Accounting Link USA

Accounting Link USA Office Locations:

Miami, FL | Fort Lauderdale, FL | Cooper City, FL |
Charlotte, NC

11/01/2024

The IRS has announced an increase in the limit for 401(k) contributions for 2025. The new amount allowed to be deferred by employees will be $23,500. This is up from $23k for 2024. Don't forget to adjust your plan at the first of the year to maximize your benefit and deduction.

03/02/2018

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Why you may want to rethink your estate plan in 2018
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The Tax Cuts and Jobs Act signed into law at the end of 2017 sets the estate tax exemption at $11.2 million per individual for 2018. (The exemption amount is adjusted annually for inflation.)
Now that the estate tax exemption has seriously increased, it's time to review your estate plan to make sure it still accomplishes your wishes.
With the higher exemption amount, fewer estates will be subject to tax. Regardless of the size of one's estate, everyone needs the following basic documents, and they need to be updated for the current rules and your particular circumstances:

• A financial inventory listing such things as bank accounts, income sources, insurance policies and other assets.

• A will that specifies who is to inherit your assets and who is to be the guardian of any minor children you have.

• A power of attorney naming someone to handle your financial affairs if you become disabled or seriously ill.

• A health care directive (living will) stating your wishes should you become terminally ill or permanently unconscious.

03/02/2018

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Tax breaks for 2017 tax return revived
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In early February, Congress passed a federal budget bill that revived several expired tax breaks for the 2017 tax year.
These late changes are retroactive to the beginning of 2017. That means they may apply to your 2017 tax return. Below you'll find a handful of commonly used tax breaks that are back on the table. Take a look and see if they apply to your situation:

• Mortgage insurance deduction. You can now once again deduct mortgage insurance premiums as an itemized deduction. This deduction begins to phase out for taxpayers with adjusted gross income (AGI) of $100,000 or more.

• Tuition and fees deduction. If you paid qualified tuition or expenses related to higher education, you may be able to deduct as much as $4,000 of those costs. The deduction is capped at $4,000 for single filers with AGI of $65,000 or less ($130,000 for married joint filers) and at $2,000 for single filers with AGI of $80,000 or less ($160,000 for married joint filers).

• Energy-efficient home improvement credit. Upgrades to windows, heating and cooling systems and other energy-efficient home improvements may be eligible for a tax credit equal to 10 percent of the amount paid, up to $500.

• Mortgage debt forgiveness exclusion. You can exclude qualifying mortgage debt on your primary residence that was discharged or forgiven from your income.

02/26/2018

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IRS updates 2018 withholding tables
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The IRS recently released updated income tax withholding tables. These updates are a result from changes in the Tax Cuts and Jobs Act (TCJA) passed in late 2017. Employers will have until Feb. 15 to update their payroll systems. Employees will start seeing the changes to their paychecks shortly thereafter.
The updates reduce income tax rates for many taxpayers. It's important to keep an eye on your pay stubs over the coming weeks. If the adjustments are done incorrectly, you'll either have too much taken out of your paychecks, or too little will be withheld. That means a big tax bill for you at the end of the year.
Here are a couple tips to ensure you'll be in a good position come the 2018 tax season:
• Check that changes have been made. Many people will see their paychecks increase a bit. If there's no change or you see a decrease, talk to your employer to find out why. You don't need to file a new Form W-4 if you already have one on file with your employer.

• Use the withholding calculator. The IRS said it will update its online withholding calculator tool by late February. Check this tool during March to see whether your withholding amounts are correct.

• Check your withholdings midyear. It's important to make sure you're having the right amount withheld from your paycheck throughout the year. Check midyear when you still have time to make adjustments. This may be especially helpful if you have multiple jobs, or change jobs this year.

01/05/2018

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Standard mileage rate increase for 2018
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It's time to revise the standard mileage rate you use to calculate deductible vehicle expenses during 2018 for business, medical and moving mileage. Take a look at what changed:

• Business: Starting Jan. 1, you can reimburse yourself or your employees 54.5 cents per mile when using a personal vehicle for business purposes. This is up 1 cent from last year.
The standard business mileage rate includes allowance for depreciation of 25 cents per mile that reduces your cost basis in your vehicle.
It's important to keep detailed records to support your deduction for mileage. Information to record includes the date, how many miles you drove, your destination and the purpose of the trip. Keep receipts for parking fees and tolls as well, as you may be able to deduct those expenses even if you use the standard mileage rate.

