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Should We Expect Delays In Refunds?

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Taxpayers have a number of deadlines they have to meet every year. Many of them wait until the last minute to complete their tax returns or file for extensions, facing the danger of costly penalties if they don’t get things done in time.

You don’t often hear about the IRS needing an extension to get its part of the tax puzzle completed, but that’s exactly what could happen this year. The magnitude of changes to the tax laws over the past year and the governmental shutdown means the tax agency could have a tough time starting the 2019 tax season on time.

The challenges began with the complexity of the tax changes and those would be hard enough. Among the highest priority items were concerns about taxpayer data security, identity theft, enabling greater online access for taxpayer services, and upgrading key systems. Many of these issues have been near the top of similar lists for years, reflecting the ongoing need to deal with these problems and the difficulties in finding lasting solutions.

With the implementation of the Tax Cuts and Jobs Act, the IRS is facing the need for massive resources to meet taxpayer expectations while still ensuring compliance with all the new laws in their entirety.  Now, with the government shutdown, the ability for the IRS to meet these changes for the 2019 tax season may very well prove insurmountable.  

The Tax Cuts and Jobs Act contained nearly 120 provisions that the IRS is responsible to administer, affecting both domestic and international taxation. The tax agency quickly estimated that implementing tax reform would require creating or revising roughly 450 forms, publications, and sets of instructions. In addition, roughly 140 information technology systems to process tax returns and monitor compliance would require modifications to ensure smooth operation, and the IRS would need to handle roughly 4 million additional telephone calls and other contacts from taxpayers trying to figure out what impact the new tax laws would have on their own individual returns.

The Inspector General praised early IRS attempts to get things moving in the right direction, but it’s still warning that the 2019 tax filing season could get delayed. Historically, returns become available for filing around the third or fourth week of January. Yet with the IRS IT department having already missed some early deadlines, it’s possible that there won’t be enough time for testing near year-end without putting off the start of tax season. Already, some information that the IRS typically releases, such as tax brackets and annual changes to various thresholds and limits, weren’t produced as early as they have in previous years.

Taxpayers need to keep an eye on the IRS to see how the shutdown will ultimately impact the tax season.  Unless the tax agency can pick up the pace and move as efficiently as possible, then taxpayers in a hurry to get their returns filed to claim their refunds could have to wait longer than they’d like.

If you or your clients have any tax issues or problems with the IRS/State or  other federal tax problems, please feel free to contact me directly at (909) 570-1103 or by email at Carlos@HealthcareTaxadvisor.com

Carlos Samaniego, EA

Enrolled Agent

Licensed by The Department of Treasury to represent taxpayers

Listen to my podcast on Anchor or your favorite podcast app – Click Here

1255 W Colton Ave, #535

Redlands, CA 92374

Ph. (909)570-1103

Fax (909)586-9190


Need Tax Deductions This Year? Why Not Replace Your Business Car!

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Two questions:

  1. Do you need a replacement business car, SUV, van, or pickup truck?
  2. Do you need tax deductions this year?

Here are some ideas for you to consider:

1. Buy a New or Used SUV, Crossover Vehicle, or Van with a GVWR Greater than 6,000 Pounds

Let’s say that on or before December 31, 2018, you or your corporation buys and places in service a new or used SUV or crossover vehicle that the manufacturer classifies as a truck and that has a gross vehicle weight rating (GVWR) of 6,001 pounds or more. This newly purchased vehicle gives you four big benefits:

  1. Bonus depreciation of 100 percent (new, thanks to the TCJA)
  2. Section 179 expensing of up to $25,000
  3. MACRS depreciation using the five-year table
  4. No luxury limits on vehicle depreciation deductions

2. Buy a New or Used Pickup with a GVWR Greater than 6,000 Pounds

If you or your corporation buys and places in service a qualifying pickup truck (new or used) on or before December 31, 2018, then this newly purchased vehicle gives you four big benefits:

  1. Bonus depreciation of 100 percent
  2. Section 179 expensing of up to $1,000,000
  3. MACRS depreciation using the five-year table
  4. No luxury limits on vehicle depreciation deductions

To qualify for full Section 179 expensing, the pickup truck must have

  • a GVWR of more than 6,000 pounds, and
  • a cargo area (commonly called a “bed”) of at least six feet in interior length that is not easily accessible from the passenger compartment.

Short bed. If the pickup truck passes the more-than-6,000-pound-GVWR test but fails the bed-length test, tax law classifies it as an SUV. That’s not bad. It’s still eligible for expensing of up to the $25,000 SUV expensing limit plus 100 percent bonus depreciation. See Section 1 above for how this works.

