The Mitz and Rozansky 2022-23 Tax Planning Guide is now available. To down load a copy, please click here. https://www.mitzandrozansky.com/wp-content/uploads/2022/09/2022-2023-Tax-Planning-Guide.pdf

If you own an IRA and are 70 1/2 or older, a Qualified Charitable Contribution (QCD) can provide you with substantial benefits. At 70 ½, IRA owners are required to make an annual minimum withdrawal (RMD). A qualified charitable distribution can satisfy all or part the amount of your required minimum distribution from your IRA and, at the same time, reduce your taxable income. Using this strategy can benefit both you and your designated charity.

Here’s how it works. A direct transfer is made from your IRA account by your plan to a qualifying charity. This helps the charity. Qualifying charities must be a 501(c)(3) organization that is eligible to receive tax-deductible contributions. Please note that fund distributions made directly to you do not qualify.

The contribution amount, while satisfying all or part of your annual RMD, can in most cases be deducted from your taxable income, potentially lowering your income tax liability.

QCD requirements:

• You must be 70½ or older to be eligible to make a QCD.
• QCDs are limited to only the amount that would otherwise be taxed as ordinary income. Non-deductible contributions are excluded.
• The QCD maximum annual amount is $100,000. It is the total sum QCD contributions made to any and all charities in a calendar year. Your spouse can also make a QCD from his or her own IRA within the same tax year for up to $100,000.
• For a QCD to count towards your current year’s RMD, the funds must come out of your IRA by your RMD deadline, generally December 31.

• You are not permitted to count any amount donated above your RMD toward satisfying a future year’s RMD.

Tax Reporting:

While a QCD is not subject to Federal withholding, State tax rules may vary.

A QCD contribution requires you to receive the same type of acknowledgement from the charity of the donation you would need to claim any other deduction for a charitable contribution.

Your Mitz & Rozansky tax adviser can help you determine if both your IRA and charity qualify for QCDs. Please contact us at (414)352-3200 to discuss how a QCD can work for you.

The new tax reform law, commonly called the “Tax Cuts and Jobs Act” (TCJA), is the biggest federal tax law overhaul in 31 years, and it has both good and bad news for taxpayers. For information on how the new law affects your taxes, please contact Mitz & Rozansky at (414)352-3200 to learn more.

Below are highlights of some of the most significant changes affecting individual and business taxpayers. Except where noted, these changes are effective for tax years beginning after December 31, 2017.

Individuals

• Drops of individual income tax rates ranging from 0 to 4 percentage points (depending on the bracket) to 10%, 12%, 22%, 24%, 32%, 35% and 37% — through 2025
• Near doubling of the standard deduction to $24,000 (married couples filing jointly), $18,000 (heads of households), and $12,000 (singles and married couples filing separately) — through 2025
• Elimination of personal exemptions — through 2025
• Doubling of the child tax credit to $2,000 and other modifications intended to help more taxpayers benefit from the credit — through 2025
• Elimination of the individual mandate under the Affordable Care Act requiring taxpayers not covered by a qualifying health plan to pay a penalty — effective for months beginning after December 31, 2018
• Reduction of the adjusted gross income (AGI) threshold for the medical expense deduction to 7.5% for regular and AMT purposes — for 2017 and 2018
• New $10,000 limit on the deduction for state and local taxes (on a combined basis for property and income taxes; $5,000 for separate filers) — through 2025
• Reduction of the mortgage debt limit for the home mortgage interest deduction to $750,000 ($375,000 for separate filers), with certain exceptions — through 2025
• Elimination of the deduction for interest on home equity debt — through 2025
• Elimination of the personal casualty and theft loss deduction (with an exception for federally declared disasters) — through 2025
• Elimination of miscellaneous itemized deductions subject to the 2% floor (such as certain investment expenses, professional fees and unreimbursed employee business expenses) — through 2025
• Elimination of the AGI-based reduction of certain itemized deductions — through 2025
• Elimination of the moving expense deduction (with an exception for members of the military in certain circumstances) — through 2025
• Expansion of tax-free Section 529 plan distributions to include those used to pay qualifying elementary and secondary school expenses, up to $10,000 per student per tax year
• AMT exemption increase, to $109,400 for joint filers, $70,300 for singles and heads of households, and $54,700 for separate filers — through 2025
• Doubling of the gift and estate tax exemptions, to $10 million (expected to be $11.2 million for 2018 with inflation indexing) — through 2025

