Saturday, December 30, 2017

What the New Tax Law Didn't Change

Excerpt from The Short Cheap Tax Book for the Trump/GOP Tax Law:

What Didn’t Change

There was a lot of talk, and two passed bills, that went into the conference committee where the final bill language was decided.  Here’s a list of things they talked about, but didn’t change:

Capital Gains tax rates stayed the same
Identification of sold securities unchanged (no forced FIFO)*
No change to education credits
Student loan interest is still deductible
Savings bond interest used for education is still tax-free
Colleges can still provide tax-free education to their employees
Electric vehicle credit wasn’t changed
Employer education expense exclusion is unchanged
No change to MSA deductibility
No change to educator expense deduction**
No change to the sale of personal residence exclusion***
No change to Dependent Care Benefits exclusion
No change to adoption rules
No change to the solar credit
No change to the Credit for Elderly and Disabled
No change to Earned Income Credit
No change to employer-provided housing rules
No change to exempt organizations rules on “politicking”
529 plan money still not usable for homeschool

*There was a proposal to force partial sales of batches of stocks or other assets to be determined based on “First In, First Out” rules, rather than allowing the person selling to specify what shares of stock among a batch were the ones sold.  This was not adopted.

**As will be discussed later, a whole bunch of itemized deductions were eliminated including the employee business expense deduction that teachers often use to deduct expenses above the $250 educator expense deduction.

***I am actually going to briefly cover the rules in a later chapter since people still think they have to buy a new home to make this work – something that was changed over 20 years ago.


****Links to my blog post on the subject for South Carolina

Wednesday, December 27, 2017

Master Index of Posts



I've compiled a Master List of my posts for easy reference. Not every post is included, and I have changed the order to put the most important or timely ones on top, and to group some based on categories (Military, Obamacare, Tax Software). I will try to keep this updated and just below the latest post. Please let me know in the comments if I screw up a link :) Some of the posts are OLD so be careful assuming the information is current.

If you have a Kindle, you can get a copy of my entertaining and useful book, The Short, Cheap Tax Book for Everyone for only 99 cents!

For the new tax law, there's The Short Cheap Tax Book for the Trump/GOP Tax Law

If you like the blog, buy my other books: Kirk Taylor, EA Author Page

Important or Time Sensitive Posts

2018 Tax Bill Changes
What the New Tax Law Didn't Change (2018)
"Office" Hours for Questions
Will Your Refund be Delayed (2016 Tax Year)
Tax Identity Theft State Efforts and Delays (2016 Tax Year)
The Dreaded CP2000 Letter from the IRS
Need a Copy of Your Tax Return? Get a Transcript Online! NOT! Updated advice...
The IRS did NOT Call You!
I Got an E-mail from the IRS!
I Want to Lower my Taxes!
Last Chance for 2013 Refunds
10 Simple Pieces of Tax Advice
10 Things Everybody Should Do
Check Your Withholding

Military

Military Spouses Residency Relief Act Details and Matrix
Retiring from the Military? Tax Warnings!
Reenlistment Bonus, Social Security, Compensation Repayment and Taxes
2017 Military State Tax Guide
2016 Military State Tax Guide
2017 Boomer Deduction Worksheet
2016 Boomer Deduction Worksheet
2015 Military State Tax Guide
2015 Boomer Deduction Worksheet
2014 Boomer Deduction Instructions for TurboTax Online
2014 Boomer Deduction Instructions for H&R Block at Home (store bought or downloaded)
2014 Boomer Deduction Instructions for TaxSlayer
2014 Boomer Deduction Instructions for TurboTax (Store bought or downloaded)
Boomer Deduction - History and References
More Boomer Deduction Information
Minnesota Combat Zone Credit
SC Military Retirement Change (2016)

Tax Software

TurboTax Admits That Easy Is Better Than Accurate
Tax Preparation Software Sucks - An Open Letter to H&R Block

Business Guides

Sole Proprietorships are Bad
Avon, Pampered Chef, Party Lites, Amway, etc. MLM Tax Guide
UBER Driver Tax Guide
Tax Guide for Contractors - or - 1099MISC WTF?
Real Estate Agent Tax Guide

