TMTW #284- Series on New Tax Law-Path Act Part 1

Posted on May 11, 2016 by taxblogger

Tax and Money Tip this Week:
Series on New Tax Law- Path Act Part 1
May 11, 2016 | No. 284

Like many taxpayers, you may have been expecting to encounter a few roadblocks while traversing your preferred tax-savings avenues. If so, tax extenders legislation signed into law this past December may make your journey a little easier. Let’s walk through a few highlights of the Protecting Americans from Tax Hikes Act of 2015 (the Path Act).

If you’re a homeowner, the PATH Act allows you to treat qualified mortgage insurance premiums as interest for purposes of the mortgage interest deduction through 2016. However, this deduction is phased out for higher income taxpayers. The law likewise extends through 2016 the exclusion from gross income for mortgage loan forgiveness.

Those living in a state with low or no income taxes (or who make large purchases, such as a car or boat) will be pleased that the itemized deduction for state and local sales taxes, instead of state and local income taxes, is now permanent. Your deduction can be determined easily by using an IRS calculator and adding the tax you actually paid on certain major purchases.

Investors should note that the PATH Act makes permanent the exclusion of 100% of the gain on the sale of qualified small business stock acquired and held for more than five years (if acquired after September 27, 2010). The law also permanently extends the rule that eliminates qualified small business stock gain as a preference item for alternative minimum tax (AMT) purposes.

Questions or Comments?
You can add comments on the blog, call 919-847-2981, or visit our web site. We look forward to hearing from you.

Mark Vitek, CPA/PFS, CFP®
…until next week.

 

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TMTW # 283- Inheriting an IRA: Ignoring Non-Person Beneficiaries

Posted on May 4, 2016 by taxblogger

Tax and Money Tip this Week:
Inheriting an IRA: Ignoring Non-Person Beneficiaries
May 4, 2016 | No. 283

IRA’s with multiple beneficiaries that include charity or other non-person entity must pay out that entity’s share by September 30 of the year following the owner’s death. If that share isn’t paid out and the account hasn’t been split, the rest of the beneficiaries can’t take withdrawals over their life expectancies. They will have to empty the account within five years if the owner died before his required beginning date for taking distributions. If the owner died after that date, the beneficiaries must take annual RMDs based on the deceased’s life expectancy, as noted in IRS tables.
If a trust is a beneficiary, send a copy of the trust to the IRA custodian by October 31 of the year following the year the owner dies. Otherwise, the trust is considered a non- designated beneficiary and the same pay-out rules that applied in the previous scenario with the charity will kick in.

Source: Kiplinger’s Retirement Report

Questions or Comments?
You can add comments on the blog, call 919-847-2981, or visit our web site. We look forward to hearing from you.

Mark Vitek, CPA/PFS, CFP®
…until next week.

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TMTW #282- Inheriting an IRA: Not Dividing the IRA Among Heirs

Posted on April 27, 2016 by taxblogger

Tax and Money Tip this Week:
Inheriting an IRA: Not Diving the IRA Among Heirs
April 27, 2016 | No. 282

Be sure to advise your beneficiaries to split the IRA, especially if they have a wide age difference. If the account is not split, the age of the oldest beneficiary will be used to calculate RMD’s which will shorten the number of years the money can grow tax deferred.

Say the beneficiaries are a 75 year old sister, a 50 year old son and a 20 year old grandchild. If the account remains whole, all the heirs will have to calculate their RMDs based on the 75 year old’s life expectancy. Instead, if the account is split by December 31 of the year following the year the owner dies, each beneficiary can use their own life expectancy to take RMDs—and can choose hoe to invest the money. “The distribution depends on age—the younger the beneficiaries are, the less they have to take out,” says Mike Piershale, president of Piershale Financial Group, in Crystal Lake, Illinois.

Source: Kiplinger’s Retirement Report

Questions or Comments?
You can add comments on the blog, call 919-847-2981, or visit our web site. We look forward to hearing from you.

Mark Vitek, CPA/PFS, CFP®
…until next week.

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TMTW #281- Inheriting an IRA: Titling the IRA Account Improperly

Posted on April 20, 2016 by taxblogger

Tax and Money Tip this Week:
Inheriting an IRA: Titling the IRA Account Improperly 
April 20, 2016 | No. 281

Nonspouse beneficiaries cannot roll an inherited IRA into their own IRA.  Instead, a separate account must be set up with a title that includes the decedent’s name and the fact that the account is for a beneficiary. For example, the account could be retitled to “John Doe (deceased April 14, 2014) IRA for the benefit of Jane Doe.” If the account is split among beneficiaries, each new IRA must be properly retitled. And once the IRA is retitled, don’t forget to name successor beneficiaries.

