Online Advisor
Timothy W. Tuttle & Associates
 


Volume 14 Edition 9                Please email comments to newsletter@tuttlefirm.com                  Sept 2018


Major Tax Deadlines:

For September 2018      

September 3: Labor Day

September 17:

October 1: SIMPLE IRA plan establishment due

With summer coming to a close, now is a good time to assess your tax situation while there is still time to make adjustments if necessary. To help you prepare, this newsletter includes articles on potential 2018 tax surprises and how the new changes affect education related deductions and credits. For your business, there are articles to help you battle employee turnover and tips to prepare for a possible trade war. Finally there are some tips for improving your credit score and a piece on video games and the impact they are having on a major portion of society.

Please call if you would like to discuss how any of this information relates to you. If you know someone who can benefit from this newsletter, feel free to forward it to them.

Is a Tax Surprise Waiting for You?

Often lost in the excitement of large-scale tax change is how they can negatively impact some individual situations. Check out the questions below to see if you might be in for a tax surprise this year.

Now is a great time to do an assessment of your situation in light of the new tax changes.

Education: Tax Changes You Need to Know

As students gear up to head back to school, there are some changes to education deductions that could save or cost you more in taxes and even raise college tuition costs. Here is what you need to know to get up to speed:

What is gone

Continuing Education as an itemized deduction: In previous years, you could deduct expenses paid for job-related continuing education as a miscellaneous itemized deduction. This deduction has been eliminated. However, if your employer will pay for the education, they can cover up to $5,250 tax-free.

Home equity line of credit (HELOC) interest for education expenses: A popular method of generating cash to pay for school expenses is taking out a HELOC. Beginning in 2018, you can only deduct HELOC interest if you use the loan proceeds to buy, build or substantially improve your home. This means that if you plan to obtain HELOC for purposes of paying for education expenses, the interest will not be deductible.

What's new

529 plans cover K-12 tuition: Funds from Section 529 savings plans can now be used tax-free to pay for up to $10,000 in K-12 private school tuition per year. Books, supplies or other K-12 expenses are not included in this change, but they are still eligible as legitimate college expenses. Be careful - not all states have adopted the K-12 inclusion, so they might still be taxable at the state level.

Endowment tax of 1.4 percent on certain private colleges: Congress added an investment income tax on private colleges that have large endowments. The tax is expected to impact roughly 30 schools, including Stanford, Harvard and Notre Dame. The effects of the new tax are yet to be determined. However, tuition may increase or reduced financial aid award amounts may be implemented to offset the cost.

What stays the same

Student loan interest deduction: You may deduct up to $2,500 in student loan interest in 2018 as an adjustment to income. To qualify, your adjusted gross income must be below $80,000 ($165,000 for married couples). Phase-outs start to apply at $65,000 ($135,000 for married couples).

American Opportunity Tax Credit and Lifetime Learning Credit: All three of these educational tax benefits are available once again. Here's a chart with basic information on these options:

 

American Opportunity
Tax Credit
(AOPC)

Lifetime
Learning Credit
(LLC)

Max Amount

$2,500 credit

$2,000 credit

Refundable?

Yes - $1,000

No

Max Years

4

Unlimited

Eligible Education

Undergraduate

Undergraduate
& graduate

As a reminder, when you make payments for any education expenses, make sure to keep your receipts and retain any Forms 1098T sent to you from qualifying schools.

The Eye-Opening Video Games Phenomena

Over the course of the last 20 years, video games have morphed from an entertainment choice to a lifestyle. According to a 2018 Nielsen study, a whopping 66 percent of Americans 13 and older identify themselves as gamers. Here's what you need to know:

Major developments

Tips for healthy gaming

With this phenomena sweeping the nation, here are some tips to consider as you ponder your gaming experience and that of your kids:

The popularity of video games is only expected to increase as technology continues to advance. If you or your children are active gamers, try to stay up on the latest trends and understand the risks to ensure a healthy gaming experience.

Combat Employee Turnover

With unemployment at historically low rates, retaining employees is harder than ever. Here are some tips to help your business maintain a thriving workforce:

With some planning and a little creativity, keeping your business running efficiently can be achieved even in times when employee retention can be challenging.

Give your Credit Score a Boost

Your credit score is one of the most important aspects of your financial health. It is used by potential lenders, landlords and even employers to analyze your financial situation in one way or another. Here are some tips that might help you improve your score:

Regardless of where you are on the credit score spectrum, you should actively monitor your credit. Implementing these ideas will improve your credit score as well as your long-term financial well-being.

Hedging Against a Trade War

As a small business owner, the words "trade war" and "tariff" can be unsettling. When cost uncertainty is on the horizon, you will want to be prepared as much as possible. Here are some ideas to help you navigate your business through a possible trade war.

Tariffs defined

A tariff is a tax on imports imposed by a governing authority. The tax can be on specific goods and services, countries of origin, or both. The current tariff conversation appears to be centered around reducing the U.S. trade deficit with China and other trading partners. When a tariff is placed, often times the affected country will impose retaliatory tariffs to protect its own businesses and reset the balance of trade to their favor.

Ideas to prepare your business

For now, try to stay current with tariff news. You may be able to hedge some of the risk that comes with a trade war.

As always, should you have any questions or concerns regarding your tax situation please feel free to call.

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The information contained in this newsletter is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance. For more information on anything in ONLINE ADVISOR, or for assistance with any of your tax, business, or financial strategy concerns, contact our office.

Timothy W. Tuttle & Associates
www.tuttlefirm.com