New Tax Law?

Still No Tax Law – 12/5/17

It is already December and the biggest tax changes since 1986 are on the table. The House and Senate bills have big differences still, making it difficult to plan before the year-end.

Some suggestions are logical despite the uncertainty. We know there will be changes. Some deductions will disappear or change in 2018. Tax brackets are changing. Standard deductions are increasing and personal exemptions could be eliminated.

Some ideas:

  1. Since state and local income tax deductions may go away, if you make estimated payments and itemize deductions, make all your state and local 4th quarter payments before Dec.31st for a larger 2017 deduction.
  2. Another itemized deduction item, mortgage payments due in January can be paid in December and increase deduction.
  3. Homeowners can also pay real estate taxes in December instead of January.
  4. If you plan to make some charitable contributions in 2018, you might want to make them in 2017 in case you don’t itemize in 2018.
  5. In addition to deduction planning, delaying income can be beneficial to self-employed individuals. Sending year end invoices in January will move your income into 2018.

These are general suggestions that will help some taxpayers and not others. Hopefully by the time your 2017 taxes are done we will understand how the changes will affect your 2018 tax filing.

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Fall Client Newsletter

Client Newsletter

Fall 2017

If you think tax planning only happens in the spring, think again. Taxes are a year-round concern and there’s no better time than the present to plan for the future. Consider the following:

Fall means the end of summer and summer camp for many kids. Did you know there’s a tax credit for that? If your child attended a summer day camp (not summer school or an overnight camp) the cost of that camp may qualify for the Child and Dependent Care Credit. While this is often referred to as the “day care credit,” some summer camps also qualify. Keep good records and bring them to your tax appointment in the spring.

Fall also means college, and college football, and there are tax implications for both. The American Opportunity Tax Credit (AOTC), which has been extended through December 2017, is a great way to offset the costs of higher education. To qualify for the AOTC, you must meet all three of the following criteria:

  1. You, your dependent or a third party pays qualified education expenses for higher education.
  2. An eligible student must be enrolled at an eligible educational institution.
  3. The eligible student is yourself, your spouse or a dependent you list on your tax return.

The AOTC can offset 100% of the first $2,000 and 25% of the second $2,000 of qualified education expenses paid. There is a phase out for higher income taxpayers and a refundable portion for lower income taxpayers so each situation is unique.

Pay special attention to #3 as this is a conversation to have with your children before you send them off to school. If a student claims himself as a dependent, he claims the education credit as well. However, students often qualify as dependents on their parents’ return and the parents often recognize a greater tax benefit when claiming the credit. Make sure your student knows to talk to you before asserting his independence and filing his own return.

In addition to the AOTC, higher education costs can be offset by the Lifetime Learning Credit, the Tuition and Fees Deduction and the Student Loan Interest Deduction. While education tax benefits are plentiful, they are also complicated. For more information, refer to IRS Publication 970 or give us a call.

As for football, many colleges and universities charge a booster fee for the right to purchase season tickets for football and other sports. While the cost of the tickets themselves is usually not deductible, the booster fee may be. If the fee is paid to the school or for the benefit of the school and gives you the right to purchase tickets, the cost of the booster fee may be 80% deductible as an itemized deduction on Form 1040, Schedule A.

Fall also means a third estimated tax payment is due on September 15. If you are self-employed or make estimated tax payments for other reasons, don’t miss this important deadline.

For those 70 1/2 or older a Required Minimum Distribution must be withdrawn from your IRAs. Your bank or financial advisor should have provided this amount earlier in the year. Check your account statements to be sure you have received the minimum by December 31. Don’t wait until the last day because it can take a few days.

Finally, fall is the perfect time to do some planning to minimize your tax bill for 2017. Has your income changed since you filed your last return? Have you started school or started a business? Married or divorced? Retired? Had a baby? Purchased a house? Incurred serious medical expenses? Changed your health insurance? These and many other life experiences can affect your tax return so planning for those events now can save you money later. Waiting until January will be too late to influence your 2017 tax bill so call today and schedule an appointment with one of the professionals in our office if you have tax concerns.

Brown Tax Accounting, LLC will be accepting tax appointments beginning January 29, 2018. Please call 614-882-4482 if you need an appointment.

Julie K. Brown, CPA, EA*

*Enrolled agents are America’s Tax Experts® and we pay attention to the important things so you don’t have to.


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Quality Tax Return Preparation

How does a tax firm provide a quality product?  Here are a few of my answers.

Acquiring good information. The more information supported by documentation the more accurate and “audit proof” the return can be. The preparer may need to ask questions to confirm history and source of documents or request more documents to clarify the client’s verbal or written statements.

Research and discussion. A firm that encourages preparers to discuss particular tax situation with each other or supervisors and to research unusual items or treatments, will have a more knowledgeable staff. Annual training is an important part of this process.

