Starting January 2, 2019 to January 31, 2019 we will resume our January tax season office hours, Monday thru Friday 9:00 AM to 5:00 PM. Starting February 1, 2019 to April 15, 2019 someone will be in our office Monday thru Friday 9:00 AM to 7:00 PM. After April 15, 2019 to December 31, 2019 our office hours are Monday thru Thursday 9:00 am to 5:00 pm. Our Tax Professionals are available by appointment only.
Denise will be out of the office for a tax conference the week of July 22, 2019.
Happy New Year! Wishing everyone a year filled with good health, peace, joy and prosperity. The new tax laws are exciting for me and at the same time a little stressful. Most of the new tax law changes for individuals have been consistent since this summer. I believe you will find quite a few advantages in the new tax laws. The stressful part for me is the ongoing technical changes which are mostly related to businesses, including sole proprietorships. During your tax appointment this year I will review with you all the changes and how they affect you. If there is a negative, we can also review any options you might have to turn the negative into a positive for 2019. This coming summer we will update this portion of our web site mixing both individual and business information.
Our clients are our priority. Please contact me if you have any questions. Enjoy each moment! Looking forward to seeing or chatting with you soon!
Denise E Brandt, EA
Important Words from our greeter:
Hi everyone, Boomer here! What a busy year here at Main Street. The gals have been getting ready for the upcoming filing season. Mom has been attending numerous workshops and webinars on the new tax laws. She is ready and very excited about the new tax laws. I hear her telling everyone the tax savings they most likely will see. As long as my Mom is happy, I am happy.
Just as a reminder our web site has some very good information:
- Following my little chat will be a few highlights of the new tax laws related to businesses
- Tax Facts – take your cursor over What’s New and you will find Tax Facts
- Security Awareness – Sarah updates both sections; Identity Theft and Scams and Security
- Learn more about the team players at Main Street
Would you like to add a testimonial to our web site? Go to our web site; you will find Share Testimonial by clicking on Contact Us.
Enjoy your reading. I cannot wait to see you.
Hugs and love Boomer
DISCLAIMER: Any tax advice noted below is based on the facts provided to us and on current tax law interpretation. Tax law is subject to continual change, at times on a retroactive basis and may result in incremental taxes, interest or penalties. Should the information below be incorrect or incomplete or should the law or its interpretation change, our advice may be inappropriate. We are not responsible for updating our advice for changes in law or interpretation after the date noted above. The following cannot be used as support in any tax audit.
MORTGAGE INTEREST DEDUCTIBLE OR NOT DEDUCTIBLE
Prior to refinancing, purchasing or taking out a home equity loan please call your tax professional for proper guidance. If you are one of our clients and currently have mortgage interest, we will review with you details at your tax appointment or during your phone call interview.
MEALS AND ENTERTAINMENT CHANGES
Effective 01/01/18 entertainment expenses are non-deductible no matter what. Your business can still pay for the cost of the entertainment; the expense will be non-deductible on the tax return.
If you are giving a client hockey or baseball tickets: This could be classified a gift. The tax laws state you can deduct business gifts given to your clients up to $25.00 per recipient; this is per year per recipient. You cannot give a client 2 deductible gifts in one year. Your business can pay for the expense. If the cost is above $25.00, the difference will be non-deductible. Be sure to note on your receipt the client’s name and business.
MEALS (Deductible 50% or non-deductible)
What is considered a meal versus entertainment is the big issue. Clarity has been added and it seems the rules are a little more lenient than what was noted in the initial tax bill.
As of now we can rely on the following guidance for expenses of business meals. Taxpayers may deduct business meal expenses if:
- The expense is an ordinary and necessary expense paid or incurred during the taxable year in carrying on any trade or business
- The expense is not lavish or extravagant under the circumstances
- The taxpayer, or an employee of the taxpayer, is present at the furnishing of the food or beverage.
- The food and beverages are provided to a current or potential business customer, client, consultant, or similar business contact; and
- In the case of food and beverages provided during or at an entertainment activity, the food and beverages are purchased separately from the entertainment, or the cost of the food and beverages is stated separately from the cost of the entertainment on one or more bills, invoice, or receipts. The entertainment disallowance rule may not be circumvented through inflating the amount charged for food and beverages.
Please remember if you are traveling on business and away from your office the meals you purchase for yourself, while you are away will be deductible. Always remember to document.
Example – You take a client to a baseball game. The tickets for the game will not be deductible. If you buy hot dogs and drinks at the game for you and your client; those expenses will be deductible, since the food is separately billed from the baseball tickets. Using the same example; after the game you take your client out for dinner to a restaurant, which is not extravagant, and discuss business while enjoying your dinner, the dinner will be a business deduction.
