We are wrapping this tax season up…


But before we get any further into 2018, I wanted to point out a couple of items that you might need to consider doing something about before we get too much further into the year.

Home Equity Line of Credit Interest: 

NO LONGER DEDUCTIBLE in 2018.  If you have a HELOC, the interest you pay on that debt is no longer deductible as mortgage interest.  If this is a significant deduction to you, you may consider refinancing in order to get the debt classified as deductible interest.

Itemized Deductions that are 2% items: 

If you have previously claimed enough other itemized deductions to exceed the 2% AGI limitation, you will lose those deductions in 2018.  These deductions included:  Un-reimbursed Employee Expenses, Advisory Fees on taxable investment accounts, Home office deductions if your employer does not provide an office.  This category contained several deductions that will not longer be available to you in 2018 and going forward unless the new tax legislation gets repealed.

If you are a sales person and previously claimed unreimbursed employee expenses this way, you need to discuss a new arrangement with your employer so that these kinds of expenses are reimbursed to you from the employer.

Your tax situation will be different in 2018.

There are many ways in which the new legislation might affect you in 2018.  We suggest that you request some tax planning before the fall in order to know the impact before it gets too late to do something about it.  That would include changing the amount of tax you are paying in because it could be too much.  We hate being the bearer of bad news when someone did not come to us for advice during the time frame we could have done something about it.

Have a great spring and summer.  We will be available for tax planning and other consultation in May and beyond.


Quarterly estimated tax payments just got trickier


The Tax Cuts and Jobs Act may make paying quarterly estimated tax payments on April 17 a little more complicated. That’s because tax law changes may have altered how much you will owe this year vs. last. Luckily, if you make the same or less this year as you did in 2017 you can use the safe harbor option. Go ahead and pay the same amounts you did last year (or 110 percent of last year if you make $150,000 or more).

The problem is that if you lower your estimated payments to match to expected tax rate decreases, you open yourself up for a penalty should you not estimate it correctly. The Safe Harbor option says 1) pay the same total tax you incurred in 2017 (110% of it if you make more than $150,000), or 2) 90% of your 2018 liability by January 15, 2019, preferably in 4 equal installments on their due dates.

So there is the problem. If you don’t pay last years tax and you screw up your 90% calculation and when you prepare your 2018 return you still owe….a penalty may come with that return.

Another joy to the new tax legislation. Yes, this is a LOT more simple, said nobody.

We are available this summer to help you figure out how 2018 will impact you.

Can’t file your 2017 tax return? Here’s what to do


If you need more time to file your 2017 income tax return, you can get an extension.

Learn more about what you have to do.
If you need more time to file your 2017 income tax return, you can get an extension — no explanation is necessary.
There are a lot of reasons why you may need more time to file your 2017 individual income tax return. For instance, you might want to hold off funding a retirement plan until you can save more money. Perhaps you’re waiting for a tax form from a trust, a partnership or an S corporation. Or maybe you’ve just been busy.
Whatever the reason, you can usually put off filing for up to six months beyond April 17. That means you will have until Oct. 15 to finalize your return.
Here’s what you need to do:
• Estimate your total tax liability for 2017, subtract what you’ve already paid in withholding or estimated payments and remit most or all of the balance.
• File an extension request form (generally Form 4868 for an individual return) by April 17. You can file the extension request form online, by phone or by mailing it to the IRS. If you owe taxes, you can pay with an electronic funds transfer, your credit card, or a check.
Requesting an extension for your personal return also gives you additional time to file a gift tax return for 2017. The gift tax return extension is automatically included. But if you owe gift tax (or generation-skipping transfer tax), or are requesting an extension only for a gift tax return, you’ll need to use Form 8892.
If you have special circumstances such as military service, or think you might have difficulty paying the tax due with your extension, give us a call. We can help you work through the rules.

How to make the most of your tax refund


If you’re receiving a tax refund this year, you have a big decision to make: What to do with it.

Are you receiving a tax refund this year? No doubt you’ve already heard about why you shouldn’t be giving the government an interest-free loan. Maybe you’ve decided to revise your withholding or estimated tax payments to reduce the amount of next year’s refund. Either way, you have options. Financial planning means creating effective strategies that work for you.

