Facebook page for our law firm

We are excited to announce the Facebook page for our law firm.

We hope you use this to keep informed about changes in the tax law and other financial planning issues.

Please check it out and “like” the new page.  Also, feel free to give us feedback.

Thank you

Impact of New Tax Law, Part I of III on year-end tax planning

New Tax Law

The Tax Cut and Jobs Act made substantial changes to tax rates, deductions and credits for individuals, corporations and other entities. It also affected changes to estate taxes. For a summary of all changes, please see our post from December in 2017 year-end tax planning – a year of uncertainty.

The purpose of this post is to get you started on year-end planning to take advantage of those changes.

What is the Impact of New Tax Law?

We have been reviewing the impact of the new law with projections in our CCH ProSystem Fx tax software. While many individuals lose deductions in 2018 that they were previously allowed, that does not mean that their taxes increase as much they feared. Here are some reasons why:

  • They probably do not owe the AMT as they have in the past.
  • The change in rates lowers total taxes for many.
  • The passthrough deduction discussed below can make a big change.

If you want us to review the impact on your taxes, please let me know.

Clarifications on New Tax Law

Mortgage interest remains deductible even on an equity line of credit (ELOC), provided proceeds from the ELOC were used to purchase or substantially improve your home. However, if the proceeds were used for consumption, then the interest is not deductible.

The deduction for state and local income taxes (SALT) and property taxes is capped at $10,000. However, property taxes for rental properties are still fully deductible against rental income on Schedule E. And farmers and self-employed taxpayers can still deduct the business portion of the taxes on Schedules F and C. Finally, you may be able to use a trust to share ownership of a property with beneficiaries so that they can deduct a portion of the property taxes.

Change for Small Businesses

One of the biggest changes is the qualified business income deduction (“QBID”) under section 199A, also know as the pass-through deduction. This deduction reduces taxable income from qualifying businesses by 20% for taxpayers under the income limitations. This is, net profits form the business after any W-2 salary paid to the owners is reduced.

Pass through businesses include sole proprietors, S corporations, LLCs and partnerships. They also include real estate investment trusts (“REITs”) and certain publicly traded partnerships (“PTP”). But there are income limits and thresholds that eliminate the QBID service companies. Here is a good chart on that may help you see if you qualify for the 20% deduction. Also, watch for more in our next post.

Planning under 199A for QBID

If you have a pass-through business and your year-end planning shows that you may hit the income limits that reduce or eliminate the deduction, you can move income and deductions for Schedule A to change that. Push income into next year and bring any deductions from next year into this year. If you succeed in getting back under the income the limitation, you get a 120% benefit for the right offs – that is, 100% deduction value on Schedule A and 20% QBID value.

The income limits are toughest on service companies. If your small business is a service company, you may want to break out any non-service business to get the benefit of QBID. A professional office that does billing, debt collection or operates a professional building may be able to put those activities in separate entities that qualify for QBID. Furthermore, if your small business is considering buying an office, keep that in a separate entity from the business.

Conclusion

Watch for Part II coming soon. In the meantime, please contact us if you have any questions.

Getting unbiased advice on your finances

Unlike many sources of financial planning guidance, we do not charge a fee based on your assets or a commission for purchasing investments or insurance. We will help you set up investments and find the insurance that you need. For all our help, we simply charge for our time.

Why pay for financial advice when you can get it on the internet for free

(she’s thinking about the question)

Many investment firms have websites offering free advice on managing your finances. However, nothing on the internet is truly free. The advice may direct you to investments from which the firm receives a commission or the website may be a lead generation site.

What is lead generation?

Awhile back, I did a post on how a website that provides “free” use of a gamified retirement calculator. Using the calculator was fun and free. However, when you delved deeper, reading the company’s ADV disclosure, you learned that the website may receive referral fees from vendors for referring users to financial products, such as lenders for a user who needs to refinance her mortgage or Schwab, Fidelity or TD Ameritrade for users who want to rollover a 401(k). In other words, the site generates leads for which it gets paid. That hardly sounds free!

When to pay

If free is not the answer, that means you pay for advice. That can be good, because when you are the sole source of compensation, then planner has no hidden agenda – she serves your needs only.

I know finances are not fun and planning sounds like bad homework, so paying only makes it worse. At the same time, I see how spending the time to plan can make peoples lives so much better.

I hope you contact me and let me know what you think.

