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Even if Your Income is High, Your Family May Be Able to Benefit From the 0% Long-Term Capital Gains Rate

Even if Your Income is High, Your Family May Be Able to Benefit From the 0% Long-Term Capital Gains Rate

If making financial gifts to your loved ones is part of your plans this gift giving season — or if you’d simply like to reduce your capital gains tax — consider giving appreciated stock instead of cash this year. Doing this might allow you to eliminate all federal tax liability on the appreciation, or at least significantly reduce it. Leveraging lower rates Investors generally are subject to a 15% tax rate on their long-term capital gains (20% if they’re in the top ordinary income tax bracket of 39.6%). But the long-term capital gains rate is 0% for gain that would be taxed at 10% or 15%...

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Accrual-Basis Taxpayers: These Year-End Tips Could Save You Tax

Accrual-Basis Taxpayers: These Year-End Tips Could Save You Tax

Tax law changes could go into effect next year that would significantly reduce income tax rates for many businesses, making 2017 an especially good year to accelerate deductible expenses. Why? Deductions save more tax when rates are higher. Timing income and expenses can be a little more challenging for accrual-basis taxpayers than for cash-basis ones. But being an accrual-basis taxpayer offers valuable year-end tax planning opportunities when it comes to deductions. Tracking incurred expenses The key to saving tax as an accrual-basis taxpayer is to properly record and recognize expenses...

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You May Need to Add RMDs to Your Year-End To-Do List

You May Need to Add RMDs to Your Year-End To-Do List

From shopping for gifts to donating to our favorite charities to making New Year’s Eve plans, most of us have a lot of things on our to-do lists this time of year. For taxpayers “of a certain age” with a tax-advantaged retirement account, as well as younger taxpayers who’ve inherited such an account, there may be one more thing that’s critical to check off the to-do list before year end: Take required minimum distributions (RMDs). A huge penalty After you reach age 70½, you generally must take annual RMDs from your: IRAs (except Roth IRAs), and Defined contribution plans, such as 401(k)...

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Getting Around the $25 Deduction Limit for Business Gifts

Getting Around the $25 Deduction Limit for Business Gifts

This is the time of year when it’s common for businesses to make thank-you gifts to customers, clients, employees, and other business entities and associates. Unfortunately, the tax rules limit the deduction for business gifts to $25 per person per year, a limitation that has remained the same since it was added into law back in 1962. Fifty-five years later, the $25 limit is unrealistically small in many business gift-giving situations. Fortunately, there are a few exceptions. The exceptions Here’s a quick rundown of the major exceptions to the $25 limit: Gifts to a business entity. The $25...

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Reduce Your 2017 Tax Bill by Buying Business Assets

Reduce Your 2017 Tax Bill by Buying Business Assets

Two valuable depreciation-related tax breaks can potentially reduce your 2017 taxes if you acquire (and place in service) qualifying assets by the end of the tax year. Tax reform could enhance these breaks, so you’ll want to keep an eye on legislative developments as you plan your asset purchases. Section 179 expensing Sec. 179 expensing allows businesses to deduct up to 100% of the cost of qualifying assets (new or used) in Year 1 instead of depreciating the cost over a number of years. Sec. 179 can be used for fixed assets, such as equipment, software and real property improvements. The...

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Why You May Want to Accelerate Your Property Tax Payment Into 2017

Why You May Want to Accelerate Your Property Tax Payment Into 2017

Accelerating deductible expenses, such as property tax on your home, into the current year typically is a good idea because it will defer tax, which usually is beneficial. Prepaying property tax may be especially beneficial this year, because proposed tax legislation might reduce or eliminate the benefit of the property tax deduction beginning in 2018. Proposed changes The initial version of the House tax bill would cap the property tax deduction for individuals at $10,000. The initial version of the Senate tax bill would completely eliminate the property tax deduction for individuals. In...

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