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May/June Dates to Remember

May 10 Employers. For Social Security, Medicare, and withheld income tax, file Form 941 for the first quarter of 2019. This due date applies only if you deposited the tax for the quarter in full and on time. May 15 Employers. For Social Security, Medicare, withheld income tax, and nonpayroll withholding, deposit the tax for payments in April if the monthly rule applies. June... Read More

Working Around the New "Kiddie Tax"

Single taxpayers with taxable income up to $39,375 ($78,750 on joint returns) can pay 0% tax on long-term capital gains. That may suggest some income-shifting strategies. Example 1: Suppose that Fred and Grace Holden plan to switch from XYZ Stock Fund to another fund. If the Holdens sell all their shares of XYZ, which has been held in a taxable account for more than one year, they would have a... Read More

Using the 0% Tax Rate

Generally, profits from selling assets such as securities and real estate held in taxable accounts are classed as long-term if the holding period was longer than one year. Tax rates on long-term capital gains are 0%, 15%, or 20%, depending on the seller's income. To maximize use of the 0% rate, your taxable income (after all deductions) in 2019 must be no more than $39,375 for single filers and married... Read More

Homeowner's Insurance Protects a Prime Asset

From coast to coast, hurricanes and wildfires and other natural disasters have created headlines while destroying homes. Your principal residence is probably a valuable asset, so you should be confident your homeowner’s insurance can protect you against multiple perils. Chances are, your first experience with homeowner’s coverage probably coincided with your first home purchase, which you financed... Read More

April/May 2019 Dates to Remember

April 15 Individuals. File a 2018 income tax return and pay any tax due by April 15 (if you live in Maine or Massachusetts, the filing deadline is April 17). If you want an automatic six-month extension of time to file the return, file Form 4868, “Application for Automatic Extension of Time To File U.S. Individual Income Tax Return.” Then, file Form 1040 by October 15. If you are not paying your... Read More

Roth Solo 401(k)s for Small Businesses

The Tax Cuts and Jobs Act (TCJA) of 2017 was not officially focused on retirement planning, but it has had a major impact on the choice of retirement plans. After-tax plans, known as Roth accounts, may be more practical now. That can be especially true regarding solo 401(k)s, which are 401(k) plans that cover business owners (including sole proprietors) without employees (other than the owners and their... Read More

The Standard Deduction's Double Standard

The 2019 “tax season,” during which most 2018 tax returns are prepared, will soon peak at the April 15 deadline. One key trend is that more people are taking the standard deduction, which has increased significantly, and fewer people are claiming itemized deductions, which have been restricted. These changes result from passage of the Tax Cuts and Jobs Act (TCJA) of 2017, which affects preparation of... Read More

March/April Dates to Remember

March 15 Partnerships. File a 2018 calendar-year return (Form 1065). Provide each partner with a copy of Schedule K-1 (Form 1065), Partner’s Share of Income, Deductions, Credits, etc., or a substitute Schedule K-1 (Form 1065). If you want an automatic six-month extension of time to file the return and provide Schedule K-1 or a substitute Schedule K-1, file Form 7004. Then, file Form 1065 and provide each... Read More

Deducting Qualified Business Income

The TCJA created a new deduction for small business owners who operate pass-through entities. That includes domestic companies operated as sole proprietorships or through S corporations, partnerships, certain LLCs, trusts, and estates. Income from such entities may allow business owners to deduct 20% of their qualified business income (QBI). On the surface, the deduction may seem straightforward. Example 1:... Read More