filers that paid no taxes. Today it affects millions of taxpayers. In an effort to eliminate this tax for many middle class taxpayers Congress enacted temporary relief during each of the last several years by passing what is called a “patch”. This patch raises the AMT exemption so that fewer people would end up paying the AMT. Congress has now permanently extended the patch and has also indexed the exemption for inflation. For 2016 the AMT exemption increases to $83,800 for married couples filing jointly and $53,900 for single filers.

December 29, 2015

2015 Income Tax Questionnaire and January, 2016 client letter are now available in PDF format under "Income Tax Questionnaire" tab

December 21, 2015

Our 2015 Income Tax Questionnaire and my cover letter will be in the mail to clients the week of January 3rd. My cover letter will have a good deal of information about recent tax legislation as well as my 2016 fee schedule. A PDF version of my cover letter and my 2015 questionnaire will be available in a few days on this web site by going to the "Income Tax Questionnaire" tab.

December 18, 2015

On Thursday December 17th the House passed a sweeping $622 billion tax package. This bill, also known as the "Tax Extenders Bill, will extend 52 provisions of the Internal Revenue Code which are powerful business incentives ( 50% bonus depreciation, Sec 179 deductions, R&D Credits) as well as many critical personal deductions and credits (child tax credit, American Opportunity tuition credit, charitable giving incentives). Important to note is that many of these 52 "extenders" were made permanent. This is a huge benefit in that we will not have to wait for Congress to pass a retroactive Bill each year. The White House has signaled support for this Bill and the Senate is expected to approve the bill today.

September 10, 2015

The discussion about taxes is making its way into the political arena. While most major candidates have "a plan" it is still too early to take these discussions seriously. One thing is for certain.... GOP candidates are seeking individual lower tax rates. Some of the plans are a bit radical. Here is a quick summary of what you may hear on the campaign trail from some of the major GOP candidates....Rand Paul will scrap the tax code and replace it with a 14.5% flat tax.......Mike Huckabee favors a national sales tax of around 30% to replace all Federal tax.....Chris Christie wants a top Federal bracket of 28% (down from 39.6%)....Rick Perry wants you to have a choice-the current tax or a flat 20% tax....Ben Carson advocates a flat tax of between 10 and 15%....Ted Cruz wants a flat tax and wants to abolish the IRS ... Donald Trump has called for tax simplification but has not yet released any details...Jeb Bush, Scott Walker and John Kasich have not released any proposals. Democrats to follow.........not as exciting as the GOP !!

September 22, 2015

OK Democrats here's your turn.....Hillary Clinton will increase the capital gains tax to as much as 39.6% (from it's current maximum rate of 20%) This is in addition to the 3.8% Medicare (Obamacare) surtax on investment income. She would also cap itemized deductions for the high earner and make the the American Opportunity Credit (tuition credit) a permanent fixture.....Bernie Sanders will raise the maximum tax rate for high earners to 50% from 39.6%. He will also raise estate tax and Social Security taxes on high earners. He would also impose a 0.5% tax on stock trades to fund his his plan for free college tuition at public universities.

I will update as we get deeper into the election season and as most Republicans drop out of the race.

Republican update: Trump will overhaul the IRS code to reduce tax and create incentives for more hiring. Cut rates...cut estate taxes...end the marriage penalty...That's a lot of promises !!.....Carly Fiorina merely wants to scrap the 70,000 page IRS tax code and replace it with "tax simplification". Easier said than done.

January 31, 2015

I get a number of calls each year from clients saying that they were contacted by telephone by an IRS Agent about unpaid taxes from a previous year. The Agent will state that you are liable for this tax and if payment is not received immediately you could be arrested. The Agent will provide you with their name and IRS badge number and may also know the last four digits of your social security number. The caller ID information on your phone may even appear as if they are calling from the IRS.
These are obviously scams phishing for payment via prepaid cards or wire transfers.

Please note the following:
1.The IRS will never make demands a for tax debt to be paid using prepaid debit cards or wire transfers.
2. The IRS does not know your Email address and will never contact you via Email or Fax
3. The IRS does not contact you about discrepancies or unpaid taxes by phone. They will always contact you via US mail.

If you are contacted by scammers don’t provide any bank account or other personal information to them. Just hang up the phone.

