BulldogTom

Thank you both. It must be a pain putting up with those of us who won't click links. I appreciate your efforts. Tom Modesto, CA

I don't think so, because they are losing the Personal Exemption for the kids as well as for themselves. What I am really trying to do is have my clients harvest deductions this year that may be less valuable or not usable next year. I think what is going to make up for the loss of those deductions is the lower tax rates and expanded tax brackets. Tom Modesto, CA

I don't click links. I know it is probably safe on this site, but I just get the heebie jebbies when I see an underlined blue link with random characters. I just think there is some scammer in a far away country waiting to jump through the interweb thingy and ruin my life. But thanks for clearing up my question. Tom Modesto, CA

In my area, the combined CA taxes plus Property taxes will exceed the 10K cap next year for my middle income clients. Tom Modesto, CA

Ah, that makes sense. Where did you find that? Thanks Tom Modesto, CA

If an S Corp is an LLC Member of a company taxed as an S Corp, how will the passthrough be handled under the new law? Here is the scenario. S Corp wholly owned by H&W (not professional Services) is a 60% owner of a LLC (taxed as S Corp as well) that provides professional services. The S Corp receives K-1 from LLC for 60K income. S Corp gives H&W K-1 with 100K income (40K from S Corp and 60K from LLC). H takes salary from both companies (so lets assume there is no limitations on the passthrough deduction at this point). Does the S Corp get the Passthrough Deduction on the income from the LLC? Or does the S Corp pass in full the 60K to the S Corp owner, who then applies the passthrough deduction at the H&W 1040? Is it possible that the S Corp can take a passthrough deduction for the income coming from the LLC, and then turn around and issue a K-1 to H&W that they then apply another passthrough deduction on their own 1040? That would be a huge loophole. This is a real scenario by the way. Not my client, yet, but could be in the future. Thanks Tom Modesto, CA

About a month ago. Still very light on forms, but the program is available. Tom Modesto, CA

No way to pass to beneficiaries. If they have significant assets and a good investment advisor, they could play in the market. If they win, the gains would be tax free up to the amount of the Capital Loss Carryover. I am not aware of any other way they can harvest that loss. Tom Modesto, CA

Senate approved early this morning (1 AM). House voting today after technical corrections. Expected to pass. President has indicated he will sign before Christmas. You fought the good fight on this on Jack, but it is happening. As soon as Corker and Rubio signed on, it was going to be a done deal. I made 4 calls last night to clients who will be affected. I will continue to review my clients situations and make pro-active calls to those that I think will be most affected under the new law. The rest I will discuss when I sit down with them to prepare their 2017 returns. Tom Modesto, CA

We are all going to be looking for all the new rules. That $500 credit is going to be one of the things we are going to have to look up the rules for. Tom Modesto, CA

OK, that makes sense. And if it works like the DPAD, I can get my head around that. I have played with that one before. What about the SP with Qualified income OVER the threshold? There must be something in there that gives relief? If the guy in my example makes 350K, he is SOL? Sounds counter-intuitive. Thanks Tom Modesto, CA

I am reading up on this provision, and I am a little confused (Yes Jack, I know the ink isn't dry yet, can we dispense with that post). It says that the owner of a pass through may deduct 20% of the income generated from the business. OK, that works. Limited to 315K of income if it is a professional service company. I get that too. Then it goes into a 50% limitation on the W2 income. This is where I get confused. Lets say my client owns an engineering firm taxed as an S Corp. He takes a salary of 150K per year as President. At the end of the year, after taking his salary into consideration, he has 200K of income from the business. I think he gets a 40K deduction? And that 40K is less than 50% of his W2 salary, so we are good. Change the salary to 50K though, which makes his Pass Through Income go up to 300K, and he only gets to take a 25K deduction because of the W2 Wage limitation. Now lets make him a Sole Proprietor. He has no salary, his income is now 350K, and he gets no deduction because he does not have W2 salary from the business and his pass through income exceeds the threshold. Is this correct on how this works? Thanks in advance. Tom Modesto, CA