3. Buy a New or Used Qualifying Cargo or Passenger Van with a GVWR Greater than 6,000 Pounds

A new or used cargo or passenger van bought and placed in service on or before December 31, 2018, can qualify for four big tax benefits:

  1. Bonus depreciation of 100 percent
  2. Section 179 expensing of up to $1,000,000
  3. MACRS depreciation using the five-year table
  4. No luxury limits on vehicle depreciation deductions

Cargo van. To qualify for full Section 179 expensing, the cargo van must

  • have a GVWR of more than 6,000 pounds,
  • fully enclose the driver compartment and load-carrying area,
  • not have seating behind the driver’s seat, and
  • have no body section that protrudes more than 30 inches ahead of the leading edge of the windshield.

If the van passes the GVWR test but fails one of the other qualifying tests listed above, the law deems it an SUV.

Passenger van. If the van has a GVWR of greater than 6,000 pounds and seats more than nine people behind the driver’s seat, it is a tax law–defined passenger van, not an SUV, and it qualifies for full Section 179 expensing of up to $1,000,000 and 100 percent bonus depreciation.

4. Buy a Depreciation-Limited New or Used Car, SUV, Truck, or Van

If you or your corporation buys and places in service a new or used passenger vehicle such as a car (or a pickup, SUV, or van with a GVWR of 6,000 pounds or less) on or before December 31, 2018, then you or your corporation may claim up to $8,000 in bonus depreciation.

Tax reform increased the 2018 luxury passenger vehicle depreciation limits to

  • $10,000 for the first taxable year in the recovery period,
  • $16,000 for the second taxable year in the recovery period,
  • $9,600 for the third taxable year in the recovery period, and
  • $5,760 for each succeeding year in the taxable period.

Here’s how this works: Say you buy a car. You add the $8,000 in bonus depreciation to the $10,000 car limit, for a 2018 limit of $18,000. To get to this limit, you can use a combination of bonus depreciation and regular depreciation. You reduce the $18,000 limit by any personal use.

The vehicle tax rules can be confusing. If you need my help, please feel free to contact me directly at (909) 570-1103 or by email at Carlos@HealthcareTaxadvisor.com

Carlos Samaniego, EA

Enrolled Agent

Licensed by The Department of Treasury to represent taxpayers

Listen to my podcast on Anchor or your favorite podcast app – Click Here

1255 W Colton Ave, #535

Redlands, CA 92374

Ph. (909)570-1103

Fax (909)586-9190

6 Strategies for Tax Planning Your Year-End Stock Portfolio

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The beauty of tax planning your year-end stock portfolio is that it might cost you pennies in commissions but allow you to pocket real money.

Here’s the basic strategy:

  • Avoid the high taxes (up to 40.8 percent) on short-term capital gains and ordinary income.
  • Lower the taxes to zero—or if you can’t do that, then lower them to 23.8 percent or less by making the profits subject to long-term capital gains.

Think of this: you are paying taxes at a 71.4 percent higher rate when you pay at 40.8 percent rather than the tax-favored 23.8 percent.

Strategy 1

Examine your portfolio for stocks that you want to unload, and make sales where you offset short-term gains subject to a high tax rate such as 40.8 percent with long-term losses (up to 23.8 percent).

In other words, make the high taxes disappear by offsetting them with low-taxed losses, and pocket the difference.

Strategy 2

Use long-term losses to create the $3,000 deduction allowed against ordinary income.

Again, you are trying to use the 23.8 percent loss to kill a 40.8 percent tax (or a 0 percent loss to kill a 12 percent tax, if you are in the 12 percent or lower income tax bracket).

Strategy 3

As an individual investor, avoid the wash-sale loss rule.

Under the wash-sale loss rule, if you sell a stock or other security and purchase substantially identical stock or securities within 30 days before the date of sale or after the date of sale, you don’t recognize your loss on that sale. Instead, the code makes you add the loss amount to the basis of your new stock.

If you want to use the loss in 2018, then you’ll have to sell the stock and sit on your hands for more than 30 days before repurchasing that stock.

Strategy 4

If you have lots of capital losses or capital loss carryovers and the $3,000 allowance is looking extra tiny, sell additional stocks, rental properties, and other assets to create offsetting capital gains.

If you sell stocks to purge the capital gains, you can immediately repurchase the stock after you sell it—there’s no wash-sale “gain” rule.

Important. Don’t die with large capital loss carryovers—they’ll disappear.

  • If your carryover originated from you only, then it all goes away if not used on your joint return in the year of your death.
  • If your carryover came from joint assets, then your surviving spouse gets 50 percent of the carryover to use going forward.