The more important consideration right now is what you do with the money you get back. Here are ideas for making the most of your refund:

  • Stash it away. When the unexpected happens, it’s your job to figure out how to pay the resulting bills. Putting part of your refund in a readily accessible location such as a checking or savings account will help you weather temporary setbacks without incurring penalties or transaction fees.
  • Use it wisely. Using your refund to invest for the long-term is usually a good idea. For instance, energy-efficient windows or a new water heater may result in lower electric and insurance bills. Ditto for paying down high-interest credit cards, as long as you resist the urge to reload them.
  • Invest in yourself. Using your refund to refresh your career skills or to learn new ones can provide a double benefit: more employment opportunities and tax savings. If you’re unsure of your job security, put your refund to work by financing a home-based business and creating a second stream of income.


Give us a call to learn about different options for your tax refund that may provide tax breaks this year.

Important April 17 tax deadlines


As you prepare for tax day, remember that the following are due on April 17:
• Individual income tax returns for 2017

• Extensions for 2017 returns and payments for 2017 taxes still owed

• 2017 calendar-year C corporation income tax returns

• 2017 annual gift tax returns

• First installment of 2018 individual estimated tax

• 2017 IRA contributions deadline

3 reasons why your child should (or shouldn’t) have life insurance


Should you carry life insurance on your children? Read on to learn the most common considerations when making this decision.

When determining whether or not to carry life insurance on your children, you’ll find that people have a variety of opinions. Here’s a look at some of the most common considerations for and against life insurance policies on children:
• Financial security. Traditionally, you take out life insurance to provide for the financial security of dependents. The policy should include funds to replace the insured’s income and to pay off debts. Neither of these reasons applies to young children. They don’t generally have any significant income, and they don’t usually have any debts. Some parents might want to carry a modest amount of insurance to cover funeral costs for their children in case the unthinkable happens.
• Insurability. Some people believe that by taking out a policy at a young age, it helps guarantee insurability as the child grows older. This could be important if the child develops a major illness later in life. The problem is that if the child does develop a serious illness, insurance will still become very expensive or limited.
• Insurance as an investment. Some advisors suggest that parents should take out a whole life policy on their children. These policies include a savings component to build up cash value in the policy. You could then use that value for education expenses or other needs. But others say that there are cheaper and more efficient ways to save than by using life insurance. For example, putting money into a tax-advantaged 529 education savings plan is often a better way to save for school tuition costs.
Although a majority of advisors may argue against life insurance for children, there may be some situations where people find it makes sense. However, you shouldn’t take out a policy just because it is offered to you or because others are doing it. Make sure to do your homework and know exactly why you need the insurance.

Do you need to take an RMD? April 1 might be an important date for you



April 1 is the last day you can take your required minimum distribution (RMD) for 2017 from your traditional IRAs. If you reached age 70½ last year, this is a big deal.

If you reached age 70½ last year, April 1 could be an important deadline. It’s the last day you can take your required minimum distribution (RMD) for 2017 from your traditional IRAs. If you miss that deadline, the penalty may be a 50 percent excise tax on the amount you should have withdrawn.

How the rules work

Once you reach age 70½, you must start taking annual distributions from your traditional IRAs. Normally these distributions must occur by Dec. 31 of each year. But a special rule lets you defer your very first RMD until April of the year after you reach age 70½. So if you turned 70½ last year, April 1 is the deadline for your 2017 distribution. Be aware that you’ll still need to take your 2018 RMD before the end of this year. Note that RMD rules don’t apply to Roth IRAs.

Generally, the amount of the RMD for any year is based on your age. You take the balance in all your traditional IRAs as of the last day of the previous year, and divide by a factor representing your life expectancy. The IRS has published a standard life expectancy table to use in the calculation. Special rules might apply if your spouse is more than 10 years younger than you are.

RMDs and tax planning

 Because all or part of your distribution may be taxable income, it is important to include RMDs in your tax planning. Ideally you should start planning for RMDs several years before you reach age 70½. But whether you’re planning in advance or looking at a distribution on April 1, contact our office for more detailed advice.

If you’re still working, this deadline may also apply to your other retirement accounts.