All Forum Posts by: Benjamin Weinhart

Hi Jhamari, I specialize in Ohio taxation (as I live here). Ohio locality can be different depending on which locality we're talking about as some tax based on income and others based on residence (I wouldn't be surprised if there was a 3rd factor as well in some niche cases). I believe both Columbus and CCA tax off of income so the income wouldn't be includable on the return where it's not present (100% apportionment to CCA).

It's very important to note that not all jurisdictions in Ohio tax at the local level and there's not a ton of rhyme or reason as to why outside of bigger localities being more likely to do it usually. A good amount of municipalities tax under either RITA or CCA to ease the burden on the taxpayer, but with many you have to file separately. Consider CCA as "Cleveland" and RITA as many other parts of the state if it helps.

Look up where a specific address falls under here: https://tax.ohio.gov/help-center/the-finder/the-finder (use the municipal tax button)

This is something I help my clients through all the time as it really is a case-by-case basis in many ways. Ohio also has a couple of other special rules such as the CAT tax and a funky bonus depreciation treatment. For these reasons, plus a few others, Ohio is the one state (some parts of KY and MI too) where I'd recommend speaking to a tax accountant specializing in the state. I have seen many tax returns where the local taxes were filed incorrectly in the past (or not at all) which caused undue penalties/interest for the taxpayer.

Quote from @Aus Smith:

Hey, 

To add to my fellow accountants, size does not matter. The first CPA I worked for told me that tax preparers who are unconfident would print every page generated by the tax software, to make a return look bigger even though it was bloated with unnecesaey supplemental sheets that provided little to no value. He called them stocking stuffers, because the client would file those pages away and never see them again.

You would not believe how large a small return would look like with these printing options.
Fun question. Thanks for providing me the opportunity to provide my perspective. Cheers! 

Austin L Smith, CPA

 Hi Austin, just adding my 2 cents. Of course, having 1 statement or 30 doesn't change things from an audit perspective. I like including the supplemental sheets to tax returns I create. I never do it with the intention of making a tax return longer and will, of course, remove unnecessary pages if they're truly useless. The main reason I do it is that if a client does move on to another tax pro next year, a lot of detail that they'd ask for can be found in those supplemental sheets. I suppose it's a lot easier for me to say/do this because I operate 100% electronically, but even if someone only looks at the sheet for a few seconds to answer a question, then I think it's worthwhile to include them. Or maybe the software(s) I've used don't really generate much fluff, haha.

Just my way of setting someone up to be the best prepared they can be, even if our relationship doesn't continue to the next year for whatever reason.

That being said though, I think there is a bit of a stigma when it comes to # of pages on a tax return and complexity. I think I could make a return 1,000+ pages if I really wanted to, for whatever reason, for a simple small business owner, and 90-95%+ of the return would be useless/unnecessary. I imagine some bad apples will do this and charge by the page rather than the complexity, but I'd like to think that the majority operate in good faith.

Hi Matthew, I'll echo what the others above have said and give my own spin on things. Yes I agree that you may be slightly too early from needing a CPA. There's some benefit with contacting a CPA now which is mostly just building the relationship and seeing if the two of you are a good fit. Ideally, the person you choose should be someone you stick with long-term to make things easier. Spending a few hundred now to get with someone to find that they won't be a good fit for you may save you a lot of headache down the line if you don't want to continue with them for whatever reason. (Could be process, communication, or a number of other things).

Now the thing I'll mention that you might want to chat with someone about is that many folks don't take the Sec. 121 exclusion into account for situations like yours. It's possible it might not be a big deal if you'll keep doing 1031 exchanges but I always want to mention it as the "what-if" scenario if you get what I mean.

Quote from @Will Mejia:

Quote from @Benjamin Weinhart:

Depending on how everything is set up, what you consider a max for retirement account contributions may only be the 20k limit whereas you can go up to ~$70k in total with other methods. It sounds like you should've talked to a CPA before the sale to help you do a little tax planning, but a bit late for that unfortunately. Also those improvements you did may only be able to be depreciated over time instead of all during this year depending on how much each one was and what they were.

As for the cash portion, keep it in savings for now, I always use 50% as a good conservative estimate when not knowing many factors about someone. That's 50% of the gain by the way, not the sales price. For the other portion, invest how you see fit really.

You can try accelerating some purchases that you would normally do next year to be this year, but there's not a ton outside of the normal stuff. (Don't buy stuff just for the sake of lowering your tax bill, it's not worth it)

 HI Basit,

When you say "
You can try accelerating some purchases that you would normally do next
year to be this year, but there's not a ton outside of the normal stuff" you mean stuff for my remaining rental property right? Like a fridge etc?

Yeah pretty much, if you had improvements to make in properties, that can help offset the gain as well as prepaying for things such as insurance or property tax. Could also be things like a new laptop if the laptop is used exclusively to conduct business on your rental properties (make the laptop or other assets $2,500 or less to avoid depreciation over multiple years).

Quote from @Michael Plaks:

Quote from @Kory Reynolds:

For my clients real estate businesses they pay between $4,000 and $650k purely for tax prep and tax consulting, 

Tell'm I can do it for $645k  ;) 

 I'd be happy to do it for $640k AND I'll personally fly both myself and the client (/client's family) to review their return together in-person...on an island in the Caribbean. ;)

Depending on how everything is set up, what you consider a max for retirement account contributions may only be the 20k limit whereas you can go up to ~$70k in total with other methods. It sounds like you should've talked to a CPA before the sale to help you do a little tax planning, but a bit late for that unfortunately. Also those improvements you did may only be able to be depreciated over time instead of all during this year depending on how much each one was and what they were.

As for the cash portion, keep it in savings for now, I always use 50% as a good conservative estimate when not knowing many factors about someone. That's 50% of the gain by the way, not the sales price. For the other portion, invest how you see fit really.

You can try accelerating some purchases that you would normally do next year to be this year, but there's not a ton outside of the normal stuff. (Don't buy stuff just for the sake of lowering your tax bill, it's not worth it)

It's possible that selling now if you're eligible for the 121 exclusion may be the best course of action to recognize tax-free gains. If you went the refinance route though, you may want to wait a little bit as the general consensus is that there will be a 25 basis point interest rate cut by the fed in September. (0.25%)

Quote from @Account Closed:

Again as @Michael Plaks mentioned this is not a political forum, there is a chance if the Republicans win there could be a tax cuts and jobs act 2. While I don't think you should speculate on politics, there is a chance bonus depreciation at 100% could come back in another form. 

 Not really political speculation on my part. I just can't see a world where there isn't some tax change that happens next year to at least make some of the more procedural items of the TCJA permanent + other changes. Regardless of who wins what.

At this point, I could easily see 100% bonus being codified on an ongoing basis as part of whatever the 2025 tax bill looks like to take effect for tax year 2026 after TCJA expires. It's an incredibly popular change, so I'd be surprised if we don't see it again.

As to the retroactive point, it's not happening. We are about a month away from the flow-through deadline and there's no way it can be applied as an automatic adjustment. For a majority of folks it would be designed to help, they've already filed their returns. We as accountants would likely reap a lot in fees from it similar to ERTC/PPP but there's nothing really pressing for it to get pushed through, unlike the pandemic for those programs.

Based on the prices that I charge for a similar return, assuming there were clean records provided and not a ton in the way of depreciable assets needing to be analyzed, then $3,000 is a bit much. I would fall much closer to your initial thought of $1,000 to $1,500. If there was a substantial amount of extra work needed, however, I could easily see how it could get up to $3,000 or even more.