Taxes

Top 5 Year-End Tax Tips for 2019

As 2018 winds down to a close we wanted to provide you with a list of the Top 5 Last-Minute tax reduction solutions.

1. Appreciated Assets: (Stocks, Real Estate, etc...) 

  • With a soft stock market, but a robust real estate market in 2018, it makes sense to lock in gains and to gift appreciated asset(s) instead of writing checks. 

  • Example of why: Stock purchased for $5,000 has now appreciated to $10,000. A gifting of the stock to a 501(c)3 avoids the capital gains taxes of $750 (assuming a 15% LTCG tax rate). Also, you still get a tax deduction for the $10,000 donated. 

UNDERSTAND HOW THE TRUMP TAX PLAN AFFECTS YOU

The Tax Cuts and Jobs Act was signed into law by President Trump in December 2017, ushering in a new wave of tax rules. The tax code is thousands of pages long, full of obscure rules on topics that don’t apply to most Americans. It’s likely that you don’t need to know expensing costs for replanting citrus plants, net operating losses for life insurance companies, and limits on FDIC premiums that banks with more than $10 billion in assets can deduct. With all the new tax law changes, what you need to understand is how the Trump tax plan affects you, and how you can take advantage of these new rules to keep more of what you make. At Financial Gravity we know that, in the end, it’s what you keep that counts.  

IRS Loves "New" Math

Parenting is full of all sorts of milestones. Some of them are precious, like your child's first steps, their first words, and their first day of school. Some of them are less welcome, like a first broken bone, or a visit from the law. But there's one milestone that takes some parents by surprise, and that's the day they realize they can't help their kid with math homework anymore. This is especially jarring when the kids come home insisting their teacher taught them 2+2=5. The "new" math can't be that different from the "old" math? It's still just math, right?

It Came From Under the Ground!

Earlier this month, archaeologists digging in Egypt unearthed a 2,000-year-old black granite sarcophagus 16 feet below the surface. Pretty cool, right? But then they announced they were going to open it. What a terrible idea! Have they never seen The Mummy? When the lid came off, they found three skeletons rotting in some dirty water that had probably leaked in from a nearby sewage trench. But that doesn't necessarily mean an ancient undead presence didn't manage to escape, too. It's not like they could actually see it!

Here's to Your Health!

When Congress raises the hood on the tax code, they're usually working to raise money to pay for government. But sometimes they're more interested in nudging us to behave in ways they can't legislate directly. Take the mortgage interest deduction, for example, which "cost" the Treasury $69.7 billion in 2013. That deduction encourages millions of Americans to spend billions of dollars buying homes, building homes, renovating money pits, and keeping their homes looking spiffy — all of which returns billions more through our overall economy.

Such a Bore

Everyone has a mental picture of what a tax professional or accountant looks like. Probably pretty boring, right? Dull. Predictable. Not quite smart enough to do useful work, like engineering. Definitely not slick enough for sales. Probably balding and paunchy, bleary-eyed from too many late nights at the office typing numbers into boxes on government forms. But that's not always the case . . . so let's take a look at a couple of fun stories that shatter that stereotype.

Area Man Treats Colleague to Dinner, Drinks

The three-martini lunch has a long and mostly honorable history as a deductible business expense. As former President Gerald Ford once said, "Where else can you get an earful, a bellyful, and snootful at the same time?" Ford's successor, famed buzzkill Jimmy Carter, tried (and failed) to cut the deduction from 100% to 50%. The Tax Reform Act of 1986 succeeded in that goal, and today's business dinner has probably switched from martinis to white wine. But old habits die hard — check any happening lunch spot and you'll find happy diners eating partly on Uncle Sam's dime.

Two-Tired to Fight About It

When you think of "federal crime," you probably think of big-ticket offenses like mail fraud, identity theft, and tax evasion. But our criminal code is also full of, shall we say, lesser offenses. For example, according to the Crime a Day Twitter feed, "18 USC §1854 makes it a federal crime to cut, chip, or chop a government-owned tree to get turpentine out of it." 7 USC §8313 "makes it a federal crime to bring an imported camel's blanket into the United States without the permission of the port inspector." And 8 USC §1865 "makes it a federal crime to roller skate in Alaska's Sitka National Historical Park."

Good Guys Share $175 Million Refund

April 15 hasn't always been the national exercise in self-flagellation that it is today. Up until the 1940s, you could just waltz into your local IRS office and they would do your taxes for you. But those days have long since passed. You're still welcome to do it yourself, if you need more stress in your life. But how will you know if you're paying too much? Even software like TurboTax can't guarantee you'll get it right. If you don't know how to use it, the program just helps you make the same expensive mistakes faster than when you made them with paper and pencils.

Ivy League Tax Problems

They say that "what goes up must come down." But that's not true when it comes to college costs. U.S. News reports the average private college tuition stood at $16,233 back in 1997-98 — roughly $24,973 in 2017 dollars. But the same tuition today costs $41,727. And that's before pricing in luxuries like, you know, meals, and a place to sleep. In-state college costs are rising even faster as legislatures cut budgets for higher education. That means colleges are increasingly turning to alternate funding sources, including their endowments.