Call and report the incident to the Treasury Inspector General for Taxpayer Administration (TIGTA) at 800-366-4484.

Forward emails from the "IRS" to phishing@irs.gov. Don’t open any attachments or click on any links in those emails.

File a complaint with the Federal Trade Commission at ftc.gov/complaint. Include “IRS Telephone Scam" in your complaint.

If you are concerned that your identity has been stolen contact one of the credit reporting agencies' fraud alert departments and place a fraud alert on your credit report

Equifax Fraud Department
Call 1-800-525-6285
www.equifax.com

Experian Fraud Department
Call 1-888-397-3742
www.experian.com

TransUnion Fraud Department
Call 1-800-680-7289
www.transunion.com

January 1, 2015

Happy New Year !!

Please note that effective January 1, 2015 our staff email addresses are as follows:

Russ Khederian russ@russkcpa.com

Sharon Murphy sharon@russkcpa.com

Jill Khederian jill@russkcpa.com

Donna Barrasso donna@russkcpa.com

Sharon will keep belmontcap@aol.com as her personal email address.

Our 2014 Income Tax Questionnaire and my cover letter will be in the mail to clients the week of January 5th. My cover letter has a good deal of information about recent tax legislation. A PDF version of my cover letter and 2014 questionnaire is available on this web site by going to the "Income Tax Questionnaire" tab.

DECEMBER 18, 2014

The following expired “extenders” (that expired on December 31, 2013) have been resurrected for 2014 in the tax bill recently passed by Congress and signed by President Obama. Many of the 55 extenders which cost an estimated $42 billion in tax revenue affect us all.

Here are some of the more popular expiring tax breaks that were extended to 2014:

1. Exclusion for cancellation of debt income on primary residences

2. Exclusion for qualified small business stock

3. Transit benefits

4. Classroom expense deduction

5. Tuition and fees deduction

6. Deduction for mortgage insurance premiums

7. Deduction for state and local tax

8. Contributions of real property made for conservation purposes

9. Energy credit for residential home owners

10. Work Opportunity tax credit

11. Expanded Section 179 (expensing) deduction for business

12. Bonus depreciation

Section 179 expense deduction
Deduction for state and local sales taxes
Tax-free IRA distributions to charity
Educators expense deduction
Energy-efficient home improvement tax credits
The Energy-efficient Home Credit
Education tax deduction
Exclusion from income for discharge of debt on principal residence

13. IRA direct distributions to charity

March 1, 2014

Your Home Office Deduction

Under the IRS rules, a taxpayer is allowed to deduct expenses related to business use of a home, but only if the space is used "exclusively" on a "regular basis". To qualify for a home office deduction you must meet the following requirements:

1. Exclusive and regular use as your principal place of business

2. A place for meeting with clients or customers in the ordinary course of business or

a place for the taxpayer to perform administrative or management activities

associated with the business, provided there is no other fixed location from

which the taxpayer conducts a substantial amount of such administrative or

management activities

The exclusive-use test is satisfied if a specific portion of the taxpayer's home is used solely for business purposes or inventory storage. The regular-basis test is satisfied if the space is used on a continuing basis for business purposes. Incidental business use does not qualify. In determining the principal place of business, the IRS considers two factors: Does the taxpayer spend more business-related time in the home office than anywhere else? Are the most significant revenue-generating activities performed in the home office? Both of these factors must be considered when determining the principal place of business.

IF YOU ARE AN EMPLOYEE THERE ARE ADDITIONAL REQUIREMENTS:

To qualify for the home-office deduction, an employee must satisfy two additional criteria. First, the use of the home office must be for the convenience of the employer (for example, the employer does not provide a space for the employee to do his/her job). Second, the taxpayer does not rent all or part of the home to the employer and use the rented portion to perform services as an employee for the employer.

Home office expenses are classified into three categories: Direct Business Expenses relate to expenses incurred for the business part of your home such as additional phone lines, long-distance calls, and optional phone services. Indirect Business Expenses are expenditures that are related to running your home such as mortgage or rent, insurance, real estate taxes, utilities, and repairs. Unrelated Expenses such as painting a room that is not used for business are not deductible.

