The investment interest expense deduction – Less beneficial than you might think

| Tax Briefs

Investment interest — interest on debt used to buy assets held for investment, such as margin debt used to buy securities — generally is deductible for both regular tax and alternative minimum tax purposes. But special rules apply that can make this itemized deduction less beneficial than you might think. Limits on the deduction First, you can’t deduct interest you incurred to produce tax-exempt income. For example, if you borrow money to invest in municipal bonds, which are exempt from Read more [...]

What you need to know about the tax treatment of ISOs

| Tax Briefs

Incentive stock options allow you to buy company stock in the future at a fixed price equal to or greater than the stock’s fair market value on the grant date. If the stock appreciates, you can buy shares at a price below what they’re then trading for. However, complex tax rules apply to this type of compensation. Current tax treatment ISOs must comply with many rules but receive tax-favored treatment: You owe no tax when ISOs are granted. You owe no regular income tax when you exercise Read more [...]

The “manufacturers’ deduction” isn’t just for manufacturers

| Tax Briefs

The Section 199 deduction is intended to encourage domestic manufacturing. In fact, it’s often referred to as the “manufacturers’ deduction.” But this potentially valuable tax break can be used by many other types of businesses besides manufacturing companies. Sec. 199 deduction 101 The Sec. 199 deduction, also called the “domestic production activities deduction,” is 9% of the lesser of qualified production activities income or taxable income. The deduction is also limited to 50% Read more [...]

Indiana Identity Protection Program for 2017 tax season

| Alerding Alerts, Tax Briefs

Notice from the Dept. of Revenue The Indiana Department of Revenue again will implement the Identity Protection Program for the 2017 tax season. This program is designed to not only stop fraud, but to deter fraud in the state of Indiana. Since its inception in 2014, the Identity Protection Program has stopped more than $100 million in fraudulent refund attempts. Security Features To prevent taxpayers’ refunds from being stolen, the department will use the automated identity verification Read more [...]

Deduction for state and local sales tax benefits some, but not all, taxpayers

| Tax Briefs

The break allowing taxpayers to take an itemized deduction for state and local sales taxes in lieu of state and local income taxes was made “permanent” a little over a year ago. This break can be valuable to those residing in states with no or low income taxes or who purchase major items, such as a car or boat. Your 2016 tax return How do you determine whether you can save more by deducting sales tax on your 2016 return? Compare your potential deduction for state and local income tax to Read more [...]

Few changes to retirement plan contribution limits for 2017

| Tax Briefs

Retirement plan contribution limits are indexed for inflation, but with inflation remaining low, most of the limits remain unchanged for 2017. The only limit that has increased from the 2016 level is for contributions to defined contribution plans, which has gone up by $1,000. Type of limit 2017 limit Elective deferrals to 401(k), 403(b), 457(b)(2) and 457(c)(1) plans $18,000 Contributions to defined contribution plans $54,000 Contributions to SIMPLEs $12,500 Contributions Read more [...]

Help prevent tax identity theft by filing early

| Tax Briefs

If you’re like many Americans, you might not start thinking about filing your tax return until close to this year’s April 18 deadline. You might even want to file for an extension so you don’t have to send your return to the IRS until October 16. But there’s another date you should keep in mind: January 23. That’s the date the IRS will begin accepting 2016 returns, and filing as close to that date as possible could protect you from tax identity theft. Why early filing helps In Read more [...]

2017 Q1 tax calendar: Key deadlines for businesses and other employers

| Tax Briefs

Here are some of the key tax-related deadlines affecting businesses and other employers during the first quarter of 2017. Keep in mind that this list isn’t all-inclusive, so there may be additional deadlines that apply to you. January 31 File 2016 Forms W-2, “Wage and Tax Statement,” with the Social Security Administration and provide copies to your employees. File 2016 Forms 1099-MISC, “Miscellaneous Income,” reporting nonemployee compensation payments in Box 7 with the IRS, and Read more [...]

Why making annual exclusion gifts before year-end can still be a good idea

| Tax Briefs

A tried-and-true estate planning strategy is to make tax-free gifts to loved ones during life, because it reduces potential estate tax at death. There are many ways to make tax-free gifts, but one of the simplest is to take advantage of the annual gift tax exclusion with direct gifts. Even in a potentially changing estate tax environment, making annual exclusion gifts before year-end can still be a good idea. What is the annual exclusion? The 2016 gift tax annual exclusion allows you to give Read more [...]

Can you pay bonuses in 2017 but deduct them this year?

| Tax Briefs

You may be aware of the rule that allows businesses to 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). But this favorable tax treatment isn’t always available. For one thing, 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. Even for accrual-basis Read more [...]