Returning Value Blog

Distinguishing traditional IRAs from Roths

There are two basic types of IRAs: the traditional IRA and the Roth IRA. With either one, the deadline for contributions for the 2017 tax year is April 17, 2018. There are no extensions for making IRA contributions for 2017, even if you obtain an extension for filing your return.

If you purchased qualifying property by December 31, 2017, you may be able to take advantage of Section 179 expensing on your 2017 tax return. You’ll also want to keep this tax break in mind in your property purchase planning, because the Tax Cuts and Jobs Act (TCJA), signed into law this past December, significantly enhances it beginning in 2018.

When it comes to income tax returns, April 15 (actually April 17 this year, because of a weekend and a Washington, D.C., holiday) isn’t the only deadline taxpayers need to think about. The federal income tax filing deadline for calendar-year partnerships, S corporations and limited liability companies (LLCs) treated as partnerships or S corporations for tax purposes is March 15. While this has been the S corporation deadline for a long time, it’s only the second year the partnership deadline has been in March rather than in April.

Do you know who received the first Social Security check and for what amount?

The “sandwich generation” accounts for a large segment of the population. These are people who find themselves caring for both their children and their parents at the same time. In some cases, this includes providing parents with financial support. As a result, estate planning — which traditionally focuses on providing for one’s children — has expanded in many cases to include aging parents as well.

New law creates retroactive tax break

The Tax Cuts and Jobs Act (TCJA) repeals or cuts back many deductions on personal returns (see “Last Chance for Key Tax Deductions”), but the medical expense deduction survived the chopping block. In fact, the new law temporarily enhances the deduction, retroactive to the 2017 tax year. In other words, you can benefit from this tax-favored treatment on the 2017 return you file in 2018.

Opportunities vanishing after 2017 returns

The new tax law enacted at the end of last year—the Tax Cuts and Jobs Act (TCJA)—provides numerous tax changes for individuals, including tax rate cuts and a higher standard deduction. Significantly, the TCJA also eliminates or modifies certain deductions, including the majority of itemized deductions, beginning in 2018. As a result, fewer taxpayers are expected to itemize returns in the future.

If you’re planning on buying a home that you one day wish to pass on to your adult children, a joint purchase can reduce estate tax liability, provided the children have sufficient funds to finance their portion of the purchase. With the gift and estate tax exemption now set at an inflation-adjusted $10 million thanks to the Tax Cuts and Jobs Act, federal estate taxes are less of a concern for most families. However, the high exemption amount is only temporary, and there’s state estate tax risk to consider.

Which countries, states, and individuals give the most to charity?

If reducing your taxable estate is an important estate planning goal, making lifetime charitable donations can help achieve that goal and benefit your favorite organizations. In addition, by making donations during your lifetime, rather than at death, you can claim income tax deductions. But some of your charitable deductions could be denied if you don’t follow IRS rules.