Home Improvements and Enhancing Value

Home Improvement Tax Benefits

With the passing of the Tax Cuts and Jobs Act in December 2017, itemizing deductions just doesn’t add up. Unless of course you have had a year with very high expenses.  But don’t stop reading yet. There are still some ways you may be able to gain some rewards for making your home a better place.

The first area of consideration is home improvements, as opposed to repairs.  Repairs, such as fixing a leaky roof or broken garage door do not qualify as deductions.  However, improvements to your home such as installing central air conditioning can be helpful when you sell your home.  Home improvements are considered capital improvements. The dollar amount for these enhancements can be added to the price you originally paid for your home.  This new total is then subtracted from how much your house sells for to determine your total profit. In this way, home improvements help to reduce your profit amount and decrease the amount of taxes paid on the sale.  Just like anything else you wish to claim, keep excellent records and receipts of the cost for the work done. You will need them.

If you make home improvements for medical purposes, such as building a wheelchair ramp, it can be deducted as a medical expense.  Additionally, if you work from home and use a home office, strictly for business purposes, improvements to the office can be deducted as business expenses.

In Tax Credits for Solar Improvements last January, we discussed the tax credits available to homeowners who go solar or geothermal.  These credits are additional ways improving your home can yield tax benefits. Solar credits are still available for a short time.  If energy efficient improvements are a consideration for your home, you can learn more about the credits on the IRS website or contact ITP Taxes LLC with questions.


Sharpen Your Business Brand with Soul Creative

For anyone looking to freshen up their business image, Soul Creative brings a unique skill set to branding your company.  Owner Aimee McGrath has an excellent eye for seeing an organization’s passion and showcasing it to your clients.  She does this through the services of brand development, website development, digital marketing, writing & editing.  

Aimee enjoys working in Lancaster because it is an area rich in storytelling heritage.  Relationships are meaningful and important in our growing city. These stories and relationships are what Soul Creative brings to the forefront of their brands.  Having consistency throughout all areas of your business brand are also critical and something that Aimee prides her organization on providing.

Her first client, and one that she is incredibly proud of is Your Language Connection.  This client is an excellent example of how Aimee can work to incorporate logo design and website development to most authentically portray your business to your desired audience.

Aimee has been in the business marketing world for 20 years.  She brings a depth of experience and a fresh new look to clients’ written content and branding style.  Soul Creative works throughout all stages of the business branding cycle including editing website content and social media posts. Aimee enjoys staying current in the industry by attending conferences such as PubCon.  You can find a sample of her writings on her website at The Writing.  

Aimee and Soul Creative can be found at the Candy Factory or by phone at 864-321-4314.  Her website shares testimonials from happy clients. She can also be reached via email at aimeemmcgrath@gmail.com.

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“ITP, LLC is supporting local small business owners through this post.  The experiences described are personal to particular users, and may not necessarily be representative of all users of the products and/or services.  We do not claim, and you should not assume, that all users will have the same experiences. Your individual results may vary. We are not affiliated with the organization referenced and are not paid or compensated for this publication.”


Tax Season is Coming…

Will the government shutdown impact my tax return?  The answer to this is still largely undetermined. The shutdown includes the Treasury Department, of which the IRS is a part.  During the shutdown, the vast majority of IRS employees are on furlough . However, the IRS has said they will bring back some workers to process returns.  This is in response to the government promising that taxpayers receive their refunds on time. But when those workers will be brought back and how many is not yet known.  

On Wednesday night, the House voted to reopen the Treasury Department.  Unfortunately, that vote is already threatened to be vetoed as the climate of uncertainty continues.  One thing seems certain. Getting in contact with the IRS with any questions this tax season will be challenging.  The limited staff is not expected to be enough for the influx of returns sent and inquiries received at the beginning of tax time.

Complicating matters further, this is the first tax filing season with the many and various law changes under the new Tax Cuts and Jobs Act (TCJA).  We’ve shared many of these changes in posts over the course of the past year. The intricacies are many and questions and confusion will be higher than normal this year, impacting a reduced staff even more so.

For the many taxpayers who depend on their returns each year, hopefully a quick end to the shutdown will alleviate many possible issues.  Until that time, our office is always open for tax questions and concerns.


Cars and Taxes

How having an electric vehicle affects your taxes.

In 2017 we looked at savings offered for purchases of hybrid and electric plug in cars in our article “Hot Wheels, Big Savings”.  What are some other considerations to be made at tax season when it comes to vehicles and your deductions?  Here we look at the increase in mileage rates for 2019, changes to depreciation, and how taxes can impact the sale or purchase of a vehicle.