Source: Kiplinger’s Retirement Report

Questions or Comments?
You can add comments on the blog, call 919-847-2981, or visit our web site. We look forward to hearing from you.

Mark Vitek, CPA/PFS, CFP®
…until next week.

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TMTW# 280- Thank You Clients! Another Successful Tax Season

Posted on April 13, 2016 by taxblogger

Tax and Money Tip this Week:
Thank You Clients! Another Successful Tax Season
April 13, 2016 | No. 280

The Week After Tax Season

Aaah…..the week after tax season is the best week in a CPA’s life each year!

We met a lot of new clients this year because of referrals from existing clients, and readers of our Tax and Money Tip of the Week. Thank you!

Our firm continues solid growth thanks to all of you.
A referral is the best compliment we can ever receive.

Even though our tax season is over, we will continue our Tax and Money Tip of the Week for the rest of the year. We will keep you updated on the constant tax law changes as well as spotlighting specific tax and money making ideas.

Again, thank you for making this one of the most successful tax seasons yet.
Questions or Comments?
You can add comments on the blog, call 919-847-2981, or visit our web site. We look forward to hearing from you.

Mark Vitek, CPA/PFS, CFP®
…until next week.

 

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TMTW# 279- Inheriting an IRA: Failing to Take Required Distributions

Posted on April 6, 2016 by taxblogger

Tax and Money Tip this Week:
Inheriting an IRA:Failing to Take Required Distributions
April 6, 2016 | No. 279

Owners of traditional IRAs must start taking required minimum distributions when they turn 70 1/2. Nonspouse beneficiaries of any age who want to “stretch” the IRA over their own life expectancies must start RMDs the year following the year the owner died. Heirs will have to pay tax on distributions of deductible contributions and earnings from a traditional IRA.

Also, while Roth IRA owners never have to take RMDs, nonspouse beneficiaries must. However, withdrawals from an inherited Roth IRA are still tax free.

Not taking an RMD results in a 50% penalty on the amount that should have been withdrawn for the year. If you miss an RMD, you may avoid the penalty by emptying the account within five years of the owners death (if the owner died before he had to start RMDs). “However, depending on the size of the IRA and the age of the beneficiary, it might be smarter to pay the penalty than to liquidate the account simply to avoid the penalty.” says Twila Slesnick, author of IRAs, 401(k)s & Other Retirement Plans.

Note, if the owner died after starting RMDs but had not yet taken the RMD for the year in which he or she died, the nonspouse beneficiary must take that RMD.

Source: Kiplinger’s Retirement Report
Questions or Comments?
You can add comments on the blog, call 919-847-2981, or visit our web site. We look forward to hearing from you.

Mark Vitek, CPA/PFS, CFP®
…until next week.

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TMTW#278- Reap Tax Breaks on Securities Sales

Posted on March 30, 2016 by taxblogger

Tax and Money Tip this Week:
Reap Tax Breaks on Securities Sales  
March 30, 2016 | No. 278

Click here to read the article by Business Management Daily
Questions or Comments?
You can add comments on the blog, call 919-847-2981, or visit our web site. We look forward to hearing from you.

Mark Vitek, CPA/PFS, CFP®
…until next week.

 

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TMTW # 277- It is “OK” to File for an Extension

Posted on March 23, 2016 by taxblogger

Tax and Money Tip this Week:
It is “Ok” to File for an Extension 
March 23, 2016 | No. 277

Please take notice of our office closing date. Our office will be closing at 6:00pm on Friday, April 15th and will not reopen until Wednesday, April 20th, 2016.

If you haven’t filed your tax return by now, you should probably consider filing for an extension.

To file for an extension, you simply need to submit Form 4868.  Submitting this form will give you until October 15th of that year to file your returns. However, an extension of the time to file is not an extension of the time to pay.  If you think you will owe taxes, you must send a payment along with the extension.  This applies for your federal and state tax returns.

Here is a link to Form 4868:
Form 4868
Questions or Comments?
You can add comments on the blog, call 919-847-2981, or visit our web site. We look forward to hearing from you.

Mark Vitek, CPA/PFS, CFP®
…until next week.

 

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TMTW # 275- Pay Tax Sooner on Installment Sale?

Posted on March 9, 2016 by taxblogger

Tax and Money Tip this Week:
Pay Tax Sooner on Installment Sale? 
March 9, 2016 | No. 275

Click here to read a great article published in the ‘Business Management Daily’

Questions or Comments?
You can add comments on the blog, call 919-847-2981, or visit our web site. We look forward to hearing from you.

Mark Vitek, CPA/PFS, CFP®
…until next week.

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