Date post: | 28-Jan-2018 |
Category: |
Economy & Finance |
Upload: | frank-zerjav-cpa |
View: | 27 times |
Download: | 1 times |
1
TAX TIPS NEWSLINE Proudly Published in the USA
JULY 2017
Produced monthly for Clients & Friends of the Advisory Group Associates.
Our Mission. Sharing Solutions that deliver real value.
This “TAX TIPS NEWSLINE” is compiled by the founder of the Tax & Advisory firms, Frank
L. Zerjav, CPA and team of Professional Tax Associates, and then it is sent by email each month
because you need tax and compliance knowledge. It’s a big part of your life and the entities that
you operate.
The CPA firm engages in proactive Strategic Tax Planning for privately-held businesses and
their owners, professionals, investors and individuals. Our clients minimize their tax burden by
appropriate proven strategies, which help them to keep more of what they earn. Advisory
Group’s Tax Resolution Experts also engage in resolving tax problems with either Federal or
State tax agencies for clients who need these specialized, proven solutions and options. Our
devoted team of Professional Tax Advisors and Tax Resolution Experts do care; their
primary objective is the well-being of clients, their family and their survivors, as well as
their satisfaction with the work we do, while our goal is to be the premier choice of Tax &
Advisory firms, not the biggest firm by sharing solutions that deliver real value.
SUMMER HOURS: The office will close at 12pm on Fridays during June, July and August
OFFICE CLOSED FOR THE JULY 4TH
HOLIDAY
We will reopen Wednesday, July 5th
. The office will also be closed
Friday, June 30th
@ 12:00 pm.
Fly our flag with pride and celebrate America’s birthday!
Inside this Month’s Issue
Contact Us
Tax & Advisory Services Offered
Tax Problem Resolution Solutions
Best Practices for Rental Property Owners
Attorney-Client Privilege with Your Accountant Matters
Independent Contractors vs Employees – Misclassification Issues
2018 Health Savings Accounts (HSA) Limits Increase
Tips for Keeping Data Secure
Advantages & Disadvantages of Using a ROTH 401(k)
Guidance on the Net Investment Income Tax
Wide Range of Services Offered
2
Contact Us - There are many events that occur during the year that can affect your tax situation.
Preparation of your tax return involves summarizing transactions and events that occurred during
the prior year. In most situations, treatment is firmly established at the time the transaction
occurs. However, negative tax effects can be avoided by proper planning. Please contact us in
advance if you have questions about the tax effects of a transaction or event, including the
following:
• Pension or IRA distributions. • Sale or purchase of a residence or • Self-employment.
• Significant change in income or deductions. other real estate. • Charitable contributions of
• Job change. • Retirement. property in excess of $5,000.
• Marriage. • Notice from IRS or other revenue • Gifts (over $14,000 to an
• Attainment of age 59½ or 70½. department. individual).
• Sale or purchase of a business. • Divorce or separation. • Starting new business.
******
TAX & ADVISORY SERVICES OFFERED
ADVISORY GROUP ASSOCIATES and their Tax & Advisory firms have practiced for over 40
years in St Louis County, Missouri, with clients nationwide, providing proactive strategic tax
planning and income tax return preparation for business and real estate owners, Investors,
individuals, corporations, partnerships, fiduciary, trust, gift and tax exempt organizations, as well
as Representation before the Internal Revenue Service and state tax agencies.
Our devoted team of tax professionals help to identify prevention tactics and defenses for clients
to avoid the financial devastation of additional tax, penalty, or interest assessments if a taxpayer
is faced with an IRS audit controversy or other tax problem. Their role includes using advanced
examination techniques while protecting taxpayer’s rights and applying proven practices and
methods. As result of such specialized tax problem resolution services, they have learned how to
apply the best practices and proven methods while representing mostly high-net-worth clients
who own a professional practice or business. Frequently, resolution has been achieved even
when the taxpayer believed that other possibilities were no longer available.
The ADVISORY GROUP ASSOCIATES, Tax & Advisory firms continue to provide quality
performance and results with the highest standards, core values, integrity and service excellence
as tax and accounting professionals. The team acts as client’s trusted advisors who, in addition to
providing core CPA services, develop solutions to complex problems by integrating knowledge,
experience and resources from multiple disciplines. Advisory services offer a range of
consulting services to clients who want to increase revenues and profits in their business. These
business owners want advice on what to do next and the team offers actionable, proactive
services that adds value to their business.
