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Posted on 11 September, 2020 at 11:35 Comments comments (8)


NM Tax & Rev

Posted on 11 December, 2018 at 14:32 Comments comments (1)

Important Reminders For Employers: 

New Mexico bases its withholding tax on an estimate of an employee’s income tax liability. Employers are required to report and pay withholding taxes to the New Mexico Taxation and Revenue Department (the Department) on their CRS-1 returns. 

Additionally, Annual statements of income and withholding (W-2’s and 1099’s) are required to be reported to the Department by the last day of February. Starting tax year 2019, the Department will be requiring electronic submittal of the annual withholding statements if you have more than 25 employees. The electronic submission will be due at the end of January. In preparation for this transition, the Department will be accepting electronic submissions starting January 5, 2019 for the 2018 tax year via the Taxpayer Access Point (TAP) https://tap.state.nm.us. 

The link below for the Department’s publication FYI-330, describes all the requirements, due dates and filing methods available. 


TAP Technical Assistance 
New Mexico Taxation & Revenue Department 

Online Banking Info....

Posted on 25 July, 2018 at 14:27 Comments comments (0)

I found this site to be of great assistance when deciphering the best banking options for clients and personal. 


Homeowner Tax Changes

Posted on 9 January, 2018 at 15:10 Comments comments (0)
Homeowner Tax Changes 
The new tax law that was signed into effect at the end of 2017 will affect all taxpayers. Homeowners should familiarize themselves with the areas that could affect them which may require some planning to maximize the benefits.
Some of the things that will affect most homeowners are the following:
  • Reduces the limit on deductible mortgage debt to $750,000 for loans made after 12/14/17. Existing loans of up to $1 million are grandfathered and are not subject to the new $750,000 cap.
  • Homeowners may refinance mortgage debts existing on 12/14/17 up to $1 million and still deduct the interest, so long as the new loan does not exceed the amount of the existing mortgage being refinanced.
  • Repeals the deduction for interest on home equity debt through 12/31/25 unless the proceeds are used to substantially improve the residence.
  • The standard deduction is now $12,000 for single individuals and $24,000 for joint returns. It is estimated that over 90% of taxpayers will elect to take the standard deduction.
  • Property taxes and other state and local taxes are limited to $10,000 as itemized deductions.
  • Moving expenses are repealed except for members of the Armed Forces.
  • Casualty losses are only allowed provided the loss is attributable to a presidentially-declared disaster.
The capital gains exclusion applying to principal residences remains unchanged. Single taxpayers are entitled to $250,000 and married taxpayers filing jointly up to $500,000 of capital gain for homes that they owned and occupied as principal residences for two out of the previous five years.
Not addressed in the new tax law, the Mortgage Forgiveness Relief Act of 2007 expired on 12/31/16. This temporary law limited exclusion of income for discharged home mortgage debt for principal homeowners who went through foreclosure, short sale or other mortgage forgiveness. Debt forgiven is considered income and even though the taxpayer may not be obligated for the debt, they would have to recognize the forgiven debt as income.
These changes could affect a taxpayers’ position and should be discussed with their tax advisor.


Posted on 9 November, 2017 at 14:19 Comments comments (0)


Posted on 9 November, 2017 at 14:10 Comments comments (0)

AICPA proposes new income tax form for S corps

Posted on 24 February, 2017 at 12:15 Comments comments (0)
The American Institute of CPAs is asking the Internal Revenue Service and the Treasury Department to develop a new income tax form to improve S corporation shareholder compliance with basis rules.

The AICPA sent a letter Tuesday proposing the form. It would be a required attachment to any income tax return filed by an S corporation and include items such as income, loss, deductions and credits. The goal would be to calculate the S corporation shareholder’s basis in the stock and debt of the S corporation correctly.

“Without accurate tracking of shareholder stock and debt basis, a taxpayer may not know whether he or she is entitled to deduct losses flowing from the S corporation or whether distributions and/or loan repayments from the S corporation to the shareholder are taxable or nontaxable,” wrote AICPA Tax Executive Committee chair Annette Nellen in the letter.
Without such a form, she noted, taxpayers can improperly claim losses and deductions in excess of basis. They may also fail to report as taxable gain distributions or loan repayments in excess of basis, or inaccurately report gains or losses on dispositions of S corporation stock.

