Thursday, December 21, 2017


Congress is fond of passing tax bills in the last week of the year, and this year was no exception!

The standard deduction is changing to $24,000 for married taxpayers, $18,000 for heads of household and $12,000 for individuals. As a result, if your total itemized deductions are below the new standard deduction number, you will no longer be itemizing.

Your itemized deductions include state and local taxes, property taxes, charitable deductions, mortgage interest, etc.

Starting in 2018, total state taxes – your state income taxes plus your property taxes – will be limited to a $10,000 deduction.

Mortgage interest will be limited to $750,000 of mortgage interest and home-equity line of credit interest will no longer be deductible.

Unreimbursed employee expenses and other 2% Miscellaneous deduction (safe deposit box, tax return preparation, investment fees) will no longer be deductible.

What can you do before year-end? 

  • Prepay your State taxes for 2017 – don’t wait until 2018 to pay. You cannot prepay next year’s taxes and take a deduction, but you can make sure to pay 2017’s tax prior to year end and take the deduction on 2017’s tax return.

  • Prepay your real-estate taxes prior to year-end, if possible. For example, if you recently received a property tax bill in the mail with the option to pay “1st half” and “2nd half” – you can pay both now. This can be tricky if you escrow your tax payments with your mortgage payment.

  • Make your 2018 charitable contributions before 12/31/17. This includes that trip to Goodwill you’ve been putting off!

Wednesday, August 9, 2017

Changes to Self-Employment Taxation in the State of Kansas.

Tax Increase In Kansas

Since 2012, self-employment income in Kansas has been exempt from state income tax. This massive tax cut was commonly referred to as “the LLC Loophole” and led to budget problems due to lack of tax revenue. The label “LLC Loophole” was a misnomer – this tax cut was not a loophole, it was a big tax cut that worked exactly as intended, and it really didn’t have a heck of a lot to do with LLCs.

Let me explain: a broad range of businesses became exempt from taxation on ordinary business income that was non-wage income. These businesses included sole proprietors, partnerships, most LLCs, and many corporations, as well as farms and rental properties. Not only did they not need to be LLCs to qualify, they didn’t have to be any type of entity: plain old self-employed individuals and owners of property benefited from the tax cut.

So you may have heard that massive quantities of new LLCs were formed in Kansas because of this tax cut, but you’re wrong. Massive quantities of new LLCs were formed in Kansas because people had no real comprehension of this law and read only the headline.

What does this mean for self-employed individuals?  Start making Kansas estimated tax payments. The tax bill is retroactive to January 1, 2017, so you’ll be paying Kansas taxes on your next tax return. Technically, you're already behind and have missed the first and second quarter estimated tax deadlines. You'll have to catch up. The Kansas Department of Revenue says they won't charge penalties for estimated tax payments that are late solely because of this tax change.

2.      Assess your structure. Now that self-employment income is no longer exempt from tax, it’s time to re-assess whether it’s prudent to make a tax election to become an S-Corp or a C-Corp. If that’s what’s right for you, there are forms to file and formalities to observe. Depending on your situation, it might be possible to make your election retroactive to January 1, 2017.

      If you're a wage earner, your tax rate also went up. The tax increase on wage earners wasn't as large as for self-employed individuals, so it's going to be less noticeable. Withholding tables should have been adjusted automatically in most payroll software. You may have noticed in the last month or so that your Kansas withholding went up a bit. There's nothing more you need to do. If your HR or payroll department changed your withholding since June 30, they have implemented the change already.