Review. Even the most experienced and accurate preparers make errors. Whether a typing error or misunderstanding of information or law, a second set of eyes, is always important. Even a sole practitioner can improve accuracy by reviewing their own work a day or two later.

Providing the client with what they need.  A quality product includes not only a neatly assembled client copy of the tax return but also other information and instruction necessary to help the client file the returns. Worksheets may be added on an as needed basis depending on the interest of the client. Instructions should be clear and usually include envelopes correctly addressed. Information on how to better prepare for the next tax year can be helpful.

Confidentiality.  Tax return preparers, whether a CPA, EA or other preparer, are required by the I.R.S. to maintain a clients confidentiality. The office staff should not be heard discussing other clients by name or description.  Everyone’s social security number must be protected.  A client’s tax documents should be securely stored and conveyed.  

Observing laws.  In this electronic age, more and more rules are necessary to prevent fraud and theft. Your tax preparation firm should be following the laws for your benefit and theirs. While preparers are now required to offer efiling, this process has many rules to be followed. A preparer should never ask you to sign a blank form or offer to file your return without getting your signature first. Even though inconvenient, it helps to protect you as a taxpayer. Dishonesty in one area of work can carryover to other acts.

As I said, everyone makes mistakes. At Brown Tax Accounting, this year we are concentrating on minimizing the errors. Sometimes this takes longer that you might like or it may cost more than someone else charges, but we hope to have more satisfied clients in the long run.

Julie K. Brown CPA, EA     January 13, 2012

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Ten Tips to Help You Choose a Tax Preparer

IRS TAX TIP 2012-06, January 10, 2012
Many people look for help from professionals when it’s time to file their tax return. If you use a paid tax preparer to file your return this year, the IRS urges you to choose that preparer wisely. Even if a return is prepared by someone else, the taxpayer is legally responsible for what’s on it. So, it’s very important to choose your tax preparer carefully.This year, the IRS wants to remind taxpayers to use a preparer who will sign the returns they prepare and enter their required Preparer Tax Identification Number (PTIN).

Here are ten tips to keep in mind when choosing a tax return preparer:

  1. Check the preparer’s qualifications. New regulations require all paid tax return preparers to have a Preparer Tax Identification Number. In addition to making sure they have a PTIN, ask if the preparer is affiliated with a professional organization and attends continuing education classes. The IRS is also phasing in a new test requirement to make sure those who are not an enrolled agent, CPA, or attorney have met minimal competency requirements. Those subject to the test will become a Registered Tax Return Preparer once they pass it.
  2. Check on the preparer’s history. Check to see if the preparer has a questionable history with the Better Business Bureau and check for any disciplinary actions and licensure status through the state boards of accountancy for certified public accountants; the state bar associations for attorneys; and the IRS Office of Enrollment for enrolled agents.
  3. Ask about their service fees. Avoid preparers who base their fee on a percentage of your refund or those who claim they can obtain larger refunds than other preparers. Also, always make sure any refund due is sent to you or deposited into an account in your name. Under no circumstances should all or part of your refund be directly deposited into a preparer’s bank account.
  4. Ask if they offer electronic filing.  Any paid preparer who prepares and files more than 10 returns for clients must file the returns electronically, unless the client opts to file a paper return.  More than 1 billion individual tax returns have been safely and securely processed since the debut of electronic filing in 1990.  Make sure your preparer offers IRS e-file.
  5. Make sure the tax preparer is accessible.  Make sure you will be able to contact the tax preparer after the return has been filed, even after the April due date, in case questions arise.
  6. Provide all records and receipts needed to prepare your return. Reputable preparers will request to see your records and receipts and will ask you multiple questions to determine your total income and your qualifications for expenses, deductions and other items. Do not use a preparer who is willing to electronically file your return before you receive your Form W-2 using your last pay stub. This is against IRS e-file rules.
  7. Never sign a blank return. Avoid tax preparers that ask you to sign a blank tax form.
  8. Review the entire return before signing it.  Before you sign your tax return, review it and ask questions. Make sure you understand everything and are comfortable with the accuracy of the return before you sign it.
  9. Make sure the preparer signs the form and includes their PTIN.  A paid preparer must sign the return and include their PTIN as required by law. Although the preparer signs the return, you are responsible for the accuracy of every item on your return.  The preparer must also give you a copy of the return.

Report abusive tax preparers to the IRS. You can report abusive tax preparers and suspected tax fraud to the IRS on Form 14157, Complaint: Tax Return Preparer. Download Form 14157 from or order by mail at 800-TAX-FORM (800-829-3676).

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New Links Added

I’ve added some new links to tax related information or forms by category to my Links page.
Some may be useful to you  for tax planning and others for understanding.

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