22 THE QUEENS COURIER • OCTOBER 31, 2019 FOR BREAKING NEWS VISIT WWW.QNS.COM
TAX TIPS
Various
Tax Questions
BY JOHN SAVIGNANO, CPA
Will Congress revive the tax extenders?
Odds are dimming that the batch of breaks that expired after 2017
will be retroactively revived. But hope remains. The best bet is for
some or all of them to be bundled with other pending items in a
package for lawmakers to vote on near year-end.
I want to help my grandchild pay for college. Do I get a tax
break if I use savings bonds?
No, unless you can claim your grandchild as a dependent on your
1040. Generally, interest on savings bonds must be reported as
income on the tax return in the year the instruments mature or
when they are redeemed, whichever is earlier. Interest on EE and I
bonds used for education may be tax-free if certain rules are met.
The bonds must have been purchased by the taxpayer after 1989
and redeemed to pay for tuition and fees for college or graduate
school for the taxpayer, spouse or dependent. The exclusion is
subject to income limits. For 2019, it phases out for couples with
modified adjusted gross income over $121,600…$81,100 for
singles. The tax break ends when modified AGI hits $151,600 and
$96,100, respectively.
Is it true that indexing capital gains for inflation is off the
table?
Yes, for now. Despite the efforts of a key White House economic
adviser, a group of GOP Senators and conservative free-market
lobbying groups to push President Trump to act on this, he recently
quashed capital gains indexing as elitist, after weeks of yo-yoing on
the idea. But that doesn’t mean the concept is dead. It would not
come as a surprise to us if talks resurface about the ability of the
White House to issue an executive order or regulations allowing
capital gains indexing. Such a move would be controversial.
Will the $10,000 cap on state and local tax (SALT) deductions
be lifted?
It’s unlikely. A group of Democrats on the House Ways & Means
Com. wants to repeal or relax the $10,000 limit. Most of the support
for this proposal comes from lawmakers from high-tax states, such
as N.Y., N.J., Conn. and Calif. Even if the House passes the relief,
it’s a nonstarter in the GOP-controlled Senate.
I’m pondering donating an annuity contract I own to charity.
Any tax issues?
You’re generally treated as receiving taxable income equal to the
difference between the annuity’s cash surrender value and your
investment in the contract. Say you have a small variable annuity in
which you invested $10,000 years ago, and it’s now worth $17,000.
If you donate it to charity, you’ll have to report $7,000 of
appreciation as additional income on your tax return in the year of
transfer. If you’re able to itemize on Schedule A, you also get a
charitable write-off equal to the value of the annuity in most cases.
But with higher standard deductions and cutbacks to itemizations
under the tax reform law, far fewer people itemize. And you’ll owe
the 10% penalty on early payouts if you donate before 59½.
John Savignano is a partner with Savignano Accountants &
Advisors located at 47-46 Vernon Blvd., Second Floor, in Long Island
City. If you have any questions or require additional information,
please call John at 718-707-0955.
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