Expenses related to the use of your home will be limited if you do not have enough "net income" (prior to taking your home office deduction) Nondeductible expenses will be suspended and carried over to the following year.

SALE OF YOUR RESIDENCE WHEN YOU DEDUCT A HOME OFFICE:

If you use property partly as a home and partly for business, tax rules generally permit a $500,000 (married filing jointly) or $250,000 (single or married filing separately) exclusion on the gain from the sale of a primary residence provided certain ownership and use tests are met during the 5-year period ending on the date of the sale: Under the new IRS Regulations If the part of your property used for business is within your home, such as a room used as a home office for a business there is no need to allocate gain on the sale of the property between the business part of the property and the part used as a home. The only "taxable event" will be a capital gain on the depreciation taken on your home office. Other rules exist if your home office involves a separate structure. The rules for excluding the capital gain are far less liberal than those discussed above.

SIMPLIFIED HOME OFFICE DEDUCTION BEGAN IN 2013:

A new simplified option available for taxpayers starting with 2013 tax returns allows taxpayers to complete a simplified form with a home office deduction cappped at $1,500 per year based on $5 a square foot for up to 300 square feet. Not a very big deduction. I do not recommend this method of calculating your home office deduction because current restrictions such as the requirement that a home office must be used regularly and exclusively for business and the limit tied to the income derived from the particular business, still apply under the new option.

In summary the home office deduction is valuable because it converts a portion of otherwise nondeductible expenses such as mortgage, rent, utilities and homeowners insurance into a deduction. Remember however, that an individual is not entitled to deduct any expenses of using his/her home for business purposes unless the space is used exclusively on a regular basis as the "principal place of business" as defined above. The IRS will apply a two part test to determine if the home office is the principal place of business. Answer these two questions:

1. Do you spend more business-related time in your home office than anywhere else? 2. Are the most significant business activities performed in your home office?

If the answer to either of these questions is no, the home office will not be deemed as the principal place of business in the eyes of the IRS.

January 15, 2014

New Mortgage rules created by the Consumer Financial Protection Bureau (CFPB) as mandated under the Dodd-Frank Act went into effect on January 10, 2014. This Act creates a new class of mortgages called "Qualified Mortgages" or QM's. Borrowers who qualify for QM's are presumed to be able to repay the loan for many years. A QM CAN NOT consist of an interest only loan, negative amortization loans, balloon loans or loans in excess of 30 years. Lenders who wish to underwrite a QM will be determined to verify the borrower's ability to repay the loan. The QM will not be able to exceed 43% of the borrowers monthly income. In addition the loan must qualify for purchase by Fannie Mae and Freddie Mac. Self employed individuals will be under intense scrutiny as lenders attempt to verify their ability to repay. Self employed borrowers may also be asked to produce forward looking profit and loss statements and balance sheets as a comfort to underwriters. These steps can be quite costly if done by a CPA firm. A good credit score (above 740) will help to eliminate the financial pain associated with borrowing. I would also advise you to shop around. This newly enacted law means banks and lenders can be flexible when looking at the "ability to repay". Also, lenders can still make loans outside of the QM regulations-these loans can offer more flexibility.

January 2, 2014

FILING SEASON DELAYED BY 10 DAYS

Taxpayers should note that the 2014 tax season opens on January 31, 2014. In most years, the filing season opens on January 21. However, due to the 16-day government shutdown that took place in October 2013, the filing season is delayed by 10 days this year. No returns, paper or electronic, will be processed by the IRS before this date. The April 15 tax deadline is set by statute and will not change.

September 1, 2014

SAME SEX FILING REQUIRMENTS

In the wake of the August 29, 2013 IRS Revenue Ruling 2013-17 all same sex married couples must now be treated as married for Federal income tax, gifting and estate tax purposes regardless of whether the couple resides in a state recognizing same-sex marriage.

Legally married same-sex couples must either file as married filing jointly or married filing separately in 2013. Legally married same-sex couples do not have the option to continue to file as single individuals. This law change may be very helpful or very harmful depending on the total income and deductions of each spouse.

If you and your spouse are both Massachusetts residents and clients of mine, you will be filling out only one income tax questionnaire and filing just one Federal/MA income tax return for 2013. If you are a client and your spouse is not, you will have to determine which spouse’s accounting firm will be preparing your 2013 returns. If I am not chosen to prepare your 2013 returns, I will do everything to assist in a smooth information transition with you spouse’s firm.