2019 Mileage Rates

The IRS has shared the 2019 mileage rates for vehicles used for business, charitable, medical, or moving purposes.  However, due to the changes brought forth under the Tax Cuts and Jobs Act (TCJA), many taxpayers are not able to claim mileage.  For example, the TCJA has suspended itemized deductions for unreimbursed employee travel expenses through December 31, 2025. Therefore, standard mileage rate provided cannot be used to claim an itemized deduction.

The rates for business use have increased 3.5 cents to 58 cents per mile.  For medical or moving purposes the rate increases 2 cents to 20 cents per mile.  Medical purposes include driving for medical care that is essential for yourself or dependents.   Another change of the TCJA states moving expenses can only be claimed by members of the Armed Forces on active duty moving under orders to a permanent change of station.   

There is no change in the rate for charitable organization mileage.  That rate remains at 14 cents per mile. All rate changes are determined based on an analysis of fixed and variable costs for operating a vehicle based on annual studies.  Details can be found under Notice-2019-02 and the IRS also provides greater detail under Deducting Business Use of a Car.  

Unless you incur very high vehicle expenses during the tax year, the higher standard deduction provided by the TCJA is generally the more advantageous choice at tax time.  Fortunately this requires less cumbersome record keeping throughout the tax year.

Actual Expenses: Depreciation

The TCJA brought bigger depreciation allowances for vehicles used for business purposes.  This includes new or used vehicles acquired in 2018 and used more than 50% for business purposes.  If the vehicle is not solely used for business purposes, allowances are reduced in proportion. Maximum allowances are $10,000 for Year 1 or $18,000 if you claim first-year bonus depreciation, $16,000 for Year 2, $9,600 for Year 3, $5,760 for Year 4 and thereafter until the vehicle is fully depreciated.  in order to be eligible for depreciation used vehicles cannot have previously been utilized by the business.

Vehicle Sales and Taxes

If you sell your automobile privately and receive less than what you originally paid for the car, you do not need to pay sales tax.  This is considered a capital loss by the IRS. However, if you make improvements to your vehicle which allow you to sell it for more than you paid for it, you are realizing capital gains.  This will need to be reported to the IRS in detail – outlining the amount that you paid to improve the car. Taxes will be paid on the amount of gain realized above what you spent on improvements.  As always, good receipts and records of these improvement costs will be needed.

When you purchase a vehicle, you will need to pay sales tax on the car if the state in which you register the car charges sales tax.  This tax is paid to the state’s DMV when you register the vehicle.

There are pros and cons to a private sale of vehicle and to using a dealership.  Typically you will receive more money selling privately. Going to a dealership to sell your car, especially if you plan to do a trade in, can be advantageous for tax purposes.  The dealer will subtract the cost of your trade in from the sale price of your new car – lowering the taxable price you pay.


ABLE Disability Benefits

There are some very positive enhancements for taxpayers with disabilities among the many changes brought about by the 2017 Tax Cuts and Jobs Act (TCJA) .

Achieving a Better Life Experience (ABLE) accounts were originally designed to help those with disabilities.  The savings are intended for expenses incurred as a result of the disability. Some typical examples of these types of expenses include housing, education, transportation, health and wellness along with assistive technology costs.  Contributions to these accounts are not tax deductible. However, distributions and earnings are tax-free when used to pay for these types of qualified expenses.

With the TCJA, eligible individuals can put more money into their ABLE account.  Traditionally, the annual contribution total equalled the annual gift-tax exclusion amount.  At present time, this amount is $15,000. Beginning in 2018, if the ABLE account beneficiary is employed, they may contribute an additional $12,140.  The one exception to this new ruling occurs if the beneficiary’s employer already contributes to a workplace retirement plan on their behalf. In that case, the additional contribution is not allowed.

Going forward, ABLE account holders may roll money from qualified tuition programs, such as 529 plans, into their ABLE accounts as well.  A final enhancement brought about by the TCJA means that moderate to low income ABLE account employees may qualify for the Saver’s Credit.  The IRS link provides information on this credit, what it does, and who is eligible.  The impact to ABLE account holders is contributions up to $2,000 may qualify for this credit.  The Saver’s Credit is claimed on Form 8880 at tax time.


