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About c06669801

Mike is an Enrolled Agent / Licensed Tax Consultant. This year marks Mike's 36 year in the tax preparation industry.

Six Things to do before January 1st 2018

December 23, 2017

This week the President signed into law a new tax bill that will affect nearly every american taxpayer.   The majority of the tax law will change your 2018 and beyond tax filing.

However, if your itemized deductions generally exceed the standard deduction for 2017, with a little planning, you could save money on your 2017 and 2018 taxes by using the new law to your advantage.  The problem is you have to come up with some money now, and if you are in the higher income brackets, the AMT tax may take away most of the advantage.

So here are six things, that you can do now to take advantage of the new tax law.  Because of the changes made to itemized deductions, those that can itemize will get a bigger tax break.

  1. Increase or prepay your Charitable Contributions.
    • Charitable contributions made in 2017 reduce your 2017 taxable income.  Since the Federal tax in 2017 is higher than the 2018 Federal tax, you can deduct your 2018 charitable contributions, by making those contributions in 2017 instead of 2018.
    • Only give what you can afford.  If you are in the 20% bracket, you can reduce your tax liability by 20% of the contribution amount.  I.E.  If you contribute $100, you will only get $20 back.
  2. Pay your 2017/18 property tax in 2017.
    • If you only paid 1/3 of your property taxes in November, pay the other 2/3 before December 31st.  You can deduct the property tax paid during the year it was paid.  The first half of your 2018 property tax was assessed in 2017, and can be paid in 2017.
  3. Pay your 2017 Oregon income tax in 2017.
    1. For 2017 the State and Local taxes paid is unlimited, which means if you generally owe taxes on Oregon, you might want to make an estimated tax payment before the end of the year.
    2. If we set you up for quarterly estimates, you may want to pay the 4th quarter Oregon estimate in 2017 instead of waiting until January 15th.
  4. Pay your Tax Prep fee, Union Dues, and unreimbursed business expenses now.
    1. If you pay union dues, professional membership fees, or buy a lot of supplies for your business that are not reimbursed by your employer, pay them before the end of the year.  The same thing applies to Tax Preparation fees, Financial planning fees, some Attorney fees, and Investment  Account Management fees.  Those fees have been deductible  if they exceeded the 2% limitation as miscellaneous itemized deductions.  They are deductible for 2017, but the new tax act eliminates the miscellaneous itemized deduction completely.
      • Miscellaneous Itemized Deductions include the following:
        • Job Hunting Expenses
        • Broker Administrative Fees
        • Union Dues
        • Unreimbursed Employee business expenses
        • Tax Return Preparation Fees
        • Hobby Expenses (limited to hobby income)
        • Some Attorney (protection of income) and Accountant Fees
        • Financial Planning Consultation fees
        • Broker Management Fees
        • and some other deductions
  5. Max Out Subtractions
    • If you can try to take the credit or deduction in 2017.
    • Teachers can get an educator subtraction of $250.  It stays for 2018 and beyond, but the subtraction is more valuable in 2017.
    • Max Out your 401k, 503b, or Traditional IRA.
    • Prepay your home-equity loan interest.  The deduction goes away, or is limited beginning next year.
  6. Delay income until 2018 (if possible)
    • Tax rates are lower for income earned after December 31, 2017.


  • Even though the new tax bill is being called an overhaul of the 1986 tax code, it has turned out to only be an amendment to the code, and a lot of tax items have not changed, or have become more advantageous.  The final bill has no changes to:
    • Student Loan Interest Deduction
    • Medical Expense Deduction (limits are lower for 2017 and 2018)
    • The Teacher Classroom Supply Credit
    • The Electric Vehicle Credit
    • Tuition Waiver for Graduate Students
    • Sale of your Home exclusion

There is a lot more in the new tax bill, and as we find out more we will be posting information on our website.


Taxpayers Should Be Wary of Unsolicited Calls from the IRS

Issue Number:    IRS Tax Tip 2017-53

Inside This Issue

Taxpayers Should Be Wary of Unsolicited Calls from the IRS

Taxpayers who get an unexpected or unsolicited phone call from the IRS should be wary – it’s probably a scam. Phone calls continue to be one of the most common ways that thieves try to get taxpayers to provide personal information. These scammers then use that information to gain access to the victim’s bank or other account.