If you have any questions about the new law please feel free to contact my office for assistance.

Section 179 expense deduction
Deduction for state and local sales taxes
Tax-free IRA distributions to charity
Educators expense deduction
Energy-efficient home improvement tax credits
The Energy-efficient Home Credit
Education tax deduction
Exclusion from income for discharge of debt on principal residence

Read more at http://freedomoutpost.com/2013/12/congress-allowing-55-tax-breaks-expire-year/#xWjrL5ETtivhyJgU.99UNDER

On Friday, January 20^th Donald Trump will be sworn in as our 45^th President. Like him or not, here are some major changes we can expect him to propose in the next twelve months:

1. Repeal of Obamacare and the Medicare surtax of 0.9% on earned income and

3.8% on unearned income.

2. Consolidation of income tax brackets (currently seven) into three brackets with a

top rate of 33% (currently 39.6%).

3. Elimination of the Alternative Minimum Tax (AMT) . This is estimated to cost

$30 billion to accomplish. See below regarding the history of the AMT and the

permanent fix to protect millions of middle class taxpayers from this tax.

4. Retaining the maximum capital gains tax of 20% (up from 15% prior to 2014).

5. Cut business taxes for C-Corporations, LLC Partnerships, S-Corporations and

for self employed individuals to just 15%.

6. Elimination of the Estate Tax, but not without a cost. The “stepped up basis” for

inherited assets will be repealed as well.

On Friday, January 20^th Donald Trump will be sworn in as our 45^th President. Like him or not, here are some major changes we can expect him to propose in the next twelve months:

1. Repeal of Obamacare and the Medicare surtax of 0.9% on earned income and

3.8% on unearned income.

2. Consolidation of income tax brackets (currently seven) into three brackets with a

top rate of 33% (currently 39.6%).

3. Elimination of the Alternative Minimum Tax (AMT) . This is estimated to cost

$30 billion to accomplish. See below regarding the history of the AMT and the

permanent fix to protect millions of middle class taxpayers from this tax.

4. Retaining the maximum capital gains tax of 20% (up from 15% prior to 2014).

5. Cut business taxes for C-Corporations, LLC Partnerships, S-Corporations and

for self employed individuals to just 15%.

6. Elimination of the Estate Tax, but not without a cost. The “stepped up basis” for

inherited assets will be repealed as well.

On Friday, January 20^th Donald Trump will be sworn in as our 45^th President. Like him or not, here are some major changes we can expect him to propose in the next twelve months:

1. Repeal of Obamacare and the Medicare surtax of 0.9% on earned income and

3.8% on unearned income.

2. Consolidation of income tax brackets (currently seven) into three brackets with a

top rate of 33% (currently 39.6%).

3. Elimination of the Alternative Minimum Tax (AMT) . This is estimated to cost

$30 billion to accomplish. See below regarding the history of the AMT and the

permanent fix to protect millions of middle class taxpayers from this tax.

4. Retaining the maximum capital gains tax of 20% (up from 15% prior to 2014).

5. Cut business taxes for C-Corporations, LLC Partnerships, S-Corporations and

for self employed individuals to just 15%.

6. Elimination of the Estate Tax, but not without a cost. The “stepped up basis” for

inherited assets will be repealed as well.

On Friday, January 20^th Donald Trump will be sworn in as our 45^th President. Like him or not, here are some major changes we can expect him to propose in the next twelve months:

1. Repeal of Obamacare and the Medicare surtax of 0.9% on earned income and

3.8% on unearned income.

2. Consolidation of income tax brackets (currently seven) into three brackets with a

top rate of 33% (currently 39.6%).

3. Elimination of the Alternative Minimum Tax (AMT) . This is estimated to cost

$30 billion to accomplish. See below regarding the history of the AMT and the

permanent fix to protect millions of middle class taxpayers from this tax.

4. Retaining the maximum capital gains tax of 20% (up from 15% prior to 2014).

5. Cut business taxes for C-Corporations, LLC Partnerships, S-Corporations and

for self employed individuals to just 15%.

