Tax Partners Northwest LLC
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Recent News Updates

All About Gifts
2/2/19, 11:09PM

Thinking about giving a gift?  Or wondering if that check from Grandma is taxable?


One of the most common questions we get asked is whether a gift is taxable to the giver or the recipient.  Most gifts are not subject to the gift tax. Here are some things to consider.


1. Nontaxable Gifts.  The majority of gifts that we see are not taxable.  They include

  • Gifts that do not exceed the annual exclusion for the calendar year, $15,000 this year.
  • Tuition or medical expenses you paid directly to a medical or educational institution for someone,
  • Gifts to your spouse
  • Gifts to a political organization for its use, and
  • Gifts to charities.


2. Annual Exclusion. For 2019, the annual exclusion is $15,000.  If you give a gift of more than this amount to one person, you will need to file a gift tax return, but even then it’s unlikely you’ll need to pay any tax.  You are allowed to give a total of $11.4 million in gifts over your lifetime before any of it becomes taxable.  The gift tax return just keeps track of how close you are to that $11.4 million.


3. No Tax on Recipient. Generally, the person who receives your gift will not have to pay taxes on it.


4. Gifts Not Deductible. Making a gift does not ordinarily affect your taxes. You cannot deduct the value of gifts you make (other than deductible charitable contributions).  Gifts to Go Fund Me and similar fundraisers are usually not deductible.


5. Forgiven Debt and Certain Loans. The gift tax rules may also apply when you forgive a debt or give a loan that is interest-free or below the market interest rate.


6. Spouses can plan together.  You and your spouse can each give any individual up to $15,000.  So if you wanted to transfer $60,000 to a married child, you could give your child and their spouse $15,000 each, and your spouse can do the same.  No gift tax return required.


The topic of gifts is a tricky one with lots of considerations.  Give us a call or stop in to tell us about your specific situation, we’re always happy to help you do some planning!

Changes to GET program
6/2/18, 7:52PM

Do you have money invested in a Washington state GET account for college tuition?  There are big changes coming soon!


Here’s an article from the Seattle Times about the changes.

Basically it works like this.  If you have money in a GET account, it’s like an insurance plan.  It is guaranteed to pay out based on tuition at the most expensive state university.  So if you own 100 GET units, you can exchange them for one full year tuition at the University of Washington.  Western Washington University tuition is lower, so 100 units will actually go farther there.


The state is now going to open a 529 plan.  This is an investment account.  You can invest the money in stocks, or a money market account, or any other option they offer.  What you take out will no longer be tied to tuition, it will just be whatever the investment money has grown to.  The state wants to encourage people who have invested in GET to move over to the new 529 plan, and they’re going to give you a 38% bonus to do it.


If you choose to stay in the GET, there MAY be up to a 15% bonus, depending how much money the state pays out to people who switch to a 529.  Right now there is more money than needed in the GET program, which is where the bonus money will come from.


Here are my thoughts on what to do.  My last child is in college now, so this is a short-term investment picture for us.  To me, it makes sense to take the 38% bonus and roll into the 529 plan, since we’ll be spending the last of it in the near term anyway.  My niece is in sixth grade, and her father is thinking he doesn’t want to risk the stock market.  For them, it may make more sense to keep the money in the GET plan and take advantage of the guaranteed tuition, regardless of what happens in the stock market between now and when she starts college.


It’s impossible to know what tuition at Washington state universities will do in the future, but it hasn’t increased since 2012/2013.  Both UW and WSU tuition have actually decreased by over 10% over the last few years. 


It’s also impossible to know what the stock market will do.  The current government debt load combined with the large new tax breaks are likely to depress the stock market in the medium term unless significant changes are made.  Most experts expect lower-than-average return from the stock market over the next 5 years or so. 


If you have several years before the GET will be used and you think tuition will go up faster than the market, or you think the stock market won’t be a good investment, then staying in GET will provide tuition insurance and possibly an up to 15% bonus.  If you’re going to use the money sooner and/or think the stock market is where you want your money to be, then taking the bonus and moving to the 529 plan may be best for you. 


Everyone has their own schedule, circumstances, expectations, and risk tolerance.  Hopefully this will give you some things to think about as you make your decision.  And whatever you decide, good for you for saving for college!