General Posts

Getting Married? One Piece of Important Tax Advice.
The Dreaded CP2000 Letter from the IRS
Investing and Taxes - A Primer
How Much does it Cost to File Taxes?
Reenlistment Bonus, Social Security, Compensation Repayment and Taxes
Open a Roth IRA Today! And Not For the Reason You Think
Foreign Earned Income Exclusion Warnings - Update
Charity Made Simple
How Fast Can I Get my Refund?
Make Estimated Tax Payments the Easy Way
Depreciation Recapture - an inaccurate description
Don't Touch that 401K or IRA!!
What do you do with that Big Tax Refund?
It's Okay to Get a Big Refund - Really...
Common Tax Return Errors - Updated
Common Tax Return Errors
I Have a Blog and I Want to Bitch!
Mortgage Tax Credit Information
Lesson from the Government Shutdown - Emergency Fund
Don't Pay Capital Gains Taxes if You Don't Have To!
I got a 1099C - Now What?
Cancelled Debt and Insolvency
The IRS, email and privacy...
IRS Checking Facebook?
>$250 Donation Acknowledgement
Drop Box Donations - US Marines
Tax Scams
Rental Property Guide for Homeowners
Taxes and Divorce
Random Thought about Books
Taking Care of the Client
Warning - Tax Resolution Scams
Foreign Earned Income Exclusion - WARNINGS!
IRS.GOV Website Update

Affordable Care Act (Obamacare) Posts

Obamacare in SC - Something's Fishy
The Affordable Care Act (Obamacare) and People with Health Insurance
Affordable Care Act (Obamacare) for the 2014 Tax Filing Season
Obamacare, Affordable Care Act and Married Filing Separately - Warning
Affordable Care Act, Obamacare update and advice
Healthcare Law, Obamacare, Affordable Care Act Info
Weird Obamacare Strategies and Incentives - 1
Weird Obamacare Incentives and Strategies - 2
Weird Obamacare Incentives and Strategies - 3
Weird Obamacare Incentives and Strategies - 4
Weird Obamacare Strategies and Incentives - 5
Weird Obamacare Strategies and Incentives - 6

Friday, December 15, 2017

2017 Boomer Deduction Worksheet

I know this worksheet is making you Boomer Dudes a crap ton of money, so share the love and buy my tax books: Kirk Taylor, EA Author Page
For the new tax law, there's The Short Cheap Tax Book for the Trump/GOP Tax Law

You should also check out these blog posts on Military State Rules and the Military Spouses Residency Relief Act.

Military Submariners serving on two crew ballistic missile or guided missile boats are eligible to deduct lodging and other expenses when their "Tax Home" (the sub) is unavailable. Sometimes this is called the FBM Deduction. There are many discussions of what exactly is deductible, but this worksheet will work in most situations and make it easy to determine what amounts to enter on various forms or enter into tax prep software. If you find this worksheet useful, and it saves you money on taxes, consider making a donation.

I will not be able to do the instructions for individual software programs this year.  It simply required too much time and effort, for not a lot of return.  I have had to allocate more of my time to the book. The 2014 instructions will probably work okay:

The new tax law repealed the entire employee business expense category that the Boomer Deduction fell under.  This is the last year for this.

Boomer Deduction Worksheet for Tax Preparation - 2017
Numbers are for entries into software or initial form entries.

(A) Days of Refit assist in 2017 __________
(B) Days of Off Crew in 2017 __________
(C) Distance from Home to Off Crew Bldg __________
(D) Distance from Home to Waterfront __________
(E) Rent (do not include any mortgage info here)*__________
(F) Average Monthly Utilities __________
(G) Do you go home for lunch every day? __________
(H) Number of people (including wife and kids) sharing your residence___________

(I) Total Days with boat unavailable (A) + (B) = _____________
(J) Monthly Housing Costs (E) + (F) = ______________

Form 2106 Computation Worksheet Entries:
(K) Lodging and Incidental Expenses ((I) / 30 x (J))/H = _____________
(L) Laundry and Cleaning Expenses (I) / 7 x $10 = ______________
(M) Meal Expense (I) x Per Diem Rate from Table below = ______________

(N) Business Mileage:
If (G) is NO:
( (A) x (D) x 2 ) + ( (B) x (C) x 2 ) = ______________