Strategy 5

Do you give money to your parents to assist them with their retirement or living expenses? How about children (specifically, children not subject to the kiddie tax)?

If so, consider giving appreciated stock to your parents and your non-kiddie-tax children. Why? If the parents or children are in lower tax brackets than you are, you get a bigger bang for your buck by

  • gifting them stock,
  • having them sell the stock, and then
  • having them pay taxes on the stock sale at their lower tax rates.

Strategy 6

If you are going to make a donation to a charity, consider appreciated stock rather than cash because a donation of appreciated stock gives you more tax benefit.

“Whoa, did you say more tax benefit?”

Yes. It works like this:

  • Benefit 1. You deduct the fair market value of the stock as a charitable donation.
  • Benefit 2. You don’t pay any of the taxes you would have had to pay if you sold the stock.

Strategy 7

If you could sell a publicly traded stock at a loss, do not give that loss-deduction stock to a 501(c)(3) charity. Why? If you sell the stock, you have a tax loss that you can deduct. If you give the stock to a charity, you get no deduction for the loss—in other words, you can just kiss that tax-reducing loss goodbye.

Solution. Sell the stock first to create your tax-deductible loss. Then give the charity the cash realized from your sale of the stock to create your deduction for the charitable contribution.

If you or your clients have any tax issues or problems with the IRS/State or  other federal tax problems, please feel free to contact me directly at (909) 570-1103 or by email at Carlos@HealthcareTaxadvisor.com

Carlos Samaniego, EA

Enrolled Agent

Licensed by The Department of Treasury to represent taxpayers

Listen to my podcast on Anchor or your favorite podcast app – Click Here

1255 W Colton Ave, #535

Redlands, CA 92374

Ph. (909)570-1103

Fax (909)586-9190

Business Meals are Deductible Again!

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Dear Client:

Hip, hip, hooray for the IRS!

In Notice 2018-76, the IRS states that client and prospect business meals continue as tax deductions under the Tax Cuts and Jobs Act.

This is very good news indeed.

Under this new IRS guidance, you may deduct 50 percent of your client and prospect business meals if

  1. the expense is an ordinary and necessary expense under Internal Revenue Code (IRC) Section 162(a) that is paid or incurred during the taxable year in carrying on any trade or business;
  2. the expense is not lavish or extravagant under the circumstances;
  3. the taxpayer, or an employee of the taxpayer, is present at the furnishing of the food or beverages;
  4. the food and beverages are provided to a current or potential business customer, client, consultant, or similar business contact; and
  5. in the case of food and beverages provided during or at an entertainment activity, the food and beverages are purchased separately from the entertainment, or the cost of the food and beverages is stated separately from the cost of the entertainment on one or more bills, invoices, or receipts. The entertainment disallowance rule may not be circumvented through inflating the amount charged for food and beverages.

To prove your business meals, follow the two easy steps below:

  1. Keep the receipt that shows the name of the restaurant, the number of people at the table, and an itemized list of food and drinks consumed.
  2. On the receipt, record the name or names of the person or persons with whom you had the meal and also record the business reason for the meal.

In the event that the receipt is not available, such as with the purchase of hot dogs and drinks at a baseball game while sitting in the stands, make sure to make a written note of the expenditures immediately after the game.

If you charge a business meal to a credit card, the credit card statement provides your proof of payment. When possible, always pay by credit card or write a check so that you have clear proof of payment.

Proof of payment is not proof of what you purchased, so in addition to proof of payment, keep the receipt with the notations as described earlier. With this combination of proof of payment and receipt with notations, you have what we call audit-proof documentation.

P.S. If you would like to review your business meal deductions with me, please call me on my direct line at

contact me directly at (909) 570-1103 or by email at Carlos@HealthcareTaxadvisor.com

Carlos Samaniego, EA

Enrolled Agent

Licensed by The Department of Treasury to represent taxpayers

Listen to my podcast on Anchor or your favorite podcast app – Click Here

1255 W Colton Ave, #535

Redlands, CA 92374

Ph. (909)570-1103

Fax (909)586-9190

Have You Budgeted for Christmas?

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It may seem strange to be discussing Christmas one month earlier, but you and I both know that, year after year, parents, husbands, wives, and kids spend too much on one another and, because they’ve relied on credit cards to pay for the holiday, January and February are “tight.”  

Now, in November, is a far better time to get ahead of that train than two weeks before Christmas.  

Let’s look at some ideas for making the holiday season more economically friendly.

Tips For Making the Christmas Season More Economically Friendly

Number one is simple – have a budget.  How much will you spend on each member of the family?  What friends are on the list? How much are you planning on spending for them?  