• Medical and moving: The rate for medical and moving mileage has also increased 1 cent from last year to 18 cents per mile.

• Charity: If you do charitable service driving, this rate remains 14 cents per mile, the same as 2017.

01/05/2018

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2018 tax reform changes: At a glance
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Some of the most significant tax changes since the 1980s took effect in 2018. Congress passed a new tax bill in late December 2017. Here's a brief recap:
• Reduces income tax brackets. The bill retains seven brackets, but at reduced rates, with the highest tax bracket dropping to 37 percent from 39.6 percent.
• Doubles standard deductions. The standard deduction nearly doubles to $12,000 for single filers and $24,000 for married filing jointly. To help cover the cost, personal exemptions and most additional standard deductions are suspended.
• Limits itemized deductions. Many itemized deductions are no longer available, or are now limited. Here are some of the major examples:
o Caps state and local tax deductions. State and local tax deductions are limited to $10,000 total for all property, income and sales taxes.
o Caps mortgage interest deductions. For new acquisition indebtedness, mortgage interest will be deductible on indebtedness of no more than $750,000. Existing mortgages are unaffected by the new cap as the new limits go into place for acquisition indebtedness after Dec. 14, 2017. The act also suspends the deductibility of interest on home equity debt.
o No more 2 percent miscellaneous deductions. Most miscellaneous deductions subject to the 2 percent of adjusted gross income threshold are now gone.
• Bumps up child tax credit, adds family tax credit. The child tax credit increases to $2,000 from $1,000, with $1,400 of it being refundable even if no tax is owed. The phaseout threshold increases sharply to $400,000 from $110,000 for joint filers, making it available to more taxpayers. Also, dependents ineligible for the child tax credit can qualify for a new $500-per-person family tax credit.
• Reduces pass-through business taxes. Most owners of pass-through entities such as S corporations, partnerships and sole proprietorships will see their income tax lowered with a new 20 percent income reduction calculation.

08/23/2016

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Will your student loans affect your tax return?
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If you have student loans to repay, you may be wondering how that debt will affect your tax return. While repayment of the principal portion of your debt is not tax deductible, you can take an above-the-line deduction for up to $2,500 of interest that you pay in a year, as long as you meet certain conditions such as an income limit. "Above-the-line" means the interest deduction reduces your taxable income before you take other eligible expenses or your standard deduction into account.
What if you don't repay your loans? If some or all of your debt is cancelled under a qualified program, you might not have to report the income. That may also be true for loan repayments made to you under specified state or federal programs. In general, however, when a student loan is forgiven, the amount you no longer have to repay is taxable income. Why? Because you have received an economic benefit equivalent to income. One other consequence of defaulting on, or failing to pay, your student loan: The IRS can apply your tax refund to the outstanding debt.

08/05/2016

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Life changes call for a tax tune-up
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Summer can be a time for life changes. Marriage, a school-break job or entrepreneurial venture, a move to a new home – all of these major events call for tax planning. The good news is a few simple steps will get you started, even if you feel your current circumstances limit the time you have to devote to your taxes.
For example, when you marry or start a new job, updating Form W-4, Employee's Withholding Allowance Certificate, will help you determine the correct amount of withholding that reflects the change in your income and deductions. If you started your own business, you may need to calculate and pay estimated tax. Buying a home could affect the amount of deductions you can claim, which in turn can affect the amount of tax you may owe. And all of those events may affect the amount of your advance premium tax credit. The credit is paid to your insurer to lower your premium. Changes can mean you receive too much and have to pay back the extra at tax time.