If (G) is YES:
( (A) x (D) x 4 ) + ( (B) x (C) x 4 ) = ______________

Per Diem Rates (assumes reasonable distance from base):
Glynn County, GA $64
Other GA Counties around Kings Bay $51
Florida (around Jacksonville) $51
Kitsap County, WA $51
King County, WA $74
Pierce County, WA $64
Other counties look up in IRS Pub 1542 or http://www.gsa.gov/portal/content/104877
*You deduct mortgage interest, taxes and mortgage insurance premiums directly on Schedule A

Saturday, November 25, 2017

"Office" Hours

I've decided to set up a little time outside of tax season specifically for handling emails and phone calls (I answer emails anytime, but I hope office hours will get me back on track with the ones I procrastinate on).  I will publish them here and am perfectly willing to give you a call to answer questions from anyone and everyone - client or not.

I love answering questions - it keeps me smart.

Big caveat - if you aren't a client, the answers are free, and you get what you pay for.  I make no guarantees, and answering your question in no way establishes a preparer client relationship as defined by any IRS regulations.  It's just a tax guy answering questions for a friend.
Also, I don't work for my employer off-season, so everything I'm doing at this time is outside of our normal in-office relationship.  Again, friend to friend.  I will be back in the same office every year unless something goes to hell in a bucket so you'll see me there as usual.

So if you want to ask a question, feel free to email me at taxadvisor@email.com
I prefer to handle it all via email, but if you think a conversation is in order, go ahead and ask me to call you within one of the office hour windows.
I will do this for as long as the volume of questions allows (after Jan 2nd I will be in regular office).
I will update the dates as I set time aside.

I will be off for the holidays until the real office is open on January 2nd. Feel free to email me with questions, but if you want to talk face to face, you need an appointment for my office:
(843) 553-0274

And buy my books:

Kirk's Amazon Author Page

2017 State Tax Guide for Military

State Guidelines for Military (2017 values)

The latest edition of my book: Everyday Taxes 2017 contains dozens of life events like getting married, moving and having children.  In each chapter I have included specific information for military members.  Please check it out: Everyday Taxes 2017 (it's also inexpensive).  Even cheaper is my entertaining and informative book: The Short, Cheap Tax Book for Everyone.  Only 99 cents on Kindle!  For the new tax law, there's The Short Cheap Tax Book for the Trump/GOP Tax Law.

The information here is subject to change as states update their information.  I will update at least weekly until mid January, so please check back just before you file.  The primary purpose of this is discussing the taxation of active duty pay, but I have mentioned retired pay for some states when I found the answer easily, but just because I don't mention pensions doesn't really tell you anything.

States with changes for 2017: NJ, WV

Military Spouses Residency Relief Act (MSRRA)
Most states have begun to treat this in a similar manner to each other. In general, the spouse of a service member has two choices for state of residency: the state they are stationed in, or the military member's state of residency. In order to claim the military members state, they must have established a domicile in that state at some time before moving to the current state. For those qualified to make the election to claim the military members state, it is important to weigh the benefits properly, for example, a spouse who works in SC married to a military resident of MI might assume that since MI does not tax the military member that they should choose this state. This would be wrong because MI will tax the non-military income of the spouse. SC is far more generous to the spouse of a service member stationed in SC. Expert assistance may be required making this determination. It can also be difficult to get the current state to stop withholding from the spouses wages. Each state Dept of Revenue has different procedures for handling this.

An added twist to this is that some states, like Maine, New Jersey and New York, have a way for residents not living in the state to claim non-residency for tax purposes.  Our best minds conclude that this would allow a military spouse claiming one of these states as their state of residency could claim non-resident status and not have to pay taxes to the state.  This has not been fought or litigated to my knowledge, so it would be wise to be aware that some states might fight it.  My advice is always to go the aggressive route, but see what the difference is going the other way, and be prepared if the state fights this later.  I personally set aside the excess refund for three years, and then spend it :)

Residency
A military member normally retains residency in the state they resided in when they joined the military unless action is taken to change this. The W-2 can generally be relied upon as to the state of residence of the military member. The states in which a service member are stationed will not tax the members military income unless they are residents. They will tax any income earned from other employment or business activities conducted in the state by the member and their spouses (subject to the MSRRA discussed above.) The discussions below talk about the taxation of military income for residents of the respective state.

