2019 is here, and it’s almost time to file your first tax return under the new law. Washington sold the Tax Cuts and Jobs Act as “tax simplification.” And really, who can’t raise a toast to that? Lower rates! Higher standard deductions! A 1040 you can fill out on a postcard! But many taxpayers, especially those in high-tax states like New York and California, can be forgiven if they feel like they woke up with a massive hangover. Deductions for state and local income and property taxes are now capped at $10,000, regardless of income. And employee business deductions are nixed entirely. That’s going to be pricey for the Very Large Men we mentioned in the title.Continue reading →
Wall Streeters have a lot to give thanks for this holiday season. Earnings are up, so bonuses are up. And that, in turn, means taxes are up, too. The New York Post just reported that Wall Street Bankers Are Throwing Excessive Parties To Dodge Taxes . But will the wining and dining actually put money back in their pockets? Or is the tax angle just a convenient excuse to party up a storm on the company tab?Continue reading →
When Congress raises the hood on the tax code, they’re usually working to raise money to pay for government. But sometimes they’re more interested in nudging us to behave in ways they can’t legislate directly. Take the mortgage interest deduction, for example, which “cost” the Treasury $69.7 billion in 2013. That deduction encourages millions of Americans to spend billions of dollars buying homes, building homes, renovating money pits, and keeping their homes looking spiffy — all of which returns billions more through our overall economy.
Last week, the House Ways and Means Committee passed another one of those “we-know-we-can’t-make-you-do-this-but-we-can-still-give-you-a-tax-break-for-it” laws. The Personal Health Investment Today (“PHIT”) Act would let you take medical deductions for general fitness expenses: gym memberships, exercise classes and personal trainers, sports and fitness equipment, and even pay-to-play school sports fees and race registration fees. (That’s right, your local Thanksgiving “Turkey Trot” 10k will be deductible!) The bill caps the new deduction at $500 for individuals and $1,000 for joint filers.Continue reading →
Baseball is back, even as some teams are looking at early-season snow days. Little-leaguers across the land are donning gloves and getting ready to watch their favorite big-leaguers take to the field. Stats geeks are prepping spreadsheets to crunch numbers like WAR (Wins Above Replacement), BABIP (Batting Average on Balls in Play), and LWCT (Largest Wad of Chewing Tobacco). And the umpires at the IRS are watching a new pitch that Washington just threw across their plate, too.
Since 1921, code section 1031 has let you exchange property you’ve held for business or investment without paying tax on your gains. These “like-kind” exchanges usually involve real estate. They also include vehicles and equipment — if an up-and-coming CEO wants to swap his company’s tired old Gulfstream IV for a newer, shinier model V, that’s cool, too. The IRS has even ruled that “trades of player contracts owned by major league baseball clubs will be considered exchanges of like-kind property.”
But last year’s Tax Cuts and Jobs Act trimmed the roster on like-kind exchanges to real estate only. And that means some teams may already be behind in the count for taxes they owe on their trades!Continue reading →