copyright 2021 Timothy E. Kelly Attorney at Lawcopyright 20 Timothy E. Kelly Attorney at Law

 

*|MC:SUBJECT|*
View this email in your browser
YOUR DECEMBER 2021 TAX NEWSLETTER
Tim Kelly Will Have Stockton, Phone & Electronic Appointments Available to All Clients of the Firm. There will be no Roseville appointments in 2022.
Kevin Rego is Again Limiting Tax Preparation to Electronic Appointments

WARNING!! Identity Theft & Exchanging Documents with Our Clients
Another Year With Our Secure Client Portal - SmartVault
Alimony Changes Under the New Tax Law in Action

Tim's practice in Estates and Trust Taxation
There will be a substantial increase in our fees in 2022.
We Help with Serious Tax Debt Problems
IRS Announces Increase in Elective Deferrals for 2022
A Quick Primer on Changes to the Mortgage Interest Deduction

Highlights and Changes for Our Practice for 2019

  • Certified Tax Specialist Attorney Tim Kelly will be conducting business with office appointments in Stockton all during tax season, as well as conferences by telephone. Tim will also continue to offer electronic tax return preparation through use of the firm's secure client portal, called Smartvault. Any Client of Tim Kelly & Associates who still wants a face-to-face conference, or to communicate by phone is welcome to make an office or phone appointment with Tim. Make a Stockton office appointment here, schedule a phone conference here or Register for an electronic appointment with Tim Kelly here.
  • We will not move forward with any engagement until we have been provided with all required information. 
  •   Beginning December 1, 2021 we will require payment of a deposit in advance      of making an appointment. Note this is not full payment of our fee in the event you have any added charges or services. It is only a deposit. We will expect full payment of all fees prior to delivery of a final product.
  • Certified Tax Specialist Attorney Kevin Rego will again only be available for electronic completion of tax returns through the use of our secure client portal, Smartvault. Read more. and then click here to register for electronic completion of your tax returns with Kevin Rego.
  • We have raised our fees substantially for 2022. For many years our fees have lagged behind those of, for example, national large chains. When a taxpayer visits one of these chain outlets they are frequently met by a courteous employee  who works only seasonally and receives only the basic training offered by the company they work for. We know this because so many clients have chosen to leave our firm for these less expensive preparers before returning to us in a subsequent year.
  • "You get what you pay for!" We have come to the realization that although we love our clients, many of them are thrifty and are looking for discounted services, which we do not provide.         We hold the highest credentials that exist in the world of taxation law. Our firm has the ability to litigate in any federal court, up to and including the Supreme Court of the United States. Because we must remain current in our ability to actively litigate, the much stricter requirements at this level means our training and experience far exceed that of most other tax preparers.
  •   
    A UNIQUE OFFER TO OUR CLIENTS

    Our firm now has the ability to see into the future and almost always predict an upcoming IRS audit long before a taxpayer receives a notice. We charge $199 for this service which may be added at the time clients pay their deposit for an appointment. In order to use this service we will require an enrolled client to execute a power of attorney form. 

    This service is only for the IRS. We have no means of determining a state-originated audit is pending. But where there is an IRS audit, in almost all cases the federal government will notify the state tax authorities who will start an audit of there own.

    Being given advance notice of an audit raises the opportunity to make a correction with a minimum of cost. Most of the time penalties may be avoided both at the federal  and state level. This will leave the taxpayer to pay only actual tax they may owe (such as in the case of a forgotten W-2, for example) and the inevitable interest.
  • Except where you are just waiting for tax documents to arrive in the mail, and for office appointments only, we will be charging additional fees for unprepared clients who require extra follow-up time because they did not follow our appointment instructions and were unprepared as a result. In the past, this lack of readiness has caused delays for other clients who were prepared. Read more
  • Do not send us anything by US Postal Service (mail) as we will accept no responsibility for its safe delivery. We are flat-out telling you not to mail anything because of the high risk of identity theft from stolen mail, a risk you must completely assume, especially since we offer our secure client portal. Do not use DropBox, Google Drive or unencrypted email, either. Do not use overnight delivery in the belief this will ensure security. Our office is rarely staffed.   Read more
  • Our tax preparation services remain focused on law enforcement, medical professionals and educational professionals. Read more about the impact of the TCJA passed back in 2017 on   these professions here.
  • Access our checklists and use them. If you do not organize your information along the lines of these checklists we may reject the documents and information you send us.- Click here
  • Although we welcome friends and family of our clients, we ask that they contact us first to ensure we are able to provide the types of levels of service they require, and that we provide. Our primary business is tax representation, including litigation. Although we appreciate referrals of friends and family members, we will make appropriate referrals to seek the advice of a CPA or Enrolled Agent where appropriate, such as with businesses that have numerous employees, run a storefront or other such operations.    .
  • Tim Kelly handles the taxation of trusts and estates. We will work with the attorney who is administering your trust or estate to ensure tax compliance, especially in light of the fact that a trustee or personal representative may be held personally liable if taxes are not paid first from a trust or estate. Read more
  • Tim's law practice also includes international tax issues, taxation of settlements and awards, Innocent Spouse cases, family law taxation (divorce and support), taxation of law enforcement labor unions, audits and appeals, and litigation both in the US Tax Court and US District courts. Consultation in these area requires separate fee agreements.   Read more
  • Tim and Kevin are Certified as Specialists in Taxation Law by the Board of Legal Specialization of the State Bar of California.