I have a client who is bugging the snot out of me on what to do. Last year, AMT and Reg tax were $200 apart. He has major changes to his income this year, most likely going to be in AMT. The 10K SALT limit is going to hurt him next year any way he goes about it (Prop taxes will take most of it and CA Taxes will far exceed 10K). Without current income, I can't tell him if he will be in AMT this year or not, so I can't tell him how much to pay in 2017 for his 4th qtr estimate. I went with 110% of last year on his es forms to keep him out of penalty, but he wants a better number for the last payment. So much for enjoying the holidays before tax season ramps up. I will be working up estimates for this client. Tom Modesto, CA

I think we can read the tea leaves on this one. The House is going to pass it. With Corker and Rubio signing on to vote yes, the numbers are just there for this to pass in the Senate as well. I think the ink will be dry by Christmas as the President has indicated. Tom Modesto, CA

Excellent question. Tom Modesto, CA

I am very interested to see how the pass through tax deduction will work. It applies to Sole Proprietors, which is interesting. But I think it excludes us Tax Preparers (along with Doctors, Engineers, other professionals)......but we will have to see how the final bill spells that out. Tom Modesto, CA

Reports are that the new bill is coming out at 5:30 Eastern Time. Sen. Corker and Sen Rubio, who were potential holdouts, signaled they will vote for it. That should give the senate enough votes (along with VP Pence if needed) to pass it in that chamber. The house is pretty solid on voting for it. Looks like we may get a new tax code after all. I am scheduled for a tax update class on 1/5. I bet I will need to take another one sometime during tax season. Buckle up folks, we have to learn a new set of laws, learn how to interpret them, and advise our clients on the best tax moves they can make, all while trying to get our 2017 returns out the door. It is going to be an interesting year to say the least. Tom Modesto, CA

This is great input. Thanks for sharing. Anyone else? From the look of it, I will be attempting this New Year's Day, which should be a light traffic day on the site and I have nothing to do but smell the Prime Rib roast in the oven and watch football. Tom Modesto, CA

If any of you complete the process, would you share your experience? I want to go update my registration but I would like someone else to be the beta tester and let me know if it is going to be a frustration or if there are things that I can do ahead of time to make the process smoother. Thanks in advance. Tom Modesto, CA

I will reschedule 1 missed appointment (stuff happens, I get it). The second time, I will not schedule them. They can drop in during my office hours and wait for me to have time to get to them. It usually ends up they mail or drop off or I never see them again. I really don't care by that point. If you don't value our time together, then I don't need you as a client. I know that sounds like I am being harsh, and I do need my clients, but if you stiff me twice, I lose respect for you and you get my very professional demeanor when you come in. Tom Modesto, CA

I get my "Final" copy of Kiplinger about every quarter. I signed up for them about10 years ago, but their analysis was a little projective ("we expect congress will pass XXX legislation and it will have this effect on your clients") and geared toward higher earning clients. I did not renew, but about every 3 months my "Final" copy arrives in the mail. Tom Modesto, CA

The real trick for me is going to be figuring out how to advise my client who are going to be on the cusp of itemizing in 2018. With the larger std deduction, loss of state income taxes, only property taxes deductible, no more job expense or miscellaneous deductions, and medical expenses probably going away, I think about 60% of my clients who itemize now will not in 2018. Are job related expenses going away? I have a couple salesmen who use their own vehicle and have an office in the home and telecommuters with offices in the home. Are they totally screwed? (I know, we will not know this until the final bill passes....just thinking out loud...so don't kick me Jack). Tom Modesto, CA

Watch out for AMT. State Taxes are a preference item. Tom Modesto, CA

I tried that one year. Backordered, backordered again, then the wrong forms. It is much less stressful to pay the $9 or whatever it is to know I have enough of them. Tom Modesto, CA

I still buy a pack of 25 1096's every year. I have 4-5 clients that need to send out 1099's. I don't even know how to efile a 1099, but I can print out the copies pretty quick. Tom Modesto, CA