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News2020-11-04T20:12:19-05:00

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Dedham, MA January 3, 2018 – For over 100 years, Waldron Rand has built a reputation for delivering unparalleled business, tax, and assurance services and expertise to our clients. And our business continues to evolve with our clients’ needs, enabled by key industry associations we maintain locally and globally.

But our most valuable associations are with our employees — our success comes from our people. Today, Waldron Rand’s ability to deliver holistic accounting, auditing, and consulting services to businesses and individuals is even more powerful, with the addition of three new partners.

Join us in celebrating the newest partners in the oldest continuing public accounting firm in the country!

Brian Dlugasch, of Medfield, MA, joined Waldron Rand in 2008. Read more about Brian.

Nicole Barrick, of Mansfield, MA, joined Waldron Rand in 2006. Read more about Nicole.

Matt Dlugasch, of Millis, MA, joined Waldron Rand in 2011. Read more about Matt.

Waldron Rand is delighted to welcome three new partners to continue our long, proud tradition of comprehensive, partner-level service to individuals and businesses. Adding these trusted advisors to our team enables us to expand the depth and breadth of our investing, accounting, auditing, and tax preparation services and leverage their special strengths to help businesses and individuals manage challenges, navigate change, and seize opportunities.

Congratulations to Brian, Nicole, and Matt as they take Waldron Rand into our next 100 years.

This alert was posted prior to the passing of more recent tax legislation.  Before acting on any of the information in the following piece, please consult with a tax expert to learn if and how current legislation might impact or nullify what is stated in this article.

With Congress passing the new tax bill, many changes will impact you and your business. We have summarized major changes for individuals, businesses, and estates and gifts. In general, most individual changes are set to expire by the end of 2025, but most corporate provisions would be permanent. The bill includes many other small provisions that we will keep you apprised of as we have more time to digest the finer points of the bill.

Individual Tax Highlights
  • Retains seven tax brackets, but lowers each rate and widens each bracket
  • Increases the standard deduction to $24,000 for married filing jointly, $18,000 for head of household, and $12,000 for single filers
  • Eliminates the deduction for personal exemptions
  • Limits the deduction for total state and local, sales, and real estate taxes paid to $10,000
  • Increases the child tax credit to $2,000, with up to $1,400 refundable
  • Provides a nonrefundable credit for nonchild dependents (ailing parents or disabled adult children) of $500
  • Expands the use of 529 college savings plans to include distributions for elementary or secondary school tuition up to $10,000 per year
  • Eliminates the deduction for moving expenses other than for members of the armed services
  • Eliminates the deduction for home equity loan interest
  • Allows qualified mortgage interest deductions on loans up to $750,000; existing mortgages would be unaffected by the change
  • Retains the deduction for medical expenses and temporarily expands the deduction by reducing the threshold to 7.5% of income
  • Retains the individual alternative minimum tax, but increases exemption amounts
  • Eliminates the deduction for alimony paid and the taxability of alimony received for divorces executed after December 31, 2018
  • Disallows any deduction for expenses associated with entertainment activities and membership dues with respect to any club organized for business, pleasure, recreation, or any other social purposes and facilities used in connection with any of these activities (the 50% deduction for business meals remains)
  • Creates a 20% income tax deduction for some pass-through income from businesses other than personal service companies
  • Eliminates the health insurance mandate penalty beginning in 2019
  • Doubles the deduction for classroom expenses paid by educators to $500
  • Simplifies the Kiddie Tax by disconnecting it from the parents’ tax situation and the unearned income of any siblings; the tax rate for a child’s unearned income will be based solely on the tax brackets applicable to trusts and estates
  • Eliminates the deduction for miscellaneous itemized deductions, including deductions for investment fees, unreimbursed employee business expenses, and home-office expenses
Note: Unrelated to the current tax bill, the IRS is currently focusing on the proper reporting of bitcoins and all other cryptocurrency. This currency is being treated as property and all sales and uses of this currency create reportable capital gains or losses. Any mining of cryptocurrency creates self-employment income.
Business Tax Highlights
  • Reduces the corporate tax rate to 21%
  • Caps the business interest deduction at 30%
  • Eliminates the business alternative minimum tax
  • Allows a 100% first-year bonus depreciation deduction for adjusted basis for qualified property acquired and placed in service after September 27, 2017 and before January 1, 2023
  • Increases the section 179 expensing limit to $1 million
  • Limits the deduction for net operating losses to 80% of taxable income
  • Mandates that research and development expenses be written off gradually
International Tax Highlights
  • Moves the United States to a modified territorial tax system that generally does not subject American companies’ foreign earnings to U.S. taxes, with an anti-abuse tax
  • Taxes companies’ current offshore earnings at 15.5% for liquid assets and 8% for illiquid assets

Estate and Gift Tax Highlights

  • Increases the taxable threshold to estates above $11.2 million (Massachusetts still taxes estates greater than $1 million)
  • Increases the gift tax threshold as above (Massachusetts has no gift tax)

The new Tax Cuts and Jobs Act is complex, and we are here to support you. We wish you and your family a happy holiday season. We look forward to working with you in the new year.