When a taxpayer answers the phone, it might be a recording or an actual person claiming to be from the IRS. Sometimes the scammer tells the taxpayer they owe money and must pay right away. They might also say the person has a refund waiting, and then they ask for bank account information over the phone.

Taxpayers should not take the bait and fall for this trick. Here are several tips that will help taxpayers avoid becoming a scam victim.

The real IRS will not:

  • Call to demand immediate payment
  • Call someone if they owe taxes without first sending a bill in the mail
  • Demand tax payment and not allow the taxpayer to question or appeal the amount owed
  • Require that someone pay their taxes a certain way, such as with a prepaid debit card
  • Ask for credit or debit card numbers over the phone
  • Threaten to bring in local police or other agencies to arrest a taxpayer who doesn’t pay
  • Threaten a lawsuit

Taxpayers who don’t owe taxes or who have no reason to think they do should follow these steps:

  • Use the Treasury Inspector General for Tax Administration’s IRS Impersonation Scam Reporting web page to report the incident.
  • Report it to the Federal Trade Commission with the FTC Complaint Assistanton
  • Taxpayers who think they might actually owe taxes should follow these steps:
  • Ask for a call back number and an employee badge number.
  • Call the IRS at 1-800-829-1040.

Every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are the Taxpayer Bill of Rights. Taxpayers can visit to explore their rights and the agency’s obligations to protect them.

IRS YouTube Videos:

Share this tip on social media — #IRSTaxTip: Taxpayers Should Be Wary of Unsolicited Calls from the IRS.

AP Story: How to find a good tax preparer

Tax preparers do a big chunk of America’s tax returns — more than 80 million a year, according to the IRS — but if you’re nervous about handing confidential information to someone in a largely unregulated field, you’re not alone.

Here are some tips to help you find a good tax preparer and reduce the risk of expensive errors and exposing your finances.

First, decide if you really need a tax preparer. Everyone’s tax situation is different, but many millions of them are simple enough — some W-2s from work, mortgage interest or a few other obvious deductions — to handle in-house. If that’s the case, it might be cheaper and faster to buy software and do your taxes yourself .

“Obviously the more you have going on, the more I would say go see a preparer,” says Trish Evenstad, president of the Wisconsin Society of Enrolled Agents.

If you do need a preparer, be choosy. “I wouldn’t just simply go through the phone book and pick someone randomly,” says Melissa Labant, director of tax policy and advocacy at the American Institute of CPAs. Asking friends, family or colleagues for recommendations can quickly reveal a preparer who’s caused headaches, she said.

Tax attorneys and enrolled agents specialize in or have passed exams on tax rules, and some certified public accountants may specialize in tax preparation. At a minimum, Labant says, a legitimate preparer should have a Preparer Tax Identification Number, or PTIN, from the IRS.

Oregon State Law requires all paid income tax return preparers be licensed and maintain annual continuing education in tax law.  For info contact the State Board of Tax Practitioners, The State Board of Accountancy, or The Oregon State Bar.

Enrolled Agents, are “America’s Tax Experts”, and are licensed by the US Treasury Department to represent taxpayers before the IRS at all administrative levels.  All Enrolled Agents specialize in Taxes.  Oregon Enrolled Agents must maintain both the Federal EA license, and the Oregon Licensed Tax Consultant license.

Enrolled Agents, CPA’s, and Attorneys who prepare tax returns are regulated by IRS Circular 230, and are held accountable at a higher level than non Circular 230 practitioners.

Professional organizations such as the National Association of Enrolled Agents (, as well the Oregon Board of Tax Practitioners, and even the IRS ( maintain a list of licensed tax professionals who have certified they have met the licensing and continuing education requirements.

Never assume that because someone works at a big tax-prep company he or she must be an enrolled agent or a certified public accountant, Evenstad warns. And don’t assume a PTIN is valid, either — a 2014 Government Accountability Office study caught some unscrupulous preparers using fake PTINs or ones that didn’t belong to them. You can verify PTINs and professional credentials on the IRS website , and you can check accounting and law licenses on state-level CPA and bar association websites. The National Association of Enrolled Agents also maintains a directory.