“From Consult to Closing, Team Claire Cares”

We are pleased to introduce Jennifer Fields!  She is beginning her first year in the real estate business as a realtor with The Claire Chivington Team.  Claire’s team is affiliated with RE/MAX Patriots in Lancaster, PA.  Prior to beginning her real estate career, Jennifer completed her real estate courses through Real Estate Express.  This course work included a 30-hour course pertaining to real estate Fundamentals in addition to a 30-hour course specifically geared towards PA real estate practices.  Taking online courses provided great flexibility in scheduling making this new career a possibility.

Jennifer loves her career in real estate because she gets to meet new people and educate them on homes and the nuances of home ownership. As a former teacher, she finds she is able to use many of the same skills, just in a different fashion.  Jennifer is thankful she found Team Claire and RE/MAX Patriots during her affiliation search. She shares that she felt it was extremely important to find an environment that focuses on highly skilled agents and top notch client service, all while fitting the needs of her family. Jennifer found all of those elements with Claire Chivington’s Team and RE/MAX Patriots.

RE/MAX Patriots offers clients a plethora of resources to assist in the home
buying/selling process with a concierge level of service from realtors, and the brand recognition to support it.  Team Claire offers a full-service experience whether you are buying or selling a home. As a team they have over 20 years of experience in the real estate business with specialties in the areas of buyer’s representative, staging, short sales, foreclosures, new construction, and assisting veterans as they transition to civilian life.

Jennifer’s advice to potential realty clients is to always do your homework when looking for a realtor. Many people use the first agent they speak to whether or not it is a good fit. It is essential to feel comfortable working with your realtor, and likewise for your realtor to be comfortable working with you. Clients should never feel locked in with an agent if it’s not the right fit. Buying and selling a home is a journey that can last for months. You want to be working with someone who you most importantly trust, but also someone who cares about your
best interests. Team Claire truly invests in their clients which is why their motto is,
“From Consult to Closing, Team Claire Cares”.

The best way for potential clients to reach Jennifer is on her direct cell number @ 717.804.4776 or email address jennifer.fields@teamclaire.net.  Jennifer can be found on Facebook through a search @JenniferFieldsPARealEstate.  She is on Twitter @JenniferMFields and LinkedIn as well https://www.linkedin.com/in/jennifermfields/.


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“ITP, LLC is supporting local small business owners through this post.  The experiences described are personal to particular users, and may not necessarily be representative of all users of the products and/or services.  We do not claim, and you should not assume, that all users will have the same experiences. Your individual results may vary. We are not affiliated with the organization referenced and are not paid or compensated for this publication.”


Saving for Retirement in 2019: 401Ks, IRAs, and Social Security

Saving for retirement is getting just a little bit easier in 2019.  As the cost of living increases, the IRS has announced higher contribution limits to 401Ks and IRAs.  These changes attempt to mirror the rise in cost of living expenses.  Technical guidelines are many and can be found in Notice 2018-83.  The major highlights for these 2019 changes include an increase from $18,500 to $19,000 for 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan.  Contributions to IRAs have not seen an increase since 2013, but are now shifting from $5,500 to $6,000. Also of note, there are certain conditions which allow deductions from traditional IRAs.  For example, if the taxpayer or spouse is covered by a retirement plan at their work, the IRS allows for a reduction or phase out of the deduction until eliminated.

Cost of living increases are having a positive impact on Social Security benefits in 2019 as well.  The Consumer Price Index measures cost of living increases based on changes in prices paid on consumer goods and services.  Social Security benefits will see a 2.3% increase in direct proportion to the CPI increase this past year. Of course, this increase in social security benefits will be covered by an increase in taxes in 2019.  The Social Security contribution will increase by around 3%.

If you are saving for retirement, 2019 will be a good time to add a little bit more to your nest.  At the same time, plan for the increase to come at tax time on social security contributions. If you are looking for additional information on changes to retirement saving and investing, we can help!


Just Because Gives: Greeting Cards for Worthy Causes

If you are looking for a unique gift this holiday, you’ve come to the right place!  Just Because offers whimsical greeting cards featuring real, live animals.  Their adorable designs utilize no photo shopping and star Pearl, a curious wild chipmunk who loves peanuts.  Pearl willingly poses for the camera in creative scenes designed to celebrate nature and fun. Pearl’s babies, Chip and Salsa, love free food but have not yet shown the same willingness to pose for pictures.

