Riding the Pan-Mass Challenge again in 2019, please donate if you can

Before diving in to my Pan-Mass Challenge update, here is the recent Facebook post from on our pedal partner, Maddie Carlson, who survived cancer twice:

I just wanted to take a second to share the amazing things that have happened in the past year that have been so insane and i can’t help but feeling extremely blessed and grateful. This time last year my cancer was out of control, I was living at BCH, severely depressed and not even looking forward to the future. Fast forward to now and I can’t even believe how much my life has changed. Here’s a few things that have happened since I was severely hospitalized that have gave me a reason to not give up. First, I transferred to Emmanuel College in Boston which was without a doubt the best decision I could have ever made. I love this city and love my cute little school. Next, since I started school, I’ve made some of the greatest people who have become my family and teach me how to be a better person and have helped me grow (y’all know who you are). In high school I didn’t really get the opportunity to get involved so I started to take advantage of that since I’ve been here. The second month of school I started an on-campus job, joined a couple clubs AND recently found out that I received an RA position for next year!!! LASTLY AND THE BEST OF IT ALL, I recently found out I am 9 months cancer free!! Though I have my off days and have a lot to conquer with my health, I am happy. Cancer was a horrible thing that happened to me but I survived (twice) and am taking advantage of the amazing opportunities presented to me, since I couldn’t for so long and many others don’t have the chance to. Again, thank you to everyone that has followed my journey and those that continue to support me 💛💛

(we posted this before from Maddie’s video when she battled cancer the first time)

She was at the Dana Farber Cancer Institute (DFCI). I hope you never have to see those facilities. Or if you do, I hope it is from curiosity and not because you or a loved one is receiving treatment.

Although was a bit challenging to go, being a cancer survivor myself and not wanting to be reminded, we accepted an invitation to tour the DFCI in late January. The facilities are amazing.

So much attention is paid to how those with cancer are treated and what resources they can access. There are even places like the indoor gardens where they can experience nature that’s otherwise off limits due to their treatments. The tour guide even made mention of the unseen researchers and physicians working tirelessly to innovate new approaches for fighting cancer, to save lives, and to make a difference to all of us.

On the tour, we also felt the impact of the PMC, from donor plaques to the amazing PMC bridge, all of which brings home the message that cancer can be fought “one mile at a time.”

Over the past 40 years, 121,264 PMC riders (and 68,044 volunteers) have raised over $550 million to fight cancer at DFCI and in 2019, over 6,000 riders will aim to raise $58,000,000.  With your help, we can make a real difference, saving lives.  We can stand up and do something about this unrelenting and ever-changing affliction.

This will be my fifth year and I’m asking for your support. I am off to a good start, having raised over $3,900, but I need your help. Please support my ride so others won’t suffer as Maddie did in the past. Click on “why I ride” and donate. Remember, 100% of funds raised by the PMC go to Dana Farber for care, treatment and research.

Thank you,

Steven

Tax Planning Hacks for your Itemized Deductions and more

The Tax Cut and Jobs Act brought the most significant changes to our income taxes in the last thirty years.  We continue to assess its impact in this post, which provides updates and some strategies for items discussed at the end of 2018 in these three posts:

As a quick summary of the posts, in the first post, we discussed the impact of the new law on personal taxes; in the second post, we discussed planning for small businesses; and in our third post, we provided a practical guide for year-end action.   

Itemized deduction strategies

As we noted in these tax planning posts, far fewer US Taxpayers will itemize because of the increased $24,000 standard deduction for married couples ($12,000 for individuals).  One estimate is that the number will be about 6% of all taxpayers for 2018, down from over 30% in prior years. 

Bunching your itemized deductions into a single year is one way to push your total above the standard deduction amount, and thus restore the tax deduction benefit for such items as charitable donations.  We discussed bunching and giving to donor advised funds in our third post.  As we noted then, charitable donations are the easiest Schedule A items to which to apply bunching.

Miscellaneous deductions are gone;
Or are they? 

Now that the miscellaneous itemized deductions are gone, can you do anything with tax prep and investment fees? 

Take tax prep fees on other schedules

For the tax preparation fees, you can deduct those amounts on Schedule C, Schedule E (page 1), or Schedule F.  And, if you have K-1s, input the fees as unreimbursed expenses so that the fees flow to Schedule E (page 2).

Capitalize investment fees

As for investment fees, there is support for capitalizing these costs, but the support is not dispositive.  This interpretation of the Treasury regulations is that you can capitalize the cost of evaluating the value of stocks purchased and sold.  You would need to elect to capitalize the related fee for each transaction, so this could be a great deal of work, depending on the amount of fees and number of stocks purchased or sold in a given year.  Taking this approach seems fair, as the treatment parallels treatment of fees in mutual fund, where the advisory fees are netted out before capital gain and dividend distributions to shareholders. 

Kiddie tax

The first $1,050 of unearned income for children who are dependents is not taxed in 2018.  Amounts above that level are taxed at the same rate as trusts and estates.  Those brackets are quite compressed compared to individual brackets.  Nonetheless, a child of a parent in the 37% tax bracket can still have $12,500 of income taxed at a lower rate.  That could save taxes on college funds (but compare to sheltering in a 529 plan).

Child tax credit

The $2,000 child credit phases out at much higher adjusted income levels for 2018:  over $400,000 for married couples, $200,000 for single taxpayers.  If your child is age 17 or over, you lose the $2,000 credit, but you may qualify for the $500 dependent credit.   This credit could not only applies to college students, it covers disabled children, elderly parents and other family that are your dependents.      

QBID for rental real estate

The IRS regulations provide a safe harbor for people who spend 250 or more hours a year on activities related to their rental properties.  You will need to keep records of your time and maintain separate bank accounts for the activities. 

Enterprise Zone rollovers  

You can roll over gain from stock or other capital assets to investments in an enterprise zone, delaying tax on the gain, and even eliminating tax on a portion.  We will post more on this at a future date.

Estate taxes

With the doubling of the federal gift and estate tax credit, few estates will be subject to federal estate tax.  This means that gifting is not nearly as important as retaining low basis assets for the step at death.  By this we mean that keeping assets in your name results in those assets are treated as having basis equal to the fair market value at death, so your heirs only pay tax on any gain that occurs after your death. 

Conclusion

There have been many changes to our tax law, so if you are not sure how you are affected, contact me for some planning. Maybe we can help you save on taxes!

Steven

Tax planning: donations for Haiti

Under a new rule, donations for the Haiti earthquake relief made in January and February of 2010 can be deducted on 2009 tax returns. The contributions that count include cash, check, credit card and cell phone text messages. The donation must be made to U.S. charities.

Be sure to let your tax preparer know if you made a contribution in 2010. The issue will be whether 2009 or 2010 is the best year to take the deduction.

Let us know if you have questions or comments. Thanks,

Steven