 
Here is a brief video explaining how to register for and use Smartvault
REGISTER FOR AN APPOINTMENT NOW
ACCESS OUR CHECKLISTS

PUBLIC SAFETY

EDUCATIONAL PROFESSIONALS

MEDICAL PROFESSIONALS
 
GENERAL CHECKLIST

SMALL BUSINESS

RENTALS

FORECLOSURE & SHORT SALES
A Quick Primer on the Changes to the Mortgage Interest Deduction
 
Quite a few clients have emailed very concerned about their mortgage interest deduction after the new tax law changes that went into effect this year.  So here is the good news and bad news about the changes.

The good news: Mortgage interest is still deductible.
The bad news: It might not matter to you.  Based on the increase in the standard deduction, it might be better to forgo the itemized deductions on Schedule A and take the standard deduction instead.  We do both calculations on your individual tax return and take the deduction which provides the greatest deduction.
The good news: Mortgage interest is still deductible
The bad news: For loans taken out after 12/22/17, the top loan amount allowed for deductible interest falls from $1 million to $750,000.  Thus, if your loan balance after that date exceeds $750,000, the amount of interest attributable to the loan balance above that amount is non-deductible interest—it is lost.

The good news: The interest on some HELOC, second mortgages or “cash out” refinancing of first loans is still deductible.
The bad news: Not all interest on these types loans are deductible. The Tax Cuts and Jobs Act of 2017, enacted Dec. 22, suspends from 2019 until 2026 the deduction for interest paid on home equity loans and lines of credit, unless they are used to buy, build or substantially improve the taxpayer’s home that secures the loan.  What does that mean?  That means that ANY interest that you pay on non-qualified residential loans is not deductible - and this is "retroactive" back to the purchase of your home.

For example:  you purchased your home in 2012 with a first mortgage loan balance of $350,000.  Two years later, in 2014, your home appreciated in value and you took out a home equity line of credit (HELOC) in the amount of $50,000.  You used $25,000 to remodel your master bathroom and you used $25,000 to pay off credit card bills.  The effect of the new law:
  1. The interest on your first mortgage remains deductible
  2. The interest on $25,000 of your HELOC is deductible because you used it to substantially improve your home that secures the loan (remodel bathroom)
  3. The interest on the remaining $25,000 of your HELOC is not deductible because you used the money to pay off credit cards, no to buy/build/substantially improve your home.
Therefore, when you get your FORM 1098 (mortgage interest paid) from your HELOC Loan, you would have to be prepared to allocate interest between the deductible and non-deductible portions.

Back to top

Back to top
IRS Announces Increase in Elective Deferrals for 2022
 
For 2022, the contribution limit for employees who participate in most 401(k), 403(b), and 457 (b) plans has increased from $19,500 to $20,500. The additional catch-up contribution limit for employees aged 50 and over who participate in most 401(k), 403(b), and 457 (b) plans remains unchanged at $6,000.
We continue to strongly encourage our client’s participation in deferred compensation plans offered through your employers.  We often get these questions: 

“How much should I contribute to get the best tax benefit?”
 Our answer: As much as you can!

“What’s the best ‘tax shelter’ for us?”
Our answer: Contribute the maximum to your deferred retirement plan, be it a 457, 401(k) or 403(b) plan.

Of course, we answer those questions generally as your tax adviser.  Each client is different and you should always consult your financial adviser to get specific recommendations based on your individual investment goals and circumstances.  All deferred compensation administrators offer financial counseling and advice as part of their investment programs.  Many do site visits to your workplace.  Take advantage of these visits to make a cost-free appointment, get an investment “checkup”, and ensure you are meeting your investment goals in preparing for a comfortable retirement.

Back to top
Copyright © *|CURRENT_YEAR|* *Tim Kelly & Associates*, All rights reserved.

Our mailing address is:
lynn@timkelly.com

Want to change how you receive these emails?
You can update your preferences or unsubscribe from this list.