Tax Cuts and Jobs Act
was signed December 22, 2017 by president Donald Trump.
Coming late in the tax year, the passing of the tax law changes leaves little time to make smart tax moves before year end.
The following is a list of 7 popular tax planning moves you can make before year end and in 2018 to save money and reduce taxes. Please note that this is a general list of tax planning strategies and you should speak with our tax experts to see if you qualify for any of the following tax planning strategies.
- Accelerate your charitable giving into 2017 if you will take the standard deduction in 2018
- Pay off home equity line of credit before year end if you don’t plan to borrow against the HELOC in 2018
- Pay 2018 home real estate tax April installment before year end. Consider AMT and NIIT.
Pay 2017 estimated state taxes before year end. Consider AMT and NIIT.
- Accelerate paying your 2017 medical expenses into 2017 if you will take the standard deduction in 2018
Pay 2017 HSA contribution before April 17, 2018 and have it applied to 2017 tax year.
- Pay 2017 Traditional IRA or SEP IRA contribution before April 17, 2018 and have it applied to 2017 tax year. Note that the due date for establishing and funding a SEP IRA can be extended with an applicable tax extension filing.
If you have any questions please contact us and speak with one of our tax experts. 800-425-0570 or email contact@MrSmartTax.com
Written by Michael R. Arrache CPA, EA
December 23, 2017
States taxes – taxpayer is ok to pay reasonable 2017 estimated state taxes prior to end of year but consider AMT consequences and note that state taxes can still reduce NIIT.
Do not prepay 2018 state tax as it can cause penalties.
Feel free to call today with any questions. 800-425-0570 or email contact@MrSmartTax.com
Swart case could be a small but notable victory for out-of-state ownership of a California LLC.
Currently, California’s franchise tax is imposed on the net income of every corporation “doing business within the limits of this state.” (§ 23151, subd. (a).) For tax years prior to January 1, 2011, section 23101 defined “doing business” as “actively engaging in any transaction for the purpose of financial or pecuniary gain or profit.” 2 (Former § 23101, now § 23101, subd. (a).) The term “actively” is the opposite of “passively” or “inactively” and means “active transaction for pecuniary gain or profit.” (Golden State Theatre & Realty Corp. v. Johnson (1943) 21 Cal.2d 493, 496 (Golden State Theatre); Hise v. McColgan (1944) 24 Cal.2d 147, 151.)
In this case, the $800 minimum franchise tax was imposed upon Swart several years after Swart made its investment and became a member of Cypress LLC. Swart argued that it was not doing business in California and that it passively held onto its investment in the tax year the franchise tax was imposed.
The Franchise Tax Board (FTB) demanded that Swart file a California corporate franchise tax return for the tax year ending June 30, 2010, and pay the $800 minimum franchise tax due on that return. Swart paid the tax, which amounted to $1,106 with penalties and interest, but contested it and requested a refund.
Swart claimed it was not subject to the franchise tax because it held no other investments in California, it did not otherwise do business in California, and it was only a passive member in Cypress LLC. Swart further claimed imposition of the franchise tax violated the due process clause and commerce clause of the United States Constitution. The FTB denied Swart’s request for refund.
Swart timely filed a complaint seeking a tax refund and declaratory relief. After briefing and argument on the parties’ cross-motions for summary judgment, the trial court entered an order granting Swart’s motion for summary judgment and denying the FTB’s motion for summary judgment. Swart was awarded a refund in the amount of $1,106.71.
Read court document here http://www.courts.ca.gov/opinions/documents/F070922.PDF
Too many tax clients? Want to sell your tax practice? If yes, then I would like to extend to you an invitation to our practitioner network for tax client referrals & tax practice acquisitions – we offer a “dollar per client” or “% of fee”. We have had tremendous success growing organically, but we always enjoy and look forward to working with local tax preparers if for nothing else than to get tax practice tips. To discuss more, you can reach me at (949) 877-3143 or by email at MRarrache@MrSmartTax.com
Owner – Mr. Smart Tax, Inc.
IR-2016-152, Nov. 22, 2016
WASHINGTON — As the holidays approach, the Internal Revenue Service today reminded taxpayers to remember that a new law requires the IRS to hold refunds until mid-February in 2017 for people claiming the Earned Income Tax Credit or the Additional Child Tax Credit. In addition, new identity theft and refund fraud safeguards put in place by the IRS and the states may mean some tax returns and refunds face additional review.
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