This alert was posted prior to the passing of more recent tax legislation.  Before acting on any of the information in the following piece, please consult with a tax expert to learn if and how current legislation might impact or nullify what is stated in this article.

As Congress works to negotiate a final version of the Tax Cuts and Jobs Act, taxpayers are wondering what — if any — action they should take. While the lack of certainty presents challenges, here are four tax planning ideas to consider while the final negotiations are underway.

  • Defer income and accelerate deductions
    If possible, it might make sense to defer income, including self-employment earnings and business income, and accelerate business deductions. If tax rates fall, you may not only benefit by pushing off the recognition of taxable income to 2018, but you may also reduce your overall tax burden by taking advantage of lower tax rates next year.
  • Make state and property tax payments (but consider the AMT)
    Making state and property tax payments early might enable you to take higher deductions on these taxes. The bill under consideration eliminates any non-business state and local income tax deduction and limits the total property tax deduction to $10,000 for married taxpayers ($5,000 for individuals). Therefore, you might consider prepaying any projected balance due on your 2017 state income tax return before year-end or accelerating the payment of future property tax payments. However, if paying these taxes in 2017 triggers the alternative minimum tax (AMT), this strategy may not be beneficial for you.
  • Accelerate other itemized deductions
    If proposed changes to certain other deductions pass, it might benefit you to pay for those costs now.  With an increased standard deduction, coupled with limitations or eliminations of previously available itemized deductions, you may no longer receive a greater tax benefit by completing Schedule A, “Itemized Deductions”, with your tax return. If this applies to you, then accelerating deductions into 2017 such as mortgage interest, charitable deductions, investment expenses, medical expenses and the aforementioned tax payments could provide a significant benefit for you.
  • Home equity indebtedness
    The new tax law could possibly eliminate the deduction for interest on home equity indebtedness starting in 2018 while retaining some benefit for acquisition indebtedness. Therefore, prepayment of interest on your home equity debt may be advisable.

At Waldron Rand, our experts are keeping a close eye on the progress of the tax bill and how it might affect our clients. We will send a follow-up alert if and when tax reform legislation is signed into law.  In the meantime, we invite you to reach out with any questions on the pending tax reform and to discuss how to apply these and other strategies to your unique tax situation.

This alert was posted prior to the passing of more recent tax legislation.  Before acting on any of the information in the following piece, please consult with a tax expert to learn if and how current legislation might impact or nullify what is stated in this article.

Dear Client:

We hope that you and your family are well. As we mentioned in our recent e-mail blast, we have all been very busy attending tax conferences so that we can best advise you about the future tax situation. While no one knows exactly what will happen, the consensus among the politicians and industry leaders is that tax rates will go down and the tax benefits of existing deductions may be reduced. Additionally, the Alternative Minimum Tax (AMT) and the Net Investment Income Tax (NIIT) may be repealed and the Estate and Generation Skipping Tax obligations will probably be eased. We can also look for education credits and dependent care deductions to be simplified and increased.

Keeping what we think we know in mind, we have compiled a list of actions that should be considered before the end of the year.

  • Be wary of the 3.8% surtax on certain unearned income and the additional 0.9% Medicare tax. Since there is a chance that both of these surcharges will be repealed in 2017, we should consider ways to minimize taxable wages and Net Investment Income for 2016. For example, it may be advantageous to try to arrange with your employer to defer, until early 2017, a bonus that may be coming your way. Further, since both surcharges depend upon Adjusted Gross Income (AGI), there may be other opportunities for 2016 tax savings by managing overall AGI. For example, contributing the maximum to your retirement plans lowers your AGI.
  • If you expect to owe state and local income taxes when you file your 2016 tax return, consider asking your employer to increase your withholding of state and local taxes (or pay estimated tax payments of state and local taxes) before year-end to pull the deduction of those taxes into 2016. This is not an advisable strategy if you will be subject to AMT in 2016. We can help you with that decision.
  • Remember to take required minimum distributions (RMDs) from your IRA or other retirement plans. RMDs must begin by April 1 of the year following the year you reach age 70-½.
  • If you become eligible in December of 2016 to make health savings account (HSA) contributions, you can make a full year’s worth of deductible HSA contributions for 2016.
  • If you are thinking about installing energy saving improvements to your home, such as certain high-efficiency insulation materials, do so before the close of 2016. You may qualify for a “nonbusiness energy property credit” that won’t be available after this year, unless Congress reinstates it.
  • Make gifts sheltered by the annual gift tax exclusion before the end of the year. The exclusion applies to gifts of up to $14,000 made in 2016 and 2017 to each of an unlimited number of individuals. You can’t carry over unused exclusions from one year to the next.
  • Businesses should consider making expenditures that qualify for the business property expensing option. For tax years beginning in 2016, the expensing limit is $500,000 and the investment ceiling limit is $2,010,000. There is also a 50% bonus first year depreciation for certain assets bought and placed in service this year. The bonus depreciation deduction is permitted without any proration based on the length of time that an asset is in service during the tax year. As a result, the 50% first-year bonus write off is available even if qualifying assets are in service for only a few days in 2016
  • If you own an interest in a partnership or S corporation, consider whether you need to increase your basis in the entity so you can deduct a loss from it for this year.
  • Consider using a credit card to charge deductible expenses before the end of the year. Doing so will increase your 2016 deductions even if you don’t pay your credit card bill until after the end of the year. It’s possible that itemized deductions will be of less value to you in 2017. Further, as mentioned above, with a potential reduction in tax rates, you may receive a greater benefit from certain tax deductions in the current tax year while the top marginal rates tax rates are seemingly at a peak.
  • To reduce 2016 taxable income, consider disposing of a passive activity in 2016 if doing so will allow you to deduct suspended passive activity losses. One word of caution regarding Publicly Traded Partnerships (PTPs); because of the complexity of the tax and foreign income laws, ownership of a PTP requires an increase in the amount of time needed to prepare your tax return . Further, when these PTPs are sold, there is often a taxable ordinary gain to report.
  • The scrutiny on foreign asset reporting and disclosure is only increasing as more and more countries are sharing information with the IRS.   Please contact us right away with any questions about your foreign investments, foreign retirement plans, offshore family trusts or any other foreign income and assets, and we will be happy to assist with an evaluation of required US reporting and disclosure responsibilities. It is critical to comply with these requirements in a complete, accurate and timely manner to avoid the extremely high penalties that accompany each foreign form.

