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Learn the ABCs of Higher Education Tax Breaks

higher education tax breaks

The pursuit of higher education may lead to tax breaks.

Back-to-school season is a good time to review the federal tax breaks that are currently available if you or a loved one will be attending college or graduate school this fall. After all, a higher education degree is one of the biggest investments you’ll ever make.

Cost Overview

How much does an advanced degree typically cost? For the 2016-2017 school year, the College Board estimates that the average annual cost (including tuition, fees, and room and board) was $20,090 for in-state students at a public four-year school — and $45,370 for students at a private not-for-profit four-year institution. These estimates don’t include books, supplies, transportation and other expenses a student may incur.

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When Can You Deduct Theft Losses?

The tax law allows you to deduct your personal losses resulting from casualties and thefts within certain limits. And a “theft” for tax purposes isn’t strictly limited to house burglaries or stolen cars. However, as you will see from several U.S. Tax Court cases, the deduction can hinge on the application of state law.

Basic ground rules: If you suffer a casualty or theft loss, you generally may deduct the amount of your unreimbursed loss only to the extent that your losses for the year exceed 10% of your adjusted gross income (AGI) for the year. (Special rules apply to losses in federal disaster areas. Before the 10% limit is applied, you must subtract $100 for each casualty or theft occurrence.)

The deductible amount must also be reduced by any insurance reimbursements.

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U.S. Treasury to Retire the myRA Program

myRA program

The IRS is set to retire the myRA program.

Created just a few years ago in 2014, the My Retirement Account (myRA) program will end, according to the U.S. Department of the Treasury. As part of the Trump Administration’s effort to slim down wasteful spending where possible, the Treasury has decided this short-lived Roth IRA backed by the government isn’t cost effective.

First Some Background on Roth IRAs

A Roth IRA is an individual retirement account that’s treated as a traditional IRA except where special rules apply. For 2017, individuals can make annual, nondeductible Roth IRA contributions up to $5,500, or $6,500 for those age 50 and older (or 100% of compensation if less). The total contributions for the tax year must be reduced by amounts that are put into all other IRAs. Read more

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Received a Foreign Gift/Bequest … Now What?

By Bethany Bouw, CPA

Foreign Gift

Received a foreign gift? Know that tax implication that come with it.

With globalization increasing, it is not uncommon for gifts or inheritances to be given by nonresident aliens to US persons. There may be concern over what needs to happen when a gift or inheritance is received – What needs to be filed? Is any tax owed? When do I report the gift?  Read more

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Eight Things to Look Out for When Reviewing A Tax Treaty

By Bethany Bouw, CPA

Tax Treaty

Know the eight key areas to look out for when reviewing a tax treaty.

One is often directed to the tax treaties when beginning to consider the tax ramifications of foreign activities or related to foreign persons. When faced with a complicated question and hoping that the income is tax exempt, we are drawn towards the treaties and their wealth of information. However, there are serious problems that can arise if the treaty is accidentally misused or misunderstood.  Read more

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Foreign Reporting: What to do When You Forgot to File

By Bethany Bouw, CPA

Foreign Reporting

What to do when you forget to file your FBAR.

Picture this, you are sitting at your dining room table and suddenly you realize you missed the Foreign Bank Account Report (FBAR) deadline. Or you remember that you need to tell your accountant about that foreign company you own part of and wonder, “Was I supposed to report anything about this company?” Thankfully, the IRS has provided procedures to follow if this happens to you.  Read more

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Technical Update- International Tax Alert

Tax Court Rules that Foreign Partner is not Liable for Tax on Certain Gain Recognized from the Disposition of a Partnership Interest

Summary

On July 13, 2017, the Tax Court held in Grecian Magnesite Mining, Industrial & Shipping Co., SA v. Comm’r, 149 T.C. No. 3 (2017) that the petitioner, a foreign corporation that disposed of its interest in a partnership that was engaged in a U.S. trade or business, was not liable for tax on certain gain recognized on the disposition. In particular, the Tax Court held that the portion of the gain recognized that was attributable to non-U.S. real property interests was capital gain that was not U.S. source income and that was not effectively connected with a U.S. trade or business. Accordingly, the Tax Court held that the foreign corporation was not liable for U.S. income tax on the portion of the gain that was attributable to non-U.S. real property interests.[1]   Read more

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Business ID Theft: Is Your Data at Risk?

The IRS and state tax authorities have made significant strides in curbing individual identity theft over the last two years.

Business ID Theft

The IRS is focusing on preventing Business ID Theft

But cyber attacks against businesses are on the upswing. Here are some simple ways business taxpayers can help protect their data from hackers.

Trends in ID Theft

The IRS recently announced that the number of individuals reporting identity theft in the first half of 2017 has declined dramatically compared to 2015 and 2016. For the first five months of 2017, about 107,000 individual taxpayers reported stolen IDs. In comparison, 297,000 victims filed reports during the same time period in 2015 and 204,000 in 2016.

Put simply, individual ID theft dropped 47% over the last year. The IRS attributes the decrease to safeguards put in place during the 2016 Security Summit.

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Tax Rules When Selling Your Home

Selling your home

When selling your home be aware of tax deductions and exemptions.

How the gains from the sale of a primary residence are taxed has changed in recent years. If you have recently sold your home, or are considering doing so, you may want to be aware of these new rules.

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Ryan & Wetmore Nominated as the Best of Falls Church!

We are excited to announce that Ryan & Wetmore has been nominated as the ‘Best of Falls Church 2017’! You can help us win the title of Best Accounting Firm by voting online! The ballot is open until Monday, August 21st at 5:00 PM.

Best of Falls Church

Ryan and Wetmore has been nominated for the best CPA firm in Falls Church!

Follow the steps bellow to vote. We appreciate your support!

  • Click here.
  • Enter your email address for verification.
  • The ballot will come up.
  • The Accounting Firm ballot is on page two. If you don’t want to vote for the categories on page one, just scroll down and click ‘Continue’.
  • You can leave a few words in the ‘Why are they the best’ comment line.
  • After voting, scroll to the bottom of the page and click ‘Continue’.
  • On the next page click ‘Finish Voting’
  • A verification will be sent to your email address. You must click ‘Confirm Survey Response’ for the vote to be counted!

 

Thank you!