Is it Time to Go through Your Tax Records? Consider This…

Chances are you’re a little confused about what to keep and what to throw when it comes to tax and financial records. No worries. It’s time to sort through what you’ve got and keep only the important stuff. Here’s what to keep in mind:

• Keep records that directly support income and expense items on your tax return. For income, this includes W-2s, 1099s and K-1s. Also keep records of any other income you might have received from other sources. It’s also a good idea to save your bank statements and investment statements from brokers.
• The IRS can audit you within three years after you file your return. But in cases where income is underreported, they can audit for up to six years. To be safe, keep your tax records for seven years.
• Retain certain records even longer. These include records relating to your house purchase and any improvements you make. Also keep records of investment purchases, dividends reinvested and any major gifts you make or receive.
• Hold on to copies. Keep copies of all your tax returns and W-2s in case you ever need to prove your earnings for Social Security purposes.

Have other questions related to tax record retention? BAS can help! Give us a call today.

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Sweeping Changes for Taxpayers & What They Mean for You

The Tax Cuts and Jobs Act was passed at the end of December 2017 with some of the most sweeping changes taxpayers have seen in 30 years. Here are a few big changes to come out of the new act — and what you can do about it.

1. The medical expense deduction threshold was lowered to 7.5 percent.

The tax reform bill retroactively lowers the threshold to deduct medical expenses in 2017 to 7.5 percent of adjusted gross income. The previous threshold was 10 percent. This new 7.5 percent threshold remains in place for 2018, but reverts back to 10 percent in the following years.

What this means: You may want to consider using the medical expense deduction this year. If there are any qualified medical expenses you can make (drug purchases, medical equipment, etc.) to push you over the new, lower threshold, consider doing so in 2018.

1. The healthcare individual mandate penalty stays in place until 2019.

The shared responsibility penalty (also known as the individual mandate) in the Affordable Care Act is effectively repealed by the tax reform legislation, but not right away. The penalty is set to zero in 2019, but remains in place for 2018.

What this means: You still need to retain your Forms 1095 this year in order to provide evidence of your healthcare coverage. Without proof of coverage, you may have to pay the higher of $695 or 2.5 percent of your income. Unless there are further changes coming, 2018 may be the last year you’ll need to worry about the individual mandate penalty.

More changes to consider for 2018 tax planning

We’re experiencing some of most significant tax law changes since the 1980s. There will be a lot of things to consider for tax planning this year. Here are some of the most significant:

• Reduced income tax rates
• Doubled standard deductions
• Suspension of personal exemptions
• New limits on itemized deductions, including:

1. Combined state and local income, property and sales tax deduction limited to $10,000
2. Casualty losses limited to federally declared disaster areas
3. Elimination of miscellaneous deductions subject to the 2 percent of adjusted gross income threshold

• Boosts to:

1. The child tax credit ($2,000 in 2018)
2. A new $500 family tax credit
3. 529 education savings plan expansion for K-12 private school education
4. The estate tax exemption​ (doubled)

Stay tuned

There will surely be more details on the tax reform changes and how they are implemented by the IRS in the weeks to come. In the meantime, contact us if you have urgent questions regarding your situation.

For More Info : Visit Here : https://www.bas-pc.com/

REVERSE MORTGAGE – Don’t say yes until you read this

There’s no doubt you’ve seen TV advertisements telling seniors that their lives could improve if they use reverse mortgages to harvest the equity in their homes. They go on to tell you that you can free up money to take an expensive trip, remodel your home or just have fun. It sounds appealing — but is it worth it?

 What is a reverse mortgage?

As the name implies, a reverse mortgage is the opposite of a traditional mortgage. With a traditional mortgage, you borrow a sum of money to purchase a home and then pay off the debt over time.

 With a reverse mortgage, you receive loan proceeds (as a lump-sum payout, an annuity, a line of credit or a combination of all three) but make no payments as long as you reside in the property. The loan, with any accrued interest, comes due when you move out or pass away. To qualify for a reverse mortgage you need to be 62 or older, own your residence and generally have significant equity in your home.

 Unfortunately, reports of abuse regarding aggressive and predatory sales practices are common. Here are a few items to analyze if you’re thinking about a reverse mortgage:

•  Determine if a reverse mortgage is logical for your situation. Evaluate alternatives. Conventional solutions such as a home-equity loan might be a better answer.

•  Consider the financial ramifications. Reverse mortgages can be expensive. Upfront fees are significant. If you stay in your home just a few years, the effective interest rate can be very high.

•  Be wary of bundled sales pitches. Commission-driven salesmen can push life insurance or various annuity products along with a reverse mortgage. You could end up with products you don’t need.

If you are considering a reverse mortgage, call us. We can help you determine potential tax issues, plus other alternatives. 

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