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Speaker 1: It's with Dan Ray. I'm going you Mazy Boston's News Radio.

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Speaker 2: Thank you very much, Al Griffin. As we move through

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Speaker 2: the month of February, one thing that all of a

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Speaker 2: sudden comes up on our timeline horizon as the month

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Speaker 2: of March, which has followed very quickly by April and

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Speaker 2: April fifteenth, we're moving into tax season and I am

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Speaker 2: delighted to be joined tonight by an extraordinary CPA professional,

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Speaker 2: Mark Misselbeck. Mark has been with us now during this month. Mark,

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Speaker 2: it's been at least I'm gonna guess maybe it's getting

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Speaker 2: close to ten years.

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Speaker 3: I'm possibly a little bit more.

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Speaker 2: Yeah, Time flies, tempest fugit, and we thank you for

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Speaker 2: your time. You do this to answer questions and help

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Speaker 2: people at all different levels here in the in the

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Speaker 2: night side audience. So now with a an LLC called

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Speaker 2: Cherry Beckert Advisory, that is I assume a CPA firm.

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Speaker 3: It is we do taxes on the advisory and then

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Speaker 3: there's another unit that does the accounting and auditing work.

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Speaker 2: Yeah, and and do you do returns as well? I

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Speaker 2: assume that's part of the what the company does.

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Speaker 3: They do valuations, They do what are known as credit studies.

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Speaker 3: So there's a broad palette of services that are available.

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Speaker 2: Okay, but I get them. I think I understand it,

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Speaker 2: but I always have to ask all the questions. Understand

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Speaker 2: so you are up to date and all the tax

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Speaker 2: changes as you have been every year. That I understand.

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Speaker 2: But if there are people who are listening and either

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Speaker 2: as individuals or as owners of businesses, do you have

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Speaker 2: services for individuals as well as businesses?

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Speaker 3: We do. Usually the individuals we work with are a

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Speaker 3: more wealthier people or tied into the businesses themselves.

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Speaker 2: Okay, fair enough, Okay, I understand you're not doing any

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Speaker 2: short form ten forty short form returns. But things are changing,

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Speaker 2: and they changed last year with the Trump as he

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Speaker 2: called it, the big beautiful tax bill, and it is big,

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Speaker 2: but there's lots of changes, and that, of course is

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Speaker 2: the sort of things that all of us have to

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Speaker 2: be up to date on. I don't know what percentage

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Speaker 2: of my audience do their own taxes, but I'm sure

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Speaker 2: that my audience has a lot of questions. There have

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Speaker 2: been just an incredible amount of changes as a result

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Speaker 2: of the tax bill, some of them that when you

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Speaker 2: listen to the news, they'll say, well, tax on tips

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Speaker 2: are gone away. Well, they've gone away up to a point.

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Speaker 2: It's not as if waiters and waitresses can can make

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Speaker 2: let's say, one hundred thousand dollars in pay no taxes

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Speaker 2: they get to deduct. I think it's the first twenty

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Speaker 2: five thousand dollars in tips that they want to declare.

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Speaker 3: They're supposed to have declared the tips. They can't be

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Speaker 3: mandatory tips or imposed to service charges by the business

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Speaker 3: where they work. And yes, it's a twenty five thousand

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Speaker 3: deduction which can be lost if the income reported by

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Speaker 3: the tip receiver is too high on a single return,

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Speaker 3: you start to lose the deduction one hundred dollars for

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Speaker 3: every thousand over one hundred and fifty thousand on a

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Speaker 3: joining return, it's three hundred thousand, right.

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Speaker 2: But I kind of image now again that there would

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Speaker 2: be too many waiters who would have individual returns in

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Speaker 2: excess of one hundred and fifty thousand dollars. I mean,

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Speaker 2: I'm when I think about waiters, I'm not talking about

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Speaker 2: the people who are you know, at the casinos in

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Speaker 2: Las Vegas, and you know, assuming they're they're declaring all

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Speaker 2: their tips. I'm talking about the person who works, you know,

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Speaker 2: in a diner, in a restaurant, they're going to have

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Speaker 2: they're gonna pay less less in taxes. Again, assuming that

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Speaker 2: from year to year they've already they have always reported

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Speaker 2: honestly their tips.

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Speaker 3: Correct, correct, Yeah, okay, all right, So they would if

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Speaker 3: they make seventy five thousand and they get a twenty

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Speaker 3: five thousand deduction and will only pay tax on fifty.

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Speaker 2: Thousand, right, which also of course brings them into a

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Speaker 2: lower tax rate as well. So they would be big winners,

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Speaker 2: I assume under the tax bill. The other thing which

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Speaker 2: which has confused me a little bit, and I'm sure

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Speaker 2: many of my listeners are a little confused by it

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Speaker 2: the President who often engages in language that is a

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Speaker 2: you know, a bit you know, perhaps less precise than

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Speaker 2: than you engage in. In terms of this, it's it's

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Speaker 2: not that all taxes on all social security benefits are

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Speaker 2: going away, correct, that a lot of people will who

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Speaker 2: are reliant upon social security alone will see a much

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Speaker 2: a much bigger tax.

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Speaker 3: Actually, the change proposed to social security didn't didn't pass.

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Speaker 3: There was an additional deduction for seniors who tend to

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Speaker 3: be the social Security collectors, but the general rules that

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Speaker 3: have been in effect for Social Security are still there.

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Speaker 3: And if your income adding half of the Social Security

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Speaker 3: and goes above a certain level, then part of your

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Speaker 3: Social Security becomes taxable. The initial tranch is fifty percent,

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Speaker 3: and if your income rises to another level, then eighty

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Speaker 3: five percent of the Social Security benefits become taxable as

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Speaker 3: income tax as including your income, where masks will exempt

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Speaker 3: it for retirees collecting social Security.

