#Tax #credits help offset #higher #education_costs IN 2018

Taxpayers who pay for higher education in 2018 can see tax savings when they file their tax returns. If taxpayers, their spouses or their dependents take post-high school coursework, they may be eligible for a tax benefit.

There are two credits available to help taxpayers offset the costs of higher education. The American opportunity credit and the lifetime learning credit may reduce the amount of income tax owed. Taxpayers use Form 8863, Education Credits, to claim the credits.

The American opportunity credit is:

  • Worth a maximum benefit up to $2,500 per eligible student
  • Only for the first four years at an eligible college or vocational school
  • For students pursuing a degree or other recognized education credential
  • Partially refundable. This means if the credit brings the amount of tax owed to zero, 40 percent of any remaining amount of the credit, up to $1,000, is refundable.

The lifetime learning credit is:

  • Worth a maximum benefit up to $2,000 per tax return, per year, no matter how many students qualify
  • Available for all years of postsecondary education and for courses to acquire or improve job skills
  • Available for an unlimited number of tax years

To be eligible to claim the American opportunity credit, or the lifetime learning credit, the law requires a taxpayer or a dependent to have received a Form 1098-T from an eligible educational institution.

More Information:
Tax Benefits for Education: Information Center
Education Credits – AOTC and LLC
American Opportunity Tax Credit: Questions and Answers
Pub 970, Tax Benefits for Education

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4 States Sue IRS and Treasury Over $10,000 Local Tax Deduction Limit

The legal action initiated on July 17 by Connecticut, Maryland, New Jersey and New York – states with among the highest income tax rates in the country – names Treasury Secretary Steven Mnuchin, Acting IRS Commissioner David Kautter, the U.S. Treasury, the Internal Revenue Service and the U.S. (including all government agencies and departments responsible for the passing and implementing the TCJA) as defendants. It asks to void the new limit on SALT deductions through declaratory and injunctive relief.

Under prior law, taxpayers who itemized deductions on Schedule A generally were able to deduct the full amount of their state and local property taxes, plus either their state income and local income taxes or state and local sales taxes. The alternative sales tax deduction was based on an IRS-approved table (plus add-ons for certain expensive items) or actual receipts.

Typically, residents of states with high income taxes, like those challenging the new SALT provision, opted to deduct state and local income taxes in addition to property taxes. This often turned into their biggest deduction on Schedule A. It’s not unusual for taxpayers in certain parts of the country to pay tens of thousands of dollars each in state and local property taxes and income taxes.

But the TCJA limits the annual deduction for any allowable combination of SALT payments to only $10,000. This change takes effect in 2018 and is scheduled to last through 2025.

In the lawsuit complaint, the four states argue that limiting the deduction conflicts with an essential part of the constitution dating back to 1861 and reflecting the Sixteenth Amendment adopted in 1913, carving out state rights in the federal scheme. Thus, they contend that the TCJA provision for SALT payments is unconstitutional.

The states also maintain that the dollar cap resulted from a “rushed and highly partisan” process. Notably, they say that the limit is unfair and causes disproportionate injury to their residents of “blue states.” For instance, it is estimated that taxpayers in New York will owe an extra $14.3 billion in federal tax in 2018 alone. By way of comparison to the $10,000 cap, the average SALT deduction claimed by New York taxpayers in 2015 was almost $22,000.

In addition, the lawsuit alleges that the SALT cap will artificially depress home values in the four states. To compound the damage, the change will have a negative impact on taxpayers who purchased their homes years ago and have come to rely on SALT deductions, only to have the rug pulled from under them without “fair warning.”

Finally, the lawsuit claims that the SALT provision impedes the ability of the states to pay for essential services such as schools, hospitals, police and road and bridge construction and maintenance.

What will the outcome be? Experts are divided, but most agree it will take a lengthy time for the case to progress through the courts. In the meantime, a reconstituted Congress could have a say in the matter.


Referenced- Avalara article dated 7/30/2018

#IRS offers #guidance on recent #529_education_savings_plan #changes

WASHINGTON — The Internal Revenue Service and Department of the Treasury today announced their intent to issue regulations on three recent tax law changes affecting popular 529 education savings plans.

Notice 2018-58, addresses a change included in the 2015 Protecting Americans From Tax Hikes (PATH) Act, and two changes included in the 2017 Tax Cuts and Jobs Act (TCJA). Taxpayers, beneficiaries, and administrators of 529 and Achieving a Better Life Experience (ABLE) programs can rely on the rules described in this notice until the Treasury Department and IRS issue regulations clarifying these three changes.

Tuition refunds

The PATH Act change added a special rule for a beneficiary of a 529 plan, usually a student, who receives a refund of tuition or other qualified education expenses. This can occur when a student drops a class mid-semester. If the beneficiary recontributes the refund to any of his or her 529 plans within 60 days, the refund is tax-free.