Filing Requirements:
Not having to file discussed below assumes there is no withholding from the given state. A member may file even if not required and should do so if they have withholding from the given state so they can get the money back. If a member would not be required to file except for the existence of withholding, they should adjust their state withholding through MyPay so no taxes are withheld from that state. They may also consider stopping withholding even if they are required to file, for states that do not tax their income (MI for example.) Many people do not file required tax returns when there is no refund or balance due. This could result in a letter from the state requesting a return but rarely any penalties – but there can be!

Death Benefits:
Many states exclude death benefits and military pay for service members killed in a combat zone or while on active duty. The specifics are not discussed here. Survivors of service members killed on active duty can obtain assistance for this from CACO personnel.

States with Blue names either require a tax return or other document to be filed by military residents, or a tax return should be prepared to determine if any refundable benefits are available from that state. 

Alabama:
Alabama treats military residents the same as all other residents.  Alabama does not tax military retirement.

Alaska:
Alaska does not have an income tax. Alaska Permanent Funds Dividends are taxable on the Federal Return.

Arizona:
Arizona does not tax active duty military pay, and does not require filing if the only AZ source income is active duty pay.

Arkansas:
Beginning in 2014, Arkansas no longer taxes active duty military pay.  A tax return is still required.

California:
California does not tax military pay of CA residents stationed outside of the state of CA. They do tax military income of their residents when stationed in CA. They also treat military spouses generously, similar to SC. Form 540NR is used to account for this. You write “MPA” to the left of column A for non-resident military income and enter the military income in column B but exclude it from column E.

Colorado:
Beginning in 2016, CO will not tax active military income of military members with a home of record of Colorado.  If the only income is military income, a tax return is not required.  There's a weird provision that makes this applicable only to members whose home of record was Colorado when they joined, not people who changed to Colorado after they joined.  I'm not sure how this will be applied in real life.  Prior to 2016, Colorado taxed military residents the same as other residents unless the member was stationed outside the US for >305 days in the year.

Connecticut:
Connecticut allows resident military personnel stationed outside of CT to be treated as non-residents for tax purposes. This can be confusing but the point is that they are still a resident, just not treated that way for tax purposes. In order to be treated as a non-resident they must meet all three of the following requirements: 1) Not maintain a permanent place of abode in CT for the entire year (a parents house is not a permanent place of abode.) 2) Maintain a permanent place of abode outside of CT for the entire year. 3) Spend no more than 30 days in CT for any reason during the year. If they meet these requirements they can file as a non-resident and exclude any military wages from gross income and need not file unless they have other CT source income.
Starting in 2015, military pensions are not taxed by CT.

Delaware:
DE taxes military residents the same as all other residents.

Washington DC:
DC taxes resident military personnel the same as all other residents.

Florida:
Florida does not have an income tax.

Georgia:
GA taxes military residents the same as all other residents however Reserves or National Guard called to active duty for more than 90 days may be able to take a credit against their individual income tax based on their income from the National Guard or Reserves.

Hawaii:
Hawaii taxes military residents the same as all other residents except that they do not tax the first $6076 of reserve pay or HI national guard pay.

Idaho:
ID residents stationed in ID pay taxes on all military income; however, if the member was on active duty >120 days and stationed outside of Idaho they can exclude any military income earned while stationed outside of ID. If they are stationed outside of Idaho the entire year they do not need to file an ID tax return, however Idaho has a Grocery Credit that a military member is eligible for that is refundable so it is possible to get a refund from Idaho even though their was no tax withheld.  This makes Idaho one of the States that a military member should file even when not required to. 

Illinois:
IL does not tax military pay; however, the member must file a tax return if they file a Federal return. Military members with children who get Federal Earned Income Credit may get up to 10% of the Federal amount even if they have no taxes due to IL.

Indiana:
Indiana taxes military income but allows a deduction of the first $5000 of military income for the taxpayer and/or the spouse ($10000 for military couple.) If a military member changes state of residency to another state they must submit the DD Form 2058 with the tax return for the year they changed state of residency.  If you were active military and you and your spouse did not live in Indiana the entire year you do not owe county tax.  Use "00" as your county.  If your spouse remained in Indiana you BOTH owe county tax to the county he/she lives in.  Don't try to take the real estate tax deduction on property that's not in Indiana.