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Speaker 2: Okay, so let's let's break that down. And again, I

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Speaker 2: know numbers are always difficult to deal with, but let

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Speaker 2: us assume someone out there is receiving let's say thirty

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Speaker 2: thousand dollars in Social Security benefits, and if that is

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Speaker 2: their only income of from social Security, let's take it

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Speaker 2: as a single sounds like keep it, it's single. Okay. Now,

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Speaker 2: they may have some other income coming in. Let's say

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Speaker 2: they have a few thousand dollars in interest, you know,

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Speaker 2: from bank accounts or something like that. At what point

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Speaker 2: would that thirty thousand dollars benefit start to disappear.

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Speaker 3: It's not that it disappears, and the other not nasty

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Speaker 3: but not too favorable. Part of this is since the

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Speaker 3: taxability of Social Security was added into the tax code.

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Speaker 3: The level at which the income starts the Social Security

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Speaker 3: starts to be taxable as income has not been adjusted

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Speaker 3: for inflation. So a single person collecting more than twenty

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Speaker 3: four thousand social Security half of the excess will be

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Speaker 3: added to income. In your example at thirty thousand with

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Speaker 3: twenty four three thousand dollars plus the other income.

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Speaker 2: Okay, So in essence, that thirty thousand dollars person with

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Speaker 2: the twenty four plus half of the difference, which would

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Speaker 2: be half of six, so they get their twenty seven

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Speaker 2: thousand dollars in effect becomes non taxable at the federal level.

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Speaker 3: Correct, And then they still have their standard deduction. And

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Speaker 3: if they're seeing sufficiently aged not agent but up there

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Speaker 3: in age, there's an extra deduction for that age bracket.

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Speaker 2: Okay, So seniors are going to probably do better for

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Speaker 2: the most part. Now, if some executive who's making a

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Speaker 2: million dollars earned Social Security, the benefit that he will

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Speaker 2: receive or she would receive will be negligible. But this

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Speaker 2: was really aimed at people who are for the most part,

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Speaker 2: relying on the Social Security retirement benefits as their income.

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Speaker 2: They if they have significant pensions, it will impact it

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Speaker 2: it's not simple, but it will benefit you know, most

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Speaker 2: older people who have. The greater your reliance on your

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Speaker 2: Social Security, the better the tax break would be. Is

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Speaker 2: that a quick way to describe it and accurately?

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Speaker 3: Pretty much? Yeah?

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Speaker 2: Okay.

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Speaker 3: I think you add any other income on top of

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Speaker 3: the social Security. So if you have three thousand dollars

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Speaker 3: of other income, half of that as well would pulling

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Speaker 3: social Security as taxable. So it's not just the thirty

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Speaker 3: sod security, it's the thirty three total against the twenty

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Speaker 3: four measure, and half of the excess would be the

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Speaker 3: portion of the Social security taxable.

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Speaker 2: Okay.

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Speaker 3: For Mary finally joined, the threshold is thirty six thousand.

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Speaker 2: Okay. What I want to do is I want to

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Speaker 2: take a break, and I wanted to get to tips

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Speaker 2: and SOB security, and i'd like to when we come back,

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Speaker 2: have you go through with us in a way that hopefully,

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Speaker 2: you know, people will be able to understand, because it's

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Speaker 2: always difficult to do numbers on night here on nightside

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Speaker 2: because there's nothing visibly.

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Speaker 3: The other one, yep, go ahead. The other one to

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Speaker 3: mention is the overtime exclusion.

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Speaker 2: Okay, they will start off with that because again I'd

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Speaker 2: like to try to talk to as many people in

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Speaker 2: blocks as possible in the meantime, If you would like

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Speaker 2: a clarification, or if you have a question of your

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Speaker 2: own taxes, this is your opportunity. This is free tax advice.

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Speaker 2: You can uh. You may be able to complete your

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Speaker 2: own taxes as a consequence of your conversation with my guest,

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Speaker 2: Mark Misselbeck. Mark has done this with us for many years.

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Speaker 2: As they say, I should go back and remember how many,

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Speaker 2: but it's at least ten, probably more. He gives us

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Speaker 2: his time. Some years we do it twice, but we

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Speaker 2: see we do it at least once. This might be

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Speaker 2: depending upon how busy and crazy things get. Your only

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Speaker 2: time you need to call if you have a question,

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Speaker 2: because there's no guarantee that I will anticipate your questions.

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Speaker 2: Six one, seven, two, five, four ten thirty six one seven, nine, three,

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Speaker 2: one ten thirty. My name is Dan Ray, and this

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Speaker 2: is Nightside. And again I know we're going into a

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Speaker 2: cold weather we again where people are going to be

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Speaker 2: able to spend some time indoors. You're not going to

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Speaker 2: be out mowing the lawn this weekend, so this might

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Speaker 2: be a good weekend to start to pull together all

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Speaker 2: of your your your statements that you've received, whether the

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Speaker 2: bank statements, W two forms or whatever. And we'll talk

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Speaker 2: about that a little bit as well. But again this

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Speaker 2: is your opportunity dial away. Coming back on Nightside with

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Speaker 2: Mark Missilbeck.

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Speaker 1: It's night Side with Dan Ray on w Boston's News Radio.

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Speaker 2: My guest is Mark Missilebeck, CPA of many decades. He

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Speaker 2: knows taxes like no one I know. And we're talking

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Speaker 2: about twenty twenty six. Let me have to since we

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Speaker 2: did start with again some questions that dealt with broad

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Speaker 2: broad groups, let's let's focus down what what should people

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Speaker 2: be doing? And I alluded to it before we went

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Speaker 2: to the break this this weekend or next weekend, on

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Speaker 2: the weekend after that, whether they're doing the taxes themselves

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Speaker 2: or they're going to a tax preparer, get your stuff

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Speaker 2: into a into a into a file. I guess it

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Speaker 2: would be my great advice. I do it every year.

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Speaker 2: How much does that save people in terms of preparation

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Speaker 2: as opposed to just walking into your CPA's office or

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Speaker 2: into a tax preparer and just say, well, here's my

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Speaker 2: stuff in a box. Can you figure it out for me?