Know what to look for. The IRS requires paid tax preparers to put their name and PTIN on returns they prepare. Not doing so, or asking you to sign a blank return first, suggests a preparer is up to no good, Evenstad said. Directing your refund to a bank account that’s not yours is another red flag. And make sure your return doesn’t say “self-prepared.”

Good preparers will also ask for last year’s return, Labant says. “If they don’t, then you’ll know right away this person is not exercising due diligence and they could easily be missing several key items that need to be reported on your tax return.”

The preparer should provide a secure portal for sending information, too.

“If someone called me and said, ‘Just email me a copy of your driver’s license,’ that would make me a little nervous about how well they’re protecting taxpayer identification information,” Labant says.

Report bad apples. If, despite your efforts, a preparer wrongs you, you have a few options. You can complain to the IRS by filling out Form 14157 and sending along supporting documents. Alerting the National Association of Enrolled Agents, the National Association of Tax Professionals and other professional groups might also spark an internal investigation if the preparer is a member, Evenstad says.

Getting restitution, though, might be harder. According to Council of Better Business Bureaus data, just 66 percent of customer complaints against tax preparers in 2015 were resolved — well below the national average of 79 percent across all industries, according to BBB spokesperson Katherine Hutt. By comparison, the cellular industry and banks usually have 98 percent and 97 percent resolution rates, she notes.

“Most of the time, when people are unhappy with a service like that, it’s because they didn’t check out the company ahead of time. Their complaints are usually the same thing that previous customers have complained about,” Hutt says.

If a preparer steals from you, call the police and file a complaint with the IRS.

“If they’ve stolen your identity, you definitely want to turn them in to the (IRS) Office of Professional Responsibility,” Evenstad says. “Because if they’ve stolen yours, they’ve probably stolen other people’s.”

Good preparers who make honest mistakes usually will pay your penalties, though any extra taxes will likely be on you, Evenstad adds.


This article was provided to The Associated Press by the personal finance website NerdWallet . Email staff writer Tina Orem:

35 Bizarre Things You Can Be Taxed On

35 Bizarre Things You Can Be Taxed On

Lifted edited and rewritten from an article on the internet, By Carrie Kirby on 19 December 2016

Once the Yuletide log burns out and the New Year’s ball drops, it’s soon time for a less joyful annual tradition: Calculating how much money you owe the Internal Revenue Service.  We all know that Uncle Sam takes a share of our earnings, but have you considered other events in the past year that you may owe taxes on? You might be surprised at all the ways Uncle Sam can lighten your wallet.

Note: This is general information. Consult your tax professional for advice on your personal situation.

  1. You Caught a Baseball

You are the lucky fan who catches a historic home run ball from the outfield bleachers. The not-so-lucky part? The IRS could hold you responsible for the resale value of the ball as soon as it hits your glove – even if you weren’t planning to sell it.

  1. You Found a Pot of Gold

You finally found the cache at the end of the rainbow. Or maybe you found a stash of rare baseball cards hidden in the wall of your home during a remodel, or a treasure chest while scuba diving in a shipwreck. Under the same regulation that applies to the baseball cards, the treasure trove rule, that windfall is taxable to you the first year that you find it. Sadly, this

means that you may be forced to sell all or part of your find even if you wanted to keep it.

  1. You Held Up a Liquor Store

It doesn’t matter if you got it illegally: Stolen money or property should be reported, lest a tax evasion charge be added to your legal woes when you get caught. Says the IRS, “If you steal property, you must report its fair market value in your income in the year you steal it unless in the same year, you return it to its rightful owner.”

  1. You Accepted Hush Money

The IRS is blunt on this one: “If you receive a bribe, include it in your income.”

  1. You Dealt in Illegal Goods

If you made money dealing drugs or by any other illegal form of self-employment, the IRS requires you to report it on Schedule C.