They also provide a wide array of specialized non-traditional solutions including Entity
Structuring, Asset Protection Solutions, Business & Tax Advisory, Competitive Accounting
Solutions, including data and payroll processing, as well as Representation for Resolution of Tax
Problems involving levy, liens, audit defense, payment plans, un-filed tax returns, penalty
abatement and offers in compromise.
3
The Team’s accomplishments are directly related to relationships, confidence, understanding,
and the loyalty and support of nearly 2,000 clients who routinely refer their colleagues and
friends. A crucial aspect of the work performed by this motivated team of skilled and
experienced professionals has been to dispel fears when dealing with the complexity of tax
codes, compliance, and administration of taxing matters.
******
TAX PROBLEM RESOLUTION SOLUTIONS
Every so often, a taxpayer will get behind in paying their federal and state income taxes. The
usual solution is to set up a payment plan so that the person can pay their taxes over a few years.
But sometimes, it becomes clear to taxpayers and their Tax Advisors that there is no
mathematically feasible way to pay off all the taxes (as well as interest and penalties) over time.
That’s when it’s time to start thinking about alternative solutions.
Revisions to the Offer in Compromise Program
The IRS revised its Offer in Compromise program. The IRS revised how the settlement amount
is computed by projecting a taxpayer’s income over the next one to two years, instead of over
four to five years. The IRS has also revised how it evaluates various types of assets and
expenses. It’s too early for us to say how these changes will play out, but the IRS has made the
program substantially more feasible.
Installment Agreements
The typical first step in trying to get caught up with payments to the IRS is to set up a payment
plan, or as the IRS likes to call it, an installment agreement. The IRS has recently become much
more lenient here as well, by granting streamlined approval to installment agreements where the
outstanding tax debt is $50,000 or less and the amount will be paid in full in six years or less.
Partial Payment Installment Agreements
If the payment amount on a regular installment agreement isn’t affordable, the IRS may agree to
a lesser monthly payment that is based on a taxpayer’s monthly income. Unlike regular
installment agreements, the payment terms are negotiated directly with the IRS after thoroughly
reviewing a taxpayer’s income and expenses.
File Bankruptcy?
One option that people frequently ask about is whether they could discharge their taxes by filing
for bankruptcy. There are several criteria that come into play in determining whether taxes are
dischargeable, and most of the criteria relate to how old the tax debts are.
4
With every IRS tax problem there is a solution.
For help, more information or specific advice regarding your situation, contact us by calling:
314-205-9595 or toll free 888-809-9595 to reserve a complimentary consultation with our
knowledgeable and experienced Tax Resolution Experts.
******
BEST PRACTICES FOR RENTAL PROPERTY OWNERS Efficient rental property investment can hinge on how you structure your accounts, claim
your expenses and pay your tax - don’t ignore this crucial step!
Have you been considering investing in rental property? Or perhaps you have an established
portfolio, but it’s not performing the way it should. No matter what stage of the game you’re at,
choosing the right Tax Advisor to handle your taxes can be the difference between growing your
wealth, developing a headache or not sleeping at night.
You might be wondering exactly what a Tax Advisor can do to make your property investment
more profitable, and the answer is - a lot! Here’s a quick rundown of what you can expect from
property related accounting and tax services.
What can my Tax Advisor do for me?
Your Tax Advisor has the power to make your investment property infinitely more valuable to
you. Not only do they have years of knowledge and experience in accounting, tax and real estate,
they also have the time and resources to investigate and implement every legitimate tax saving
they can possibly pass on to you. Aside from the benefits of time and know-how, an experienced
real estate Tax Advisor should also be properly qualified to perform their job.
There’s also the fact that your tax affairs are not simply erased and restarted every financial year.
The Internal Revenue Service (IRS) actively looks for reporting that may be incorrect or false, so
accurate record-keeping is your best line of defense. Not only can your Tax Advisor help you
make sure you stay on the right side of the law using proven tax-smart strategies and
opportunities to lower your tax burden and keeping more of what you earn, they also prepare all
of the financial documentation that protects you if you ever need it.
These documents are also extremely handy if you are planning on increasing your portfolio with
new assets - a bank or lender may look considerably more kindly on an investor that can show
exactly what they’re doing with their money and what their overall financial standing is. Again,
experienced real estate Tax Advisors deliver outstanding value.