These are just some of the year end steps that can be taken to save taxes. Again, by contacting us, we can tailor a particular plan that will work best for you. Please let us know in advance if you have had any complicated tax transactions this year so that we have time to plan any moves that you should make before the end of 2016. It’s also important for us to know if you have a change in address or e-mail address, or any major life milestones.

Very truly yours,

Waldron H. Rand & Company, P.C.

2017 TAX BRACKETS

If taxable income is:
SINGLE MARRIED-JOINT MARRIED-SEPARATE
10% Not over $9,325 Not over $18,650 Not over $9,325
15% Between $9,325 and $37,950 Between $18,650 and $75,900 Between $9,325 and $37,950
25% Between $37,950 and $91,900 Between $75,900 and $153,100 Between $37,950 and $76,550
28% Between $91,900 and $191,650 Between $153,100 and $233,350 Between $76,500 and $116,675
33% Between $191,650 and $416,700 Between $233,350 and $416,700 Between $116,675 and $208,350
35% Between $416,700 and $418,400 Between $416,700 and $470,700 Between $208,350 and $235,350
39.6% Over $418.400 Over $470,700 Over $235,350

2017 PHASEOUTS

ADJUSTED GROSS INCOME
SINGLE MARRIED-JOINT
Itemized Deductions $           261,500 $         313,800
Personal Exemptions $           261,500 $         313,800
American Opportunity Credit $             80,000 $         160,000
Lifetime Learning Credit $             56,000 $         112,000

Lifetime gift and estate tax exemption Per Person will be $5,490,000

The Kiddie Tax will apply to children under the age of 19 and college students under the age of 24 with unearned income greater than $2,100.

This alert was posted prior to the passing of more recent tax legislation.  Before acting on any of the information in the following piece, please consult with a tax expert to learn if and how current legislation might impact or nullify what is stated in this article.
What’s to come?
Given the newness of the election, we are probably far from understanding the dynamics of the workings of the 115thCongress that will begin work in January. Some significant 2017 tax legislation and health care reform seem quite likely. There is a large overlap between the tax plans of the House Republicans and Mr. Trump. Both plans would:
  1. Reduce the current 7 tax brackets to 3, with a maximum rate of 33%.
  2. Repeal AMT
  3. Repeal the 3.8% Net Investment Tax that is contained in the Affordable Care Act
  4. Increase the standard deduction enough to lessen the relevance of itemized deductions and cap itemized deduction
  5. Repeal the estate tax, possibly taxing capital gains on the sale of inherited appreciated assets greater than $10,000,000
  6. Tax carried interest as ordinary income
  7. Lower corporate tax rate
  8. Create a “deemed repatriation” of offshore profits
  9. Eliminate some business credits
  10. Simplify tax benefits for higher education
  11. Increase child and elder care tax benefits
Several of us are currently at a National Tax Conference in DC. We will continue to monitor the situation and let you know how this will affect you and your tax planning.

This alert was posted prior to the passing of more recent tax legislation.  Before acting on any of the information in the following piece, please consult with a tax expert to learn if and how current legislation might impact or nullify what is stated in this article.

In December 2016 the Fair Labor Standards act will have new rules. The Department of Labor’s revised rules impact how exempt and nonexempt employees are classified and compensated.  ADP’s ebook provides a quick summary of the key changes you will need to know regarding:

  • Classification of exempt and nonexempt employees
  • Overtime and travel
  • Independent contractors
  • Weather related compensation

Of course we are always here to assist you look at the impact these revisions will have on your business and help you think about where you might have exposure.  Please reach out if you have concerns regarding these forthcoming changes.