Just Because was created by Bethany, who has spent three decades working in the nonprofit world.  During that time she has worked to help prevent human trafficking, child sexual abuse, and homelessness.  The greeting card business allows her to balance a life seeking justice and fairness for everyone with taking time to just relax and be.  Just Because allows her to give back to causes that she believes in while pursuing other hobbies and enjoying nature. For every Just Because purchase, 50% of the profit is passed on to one of several charities committed to making the world a better place.  Among these worthy organizations are Hope International, International Justice Mission, Preemptive Love, and Samaritan Safe Places.  These organizations share a common bond of working to create safe and fair conditions for all people.

In addition to Pearl’s greeting cards, Just Because has teamed up with Freiman Stoltzfus.  As a friend and local artist, Freiman paints the gorgeous Freedom Dancer cards for Bethany to sell in conjunction with her own creations.  An equal portion of proceeds from these cards benefits the same worthy organizations.  

Pearl’s greeting cards will bring a smile to anyone’s face. To see available designs, please visit   https://justbecause.gives/cards/.  Five retail store fronts also offer the cards around Lancaster County and those locations can be found online at https://justbecause.gives/retail-locations/.  To view the latest Just Because happenings and creations, check them out on instagram, youtube, and facebook.  To contact Bethany directly, she can be reached at justbecausegives@gmail.com.

 

 

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“ITP, LLC is supporting local small business owners through this post.  The experiences described are personal to particular users, and may not necessarily be representative of all users of the products and/or services.  We do not claim, and you should not assume, that all users will have the same experiences. Your individual results may vary. We are not affiliated with the organization referenced and are not paid or compensated for this publication.”


Tax Inflation Adjustments

It’s never too early to plan ahead!  While we are still in the midst of preparing 2018 taxes for April 2019, the IRS has just released several changes that will impact next year’s tax returns.  These 2019 tax year adjustments are to be used on tax returns filed in 2020 and were designed to adjust for inflation.  Some of the more relevant to the majority of taxpayers are described here.

To begin, the standard deduction increases for everyone.  For married filing jointly it rises $400, for single taxpayers and married individuals filing separately it goes up $200.  Heads of households will experience a $350 increase from the prior year.

Many other deductions, exemptions, and credits will realize various increases for tax year 2019 as well.  Among these are the Alternative Minimum Tax exemption, which sees both an increase in the exemption amount and the phase out dollar figure.  Additionally the Earned Income credit increases when filing jointly with three or more qualifying children. The amount allowed for qualified adoption expenses increases incrementally as well.  There will be no penalty for not having minimum health coverage in 2019.

As can be seen, the number of changes and the intricacies are wide ranging.  Over 60 tax provisions were adjusted for 2019. For a complete list of these tax inflation adjustments, the IRS website contains a detailed list.  Our office is open for questions as well.  While many of these increases are small, the amounts can add up depending upon your filing status and qualifications!


Sam Beiler: Boosting Your Business Marketing Potential!

Sam Beiler is a local business entrepreneur who understands the power of marketing at all levels.  He began his career as a roofing tech with B&E roofing. There he gained the hands on experience that allowed him to see innovations that would work in the roofing industry.  His next steps were with Equipter in manufacturing, sales, and director of marketing.  Equipter creates the machinery that enables the roofing industry to run a little easier.  

Sam has been an Equipter team member for 11 years.  Throughout this time he’s worked with roofers and general contractors to help them to market their business.  The thing he enjoys most about his experiences in business is helping individuals and companies reach their full potential and purpose.  Sam’s 3 years in sales at Equipter where very impactful in gaining experience and education in business. He has been able to take the knowledge and experience gained there to create his own marketing platform, Boostpoint.  

Boostpoint is a streamlined ad platform that helps local brands create, target, publish and measure digital ad campaigns to build a brand that generates more local business.  Boostpoint helps small businesses to generate more revenue with 1 streamlined platform. With Boostpoint’s help, your business can create, target, publish, and then measure your digital ad campaigns.  To learn more about Boostpoint, check out their informational video.  Sam enjoys photography and videography when he has spare time.  He has been able to utilize his hobby in videography to create documentaries about his journey with the Boostpoint start-up.

Sam shares his brand building strategies through marketing workshops and webinars.  If you would like to learn more about how he can help your business achieve greater potential, he can be reached at 717-983-4474 or sam@boostpoint.com.

 

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“ITP, LLC is supporting local small business owners through this post.  The experiences described are personal to particular users, and may not necessarily be representative of all users of the products and/or services.  We do not claim, and you should not assume, that all users will have the same experiences. Your individual results may vary. We are not affiliated with the organization referenced and are not paid or compensated for this publication.”