As experienced real estate taxation experts, our Tax Advisors are able to help you figure out all
of the proper deductions for your investment property, and help you claim them against your
rental income or other income stream to reduce your overall tax burden.
5
Tax Advisors also help investors by preparing tax returns, proactive strategic tax planning and
providing advice on Entity (ownership) structures to ensure that your investment property is
working for you and not the other way around.
Is tax-reduction a legitimate strategy?
Reducing the tax you pay, claiming legitimate expenses paid and incurred through a
wealth-creating asset is not only legal, it’s an established and highly recognized way to help
everyday investors grow their wealth. At the same time, investment properties provide housing
solutions - which is a benefit to the local community.
Tax Advisors provide guidance for rental property owners & investors on how to treat rental
income, expenses and other items. However, there are many regulations and rental property
items that can have a bearing on your tax ability - so don’t make the mistake of trying to tackle
this on your own, Unless you are an accountant, chances are you don’t have the time, knowledge
or resources to make sure you are making the most of your rental property.
Your Tax Advisor can help you to reduce the amount of tax you pay on your property’s income
and your personal salary, too. All of the money saved by using tax-reduction strategies can be
used for debt reduction or you may choose to retain your investment property as a cash flow
positive investment to fund your retirement, or by putting it on the market when prices are high.
The future of your investment property
Whether you choose to buy more rental property in the future, sell an investment or keep what
you currently have, your decision could greatly affect your retirement strategy or estate planning,
but so can other factors.
Proper Entity and tax structuring for your rental property portfolio will help you to protect your
assets and wealth you have built up for your family should anything adverse occur. This is
particularly beneficial for those who are self-employed, business owners or professionals whose
job also carries risk.
Efficient tax planning is not only concerned with making sure you take advantage of every
opportunity available to you, it’s also about making sure you are never caught off guard when it
comes to your wealth and financial prosperity.
******
6
ATTORNEY-CLIENT PRIVILEGE WITH YOUR
ACCOUNTANT MATTERS
Lawyers may take attorney-client privilege for granted, but if you have tax problems, you may
be reminded how fundamental and important this privilege can be. Thanks to attorney-client
privilege, if you tell your lawyer you are hiding money offshore, the IRS can’t make your lawyer
reveal that information.
Of course, under the U.S. Constitution, you cannot be forced to testify against yourself. You can
assert your Fifth Amendment rights and decline to answer IRS questions, even in front of a
judge. But if you have documents - such as foreign bank account records - the IRS can obtain
them from you with a summons, subpoena or search warrant.
That may make you wonder if you aren’t better off with sensitive information in the hands of
your lawyer. If you ask your lawyer to obtain your foreign bank records, your lawyer generally
can’t be forced to hand them over to the IRS. In contrast, if you obtain your own foreign bank
records, they are fair game.
Attorney-client privilege is designed to be strong so that clients (in both civil and criminal cases)
will be forthcoming with their lawyers. Communications with accountants, however, are not
protected by this privilege. If you make statements or provide documents to your accountant, he
or she can be compelled to divulge them, no matter how incriminating they may be.
Of course, as accountants are quick to point out, there is a statutory “tax preparation” privilege. It
was added to the Internal Revenue Code in 1998 (IRC Section 7525(a)(1)). Yet it is quite narrow
in scope, and in any event, is entirely inapplicable to criminal tax cases. That makes it of little
practical value.
In sensitive tax matters, one should confide in and obtain advice from a lawyer. Yet lawyers
cannot do everything themselves. In fact, most tax lawyers do not prepare tax returns at all.
The answer to this quandary - used successfully for the last 50 years - is the Kovel letter, named
after United States v. Kovel, 296 F.2d 918 (2d. Cir. 1961). In a practiced procedure, your tax
lawyer hires an accountant. In effect, the accountant is doing your tax accounting and tax return
preparation, but is reporting as a sub-contractor to your tax lawyer.
That brings the work of the accountant under the auspices of the lawyer’s privilege. There may
be work product protection too, of course, but that is a separate and generally weaker privilege in
any event. Properly executed, a Kovel letter imports attorney-client privilege to the accountant’s
work and communications.
The importance of this rule to the handling of even many pedestrian civil tax matters cannot be
overstated. And when it comes to potential inquiries from the Criminal Investigation Division of
the IRS, the Kovel letter is essential. However, recent IRS lawsuits are eroding some of
traditional Kovel protections.
