Gifts to Charity: 6 Facts about Written Acknowledgments

And of course, make sure the deduction is qualified.

By Barry J. Friedman, CPA
IndustryNewsletters

If your clients offer gifts or money to qualified organizations eligible to receive tax-deductible charitable contributions, they must do two things:

MORE: The Latest Fraud Problem: Synthetic Identities | Why Padding Tax Deductions Is a Risky Proposition | Portability: Sharing the Estate Tax Exemption | Tariffs: What Clients Need to Know Now | Basis: Turning a Common Client Question into New Business | The W-4 Time-Bomb and What To Do About It
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  1. Have a bank record or written communication from the charity for any monetary contributions.
  2. Get a written acknowledgment from the charity for any single donation of $250 or more.

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The Latest Fraud Problem: Synthetic Identities

BONUS: 5 steps for prevention.

By Barry J. Friedman, CPA
IndustryNewsletters

By combining some factual stolen information with completely fake information, thieves convince banks and credit monitoring companies that a fake identity is real. The "bad guy" is not pretending to be the person whose information was stolen or acquired; rather, the data is being used to create a brand-new identity. Thus, the phrase "synthetic identity theft" is born.

MORE: Why Padding Tax Deductions Is a Risky Proposition | Yes, Home Equity Loans May Still Be Deductible | Social Security Hike the Largest in 7 Years
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But how do these scams work?

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Why Padding Tax Deductions Is a Risky Proposition

Some client education may be in order.

By Barry J. Friedman, CPA
IndustryNewsletters

"In this world, nothing can be said to be certain, except death and taxes" is a quote often attributed to Benjamin Franklin. With that in mind, it's best to be prepared, at least financially, for taxes and tax season each year.

MORE: Yes, Home Equity Loans May Still Be Deductible | How to Challenge Property Taxes | Real Estate, IRAs & Clients | Percentage-Withholding for Clients | Bitcoin: What Clients Need to Know | Supreme Court Wayfair Ruling Sows Confusion – And Opportunity
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The Risks

When it comes to deductions, things can get a little sticky. Some clients may wonder what the harm is in taking a little extra here or a little extra there.
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Yes, Home Equity Loans May Still Be Deductible

But watch out for the lower dollar limit.

By Barry J. Friedman, CPA
IndustryNewsletters

Contrary to early reports, the Tax Cuts and Jobs Act allows taxpayers who buy, build or substantially improve their homes using either a home equity loan, home equity lines of credit (HELOC) or second mortgages to deduct interest on the loans.

MORE: How to Challenge Property Taxes | Portability: Sharing the Estate Tax Exemption | Tariffs: What Clients Need to Know Now | New SALT Deduction Limit: What Clients Need to Know | Passwords: How to Beat the Hackers
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That's the good news. But if clients take out the loan to pay for personal living expenses – credit card debt, for instance – they can't deduct the interest from their taxes.
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How to Challenge Property Taxes

5 steps for homeowners.

By Barry J. Friedman, CPA
IndustryNewsletters

Have your clients' property tax bills increased significantly? Do you think they may have grounds for an appeal, particularly if the increase seems out of line with overall appreciation in their area?

MORE: Social Security Hike the Largest in 7 Years | Real Estate, IRAs & Clients | Percentage-Withholding for Clients | Bitcoin: What Clients Need to Know | Supreme Court Wayfair Ruling Sows Confusion – And Opportunity
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Property tax rules and policies are local, but in general, homeowners have 90 days after receiving a new assessment to appeal in most jurisdictions; some close the appeals window after 30 days.

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Portability: Sharing the Estate Tax Exemption

6 key points.

By Barry J. Friedman, CPA
IndustryNewsletters

Portability is actually a simple concept. It means that if one half of a married couple doesn't use up the entirety of the federal estate tax exemption at death, the surviving spouse can use this leftover portion, plus his or her own exemption.

MORE: Real Estate, IRAs & Clients | Tariffs: What Clients Need to Know Now | New SALT Deduction Limit: What Clients Need to Know | Passwords: How to Beat the Hackers
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It makes a high federal estate tax bill less likely. This provision has changed the way estate planning can be approached today.
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Social Security Hike the Largest in 7 Years

Older man using laptop at homeDisability thresholds also are changing.

By Barry J. Friedman, CPA
IndustryNewsletters

As is usual this time of year, the Social Security Administration has published critical information on benefit changes and maximum taxable income.

