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cbslee

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About cbslee

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  1. 6 GROUPS OF TAXPAYERS MOST AFFECTED BY TAX REFORM MICHAEL LAW, CPA - CANOPY ON MAY 20, 2018 Due to the tax reform passed in December, many taxpayers will be seeing tax changes in their 2018 tax return. Some changes are positive and some negative, and it is important to keep as updated as possible with the ever-changing tax environment, especially if your clients are among the groups affected. Let’s take a look at a few of the groups of taxpayers who will be affected the most. TAXPAYERS WHO WILL BENEFIT FROM TAX REFORM Most individual taxpayers will have less tax to pay next year, but there are a few groups in particular that will see significant tax savings. INFRASTRUCTURE/FIXED ASSETS For federal purposes, taxpayers who heavily invest in fixed-assets have almost full write off of depreciable assets they are purchasing. Before this law change, these taxpayers who bought equipment had to depreciate the cost over five or 10 years. Going forward, almost the only thing they have to depreciate for federal purposes is real property—the buildings they are buying. The changes to depreciation is one of the few changes that had an early effective date. The accelerated depreciation started for assets placed in service mid- September 2017. CORPORATIONS Corporations now pay lower marginal rates than most other taxpayers. The decreased corporate tax rate is significant enough that some business entities are considering switching their businesses from being taxed as partnerships to being taxed as corporations. Some are electing out of S-corp status to become C-corps. expect we will hear of more businesses doing this as the year progresses PASS-THROUGH ENTITIES To benefit taxpayers who are not corporations, Congress made a new “pass-through“ deduction. The name is a bit of a misnomer since a sole proprietor who files Schedule C could also take the deduction. The deduction is almost like getting 20 percent of the business’s income tax free. This new provision has specific limitations for accountants, engineers, and lawyers when their income exceeds certain thresholds. As with anything new, there ar a lot of questions about what does and does not qualify. The IRS expects to provide additional guidance in July. TAXPAYERS WHO WILL BE NEGATIVELY AFFECTED BY TAX REFORM PROFESSIONAL ATHLETES Professional athletes will be among the taxpayers hardest hit by tax reform. They used to be able to deduct training fees, out of town fees, equipment fees, etc. as two percent itemized deductions, but those deductions were eliminated as of January 1, 2018. Because they will still make high wages that place them in the top marginal tax brackets, they will pay even more in taxes next year. SMALL WAGE CONTRACTORS Contractors who work for wages instead of as independent contractors will be negatively affected by the new tax law. This situation often comes up in union trade jobs. Like the athletes mentioned previously, these contractors have lost the ability to deduct business production expenses like uniforms, tools, and safety clothin against their wage income with the loss of two percent itemized deductions. These tradesmen may include construction workers, electricians, iron workers, plumbers, etc. If these wage-earning taxpayers could switch to independent contractors, it might be beneficial in order to deduct the expenses, but switching could prove difficul California, for example, is trying to make it so more independent contractors will be considered employees. TAXPAYERS WHO ENTERTAIN Taxpayers who wine and dine or recruit clients and employees have lost many of their meal and entertainment deductions. Entertainment expenses such as renting box seats or rooms at stadiums are no longer tax deductible. There is some debate in CPA circles if a meal expense for working out of town is 50 percent deductible. Hopefully the IRS will provide more guidance on this deduction restriction before the end of the year. There are many other tax changes to be aware of outside of those mentioned in this post. One of the best ways to keep informed is to read a lot of different notices newsletters, updates, and publications. The Attorneys and Accountants Retirement Act revived one more time
  2. cbslee

    New Tax in Washington

    Oregon has a new statewide transit tax effective July 1st. It's a .001 withholding tax on Employee ( Box 1 )Gross Wages i.e. $ 1.00 for each $ 1,000.00 remitted quarterly
  3. Unfortunately, common sense does not always prevail.
  4. cbslee

    Good and Bad States

    These kind of lists are so arbitrary and biased, depending on selection parameters and weighting factors, that they tend to say more about the list maker than anything else.
  5. I had a client about about 10 years ago who received a 1099 for $60,000, should have been $6,000. However, I knew it was in error since I did his bookkeeping.
  6. cbslee

    1040X for client that came back

    Woah, I am thankful that I am not wrestling with this one.
  7. cbslee

    Finally switching to Drake

    Actually, I was very pleased with the ATX to Drake conversion. There were a few things that didn't come across. There were other things that Drake prompts your to confirm. Depreciation was my biggest concern, so I was satisfied that all the assets came across. However a number of depreciation parameters/categories didn't convert, so I had to go thru each asset to double check things and correct a number of selections/parameters, In my opinion, Drake's Depreciation is a noticeable improvement over the ATX Depreciation Module.
  8. cbslee

    Finally switching to Drake

    I switched about 3 months ago, cold turkey, after being with ATX for about 20 years. After two days, I was pulling my hair and cursing frequently. The layout and logic is very different. After 1 week, I was saying, OK I can survive this. After 1 month, I was happy that I made the change , although there are certain Drake functions that are more opaque than ATX. After playing with Drake's forms option, I quickly switched to learning where everything is with Drake's input approach. One thing I will say that Drake software for my state of Oregon is more in depth, significantly better than ATX. After I catch up with my CPE this month, I was planning to share my observations of Drake vs ATX.
  9. cbslee

    Deceased Client's Tax Refunds

    I just double checked and both federal and state refunds are scheduled to be direct deposited next week.
  10. cbslee

    Deceased Client's Tax Refunds

    Pleasantly surprised. I efiled these returns after lunch and they have been accepted. Now I can wait and see if the direct deposit instructions are followed ?
  11. For the first time since 1992 when I started my current practice, I am preparing a tax return for a deceased client without a surviving spouse. There are refunds due totaling about $ 3,000. There is a will with one of 3 children named as personal representative. However there are no probate assets since everything was " Payable on Death" or jointly owned with the 3 children. In Oregon, if there are no probate assets, then there is no court appointed or certified personal representative. Reading thru Form 1310, you just answer the questions and the refund check is issued to the personal representative in their name ? The deceased's checking account is still open with all 3 children's names also on the account. Any way to have the refunds direct deposited into that account ?
  12. cbslee

    Quick question about 2018

    I don't think there is any connection between the two ?
  13. cbslee

    Incorrect cost on rental property

    Can you do that ? Don't you have to file the 3115 with the current year return ?
  14. cbslee

    Incorrect cost on rental property

    Classic example of when to use a 3115 to correct the depreciation expense claimed. Since this will increase tax due,I believe you still get a 4 year spread forward to pay any additional tax.
  15. cbslee

    Uber Drivers Losing Money

    According to a very large survey, the average Uber driver makes well under the federal minmum wage.
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