7
These IRS inroads into attorney-client privilege should motivate tax lawyers, accountants and the
clients who hire them to be increasingly careful. Sometimes slips in communication protocols or
in dual roles where the accountant is also working directly with the ultimate client can vitiate
protection. For example, in United States v. Richey, 632 F.3d 559 (9th Cir. 2011), the Ninth
Circuit refused to protect an appraisal that a taxpayer, lawyer and accountant sought to keep from
the IRS.
In some cases the assaults are even more frontal. In United States v. Hatfield, 210 WL 183522
(E.D.N.Y. 2010), the court forced disclosure of discussions between the lawyer and accountant.
These and other developments make clear lines of communication more imperative than in the
past. The scope of the engagement is important, too.
A Kovel arrangement is premised on the notion that the accountant’s communications were
“made in confidence for the purpose of obtaining legal advice from the lawyer.” See United
States v. Adlman, 68 F.3d 1495 (2d Cir.1995). The attorney is the client in a Kovel engagement.
That means the accountant should address all correspondence to the lawyer.
It also means that information acquired by an accountant under a Kovel agreement should be
distinguished from information collected by the accountant as an auditor or in some other
capacity. The Kovel agreement is so commonplace that lawyers, clients and accountants
sometimes take them for granted. Some may even blithely assume that attorney-client protection
will always apply.
You must, however, keep things as separate and well-documented as you can. Pre-existing
relationships between the accountant and the ultimate client are especially prickly. A Kovel
agreement should protect communications prospectively but clearly cannot protect the past.
There is no right answer to this situation, nor is there a single right way to handle it. However, it
is better to consider the advantages and disadvantages of hiring a particular accountant or
accounting firm than to ignore the issue.
Fortunately, attorney-client privilege is rarely tested in this context. That is true even in criminal
tax cases. However, you don’t want to end up having to fight about disclosure before a judge,
especially where the communications may be very revealing. Having a lawyer hire the
accountant to try to import privilege is cautious and the practice remains widespread. But
additional precautions, such as more rigid direction from the lawyer to the accountant and
segregation of accounting and legal files, are good ideas.
******
8
INDEPENDENT CONTRACTORS VS EMPLOYEES –
MISCLASSIFICATION ISSUES
Today more and more businesses are making increasing use of outside workers to cut costs,
including payroll tax costs. Unfortunately, this trend has caught the attention of the IRS. What
the IRS is looking for are workers who are treated as independent contractors but who actually
are employees. If the IRS is successful in reclassifying workers, there is the potential of a
substantial tax bill, consisting of, just for starters, the employer’s back social security taxes and
FUTA taxes, plus possible penalties and interest.
The amounts involved are significant. For 2017, in addition to income tax withholding, the
employer is required to withhold 6.2 percent from taxable wages up to a wage base of $127,200
for the Old Age, Survivors and Disability and Insurance (OASDI) portion of the Federal
Insurance Contributions Act (FICA). The Hospital Insurance (HI, or Medicare) portion of the tax
has no wage cap.
Despite the high stakes, classifying a worker as either an independent contractor or an employee
is not straightforward. The determination depends on a number of factors and can be quite
complex. Control of how and when the worker gets the job done may or may not be the most
important factor. Some workers are employees no matter how little or how much they are
supervised. Others are independent contractors no matter how tightly a business controls them.
For many years, the IRS applied a 20-factor control test as an analytical tool. The IRS has
attempted to simplify this test by examining evidence of the degree of control and independence
based on three categories: (1) behavioral control, (2) financial control, and (3) the relationship of
the parties.
There is some good news in all this intricacy. First, taxes due may be reduced if the
misclassification is unintentional. Second, in some cases, if you have always treated workers as
independent contractors the IRS may let you go on doing so. You cannot take advantage of this
unless there was a reasonable basis for not classifying the individual as an employee in the first
place and unless you have filed all returns required for nonemployees, such as Form 1099
information returns. Third, if you are unable to meet all the safe-haven requirements but have
filed returns, the IRS may let you settle for a fraction of the cost. Of course, there are times when
the IRS is incorrect in its demands for reclassification and litigation, rather than quick settlement,
may be the better course of action.
