Newsletter Topics

Sub S Basis Reporting 2018 Forward

on .

2018 Form 1040 U.S. Individual Income Tax Returns that have an S Corporation K-1 are required to check a box on line 28 of Schedule E to attach a basis computation.  This applies to corporations reporting a loss, stock disposal, receive a loan repayment or DISTRIBUTION!

RMD Missed?

on .

RMD (Required Minimum Distribution) if not timely made is subect to a 50% non-deductible penalty!  YES, 50%
If you can show cause (illness, bad advice, the broker/banker screwed up) and that you took steps to comply just follow the instructions on Form 5329 and attach a letter of explanation.  The penalty will be due only if IRS denies it.

2019 Charitable Donations

on .

Taxpayers aged 70 1/2 (and older) can make Donations of up to $100,000 DIRECTLY from an IRA to a 510(c)(3) charity.
You don't get your hands on the money... it goes DIRECT.
This QCD (Qualified Charitable Distribution) is NOT TAXABLE but it DOES COUNT toward RMD (Required Minimum Distribution).

2018 Can Unreimbursed Employee Expenses be Deducted?

on .

Can unreimbursed employee expenses be deducted?

            No, not for a W2 employee. Any of the 2017 expenses and years prior that were subject to a 2% of AGI limitation are no longer deductible.

            Yes, for independent contractors.

            Yes, for Statutory employees.

The best example of a Statutory Employee is an outside insurance agent.

Statutory Employees | Internal Revenue Service

Apr 23, 2018 · Statutory Employees. An individual who works at home on materials or goods that you supply and that must be returned to you or to a person you name, if you also furnish specifications for the work to be done. A full-time traveling or city salesperson who works on your behalf and turns in orders to you from wholesalers, retailers, contractors,...

I have never seen a mortgage agent classified as a statutory employee.

Now, what if you are both a W2 employee AND an independent contractor?

            No for employee expenses.

            Yes for independent contractor expenses.

BUT we are talking about the same business field. It would be fair if unreimbursed expenses should are pro-rated……

i.e. W2 $80k       Form 1099 Independent $5k

Expenses $4k

$80 + $5 = $85k

$4k/85k = 4.7%

4.7% x $4k expenses = $188 Sch C expenses to reduce the $5k F1099.


SEVEN states have no income tax... one more soon

on .

Tennessee may soon have NO income tax.
Now it taxes only interest from notes and bonds and dividends.
Recently the new law lowers the tax rate to 5% (from 6%) for 2016 and drops further
until the tax is gone at the end of 2021. 
There are SEVEN states with no income tax:
  •      Alaska
  •      Florida
  •      Nevada
  •      South Dakota
  •      Texas
  •      Washington (state)
  •      Wyoming