  1. You Hit the Jackpot

Yes, you have to pay taxes on your lottery prize. Yes, if you have been buying lottery tickets all year, you can also deduct the expenses. But you have to keep a diary_ of wins and losses, and the IRS has specific instructions on how to do that.

  1. You Stuck the Landing and Won Gold

It’s estimated that Michael Phelps will owe $55,000 to the IRS on his Rio winnings – the medals and the cash prizes that come with each are taxable. Many other Rio champions will get off scot free, however. That’s because Congress recently passed a law to exempt Olympians from “victory taxes” – but only for athletes who earn a million dollars a year or less. Phelps earned an estimated $12 million in endorsements alone in 2016, so he doesn’t get that break.

  1. You Got a MacArthur Genius Grant

It would feel great to win this $625,000 no-strings stipend, or the approximately $1 million that comes with the Nobel Prize. That good feeling won’t protect you from the tax bite, though. You’re required to pay taxes on all such awards – unless you have them directly transferred to a recognized charity. That’s what President Obama did with his 2009 Nobel Peace Prize winnings.

  1. You Are Gifted

Usually, the presents you unwrap over the holidays come to you tax-free, but there are some exceptions. Cash or a gift card from your boss is taxable as a fringe benefit. A hostess gift you receive as a thank-you for having a sales party in your home is taxable as miscellaneous income.  Personal gifts, though, are generally safe from the tax man.

  1. You Airbnb’d Your Pad

Just like regular rent payments, money you earn by hosting Airbnb guests is counted as part of your gross income. Unlike rent received from your rental house, short-term rental income is treated like a business and subject to regular federal and state income tax, plus Self-Employment tax (approx.15.3% S/E Soc. Sec. & Fica), as well as transit tax, and business licenses.  The exception: You don’t have to pay if you live in the home and rent it out for a total of two weeks or less per year.

  1. You Got Your Social Security Check

It may seem nonsensical that the government pays retirement benefits from a fund you paid into (Fica withholdings) while working, then requires people report the gross amount (including the amount withheld for Medicare premiums) as income and then collecting tax on 50 to 80 percent of those payments, but that’s how it goes. However, SSI, or disability benefits, are generally not taxable.

  1. You Divorced Well

Alimony you receive from your ex is taxable income, but child support payments are not. For this reason, it’s important to know how payments are categorized in your divorce settlement.  Make sure you show your tax professional a copy of your divorce decree.

  1. You Won a Scholarship

If you win a grant that covers your tuition and books, that’s tax-free. But if it pays for room and board or travel., pay up.

  1. Your Fantasy Football Team Won the Super Bowl

If you win at least $600 worth of cash and prizes from a business operating a fantasy sports league, they’ll file a 1099-MISC with the IRS. But even if you win less or your league is informal, you are still supposed to pay on your winnings.

  1. Triple 7s Came Up

Just like with the lottery, the IRS gets a cut of your casino winnings once they surpass the amount you document losing. Usually it’s a flat 25%.

  1. You Spun the Wheel of Fortune

It’s simple enough to pay the tax if you win a cash prize, but if you win a car or vacation, you still owe tax on its value – which can be tough to pay if you didn’t a/so win cash.  Because of this, it’s often wise to take the cash equivalent of a prize if offered.

  1. Your Debt Was Forgiven

The IRS is very specific about this: If a debt is cancelled as a gift to you – for example, if Grandpa says, “Merry Christmas, you no longer owe me for that time I bailed you out!” – you don’t have to pay taxes, because Grandpa gave you a gift. Otherwise, you do.

  1. You Traded a Haircut for Cigarettes

This may surprise you, but if you receive goods or services in exchange for services you render, the IRS expects you to include the value of those in your gross taxable income.

  1. The Boss Lets You Take the Ice Cream Truck Camping

If you drive your company car to work and home, or use it on weekends, this is a taxable employee fringe benefit and you should be tracking and reporting your personal miles to your employer.  The value based on the standard mileage rate should be added to your taxable wages.