Businesses

• Replacement of graduated corporate tax rates ranging from 15% to 35% with a flat corporate rate of 21%
• Repeal of the 20% corporate AMT
• New 20% qualified business income deduction for owners of flow-through entities (such as partnerships, limited liability companies and S corporations) and sole proprietorships — through 2025
• Doubling of bonus depreciation to 100% and expansion of qualified assets to include used assets — effective for assets acquired and placed in service after September 27, 2017, and before January 1, 2023
• Doubling of the Section 179 expensing limit to $1 million and an increase of the expensing phaseout threshold to $2.5 million
• Other enhancements to depreciation-related deductions
• New disallowance of deductions for net interest expense in excess of 30% of the business’s adjusted taxable income (exceptions apply)
• New limits on net operating loss (NOL) deductions
• Elimination of the Section 199 deduction, also commonly referred to as the domestic production activities deduction or manufacturers’ deduction — effective for tax years beginning after December 31, 2017, for noncorporate taxpayers and for tax years beginning after December 31, 2018, for C corporation taxpayers
• New rule limiting like-kind exchanges to real property that is not held primarily for sale
• New tax credit for employer-paid family and medical leave — through 2019
• New limitations on excessive employee compensation
• New limitations on deductions for employee fringe benefits, such as entertainment and, in certain circumstances, meals and transportation

More to consider

This is just a brief overview of some of the most significant TCJA provisions. There are additional rules and limits that apply, and the law includes many additional provisions. Contact Mitz & Rozansky at (414)352-3200 to learn more about how these and other tax law changes will affect you in 2018 and beyond.

© 2017

Did you know that a little known tuition tax deduction started in Wisconsin in 2014? Now parents are allowed to deduct private and religious school tuition up to $4000 for each child in grades K-8 and up to $10,000 for each child in grades 9-12.

This tax deduction does not require the schools to comply with voucher program regulations and is available to all families for tuition assistance. Please see the information below containing specific information about this program or give us a call at (414)352-3200 to discuss how this program can be applied to your specific family situation.

Any taxpayer who pays tuition expenses at a private school (grades K-12) is eligible. Taxpayers who have incomes that have at least some tax liability and who are within the allowable deduction per child will receive the benefit. The portion of tuition covered by scholarship or tuition assistance is not eligible as the deduction is applicable only to expenses that families have actually paid. Please note that this is a deduction and not a tax credit. The amount that any one family or individual will save is dependent on their income, how they file, and the resulting tax liability.

Please give a call at (414)352-3200 to discuss specifics regarding your personal circumstances.

The “Tax Increase Prevention Act of 2014,” recently enacted by Congress, once again extends a variety of expired or expiring individual, business and energy provisions popularly known as “extenders.” The extenders include more than fifty tax deductions, credits and other tax savings laws that have been in place for several years, but have remained technically temporary because all have a specific end date. Congress has repeatedly extended these tax breaks for a year or two at a time, which is why we call them “extenders.”
The newest law generally extends these tax breaks retroactively, most of which expired in 2013, for one year through 2014. Here is an overview of the key tax breaks extended. Please call us for specific guidance on how these changes may affect you or your business.
Individual extenders – these provisions were extended through 2014:
• $250 deduction for educators’ expenses
• Exclusion (up to $2 million for married/$1 million if married filing separately) of discharged principal residence indebtedness
• Increase in employer-provided mass transit benefits to match parking exclusion of $250
• Mortgage insurance premiums are deductible as qualified residence interest
• Option to deduct state and local sales tax instead of state and local income taxes
• Increased contribution limits and carry-forward period for contributions of appreciated real property for conservation purposes
• Deduction for qualified tuition and related expenses
• Ability to transfer up to $100,000 from an IRA directly to charity as a tax-free distribution for taxpayers age 70 ½ or older
Business extenders – generally extended through 2014:
• Research credit
• Temporary minimum low-income housing tax credit rate for non-federally subsidized new buildings
• New markets tax credit
• Employer wage credit for activated military reservists
• Work opportunity tax credit
• 15-year straight line cost recovery for qualified leasehold improvements, qualified restaurant buildings and improvements, and qualified retail improvements
• 50% bonus depreciation (extended before Jan. 1, 2016 for certain longer-lived and transportation assets)
• Section 179 rules: increase in expensing (up to $500,000 write-off of capital expenditures subject to a gradual reduction once capital expenditures exceed $2,000,000) and an expanded definition of property eligible for expensing
• Special treatment of certain dividends of regulated investment companies (RICs)
• Definition of RICs as qualified investment entities under the Foreign Investment in Real Property Tax Act
• Exclusion of 100% of gain on certain small business stock
• Basis adjustment to stock of S corporations making charitable contributions of property
• Reduction in S corporation recognition period for built-in gains tax
Again for more information on how these changes or other aspects of the new law affect you, please call us at (414)352-3200.