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Speaker 3: Well, we we typically charge by the time it takes

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Speaker 3: us to do the work. So the more organized and

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Speaker 3: set your numbers are for us to just plug in

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Speaker 3: where we need to put them, the easier and the

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Speaker 3: less costly it is to get the return done.

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Speaker 2: What about the tax changes, and this is not a

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Speaker 2: political question, but what from the point of view a

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Speaker 2: tax what are the two or three best developments And

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Speaker 2: are there a couple of things that are going to

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Speaker 2: bite people a little bit more sharply, or are all

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Speaker 2: the changes intended to try to reduce taxes on individuals.

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Speaker 3: There's probably a few that will bite, but it's more

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Speaker 3: favorable than unfavorable in the whole scheme of things. The

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Speaker 3: last round they kept real estate income and automobile taxes

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Speaker 3: that no more than ten thousand dollars a year plus

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Speaker 3: your mortgage interest if you have a mortgage that qualifies.

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Speaker 3: There's an overall limit on the amount you can borrow

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Speaker 3: and take an interest deduction for in buying your home,

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Speaker 3: depending upon when you took out the mortgage, and a

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Speaker 3: lot of people as against getting just the standard deduction,

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Speaker 3: stopped itemizing. Now the threshold the limitation of ceiling on

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Speaker 3: tax deductions was moved from ten to forty thousand. Provide

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Speaker 3: your income is under fifty or six five hundred or

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Speaker 3: six hundred thousand dollars, so a lot more people will

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Speaker 3: be able to itemize taking into account, particularly a mess

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Speaker 3: chooses between property and income taxes plus their mortgage interest

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Speaker 3: and then any charitable donations. On top of that, medical expenses,

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Speaker 3: you have to have paid out of pocket more than

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Speaker 3: seven and a half percent of the income you're seeking

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Speaker 3: to deduct the items against. That typically undercuts a lot

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Speaker 3: of the medical expense that people might have unless it's

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Speaker 3: a very serious illness.

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Speaker 2: Yeah, comes back to that salt tax. Salt deduction. The

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Speaker 2: bill that the Republicans along with President Trump passed back

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Speaker 2: during his first term was really crafted in a way,

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Speaker 2: in my opinion, to hurt some of the Democratic states

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Speaker 2: where cost of real estate and real estate taxes are

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Speaker 2: way over that amount of ten thousand dollars, and in

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Speaker 2: other parts of the country there's different state tax rates

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Speaker 2: and there's different state formula. Would you agree with me

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Speaker 2: that that was really devised by the Trump administration that

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Speaker 2: was intended to hurt as states like New York, Massachusetts, California,

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Speaker 2: New Jersey. Just from a mathematical point of view as

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Speaker 2: opposed to states like Wyoming in Kansas and North Dakota

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Speaker 2: and South Dakota.

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Speaker 3: And it's certainly in a point of argument. I'm not

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Speaker 3: going to get political on it. The end result is

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Speaker 3: that those states that put a heavy burden on their

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Speaker 3: populace will tend to get less money back from Washington

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Speaker 3: for their populace because of the ceiling of ten thousand dollars.

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Speaker 3: Now that's been relaxed, as I say, for the next

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Speaker 3: few years, back up to a cap of forty thousands

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Speaker 3: or four times what the number was. Provided you are

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Speaker 3: not in the true upper reaches of income generation.

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Speaker 2: Right, A lot of these benefits go away the more

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Speaker 2: money that you make, which is understandable, and that is

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Speaker 2: what you would always expect Congress to do. We're talking

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Speaker 2: with Mark Misselbeck, a CPA of great experience, has been

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Speaker 2: a guest on our program now for I'm going to

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Speaker 2: guess probably twelve years. I got to go back and

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Speaker 2: check that for us. Mark, he's not here necessarily looking

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Speaker 2: for clients. That's not what his role is here. He's

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Speaker 2: doing this really as a public service, and I appreciate

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Speaker 2: it immensely and I hope all of you do as well.

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Speaker 2: So I'm going to remind you that if you'd like

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Speaker 2: to ask a question, even if it's a question about

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Speaker 2: your own circumstances, he can apply. He's not going to

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Speaker 2: do the math for you and tell you what your

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Speaker 2: your rebate or your refund might be, but he can

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Speaker 2: give you some information and some guidance as to what

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Speaker 2: you should be concerned about. As they say, I think

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Speaker 2: everyone is always well advised to pull your documents together,

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Speaker 2: get some paper clips, and take your W two's and

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Speaker 2: put there and them in one file so and put

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Speaker 2: them inside a Manila folder. And when you hand them

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Speaker 2: to your tax prepare again, whether it's someone down the

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Speaker 2: block or whether it's someone in downtown Boston. How the

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Speaker 2: more organized you are, the less time they will have

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Speaker 2: to spend trying to figure out exactly what you're saying.

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Speaker 2: The other benefit is if you continue to go back

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Speaker 2: to the same person who prepared your taxes for years

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Speaker 2: and years and years, as long as they're doing a

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Speaker 2: good job, they have a familiarity with your tax situation,

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Speaker 2: which is going to save you some money and save

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Speaker 2: you some time. Those are things that I believe and

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Speaker 2: I assume Mark you would share those those general, very general,

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Speaker 2: a non mathematical suggestions.

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Speaker 3: Well, yeah, and if you have a change in circumstance

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Speaker 3: during the year, communicate let us know and by a

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Speaker 3: change across it in your materials. We can't plan or

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Speaker 3: help you try and minimize taxes or anticipate what the

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Speaker 3: impact is on your taxes. You've done the deal when

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Speaker 3: you walk in the door and dump it on us

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Speaker 3: with a surprise number, and all we can do is

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Speaker 3: factor it in and give you the good or bad news,

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Speaker 3: depending upon what the circumstances are.

