Idea of the Week



Basis in Cooperative


Co-op owners get an additional tax break. Along with an annual deduction for real estate taxes and interest paid on the mortgage on their co-ops, owners also receive an increase in their tax basis for their share of payments that reduce the principal of the building’s mortgage. A portion of your monthly maintenance payments consists of your share of the amortization of the underlying mortgage. The total of your contributions towards the reduction of the mortgage is added to the tax basis of the co-op which reduces your capital gain upon a sale.


United States Postal Service Informed Delivery


What is Informed Delivery®?

Informed Delivery is a free and optional notification service that gives residential consumers the ability to digitally preview their letter-sized mail pieces and manage their packages scheduled to arrive soon. Informed Delivery makes mail more convenient by allowing users to view what is coming to their mailbox whenever, wherever – even while traveling – on a computer, tablet or mobile device. To automate the sortation and delivery of mail, the United States Postal Service® (USPS) digitally images the front of letter-sized mail pieces that run through automation equipment. USPS is now using those images to provide digital notifications to users in advance of the delivery of physical mail. Informed Delivery benefits the entire household, ensuring that everyone has visibility into mail and package delivery each day. Informed Delivery allows users to take action before important items reach their mailbox, while offering mailers an unprecedented opportunity to engage users through synchronized direct mail and digital marketing campaigns


Roth 401(K)


Traditional 401(k) plans can add a “Roth” feature for employee contributions with tax effects very much like those of a Roth IRA. This feature allows a 401(k) plan to permit an employee who makes elective plan contributions to designate some or all of those contributions as Roth contributions. Unlike a traditional 401(k), which allows participants to invest pre-tax dollars but pay taxes at withdrawal, a Roth 401(k) holds after-tax dollars and requires no tax payment at withdrawal.

The Roth contribution feature operates similarly to the way in which employees currently make contributions to the company's 401(k) plan. The primary difference is employees participating in a Roth 401(k) must irrevocably designate a portion of their plan contribution as a Roth contribution and the company must treat this portion of the contribution as wages included in income and subject to applicable withholding requirements. The separate accounting requirement applies beginning when designated Roth contributions are invested in the plan and continues until the employee's designated Roth contribution account is completely distributed.

Each individual employee's situation—their investments, their post-retirement income, and the state of future tax laws—varies and will determine if a traditional 401(k) or a Roth 401(k) would ultimately benefit them more. Giving them the opportunity to invest in both plans helps them maximize their investments.


Online Tax Payment


Making tax payments directly to the IRS, New York, New Jersey and Connecticut is now available. Taxpayer’s can pay their tax liability as well as their estimated tax payments from their checking or savings account without any fees through a secure online website. In addition, credit card or debit cards can be used for a fee.

No username or password is needed to make payments with the IRS, New Jersey or Connecticut.

Below are the websites to make the tax payments:

IRS’s website is

New York’s website is

New Jersey’s website is

Connecticut’s website is


Unclaimed Funds


Banks, insurance companies, corporations and the courts are among the many organizations required by law to report dormant accounts to the State Comptroller. These organizations must attempt to notify you by mail and publish the information in newspapers. Despite these efforts, many funds remain unclaimed and are turned over to the Office of the State Comptroller. There is no statute of limitation for almost all unclaimed funds and property owners or their heirs can claim the property.

Types of Unclaimed Funds Accounts

•Bank Accounts – savings, checking and CDs

•Court Funds


•Estate Proceeds

•Insurance Benefits/Policies

•Stocks, Bonds, Mutual Funds

•Telephone/Utility/Security Deposits

New York State has $15.5 billion in unclaimed money

= More than 39 million account records remain unclaimed

= Every day we return over $1.5 million

= A New York State resident received $5.2 million from a stock claim

= Largest amount still unclaimed is approximately $8 million for an estate

New York State Unclaimed Funds website

New Jersey Unclaimed Funds website

Other Places to Search for Unclaimed Funds

A list of all State unclaimed property programs from the United States:

Federal Unclaimed Funds:


Gift Tax Exclusion for Education or Medical Payments


An unlimited gift tax exclusion is available for any amount paid on behalf of an individual as tuition to a qualifying educational organization for that individual's education. The exclusion is limited to tuition and does not include books, supplies, dormitory fees, board, or similar expenses which do not constitute direct tuition costs.

The exclusion is not limited to college tuition. Private school tuition for primary or secondary schools is also eligible for the exclusion. In some cases, tuition to pre-primary schools may also qualify, if the school is considered an educational institution rather than simply a day care provider.