Please do not hesitate to contact one of our Professional Tax Advisors who can work with you to
review existing payment arrangements, help you with future plans and advise you what, if any,
action is necessary. They may even find that your workers are actually “independent contractors”
who have been misclassified as employees. One last word: Congress is aware that reform is
necessary. We will let you know promptly of any action from Washington.
******
9
2018 HEALTH SAVINGS ACCOUNTS (HSA) LIMITS
INCREASE
The IRS has recently issued the inflation-adjusted figures for calendar year 2018 for the annual
contribution limits for health savings accounts (HSAs) and the minimum deductible amounts and
maximum out-of-pocket expense amounts for high-deductible health plans (Rev. Proc. 2017-37).
Under Sec. 223, individuals who participate in a high-deductible health plan (HDHP) are
permitted a deduction for contributions to HSAs set up to help pay their medical expenses. The
contribution deduction limit is subject to an annual inflation adjustment. For 2018, the annual
limit on deductible contributions is $3,450 for individuals with self-only coverage (a $50
increase from 2017) and $6,900 for family coverage (a $150 increase from 2017 after not
increasing last year).
To be eligible to contribute to an HSA, an individual must participate in an HDHP, which is a
health plan with an annual deductible that is not less than a certain limit each year and for which
the annual out-of-pocket expenses, including deductibles, co-payments, and other amounts, but
excluding premiums, do not exceed a certain limit each year (Sec. 223(c)). These limits are also
subject to annual inflation adjustments.
For 2018, the lower limit on the annual deductible under an HDHP is $1350 for self-only
coverage and $2,700 for family coverage, both increased from 2017. The upper limit for
out-of-pocket expenses is $6,650 for self-only coverage and $13,300 for family coverage, also
both increased from 2017.
******
TIPS FOR KEEPING DATA SECURE
Information hacking has been a big topic of discussion in the national news in recent months.
With all the financial information that is shared during tax time, keeping data secure is a big
concern as hackers proliferate and become more sophisticated in their methods to steal your
financial information.
Businesses are prime targets for identity and information theft because it’s easy to get
information about individual businesses. There is a lot of important information about them that
is part of the public record, it can be very profitable because the balances in business bank
accounts are often larger than in a personal bank account, and, in many cases, it’s easier to slip
by undetected because many businesses are likely unaware that there are credit reporting bureaus
that focus on business credit. What’s more, because some vendors don’t report credit history to
the bureaus, identity theft can go on under the radar for a long time.
10
There are seven specific things you can start doing now to help you protect data:
Audit your data protection practices: Don’t wait for a data breach to take your security
protocols seriously. An annual review of your systems by an outside firm is a good best
practice for anyone who regularly handles sensitive information. When you are doing this
on an annual basis, it becomes additional value and security for keeping your data secure.
Learn about email security: If you are emailing financial information, be aware that
email might not be the best way to share sensitive data. When an email is sent it stops in
several locations (or servers) before it hits an inbox, so without encryption, hackers can
intercept the email. Develop a system that is secure for both you and your customers.
Don’t ignore physical security: If your computer network is secure, but your staff isn’t
careful about walking away from a computer with files open, those files are at risk.
Something as simple as putting computers to sleep with a password when no one is at the
desk is an easy first step. Other physical security, like keeping locks on doors leading to
any sensitive files, cable locks on computers to ensure they are locked to the desk, and
keeping desks clean and tidy so that information can’t be misplaced or picked up by the
wrong hands are other things you can do to avoid the theft of sensitive data.
Is Wi-Fi secure? Make sure your Wi-Fi network is secured with strong passwords and
encryption protocols. It’s also a good idea to keep guest networks completely separate
from your internal network.
Are files regularly backed up? If your computers suffer from a virus or malware attack,
you can recover lost data if you conduct regular backups. Regularly backing up critical
client files is a good best practice, and could be considered insurance against a hacker
attack.
Prohibit employees from accessing customers data on their personal computers: It’s
just not a good idea for employees to use their personal devices to handle customer’s
information and can be a huge security concern. While there are policies you can put in
place to limit the security vulnerabilities this may cause, it might be a better approach to
simply keep all data on your business’s computer devices.
Take an active role in monitoring data security: A good first step is to understand the
business credit bureaus and how important it is to regularly monitor what is being
reported about your businesses. It’s not uncommon for the public record to include
mistakes and regularly monitoring business credit will allow you to find evidence of
identity theft earlier, rather than later.
You don’t need to dive too deep into the news to read about hacking and cybercrime. If large
banks, insurance companies, and others can be hacked, your business is likely not immune.