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Speaker 2: Right, when you talk about circumstances, whether you got married,

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Speaker 2: whether you got divorced, had children, all of that, or

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Speaker 2: had some extreme stock. Yeah, well, of course that gets

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Speaker 2: into can gains as well, And we haven't even touched

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Speaker 2: upon that, but we will six one, seven, two, five,

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Speaker 2: four ten thirty six one seven, nine, three, one ten thirty.

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Speaker 2: Your questions or again, your questions are going to come

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Speaker 2: out of your circumstances. Don't miss this opportunity. I got

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Speaker 2: some wide open lines and I'd love to have you

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Speaker 2: join the conversation and ask whatever question you want. As

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Speaker 2: I have often said, the only dumb question is the

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Speaker 2: question that you're not courageous enough to ask. I learned

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Speaker 2: that in law school many years ago, because the questions

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Speaker 2: that I didn't drill down on in class, those were

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Speaker 2: the fine points that were in the exams. They just said, gee,

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Speaker 2: I wish I had asked the professor about that. We

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Speaker 2: have a professor of taxation with a CPA Mark Missileback.

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Speaker 2: Take advantage of the opportunity six one, seven, two, five,

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Speaker 2: four to ten thirty six one seven, nine three one

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Speaker 2: ten thirty be right back on night side.

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Speaker 1: It's night Sign with Dan Ray on WBS, Boston's news radio.

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Speaker 2: I guess the CPA Mark Missileback been with us several

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Speaker 2: years now. Appreciate the time and of course the expertise.

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Speaker 2: You can ask the questions, he'll give you the answers.

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Speaker 2: There's just a lot to the twenty twenty six so

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Speaker 2: called one big beautiful tax bill. Overall, I think most

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Speaker 2: people will probably do a little better this year. The

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Speaker 2: other thing which I want to mention, I want to

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Speaker 2: go to phone calls Mark. But I also want people

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Speaker 2: to understand that if they are in a bind, and

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Speaker 2: they're getting towards April fifteenth, everyone can file for an extension.

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Speaker 2: If they have some documents that haven't been sent to

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Speaker 2: them on time, that extension will be granted, but they

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Speaker 2: have to make sure that they also pay approximately what

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Speaker 2: they would owe if they were filing on April fifteenth

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Speaker 2: when they filed it. When they finally file their extension

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Speaker 2: later in the summer or in the fall.

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Speaker 3: Right, Yeah, the time for the additional time is permitted

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Speaker 3: to gallow the information and nailed it. Nail it down,

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Speaker 3: but you need to make a reasonable effort to determine

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Speaker 3: what the exact amount you owe is and should you

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Speaker 3: be off the mark by too great a degree, the

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Speaker 3: IRS will say you didn't make that effort and you're

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Speaker 3: not entitled to the extension, at which point the late

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Speaker 3: filing and lake payment penalties would kick in at five

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Speaker 3: percent for lake filing or half percent per month for

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Speaker 3: five months on the balance too.

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Speaker 2: Yeah, So so be a if you're going to do that,

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Speaker 2: make sure you do it in conjunction with a tax professional.

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Speaker 2: Let me go to Vinnie and Maine. Vinnie, Welcome to Nightside,

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Speaker 2: your first tonight with Mark Misselbeck. What is the question

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Speaker 2: or comment that you'd like to make Vinie Welcome to Nightside.

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Speaker 4: Hey, how you doing, Mark, I have a quick question

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Speaker 4: for you. I don't know if you heard anything about

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Speaker 4: what jerks like myself who have to pay child support

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Speaker 4: if they can automatically claim them on as a deduction

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Speaker 4: versus the other person having them in the decree. I

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Speaker 4: wonder if that was overridden this year.

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Speaker 3: Do you know anything about that style? Support has never

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Speaker 3: been a deductive item, only the alimony element, and that

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Speaker 3: has gone away now several years.

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Speaker 4: Okay, so alimony is not an issue in my particular case.

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Speaker 4: But so there's nothing about child support. I can't because

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Speaker 4: every time I claim I do my taxes or I

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Speaker 4: have you know, a taxman do it for me. He

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Speaker 4: shakes his head as to why I didn't claim or

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Speaker 4: try to claim one of my twins as you know,

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Speaker 4: as a tax deduction.

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Speaker 3: So that's usually that usually is required by the agreement

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Speaker 3: between the former spouses as to who is entitled to

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Speaker 3: claim either or both of the or however many there

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Speaker 3: are children, it would require support and that they reside

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Speaker 3: with you or the other person would have to sign

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Speaker 3: an agreement to concede the claiming of the child as

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Speaker 3: a dependent. Now there are no longer any dependency deductions

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Speaker 3: you're parkening back to the prior tax law before Trump

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Speaker 3: won changes were put into effect. So they all, right,

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Speaker 3: that's not an issue any longer.

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Speaker 2: So Mark, break it down for me and for others

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Speaker 2: who might be listening. What was the law previously of

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Speaker 2: any How many children do you and your wife did?

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Speaker 2: Are you talking about two?

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Speaker 4: Did you say, Okay, yeah, I have I have my

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Speaker 4: boys exactly half the time, exactly half the time.

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Speaker 2: Literally, I mean literally six months to the day with

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Speaker 2: you in six months to the year they stay with

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Speaker 2: your former wife.

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Speaker 4: Right, I have them. I have them every week Sunday, Monday, Tuesday,

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Speaker 4: taking the school Wednesday morning.

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Speaker 2: Okay, So fifty fifty split?

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Speaker 4: And is fifty fifty split?

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Speaker 2: And I think, Mark, you if we can drill down

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Speaker 2: here just a little bit for him, unless there's something

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Speaker 2: in the do you have a final divorce degree in

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Speaker 2: all of that from your former wife? Yes, you're divorced. Okay,

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Speaker 2: so is that what? What? What what document Vinnie should

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Speaker 2: look at to see if there was some understanding as

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Speaker 2: to what percentage your child support could be could be

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Speaker 2: deducted by either of the couple.

