Tax Warrior Chronicles

Rogue One: A Single Tax on Foundation Investment Income Story

Posted on Wed, Jan 22, 2020

By: Keisha Price, CPA, MST

 

A Long Time Ago in a Tax System Far, Far, Away…Private Foundations were subject to a 2% tax on net investment income generated from the Foundation’s charitable assets. This 2% tax could be reduced to 1% if the foundation’s current year charitable distributions exceeded its average charitable distributions over the prior five years…until now!

 

Makes Sense Right?

Well yes! It makes sense for a foundation with a clear charitable purpose, effective directorship, and meaningful assets to give more for the greater good of the galaxy each year and that deserves a tax break.

 

Constructing the Death Star

Let’s say the good and benevolent founder of the foundation

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Deductions for Qualified Transportation Benefits - Another Casualty of TCJA

Posted on Fri, Sep 06, 2019

By: Robert N. Polans, CPA, MT, PFS, and Stefanie Ostrich, CPA

 

The Tax Cuts and Jobs Act of 2017 (TCJA) contained hundreds of changes to our tax law including Qualified Business Income Deductions, limits on business interest expense, limits on excess business losses, and major changes to the U.S. taxation of profits earned overseas.  While much of the noise about the new tax law revolved around these items and others, less noise surrounded the part of the law which eliminates the deduction for Qualified Transportation Benefits.

 

The Internal Revenue Code (IRC) allows employers to offer certain non-taxable Qualified Transportation Fringe (QTF) benefits to their employees.  These can

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Your Kids in the Family Business Post-Trump Tax Reform

Posted on Mon, Aug 12, 2019

By: Melissa Boyce, CPA

 

The Tax Cuts and Jobs Act of 2017 (TCJA) changed many areas of the tax code, including when family business hires their child(ren). While there was a similar pre-TCJA benefit to hiring one’s child(ren), the new law increased several tax savings and warrants another look at hiring children into the family business.

 

Income Shifting

The largest benefit of hiring a child into a family-owned business is the ability to convert the parents’ high-taxed income into tax-free or low-taxed income. There are rules that must be followed; specifically, the children’s work must be legitimate, and the amount the enterprise pays them must be reasonable for the wages to be

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Divorce on Schedule 1 – Alimony

Posted on Thu, Aug 08, 2019

By: Sherri Sorbello, CPA

 

The tax treatment of alimony was one of the many items modified by the Tax Cuts and Jobs Act of 2017 (“TCJA”).  Alimony received is no longer taxable income to the recipient spouse and alimony paid is no longer deductible by the payer spouse for divorce or separation agreements executed after 2018, unless...

 

This change does not apply to divorce or separation agreements executed prior to 2019. For those agreements, the prior rules apply in which the alimony recipient reports the alimony received as taxable income and the payer of the alimony can deduct the alimony paid as an “above-the-line” deduction. An “above-the-line deduction” adjusts gross income, which

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Tax Considerations for Pass-Through Entities: §§ 199A and 163(j)

Posted on Tue, Jul 30, 2019

By: Jeremy Ferman, CPA, MA

 

The Tax Cuts and Jobs Act (“TCJA”) added several complicated tax laws to the books, adding a level of complexity for even the smallest pass-through entity returns.  As we enter the home-stretch of the extended filing season, we will examine arguably the two most difficult areas for pass-throughs to navigate: §§ 199A and 163(j). 

Section 199A: The 20% Pass-Through Deduction

Written to help lessen the gap between the corporate tax rate and the individual tax rates for pass-through income, § 199A allows a deduction of up to 20% of qualified business income reported by a pass-through entity.  While simple at face-value, the application of § 199A is far from it. 

 

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TCJA: What it Said vs. What it Did

Posted on Mon, Jul 22, 2019

By: Joe Brunell, CPA

 

The Tax Cuts and Jobs Act of 2017 (TCJA) is the most significant tax code overhaul since the Tax Reform Act of 1986.  The TCJA had four goals; tax relief for middle-income families, simplification for individuals, economic growth and repatriation of oversea income.   It cut individual income tax rates, doubled the standard deduction, eliminated personal exemptions and capped state and local itemized deductions.  While on the surface tax compliance now sounds simpler, as you will see, this isn’t the case.

 

Individuals

First and foremost, the new 1040 tax form is now postcard sized.  However, smaller is not always simpler; the new tax forms have become more

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Tax Warrior Vlog - Let's Pick on Congress: Drafting Errors in TCJA

Posted on Wed, Jun 12, 2019

 

Remember the Tax Cuts and Jobs Act drafting errors Chris Catarino talked about in the last vlog? Now he goes into a little more detail.

 

CJC - Drafting Errors in TCJA
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"Spring Forward" with a W-4 Check-up

Posted on Tue, Jun 04, 2019

By: Kelly Ha

 

Remember that government form called a W-4? It's usually part of a pile of other forms when starting a new job, and determines the amount of income taxes that your employer will withhold from your paycheck. This week, the IRS issued a draft of the new Form W-4, which reflects changes under the Tax Cuts and Jobs Act (TCJA).  Here's what you need to know...

 

A Form W-4 comes with a series of worksheets that help you calculate the appropriate number of allowances to claim. You can take a closer look at the full current W-4 form and worksheets here. The revised Form W-4 doesn't take effect until 2020.

 

How often should you reevaluate your W-4?

There really is no right or

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Tax Rates and Brackets at Your Fingertips!

Posted on Mon, Feb 04, 2019

Memorizing the different tax brackets, rates, standard deduction amounts, etc., is near impossible for most. Unless you are an accountant, these numbers don’t come naturally. Truth be told, even we need to look up something every now and then. As a handout at our presentations, we’ve prepared a two-page 2017-2019 comparative federal tax sheet. It is extremely helpful to have at your fingertips to quickly find brackets, limits, rates, and exclusions of more common areas of the code. Keep it handy for when you or your client may need it.

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Section 199A Aggregation Rules

Posted on Wed, Jan 30, 2019

By: Lana Goldina, CPA, and Dan Marques, CPA, MT

 

The infamous Section 199A, also known as “20% pass-through deduction,” is considered one of the most complex areas of the Tax Cuts and Jobs Act of 2017. On Friday, January 18, the IRS issued final regulations on parts of the law. Among the many issues and questions needing clarification under Section 199A is how you can elect to aggregate your trades or businesses to potentially maximize the qualified business income (“QBI”) deduction.

 

By aggregating their trades or businesses, some may be able to increase the 20% deduction by combining W-2 wages and the unadjusted basis of qualified property. To aggregate, there are five (5) requirements:

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