Planning for now and for later
12/13/17, 2:41PM

It’s hard to believe that we’re coming to the end of another year!  As we get ready to wrap up 2017, we’re getting lots of questions about the new tax law working its way through Congress, and how it will affect our clients.


As I write this, the bill is in a joint committee, which means a group of members of the House and Senate are sitting down to combine the House and Senate versions.  Once they’ve completed their work, the joint bill must be passed by both the House and the Senate, and then signed by the President, before it becomes law.  There are many differences between the two bills being reconciled, but we can guess at some of the things that will emerge.


So how can you position yourself to take best advantage of what is likely to become law?  We have a few suggestions.


Consider deferring income into 2018


It is possible that you will be in a lower tax bracket in 2018 than you were in 2017.  If you can control when you receive income, you might want to wait to receive it until January.  For instance, if you’re in business for yourself, you could send out your invoices late in December, so you wouldn’t receive the income until January.  If you haven’t put money into a tax-deferred retirement account yet this year, or if you haven’t maxed out your contribution, this would be an excellent time to do that.


Push deductions into 2017


It seems likely that the standard deduction will be raised high enough that many people who currently itemize won’t be able to anymore.  If you are able to itemize your medical deductions, you could make sure to pay all your bills in 2017.  Track your mileage and parking for doctor appointments.  If you donate to charity, you could make your January payment in December.  A donation charged to a credit card in 2017 is deductible in 2017, even if you don’t pay the bill until 2018. 


Do you have stock that’s worth less than you paid for it?


Consider selling it in 2017.  You’ll be able to use that loss to offset gains, and can take a loss of up to $3000 over the amount of gains for the year, reducing your other income.


Are you going to purchase a vehicle or construction materials?


You will want to do that in 2017.  The sales tax on both will be deductible on your 2017 tax return, but it’s on the chopping block for 2018.


Do you deduct expenses associated with your job?


If you have unreimbursed expenses for your job, like union dues, mileage, small tools, uniforms, and so forth, pay for them in 2017 and keep the receipts. 


As the process moves forward, I encourage you to contact your representatives to share your opinions on what is important to you.  You can find and email your Senators here:  And here is the site to find and email your Congressional Representative:


As we learn more about what is likely to be passed we’ll share that too.  In the meantime, let us know if you have any questions, we’re always happy to help with tax planning.  Enjoy the holidays, and we’ll see you in the spring!



End of Year Donations
12/4/17, 4:25PM

As we approach the end of the year, our mailbox fills up with requests for money from all the charities we’ve ever supported and some we’ve never even heard of.  As you evaluate your charitable giving for the year and figure out how much you want to donate, keep these tax tips in mind.


1. Qualified Charities. You must donate to a qualified charity. Gifts to individuals, political organizations or candidates are not deductible.  Make sure that you are giving to a 501(c)3 organization.  If you’re not sure, ask.


2. Itemize Deductions. To deduct your contributions, you must file Form 1040 and itemize deductions. If you don’t itemize, you can still donate to charity, but it won’t affect your tax return.


3. Benefit in Return. If you get something in return for your donation, you may have to reduce your deduction. You can only deduct the amount of your gift that is more than the value of what you got in return. Examples of benefits include merchandise, meals, tickets to an event or other goods and services.


4. Type of Donation. If you give property instead of cash, your deduction amount is normally limited to the item’s fair market value. Fair market value is generally the price you would get if you sold the property on the open market. If you donate used clothing and household items, they generally must be in good condition, or better, to be deductible. Special rules apply to cars, boats and other types of property donations.


5. Form to File and Records to Keep. You must file form 8283, Noncash Charitable Contributions, for all noncash gifts totaling more than $500 for the year.  If you need help setting a value for your donations of used items, google Donation Value Guide.


6. Donations of $250 or More. If you donated cash or goods of $250 or more, you must have a written statement from the charity. It must show the amount of the donation and a description of any property given. It must also say whether you received any goods or services in exchange for the gift.


You must get this acknowledgement on or before the date you file your tax return.  Remember, having a cancelled check isn’t enough proof, you have to have the letter of acknowledgement as well.  If the IRS decides to audit you and you get a letter dated after the date you filed your return, the IRS will disallow your deduction, even if you can prove you made it.