Iowa:
IA does not tax military income and military income is not used in determining filing requirements (if the only significant sources of income are military income, a tax return is not required.) Starting in 2014, Iowa no longer taxes military retirement.

Kansas:
Kansas taxes military income but allows a deduction for recruitment, sign-up and retention bonuses paid that are included in Federal taxable income (if the bonus was tax free to federal do not deduct it from KS. Kansas starts with Federal AGI so it is already excluded.)  The subtraction is made on Adjustments line A21.

Kentucky:
KY does not tax military income and does not require a tax return if the only KY source income is military pay.

Louisiana:
Louisiana requires a tax return from military personnel the same as any other resident; however, LA gives an exclusion of up to $30000 of military pay if the person has been on active duty outside of Louisiana for at least 120 days during the tax year. The subtraction is taken as a Schedule E subtraction, Code 10E, by entering military pay up to $30000 on the schedule.

Maine:
Maine allows resident military personnel stationed outside of ME to be treated as non-residents for tax purposes. This can be confusing but the point is that they are still a resident, just not treated that way for tax purposes. In order to be treated as a non-resident they must meet all three of the following requirements: 1) Not maintain a permanent place of abode in ME for the entire year (a parents house is not a permanent place of abode.) 2) Maintain a permanent place of abode outside of ME for the entire year. 3) Spend no more than 30 days in ME for any reason during the year. If they meet these requirements they can file as a non-resident and exclude any military wages from gross income and need not file unless they have other ME source income. Maine calls this the General Safe Harbor Rule.  Maine no longer taxes military pensions as of 2016.

Maryland:
Maryland taxes military residents just like other residents; however, they allow a subtraction for up to $15000 of military pay earned outside of the U.S. (Military Overseas Income.) The deduction phases out dollar for dollar as ALL military income goes above $15000 and there is no exclusion if the total military income exceeds $30000. The subtraction is taken on Form 502SU and the Military Overseas Income Worksheet is used to calculate the deduction.

Massachusetts:
There are no special tax benefits for military, however, the Massachusetts Dept of Veterans Affairs will give a one time payment of $500 to any resident after they served at least 6 months active duty in the military. They also have a $1000 benefit for personnel who serve in Iraq or Afghanistan.
Michigan:
Michigan requires military members to file a tax return; however, they subtract active duty pay from income (Schedule 1, Line 11). Military members with children who receive Earned Income Credit on their Federal return may collect 6% of the federal amount, even if they pay no taxes to MI. (This was 20% for 2011 and prior years.)

Minnesota:
Minnesota subtracts Active Duty Military pay from income of MN residents. If Gross Income on Federal return other than military is less than $10000, no MN return is required.
Minnesota pays $120 per month a military resident spends in a combat zone. This is paid separately from the tax return and is claimed on Minnesota form M99

Mississippi:
Mississippi taxes military residents the same as other residents except that they do not tax National Guard and Reserve pay up to $15000.

Missouri:
MO allows resident military personnel stationed outside of MO to be treated as non-residents for tax purposes. This can be confusing but the point is that they are still a resident, just not treated that way for tax purposes. In order to be treated as a non-resident they must meet all three of the following requirements: 1) Not maintain a permanent place of abode in MO for the entire year (a parent's house is not a permanent place of abode.) 2) Maintain a permanent place of abode outside of MO for the entire year. 3) Spend no more than 30 days in MO for any reason during the year. If they meet these requirements they can file as a non-resident and exclude any military wages from gross income and need not file unless they have other MO source income. If your spouse works but claims MO as your state of residency through the MSRRA their income is taxable to MO and must file a tax return if they earn more than $1200. As of 2014, Missouri exempts 75% of military retirement income from tax and starting in 2016 all military retirement income will be tax exempt.  Starting in 2016, MO is allowing you to subtract your military pay, so you don't have to file as a non resident.

Montana
Montana requires military residents to file a tax return but exempts active military pay from taxation on Schedule 2, Line 8. Verification of active duty status must be attached to the return.  National Guard pay is tax exempt.

Nebraska:
Nebraska taxes military residents just like other residents.Nebraska has implemented an incredibly complicated option to exclude certain amounts of military retirement income for some years.  It's too stupid to attempt to explain, but if you are retiring or retired from the military in Nebraska you should read this immediately:
http://www.revenue.nebraska.gov/info/military_benefits.html 

Nevada:
Nevada does not have an income tax.