Example – You have a meeting with a client and after the meeting you take the client for dinner. The cost of the dinner, as long as the dinner is not considered lavish or extravagant, will be a business deduction.
Documentation – you will still need all the documentation you needed in the past.
HOTEL AND TRAVEL
As of the writing of this document there has not been any change as to the deductibility of hotel and travel expenses for business purposes. You need to note the business purpose and of course who, what, when, where and why for the expense to be deductible to the entity.
You are allowed to deduct ordinary and necessary expenses paid or incurred during the tax year in carrying on your trade or business. As long as the food and beverage is not considered lavish or extravagant and you have the documentation to back up the necessary expense your meals should be deductible. You will still need to discuss business and document the cost with a receipt. Briefly noting what was discussed will help you back up the cost; verifying it is an ordinary and necessary business expense for you to carry out your trade or business.
RENTAL PROFITS SECTION 199A RENTAL REAL ESTATE TRADE OR BUSINESS ACTIVITY Federal update 01/18/2019
The following is not a summary of the entire law related to rental activities or 199A. The following is related to the revenue procedure for treating a rental activity as a trade or business for purposes of 199A.
Safe Harbor Test
- Separate books and records are maintained which reflects income and expenses for each rental activity
- For taxable years beginning prior to January 1, 2023, taxpayers must perform 250 or more hours of rental services per year for each rental activity. For taxable years beginning after December 31, 2022, taxpayers must perform 250 or more hours of rental services per year for each rental activity in any three of the five consecutive years that end with the taxable year (every year if the activity was held for less than five years).
- The taxpayer must maintain contemporaneous records, including time reports, logs or similar documents:
- Hours of all services performed
- Description of all services performed
- Dates the services were performed
- Who performed the services
Rental Services may be performed by owners or by employees, agents, and/or independent contractors of the owners. They include:
- Advertising to rent or lease the property
- Negotiating and executing leases
- Verifying information on prospective tenant applications
- Collection of rent
- Daily operation, maintenance and repair of the property
- Management of the real estate
- Purchase of materials
- Supervision of employees and independent contactors
Rental Services DO NOT include financial or investment management activities such as:
- Arranging financing
- Procuring property
- Studying and reviewing financial statements on operations
- Planning, managing or construction long-term capital improvements
- Hours spent traveling to and from the rental property
There are other rules and issues which might have you excluded from using the safe harbor method. Please be sure to review this entire law with your tax professional.
The taxpayer must include a statement attached to the return claiming or passing through the 199A deduction information that the requirements in Section 3.03 of this revenue procedure have been satisfied. The statement must be signed by the taxpayer, or an authorized representative of an eligible taxpayer which states:
“Under penalties of perjury, I (we) declare that I (we) have examined the statement, and, to the best of my (our) knowledge and belief, the statement contains all the relevant facts relating to the revenue procedure, and such facts are true, correct, and complete.”
TUITION (FORM 1098-T) AND BILLING STATEMENTS
If you have a child attending college we will need the 1098T from the college (this will be in your child’s name). We will also need the tuition and fees billing statements from the college for the full calendar year. We want to be sure we are not missing any qualified expenses. You may have to go on the school’s web site to retrieve the billing statements. The information will most likely be in the student’s name. The student most likely will have access to this information. Tax preparers are mandated by IRS to verify the numbers we enter on your return. The only way for us to verify this information is to review the billing account statement for the calendar and Form 1098T.
BEFORE BAD WEATHER AND DISASTER STRIKES – BE PREPARED!
Being prepared for the worst is always a good idea. Your plan shouldn’t only include bottled water, batteries and candles— but also your financial and family documents. While putting together your emergency kit, don’t neglect your financial kit:
- Store copies of important documents either in a safety deposit box at the bank or in a weather-proof box at home.
- Another option would be to put PDF copies on a password-protected USB drive or in cloud storage.
- Have accessible copies of insurance documents and contacts, bank statements, credit card bills, family records (birth, marriage, and death certificates), photocopies of credit and identification cards (e.g., passports, driver’s licenses), all tax records and any supporting documents.
- Take inventory of your home (and business) by photographing or videotaping all of the items inside and out. When taking inventory, also make it a habit to back up your computer, especially if you store important documents and pictures on it.
DISCLAIMER: Any tax advice noted above is based on the facts provided to us and on current tax law interpretation. Tax law is subject to continual change, at times on a retroactive basis and may result in incremental taxes, interest or penalties. Should the information below be incorrect or incomplete or should the law or its interpretation change, our advice may be inappropriate. We are not responsible for updating our advice for changes in law or interpretation after the date noted above. The above information cannot be used as support in any tax audit.