Tax Season is Scam Season

As the tax season begins and you start receiving your tax documents in the mail, scammers also start to call or send emails and letters to unsuspecting individuals attempting to obtain banking and personal information.

The IRS has provided information about what to be aware of if you receive a call from someone purporting to be from the IRS.  Many times these "scammers" state that you owe taxes and demand immediate payment.  

The IRS will never:

• Call demanding immediate payment. The IRS won't call taxpayers if they owe taxes without first sending a bill in the mail.
• Demand payment without allowing taxpayers to question or appeal the amount owed.
• Demand that taxpayers pay their taxes in a specific way, such as with a prepaid debit or gift card.
• Ask for credit or debit card numbers over the phone.
• Threaten to contact local police or similar agencies to arrest taxpayers for non-payment of taxes.
• Threaten legal action, such as a lawsuit.

Also be aware of phishing scams that come via email.  Many emails may have links that look like official IRS websites but they instead are created to capture your personal information. 

You can forward suspicious emails to the IRS or contact the Treasury Inspector General if you suspect you have been scammed. 

If you have questions regarding tax or estate planning, please feel free to contact Glick and Trostin, LLC at 312-346-8258.

Disclaimer: The materials on this website are provided for informational purposes only and do not constitute legal advice. Transmission of the information is not intended to create, and receipt does not constitute, an attorney-client relationship between any attorney and any other person, group or entity. No representations or warranties whatsoever, express or implied are given as to the accuracy or applicability of the information contained herein. No one should rely upon the information contained herein as constituting legal advice. The information may be modified or rendered incorrect by future legislative or judicial developments and may not be applicable to any individual reader's facts and circumstances.

Illinois Tax Break on Certain Dividends

If you are an Illinois resident, you may be permitted to subtract certain dividends from specific Illinois companies. Under Illinois law, dividends you receive from a corporation that conducts business in a foreign trade zone and is designated a “High Impact Business” are eligible for the subtraction modification from Illinois base income.

Over the past few years, I have had a number of clients with stock ownership who received dividends from companies that qualify for the dividend subtraction in Illinois.  Depending on the total dividend distribution, this subtraction can be a sizable reduction in Illinois State Income Taxes, especially for shareholders who may have received stock through their employment with the company.

I am currently aware of the following 4 companies that have published letters to their shareholders notifying them of the potential dividend subtraction for Illinois that have current letters online for 2018.

Abbott Laboratories (Tax year 2018 letter)

AbbVie Inc. (Tax year 2018 letter)

Caterpillar Inc (Tax year 2018 letter)

Walgreens Boots Alliance, Inc. (Tax year 2018 letter)

There may be other qualifying companies in Illinois although it is best to receive a letter from the company if you decide to utilize the dividend subtraction on your income tax return.  If you believe you have received dividends from a qualifying company in the past 3 years, you may want to determine if filing an amended Illinois Income Tax Return is worthwhile.

If you have any questions about tax and estate planning, please feel free to contact Glick and Trostin, LLC at 312-346-8258.

Disclaimer: The materials on this website are provided for informational purposes only and do not constitute legal advice.  Transmission of the information is not intended to create, and receipt does not constitute, an attorney-client relationship between any attorney and any other person, group or entity. No representations or warranties whatsoever, express or implied are given as to the accuracy or applicability of the information contained herein.  No one should rely upon the information contained herein as constituting legal advice.  The information may be modified or rendered incorrect by future legislative or judicial developments and may not be applicable to any individual reader's facts and circumstances.

Does Your Company have a Roth 401k Option?

Over the past decade, more and more employers are offering a Roth option with their employee 401k plan.  This might not be publicized as many individuals tend to look at the tax deduction of contributing to a Traditional 401k plan.  But with tax rates at historical lows, it might be beneficial to contribute a portion of your 401k contribution to a Roth 401k and pay the tax on that contribution now.

The difference between a Traditional 401k and a Roth 401k is similar to the differences between an IRA and a Roth IRA, it comes down to when the tax is paid.  

A Traditional 401k allows you to take a portion of your income and contribute to your retirement plan, this contribution is tax-free and reduces your taxable income that is reported at the end of the year.   The Traditional 401k funds then grow tax-free over the course of time and when you withdraw funds during retirement, you then pay tax on those distributions. 

The Roth 401k is taxable income during the year that you contribute to a retirement plan.  Once in the Roth 401k, the funds grow tax-free and when you reach retirement you can withdraw the funds without any tax consequence. 

If your company has a 401k match program, that matching contribution would go into the Traditional 401k even if you contribute 100% into a Roth 401k.  What is nice is you can decide what percentage you wish to contribute to each as many opt for a 50/50 split between the Roth and Traditional 401k contribution.

Nobody has a crystal ball as to what tax rates will be in 5 years much less when you retire, although rates will likely increase and depending on your income level, you may pay a higher tax in retirement than you do now.  Having a mixture of Roth and Traditional 401k funds in your retirement nest can also be beneficial as you can withdraw funds from a Roth without triggering a large tax for purchases in retirement such as a vehicle or vacation.

If you have questions regarding tax or estate planning, please feel free to contact Glick and Trostin, LLC at 312-346-8258.

Disclaimer: The materials on this website are provided for informational purposes only and do not constitute legal advice. Transmission of the information is not intended to create, and receipt does not constitute, an attorney-client relationship between any attorney and any other person, group or entity. No representations or warranties whatsoever, express or implied are given as to the accuracy or applicability of the information contained herein. No one should rely upon the information contained herein as constituting legal advice. The information may be modified or rendered incorrect by future legislative or judicial developments and may not be applicable to any individual reader's facts and circumstances.