Harless Tax Blog

Harless Tax Blog

Did You Know?

Wednesday, March 29, 2017

Source: collegeboard.org
The average published cost for tuition, fees, room and board at private nonprofit colleges and universities is $45,570 in the 2016-17 academic year. At public institutions, that average cost is $35,370 for out-of-state students, while state residents pay $20,090, on average. Financial aid and tax benefits may reduce the actual cost of higher education.  See More

Safe Harbor 401(k) Plans for Small Companies

Thursday, March 23, 2017

Among employer-sponsored retirement plans, 401(k)s have become the standard. Some prospective employees assume that a job will come with a 401(k). Therefore, offering a 401(k) at your company may help you hire desired workers, and help you retain valued employees.

That said, there can be drawbacks to sponsoring a traditional 401(k). Such plans require annual testing to ensure that a 401(k) does not discriminate in favor of highly compensated employees, including owner-employees. Failing such a test may limit the amount that company principals and certain others may contribute to the plan, resulting in a reduced tax-deferred retirement fund for key individuals.

One solution is to offer a safe harbor 401(k) for your small business. A study released in late 2016 by Employee Fiduciary, a 401(k) provider for small businesses, found that 68% of the small firms responding to the survey use a safe harbor 401(k) plan design to avoid annual nondiscrimination testing. A safe harbor 401(k) allows sponsoring companies to avoid these tests, providing the business makes certain contributions to employees’ accounts. The mandatory employer contributions are always 100% vested.  See More

Holding Down Premiums for Medicare Part B

Monday, March 20, 2017

Medicare, the federal government’s health insurance program for people 65 and older, has four parts (see Trusted Advice, “ABCDs of Medicare”). Although Medicare offers good value to many seniors, high-income Medicare enrollees can pay over $5,000 a year for Part B, whereas high-income couples on Medicare can pay over $10,000 in annual premiums. For that money, high-income enrollees get the same Medicare coverage that most seniors get for about $1,300 a year, or $2,600 for couples.

Income-based premiums
Medicare Part B, which covers doctor visits and some other medical outlays, charges a monthly premium. Most enrollees have that premium deducted from their Social Security deposits, paying around $109 a month in that manner. (The “standard” amount, paid by some enrollees, is $134 a month in 2017, about $1,600 a year.) However, in 2017, seniors with certain levels of income will pay more, with premiums increasing as income tops certain thresholds.  See More

Trump’s “Skinny” Budget Proposal Calls for Decreased IRS Funding

Friday, March 17, 2017

Source CCH Tax Group. Read Original Article

President Trump released his much-anticipated 2018 budget blueprint, also known as a “skinny” budget, on March 16. The budget blueprint calls for a reduction in IRS funding by $239 million for the next fiscal year (FY) 2017-2018, including an overall funding reduction of $519 million, or 4.1 percent decrease, for the Treasury from current levels. “The Budget will bring renewed discipline to the Department by focusing resources on collecting revenue, managing the Nation’s debt, protecting the financial system from threats, and combating financial crime and terrorism financing,” the blueprint states.

According to the budget blueprint, the proposed reduction of the IRS budget by $239 million would be made in conjunction with savings accrued from diverting resources from “antiquated operations.” The blueprint states that the budget proposal preserves key operations of the IRS, including combating fraud and identity theft, as well as the enforcement of tax laws.  See More

Playing Defense as Stock Prices Soar Part 1 of 2

Monday, March 13, 2017

As of this writing, major U.S. stock market indexes are at or near record highs. This bullish run might continue...or it might end with a severe slide. Here are some strategies to consider.

Stay the course Many investors will prefer to keep their current stock market positions. For nearly a century, every stock market reversal has been followed by a recovery. Even the severe shock of late 2008 through early 2009 has led to new peaks, less than a decade later.  See More

TAX DEADLINE REMINDERS, MARCH 15

Friday, March 10, 2017

Partnerships. File a 2016 calendar-year return (Form 1065). Provide each partner with a copy of Schedule K-1 (Form 1065), Partner’s Share of Income, Deductions, Credits, etc., or a substitute Schedule K-1. If you want an automatic six-month extension of time to file the return and provide Schedule K-1 or a substitute Schedule K-1, file Form 7004. Then file Form 1065 by September 15.

S corporations. File a 2016 calendar-year income tax return (Form 1120S) and pay any tax due. Provide each shareholder with a copy of Schedule K-1 (Form 1120S), Shareholder's Share of Income, Deductions, Credits, etc., or a substitute Schedule K-1. If you want an automatic six-month extension of time to file the return, file Form 7004 and deposit what you estimate you owe.  See More

Factoid: States for Seniors

Wednesday, March 08, 2017

Of more than 55 million total Medicare beneficiaries, about 10 million live in just two states: California and Florida.  See More

Tax Date Reminder

Tuesday, February 07, 2017

February 15
All businesses. Give annual information statements (Forms 1099) to recipients of certain payments you made during 2016. Payments that are covered include: (1) amounts paid in real estate transactions; (2) amounts paid in broker and barter exchange transactions; and (3) payments to attorneys.

Employers. For Social Security, Medicare, withheld income tax, and nonpayroll withholding, deposit the tax for payments in January if the monthly rule applies.

Individuals. If you claimed exemption from income tax withholding last year on the Form W-4 you gave your employer, you must file a new Form W-4 to continue your exemption for another year. See More

The “Other” Exchange-Traded Funds

Sunday, February 05, 2017

Exchange-traded funds (ETFs) have become popular in this century, due largely to relatively low expenses and tax efficiency. As the name indicates, ETFs trade like stocks, on an exchange, as opposed to mutual funds, which typically are bought from and sold to the sponsoring company. Often, ETFs track a particular market index.

Less publicized these days are what might be considered the original exchange-traded funds, known as closed-end funds. Closed-end funds also issue a certain number of shares, which trade between investors on a stock exchange. Rather than mimic an index, closed-end funds usually are actively managed, in an effort to deliver superior returns to investors.  See More

Did You Know?

Monday, January 30, 2017

Source wsj.com.  About 84% of large employers will offer high-deductible health plans in 2017. Indeed, 35% of large employers will offer only high-deductible plans to their workforce. Some workers’ deductibles will be offset by employers’ contributions to health savings accounts: tax-free funds that workers can use to pay for out-of-pocket health care costs.

[FEB 1] IRA REMINDER: For 2016 and 2017, total contributions to traditional and Roth IRAs cannot be more than $5,500, or $6,500 for those age 50 or older.  See More