“We believe that a significant contributing factor to S corporation shareholders claiming losses in excess of basis is that S corporation shareholders are not required to attach a form, to his or her income tax return, on which their basis in the S corporation is computed and the loss limitation rules are applied,” Nellen wrote, adding that the form would provide “shareholders and the IRS with the information necessary to properly determine the taxability of distributions and loan repayments made by the S corporation to its shareholders, gain or loss on stock dispositions, as well as the amount of losses and deductions that shareholders are allowed to take into account when computing taxable income for the year.”

Ivanka Trump is pushing her $500B child care tax credit plan on the Hill

Posted on 24 February, 2017 at 12:12 Comments comments (1)
(Bloomberg) Ivanka Trump has urged lawmakers writing a tax overhaul to include a deduction for child care expenses, but with a price tag of as much as $500 billion over a decade she may have trouble finding support in Congress.

Members of the House and Senate met with the president’s eldest daughter in the Roosevelt Room at the White House last week to discuss her proposed child care tax benefit, according to a person with knowledge of the meeting. President Donald Trump said earlier this month that he would soon propose a comprehensive tax overhaul, without offering any details.

Ivanka Trump’s involvement in tax negotiations between the White House and congressional Republicans is a signal of her influence with her father despite having no formal role in his administration. Dina Powell, the former Goldman Sachs Group Inc. executive who is an economic adviser to the president, is helping Trump to ensure a tax overhaul includes both the child care benefit and a requirement that employers provide paid maternity leave, policies that she pressed her father to embrace on the campaign trail last year.

"Ivanka is really pushing that none of it gets passed unless it includes the child care tax plan,” said Sheila Marcelo, founder of www.care.com, a website to find babysitters and other caregivers. "She and Dina Powell are really pushing to make sure it gets included."
Deng Lunch
In January, Ivanka Trump invited Marcelo to dinner at the home of Wendi Deng, the ex-wife of Twenty-First Century Fox Inc. co-Chairman Rupert Murdoch, to discuss her plans to focus on women’s empowerment during her father’s presidency. The dinner included top female executives, including International Business Machines Corp. Chief Executive Officer Ginni Rometty, Xerox Corp. Chairman and CEO Ursula Burns, and Deloitte CEO Cathy Engelbert.

It’s not clear whether Ivanka Trump is finding much appetite on Capitol Hill for her proposal. A deduction for child care expenses is both costly and regressive because it would favor wealthier families with two working parents. The deduction would cost the federal government $500 billion in revenue over a decade, according to an estimate by the Tax Foundation, a politically conservative, nonprofit research group.

"The child care proposal is generous and broad; almost everyone with young children will get some benefit from it. However, the largest benefits will go to relatively affluent dual-income families using paid child care," said Alan Cole, an economist with the Tax Foundation.
Lower Priority
Republican aides on the tax-writing House Ways & Means Committee have discussed a child care tax deduction with the Trump administration. The proposal is not a priority for House GOP leaders, who made no mention of child care in their tax-reform blueprint released in June 2016. The blueprint vows to eliminate "carve-outs and loopholes," describing them as unfair and market-distorting, in favor of a flatter and simpler code.
“We’ve had some preliminary and very productive discussions with the Trump transition team and their desire to make child care more affordable for families,” the committee’s chairman, Kevin Brady, told reporters earlier this month. "So we’re exploring a number of options. They’ve brought some ideas forward, and it’s early in those discussions, but we’re having them."

The cost of the plan is a problem for Republican congressional leaders, who are already struggling to win consensus in their party on revenue increases to offset trillions of dollars in proposed tax rate cuts. A tax overhaul that adds to the deficit would likely have to be temporary, to avoid a Democratic filibuster in the Senate.
Policy Surprise
In her July 2016 speech at the Republican convention, Ivanka Trump promised that her father would "focus on making quality child care affordable and accessible for all" if elected president. The remark was a surprise; Trump had made virtually no mention of the issue during the campaign. Soon, Trump said he was working on a child care plan, with his daughter’s input, and released it in September.