6. Elimination of the Estate Tax, but not without a cost. The “stepped up basis” for

inherited assets will be repealed as well.

On Friday, January 20^th Donald Trump will be sworn in as our 45^th President. Like him or not, here are some major changes we can expect him to propose in the next twelve months:

1. Repeal of Obamacare and the Medicare surtax of 0.9% on earned income and

3.8% on unearned income.

2. Consolidation of income tax brackets (currently seven) into three brackets with a

top rate of 33% (currently 39.6%).

3. Elimination of the Alternative Minimum Tax (AMT) . This is estimated to cost

$30 billion to accomplish. See below regarding the history of the AMT and the

permanent fix to protect millions of middle class taxpayers from this tax.

4. Retaining the maximum capital gains tax of 20% (up from 15% prior to 2014).

5. Cut business taxes for C-Corporations, LLC Partnerships, S-Corporations and

for self employed individuals to just 15%.

6. Elimination of the Estate Tax, but not without a cost. The “stepped up basis” for

inherited assets will be repealed as well.

On Friday, January 20^th Donald Trump will be sworn in as our 45^th President. Like him or not, here are some major changes we can expect him to propose in the next twelve months:

1. Repeal of Obamacare and the Medicare surtax of 0.9% on earned income and

3.8% on unearned income.

2. Consolidation of income tax brackets (currently seven) into three brackets with a

top rate of 33% (currently 39.6%).

3. Elimination of the Alternative Minimum Tax (AMT) . This is estimated to cost

$30 billion to accomplish. See below regarding the history of the AMT and the

permanent fix to protect millions of middle class taxpayers from this tax.

4. Retaining the maximum capital gains tax of 20% (up from 15% prior to 2014).

5. Cut business taxes for C-Corporations, LLC Partnerships, S-Corporations and

for self employed individuals to just 15%.

6. Elimination of the Estate Tax, but not without a cost. The “stepped up basis” for

inherited assets will be repealed as well.

On Friday, January 20^th Donald Trump will be sworn in as our 45^th President. Like him or not, here are some major changes we can expect him to propose in the next twelve months:

1. Repeal of Obamacare and the Medicare surtax of 0.9% on earned income and

3.8% on unearned income.

2. Consolidation of income tax brackets (currently seven) into three brackets with a

top rate of 33% (currently 39.6%).

3. Elimination of the Alternative Minimum Tax (AMT) . This is estimated to cost

$30 billion to accomplish. See below regarding the history of the AMT and the

permanent fix to protect millions of middle class taxpayers from this tax.

4. Retaining the maximum capital gains tax of 20% (up from 15% prior to 2014).

5. Cut business taxes for C-Corporations, LLC Partnerships, S-Corporations and

for self employed individuals to just 15%.

6. Elimination of the Estate Tax, but not without a cost. The “stepped up basis” for

inherited assets will be repealed as well.

On Friday, January 20^th Donald Trump will be sworn in as our 45^th President. Like him or not, here are some major changes we can expect him to propose in the next twelve months:

1. Repeal of Obamacare and the Medicare surtax of 0.9% on earned income and

3.8% on unearned income.

2. Consolidation of income tax brackets (currently seven) into three brackets with a

top rate of 33% (currently 39.6%).

3. Elimination of the Alternative Minimum Tax (AMT) . This is estimated to cost

$30 billion to accomplish. See below regarding the history of the AMT and the

permanent fix to protect millions of middle class taxpayers from this tax.

4. Retaining the maximum capital gains tax of 20% (up from 15% prior to 2014).

5. Cut business taxes for C-Corporations, LLC Partnerships, S-Corporations and

for self employed individuals to just 15%.

6. Elimination of the Estate Tax, but not without a cost. The “stepped up basis” for

inherited assets will be repealed as well.

On Friday, January 20^th Donald Trump will be sworn in as our 45^th President. Like him or not, here are some major changes we can expect him to propose in the next twelve months:

1. Repeal of Obamacare and the Medicare surtax of 0.9% on earned income and

3.8% on unearned income.

2. Consolidation of income tax brackets (currently seven) into three brackets with a

top rate of 33% (currently 39.6%).

