October Newsletter

As fall approaches, the election cycle seems to be putting a freeze on any new tax legislation. This is good news for 2016 tax planning. Included this month is estimated tax information for 2017 based upon the Consumer Price Index. There are also articles on recovering from identity theft and how to save money from long-time suppliers of services. Ideas for small businesses to deduct the cost of event tickets rounds out this month’s newsletter.

Should you know of someone who may benefit from this information please feel free to forward this newsletter to them.

Preview of Some Key 2017 Tax Figures

While official numbers for 2017 are not yet released by the Internal Revenue Service (IRS), many figures are based on the Consumer Price Index (CPI) published by the Department of Labor. Using the release of recent CPI figures, a number of sources are projecting key figures for 2017.

Tax Brackets: While the actual income brackets for tax rates are not set for 2017, the rate of inflation impacting the income levels for each rate is anticipated to raise the income brackets by approximately 0.6 – 0.8%.

Personal Exemption: $4,050 in 2017 (unchanged from 2016)

2017 compass

Standard Deductions:

Deduction Tax Year 2017 Tax Year 2016
Head of Household
Married Filing Jointly
Married Filing Separately
Dependents (kiddie tax)
65 or Blind: Married
Add $1,250
Add $1,250
Add $1,550
Add $1,550

Other Key figures:

Estate & Gift Tax Exclusion
$5.49 million
$5.45 million
Annual Gift Tax Exclusion
Roth and Traditional IRA Contribution Limit

Caution: Remember, these are early figures using the recently announced Consumer Price Index. Official numbers are released by the IRS later in the year.

Recovering from Identity Theft

There are now millions of victims of the identity theft epidemic. From stolen credit cards to fraudulently filed tax returns, a vast swath of the U.S. is trying to figure out how to repair the damage. To help, the Federal Trade Commission has created a nice tool to work through the recovery process.

The site: IdentityTheft.gov

Caution: Do not confuse this site with IdentityTheft.com or .org

The Process: The site will walk you through a step-by-step approach to report and repair your damage. There are different paths depending on the type of identity theft you have been subjected to.

Here is a snapshot of the Federal Trade Commission’s recovery process.

Identity Theft

identity theft recovery process

Everyone should review the site. Even if you are not currently a victim of identity theft, spend a few minutes reviewing the site. A review now can help you become more aware of the problem and help you understand what immediate steps you should take if this happens to you.

Stop Price Creep

Review your household vendors

One simple idea could save you hundreds in your monthly expenses. It has to do with the tendency for inertia. When you are looking for a supplier of basic services, you tend to shop alternative companies, ask friends for recommendations, and get quotes from alternate choices. After completing this often exhausting work, you sit back and enjoy your new supplier.

The problem. Once a supplier is chosen, review of the service is often not redone. Unfortunately, things change and what was once a good deal can become a very expensive proposition.

Example, talk about trash. A young couple move into a new home. They shop and hire a trash collector. Over the years, the trash collector is purchased by a new hauler and the new hauler merges with another hauler a couple of years later. One day their supplier-provided trash can disappears. When looking online for the phone number to request a replacement, the couple discovers a listed price for their service much lower than what they are paying. Their $28 per month fee is offered to new customers for $10 per month.

Review household vendors

What to do. Every two or three years conduct a review of your suppliers. To keep the process manageable, rotate a few vendors each year for this review exercise. The longer you use a supplier without a review, the more important the review becomes. Here are some common culprits for price creep:

Check Cell phone providers
Check Cable services
Check Internet services
Check Auto insurance
Check Health insurance
Check Trash collectors
Check Homeowner insurance
Check Cleaning services

It is not only price. Remember, just because your supplier is not the lowest price, there may be other reasons to continue your service. Trust and quality of service should also be considered in your decision making process.

Want to Deduct an Event Ticket?

Things to consider

As an employee, can you ever deduct the cost of a sporting event or other ticket on your expense report? Surprisingly, the answer can be yes, but only if you know and abide by the rules.

The accountable plan

If your employer uses accountable plan rules for reimbursing expenses, the IRS will not only provide the ability for you to be reimbursed by your employer for your qualified expenses, it will also allow your employer to deduct the expense on their corporate tax return. To be a qualified expense, three rules must be met:

Number 1 Expenses must be related to the duties and responsibilities of the employee for their employer.
Number 2 The expenses must be properly substantiated in a timely manner. This is usually within 30 to 60 days.
Number 3 Any excess reimbursements to the employee must be returned to the employer.
Event stadium

Applying the rules

To apply these expense deduction rules to a sporting event:

Checkmark There must be a business purpose for attending the event and
Checkmark an employee must accompany a prospective customer, a current customer or supplier to the event.

If you apply these rules, your employer can usually deduct 50% of the ticket cost and related expenses.

What can go wrong?

As you can imagine, the IRS looks closely at those who deduct entertainment as a qualified business expense. Here are some things to watch for:

Caution No customer or supplier is in attendance. Make sure you attend the event with your customer or the tickets are deemed a gift.
Caution The environment does not provide for a quiet place to conduct business. Do not try to deduct concert tickets or sporting events if you do not first meet in a quiet place prior to or after the event to conduct your business affairs.
Caution Over-charging the ticket price. You may only deduct the price of a ticket that is generally available to the public.
Caution Bringing friends. Generally you can include a spouse in the event, but other family members or unrelated guests can raise red flags.

As you can imagine, this area of expense deductibility is often the focus for the IRS during a review. If in doubt, please ask for help and clarification on the deductibility of this type of entertainment expense.

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

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