New Hampshire:
NH does not have an income tax but they do tax interest and dividends. Generally, these would need to exceed $2400 for an individual and $4800 for a couple.

New Jersey:
NJ allows resident military personnel stationed outside of NJ to be treated as non-residents for tax purposes. This can be confusing but the point is that they are still a resident, just not treated that way for tax purposes. In order to be treated as a non-resident they must meet all three of the following requirements: 1) Not maintain a permanent place of abode in NJ for the entire year (a parent's house is not a permanent place of abode.) 2) Maintain a permanent place of abode outside of NJ for the entire year. 3) Spend no more than 30 days in NJ for any reason during the year. If they meet these requirements they can file as a non-resident and exclude any military wages from gross income and need not file unless they have other NJ source income.(NJ does not consider barracks maintaining a permanent place of abode outside NJ)
New Jersey just passed a $3,000 exemption for honorably discharged Veterans which applies to tax years 2016 and beyond.

New Mexico:
New Mexico does not tax active duty military pay however; NM residents are required to file a NM return if they were required to file a Federal return.

New York:
NY allows resident military personnel stationed outside of NY to be treated as non-residents for tax purposes. This can be confusing but the point is that they are still a resident, just not treated that way for tax purposes. In order to be treated as a non-resident they must meet all three of the following requirements: 1) Not maintain a permanent place of abode in NY for the entire year (a parents house is not a permanent place of abode.) 2) Maintain a permanent place of abode outside of NY for the entire year. 3) Spend no more than 30 days in NY for any reason during the year. If they meet these requirements they can file as a non-resident and exclude any military wages from gross income and need not file unless they have other NY source income. NY specifically excludes barracks as an abode outside of NY for the purpose of this rule. Also, if a NY return is required to be filed to get back state taxes withheld and this exemption results in zero income (as it usually does) the return may have to be mailed in vice electronically filed.  NY does not tax military pensions.

North Carolina:
NC taxes military residents the same as other residents.

North Dakota:
ND taxes military residents the same as other residents, however, National Guard and reserve members called to active duty can exclude their active duty pay form ND income.

Ohio:
Ohio does not tax military pay of OH residents stationed outside of the state of OH. They do tax military income of their residents when stationed in OH. Ohio does not tax military retirement pay.

Oklahoma:
Oklahoma allows military members to exclude active duty pay. This exclusion is accomplished using Schedule 511-C. Military members are required to file an OK tax return if they were required to file a federal return.

Oregon:
Oregon allows a subtraction of all military pay earned while stationed outside of OR and up to $6000 earned while stationed in Oregon (Subtraction Code 319). OR also allows military residents to be treated as non residence if they spent less than 31 days in OR, did not have an abode in OR and had a permanent abode outside OR the entire year.

Pennsylvania:
Pennsylvania does not tax Active Duty Military Income of residents stationed outside of PA and does not require a tax return; however, they do require the service member to mail or fax a copy of their orders stationing them outside of PA and their W-2. If filing a tax return a copy of the orders must be included when mailing the return, or sent separately to the address below.
PA DEPT OF REVENUE
NO PAYMENT OR NO REFUND
2 REVENUE PLACE
HARRISBURG PA 17129-0002
May also be faxed to: (717) 772-4193
Starting in 2016, PA exempts military pay from LOCAL taxes, regardless of where you are stationed.

Rhode Island:
Rhode Island taxes military residents the same as other residents.

South Carolina:
SC taxes military residents just like regular residents except that it does not tax reservist drill pay. SC is very generous to the spouses of military (residents of another state) in that they allow you to exclude the active duty income of the non-resident military member from the calculation of what percentage of deductions to allocate to the spouse. This generally results in 100% of the deductions against only the spouses SC income. It is very difficult to get tax software to handle this correctly. Line 1 of the SCNR should have no active duty military income in the Federal column.

South Dakota:
SD does not have an income tax.

Tennessee:
TN does not have an income tax but they do tax interest and dividends. Generally, these would need to exceed $1250 for an individual and $2500 for a couple.

Texas:
Texas does not have an income tax.