In recent months, the IRS has issued warnings about phone scams that have caused over $23 million in losses for victims.
The thieves’ goals are to steal money and identities. They are reported to be using the following tactics:
  • Claiming to be IRS officials
  • Stating you have a tax bill due and to wire money or share debit card information
  • Scaring or bullying victims with threats of legal action, tax levies, and jail time if they fail to pay immediately
  • Spoofing their caller ID so that it looks like it is from an agency of the government
  • Using actual IRS addresses and fake email addresses to make it seem like you are in touch with the IRS

Be aware that the IRS will:

  • Not require immediate payment
  • Always send you a bill in the mail before calling
  • Never require you to pay a particular way (i.e. using a prepaid debit card)
  • Not ask for credit card or debit card numbers over the phone
  • Under no circumstances threaten to have the police or other authorities arrest you
Waldron Rand would like our clients to remain vigilant about protecting personal information. If you receive a call from someone claiming to be from the IRS, please contact us immediately and we will help ascertain if it is truly the IRS vs. a scam. Learn more.

This alert was posted prior to the passing of more recent tax legislation.  Before acting on any of the information in the following piece, please consult with a tax expert to learn if and how current legislation might impact or nullify what is stated in this article.

On December 18, 2015, Congress passed the “Protecting Americans from Tax Hikes Act of 2015” (PATH).    There are a number of tax relief provisions that were set to expire at the end of 2015. These have been either retroactively extended or made permanent.

What this mean for businesses:

PERMANENT INCREASE AND EXTENSION OF SEC. 179 EXPENSING: The provision permanently extends the small business expensing limitation and phase-out amounts in effect from 2010 to 2014 ($500,000 and $2 million, respectively). These amounts currently are $25,000 and $200,000, respectively. The special rules that allow expensing for computer software and qualified real property (qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property) also are permanently extended. The provision modifies the expensing limitation by indexing both the $500,000 and $2 million limits for inflation beginning in 2016 and by treating air conditioning and heating units placed in service in tax years beginning after 2015 as eligible for expensing. The provision further modifies the expensing limitation with respect to qualified real property by eliminating the $250,000 cap beginning in 2016.

EXTENSION AND MODIFICATION OF BONUS DEPRECIATION: The provision extends bonus depreciation for property acquired and placed in service during 2015 through 2019 (with an additional year for certain property with a longer production period). The bonus depreciation percentage is 50 percent for property placed in service during 2015, 2016 and 2017 and phases down, with 40 percent in 2018, and 30 percent in 2019. The provision continues to allow taxpayers to elect to accelerate the use of AMT credits in lieu of bonus depreciation under special rules for property placed in service during 2015. The provision modifies the AMT rules beginning in 2016 by increasing the amount of unused AMT credits that may be claimed in lieu of bonus depreciation. The provision also modifies bonus depreciation to include qualified improvement property and to permit certain trees, vines, and plants bearing fruit or nuts to be eligible for bonus depreciation when planted or grafted, rather than when placed in service.

15-YEAR STRAIGHT-LINE COST RECOVERY FOR QUALIFIED LEASEHOLD IMPROVEMENTS MADE PERMANENT: The provision permanently extends the 15-year recovery period for qualified leasehold improvements, qualified restaurant property, and qualified retail improvement property.

EXTENSION AND MODIFICATION OF RESEARCH CREDIT: The Research and Development tax credit which generally allows taxpayers a 20 percent credit for qualified research expenses or a 14 percent alternative simplified credit will be extended. Additionally, beginning in 2016 eligible small businesses ($50 million or less in gross receipts) may claim the credit against alternative minimum tax (AMT) liability, The credit can also be utilized by certain small businesses against the employer’s portion of payroll tax (i.e., FICA) liability.

EXTENSION OF EXCLUSION OF 100% OF GAIN ON CERTAIN SMALL BUSINESS STOCK: The provision extends the temporary exclusion of 100 percent of the gain on certain small business stock for non-corporate taxpayers to stock acquired and held for more than five years. This provision also permanently extends the rule that eliminates such gain as an AMT preference item.

PERMANENT EXTENSION OF REDUCTION IN S CORPORATION RECOGNITION PERIOD FOR BUILT IN GAINS: The provision permanently extends the rule reducing to five years (rather than ten years) the period for which an S corporation must hold its assets following conversion from a C corporation to avoid the tax on built-in gains.

What this means for individuals:

ENHANCED CHILD TAX CREDIT MADE PERMANENT: The Child Tax Credit (CTC) allows taxpayers to claim a $1,000 tax credit for each qualifying child under age 17 that the taxpayer can claim as a dependent. The CTC phases out when taxpayers’ income exceeds certain thresholds. To the extent the CTC exceeds the taxpayer’s tax liability, the taxpayer is eligible for a refundable credit equal to 15% percent of earned income in excess of a threshold dollar amount. The provision permanently sets the threshold amount at an unindexed $3,000.

ENHANCED AMERICAN OPPORTUNITY TAX CREDIT MADE PERMANENT: The Hope Scholarship Credit is a credit of $1,800 (indexed for inflation) for various tuition and related expenses for the first two years of post-secondary education. It phases out for AGI starting at $48,000 (if single) and $96,000 (if married filing jointly) – these amounts are also indexed for inflation. The American Opportunity Tax Credit (AOTC) takes those permanent provisions of the Hope Scholarship Credit and increases the credit to $2,500 for four years of post-secondary education, and increases the beginning of the phase-out amounts to $80,000 (single) and $160,000 (married filing jointly) for 2009 to 2017. The provision makes the AOTC permanent.

