As of January 1, 2019, the maximum wage base that is subject to the Social Security payroll tax will increase from $128,400 to $132,900.
There is no limit on earnings subjected to the Medicare payroll tax.
Tag: Important Tax Information (page 3 of 3)
For tax year 2017, student must receive Tuition Statement, form 1098-T, from an eligible institution to claim the tuition and fees deduction, American opportunity credit, or the lifetime learning credit,
There are certain reasons why institutions will not send you form 1098-T. For example having tuition waived or paid in full with scholarships, being a non-resident student, or having a formal separate financial and billing arrangement with an employer or government agency.
Keep records to prove enrollment, related expenses and tuition payments. This can be used to send to the IRS directly to claim the credit.
For more information and a test of questions to determine eligibility Click Here!
President Trump recently signed the tax reform bill into law which resulted into major changes to the code for both individuals and corporations. Here is a brief summary of the changes that will affect most of you.
- Tax Brackets – Same number of brackets, different tax rates and different ranges. If your taxable income is the same in 2018 as was 2017, you will pay less federal taxes. A lot of the difference are in the changes leading to “taxable income”.
- The marriage penalty is almost gone. – Under the old law the combined income for a married couple was taxed at a higher rate than the same total income for 2 individuals. For example: a single person with taxable income of $90K would be in the 25% bracket. A couple with $180k in taxable income is in the 28% bracket. Under the new law, both cases are in the 25% bracket.
- New Standard Deductions
| Filing Status | Old Law | New Law |
| Single | $6,500 | 12,000 |
| MFJ | 13,000 | 24,000 |
| MFS | 6,500 | 12,000 |
| HOH | 9,350 | 18,000 |
- Capital Gains (stock sales and sales of other appreciated assets)
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- Short term gains are taxed as ordinary income (no difference)
- Long term rates are as follows:
| Single | MFJ | HOH | MFS | |
| 0% up to: | $38,600 | $77,200 | $51,700 | $38,600 |
| 15% up to: | 425,000 | 479,000 | 452,400 | 239,500 |
| 20% over | 425,000 | 479,000 | 452,400 | 239,500 |
- Tax Breaks for Parents. The child tax credit is increased from $1,000 per child to $2,000 per child. Of that amount $1,400 is refundable. In addition, the phase out for eligibility is expanded.
| Tax Status | Old Law | New Law |
| MFJ | $110,000 | $400,000 |
| Individuals | $75,000 | $200,000 |
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- If children are 17 years and older or you care for elderly relatives, you can claim a nonrefundable credit of $500 each.
- Home mortgage interest can only be taken for mortgage balances up to $750,000. This was previously $1 million. This applies to loans taken after Dec. 15, 2017. Interest on home equity debt can no longer be deducted.
- State and Local Tax Deduction (SALT) is now limited to $10,000.
- Deductions that are disappearing:
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- Casualty and theft losses
- Unreimbursed employee expenses
- Moving expenses
- Pass-through income from sole proprietorship, LLCs, partnerships, and S corporations will be able to deduct 20% of the profit. There are phaseout income limits that apply to “professional services” business owners. They are $157,500 and $315,000 for individuals and married couples respectively.
- Corporate tax rates have been reduced for most corporations, but not for all. A corporation with profit below $50,000 will pay more in taxes. The new rate is 21% for all profits. The old rates were:
| From | To | Rate |
| $0 | $50,000 | 15% |
| 50,000 | 75,000 | 25% |
| 75,000 | 100,000 | 34% |
| 100,000 | 335,000 | 39% |
- Interesting: If in 2017 your corporate profit was $50,000; your federal tax was $7,500 (50K * 15%). That tax increases under the new law to $10,500 (50K * 21%). Let’s hope this is corrected soon.
This holiday season, if you’re in the spirit of giving, charitable contributions can be the gift that gives back!
Charitable contributions made to qualified organizations can help lower your tax bill. Record keeping of donations and contributions must be maintained no matter the amount. To properly back up your contributions please keep bank records, receipts, or payroll deductions reflecting the amount.
If you are receiving a benefit for your contribution, you can only deduct the amount that exceeds the fair market value (ex. gala tickets). Non-cash donations such as household items and clothing, must be in good used condition and valued at fair market price.
For more information, read these eight tips the IRS provides here!
On July 19, Governor Cuomo announced final regulations implementing New York’s nation-leading Paid Family Leave (PFL) program. The state’s PFL program will provide New Yorkers with job-protected, paid leave to bond with a new child, care for a loved one with a serious health condition or to help relieve family pressures when someone is deployed abroad on active military service.
Insurance companies notified disability benefits (DB) policyholders that PFL will be added to their DB policies effective January 1, 2018. Nearly all employees of DB policyholders will be automatically covered for PFL.
PFL will be funded through employee payroll deductions. As an employer, you are responsible for collecting the appropriate PFL contributions to cover the cost of the program. You may begin employee payroll deductions for PFL as of July 1, 2017.
The rate of PFL is 0.126% of the employee’s weekly wage, not to exceed 0.126% of the current New York State average weekly wage (AWW) of $1,305.92.
Please review the fact sheet for further information.
The IRS and state governments are combating identity theft and tax fraud this tax year. Beginning this filing season all tax payers are required to have identity verification. Please include with your tax documents a copy of your state driver’s license or other state ID. If you’re married, both individuals must meet the requirement.
Sincerely,
BYB
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