New York State Tax Credits

There are many state tax credits available in New York, many that you may have never heard about.  We thought we would highlight just a few that you may not be aware of:

Clean Heating Fuel Credit – You may be entitled to this refundable credit if you or your business purchased bioheating fuel to be used for space heating or hot water production for residential purposes within NYS.  The credit is equal to one cent for each percent of biodiesel per gallon of bioheating fuel purchased before 1/1/2020.

Volunteer Firefighters’ and Ambulance Workers’ Credit – You may be entitled to claim this credit if you were an active volunteer firefighter or volunteer ambulance worker for all of the tax year and you were a resident of NYS for all of the tax year.  The credit amount is $200.

Automated External Defibrillator Credit – You may be entitled to this nonrefundable credit if you or your business purchased an automated external defibrillator(s) during the tax year.  The credit is equal to the purchase cost of the unit, or $500, whichever is less. 

Nursing Home Assessment Credit – You may be entitled to this refundable credit if you paid the nursing home assessment imposed on a NYS nursing home.  You can find the amount of this assessment on the billing statement from the nursing home.  The assessment amount is not the amount of expenses paid.  The credit is equal to the 6% base-rate portion of the assessment that you directly paid during the year. 

If you think you may be entitled to any of these credits, contact our office immediately for a free consultation at 516-409-1120. 

Sandra G. Johnson, CPA, EA, CFE

Retirement or College Savings

Retirement or College Savings

We hear from so many clients that they have reduced their retirement savings so that they can put something away for their children’s college fund.  It is understandable that parents have a feeling of obligation to provide for their child’s education.  In a perfect world, you would max out your retirement contributions and still be able to save for college.  Of course, if you are living paycheck to paycheck – this is not possible.

We view retirement as the priority when you must choose between the two, and this is why.  There is no financing for retirement.  Unless you have a pension to look forward to, it will be up to you to make up the gap that Social Security does not fill.  That is why saving for your retirement is imperative.  You may plan to work part-time during retirement, but that plan may change as you age and desire the freedom to do other things.  The goal is to build up enough of a nest egg, that you do not exhaust it before you’re done spending!

When it comes to college, however, there are options.  Perhaps the biggest way to manage college spending is to limit choices to those that are financially achievable.  Once the field is narrowed, you can look to financial aid packages, scholarships (from schools and other organizations), work-study programs, grants and loans to make up the difference. 

One thing is sure – when it comes to retirement or college savings – start early to maximize the magic of compounding!

 

Honorine M. Campisi, CPA

Tax Reform

Tax Reform and How it May Affect You

As of today, the House and Senate have each passed their own versions of the tax bill.  They will have to hammer out differences between the plans before a final bill can be approved and signed by President Trump.

Here are a few pros and cons that we see in the current bills.  Although not yet final, these changes are expected in some degree in the final legislation, which would become effective for 2018 tax returns.

Pro:  The standard deduction will be increased depending on your filing status to $12,200 for single and $24,400(House) and $24,000(Senate) for married filing jointly. 

Con:  The personal and dependent exemptions will no longer be available.  They were worth $4,050 per person last year.  A family of four would lose $16,200 in personal exemptions. 

   

Pro:  Both plans call to increase the amount of the child tax credit and increase the income level at which that credit is phased out.

Con:  Homeowners beware:  Both proposed versions of the bill cap the real property tax deduction to $10,000.  

Con:  Deductions for state and local income taxes would be eliminated. 

Con:  The mortgage interest deduction limits the deduction on new mortgages ($500,000 principal).

Con:  No mortgage interest deduction on vacation homes.

Con:  Repeals the deduction on home equity interest. 

Con:  Miscellaneous deductions will be eliminated.  This includes tax preparation fees, union dues, unreimbursed employee expenses, investment expenses…

Pro:  Everyone’s favorite Alternative Minimum Tax would be gone under the House bill, whereas the Senate bill would keep the AMT (boo!) but raise the exemption and phase-out thresholds.

Con: Tax rates would change under both plans – The House version has just 4 tax brackets compared to the Senate’s 7 brackets.  Fewer tax brackets mean a bigger jump between brackets.

Pro: Partnerships and S-Corps taxed as pass-throughs would see a reduction in tax rate on that income under both plans, although the details differ.

What to do:  CONTACT YOUR CPA RIGHT AWAY!  Consider paying for expenses before year end that are a deduction in 2017 but will be limited or eliminated in 2018 such as real property taxes, state and local estimates, tax preparation fees, etc. 

Note:  This is only a brief listing of the potential changes to be made.  Stay tuned to learn more. 

Honorine M. Campisi, CPA