We apologize for this late post. It has been a crazy 2018 and despite the government shut-down, the IRS will officially open the 2018 tax year filing starting Monday January 28, 2019. The good news is that the IRS will start processing tax returns on that date and hopefully will issue refunds timely.
Our contact information remains the same including our mailing address:
Federal Tax Management Inc.
303 N. Glenoaks Blvd.
Burbank, CA 91502
Our office phone number is still the same at 877.237.2919 and of course you can also text us as well!
The fax number also remains unchanged at 800.599.1612.
This was covered in last year’s email but here is a recap of a few of the biggest changes from the new tax reform that may affect you.
Tax rate changes: Both individual and corporate rates have changed. The maximum individual rate is reduced to 37% and the corporate rate is now a flat 21%. The rate change could benefit you — or in some cases cause your tax liability to go up.
Standard deduction increases: However, there are no more personal exemption deductions allowed. So this may help you — or hurt you.
Increased Child Tax Credit and new Dependent Credit: The credit is increased for each child to $2,000 (up to $1,400 of which is refundable for each child) and each non-child dependent can now receive a new credit of $500. But you will have no exemption credit or deduction for yourself, your spouse, or your dependents.
The phaseout thresholds for these credits are drastically increased. Married taxpayers filing a joint return can claim the full credits if their adjusted gross income is $400,000 or less ($200,000 for all others). The credits are fully phased out for married taxpayers filing a joint return when their adjusted gross income reaches $440,000 ($240,000 for all others). This means that many more taxpayers will be able to claim these credits in 2018 and beyond.
Disappearing deductions: Beginning with the 2018 tax year, you will NO longer be able to deduct:
- State income tax and property taxes above $10,000 per year in total;
- Moving expenses (with an exception for certain military);
- Employee business expenses such as mileage, travel, entertainment, home office expenses, union dues, tax preparation fees, and investment fees, among others;
- Mortgage interest beyond interest on $750,000 of acquisition debt, if you purchase a new home; and
- Mortgage interest paid on equity debt (this is no longer deductible for any taxpayers).
Some new benefits for individuals: These new benefits include:
- The medical expense AGI threshold will temporarily drop to 7.5% of AGI for 2017 and 2018;
- The AMT threshold is increased, so fewer middle-income taxpayers will be subject to AMT;
- The estate tax exclusion has nearly doubled, to $10 million (adjusted for inflation); and
- The annual gift tax exclusion remains the same ($14,000 for 2017 and $15,000 for 2018), but the maximum rate on gifts is 35%.
Small business benefit: Beginning in 2018, there will be up to a 20% deduction from net business income for a sole proprietorship, LLC (excluding those taxed as a C corporation), partnership, S corporation, and rental activity. The rules are incredibly complex but there is a lot of planning that we can do to maximize this deduction for you.
These are the most common changes, and at your tax interview this year we will discuss any other changes that might affect you. As these changes are not simple, we suggest a separate appointment to go over the changes that apply to your situation.
Identity Theft: Tax refund fraud and identity theft are an increasing problem. Please remember these tips:
- The IRS does not call you about collection or balances due. In fact, the IRS will generally only call if you are working with an employee on an audit or other issue. If you get one of these calls, hang up immediately; and
- If you receive an official looking bill for a small amount – maybe $200 or so. You decide it’s easier to just pay the bill than to contact our office about it. Please let us know any time you receive correspondence from the IRS or the State of California. In the most recent fraudulent letters, you are told to make out a check to “I.R.S.” rather than to “United States Treasury;” and the return address does not match the processing center address posted on the IRS website.
We are available for any questions or concerns that you may have. Feel free to call us anytime!
IRS Circular 230 Disclosure: As required by U.S. Treasury Regulations governing tax practice, you are hereby advised that any written tax advice contained herein was not written or intended to be used (and cannot be used) by any taxpayer for the purpose of avoiding taxes or penalties that may be imposed under the U.S. Internal Revenue Code.