Take a proactive approach to protect data rather than waiting for a successful attack. You can
potentially avoid the financial harm your customers could experience should their data be stolen.
******
11
ADVANTAGES & DISADVANTAGES OF USING
A ROTH 401(K)
The biggest advantage of a ROTH 401(k) is that appreciation on the contributions are never
taxed. However, this comes because of the main disadvantage of ROTH 401(k)s - contributions
are elective contributions under a qualified 401(k) plan that, unlike pre-tax 401(k) elective
contributions, are currently includible in gross income. Therefore, contributions are from
after-tax dollars.
Another advantage is that contributions can be made to a designated ROTH 401(k) account even
if income is too high to be eligible to contribute to a ROTH IRA. Similar to a ROTH IRA, an
individual can begin distributions tax-free after age 59½ provided the individual has been in the
plan for at least five tax years. One disadvantage of the ROTH 401(k), as opposed to the ROTH
IRA, is that individuals are required to take distributions beginning when they turn age 70½.
However, this rule can be circumvented by rolling over the ROTH 401(k) account to a ROTH
IRA before turning 70½. The ROTH IRA has no minimum distribution rules. Therefore, the
funds in the account can continue to grow tax free.
As mentioned above, for a distribution to be a qualified distribution and therefore not includible
in income, a five-year requirement must be met for both ROTH IRAs and ROTH 401(k)s. In
contrast to how the five-year period is calculated for ROTH IRAs, the five-tax-year rule for
ROTH 401(k)s is the period of five consecutive tax years that begins with the first day of the first
tax year in which the employee makes a ROTH 401(k) contribution to any designated ROTH
account established for the employee under the same plan and ends when five consecutive tax
years have been completed. For a ROTH IRA, the five-tax-year period begins with the first tax
year for which a contribution is made to any ROTH IRA.
In addition, unlike nonqualified distributions from a ROTH IRA which are first treated as
distributions of after-tax contributions and therefore are tax-free, distributions from a ROTH
401(k) are prorated between after-tax contributions and taxable earnings. Therefore, if the
account has appreciated, any distribution that is not a qualified distribution will have a taxable
income component.
Contact one of our Professional Tax Advisors to help determine if this strategy is right for your
particular situation.
******
12
GUIDANCE ON THE NET INVESTMENT INCOME TAX
The IRS has issued guidance on the general application of the net investment income tax (NIIT)
and the computation of net investment income (NII). This tax, which became effective in 2013,
generally affects individuals, estates and trusts with income above certain threshold amounts.
The NIIT does not apply to nonresident aliens. This tax is subject to estimated tax rules and is
reported on Form 1040 for individuals and Form 1041 for estates and trusts. It is not required to
be withheld from wages.
The 3.8 Percent NII Tax
Individuals. The NII tax on individuals equals 3.8 percent of the lesser of:
1. net investment income for the tax year, or
2. the excess, if any, of
a) the individual’s modified adjusted gross income (MAGI) for the tax year,
over
b) the threshold amount.
For purposes of the NII tax computation, MAGI is defined as adjusted gross income before the
foreign earned income exclusion.
The threshold amount is equal to:
1. $250,000 in the case of a taxpayer filing a joint return or a surviving spouse;
2. $125,000 in the case of a married taxpayer filing a separate return; and
3. $200,000 in any other case.
These amounts are not indexed for inflation. Consequently, the number of affected taxpayers is
expected to increase over time.
13
Net Investment Income defined. In general, net investment income is the sum of:
1. gross income from interest, dividends, annuities, royalties, and rents, other than such
income which is derived in the ordinary course of a trade or business;
2. other gross income derived from any trade or business that is a passive activity with
respect to the taxpayer, or the trade or business of trading in financial instruments or
commodities; and
3. net gain attributable to the disposition of property, other than property held in a trade or
business.
Less
deductions properly allocable to such gross income or net gain.
Trusts and Estates. Trusts and estates are subject to the NII tax on the lesser of:
1. undistributed net investment income, or
2. the excess of adjusted gross income over the dollar amount at which the
highest tax bracket begins ($12,400 for 2016; $12,500 for 2017).
The NII tax does not apply to certain tax-exempt trusts and grantor trusts. Special NII
computational rules apply for electing small business trusts and charitable remainder trusts.