Pan-Mass Challenge update May 2018

 The Pan-Mass Challenge has different meanings for all of us, but the great news for our pedal partner will make anyone happy:

Her scan in May showed that she is cancer free! The trial immunotherapy worked. She had nasty side effects, but we all hope that continued research will improve this treatment, so others don’t suffer.

As for me, I kicked-off to my post-tax season training with a daunting ride:

On May 14th, I rode the 102.7-mile Assault on Mount Mitchell, from Spartanburg, SC, to Mount Mitchell, NC. The elevation change graph below shows why it took me over seven hours! I am thrilled to have made it to the top (not all riders finished).

And I will continue to train so I will be prepared for the PMC in August:

On that weekend, more than 6,000 riders and 4,000 volunteers show our commitment to raising money to battle cancer.

While I have raised over $7,000, I still need your help to reach my goal. Please support my ride so we can help make cancer a bad memory. Read my post “why I ride” and donate.

Victory salute in my Team THANKS jersey

This graph says it all!

 

Why the PMC? The PMC hit a record-shattering $51 million gift last fall. Over the past 38 years, PMC cyclists have ridden to raise and contribute $598 million to the Dana-Farber Cancer Institute (“DFCI”). 100% of every donation to the PMC goes to cancer research and treatment at DFCI.

The Pan-Mass Challenge raises more money than any other athletic fundraising event in the country and 100% what we raise goes to Dana Farber for on-going cancer care, treatment and research, supplying more than 50% of the Jimmy Fund’s annual revenue. It is Dana-Farber’s single largest contributor.

Why DFCI? DFCI combines exceptionally strong commitment to cutting edge research with equally strong commitment to the best, safest and most expert clinical care and a relentless focus on providing the best patient care experience throughout their care. No other cancer center combines all of these as well as DFCI. It is the only cancer center in the world with a top 5 ranking in both pediatric and adult cancer (#1 in pediatric). Also, a recent international survey ranked DFCI #1 in Research Impact.

If your employer has a matching gift program, ask your Human Resources department for a form, and follow the process for matches. To learn more about the Pan-Mass Challenge, please visit www.pmc.org.

Fighting cancer the Pan-Mass Challenge way – my post on “why I PMC”

When asked the question, “why do you PMC,” I was not sure my reasons are special. Everyone faces cancer, either directly or with family and friends. But as I thought more, I realized I have a story about how I became such a committed PMC-er.

I am a cancer survivor; I had a tumor removed from my cheek in 2003. The day I was told I had cancer changed my life forever. But that did not make me a PMC-er. No, I only donated when my friend Mark asked me to contribute to his PMC ride.

But then, my best friend, Alan, was diagnosed with multiple myeloma. He had terrific care from Dana Farber. But, after three years, it became clear that he was on the verge of losing his battle to cancer and he was back in the hospital.

At the same time, Mark sent an e-mail about his PMC ride. I said, “I’m in.” He responded, “to ride or to donate.” Initially I thought, “to donate, of course.” But, after some reflection, I responded, “to ride!” So, in January of 2015, I told Alan that I was building a road bike and riding in his name. He died a few weeks later.


A photo of Alan working on a 1973 Alfa Romeo that I owned

Keep in mind that I was a mountain bike rider, used to slow rides over rocks and roots. On my first time out on a road bike, I did 15 miles in an hour and thought it was such effort that I could not imagine ever completing the 192 PMC ride that August.

So, I trained. And not only did I make that PMC ride, I have done two more after. Now, I am preparing for my fourth ride. In fact, I rode almost 4,500 miles last year to train for the two-day event in August.

Me, thrilled to finish the B2VT ride

My commitment to the PMC ride gets more serious each year. Two years ago, I started working with a coach to train, and hired a dietician to eat better. And when Mark formed Team THANKS, I joined (learn more about Team THANKS here). This year, I helped design our team jerseys and shorts that we plan to wear on day two in August. I have also built five carbon fiber road bikes for me and other riders.

Parts out of the box to build my current bike

Team salute last year

Our team has a pedal partner, who we thought was cancer free. But, this winter, we learned that she back in the hospital, facing a very tough battle with cancer that returned in a new form.

 Maddie in her first fight that she won against cancer

When someone so young faces a painful, daunting form of cancer, it is heartbreaking. The I only way I have to deal with something like this is to try and raise more for the PMC!!

So, that is why I PMC.


This photo taken in my first year is from the last ten-mile stretch shows
me with Keven Lewis enduring to the end demonstrating how much we can all do!!