(941) 637-0544

Bear says: “Why retire? I really like coming to work with Dad every day and meeting all our friends”.
Boo says: “You are retired. I do all the work”.
Estate Tax Exemption: Congress increased the amount that you can leave, or gift, to your heirs tax free to about $10 million for each individual person.
Tax Tip: Each person may “gift” to another person up to $14,000 in a calendar year without any tax reporting or tax consequences.
Re-characterization of IRAs: New tax law will stop what is called “re-characterization” of IRA’S, which allowed one to undo their decision to rollover or convert accounts to Roth IRAs.
Tax Tip: Long Term Capital Gains Rate of “ZERO PERCENT”. Take advantage of the ZERO percent rate for Long Term Capital Gains in specified tax brackets. Single limit is $38,600, married filing jointly is $77,200. This is a great tool for tax planning; Sell assets over a specified period of time for great tax savings.
Qualified Charitable Distributions: New tax law allows donations to be made directly to charity from individual retirement accounts. These count toward required distributions, and there is no need to itemize.
Tax Tip: Itemize every other year. By combining deductions that can be itemized such as medical expenses, real estate taxes and charitable contributions for 2 years, you might overcome the standard deduction amount and be able to itemize your deductions every other year. Example, pay your real estate taxes or make your contribution in January for the prior year and then timely in the current year.
Investment Expenses: Investment management fees and associated investment expense are no longer available as an itemized deduction
Tax Tip: Contribution caps for 401K remained the same. Under age 50 may contribute up to $18,500; 50 or older up to $24,500.
FIFO is gone: First in, first out is not mandatory. Investors can continue to specifically identify which shares to sell, regardless of when purchased. Remember to identify the shares to be sold before the sale and get a written confirmation from your broker or mutual fund.
Tax Tip: Stretch IRA. An heir may stretch out the distributions of an Inherited IRA over their lifetime, as long as they properly title the inherited account and begin distributions by end of the year following original owner’s death.
Kiddie Tax: Custodial accounts for grandkids and great grandkids are no longer limited to the maximum tax to the parent’s rates. Such income will be taxed at rates that apply to trusts and estates which is a far higher rate. This applies to investment income over $2,100 of children under age 19 or, if full time students, age 24.
Tax Tip: The step up basis was retained. This provision increases the tax basis of inherited assets to the value on the date that the previous owner died. If you inherit assets that have appreciated over the time held by the previous owner, you do not pay tax on the amount of the increase.
Home Equity Loans: Home Equity Loans are no longer deductible. This applies to old loans as well as new loans.
Tax Tip: New law reduces the minimum threshold of 10% down to 7.5% for medical expenses for everyone for 2017 and 2018.
401K Loans: New law allows employees who borrow from their 401K plans more time to repay the loan if they lose their jobs. They can repay up to the due date of their tax return for the year they left the job.
Tax Tip: Mortgage interest is capped at $750,000 acquisition debt for married filing jointly, $375,000 for singles.
Tax Free income for Businesses: Persons who have business income will welcome that the New law allows 20% of “flow thru” income from sole proprietorships, partnerships, and S corporations to be deductible before calculating tax.
AS ALWAYS, PLEASE CALL US with any questions about your particular situation. 941-637-0544. We like to hear from you, and Boo and Bear love to have you visit.