The plan Ivanka Trump is pushing is broadly similar to the outline Trump released in September, with his daughter at his side. It would allow individuals earning less than $250,000 a year, or couples earning less than $500,000, to deduct the cost of child care expenses from their income taxes. Lower-income families without tax liability would get a rebate for their expenses in the form of a larger earned income tax credit.
The September proposal said the cost of the child care deduction could "more than be offset" by additional economic growth.

Trump said his plan also would guarantee six weeks of paid maternity leave by amending the existing unemployment insurance system. The measure would only apply to employers that don’t already offer paid maternity leave.
The leave plan would be "completely self-financing" by reducing fraud in the unemployment insurance program, Trump said in September.

Trump’s opponent, Democrat Hillary Clinton, decried the child care deduction as a boon to wealthier households with nannies and insufficient to help working families. Marcelo echoed that concern, saying the plan in its current form doesn’t help families whose incomes are too low to pay taxes and thus don’t benefit from deductions.

"It actually doesn’t help make child care affordable for the vast majority of working families,” Marcelo said. She hasn’t given Ivanka Trump her feedback on the plan yet, she said.
— Sahil Kapur, Shannon Pettypiece and Stephanie Baker, with assistance from Lindsey Rupp
Bloomberg News

Goldman has grim prognosis for tax reform amid Obamacare debate

Posted on 24 February, 2017 at 12:07 Comments comments (0)
(Bloomberg) Investors counting on major U.S. tax reform in 2017 are going to be disappointed, according to Goldman Sachs Group Inc.

The problem is that lawmakers and Donald Trump’s administration are going to be so caught up figuring out how to repeal Obamacare that coming up with a new corporate tax system will get pushed to the side, economists at the bank led by Alec Phillips wrote in a note Wednesday.

“This process is likely to take longer than expected, which is likely to delay the upcoming debate over tax reform,” they said. “The difficulty the Republican majority is having addressing a key political priority suggests that lawmakers might ultimately need to scale back their ambitions in other areas as well, such as tax reform.”

Republicans disagree on a number of aspects of the repeal process, such as whether to scrap the Affordable Care Act first and pass a replacement later and how big the changes to health benefits should be. Goldman’s expectation is that legislation will be enacted in the second quarter that will probably modify tax credits for health-insurance coverage and increase the amount of flexibility that states have under Medicaid.

A delay to tax reform has been cited as a risk by other banks as well, which have warned it could spell trouble for a stock market that has priced in Trump’s pledges for a “phenomenal tax plan,” as well as scaled-back regulation and a boost in fiscal spending. Goldman itself says that the prospects of tax cuts have played a huge role in the 10 percent rally the S&P 500 Index has seen since Nov. 8, but that the risks are continuing to rise.

- Julie Verhage

    Bloomberg News

      Trump tax cuts could boost profit $12B at big U.S. banks

      Posted on 17 February, 2017 at 11:25 Comments comments (2)

