Once your 2018 tax return has been successfully filed with the IRS, you may still have some questions.
Here are brief answers to three questions that we’re frequently asked at this time of year.
Attention Seniors! Medicare Premiums May Lower Your Tax Bill
Americans who are 65 and older qualify for basic Medicare insurance, and they may need to pay additional premiums to get the level of coverage they desire. The premiums can be expensive, especially if you’re married and both you and your spouse are paying them.
But one aspect of paying premiums might be positive: If you qualify, they may help lower your tax bill.
It’s Not Too Late to Make a Deductible IRA Contribution for 2018
Do you want to save more for retirement on a tax-favored basis? If so, and if you qualify, you can make a deductible traditional IRA contribution for the 2018 tax year between now and the tax filing deadline and claim the write-off on your 2018 return. Or you can contribute to a Roth IRA and avoid paying taxes on future withdrawals.
You can potentially make a contribution of up to $5,500 (or $6,500 if you were age 50 or older as of December 31, 2018). If you’re married, your spouse can potentially do the same, thereby doubling your tax benefits.
The deadline for 2018 traditional and Roth contributions for most taxpayers is April 15, 2019 (April 17 for those in Maine and Massachusetts).
There are some ground rules.
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Understanding Required Minimum Distributions (RMDs)
Required minimum distributions (RMDs) are the amounts you’re legally required to withdraw from your qualified retirement plans and traditional IRAs after reaching age 70½. If you participate in a qualified retirement plan, such as a 401(k), you must generally begin taking required withdrawals from the plan no later than April 1 of the year after which you turn age 70½.
However, there’s an exception that applies to certain plan participants who are still working for the entire year in which they turn 70½.
Your IC-DISC Strategy: Does it Need to Change?
Jen: This is the PKF Texas Entrepreneur’s Playbook. I’m Jen Lemanski, and I’m back again with Frank Landreneau, one of our International Tax Directors. Frank, welcome back to The Playbook.
Frank: Thanks, Jen. It’s great to be back.
Jen: We’ve been talking about IC-DISC, and last time we talked about tax reform. What’s changed strategy wise since before tax reform and now after tax reform?
Frank: I think with IC-DISC it’s kind of a Back to the Future type of thing, because when the IC-DISC came out, it was really meant to be a deferral tactic and to really get tax advantages, because you’re deferring the recognition of the IC-DISC income, or really, the export income.
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How You (and Your College Student) Qualify for Dependent Tax Credit
If you’re the parent of a child who is age 17 to 23, and you pay all (or most) of his or her expenses, you may be surprised to learn you’re not eligible for the child tax credit.
But there’s a dependent tax credit that may be available to you. It’s not as valuable as the child tax credit, but when you’re saving for college or paying tuition, every dollar counts!
Keeping Your Not-for-Profit Tax-Exempt Status
If you think that, once your not-for-profit receives its official tax-exempt status from the IRS, you don’t have to revisit it, think again. Whether your organization is a Section 501(c)(3), Sec. 501(c)(7) or other type, be careful.
The activities you conduct, the ways you generate revenue and how you use that revenue could potentially threaten your exempt status. It’s worth reviewing the IRS’s exempt-status rules to make sure your organization is operating within them.
Upcoming Deadline: 2018 Gift Tax Return
Did you make large gifts to your children, grandchildren or other heirs last year? If so, it’s important to determine whether you’re required to file a 2018 gift tax return — or whether filing one would be beneficial even if it isn’t required.
Filing Requirements
Generally, you must file a gift tax return for 2018 if, during the tax year, you made gifts:
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What Individual Taxpayers Need to Know About Vehicle-Expense Deductions
It’s not just businesses that can deduct vehicle-related expenses. Individuals also can deduct them in certain circumstances. Unfortunately, the Tax Cuts and Jobs Act (TCJA) might reduce your deduction compared to what you claimed on your 2017 return.
For 2017, miles driven for business, moving, medical and charitable purposes were potentially deductible. For 2018 through 2025, business and moving miles are deductible only in much more limited circumstances. TCJA changes could also affect your tax benefit from medical and charitable miles.
If You Own a Pass-Through Entity… Beware the Ides of March
Shakespeare’s words don’t apply just to Julius Caesar; they also apply to calendar-year partnerships, S corporations and limited liability companies (LLCs) treated as partnerships or S corporations for tax purposes. Why?
The Ides of March, more commonly known as March 15, is the federal income tax filing deadline for these “pass-through” entities.