3. Elimination of the Alternative Minimum Tax (AMT) . This is estimated to cost

$30 billion to accomplish. See below regarding the history of the AMT and the

permanent fix to protect millions of middle class taxpayers from this tax.

4. Retaining the maximum capital gains tax of 20% (up from 15% prior to 2014).

5. Cut business taxes for C-Corporations, LLC Partnerships, S-Corporations and

for self employed individuals to just 15%.

6. Elimination of the Estate Tax, but not without a cost. The “stepped up basis” for

inherited assets will be repealed as well.

On Friday, January 20^th Donald Trump will be sworn in as our 45^th President. Like him or not, here are some major changes we can expect him to propose in the next twelve months:

1. Repeal of Obamacare and the Medicare surtax of 0.9% on earned income and

3.8% on unearned income.

2. Consolidation of income tax brackets (currently seven) into three brackets with a

top rate of 33% (currently 39.6%).

3. Elimination of the Alternative Minimum Tax (AMT) . This is estimated to cost

$30 billion to accomplish. See below regarding the history of the AMT and the

permanent fix to protect millions of middle class taxpayers from this tax.

4. Retaining the maximum capital gains tax of 20% (up from 15% prior to 2014).

5. Cut business taxes for C-Corporations, LLC Partnerships, S-Corporations and

for self employed individuals to just 15%.

6. Elimination of the Estate Tax, but not without a cost. The “stepped up basis” for

inherited assets will be repealed as well.

On Friday, January 20^th Donald Trump will be sworn in as our 45^th President. Like him or not, here are some major changes we can expect him to propose in the next twelve months:

1. Repeal of Obamacare and the Medicare surtax of 0.9% on earned income and

3.8% on unearned income.

2. Consolidation of income tax brackets (currently seven) into three brackets with a

top rate of 33% (currently 39.6%).

3. Elimination of the Alternative Minimum Tax (AMT) . This is estimated to cost

$30 billion to accomplish. See below regarding the history of the AMT and the

permanent fix to protect millions of middle class taxpayers from this tax.

4. Retaining the maximum capital gains tax of 20% (up from 15% prior to 2014).

5. Cut business taxes for C-Corporations, LLC Partnerships, S-Corporations and

for self employed individuals to just 15%.

6. Elimination of the Estate Tax, but not without a cost. The “stepped up basis” for

inherited assets will be repealed as well.

On Friday, January 20^th Donald Trump will be sworn in as our 45^th President. Like him or not, here are some major changes we can expect him to propose in the next twelve months:

1. Repeal of Obamacare and the Medicare surtax of 0.9% on earned income and

3.8% on unearned income.

2. Consolidation of income tax brackets (currently seven) into three brackets with a

top rate of 33% (currently 39.6%).

3. Elimination of the Alternative Minimum Tax (AMT) . This is estimated to cost

$30 billion to accomplish. See below regarding the history of the AMT and the

permanent fix to protect millions of middle class taxpayers from this tax.

4. Retaining the maximum capital gains tax of 20% (up from 15% prior to 2014).

5. Cut business taxes for C-Corporations, LLC Partnerships, S-Corporations and

for self employed individuals to just 15%.

6. Elimination of the Estate Tax, but not without a cost. The “stepped up basis” for

inherited assets will be repealed as well.

. Repeal of Obamacare and the Medicare surtax of 0.9% on earned income and

On Friday, January 20^th Donald Trump will be sworn in as our 45^th President. Like him or not, here are some major changes we can expect him to propose in the next twelve months:

1. Repeal of Obamacare and the Medicare surtax of 0.9% on earned income and

3.8% on unearned income.

2. Consolidation of income tax brackets (currently seven) into three brackets with a

top rate of 33% (currently 39.6%).

3. Elimination of the Alternative Minimum Tax (AMT) . This is estimated to cost

$30 billion to accomplish. See below regarding the history of the AMT and the

permanent fix to protect millions of middle class taxpayers from this tax.

4. Retaining the maximum capital gains tax of 20% (up from 15% prior to 2014).

5. Cut business taxes for C-Corporations, LLC Partnerships, S-Corporations and

for self employed individuals to just 15%.

6. Elimination of the Estate Tax, but not without a cost. The “stepped up basis” for

inherited assets will be repealed as well.