The Treasury Department and the IRS intend to issue future regulations simplifying the tax treatment of these transactions. Re-contributions would not count against the plan’s contribution limit.

K-12 education 

One of the TCJA changes allows distributions from 529 plans to be used to pay up to a total of $10,000 of tuition per beneficiary (regardless of the number of contributing plans) each year at an elementary or secondary (k-12) public, private or religious school of the beneficiary’s choosing.

Rollovers to an ABLE account

The second TCJA change allows funds to be rolled over from a designated beneficiary’s 529 plan to an ABLE account for the same beneficiary or a family member. ABLE accounts are tax-favored accounts for certain people who become disabled before age 26, designed to enable these people and their families to save and pay for disability-related expenses.

The regulations would provide that rollovers from 529 plans, together with any contributions made to the designated beneficiary’s ABLE account (other than certain permitted contributions of the designated beneficiary’s compensation) cannot exceed the annual ABLE contribution limit — $15,000 for 2018. For more information about other TCJA provisions, visit IRS.gov/taxreform.

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Top 10 Small Business Industries to Start in 2018-Provided by Guidant Financial

Want to become a small business owner, but you’re not sure where start? Check out the Top 10 Small Business Industries to get started today.

According to the 2018 State of Small Business Survey the top reason for wanting to start a business was ‘Ready to Be My Own Boss.’ Men and women across the country of every age, income and education level are driven to entrepreneurship seeking a greater sense of autonomy in their careers. Some of these hopeful small business owners get started knowing exactly what they want to do, while some just know they want to work for themselves — neither path more or less worthy than the other.

If you find yourself in the ‘knowing you want to work for yourself’ category, thinking of small business ideas can be overwhelming, but there are many tools and processes to help you get started. For example, narrowing down a few top industries you’re interested in is a great way to begin your business search.

Our State of Small Business Survey gave us insights into which industries are most popular for successful business owners across the nation. Here are the top industries for the best businesses to start in 2018

1. The Business Services Industry

Postal, printing and PC servicing, as well as office product sales, are all included in the wide-reaching industry of business services. And with around 28 million small businesses in the U.S., it’s no wonder these establishments that support commerce are all staying busy. IBISWorld reports expected revenue for this industry in 2018 is $9.5 billion with 22,939 establishments in the U.S. However, aspiring business owners interested in opening a business services-based company should potentially focus on providing online-based services. IBIS also indicated that while the ecommerce sector of the business is growing, brick-and-mortar establishments have seen a -1.9 percent annual growth in recent years. Fortunately, launching an e-business can cost less upfront.

2. The Food and Restaurant Industry

If it seems like Americans are busier than ever, it’s because we are. With two parents working in over 60 percent U.S. families, more people working multiple jobs and an average 47-hour work week, making home-cooked meals isn’t an option for everyone. Fortunately, in today’s strong economy, more people are saving time by turning to delivery services, fast-casual dining and full service restaurants, making it a great time to break into the food and restaurant industry. According to a recent study by Deloitte, the key to finding and sustaining success as a restaurant owner is establishing customer loyalty. Whether your plan is to open a food truck, full service dining or fast food chain, you can find success just about anywhere in the U.S. if you service quality food and get creative with attracting repeat customers.

3. The General Retail Industry

If you’re interested in selling a good or product in a retail setting, there’s a market for it. In fact, IBISWorld describes this industry as selling a diverse range of products from cigars to grave markers. Fortunately, the general retail industry is another great example of businesses that can thrive in both brick-and-mortar and ecommerce business models. The key to finding success is understanding how people shop for your product. For example, consumers are more likely to want to physically see items like furniture, clothes and cosmetics before purchasing them. However, some retailers that take chances on non-traditional business models, like Warby Parker, have found success in unsuspecting white space. Though they initially sold eyeglasses online, they made it easy for customers to try on and return frames — selling out of their top 15 styles in just four weeks.

4. The Health, Beauty and Fitness Industry

Another niche that’s not just thriving in our strong economy, but growing without much ecommerce competition, is the health, beauty and fitness industry. From gym and fitness franchises to day spas, med spas and nutrition counseling, the options here are endless. Better still, according to IBISWorld, industry saturation has not yet peaked. No matter which industry specialty you choose to embark on, IBIS reports your focus should be on both specialization and accessibility. For example, more gyms are finding success offering boutique workouts like Pilates, barre or spin and the same goes for spas with more narrowed product lines like Botox or organic only products.