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Speaker 3: Is that what I understand?

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Speaker 2: There?

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Speaker 3: There is no there has not and never has been

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Speaker 3: a deduction for child support.

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Speaker 2: Okay.

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Speaker 3: The only time there was a deduction was for alimony,

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Speaker 3: and that was before the twenty seventeen taxac change. Ok So,

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Speaker 3: now some or change material changes to an existing alimony

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Speaker 3: decree would scotch the alimony deduction even before. So if

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Speaker 3: you had an alimony agreement in place, there were technical

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Speaker 3: requirements that had to be met for the alimony to

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Speaker 3: in fact be counted as a deductible alimony amount.

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Speaker 4: All right, So there's still no positive outcome for me

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Speaker 4: to be able to claim child support because that's there

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Speaker 4: just isn't any Okay, so I still got no respect.

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Speaker 2: Well, you need to talk to you members of Congress,

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Speaker 2: and the next time they changed the federal tax law,

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Speaker 2: incorporate something in that regard. So, just so I can

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Speaker 2: understand mikeself, if he had had an alimony agreement with

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Speaker 2: his wife prior to the first tax change, would that

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Speaker 2: have survived the tax change over that tax change engine

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Speaker 2: twenty seventeen or twenty eighteen have wiped out the whatever

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Speaker 2: alimony deduction.

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Speaker 3: Call ahead if it were deductible under the prior law

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Speaker 3: and was not materially changed subsequent to the adoption of

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Speaker 3: the new tax provisions, then it would survive as a

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Speaker 3: deductible item.

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Speaker 2: Do you do you have that as a deduction Vinny, No,

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Speaker 2: I don't pay alimony, so you're okay. So if you

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Speaker 2: don't pay alimony, you can't deduct anything. And as Mark

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Speaker 2: has made pretty clear, you got all the answers here.

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Speaker 2: They weren't the answers you wanted, but you got the

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Speaker 2: honest answers. And I think that's of some value to you. Vinny,

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Speaker 2: appreciate you call it and getting us going.

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Speaker 4: Thank you so much, have a great night, take care

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Speaker 4: and go Pats, Go Patriots.

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Speaker 2: That's the most important thing. Maybe. I think getting your

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Speaker 2: taxes filed and getting every dollar that you have a

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Speaker 2: right to get back is the most important. Let me

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Speaker 2: go to Emily in Woburn. Emily, you're on with Mark Misselbeck.

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Speaker 2: Right ahead.

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Speaker 5: Hi, thank you for taking my call. Mark. I'd like

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Speaker 5: to know if the donor of an irrevocable trust is

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Speaker 5: the recipient of all of the income generated from the trust,

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Speaker 5: which basically is a piece of real estate and is

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Speaker 5: rental income. That's the only thing that's in the trust.

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Speaker 5: And let's say the donor makes a capital improvement, like

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Speaker 5: one that she can't just expense because it's it's considered

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Speaker 5: something that you have to like normally.

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Speaker 3: Depreciate.

439
00:27:50,160 --> 00:27:55,119
Speaker 5: I mean, can a donor get depreciation on a capital improvement.

440
00:27:58,960 --> 00:28:02,800
Speaker 3: Trust. It all depends on the nature of the trust

441
00:28:02,840 --> 00:28:06,439
Speaker 3: and the terms of the trust. A trust can be

442
00:28:06,520 --> 00:28:12,040
Speaker 3: irrevocable and get the property out of your estate, but

443
00:28:12,320 --> 00:28:14,640
Speaker 3: the terms can be such that the income is still

444
00:28:14,720 --> 00:28:19,359
Speaker 3: taxable to the donor. If that's the case, you would

445
00:28:19,359 --> 00:28:26,280
Speaker 3: get the income and the associated deductions. On the other hand,

446
00:28:27,520 --> 00:28:30,239
Speaker 3: if the terms of the trust make it such that

447
00:28:30,320 --> 00:28:33,440
Speaker 3: it is what is known as perfected both for income

448
00:28:33,520 --> 00:28:37,280
Speaker 3: and estate purposes. The income is out of your return

449
00:28:37,520 --> 00:28:40,960
Speaker 3: and the property is out of your estate, then the

450
00:28:40,960 --> 00:28:44,120
Speaker 3: trust would pay tax unless the on the income and

451
00:28:44,160 --> 00:28:47,520
Speaker 3: take the deductions, and an addition such as you're talking

452
00:28:47,520 --> 00:28:50,480
Speaker 3: about as a capital improvement would be another gift to

453
00:28:50,520 --> 00:28:56,440
Speaker 3: the trust. In fact, if it's perfected for a state purposes,

454
00:28:56,480 --> 00:28:58,960
Speaker 3: it will be a gift to the trust or the

455
00:28:59,000 --> 00:29:02,880
Speaker 3: beneficiaries of the trust if the terms permit you to

456
00:29:03,040 --> 00:29:08,200
Speaker 3: count that for annual exclusion purposes. The annual exclusion is

457
00:29:08,360 --> 00:29:12,800
Speaker 3: currently eighteen thousand dollars, rising possibly to nineteen thousand. This year,

458
00:29:12,840 --> 00:29:16,880
Speaker 3: I haven't checked on it lately. I'm still working with

459
00:29:17,000 --> 00:29:19,800
Speaker 3: last year's and reporting gifts from last year.

460
00:29:20,920 --> 00:29:22,840
Speaker 2: So, Emily, do you do you want to try to

461
00:29:22,880 --> 00:29:25,880
Speaker 2: just walk knowing now what Mark has told you? Do

462
00:29:25,920 --> 00:29:29,160
Speaker 2: you want to try to just walk through the set

463
00:29:29,160 --> 00:29:34,120
Speaker 2: of circumstances and let Mark jump in if you're not

464
00:29:34,240 --> 00:29:35,240
Speaker 2: clear on what he said.