On Friday, January 20^th Donald Trump will be sworn in as our 45^th President. Like him or not, here are some major changes we can expect him to propose in the next twelve months:

1. Repeal of Obamacare and the Medicare surtax of 0.9% on earned income and

3.8% on unearned income.

2. Consolidation of income tax brackets (currently seven) into three brackets with a

top rate of 33% (currently 39.6%).

3. Elimination of the Alternative Minimum Tax (AMT) . This is estimated to cost

$30 billion to accomplish. See below regarding the history of the AMT and the

permanent fix to protect millions of middle class taxpayers from this tax.

4. Retaining the maximum capital gains tax of 20% (up from 15% prior to 2014).

5. Cut business taxes for C-Corporations, LLC Partnerships, S-Corporations and

for self employed individuals to just 15%.

6. Elimination of the Estate Tax, but not without a cost. The “stepped up basis” for

inherited assets will be repealed as well.

1. Repeal of Obamacare and the Medicare surtax of 0.9% on earned income and

Repeal of Obamacare and the Medicare surtax of 0.9% on earned income and

On Friday, January 20^th Donald Trump will be sworn in as our 45^th President. Like him or not, here are some major changes we can expect him to propose in the next twelve months:

2. Consolidation of income tax brackets (currently seven) into three brackets with a

top rate of 33% (currently 39.6%).

3. Elimination of the Alternative Minimum Tax (AMT) . This is estimated to cost

$30 billion to accomplish. See below regarding the history of the AMT and the

permanent fix to protect millions of middle class taxpayers from this tax.

4. Retaining the maximum capital gains tax of 20% (up from 15% prior to 2014).

5. Cut business taxes for C-Corporations, LLC Partnerships, S-Corporations and

for self employed individuals to just 15%.

6. Elimination of the Estate Tax, but not without a cost. The “stepped up basis” for

inherited assets will be repealed as well.

On Friday, January 20^th Donald Trump will be sworn in as our 45^th President. Like him or not, here are some major changes we can expect him to propose in the next twelve months:

2. Consolidation of income tax brackets (currently seven) into three brackets with a

top rate of 33% (currently 39.6%).

3. Elimination of the Alternative Minimum Tax (AMT) . This is estimated to cost

$30 billion to accomplish. See below regarding the history of the AMT and the

permanent fix to protect millions of middle class taxpayers from this tax.

4. Retaining the maximum capital gains tax of 20% (up from 15% prior to 2014).

5. Cut business taxes for C-Corporations, LLC Partnerships, S-Corporations and

for self employed individuals to just 15%.

6. Elimination of the Estate Tax, but not without a cost. The “stepped up basis” for

inherited assets will be repealed as well.

I hope this helps

So we now have a House and a Senate version of this massive tax bill. There are a number of significant differences that must be resolved before a final version can be sent to the President for his signature. These issues will be resolved by the House and Senate conference committee. I am not addressing the entire tax bill here....just the major differences that need to be resolved in Committee.

Individual tax rates.….The House bill reduces the number of brackets to four (top bracket 39.6%). The Senate bill retains the current seven brackets (top bracket of 38.5%)

Child tax credit…..The child tax credit is increased to $1,600 in the House bill and $2,000 in the Senate bill.

Mortgage interest deduction…..The House bill caps the interest deduction on $500K for new purchases. The Senate bill keeps it at $1M

Medical expenses…..The House bill repeals the medical deduction. The Senate bill maintains the deduction and drops the current 10% threshold to 7.5% of adjusted gross income.

Affordable Care Act's Individual Mandate.....The House bill preserves the individual mandate. The Senate bill repeals the individual mandate.

Corporate tax rate reduction start date…..Both bills cut the Corporate tax rate to 20% yet the House bill cuts begin on January 1, 2018 while the Senate bill cuts begin in 2019.

Estate tax…..The House bill repeals the estate tax. The Senate bill essentially doubles the Federal estate tax exemption.
Student loan interest…..The House bill repeals the deduction. The Senate bill maintains the deduction.

Alternative Minimum Tax…..The House bill eliminates the AMT. The Senate bill maintains the AMT but raises the amount of income exempt from it.
Teacher out of pocket expenses…..The House bill eliminates the current $250 deduction. The Senate bill maintains the deduction and raises it to $500.