It’s nothing personal, but we all know that “incidental” expenses around Christmas – including last minute gifts for co-workers, that bottle of wine you bring to your host at a party, and even postage can all add up.  

Get it on paper now, and be real with your budget.  If you have kids, of course, you know they want technology – video games, game systems, and computers/laptops/tablets.  Can you buy them now and avoid price-gouging after Thanksgiving?

At the same time, does it make more sense to buy a “family” Christmas gift?  One of our clients decided he was tired of the Christmas silliness last year, so he took the bull by the horns.  He told his wife and children they would each buy one gift for each member of the family – all less than $20, and then he and his wife used the rest of their Christmas budget and took the family on a vacation.

By buying plane tickets one quarter, paying for the time share in another, and finally, allocating incidental expenses in the las quarter, there simply wasn’t any exceptional costs for a truly unique gift the entire family enjoyed.

In the end, because they had done this well in advance of the actual travel dates, they were able to secure airfare at astronomically low rates, they rented a friend’s timeshare in the mountains, and overall, they spent far less than they normally would during the holidays and created a week’s worth of memories.

I’d say that’s a pretty good return on their investment and there were no batteries required.  

Now, that isn’t for everyone.  Nonetheless, if you haven’t already started to put back some money for the holiday season, or even started to shop, then now is the time.  Be honest here, every year, you mutter to yourself as you park your car in the mall, “Next year I’m going to state earlier.”

Make it this year!

And I say this as someone who loves the holidays – don’t take on debt to somehow validate your love to your family or your friends.  If you can’t afford it, then send a card. How many times have we spent a small have we spent a small fortune on Christmas only to eat macaroni and cheese and peanut butter sandwiches all January?  Stop it.

Plan now and enjoy the holidays!

If you or your clients have any tax issues or problems with the IRS/State or  other federal tax problems, please feel free to contact me directly at (909) 570-1103 or by email at Carlos@HealthcareTaxadvisor.com

Carlos Samaniego, EA

Enrolled Agent

Licensed by The Department of Treasury to represent taxpayers

Listen to my podcast on Anchor or your favorite podcast app – Click Here

1255 W Colton Ave, #535

Redlands, CA 92374

Ph. (909)570-1103

Fax (909)586-9190

Making Extra Money, Part 2!

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Now, no CPA worthy of the title will advise you to sell assets to pay bills, but sometimes, that’s sound advice. If your kids don’t wear it, play with it, or use it, then get it into the hands of a child who will. But let’s talk about real money…  

Everyone lives somewhere, and homeowners already have a tremendous advantage as a result of the mortgage interest they can write off.  What else, though?

For starters, if you have a mortgage, you have homeowner’s insurance.  Chances are, you also have a vehicle. Have you taken an hour to discuss any discounts on that insurance for bundled policies?  All too often, insurance rates creep up over time, even if you haven’t had any claims. So it’s good business to check in each year to ensure you’re getting the best rates.  We know of at least one homeowner who hadn’t had this conversation in years. And when they had their insurance company requote the policy, was able to save several thousand dollars annually.

That’s money you can see!

Even if you don’t own a home and you rent, then the same rules apply – can your auto insurer provide a renter’s policy for your apartment?  Can you switch companies and save some money for a similar policy? I know, I know, we might not be talking about thousands of dollars each year. But it’s money you can save or money you can use, right?  It’s your money!

Now, no discussion about saving – or making – money can be complete without taking a long look at the two major bills. The two major bills many folks pay each month are their home and their car.

Have you considered refinancing either one of these?  Sure, interest rates are low, and yes, they have gone up slightly in the last few quarters. But it might be a perfect time to begin a conversation with the company that holds your mortgage and discuss refinancing.  By the way, if you aren’t looking for any extra money, this might be a great time to consider looking at shortening the length of your mortgage. From 30 to 15 years – and owning your home free and clear that much faster.  

Along that same line is the idea of refinancing your vehicle.  Car loans have slowly stretched from 4 years to 7 and even 8 years in the last three decades. So, the amount of money spent financing a car – and the residual value of that car once it is finally paid off – has changed substantially.   It “pays” to look at this and consider how refinancing might positively impact you – short term and long term.

If you or your clients have any tax issues or problems with the IRS/State or  other federal tax problems, please feel free to contact me directly at (909) 570-1103 or by email at Carlos@HealthcareTaxadvisor.com

Carlos Samaniego, EA

Enrolled Agent

Licensed by The Department of Treasury to represent taxpayers

Listen to my podcast on Anchor or your favorite podcast app – Click Here

1255 W Colton Ave, #535

Redlands, CA 92374

Ph. (909)570-1103

Fax (909)586-9190