DEDUCTION OF CERTAIN EXPENSES OF ELEMENTARY AND SECONDARY SCHOOL TEACHERS MADE PERMANENT: The provision permanently extends the above-the-line deduction (capped at $250) for the eligible expenses of elementary and secondary school teachers. Beginning in 2016, the provision also modifies the deduction to index the $250 cap to inflation and include professional development expenses.

EXTENSION OF MORTGAGE INSURANCE PREMIUMS TREATED AS QUALIFIED RESIDENCE INTEREST: The provision extends through 2016 the treatment of qualified mortgage insurance premiums as interest for purposes of the mortgage interest deduction. This deduction phases out ratably for a taxpayer with AGI of $100,000 to $110,000.

EXTENSION AND MODIFICATION OF CREDIT FOR NONBUSINESS ENERGY PROPERTY: The provision extends through 2016 the credit for purchases of nonbusiness energy property. The provision allows a credit of 10 percent of the amount paid or incurred by the taxpayer for qualified energy improvements, up to $500.

EXTENSION OF ABOVE-THE-LINE DEDUCTION FOR QUALIFIED TUITION AND RELATED EXPENSES: The provision extends through 2016 the above-the-line deduction for qualified tuition and related expenses for higher education. The deduction is capped at $4,000 for an individual whose AGI does not exceed $65,000 ($130,000 for joint filers) or $2,000 for an individual whose AGI does not exceed $80,000 ($160,000 for joint filers).

EXTENSION OF TAX-FREE DISTRIBUTIONS FROM INDIVIDUAL RETIREMENT PLANS FOR CHARITABLE PURPOSES: The provision permanently extends the ability of individuals at least 70½ years of age to exclude from gross income qualified charitable distributions from Individual Retirement Accounts (IRAs). The exclusion may not exceed $100,000 per taxpayer in any tax year.

Please keep in mind that these are just a few of the provisions that could affect you or your business. As always, please contact us if you have any questions or concerns.

Please remember that the due date for the 2015, 2nd Quarter Estimated Tax Payments is June 15, 2015.

If you have questions about your second quarter payments, please contact us at 781.449.5825.

This alert was posted prior to the passing of more recent tax legislation.  Before acting on any of the information in the following piece, please consult with a tax expert to learn if and how current legislation might impact or nullify what is stated in this article.

Congress Passes & the President Signs “Tax Increase Prevention Act of 2014”

The Senate passed and the President signed into law legislation which will retroactively extend many critical tax credits and deductions that had originally expired at the end of 2013.

What does this mean for your business?

  • An increase in the Sec. 179 deduction from $25,000 to $500,000 through December 31, 2014. The deduction ceiling for 2014 was set at $25,000 (allowing only $25,000 in equipment or major purchases to qualify for an immediate deduction). This law will retroactively extend 2013’s $500,000 Sec. 179 limitation for one year.
  • 50% bonus depreciation will be extended for eligible property acquired and placed in service during 2014.
  • Retroactive extension of the research and development tax credit through December 31, 2014.

What does this mean for individuals?

  • The law will extend a number of individual tax credits and deductions, including previously expired residential energy credits and green energy tax incentives.

Please keep in mind that these are just a few of the provisions that could affect you or your business and that these extensions will apply to 2014 only. Additional legislation will be required to extend them past December 31, 2014.

To take advantage of these changes, please call us to discuss possible moves to consider before year end.

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Waldron H. Rand & Company, P.C. is an independent member of KSI International (“KSI”), an association of independent accounting firms located around the world. The member firms of KSI collaborate to provide services to global clients, but are separate and distinct legal entities which cannot obligate each other. Each member firm is responsible only for its own acts and omissions, and not those of any other party.

Circular 230 Disclosure: Any advice contained in this email (including any attachments unless expressly stated otherwise) is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer.

©2014 Waldron H. Rand & Company, P.C. All Rights Reserved.

This alert was posted prior to the passing of more recent tax legislation.  Before acting on any of the information in the following piece, please consult with a tax expert to learn if and how current legislation might impact or nullify what is stated in this article.

We understand that tax planning is never easy. This year (2014) the midterm elections have changed the Congressional landscape and added to the complexity of year end planning.  It is too early to know exactly how, or if, this will affect the 2015 tax structure. In addition, to make planning even more complicated, Congress has yet to act on a host of tax breaks that expired at the end of 2013.

In 2013 many of our clients felt the effect of the expiration of the Bush tax cuts and the commencement of the Affordable Care Act Medicare surcharges.  Most of these tax increases take effect when Adjusted Gross Income (AGI) is above specified thresholds. Therefore, reduction of AGI has become an important tax planning technique.

