A trust can be set up for a multitude of purposes in various forms and of course there are tax consequences, with which a Reno CPA can assist you. There are many moving parts with trust taxation, but simplistically nongrantor trusts must file a federal tax return of which the highest income tax rate is assessed on incomes over $12,400, as opposed to a single person with this threshold over $415,050.
Various state income taxes can also be assessed by merely having a trustee in a state like California or Colorado, even if the beneficiary lives in another state that doesn’t impose personal or trust income taxes like Nevada. These states consider the trust to be a resident trust in that state as the trust is administered in that state by having the trustee located there.
As you can probably guess, California’s trust taxes can be quite onerous. The trust tax rate can reach 12.3% of taxable income. Combined with the federal tax rate of 39.6% and the additional tax on investment income to pay for the Affordable Care Act of 3.8%, a California trust could be taxed at up to 55.7%!
This 12.3% California trust tax can easily be avoided by choosing a trustee that resides in the state of Nevada, even if the beneficiary lives in California. A trustee can be a trusted family member, banker, attorney or a CPA. For any trust related tax questions the Reno CPAs at Barnard Vogler can help sort through the regulations.
The IRS is warning that con artists are using video relay services (VRS) as a way of potentially scamming deaf and hard of hearing individuals. It appears these bad actors are using VRS just like many of the other phone and email scams that are constantly being reported. These people will call claiming to be from the IRS and demand payment of a tax debt or say that the taxpayer is due a refund. Simply, these scammers are looking for personal information. As always, do not give out personal and financial information to anyone you do not know and confirm that the person requesting information really is who they claim to be. The IRS adds that people should not assume they can trust VRS calls as VRS interpreters do not screen calls for validity.
As listed on IRS.gov, the IRS will never:
- Demand immediate payment and require the payment be made a specific way, such as by prepaid debit card, gift card or wire transfer. In most cases, the IRS will not call taxpayers about taxes owed without first having mailed a letter to the taxpayer.
- Threaten that local police or other law-enforcement groups will immediately arrest taxpayers for not paying a tax bill.
- Demand that taxpayers pay taxes without giving them the opportunity to question or appeal the amount owed.
- Ask for credit or debit card numbers over the phone.
If a deaf or hard of hearing individual suspects they received one of these calls, they should call the Treasury Inspector General for Tax Administration (TIGTA) at 800-366-4484. The IRS now accepts calls from all type of relay services whether they are federal, state or private relay providers. The IRS also has YouTube videos in American Sign Language (ASL) with a listing that can be found here. A YouTube video in ASL about this VRS scam is also available.
It’s that time of year again, that time when you have to file your tax returns. It is also the time of year where the scammers come out of the woodwork to try to steal your money and/or identity. Scammers will try many different things to get information from you, with the list below a selection of the some of the most common ones for 2017 (so far).
- Email Phishing – Scammers will send an email to you that appears to be from the IRS saying such things as “You must pay this tax amount now” and “Send your information to this email to avoid penalties”. Be very cautious of these emails and don’t hesitate to ask a tax professional for any advice on how to proceed.
- Phone Scams – The IRS will NEVER call people randomly and say that they must make a payment immediately. They will always contact you by U.S. mail first. If you receive a call that you feel may be alarming or threatening just hang up and report it to the IRS at firstname.lastname@example.org.
- Email Look-A-Like – Tax preparers will send you emails from time to time to talk about tax prep and planning, but this new type of scamming is when a scammer will send a tax related email to you, but from a fake email address that looks very similar to the ones we use. For instance, email@example.com is a proper email from Barnard Vogler & Co., but be sure that you are not getting an email from firstname.lastname@example.org. That is a fake email, where the scammer just looks for you to send your information to them or attach a pdf that you go and open, which can include a virus. This one is tricky, but pay attention to all emails that you receive to avoid this scam.
These are just a few scams of the many that are out there. Educate yourself by going to IRS.gov and report any phishing emails to
We all know how it goes – as soon as the New Year begins the tax forms begin filling up your mailbox. Just another year to throw the 1099s and W-2s in a pile and ship them off to your accountant just in time to throw a return together and be done with it. Many people see tax time as a necessary evil which they grin and bear their way through the steps in order to get it done and over with. If you are one of these people you may benefit from doing things a little different this year and seeing where it gets you.
There are many benefits to paying attention during your tax filing process if you have never cared or take the time to understand before. It doesn’t matter whether you are a wealthy business owner or just a normal guy or gal working for your paycheck – a good CPA can help you get the most benefit not only tax wise but possibly financially as well. Taking time with your tax preparer to understand the why’s and how’s can open your eyes to things you may be able to do differently to better your tax or financial position in the future. If your accountant does not have your best interest at heart then find a new one because a good accountant takes a personal interest in their clients and wants to see them do as well as absolutely possible. A good accountant will not only be able to prepare your tax return to its fullest potential but they are able to advise you on future moves and desires.
This year, make a resolution to spend some time with your accountant, learn something new, and solidify the relationship. Having a trusted advisor as opposed to a tax preparer on your team will take you a long way and be worth every penny.
Having a baby is such a wonderful blessing, but along with the tremendous amount of joy comes a large amount of new expenses. The federal government offers a number of tax breaks to help parents save money on their tax bill.
The Dependent Exemption
For 2016, you can claim a $4,050 exemption by adding your child as a dependent. This will reduce the amount of income which you will be taxed on. This is not a prorated amount, meaning that you qualify for the entire amount no matter what time of the year the child was born. For example, a married couple with one child would qualify for three exemptions, even if that baby was born in December of the year.
There is a phase-out on the dependent exemption that applies once your adjusted gross income exceeds $259,400 for single filers, $285,350 for head of household, $155,650 for married filing separately, and $311,300 for married couples filing jointly in 2016.
The Child Tax Credit
The child tax credit provides a credit of $1,000. A credit is different than a deduction in that it reduces the amount of the tax bill dollar for dollar compared to a deduction that reduces the amount of income you are being taxed on.
There is a phase-out for the child tax credit which starts when your income is above $110,000 for married couples filing jointly, $75,000 for single filers and head of household, or $55,000 for married filing separately.
The Child Care Credit
The child care credit provides a credit for the costs you pay for a qualifying individual while you and your spouse, if you are married filing jointly, work or look for work.
The dollar limit on the amount of the expenses you can use to figure the credit is $3,000 for the care of one child under age thirteen or $6,000 for two or more children under age thirteen. The amount of your credit is between 20-35 percent of your allowable expenses. There is not a complete phase-out for this credit, but the credit decreases as the amount of income increases. Families with an adjusted gross income of $43,000 or more will only be able to take 20% of allowable expenses.