On August 8, 2018, the IRS issued proposed regulations for the new Section 199A.  199A allows many sole proprietorships, partnerships, trusts, and S corporations to deduct 20% of their qualified business income. Qualified business income includes domestic income from a trade or business.  However, wages, capital gains, interest income, and dividend income do not constitute qualified business income. Eligible business owners can claim the 199A deduction for the first time with respect to their…

  Under the Tax Cuts and Jobs Act, moneys withdrawn from a 529 Plan in an amount up to $10,000.00 and paid towards a child’s annual tuition expenses at a private or religious elementary or secondary public school are excluded from gross income.  This only applies to tuition.  This also only applies at the federal level. California currently does not conform to the new federal laws with respect to 529 plans.  This means that if…

  Settlements and judgments are both taxable, but there may some exceptions if you settle. Settlements and judgments are taxed pursuant to the type of claim involved.  For example, lost wages that are recovered will be taxable as wages; lost business profits will be taxable as business profits; etc.  With respect to losses in value of property, there could be capital gains or losses. You may have heard that personal injury damages are not taxable,…

  At the end of May, 2018, the IRS issued Notice 2018-54.  The Notice indicates that the IRS is working on proposed regulations to address State attempts to circumvent the new laws regarding the deductibility of state and local tax payments on an individual’s federal income tax return. See SB 227, which would have started the California Excellence Fund allowing taxpayers to make payments to the fund and deduct those payments as charitable deductions.  This…

  Mendes Weed, LLP has combined resources and knowledge to assist you and your family throughout any phase of your life.  We assist clients with estate planning, tax, family law, business law, trust administration, probate, and elder law. Because we assist families and small businesses in so many important areas of law, we understand which changes in the laws, including tax law, will affect our clients. Did you know that minor children are subject to…

  Update your W-4   Taxpayers can no longer claim a personal exemption.  Make sure you have proper wage withholding.  If you enjoy getting a refund when you file taxes, and you don’t want to owe, you will likely need to update your W-4   Get your medical procedure you’ve been putting off done in 2018   The AGI floor for itemizing medical deductions is now 7.5% instead of the previous 10%.  In other words…

  Business owners may have questions about which flow-through entity might be right for them after the Tax Cuts and Jobs Act. Internal revenue Code (IRC) Section 199A provides a deduction for individuals and trusts on combined qualified business income (QBI).  This provision is effective December 31, 2017, through December 31, 2025, and it applies to sole proprietorships, disregarded entities, partnerships (LLCs taxed as partnerships), and S Corporations. QBI is ordinary income less ordinary deductions…

At Mendes Weed, LLP, we advocate for our clients to the fullest extent of the law. Part of our advocacy is helping our clients keep informed of news and information that may affect their livelihood, their family, and their business. Since this is the time of year many people are preparing to file their 2017 tax return, we wanted to bring to attention that IRS tax audits for self-employed individuals are on the rise. Prepare…

https://youtu.be/2TE1RvU4TQg As you may be aware, there will be some drastic tax changes that will go into effect in 2018.  Many clients want to know how this will affect them. Please consider the following changes: There will still be 7 income tax brackets for individuals, but the rates are all slightly lower for the most part.  The standard deduction will double, and the personal exemption will be eliminated. Many itemized deductions will be eliminated. Alimony…

  The new tax bill, which was signed into law on December 22, 2017 by President Trump, leaves many taxpayers uncertain about how this law may affect their tax and income status. Of primary concern in California and other high-tax, high-cost states is the $10,000 limit on deductions for state, local, and property taxes. Data from the Department of Finance stated the average state and local deductions for Californians in 2015 was over $18,400. The…