  1. Your Bitcoins Doubled in Value

Bitcoin is a virtual currency that is represented by computer code, but it can be used to buy real goods and services. So of course, the IRS considers gains in this or any other virtual currency taxable. It’s considered a capital asset like stocks and bonds, so if you buy Bitcoins low and sell them high, the difference is your profit. But it can be even more complicated

than that: If you create new Bitcoins by mining, you have to count those as income, too.

  1. You Got a Blogger Freebie

If a widget maker sends you their Super-Widget 2000 to review and you get to keep it, you just received a taxable payment. However, you don’t owe taxes on the market value of the product – just what the company agrees it’s worth. Make sure to put an agreed-upon value in your contract.

  1. You Sold Stuff on eBay

If you occasionally sell your kids’ outgrown clothes on eBay, you won’t owe taxes because you most likely took a loss on the items. But if you create a resale business on eBay, you better believe you have to report your profits.  If you sell something for more than your cost or basis you have taxable income.  If you sell it at a loss, it’s a personal loss and generally not deductible.

  1. You Had a Yard Sale

Like eBay, most yard sale transactions are not income producers, but if you’re one of those people who holds a sale every weekend and resells stuff at a profit, do the right thing.  If you sell something for more than your cost or basis you have taxable income.  If you sell it at a loss, it’s a personal loss and generally not deductible.

  1. You’re a Child Entrepreneur

Starting a small business, whether it’s dog walking or selling handmade items, can be a great activity for a tween or teen. But don’t expect them to be IRS-exempt just because they’re kids. If the business earns more than $400, file a tax return.

  1. You Set Up a GoFundMe Campaign

This is one of those tricky gray areas. If you start a crowdfunding benefit for someone in need, the donations should be considered personal gifts. But if the gifts run into the large numbers, the crowdfunding site may file a 1099, reporting the transaction to the IRS.  A word to the wise: If you are setting up a crowdfunding campaign for a needy friend, make sure it’s in their name so you don’t end up wondering if you need to pay taxes on money you handed over to them. And consult with us before going down this route.

  1. You Asked for Spare Change

The tax code says, all income from whatever source is taxable, unless there is an exception.  There are differing opinions out there over whether quarters dropped in a panhandler’s cup are considered earned income or a gift. Gifts you receive from other individuals are generally not taxable to the recipient.  Currently you can gift up to $14,000 per year to any one person and not have to file a gift tax return.  Since panhandlers tend to live below the poverty line, they probably wouldn’t owe any income taxes, either way.   However, if they are in the business of panhandling, or busking, only the first $400 of profit is exempt from Self-Employment (FICA) tax.  A more pressing issue for many would be whether the panhandling counts as earned income, qualifying recipients for the earned income tax credit, which could lead to a cash payment from the IRS even if the panhandler pays no taxes.  In addition, you cannot deduct as a charitable contribution amounts given to a panhandler, because the majority are not 503(c)3 not for profit organizations.  If they are, you need to get a written receipt which includes the charity’s name, address, federal ID number, and a statement regarding their nonprofit status.

  1. You Received Punitive Damages

Court settlements vary in their tax treatment. If you get a settlement in court to compensate you for a physical injury or emotional distress stemming from an injury, the money isn’t taxable. But if you get paid for emotional distress not tied to an injury, or you receive punitive damages, you have to pay.

  1. You Cashed in Your Life Insurance Policy

If you die, your beneficiaries probably won’t be taxed on your life insurance portion of the payout, but will be taxed on the earnings (if any).  But if you cash it in while you’re alive? Any profit you made on the policy – that is, the value in

excess of premiums paid – is taxable to you.

  1. Your Champion Pug Had a Litter

Whether you breed your dog as a business or a hobby, money made selling puppies is taxable income. However, it’s also not cheap to breed and raise puppies, so once you deduct stud fees and all those vet bills, you may not actually show a taxable profit for your prized pups.

  1. You Put on the Red Light

Just like dealing drugs, if you sell your body in a jurisdiction where that’s illegal, you still have to report the income on Schedule C. In fact, smart high-earning prostitutes declare their income to put themselves into the position to buy a house or get credit.

  1. You Couldn’t Get Out of Jury Duty

If you got $15 for sitting on a jury, that’s taxable income, even if you turn it over to your employer. However, if you did turn it over to your employer, you also can put in a deduction for the same amount on your tax form so your gross income will remain the same.

