Tax impact of the Supreme Court’s same-sex marriage decision 08-02-2015

On June 26, the U.S. Supreme Court ruled that same-sex couples have a constitutional right to marry, making same-sex marriage legal in all 50 states. For federal tax purposes, same-sex married couples were already considered married, under the Court’s 2013 decision in United States v. Windsor and subsequent IRS guidance — even if their state of residence didn’t recognize their marriage.

From a tax planning perspective, the latest ruling means that, in states where same-sex marriage hadn’t been recognized, same-sex married couples no longer will need to deal with the complications of being treated as married for federal tax purposes but not married for state tax purposes. So their tax and estate planning will be simplified and they can take advantage of state-level tax benefits for married couples. But in some cases, these couples will also be subject to some tax burdens, such as the “marriage penalty.”

Same-sex married couples should review their tax planning strategies and estate plans to determine what new opportunities may be available to them and whether there are any new burdens they should plan for. Employers will need to keep a close eye on how these developments will affect their tax obligations in relation to employees who have same-sex spouses. Please contact us if you have questions.

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Tax treatment of NQSOs differs from that of their better-known counterpart 07-24-2015

With nonqualified stock options (NQSOs), if the stock appreciates beyond your exercise price, you can buy shares at a price below what they’re trading for. This is the same as for the perhaps better-known incentive stock options (ISOs).

The tax treatment of NQSOs, however, differs from that of ISOs: NQSOs create compensation income — taxed at ordinary-income rates — on the “bargain element” (the difference between the stock’s fair market value and the exercise price) when exercised. This is regardless of whether the stock is held or sold immediately. Also, NQSO exercises don’t create an alternative minimum tax (AMT) preference item that can trigger AMT liability.

When you exercise NQSOs, you may need to make estimated tax payments or increase withholding to fully cover the tax. Keep in mind that an exercise could trigger or increase exposure to top tax rates, the additional 0.9% Medicare tax and the 3.8% net investment income tax.


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Tax Deduction Rules for Business Start-Up Expenses 06-10-2015

If you have started a new business this year or are planning on starting a new business there are some important rules related to the deductibility of certain start-up expenses.  Many taxpayers struggle with the question of when to deduct costs related to starting a business. A recent U.S Tax Court case demonstrates how it can be difficult to differentiate between Section 162 expenses that are deductible in the current year and Section 195 start-up costs that are deductible after the start-up commences business operations. Here's some guidance on deducting start-up expenses with confidence. Continue reading

Update on Tax Rules Related to Gambling 05-11-2015

Are you headed to Las Vegas or Biloxi in the near future? The recent Floyd Mayweather/Manny Pacquiao boxing match put a brief spotlight on sports gambling. Gambling is more than just fun and games. It can also have serious federal tax implications. So it's important for amateur gamblers to know the latest IRS reporting requirements for winnings, losses and expenses, including time spent on electronically tracked slot machines. Here are the details, including information about new proposed rules. Continue reading

Non-Cash Charitable Contributions – How to Maintain Adequate Records of Your Gifts? 04-27-2015

Non-cash contributions, or charitable contributions of used property, provide more than the satisfaction of cleaning out your home of unused and unneeded items and the self gratification that accompanies giving those items to a worthy cause. They can also lower your income tax liability, if you follow the strict substantiation rules set forth by the IRS. A recent U.S. Tax Court cases shows how failure to retain detailed records for donations can be a costly mistake.  Please let us know if you have any questions after reading this article. Continue reading

Tax Documents and Related Records: What Should You Keep 04-13-2015

After a few years, tax and other paper records can begin to accumulate and become overwhelming. Many individuals and companies keep records longer than necessary, just in case the IRS, state tax authorities or another regulatory body makes an inquiry.  Here are some record retention guidelines we hope will help prevent you from becoming the subject of an upcoming episode of Hoarders. Continue reading

The April 15 Deadline is Quickly Approaching: Last-Minute Personal Tax Filing Reminders 04-06-2015

If you have not filed your 2014 personal tax return (or an extension) yet, here are some end-of-tax-season thoughts to help minimize potential errors and track any refunds you may receive. You may also have to make first quarter estimated tax payments by April 15 if you earn income that's not subject to withholding. If you fail to properly make estimated tax payments you could be subject to penalties. Continue reading

When Can You Deduct Job-Related Moving Expenses? 03-30-2015

When you relocate for work purposes you may be eligible to deduct certain moving costs on your income tax returns if you meet the distance and time tax law tests. Here is a discussion of eligibility requirements for the deduction and explanations of how to handle reimbursements you may receive from your employer. Continue reading

April 15th Countdown: Retirement Accounts Could Help Reduce Your Tax Liability 03-23-2015

As of March 23, 2015, the IRS has already issued 54.2 million tax refunds, averaging nearly $3,000 each. However, many taxpayers face the reverse situation and will not be receiving a refund. If you anticipate that you will owe taxes for 2014, you still may be able to reduce your tax liability by contributing to an IRA or SEP before the April 15 deadline. For your benefit, this article provides some basic rules, deadlines and strategies. We'll also tell you how to open and fund a myRA account, the Treasury's new Roth-IRA variant. Continue reading

SOMETHING NEW: Disabled Individuals May Possibly Utilize ABLE Accounts 03-16-2015

Begging in 2015, thanks to the Tax Increase Prevention Act of 2014, families of individuals with disabilities may be eligible for a new type of tax-advantaged savings account.  These accounts are similar to the 529 plans that allow individual to save money to be used to pay for college expenses. Here are 10 key facts you should know about these savings plans, which were created under the Achieving Better Life Experience Act of 2014 (ABLE Act). Continue reading