MORE: Real Estate, IRAs & Clients | Tariffs: What Clients Need to Know Now | New SALT Deduction Limit: What Clients Need to Know | Passwords: How to Beat the Hackers | The W-4 Time-Bomb and What To Do About It  | Supreme Court Wayfair Ruling Sows Confusion – And Opportunity
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How will these affect your clients?
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Real Estate, IRAs & Clients

What clients want to know.

By Barry J. Friedman, CPA
IndustryNewsletters

Real estate can be a great investment, and many people don't know they can also put property into their IRAs. However, they have to be careful: One small mistake and an IRA's tax advantages disappear.

MORE: Tariffs: What Clients Need to Know Now | How to Talk to Clients about ‘Basis’ | Basis: Turning a Common Client Question into New Business | The W-4 Time-Bomb and What To Do About It
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So what do you tell clients about the rules to follow to have a qualified real estate purchase?
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Tariffs: What Clients Need to Know Now

Talking about politics and controversy.

By Barry J. Friedman, CPA
IndustryNewsletters

Tariffs have been in the news recently. What exactly are they?

MORE: How to Talk to Clients about ‘Basis’ | Percentage-Withholding for Clients | Bitcoin: What Clients Need to Know | Supreme Court Wayfair Ruling Sows Confusion – And Opportunity
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Tariffs are import taxes the government imposes, like a sales tax, on goods.
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How to Talk to Clients about ‘Basis’

Woman and Man Working with Calculator"Step-ups" ease the burden of capital gains.

By Barry J. Friedman, CPA
IndustryNewsletters

Basis seems like a simple concept, but as with so many tax issues, it can become complicated quickly when you try to explain it to clients.

MORE: Percentage-Withholding for Clients | New SALT Deduction Limit: What Clients Need to Know | Passwords: How to Beat the Hackers | Supreme Court Wayfair Ruling Sows Confusion – And Opportunity
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This is especially true after the TCJA. READ MORE →

Percentage-Withholding for Clients

hand on calculatorThe wage bracket method is the most straightforward approach – until you exceed 10 allowances.

By Barry J. Friedman, CPA
IndustryNewsletters

Clients may not be aware that the IRS has developed multiple methods that employers may use to withhold federal income tax from employees' wages. One of the methods that often needs explaining is the percentage-withholding basis.

MORE: New SALT Deduction Limit: What Clients Need to Know | Basis: Turning a Common Client Question into New Business | Bitcoin: What Clients Need to Know | Passwords: How to Beat the Hackers | The W-4 Time-Bomb and What To Do About It  | Supreme Court Wayfair Ruling Sows Confusion – And Opportunity
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Employers are required to withhold federal income tax from all employees' wages unless the employee is exempt from the tax. The withholding amount is based on the employee's taxable wages, marital status and number of allowances stated on his or her W-4 form, plus the withholding tax tables in IRS Circular E (or Publication 15). Employers can calculate federal income tax withholding using either Circular E's wage bracket method or its percentage method.
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New SALT Deduction Limit: What Clients Need to Know

TCJA caps deduction at $10,000.

By Barry J. Friedman, CPA
IndustryNewsletters

The IRS is taking a look at the deductibility of state and local tax payments for federal income tax purposes in the wake of tax reform. So what’s happening with this complicated issue?

MORE: Basis: Turning a Common Client Question into New Business | Bitcoin: What Clients Need to Know | Supreme Court Wayfair Ruling Sows Confusion – And Opportunity
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The IRS will be addressing the deductibility of state and local tax payments for federal income tax purposes. It's a reminder that federal law controls payments for federal income tax purposes no matter how state law wants to view things.
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Basis: Turning a Common Client Question into New Business

How a simple conversation opens the door to a host of new opportunity.

By Barry J. Friedman, CPA
IndustryNewsletters

Basis seems like a simple concept, but as with so many tax issues, it can become complicated quickly. This is especially true after recent tax reform.

More Hot-Button Topics for Clients: Supreme Court's Wayfair Ruling on Sales Tax Sows More Confusion  |  Making Passwords Hack-Proof  |  Check Your Clients' Withholding Now  |  What Clients Need to Know about Bitcoin

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First, let's start with what "basis" means. Clients need to understand that basis is usually what you paid for an asset. According to the IRS, a capital gain or loss is the difference between your basis and the amount you get when you sell an asset. So, if you sell an asset that is worth more than you paid for it, you will have to pay taxes on the gain.

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