05/11/2016

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Protect your family elders from tax and financial scams
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The "Older Americans Act Reauthorization Act of 2016" was signed into law in April, and May is Older Americans Month, a national celebration of the many contributions of older Americans. Both events present a good opportunity to talk to your family elders about financial safety.
One place to start: The top ten scams reported to the U.S. Senate Aging Committee's Fraud Hotline. Number one on that list is a tax scam that plagues every age – receiving calls from fraudsters posing as agents of the Internal Revenue Service. The IRS has issued multiple warnings about this scam, which continues to evolve into different forms. Make certain your family members know the IRS does not telephone to initiate contact about tax matters.
Other frauds from the Aging Committee list include sweepstakes scams and "robocalls," those annoying unwanted phone calls that have effectively sidelined the federal government's do-not-call registry. Computer scams, where callers claim to represent a well-known technology company and attempt to gain access to a victim's computer, and identity theft, another scourge affecting all ages, also made the list

05/10/2016

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Simplify your tax life by organizing your chart of accounts
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If you haven't revised your business's chart of accounts since you initially set it up, you may be missing out on an easy way to simplify your life at tax time. That's because your chart of accounts is more than a basic bookkeeping tool. Your chart can also help you keep track of items that affect your tax return.
For example, your business income may have multiple sources, including the sale of goods and services to customers, rents, royalties, interest, dividends, gains from the sale of business and investment assets, and "miscellaneous" receipts. These different types of income are treated differently under federal income tax rules and appear in different places on your return. Arranging your income accounts for tax-specific categories can streamline tax preparation time and reduce misstatements.
Expense accounts can benefit from organization too. For instance, you'll want to separate allowable deductions, such as ordinary and necessary business costs, from expenditures that produce benefits in future taxable years, such as equipment. That keeps your depreciation schedule current, highlights assets you've purchased and disposed of, and ensures proper reporting on federal, state, and local returns.
Organizing your chart of accounts to accurately track business events that affect your taxes can be cost-effective. Contact us for additional ways to get the most benefit from your chart of accounts.

03/04/2016

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The Affordable Care Act:
What you can expect on your 2015 return
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How will the Affordable Care Act affect your 2015 federal income tax return? Here are four items to consider.

* Premium tax credit. If you bought your health insurance policy on the healthcare.gov website, you may have received a tax credit. You could receive the credit in advance during the year as a reduction in your health insurance premium or claim it on your tax return. Either way, you need to file a tax return using the information on Form 1095-A, Health Insurance Marketplace Statement.

* New information forms. This year, you may have received new-to-2015 forms from your insurance company or other health insurance provider, or from your employer. Forms 1095-B and 1095-C provide information about your health policy. You don't need to attach either of these forms to your federal income tax return and you can file before you receive them.

* Penalties. If you did not have health insurance during 2015, you'll owe a penalty unless you qualify for an exception. For 2015, the penalty is the greater of $325 per adult ($162.50 per child), up to a maximum of $975 for families, or 2% of your yearly household income above the filing threshold (capped at the price of a Bronze plan).

* Net investment income surtax. This 3.8% surtax applies to income such as interest, dividends, and capital gains when your adjusted gross income (AGI) exceeds certain levels. Those levels, known as thresholds, are not adjusted for inflation. For 2015, if you are married filing jointly, the surtax applies when your AGI exceeds $250,000. If you're single or filing as head of household, the AGI threshold is $200,000.

02/25/2016

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Bonus depreciation in 2016: Better than before?
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The tax extenders law passed in mid-December changed some of the rules for claiming bonus depreciation in 2016. While the amount you can deduct for 2016 is still 50% of the cost of qualified assets you buy, certain restrictions have been lifted.
Bonus depreciation overview. Bonus depreciation is an additional deduction of 50% of the cost of certain property you place in service during the year. Bonus depreciation is available only for new equipment purchases and applies for the first year you place the property in service. You claim bonus depreciation after any Section 179 deduction and before you figure regular depreciation.

* Change #1. Under the new rules, bonus depreciation will be available through 2019. You can claim bonus depreciation at the 50% rate through 2017. The rate declines to 40% in 2018 and 30% in 2019. The additional amount you can deduct for certain cars will also be reduced in 2018.

* Change #2. Starting this year, two of the restrictions limiting the amount of bonus depreciation you can claim on qualified leasehold improvements have been lifted. First, you can claim bonus depreciation for qualified improvement property even if the improvements are not made under a lease. Second, the improvement you make no longer has to be placed in service more than three years after the building was first placed in service.

* Change #3. Certain trees, vines, and plants bearing fruit and nuts are considered placed in service and eligible for 50% bonus depreciation when planted or grafted. This allows depreciation to be taken sooner than under the old rule. Prior to 2016, these plants were considered placed in service when they reached an income-producing stage.

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