Ways to reduce Adjusted Gross Income:

  • Contribute the maximum to any retirement plan in which you are entitled to participate.
  • Contribute to a Health Savings Account if you are eligible.
  • Consider selling stocks that have decreased in value in order to realize losses.
  • Taxpayers who don’t expect to be in a higher tax bracket in 2015, should postpone income to 2015 and accelerate deductions to 2014.
  • Converting an IRA to a ROTH IRA may be a good long term plan, but it will increase your 2014 AGI.

Sole proprietors should consider using their credit card at the end of the year to pay deductible expenses. Doing so will increase deductions even if the credit card bill is paid in 2015.

If you are 70½+:

  • If you turned 70 ½ in 2014 and are required to take the Required Minimum Distribution (RMD) from your retirement plan, let us do some planning to see if you would benefit by taking the RMD in 2014 or delaying it until 2015.
  • For taxpayers over age 70 ½, failure to take the RMD will result in a large penalty.

Other items to consider before the end of the year:

  • If your 2014 taxable income is similar to 2013 taxable income, make sure that your withholding and estimated quarterly payments are large enough to avoid an underpayment penalty. Keep in mind that if your 2013 taxable income was above $150,000, your estimated payments and withholding must equal at least 110% of your 2013 tax liability. If your 2013 taxable income was under $150,000, your prepayments only need to be 100% of the prior year’s tax liability.
  • Estimate the effect of any year end planning on the Alternative Minimum Tax (AMT).
  • Gifts of up to $14,000 per donee can save gift and estate taxes in the future.
  • An estate tax return must be filed in Massachusetts for any decedent whose gross assets totaled more than $1,000,000. The exclusion amount for a federal return is $5,340,000. However, if the decedent had a surviving spouse, a federal return should be filed in order to take advantage of the portability of the exemption.
  • If you own an interest in a partnership or S corporation consider whether you need to increase your basis in the entity to be able to deduct a loss.
  • Disposing of a passive activity with suspended losses will allow the losses to be taken in 2014.

Be Aware of Fraud!       

  • The IRS does not have your email address. If you receive an email that seems to be from the IRS, DO NOT RESPOND.

See below for  2014 pertinent numbers and tax bracket charts

  • These are just some of the year end steps to consider.  We can tailor a particular plan that will work best for you.  If you have any tax issues in 2014 or if your 2014 income is substantially different from 2013, please contact us as soon as possible.

Our best wishes for a great Holiday Season and a Healthy New Year!

Waldron H. Rand & Company, P.C.

 

2014 Applicable Tax Related Numbers:

3.8% Net investment income tax threshold: $250,000 AGI Joint Filers – $200,000 AGI Single Taxpayers
Phase out of personal exemptions and itemized deductions- Beginning at: $305,050 AGI Joint Filers- $254,200 AGI Single Filers
Retirement Plan Contribution Maximums: 401(k)-$17,500 in 2014- $18,000 in 2015
  Defined contribution Plans – $52,000 in 2014- $53,000 in 2015
  Over age 50 Catch Up Contribution- $5,500 in 2014- $6,000 in 2015

 

Single Tax Payers Income and Tax:

If Taxable Income Is: The Tax Is:
Not over $9,075 10% of taxable income
Over $9,075 but not over $36,900 $907.5 plus 15% of the excess over $9,075
Over $36,900 but not over $89,350 $5,081.25 plus 25% of the excess over $36,900
Over $89,350 but not over $186,350 $18,193.75 plus 28% of the excess over $89,350
Over $186,350 but not over $405,100 $45,353.75 plus 33% of the excess over $186,350
Over $405,100 but not over $406,750 $117,541.25 plus 35% of the excess over $405,100
Over $406,750 $118,118.75 plus 39.6% of the excess over $406,750

 

Married Filing Jointly and Surviving Spouses:

If Taxable Income Is: The Tax Is:
Not over $18,150 10% of taxable income
Over $18,150 but not over $73,800 $1,815 plus 15% of the excess over $18,150
Over $73,800 but not over $148,850 $10,162.50 plus 25% of the excess over $73,800
Over $148,850 but not over $226,850 $28,925 plus 28% of the excess over $148,800
Over $226,850 but not over $405,100 $50,765 plus 33% of the excess over $226,850
Over $405,100 but not over $457,600 $109,587.50 plus 35% of the excess over $405,100
Over $457,600 $127,962.50 plus 39.6% of the excess over $457,600

This alert was posted prior to the passing of more recent tax legislation.  Before acting on any of the information in the following piece, please consult with a tax expert to learn if and how current legislation might impact or nullify what is stated in this article.

The Affordable Care Act has brought with it many changes to the tax and employee benefit options that companies need to consider. What were once eligible benefits for an individual employee now can cause heavy penalties for employers. Prior to 2014, the reimbursement of health insurance purchased by the employee, outside of the employer group health insurance plan, was not included in taxable income of the employee.

Beginning in 2014, reimbursements of that nature must be treated as taxable to the employee, according to the IRS issued Notice 2013-54. This Notice eliminates the opportunity for employers to offer “stand-alone” Health Reimbursement Accounts (HRAs) and other tax-favored arrangements for individual (non-group) health insurance policies that the employee buys either in the new Health Insurance Marketplace or outside it. Violation has the potential to subject the employer to a $100 per day penalty for each violation ($36,500 per year, per employee). The notice eliminates many but not all tax favored reimbursement plans. You simply do not want to be in violation. It is therefore recommended that you discuss any employee health care reimbursement plans or payments with us.