465
00:29:37,560 --> 00:29:41,720
Speaker 5: Yes, I'm not clear on it, so just take it

466
00:29:41,720 --> 00:29:48,040
Speaker 5: a step at a time. Yeah. To my knowledge, what

467
00:29:49,520 --> 00:29:52,960
Speaker 5: the attorney has said that the trust did not even

468
00:29:53,160 --> 00:30:01,400
Speaker 5: have to the rent didn't have to go directly to

469
00:30:01,520 --> 00:30:06,080
Speaker 5: the trust. It's set up in the in the irrevocable trust,

470
00:30:06,200 --> 00:30:10,400
Speaker 5: that the rent goes directly to the donor, to the

471
00:30:10,440 --> 00:30:12,760
Speaker 5: donor just for purposes?

472
00:30:13,120 --> 00:30:17,440
Speaker 2: Is the dot? Emily? Is the donor your your former husband?

473
00:30:19,800 --> 00:30:21,400
Speaker 5: No, the donor is myself.

474
00:30:22,080 --> 00:30:24,880
Speaker 2: Okay, so we're talking about you, So therefore you should

475
00:30:24,880 --> 00:30:27,760
Speaker 2: Now it's set up. So you're telling Mark that you

476
00:30:27,880 --> 00:30:31,400
Speaker 2: set up an irrevocable trust for a piece of property.

477
00:30:31,560 --> 00:30:34,240
Speaker 2: Who's going to be the ultimate beneficiaries if it's an

478
00:30:34,280 --> 00:30:35,920
Speaker 2: irrevocable trust, your children?

479
00:30:37,560 --> 00:30:37,800
Speaker 3: Yes?

480
00:30:38,160 --> 00:30:42,640
Speaker 2: Okay, So in the meantime, while you're still alive, the

481
00:30:43,440 --> 00:30:47,480
Speaker 2: rental benefit goes to you.

482
00:30:49,040 --> 00:30:53,040
Speaker 5: I understand that that all of the rental goes to me. Okay,

483
00:30:53,080 --> 00:30:55,560
Speaker 5: so then that I have to claim it on my

484
00:30:55,680 --> 00:31:00,880
Speaker 5: income taxes, and I also can subtract any expenses because

485
00:31:00,880 --> 00:31:04,520
Speaker 5: I'm also it's also written out in the in the

486
00:31:04,600 --> 00:31:08,880
Speaker 5: trust that I am responsible for all of the expenses,

487
00:31:08,960 --> 00:31:12,000
Speaker 5: but I am also getting all of the inst So

488
00:31:12,080 --> 00:31:15,240
Speaker 5: I want to know, like there's a difference between an

489
00:31:15,280 --> 00:31:20,280
Speaker 5: expense and a large capital improvement, because if you do

490
00:31:20,440 --> 00:31:26,320
Speaker 5: something like a big item, he pays the driveway, you

491
00:31:26,480 --> 00:31:30,840
Speaker 5: have to well, no, that's that might be considered make.

492
00:31:30,720 --> 00:31:33,800
Speaker 3: I'm giving that as an example of a major expenditure

493
00:31:34,200 --> 00:31:35,560
Speaker 3: that would have to be capitalized.

494
00:31:35,880 --> 00:31:40,400
Speaker 5: Oh okay, all right, all right, So let's say let's

495
00:31:40,440 --> 00:31:42,760
Speaker 5: say a driveway, let's say a crust two thousand.

496
00:31:42,920 --> 00:31:46,520
Speaker 3: You have to you would have to depreciate that over

497
00:31:46,800 --> 00:31:51,200
Speaker 3: fifteen years, but you would get the deduction of the

498
00:31:51,280 --> 00:31:57,760
Speaker 3: depreciation because the depreciation is itself an expense against the property. Okay,

499
00:31:57,960 --> 00:31:59,960
Speaker 3: you have what is what is in the in the

500
00:32:00,080 --> 00:32:05,480
Speaker 3: to trade a grand for trust. Even though it's Arabical,

501
00:32:05,560 --> 00:32:10,640
Speaker 3: you can't change the terms, but it's crafted in the

502
00:32:10,720 --> 00:32:14,520
Speaker 3: language by the attorney, so that you are still responsible

503
00:32:14,560 --> 00:32:16,600
Speaker 3: for reporting and paying tax on the income.

504
00:32:18,520 --> 00:32:23,040
Speaker 5: Yes, but your question, Emily, what us have to do

505
00:32:23,120 --> 00:32:25,200
Speaker 5: with depreciation and not expenses.

506
00:32:25,240 --> 00:32:29,880
Speaker 3: But depreciation would still be yours to offset the income.

507
00:32:31,040 --> 00:32:37,040
Speaker 5: Okay, so you can still have depreciation, yes, ma'am. Okay,

508
00:32:37,160 --> 00:32:39,320
Speaker 5: thank you very much. A great my question.

509
00:32:39,400 --> 00:32:42,840
Speaker 2: Ok thank you very much. But take a very quick break.

510
00:32:43,240 --> 00:32:46,080
Speaker 2: That's it again, folks. When you do ask your questions,

511
00:32:46,080 --> 00:32:49,520
Speaker 2: feel free to be very specific, uh and and clear

512
00:32:50,120 --> 00:32:53,160
Speaker 2: so that Mark can imply six one seven, two five

513
00:32:53,200 --> 00:32:56,920
Speaker 2: four ten thirty six one seven nine back with more

514
00:32:56,960 --> 00:32:59,960
Speaker 2: phone calls from my guest, Mark missileback. He's a CPA,

515
00:33:00,160 --> 00:33:03,719
Speaker 2: been doing it for a long time. There's no one

516
00:33:03,800 --> 00:33:06,880
Speaker 2: who I know who is more up to date on this,

517
00:33:07,000 --> 00:33:09,880
Speaker 2: and I genuinely appreciate the fact that he will take

518
00:33:09,920 --> 00:33:12,160
Speaker 2: the time to talk to my listener, to our listeners

519
00:33:12,200 --> 00:33:18,400
Speaker 2: tonight and answered their questions. So we were talking big

520
00:33:18,440 --> 00:33:21,480
Speaker 2: policy initially. Now we're getting down to questions from callers.