  1. You Got a Tax Refund

Last year’s state and federal refunds are taxable in most situations.

  1. You Exercised Stock Options

This is one that has gotten a lot of tech workers into financial hot water. If your company gives you stock options, that’s not a taxable event. But when you exercise the option by purchasing stock in your employer at a discount, that is a taxable event even if you don’t sell the stock right away. This can go bad if the stock declines in value after you exercise the option, because now you may owe the IRS more money than you can raise by selling the stock.

  1. Your Landlord Is Paying You to Get Out

In rent-controlled areas with high demand, such as San Francisco, it’s common for landlords to buy tenants out. This is often referred to as a relocation assistance. This is taxable, but whether to treat it as regular income or a capital gain is dicey, so you may need professional help with that one.

  1. You Are an Undocumented Worker

Despite a common belief that undocumented immigrants don’t contribute to society with tax dollars, anyone working in the U.S. is legally required to pay taxes, papers or not.

New Due Date: Partnerships & LLC’s (2 or more member)


New for 2016, the due date for filing your Partnership (Form 1065) has been moved up to March 15th instead of April 15th.  This change affects not only partnerships, but also multi-member LLC’s.

For 2015 and earlier partnership returns, the due date of the return was April 15th, the same as individual returns.  But, Congress enacted legislation in early 2016 which moves the due date to March 15th.

This means we have less time to work on your partnership returns, and you have less time to get your books and records and tax related documents to us.

As the year comes to an end, it is not too early to get your partnership books and records for 2016 completed.  It is also not too early to schedule your “TRIN” (Tax Return IN) appointment.

Call and schedule your appointment for late January or Early February now.



NEW – IRS Changes 1099-MISC Filing Dates

2016 Form 1099-MISC Miscellaneous Income

What’s New

New filing date. Public Law 114-113, Division Q, section 201, requires Form 1099-MISC to be filed on or before January 31, 2017, when you are reporting nonemployee compensation payments in box 7.

The new law only applies to Form 1099-MISC,  and only when there is an amount in box 7.

Other 1099’s need to be issued to the recipient by January 31st, and filed with the IRS by February 28, 2017, if you file on paper, or by March 31, 2017, if you file electronically.

Click Form 1099-MISC For the latest information about developments related to Form 1099-MISC.   or go to form1099misc.

File Form 1099-MISC, Miscellaneous Income, for each person to whom you have paid during the year: At least $10 in royalties (see the instructions for box 2) or broker payments in lieu of dividends or tax-exempt interest (see the instructions for box 8); At least $600 in: 1. rents (box 1); 2. services performed by someone who is not your employee (including parts and materials), box 7; 3. prizes and awards (see instructions for boxes 3 and 7); 4. other income payments (box 3); 5. medical and health care payments (box 6); 6. crop insurance proceeds (box 10); 7. cash payments for fish (or other aquatic life) you purchase from anyone engaged in the trade or business of catching fish (box 7); 8. generally, the cash paid from a notional principal contract to an individual, partnership, or estate (box 3); 9. Payments to an attorney. See Payments to attorneys, later; or 10. Any fishing boat proceeds (box 5). In addition, use Form 1099-MISC to report that you made direct sales of at least $5,000 of consumer products to a buyer for resale anywhere other than a permanent retail establishment (box 9). You must also file Form 1099-MISC for each person from whom you have withheld any federal income tax (report in box 4) under the backup withholding rules regardless of the amount of the payment.

Trade or business reporting only. Report on Form 1099-MISC only when payments are made in the course of your trade or business. Personal payments are not reportable. You are engaged in a trade or business if you operate for gain or profit. However, nonprofit organizations are considered to be engaged in a trade or business and are subject to these reporting requirements. Other organizations subject to these reporting requirements include trusts of qualified pension or profit-sharing plans of employers, certain organizations exempt from tax under section 501(c) or (d), farmers’ cooperatives that are exempt from tax under section 521, and widely held fixed investment trusts. Payments by federal, state, or local government agencies are also reportable.