Utah:
Utah taxes resident service members the same as other residents.

Vermont:
Vermont does not tax military pay of VT residents stationed outside of the state of VT. They do tax military income of their residents when stationed in VT. Military pay is subtracted on line 32. A tax return is not required if the only income is military pay while stationed outside VT. 

Virginia:
Virginia taxes military residents just like other residents except that they give a subtraction of basic military pay of up to $15000. The subtraction phases out dollar for dollar as income goes from $15000 to $30000 and is completely gone at $30000 of income. (If a military member made less than $15000, it would all be subtracted. If they made $20000, they get to subtract $10000.) The subtraction code is 38.

Washington:
Washington does not have an income tax.

West Virginia:
West Virginia taxes military residents unless they spent less than 30 days in WV. In this case they file as a non-resident. WV does not tax military income of reserves or national guard called to active duty by Executive Order of the President.  Starting in 2017, West Virginia no longer taxes Military Retirement pay.

Wisconsin:
Wisconsin taxes military residents the same as other residents except that they do not tax military pay of reserves or national guard called to active duty. Rent paid by the military member in a state other than WI is allowed to be used for the School Property Tax Credit (not military housing.) If a military member is stationed outside the United States, they may take a credit of up to $300 for pay received while stationed outside the U.S.  Wisconsin does not tax military retirement.

Wyoming:
WY does not have an income tax.

Feel free to send questions to Kirk at taxadvisor@email.com

I am available to prepare taxes via mail, e-mail, fax and online approval. No fees are charged until the return is complete and you are 100% satisfied. If the fees are too high, refund too low, or we determine that a cheaper filing method is appropriate, I will return all materials and charge no fees.

I will check any individual tax return from 2014, 2015, 2016 or 2017 for free. If I find an error, I will offer to fix it for a fee if desired

I have made every effort to ensure the above information is 100% accurate, but I am human and the various governments love to change the rules. If you think something is wrong please inform me via e-mail at taxadvisor@email.com

The Trump Tax Plan and You

The Short Cheap Tax Book for the Trump/GOP Tax Law is available now on Kindle.  Just $1.49.  If you don't have a Kindle, you can use a free cloud reader or phone app from Amazon.  Tons of great information and details on the new law.  All the major changes that are likely to impact most people are covered.

Here is a summary of the tax changes in the final bill that is expected to pass.  Unless otherwise noted, they apply to 2018 taxes:

Tax tables are generally better, and the tax brackets went from 10, 15, 25, 28, 33, 35, and 39.6 percent to 10, 12, 22, 24, 32, 35, and 37 percent.

Standard deductions were changed to $12,000 for Single and MFS, $18,000 for Head of Household (HH) and $24,000 for Married Filing Jointly (MFJ) and Qualifying Widower (QW).  This sounds awesome, but they eliminated the personal exemption of $4050 for everyone on the return.  For kids, this was offset by doubling the Child Tax Credit (discussed below).  Effectively, your standard deduction plus exemptions for Single/MFS went from about $10,500 to $12,000.  For MFJ it went from about $21,000 to $24,000 and for HH it went from about $13,500 to $18,000.

Claiming Head of Household has been subjected to preparer due diligence rules, so be prepared for more scrutiny from your tax guy and the IRS (starting in 2019 with 2018 tax returns - this year you are okay).

The Child Tax Credit went from $1000 to $2000, with up to $1400 refundable (able to reduce your taxes below zero.)  Other dependents get $500 (dependents who are not qualifying children age 16 and below).  The income numbers where the credit phased out were dramatically increased to $200,000 for Single and $400,000 for MFJ (up from $110,000 for MFJ).  If you are in the 25% tax bracket, you almost break even with these changes and the elimination of the exemption.  In the lower brackets, you come out well ahead.

You can deduct no more than $10,000 of state and local income and property taxes on your tax return.  You cannot prepay 2018 INCOME taxes in order to deduct them in 2017 before this change happens (You can prepay property taxes if assessed).

NEW home loans in 2018 and later can deduct interest on up to $750,000 of loans (down from 1,000,000).  Home equity debt interest is no longer deductible (new loans only).

ALL miscellaneous itemized deductions subject to the 2% of income limitation are eliminated: tax prep fees, employee business expense, investment expense and a TON more.