521
00:33:21,960 --> 00:33:23,600
Speaker 2: You have the numbers, all you got to do is

522
00:33:23,680 --> 00:33:25,080
Speaker 2: dial coming back on night Side.

523
00:33:25,920 --> 00:33:30,840
Speaker 1: You're on night Side with Dan Ray on Boston's news radio.

524
00:33:31,680 --> 00:33:33,560
Speaker 2: Mark, just a real quick follow up question, on that

525
00:33:33,640 --> 00:33:39,520
Speaker 2: last call, How is it determined what is an investment

526
00:33:40,640 --> 00:33:43,600
Speaker 2: and what is an expense? It would seem to me

527
00:33:43,680 --> 00:33:46,160
Speaker 2: that if you were going to, let's say, build a

528
00:33:46,200 --> 00:33:49,000
Speaker 2: structure on a property, that would clearly be an investment,

529
00:33:49,440 --> 00:33:52,920
Speaker 2: where I would think that a driveway, if the driveway

530
00:33:52,960 --> 00:33:55,719
Speaker 2: had deteriorate it and you were you were, you know,

531
00:33:56,000 --> 00:33:58,760
Speaker 2: replacing the driveway, I would look at that as a

532
00:33:58,800 --> 00:34:02,160
Speaker 2: deductible expense. How is that determined? Is that determined in

533
00:34:02,200 --> 00:34:02,600
Speaker 2: the code?

534
00:34:04,280 --> 00:34:08,879
Speaker 3: Howmination it's more interpretive than determined by the tax law

535
00:34:08,960 --> 00:34:12,520
Speaker 3: itself the statue. If it's if it's something that will

536
00:34:12,560 --> 00:34:15,520
Speaker 3: have a benefit for a number of years in the future,

537
00:34:16,320 --> 00:34:19,080
Speaker 3: typically it's going to have to be a capital improvement.

538
00:34:19,719 --> 00:34:23,279
Speaker 3: If it's more in the nature of a repair rather

539
00:34:23,360 --> 00:34:25,760
Speaker 3: than a replacement, then it would be an expense.

540
00:34:26,280 --> 00:34:26,600
Speaker 2: Okay.

541
00:34:26,760 --> 00:34:29,719
Speaker 3: So if if that's a roof, it's a it's typically

542
00:34:29,719 --> 00:34:32,719
Speaker 3: a deduction. But if you replaced the entire roof with

543
00:34:32,840 --> 00:34:36,760
Speaker 3: a brand new roof, then it's a capital improvement, okay.

544
00:34:36,840 --> 00:34:39,560
Speaker 2: And so a driveway it would be because I just

545
00:34:39,800 --> 00:34:42,960
Speaker 2: it struck me odd that a driveway would be considered

546
00:34:43,400 --> 00:34:46,000
Speaker 2: uh an investment as opposed to an expense. But we'll

547
00:34:46,040 --> 00:34:48,520
Speaker 2: just let that one go. Let's get back to the phone.

548
00:34:48,520 --> 00:34:50,719
Speaker 2: It's going to go to Zach in Medford. Zach, want

549
00:34:50,719 --> 00:34:52,799
Speaker 2: to get you in here before the ten o'clock news.

550
00:34:52,840 --> 00:34:54,040
Speaker 2: You're on with Mark Misselbeck.

551
00:34:54,040 --> 00:34:57,080
Speaker 4: Go ahead, Zach, Hi Dan, How you doing doing great?

552
00:34:57,160 --> 00:34:57,959
Speaker 2: Say hello to Mark?

553
00:34:58,760 --> 00:35:01,919
Speaker 6: Hey marky Dan? Quick question.

554
00:35:01,960 --> 00:35:02,319
Speaker 4: I'm Mark.

555
00:35:03,320 --> 00:35:08,200
Speaker 6: I have a my son is in Suffolk, and I

556
00:35:08,239 --> 00:35:13,279
Speaker 6: was told about the ten ninety eight form that we

557
00:35:13,480 --> 00:35:16,640
Speaker 6: have to submit if we pay out of pocket for

558
00:35:16,920 --> 00:35:19,440
Speaker 6: college kids. Can you kind of like explain little to

559
00:35:19,480 --> 00:35:21,640
Speaker 6: me about this form because I'm ready to find my

560
00:35:21,680 --> 00:35:25,080
Speaker 6: taxes and if you know anything about it. The ten

561
00:35:25,160 --> 00:35:26,080
Speaker 6: ninety eight.

562
00:35:28,640 --> 00:35:31,600
Speaker 3: The ten ninety eight reports the tuition that was paid

563
00:35:32,239 --> 00:35:37,920
Speaker 3: that is available or qualifies to attempt to claim a

564
00:35:38,040 --> 00:35:43,439
Speaker 3: credit for the education of the person involved, depending upon

565
00:35:43,719 --> 00:35:48,000
Speaker 3: who is paid the tuition. And again, as with the

566
00:35:48,040 --> 00:35:50,560
Speaker 3: benefit that Congress gives you with one hand, they will

567
00:35:50,600 --> 00:35:52,680
Speaker 3: take away with another. If your income is too high,

568
00:35:52,760 --> 00:35:55,440
Speaker 3: you won't get the credit at all.

569
00:35:55,560 --> 00:36:00,279
Speaker 6: So he had some nots like a Deaness scholarship, but

570
00:36:00,640 --> 00:36:02,000
Speaker 6: we're still paying out of pocket.

