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Recent Blog Posts

Potential Changes to California Property Taxes Under Proposition 13

 Posted on December 05, 2018 in Property Taxes

San Jose, CA property tax assessment attorneyIn the face of receiving dramatic annual increases in property tax bills, in 1978, California voters passed Proposition 13, which has limited the rate of property tax increases for the past 40 years, so long as certain criteria are met. 

About Prop. 13

Prop. 13 limits property tax increases to 1 percent of the property’s assessed value. Assessed value cannot be increased more than 2 percent per year. Prop. 13 also provides that property taxes may include any bond payments or special assessments as approved by voters. All special assessments must receive a two-thirds vote. Importantly, a key provision of Prop. 13 for tax planning purposes is that properties will only be reassessed after an ownership transfer or if substantial improvements have been made to the property.

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IRS Changes Allow for More Retirement Savings and Tax Deductions

 Posted on November 15, 2018 in Taxation Law

San Jose tax planning attorneyIf you are one of the millions of Americans who is saving for retirement, the IRS recently announced some good news for you. Starting in 2019, you can contribute more money to certain retirement accounts, including IRAs, 401(k)s, 403(b)s, most 457 plans, and the Thrift Savings Plan for federal workers. These changes will allow many people to save more money for retirement, and more tax deductions will be available.

Changes to Contribution Limits and Deductions

With this change, the IRS has increased the annual IRA contribution limit for the first time since 2013. The IRS also announced rules that make it easier to qualify for a Roth IRA as well as to deduct contributions to a traditional IRA. The changes include:

  • With respect to the contribution limits to IRAs and Roth IRAs, the limit in 2019 is $6,000. That is a $500 increase from years prior.

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Tax Issues to Be Aware of Before the End of the Year

 Posted on October 23, 2018 in Taxation Law

San Jose tax law attorneyEven though Tax Day for most people is in April, it is important to think about your taxes throughout the year. Reviewing tax information such as your withholding amounts and making sure you are keeping appropriate records as the year progresses are prudent measures that can save you money and trouble once Tax Day arrives.

If this is something that you have not thought a lot about, or if you discover an issue with your taxes, you should contact a tax attorney as soon as possible. It may still be early enough to correct course and resolve the issue before the end of the year.

Is it Time to Check Your Paycheck Withholdings?

With the recent revisions to the tax code made by the Tax Cuts and Jobs Act of 2017, the IRS encourages taxpayers to conduct a “paycheck check up” to review how much taxes are being withheld from your paycheck. The IRS provides a withholdings calculator to help you determine what the proper amount should be. If you need to adjust your withholdings, you can fill out a new W-4 form.

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New Tax Credit for Paid Family and Medical Leave Available to Employers

 Posted on October 16, 2018 in Small Business Taxes

San Jose, CA small business tax credit lawyerThe federal Tax Cuts and Jobs Act of 2017 has brought sweeping changes to many areas of tax law. One change that might have been overlooked by businesses is that employers are now eligible for a tax credit if they offer certain kinds of paid family and medical leave to full and part-time workers. If you act before the end of this year, you may be able to qualify for this tax credit.

Qualifying for Tax Credits

Eligible businesses that enact qualifying paid family leave programs or amend existing ones by the end of this year will be able to claim the employer credit. This tax credit will be available for tax years 2018 and 2019. The credit is retroactive to the beginning of the business’ 2018 tax year for qualifying leave already given.

To qualify for the tax credit, employers must meet the following requirements:

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Changes to Business Expense Deductions Under the Newest Tax Rules

 Posted on October 10, 2018 in Small Business Taxes

San Jose small business tax deduction attorneyThe Tax Cuts and Jobs Act (TCJA) of 2017 has made many significant changes to tax laws that affect both individuals and small businesses. Understanding how these changes will affect the taxes a business owner must pay and the deductions they are allowed to take can help avoid tax penalties or audits. 

One area affected by the TCJA is the allowance for deductions for business expenses. This change went into effect for the 2018 tax year. 

Entertainment and Meal Expense Deductions

Business owners should understand that the TCJA removed the deduction for any expenses incurred by a business involving activities generally considered entertainment, amusement, or recreation. Previously, a company was typically allowed a deduction of up to 50 percent of entertainment expenses. To qualify for this deduction, the expense had to relate directly to the active performance of a business or trade. Common examples of ways a business would claim this deduction were for sporting event tickets or club memberships. Under the new rules, these expenses are now non-deductible.  