Unlike the individual threshold amounts, the threshold amount used for estates and trusts is
adjusted for inflation because the threshold is tied to the highest tax bracket. Nevertheless, the
amount is far less than the lowest threshold amount for individuals ($125,000 for married filing
separately). Therefore, trusts and estates should consider distributing investment income,
especially if one or more beneficiaries would not otherwise be subject to NII tax because of their
threshold amount.
The guidance on the computation of net investment income subject to the net investment
income tax is complex. However, we can assist you in evaluating the impact of this tax on
your total tax liability and guide you in a developing a tax saving strategy. Please contact
one of our Professional Tax Advisors for an appointment.
******
Contact us to schedule your consultation to identify proven
tax-smart strategies, options & solutions that deliver real value for
the professional services needed based upon your particular
situation by calling (314) 205-9595.
******
14
TAX ACCOUNTING ADVISORY
Providing a wide array of specialized non-traditional solutions plus offering
traditional CPA services including:
Real Estate Transactions
Entity Structuring
Asset Protection Solutions
Tax & Business Advisory
Strategic Tax & Business Planning
Comprehensive Accounting Solutions including data and payroll processing
Representation for Resolution of Tax Problems involving levy, liens, audit defense,
payment plans, un-filed tax returns, penalty abatement and offer in compromise.
Tax Return Preparation for individuals, investors, professionals, real estate and business
owners, Corporations, Partnerships, Trusts and tax exempt organizations.
Our knowledgeable and experienced team of dedicated Professional Accounting Professionals
are committed to providing personal attention, quality work, reliable, proactive, helpful services
and solutions to make complex accounting and compliance tasks easier, gain greater financial
control and increase profitability by providing timely, accurate and complete accounting, data
and payroll processing services. This allows you more time to focus on growing your
enterprise.
Professional Tax Advisors & Experts consult on all aspects of tax compliance, advisory and
planning, as well as, Tax Return preparation and Tax Problem Resolution Specialized Solutions.
These tax related services are provided by Zerjav & Associates, Certified Public Accountants,
which has an alternative practice structure that is a separate and independent entity which works
together with Advisory Group Associates to serve clients’ needs.
Our Core values include: Accountability, Accuracy, Collaboration, Commitment, Efficiency,
Integrity, Passion, Quality, Respect and Service Excellence offered by our team of Professional
Tax & Accounting Associates.
Our primary objective is the well-being of clients, their family and their survivors,
as well as their satisfaction with the work we do, while our goal is to be the premier choice
of Tax & Advisory firms, not the biggest firm, by sharing solutions that deliver real value.
15
Visit our NEW website launched January 25, 2017:
www.advisorygroupassociates.com
Are we providing the Tax, Advisory & Accounting services you want?
How may we better service you?
Your opinion matters!
For More Information, Contact by phone or email
(314) 205-9595 or toll free (888) 809-9595
Our professional service offerings are tailored to each stage of a client's tax life, from basic
compliance and tax return preparation, where our process is imperative to minimizing costs, to
many complex circumstances, where both our process and specialized knowledge is the key to
successful results and the best outcome.
Our complimentary monthly electronic newsletter to subscribers provides comprehensive and
timely insight on a wide range of taxation issues including federal and state tax incentives and
current issues.
We also offer an initial complimentary consultation to help identify proven tax-smart strategies,
options and solutions that deliver real value for the professional services needed based upon the
particular situation of any taxpayer.
ADVISORY GROUP ASSOCIATES’ Tax & Advisory Firms
Trusted Advisors & devoted professional experts providing tax, accounting, compliance and
business solutions.
Our Mission: Sharing Solutions that deliver real value.
NOTICE: This “TAX TIPS NEWSLINE” publication is designed to provide accurate and authoritative
information regarding the subject matters covered. The information contained herein have been
compiled from sources considered reliable. ADVISORY GROUP ASSOCIATES’ Tax & Advisory
firms staff and associates do not receive fees or commissions for any recommendations of service
providers, professionals or products nor offer any investment recommendations which carry inherent
risks.
If you are not the original addressee of this communication you must delete this message from your
computer system. Any disclosure, copying, distribution of this communication or the taking of any
action based on it is strictly prohibited.
You have received this communication because you may have agreed to receive correspondence from this
office. If you no longer wish to receive this newsletter, or you need to update your email address you
must respond to this e-mail and place "UPDATE INFORMATION" in the subject line.