571
00:36:04,320 --> 00:36:07,399
Speaker 3: Roughly tuition would be reduced by the scholarship amount. Which

572
00:36:07,400 --> 00:36:11,120
Speaker 3: would also be reported on the ten ninety eight. So

573
00:36:11,239 --> 00:36:15,919
Speaker 3: how much yours your gross tuition minus the scholarship will

574
00:36:15,960 --> 00:36:19,879
Speaker 3: be qualified education expenses. And then you can go through

575
00:36:19,920 --> 00:36:23,920
Speaker 3: the machinations of calculating what credit you may be entitled

576
00:36:23,960 --> 00:36:27,480
Speaker 3: to based on that number and your income level.

577
00:36:28,360 --> 00:36:33,600
Speaker 6: Okay, yeah, almost month out of bucket.

578
00:36:34,080 --> 00:36:35,960
Speaker 2: Okay, So over the course of the year, how much

579
00:36:36,000 --> 00:36:36,359
Speaker 2: do you pay?

580
00:36:36,440 --> 00:36:44,040
Speaker 6: Roughly, No, about maybe twelve twelve thousand dollars?

581
00:36:44,120 --> 00:36:45,440
Speaker 2: What's your what's your gross.

582
00:36:45,200 --> 00:36:48,520
Speaker 6: Income under one fifty?

583
00:36:49,400 --> 00:36:54,359
Speaker 2: Okay? Can you give him any guidance with those rough numbers?

584
00:36:54,800 --> 00:36:58,360
Speaker 3: Mark not, not offhand. We rely too much on the

585
00:36:58,360 --> 00:37:00,360
Speaker 3: computer programs. We plug in the number is and it

586
00:37:00,400 --> 00:37:02,879
Speaker 3: spits it out in you. You take a quick look

587
00:37:02,880 --> 00:37:05,040
Speaker 3: to see if it makes sense. It's capped at a

588
00:37:05,160 --> 00:37:10,200
Speaker 3: I think two thousand dollars credit on the Lifetime Learning

589
00:37:10,880 --> 00:37:14,880
Speaker 3: Credit okay the first couple of years, the first No,

590
00:37:14,960 --> 00:37:17,279
Speaker 3: they expanded it the last round to four years, where

591
00:37:17,280 --> 00:37:20,319
Speaker 3: it was limited to two previously. So you've got to

592
00:37:20,560 --> 00:37:24,160
Speaker 3: look it up for the Lifetime Learning Credit or the

593
00:37:24,840 --> 00:37:28,880
Speaker 3: I figure what the designation is. But that tuition will

594
00:37:29,120 --> 00:37:32,600
Speaker 3: potentially generate a credit that will cover some of your tax.

595
00:37:33,320 --> 00:37:35,560
Speaker 2: So let me ask you this sack, do you prepare

596
00:37:35,560 --> 00:37:37,560
Speaker 2: your own taxes or do you have them prepared?

597
00:37:38,320 --> 00:37:38,400
Speaker 5: No?

598
00:37:38,560 --> 00:37:41,160
Speaker 4: I have an accountant, a local one, and that.

599
00:37:43,840 --> 00:37:47,480
Speaker 6: Yeah, we attain this from the college or is this

600
00:37:47,560 --> 00:37:50,759
Speaker 6: a form that we can obtain at the accountant And

601
00:37:50,800 --> 00:37:51,520
Speaker 6: he will do that.

602
00:37:51,440 --> 00:37:54,440
Speaker 3: For us if you give him the ten ninety eight.

603
00:37:54,680 --> 00:37:58,200
Speaker 3: He'll plug it into his tax program and will determine

604
00:37:58,200 --> 00:38:00,879
Speaker 3: whether or not on your income level much and whether

605
00:38:00,960 --> 00:38:02,719
Speaker 3: or not you get any credit at all for it.

606
00:38:02,960 --> 00:38:07,120
Speaker 2: And if you haven't received that that form from from

607
00:38:07,120 --> 00:38:09,600
Speaker 2: the from the university of the college you said is

608
00:38:09,640 --> 00:38:12,480
Speaker 2: going to you want to call them uh and uh

609
00:38:12,560 --> 00:38:14,120
Speaker 2: and make sure that they send it out to you

610
00:38:14,320 --> 00:38:16,680
Speaker 2: uh and then you can present it to make But.

611
00:38:16,719 --> 00:38:18,520
Speaker 3: Man, if you got it in an earlier year and

612
00:38:18,560 --> 00:38:22,239
Speaker 3: didn't give it to your preparer, dig out the earlier year,

613
00:38:22,480 --> 00:38:25,000
Speaker 3: because you have three years to amend your return to

614
00:38:25,080 --> 00:38:28,879
Speaker 3: claim and a missed item. Yeah, I have three years

615
00:38:28,880 --> 00:38:29,840
Speaker 3: from the data filing.

616
00:38:30,640 --> 00:38:33,759
Speaker 6: Yeah, so it's been last year, I mean twenty four

617
00:38:34,440 --> 00:38:36,120
Speaker 6: and twenty five, So I I.

618
00:38:36,800 --> 00:38:37,359
Speaker 3: Will do that.

619
00:38:37,400 --> 00:38:40,080
Speaker 4: But thank you so much for bringing that very informative program.

620
00:38:40,160 --> 00:38:42,200
Speaker 3: Thank you, Thank you Mark. You guys are wonderful.

621
00:38:42,280 --> 00:38:44,200
Speaker 2: Thank you very much, Zach. We're going to stick with

622
00:38:44,360 --> 00:38:48,680
Speaker 2: Mark Misselbeck into the next hour. You decide how far

623
00:38:48,760 --> 00:38:51,160
Speaker 2: we go. Six one, seven, two, five, four, ten thirty

624
00:38:51,640 --> 00:38:55,800
Speaker 2: six one seven, nine three one ten thirty. Feel free.

625
00:38:56,000 --> 00:39:00,760
Speaker 2: This is an opportunity. Don't don't fail to take advantage

626
00:39:00,760 --> 00:39:03,080
Speaker 2: of the opportunity. Back on Nightside right after the ten

627
00:39:03,120 --> 00:39:03,680
Speaker 2: o'clock news,