Questions?  Call us!  We are always happy to talk taxes!

Do I need a tax planning session?
11/21/17, 3:11PM

As the end of the year approaches, you should consider a tax planning session. By checking now to make sure the right amount of tax is being withheld, you can avoid an unexpected tax bill next year.


Here are five examples of taxpayers who would benefit from a tax planning session:


• Did you receive a large refund last year?  When you have too much tax withheld from your paycheck, you are letting the government use your money interest free.  You can change your withholding to receive larger paychecks, rather than waiting for a bigger refund.


• Did you owe a large amount when you filed your taxes last year?  If you haven’t withhold enough tax from your paycheck, you might owe money again this year.  This can lead to an unexpectedly large bill at tax time, and possible penalties. 

• Do you work a second job?  Or drive for Uber or Lyft in your spare time?  You should adjust the withholding on your paycheck(s) to make sure you’re paying in enough money.  Part time jobs frequently don’t withhold enough tax, and people who work in the gig economy aren’t having taxes withheld at all.


 • Did you make estimated tax payments?  We estimate your tax payments at the beginning of the year, based on last year’s income.  It’s a good idea to do a check now, when you have a better idea what your income for the year is going to look like.  Your last payment can be adjusted accordingly.

• Did you start a new job?  You should make sure that your withholding is enough to cover your new income. 

Give us a call today to schedule a tax planning session.  All of our clients are entitled to one half hour of free tax planning every year.  We can estimate how much tax you will owe, see how much money you’ve paid toward that bill and make recommendations for the rest of the year.  We can also help you fill out a new W-4 to give your employer, or show you how to make estimated payments, if you’ve never done it before.  Nobody likes ugly surprises at tax time.  Schedule your planning session today!


Protecting Yourself After the Equifax Hack
9/10/17, 9:11PM

Another day, another information breach.  Ho hum, right?  No.  This one is different.  Equifax estimates that identifying information for 143 million people has been hacked from their website.  Chances are, it includes you.  Even if you went to their website and it says it didn’t affect you, it’s time to start taking steps to protect yourself.


In the past, we have advised you to freeze your credit if your identity was stolen.  This time, the information that was stolen is enough that a person could unlock your credit without you knowing.  Those of us with frozen credit aren’t in the habit of checking it, so they could do a lot of damage before you find out.


You can notify one credit bureau that you want a fraud alert placed on your account, and they will notify the others.  Here is where to go for Transunion.  Here is the site for Experian.  We’ll just figure Equifax has done enough damage already and leave them off the list.  Put a reminder on your calendar to do new fraud alerts every 90 days. 


I still suggest that you get a free credit report here  You can get one from each of the three credit bureaus every year.  So get one today from one, get one in four months from another, and get another from the third four months after that.  You won’t have to pay anything, and you’ll be monitoring your credit on a consistent basis.


If you want to pay someone to do this for you, this is what companies like Lifelock are for.


Go here and create an account for yourself.  Make a note in a safe place of the information you used and your password.  This will stop someone from going in to the IRS records, getting your tax returns and doing mischief with them.


Finally, I have set up my bank account so that I receive an alert anytime money is taken out of my checking or savings account, or a charge is made on my credit card.  This was very easy to do online.


It’s important to note that you need to be vigilant about all this forever.  Equifax is offering credit monitoring for only one year.  My identity was stolen four years ago, and I still get notices every few months that someone is trying to open credit in my name.  Once your information is out there, you can’t get it back.


Irritated that you are caught in this web?  Welcome to the club.  If you visited the Equifax site and it says that you weren’t affected, don’t heave too big a sigh of relief, it’s only a matter of time.  Once you’ve taken the steps above, get another coffee and write an email to your Congressperson letting them know your opinion of the current system.  These credit bureaus collect amazing amounts of information about us, we have no control over what they do with it, and now it turns out they didn’t keep it secure.  It’s not like we can go out and get a new social security number.  It’s time for Congress to take a look at this issue and make some rules to protect us.  Here’s where you can go to find an email address for your member of Congress.  And here’s where you can find contact information for your senators.


As always, feel free to call us if you have any questions!


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