5. The Automotive Repair Industry

If you’re considering an auto repair or maintenance shop for your next small business, you may be on the fast track to success. According to an IBISWorld report, auto maintenance and repair franchises have grown 3.3 percent over the last five years, comprising an $8.1 billion industry. And several factors are contributing to this economy-proof industry’s growth. Cars are now built better and living longer, which means rather than buying a new car, people are taking their cars in for regular maintenance; this includes major body and paint services which accounts for about half of the industry’s market share. Other popular services in this industry include oil and lubrication, transmission work and mechanical repair. Because of the brick-and-mortar nature of these businesses, start-up costs in the auto repair industry can run higher than average, so take the time to understand your financing options before locking down your dream automotive business.

Learn more about your funding options: Pre-qualify Today.

6. The In-Home Care Industry

The aging baby boomer generation is experiencing growing demand for in-home services. In fact, IBIS expects in-home senior care franchises to see 10.5 percent annual growth between now and 2022. With a wide range of needs, the in-home care industry includes everything from traditional nursing (57.3 percent of market share) to physical therapy, home hospice, personal services and more. With a growing consumer base and the low likelihood of private health insurance disappearing anytime soon, it’s a hot time to become a business owner in this high-demand industry.

7. The Technology Industry

Some aspiring business owners tend to shy away from the seemingly intimidating landscape of the technology industry, but you don’t have to start the next Google or Microsoft to find a tech business you love. From social networking sites, E-libraries and phone repair shops, you can apply your specialty — whether it be marketing, sales or operations — to a tech-based gig that’s sure to thrive in today’s digital world. Deloitte reports that while there is plenty of room for growth in the high-tech sector, expanding companies should focus on cyber security as well as regulatory considerations — sound advice for any business in today’s online world.

8. The In-Home Cleaning and Maintenance Industry

Among the many services in high demand due to a growing generation of aging and retired adults, along with increased disposable income nationwide, is in-home cleaning. And as long as our economy continues to be strong, you’re well positioned as the owner of a home cleaning service business. One of the easiest ways to get started is to open a franchise. IBIS reports that franchises in this industry saw 3 percent annual growth from 2012 to 2017 and, though this may slow as the industry become more saturated, the industry is expected to continue to grow.

9. The Travel and Lodging Industry

It’s safe to say that just about everyone (or someone they know) has thought a good way to retire would be to open a Bed and Breakfast. And as it turns out, it is! With younger generations looking for out-of-the-box experiences and older generations with more to spend on luxury accommodations, consumers are opting for boutique lodging experiences. IBIS reports this sect of the travel industry has seen almost five percent growth over the last five years and is expected to continue to perform well. Even if becoming the purveyor of a quaint inn isn’t in your future, the travel industry has room for growth and innovation in terms of technology, food and wellness.

10. The Sports and Recreation Industry

Starting a sports and recreation small business may not seem like the most lucrative idea, but this industry is quietly growing, and there’s room for more players. Club sports programs are no longer limited to peewee football — adults want in on the fun, too! Whether you’re interested in coaching, teaching, renting equipment or facilitating activities, it’s essential to have a creative and informative website, even if it’s simple, so that the tech-savvy generations can easily search your business.

No matter what type of business you start in 2018, there are so many growing and in-demand industries to choose from. And with a strong economy in place, there’s no better time to claim your spot on Main Street. Get started today by learning how much small business financing you’re qualified for — it’s probably more than you think.


Resources on #IRS.gov help all #taxpayers #understand #tax #reform

IRS.gov is a great place for taxpayers to visit when they have questions about the Tax Cuts and Jobs Act. The legislation, which was passed late last year, includes changes to many areas of the tax law. Here are some of the resources on IRS.gov that will help individual taxpayers, businesses and the tax community understand the law and its effect on their taxes:

  • Tax Reform Web Page. The Tax Reform page highlights what taxpayers need to know about the tax law changes and how these changes affect them. This page also links taxpayers and tax professionals to news releases, tax tips, publications, notices, and legal guidance related to the legislation.
  • Updated Withholding Calculator. The IRS encourages everyone to use the Withholding Calculator to perform a “Paycheck Checkup,” which is even more important this year because of the tax law changes. The calculator helps taxpayers determine if they’re having the right amount of tax withheld from their paychecks.
  • Updated Form W-4, Employee’s Withholding Allowance Certificate. Taxpayers who determine they need to make changes to their withholding can complete a Form W-4, which reflects the tax law changes. Employees will submit the completed Form W-4 to their employers.
  • Frequently Asked Questions. The IRS posted new FAQs to help people understand how to use the Withholding Calculator and the changes to the Withholding Tables.

More information about the tax law changes will be coming throughout the year. IRS.gov will be updated to reflect changes as they develop.

Share this tip on social media — #IRSTaxTip: Resources on IRS.gov help all taxpayers understand tax reform. https://go.usa.gov/xURHv

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