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My Tax Return Is Going to Be Examined. What Is Going to Happen?

 Posted on September 24, 2018 in Tax Audits

San Jose, CA IRS audit attorneyIf you have been informed that your tax returns will be examined, or audited, you may not know what to expect from the process. Often, taxpayers are upset about having to devote more time to their tax returns, and they may be worried about a larger tax liability or concerned that they will face penalties from the IRS.

All of these thoughts are well-founded. Hiring an attorney to look out for your best interests during the course of an examination is allowed under IRS rules and may help you keep your tax liability as low as possible.

How Is One Chosen for an Examination?

According to the IRS, there are two ways your tax return may be selected for an audit. The first way is by computer programs that find incorrect amounts on your returns when compared to documents like W-2s or 1099s. 

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Opportunity Zones Offer Tax Incentives for Investments in Low-Income Communities

 Posted on September 14, 2018 in Taxation Law

San Jose capital gain tax incentive lawyerA new federal initiative seeks to infuse low-income areas with investments for new projects and enterprises by offering tax breaks to investors. Opportunity Zones were added to the tax code by the Tax Cuts and Jobs Act in December 2017.

Under the new rules, Qualified Opportunity Zones are low-income census tracts selected by state governors and certified by the Department of the Treasury. A Qualified Opportunity Fund is an investment vehicle that invests at least 90 percent of its capital in Opportunity Zones. 

How Do Opportunity Zones Incentivize Investors?

When an investor makes a gain from selling a capital asset to an unrelated party, the investor can put the amount of the gain into a Qualified Opportunity Fund and defer payment of capital gain tax. This step must be taken within 180 days of the disposition of the sale or exchange.

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What You Need to Know About Taxes When Renting a Residence Seasonally

 Posted on September 10, 2018 in Taxation Law

San Jose, CA tax lawyer property rentalWebsites such as Airbnb, VRBO, and HomeAway make it easier than ever to generate income by renting out a private residence, meeting the huge demand for home rentals, especially during the summer months when people go on vacation. However, the income collected from rental of a residence is typically subject to taxation, and there are special tax rules that must be followed. If you are a homeowner who plans to rent your property seasonally, you should be sure to understand whether your situation meets certain IRS requirements for taxation. 

Residential Rental Property Defined

The first step in determining how rental income will be taxed is understanding if the property you are renting is a residential rental property under the definition provided by the IRS. A dwelling will be classified as a residence if it is utilized for personal purposes during the tax year for 14 days, or for 10 percent of the total number of days the residence has been rented to tenants at its fair rental value, whichever is greater. Personal use could include the use of the dwelling by:

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Can My Spouse and I Operate a Business as a Sole Proprietorship Or Do We Need to Be a Partnership?

 Posted on August 17, 2018 in Small Business Taxes

business formation, San Jose business formation attorney, business and tax attorney,  sole proprietorship, business corporationIf you are considering opening a business with your spouse, there are several important areas to consider. One such area is what type of business should be formed. There are different reasons why one would select a corporation, an LLC, or a partnership for his or her business. Additionally, there may be legal constraints on this decision. 

With regard to a business operated with a spouse, people may wonder if a partnership is the correct type of business to form given that the two people operating the business are married. While the IRS has given guidance on this issue, it is always best to contact a tax and business formation attorney to understand what is required under law based on the facts of your case.

According to the IRS, if the business is a sole proprietorship, it must be owned only by one spouse. The other spouse can work at the business as an employee. If the business is owned and operated by both spouses, the business must be a partnership. All partnerships must file IRS Form 1065, U.S. Return of Partnership Income.

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Taxpayers with Unreported Foreign Assets Urged to Use Voluntary Disclosure Program or Face Serious Repercussions

 Posted on August 10, 2018 in Taxation Law

California offshore tax attorney, Offshore Voluntary Disclosure Program, report foreign assets, unreported foreign assets, avoid criminal prosecutionThe IRS will soon be ending its Offshore Voluntary Disclosure Program for undisclosed foreign assets. Failure to utilize this disclosure program by the date of its termination on September 28, 2018, means that taxpayers who have not reported foreign assets can no longer do so with assurance of avoiding criminal prosecution.

What is the Offshore Voluntary Disclosure Program?

The Offshore Voluntary Disclosure Program (OVDP) was developed as a way for taxpayers to come into compliance with fewer legal consequences in situations where the taxpayer had previously not disclosed foreign assets and the income generated on those assets. The OVDP has existed in some iteration since 2009.

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