Casualty and theft losses are only deductible for President declared disasters.  There is also a special provision for losses due to disasters that occured in 2016.

You can deduct up to 60% of your income in "normal" charitable contributions.  Up from 50%.  (Some contributions have more restrictive limits such as stock that's worth more than when you bought it).

For 2017 and 2018 ONLY, you can deduct medical expenses that exceed 7.5% of your Adjusted Gross Income (Obamacare was phasing in a 10% threshold which will apply to everyone in 2019 and later years).

The high-income phaseout of itemized deductions was repealed.

There's a chance they won't change the withholding tables for 2018, so all these changes may show up on your tax return and not on your paycheck.  Most people will get bigger refunds, so this isn't a disaster.  UPDATE: The IRS will not be changing the W-4 form where you tell them your marital status and number of exemptions (at least not in 2018), but they do expect to have withholding tables updated by the end of January.

The Kiddie Tax was simplified dramatically (when your child has more than $2000 ish of investment income).  Children subject to the Kiddie Tax pay taxes at the rate of Estates and Trusts (higher than they normally would).

You can use up to $10,000 of 529 college savings plan money, per child, per year, on elementary and secondary tuition and other expenses without paying tax on it.

Moving expenses are no longer deductible and employer reimbursement for moving expenses is taxable except for military PCS moves.

Starting in 2019, any NEW divorce agreements will have alimony non-taxable to the recipient and non-deductible by the payer.

The estate tax exemption was raised from 5 million to 10 million.

Starting in 2019, there is no penalty for not having health insurance.

The Alternative Minimum Tax exemption and income at which it phases out were significantly increased and indexed for inflation.

Student loans cancelled due to death or total and permanent disability are no longer included as income.

They made some changes affecting the ability to undo conversions between Roth and traditional IRA during year due to value changes - too wonky to go into here.

*The following things that were talked about or included in either the House or Senate bill did not end up changing in the final bill:

Capital Gains rates are unchanged.

No change to education credits, student loan interest deductibility, plug-in vehicle credits.

Savings bond interest used for education is still not taxable.

Education provided by colleges to their employees is still tax-free in the same way as it was before.

The exclusion of employer-provided education assistance is unchanged.

Educators can still deduct $250 of in-class supplies they provide in the same manner as before, but anything above this amount that used to be deductible was eliminated with the elimination of the 2% floor itemized deductions.

No change to the exclusion of gain from the sale of personal residence (to be clear - you DO NOT have to buy a new home within 2 years to exclude it, that law was changed 20 years ago).

No change to MSA deductions or employer-provided Dependent Care Benefits rules.

No change to adoption credit or exclusion of employer-provided assistance.

No change to the solar credit (it still starts phasing out in 2020.

**Need to research more:

There's a 20% deduction for income from pass-through entities like partnerships or LLC's - Buy my Book

There are some weird changes to deducting business losses off of your ordinary income

The deduction for entertainment expenses might have been eliminated

Saturday, October 7, 2017

IRS.GOV Gets a New Look

As a Tax Professional, I'm acutely aware of the myriad of ways that criminals try to steal your information.  As a person who spends their summer in a technology-free zone to allow uninterrupted tax book work, I sometimes miss some big news.

So when I typed irs.gov into my browser today to begin the long, arduous process of fact-checking and verifying data for the work I did all summer, I immediately suspected someone was trying to scam me with a fake website.  IRS.GOV looks COMPLETELY different!  It looks more streamlined, less cluttered, and at first glance, like a totally amateur attempt to fake a website.

A lot of research later (because I am SERIOUSLY paranoid) ensures me that it is genuine.

Things I like so far: Less fluff and more meat on the home page, big buttons and tabs for things you are most likely to need, and tax professional and charity stuff moved to its own area with easy to find buttons.

Things I don't like so far: The eight buttons on the home screen aren't buttons since you have to click on the words.  A bunch of other stuff that will inevitably suck but I haven't discovered yet since I rushed to make this post so you would know that the website is real and not a scam.

While your here, click on this link to get to the IRS website, click on the "Get a Transcript Online" button, and go through the steps.  This will set up an account for you that will allow you a lot of access to your tax information without having to jump through hoops later.  It's well worth your time to have this done.  Just keep the username and password handy!