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Waldron H. Rand & Company, P.C. is an independent member of KSI International (“KSI”), an association of independent accounting firms located around the world. The member firms of KSI collaborate to provide services to global clients, but are separate and distinct legal entities which cannot obligate each other. Each member firm is responsible only for its own acts and omissions, and not those of any other party.

Circular 230 Disclosure: Any advice contained in this email (including any attachments unless expressly stated otherwise) is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer.

©2014 Waldron H. Rand & Company, P.C. All Rights Reserved.

This alert was posted prior to the passing of more recent tax legislation.  Before acting on any of the information in the following piece, please consult with a tax expert to learn if and how current legislation might impact or nullify what is stated in this article.

In a highly unusual move, the leadership of the Massachusetts Senate and House of Representatives held a press conference on Thursday, September 12 to announce their intention to repeal a new half-billion dollar state tax on custom software and network design services, better known as the “tech tax.” The “tech tax” included a 6.25 percent sales tax on computer and software services and there was growing concern that the new tax, which was vague and confusing, was creating a perception that Massachusetts had become a less friendly environment for innovative technology firms.With the repeal of this unpopular new tax legislative leaders stated that they would not propose any other taxes to make up for the lost revenue. Christopher Anderson, President of the Massachusetts High Technology Council explained in an email to the organization’s constituents, “This tax was aimed squarely at the heart of the Massachusetts economy, which is why our Tax Competitiveness Team flagged it as problematic as soon as it was first proposed by Governor Patrick in January. Since then, as the tax worked its way through a rigid legislative process with no formal hearings, we regularly called attention to the harm it would cause to our state’s competitiveness and high tech economy.”

Lawmakers said they will review surplus from last year’s state budget and early projections of a surplus in the current year spending plan, along with one-time corporate tax settlements, to make up the difference. If you have any questions about this repeal, please feel free to contact any of us.

The Waldron Rand Leadership Team

Bill Kams, Jack Mozes, Rick Dlugasch, Sharon Shaff and Susan Kams

[av_hr class=’short’ height=’50’ shadow=’no-shadow’ position=’left’]

Waldron H. Rand & Company, P.C. is an independent member of KSI International (“KSI”), an association of independent accounting firms located around the world. The member firms of KSI collaborate to provide services to global clients, but are separate and distinct legal entities which cannot obligate each other. Each member firm is responsible only for its own acts and omissions, and not those of any other party.

Circular 230 Disclosure: Any advice contained in this email (including any attachments unless expressly stated otherwise) is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer.

©2013 Waldron H. Rand & Company, P.C. All Rights Reserved.

The U.S. Department of the Treasury and the Internal Revenue Service (IRS) ruled on August 29, 2013 that same-sex couples, legally married in jurisdictions that recognize their marriages, will be treated as married for federal tax purposes. The ruling applies regardless of whether the couple lives in a jurisdiction that recognizes same-sex marriage or a jurisdiction that does not recognize same-sex marriage.

Under the ruling, same sex couples will be treated as married for all federal tax purposes, including income and gift and estate taxes. The ruling applies to all federal tax provisions where marriage is a factor, including filing status, claiming personal and dependency exemptions, taking the standard deduction, employee benefits, contributing to an IRA, and claiming the earned income tax credit or child tax credit.

For more information or to discuss your specific questions, please contact any of us directly or review the Treasury Department’s official press release.

The Waldron Rand Leadership Team

Bill Kams, Jack Mozes, Rick Dlugasch, Sharon Shaff and Susan Kams

[av_hr class=’short’ height=’50’ shadow=’no-shadow’ position=’left’]

Waldron H. Rand & Company, P.C. is an independent member of KSI International (“KSI”), an association of independent accounting firms located around the world. The member firms of KSI collaborate to provide services to global clients, but are separate and distinct legal entities which cannot obligate each other. Each member firm is responsible only for its own acts and omissions, and not those of any other party.

Circular 230 Disclosure: Any advice contained in this email (including any attachments unless expressly stated otherwise) is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer.

©2013 Waldron H. Rand & Company, P.C. All Rights Reserved.

This alert was posted prior to the passing of more recent tax legislation.  Before acting on any of the information in the following piece, please consult with a tax expert to learn if and how current legislation might impact or nullify what is stated in this article.

Fiscal Cliff Compromise Ready for Obama’s Signature

It’s finally done! Congress has passed the “American Taxpayer Relief Act.” Although the Act would prevent many of the scheduled tax hikes for the upcoming year, it will result in an increase in income taxes for most high-income individuals, including flow-through income from their S Corporations, LLCs and Partnerships. If you would like to discuss how the new rules will impact your specific tax situation, please don’t hesitate to contact any of us at (781) 449-5825.

