Tax News You May Use

02/02/2017

Good news for Minnesota residents:
The Legislature passed and the Governor signed a Federal tax compliance bill,for 2015-16. If you have a correction to 2015 for the new law, the MDR will review all effected 2015 returns and will issue a refund, no cases of add'l tax tax due. You will sent a letter notifying you of the or if you in rare cases need to file an amended. We are expecting a refund of about $20, expecting a direct deposit to same account used for the regular return.

10/06/2016

All these tax questions, about deducting operating losses, or other losses related to foreclosure of real-estate. If you have a realized loss it is in my opinion that it is quite moral and legal to deduct that loss against other years of income.

What did exist was a loophole that would have allowed him to deduct business losses on his personal income tax return, even if those losses were actually borne by banks that loaned Trump money and never got it back, 'Business Insider's Josh Barro wrote'.

This loophole was an error in how the law was written and closed by congress in 2002.

Trump I'm sure employed tax professionals, attorneys and accountants, and they would have used this loophole.

If the debt is forgiven Trump never had to repay the loan and thus lost $0 of his own money, but still was able to write the forgiven loan amounts off as a loss against future actual income

05/20/2015

Income Taxes and the Candidates
By: Richard Schneider, Professor Emeritus, CPA inactive

Well the Presidential election is in 2016, but the campaigning has already started. Each candidate will have some sort of tax reform plan, but in general the essence of the plans will embody the philosophy of their party.
Democrats generally believe in the demand side economics, not supply side. They will look at programs and policies to increase spending on goods and services, to which companies respond by producing more goods and services and thus hiring more workers, which puts more money into the economy for current spending. Workers are more likely to spend a greater percentage of their increased income on consumption than investors would, thus further stimulating the economy.
Look for Democrats to put more money in the hands of low and middle income taxpayers, and increase taxes on the wealthiest, both earned and unearned income.
Republicans generally believe in the supply side economics; trickle down. They will look at programs and policies to increase cash flow to investors and companies. If investors have more money they will invest at least some of the additional retained income in businesses. With the additional cash, companies will expand production of goods and services, hiring more workers and stimulating the economy. Look for Republicans to put more money in the hands of the wealthiest Americans. They will advocate lowering the rate of tax on the highest wage earners, with salaries and wages over $200,000 to $300,000. Also look for them to propose lowering or eliminating income tax on unearned income: interest, dividends, and capital gains. They will also propose allowing corporations to bring back to the United States, with little or no tax, significant amounts of cash, companies had stashed in foreign accounts to avoid paying income tax on those profits.
Both parties have talked about limiting itemized deductions and eliminating special tax credits and deductions for oil companies. I believe we will see a simplification of itemized deductions, keeping at least charitable contributions in addition to an enhanced standard deduction. I expect talk on both sides of the trillions of dollars of lost tax revenue to the oil industry, but in the end there will be no change.
As the front runners become clearer, I will give an over view of each income tax plan. Currently there are too many candidates in the running, to keep them straight. I have seen some plans from Rubio and Clinton, both which follow the party lines outlined above.

11/06/2012

This one's on my truck bumper.

11/06/2012

06/24/2012

2012 Tax Information
By: Richard Schneider, Emeritus Professor of Accounting
Winona State University

Here I sit with fading memories of the busy tax filing season, and realized we are six months into the next tax year and need to look at some 2012 provisions, rates, and brackets.
There are some changes built into the system, indexed to the cost of living, such as the standard deduction, personal exemptions, and the dollar limits within the tax brackets. Here are a few:
Standard deduction:
Single and Head of Household - $5,950 (increase $150)
Married filing Jointly -------------$11,900 (increase $300)
Personal and dependent exemptions: $3,800 (increase $100)
Tax rates and brackets: (rates have not changed) amounts below are the upper limits of taxable income (which is adjusted gross income less deductions and exemptions). S = single M = married filing jointly
10% S - $8,700 M - $17,400 (increase $300 per person)
15% S - $35,350 M - $70,700
25% S - $85,650 M - $142,700
28% S - $178,650 M - $217,450
33% S - $388,350 M - $388,350
35% S & M – taxable income over $388,350

For example the tax for a married couple with one child and adjusted gross income of $55,000, would be computed as follows:
Adjusted Gross Income $55,000
Less:
Exemptions 3 x $3,800 -11,400
Standard deduction -11,900
Taxable Income $31,700

Tax computation: (using the $31,700)
10% First $17,400 at 10% = $1,740 (31,700 – 17,400 = $14,300 remaining)
15% Remainder $14,300 at 15% = $2,145
Total Tax $3,885
The tax for 2011 would have been: $3,999
You will note even though the taxpayers are in the 15% bracket, not all of the $31,700 of taxable income is taxed at 15%, the first $17,400 is taxed at 10%. This would be true even if you were in the 35% bracket, some would taxed at 10%, 15%, 25%, etc. Climbing into the next tax bracket does not mean all of the income is taxed at the higher bracket rate, only the additional dollars that land in that bracket are taxed at the higher rate. Also noteworthy here, is the fact for this family, the first $23,300 (exemptions of $11,400 + std deduction of $11,900) were not taxed at all.
The Gift Tax exclusion for 2012 is $13,000 per person, the same as the 2009, 2010, and 2011 amounts. A married couple could give a total of $26,000 to an individual, such as a grandchild, and not pay a gift tax.
The 2012 auto mileage rates are: 55½ cents per mile for business, 23 cents for moving and medical, and 14 cents for charity.
Some other tax provisions that are still available for 2012:
1. American Opportunity education credit – good for the first 4 years of higher education.
2. Long Term Capital Gains and most dividends, taxed at a maximum of 15%, or if your total taxable income, including capital gains and dividends, is at the 15% bracket or lower, the tax rate on the Long Term gains and dividends is 0%.
3. The Bush era tax revenue reductions will continue even for upper income taxpayers.
4. Oil and gas companies may continue to use the % of revenue write off, and various credits for drilling and development.
5. The Child tax credit and Additional Child tax credit remain intact.

Will we see tax reform in 2012? Committees are busy taking evidence and writing reforms, but congress is not interested in passing tax reform before the elections, they would have less to promise and it may look like something good for the party in power. Some form of tax reform will come in 2013. My tax services are predicting lower tax rates, and decreased deduction amounts, such as a limit on the amount of home mortgage interest, maybe interest only on the first $500,000 of mortgage debt. It’s possible they will have the fortitude to eliminate special tax breaks, such as those in number 4 above for the oil and gas industry, treat investment income as ordinary income, eliminate the Bush era tax cuts and reform the additional child tax credit and earned income credit, to curb abuse and fraud.