      • (Bloomberg) The six largest U.S. banks could see annual profit jump by an average of 14 percent if President Donald Trump delivers on his promise to cut corporate taxes.The lenders, which stand to benefit more than other industries because they typically have fewer deductions, could save a combined $12 billion a year, according to data compiled by Bloomberg. 
      • Trump has called for cutting the corporate tax rate to 15 percent from 35 percent.While investors have focused on Trump’s campaign pledge to relax bank regulations, tax cuts could happen faster and their impact could be greater. The effective federal tax rate for the biggest banks averaged 28 percent for the three years ending in 2015, data compiled by Bloomberg show, twice the 14 percent rate paid by all large companies. Bank shares have rallied since the election, with the KBW Bank Index up 29 percent and Goldman Sachs Group Inc. hitting record highs this week.“Tax reform is difficult, but raising or cutting taxes is easy,” said Fred Cannon, head of research at Keefe, Bruyette & Woods. “A lower tax rate would be a boon for banks, more so than other sectors, because banks don’t get many of the deductions industrial or retail firms get and end up paying a higher effective rate.”
      • Bank BoonWells Fargo & Co.’s savings in 2015 would have been $3.8 billion had the tax rate been 15 percent and existing deductions were disallowed. The San Francisco-based bank is poised to reap the biggest benefit because its earnings are overwhelmingly in the U.S. and taxed at the 35 percent rate. The savings could boost Wells Fargo’s earnings by 16 percent. JPMorgan Chase & Co., the nation’s largest lender, would save about $3 billion a year and see net income go up by 14 percent.Citigroup Inc. would save less because more of its earnings are outside the U.S. Bank of America Corp. currently pays a lower effective tax rate in the U.S. and would benefit less if existing deductions no longer applied. Goldman Sachs and Morgan Stanley would see profit jump at rates similar to Wells Fargo and JPMorgan, even though the dollar amount of their savings is smaller. Spokesmen for all six banks declined to comment.While bank deregulation faces opposition from Democrats, who can block changes because Republicans lack the 60 Senate votes needed to pass most legislation, tax cuts can be done within the budget process, which requires only a simple majority. Trump said on Feb. 9 that he’ll be releasing a tax overhaul outline within weeks—an effort that’s said to be led by his chief economic adviser, former Goldman Sachs President Gary Cohn.Taxes have been high on lobbyists’ agendas as well. The Financial Services Roundtable, which brings together chief executive officers of the biggest banks, listed “fixing a broken tax system” on top of its 2017 wish list published last week. Leaders of the Securities Industry and Financial Markets Association talked more about potential tax reform than regulatory changes in its state-of-the-industry meeting in December.
      • House BlueprintTrump’s campaign pledge to lower corporate taxes goes further than a plan put forward by House Republicans last year that would cut the rate to 20 percent.Trump said last week that he was working with House Speaker Paul Ryan and Senate Majority Leader Mitch McConnell on potential tax measures. Ryan was an author of what’s known as the House blueprint, which also calls for eliminating companies’ ability to deduct the interest they pay on deposits and other debt. Although the House plan exempts financial firms, KBW’s Cannon says there’s a risk banks will be included if Republicans decide they need to raise revenue to counter other cuts to keep tax revenue neutral.Eliminating that deduction would hurt banks because their business model relies on borrowing from depositors and markets, and then lending to companies and consumers. The interest banks pay is typically one of their biggest costs, and disallowing that expense would inflate taxable income and threaten their ability to make money by lending.While the cost of borrowing has been low since 2008, interest expenses can be much higher. Banks incorporate net-interest income—interest earned on assets less interest paid on deposits and other debt—in their revenue calculations. Revenue would balloon if interest expenses were excluded from this calculation.“Without the interest-expense deduction, many mainstream banks would go out of business,” said Mark Roe, a professor at Harvard Law School. “They’d be paying tax on gross revenue, not profits.”
      • Too Disruptive’For that reason, it’s hard to imagine lawmakers eliminating the deduction, said Alan Cole, an economist at the Tax Foundation, a nonprofit organization analyzing tax policy.It “would be too disruptive,” he said.In 2006, JPMorgan’s income before taxes was $20 billion. If interest expenses were excluded, it would have almost tripled to $58 billion.Roe and others have argued that interest-expense deductions from taxes have wrongly encouraged public companies to rely more on debt than equity. While a company can deduct the interest it pays on its debt, it can’t deduct dividends paid to shareholders. In a June paper, Roe suggested eliminating that incentive to borrow by allowing banks to deduct their cost of equity as they do interest expenses.
      • Deferred TaxesFor some large banks, a rate cut would mean a one-time loss because of a reduction in the value of their deferred-tax assets. Those are benefits that build up because losses are recognized earlier in public company accounting than they can be in tax returns. Citigroup and Bank of America, which had the largest losses in the financial crisis, still have large amounts of such benefits that they can’t fully use in a lower tax-rate environment.Citigroup has estimated its hit would be about $12 billion. KBW’s estimate for Bank of America’s upfront loss is $4 billion, and about $1 billion each for Goldman Sachs and Morgan Stanley.While those writedowns could wipe out the potential benefit from a lower tax rate, the elimination of deferred-tax assets would bring reported profits for some banks closer to what analysts and investors already look at, according to KBW’s Cannon. They generally ignore the impact of deferred-tax assets on earnings, adjusting reported figures to understand the true nature of a firm’s profitability. Writedowns on deferred-tax assets would be considered cosmetic, while the benefit from lower tax bills will be seen as concrete and permanent.
      • - Yalman Onaran
      • Bloomberg News