Tax rates. Beginning in calendar year 2013, the income tax rates for most individuals will stay at 10%, 15%, 25%, 28%, 33% and 35%, however there will be 39.6% rate for individuals with income above a certain threshold. The applicable threshold is $450,000 for joint filers and surviving spouses; $425,000 for heads of household; $400,000 for single filers; and $225,000 for married taxpayers filing separately. These dollar amounts are inflation-adjusted for tax years after 2013.

Personal Exemption and Itemized Deduction Phaseouts. For tax years beginning after 2012, the personal exemption phaseout is reinstated for joint filers making at least $300,000 and single filers making at least $250,000. Similarly, the reduction in the benefit that higher income taxpayers can receive from itemized deductions (which also had been previously suspended) is also reinstated beginning this year.

Capital Gains and Qualified Dividend Rates. Tax rates on capital gains and qualified dividend income would increase from 15% to 20% for single filers with income exceeding $400,000 and joint filers with income exceeding $450,000. Taxpayers in the 10% and 15% tax brackets will continue to benefit from a 0% rate.

Estate Tax. The estate and gift tax lifetime exemption will be $5,000,000 per person( $10,000,000 per married couple). For amounts above this level, the estate tax rate will be increased to 40%. The portability feature that allows the estate of the first spouse to die to transfer his or her unused exclusion to the surviving spouse will remain. All changes are effective for individuals dying and gifts made after 2012.

AMT relief. The Act permanently provides a patch for the alternative minimum tax by increasing the AMT exemption amounts for 2012 and beyond.

Education. The Act extends for five years the American Opportunity tax credit, which permits eligible taxpayers to claim a credit equal to 100% of the first $2,000 of qualified tuition and related expenses, and 25% of the next $2,000 of qualified tuition and related expenses (for a maximum tax credit of $2,500 for the first four years of post-secondary education). The Act also extends temporarily the deduction for certain expenses of elementary and secondary school teachers, which expired at the end of 2011 and which is now revived for 2012 and continued through 2013, and the above-the-line deduction for qualified tuition and related expenses, which expired at the end of 2011 and which is now revived for 2012 and continued through 2013.

Miscellaneous Extended Provisions:
  • The exclusion for discharge of qualified principal residence indebtedness, which applied for discharges before Jan. 1, 2013 and which is now continued to apply for discharges before Jan. 1, 2014;
  • The treatment of mortgage insurance premiums as qualified residence interest, which expired at the end of 2011 and which is now revived for 2012 and continued through 2013;
  • The option to deduct State and local general sales taxes, which expired at the end of 2011 and which is now revived for 2012 and continued through 2013.
  • Tax-free distributions from individual retirement plans for charitable purposes, which expired at the end of 2011 and which is now revived for 2012 and continued through 2013. Because 2012 has already passed, a special rule permits distributions taken in 2012 to be transferred to charities for a limited period in 2013. Another special rule permits certain distributions made in 2013 as being deemed made on Dec. 31, 2012.

Depreciation Provisions. The following depreciation provisions are retroactively extended by the Act through 2014:

  • 15-year straight line cost recovery for qualified leasehold improvements, qualified restaurant buildings and improvements, and qualified retail improvements;
  • 7-year recovery period for motorsports entertainment complexes;
  • The increased 2012 expensing limitations of $500,000 and the treatment of certain real property as Code Sec. 179 property;
  • The Act also extends the 50% bonus depreciation provisions with respect to property placed in service after Dec. 31, 2012.

The Code Sec. 41 research credit is modified and retroactively extended for two years through 2013. There are many other business credits such as the New Markets, Employer Wage, and Work Opportunity Credits that are extended. The exclusion of 100% of gain on certain small business stock acquired before Jan. 1, 2014 is also extended, as is the basis adjustment to stock of S Corporations making charitable contributions of property under Code Sec. 1367(a) in tax years beginning before Dec. 31, 2013. The reduction in S corporation recognition period for built-in gains tax under Code Sec. 1374(d)(7) is extended through 2013, with a 5-year period instead of a 10-year period.

Various Energy Credits are Extended:
  • These include the nonbusiness energy property credit under Code Sec. 25C for energy-efficient existing homes. This is retroactively extended for two years through 2013. A taxpayer can claim a 10% credit on the cost of: (1) qualified energy efficiency improvements, and (2) residential energy property expenditures, with a lifetime credit limit of $500 ($200 for windows and skylights)
  • Also included is the alternative fuel vehicle refueling property credit under Code Sec. 30C. Taxpayers can claim a 30% credit for qualified alternative fuel vehicle refueling property placed in service through Dec. 31, 2013, subject to the $30,000 and $1,000 thresholds.
  • The credit for 2- or 3-wheeled plug-in electric vehicles under Code Sec. 30D is modified and retroactively extended for two years through 2013.
  • The credit for biodiesel and renewable diesel under Code Sec. 40A is retroactively extended for two years through 2013.
  • The credit for energy-efficient new homes under Code Sec. 45L and The credit for energy-efficient appliances under Code Sec. 45M are retroactively extended for two years through 2013.

This is a quick summary of the law as we know it. There will be many more details to follow. The new taxes on investment income and earned income that were included in the Healthcare Bill are in effect for 2013 and beyond and are in addition to any taxes mentioned above.

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