While most provisions of the Tax Cuts and Jobs Act (TCJA) went into effect in 2018 and either apply through 2025 or are permanent, there are two major changes under the act for 2019. Here’s a closer look. 1. Medical expense deduction threshold With rising health care costs, claiming whatever tax breaks related to health care that you can is more important than ever. But there’s a threshold for deducting medical expenses that was already difficult for many taxpayers to meet, and it may be even harder to meet this year. The TCJA temporarily reduced the threshold from 10% of adjusted gross income (AGI) to 7.5% of AGI. Unfortunately, the reduction applies only to 2017 and 2018. So for 2019, the threshold returns to 10% — unless legislation...
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Jan 2019
Retirement plan contribution limits are indexed for inflation, and many have gone up for 2019, giving you opportunities to increase your retirement savings: Elective deferrals to 401(k), 403(b), 457(b)(2) and 457(c)(1) plans: $19,000 (up from $18,500) Contributions to defined contribution plans: $56,000 (up from $55,000) Contributions to SIMPLEs: $13,000 (up from $12,500) Contributions to IRAs: $6,000 (up from $5,500) One exception is catch-up contributions for taxpayers age 50 or older, which remain at the same levels as for 2018: Catch-up contributions to 401(k), 403(b), 457(b)(2) and 457(c)(1) plans: $6,000 Catch-up contributions to SIMPLEs: $3,000 Catch-up contributions to IRAs: $1,000 Keep in mind that additional factors may affect how much you’re allowed to contribute (or how much your employer can contribute on your behalf). For example, income-based limits...
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Jan 2019
There aren’t too many things businesses can do after a year ends to reduce tax liability for that year. However, you might be able to pay employee bonuses for 2018 in 2019 and still deduct them on your 2018 tax return. In certain circumstances, businesses can deduct bonuses employees have earned during a tax year if the bonuses are paid within 2½ months after the end of that year (by March 15 for a calendar-year company). Basic requirements First, only accrual-basis taxpayers can take advantage of the 2½ month rule. Cash-basis taxpayers must deduct bonuses in the year they’re paid, regardless of when they’re earned. Second, even for accrual-basis taxpayers, the 2½ month rule isn’t automatic. The bonuses can be deducted on the tax return for the year...
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Jan 2019
As posted to the Paul Grignon YouTube Channel on 10/13/11 Debt . . . government, corporate and household . . . has reached astronomical proportions. Where does all this money come from? How could there BE that much money to lend? The answer is . . . there isn't. Today MONEY IS DEBT. If this is puzzling to you, you are not alone. Very few people understand, even though ALL of us are affected. This fast-paced and highly entertaining animated feature by artist, Paul Grignon explains today's magically perverse DEBT-MONEY SYSTEM in terms that are easy to understand. Money as Debt has been viewed by millions and is now available online in at least 24 languages. Segment 1 - Run time (9:54) Segment 2 - Run time (13:38) Segment 3...
Now that 2019 has begun, there isn’t too much you can do to reduce your 2018 income tax liability. But it’s smart to begin preparing for filing your 2018 return. Because the Tax Cuts and Jobs Act (TCJA), which was signed into law at the end of 2017, likely will have a major impact on your 2018 taxes, it’s a good time to review the most significant provisions impacting individual taxpayers. Rates and exemptions Generally, taxpayers will be subject to lower tax rates for 2018. But a couple of rates stay the same, and changes to some of the brackets for certain types of filers (individuals and heads of households) could cause them to be subject to higher rates. Some exemptions are eliminated, while others increase. Here...
The dawning of 2019 means the 2018 income tax filing season will soon be upon us. After year end, it’s generally too late to take action to reduce 2018 taxes. Business owners may, therefore, want to shift their focus to assessing whether they’ll likely owe taxes or get a refund when they file their returns this spring, so they can plan accordingly. With the biggest tax law changes in decades — under the Tax Cuts and Jobs Act (TCJA) — generally going into effect beginning in 2018, most businesses and their owners will be significantly impacted. So, refreshing yourself on the major changes is a good idea. Taxation of pass-through entities These changes generally affect owners of S corporations, partnerships and limited liability companies (LLCs) treated as...
Tax planning is a juggling act for business owners. You have to keep your eye on your company’s income and expenses and applicable tax breaks (especially if you own a pass-through entity). But you also must look out for your own financial future. For example, you need to develop an exit strategy so that taxes don’t trip you up when you retire or leave the business for some other reason. An exit strategy is a plan for passing on responsibility for running the company, transferring ownership and extracting your money from the business. Buy-sell agreement When a business has more than one owner, a buy-sell agreement can be a powerful tool. The agreement controls what happens to the business when a specified event occurs, such as an owner’s...
When Robert Kiyosaki was young, his poor dad always told him that he needed to go to school so that he could get a good job. To his poor dad, getting a good job was the most important thing in life. His poor dad worked very hard . . . and he was always worried about money. Yet, he never got ahead. His job was actually one of the things that kept him from succeeding. He toiled away working for others, often getting raises only to keep with the cost of living and pay a high percentage to the government in taxes. On the other hand, Robert’s rich dad never had a “real” job, and he was rich and successful. Rich dad understood that the sentiment,...
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