The tuition payment must be made directly to the educational institution to enable qualification for the tuition exclusion. This payment cannot be made to the student to reimburse them for costs they have paid from other sources.

In some situations, the prepayment of tuition for several years is possible, and we can further advise you about this possibility. This would necessitate some discussion with the financial officials at the university.

A similar unlimited gift tax exclusion applies to medical expenses or premiums paid directly to the medical provider. The gift tax exclusion uses the same definition for “medical expenses” as the income tax definition. To be eligible for the exclusion, you must make the payments directly to the medical provider.

Please contact me if you have further questions.


65 Day Election for Estates and Complex Trusts


Trustees and executors can elect, under Section 663(b) of the Internal Revenue Code, to treat certain distributions made within 65 days after the end of the tax year as if they had been made at the end of the previous tax year. For a 2018 calendar tax year, this 65-day period extends through March 6, 2019. The 65-day rule provides an especially significant tax-reduction opportunity. If the 65-day election is made, distributions made by March 6, 2019 are considered to have been made on December 31, 2018 . For 2018, the highest tax rate will apply to trusts / estates with income in excess of $12,500, while for a single individual the highest tax rate will not apply until income exceeds $500,000.



Your Rights to Your Free Annual Credit Reports


Federal law requires each of the three nationwide consumer credit reporting companies - Equifax, Experian and TransUnion - to give you a free credit report every 12 months if you ask for it. They also make it easy to accomplish many credit-related tasks right from your computer. is the official site to get your free annual credit reports. This right is guaranteed by Federal law. You can verify this is the official site by visiting the CFPB's website.

  • Don't be fooled by look-alike sites. You can be sure that you are on the right site if you type in your browser address line. Don't come to this site by clicking on a link in another site or in an email.

  • This site is maintained by Central Source, LLC. Central Source, LLC is sponsored by Equifax, Experian and TransUnion so you have a single site where you can ask for all three of your free credit reports.

Free credit freezes

Security freezes, also known as credit freezes, restrict access to your credit file, making it harder for identity thieves to open new accounts in your name. Starting September 21, 2018, you can freeze and unfreeze your credit file for free. You also can get a free freeze for your children who are under 16. And if you are someone’s guardian, conservator or have a valid power of attorney, you can get a free freeze for that person, too.

How will these freezes work? Contact all three of the nationwide credit reporting agencies –EquifaxExperian, and TransUnion. If you request a freeze online or by phone, the agency must place the freeze within one business day. If you request a lift of the freeze, the agency must lift it within one hour. If you make your request by mail, the agency must place or lift the freeze within three business days after it gets your request. You also can lift the freeze temporarily without a fee.

Don’t confuse freezes with locks. They work in a similar way, but locks may have monthly fees. If you want a free freeze guaranteed by federal law, then opt for a freeze, not a lock.


IRS First Time Abatement (FTA)


You may qualify for administrative relief from penalties for failing to file a tax return, pay on time, and/or to deposit taxes when due under the Service's First Time Penalty Abatement policy if the following are true:

  • You didn’t previously have to file a return or you have no penalties for the 3 tax years prior to the tax year in which you received a penalty.

  • You filed all currently required returns or filed an extension of time to file.

  • You have paid, or arranged to pay, any tax due.

1. IRS provides administrative relief from the following penalties if the qualifying criteria are met:

  1. Failure to file (FTF) penalty under IRC 6651(a)(1), IRC 6698(a)(1), or IRC 6699(a)(1),

  2. Failure to pay (FTP) penalty under IRC 6651(a)(2) and/or IRC 6651(a)(3), and

  3. Failure to deposit (FTD) penalty under IRC 6656.

Penalty relief under the FTA waiver does not apply to the following:

  • Returns with an event-based filing requirement, generally returns filed once or infrequently such as Form 706, U.S. Estate Tax Return, and Form 709, United States Gift Tax Return.

  • The daily delinquency penalty (DDP), see e.g., IRC 6652(c)(2)(A) and IRM 20.1.8, Employee Plans and Exempt Organization Penalties.


Medicare Part B


Medicare Part B covers services like doctors’ services, outpatient care. You can sign up for Part B either 3 months before or 3 months after turning 65. In most cases, if you don’t sign up for Part B when you’re first eligible, you’ll have to pay a late enrollment penalty for as long as you have Part B. The penalty is about 1% of the premium for each month that you late in obtaining coverage.

Here is the Trap. Some people make the mistake and do not sign up for Part B because they have COBRA benefits. However, if you are 65 or older and do not have Part B, you will still be subject to the late penalty when you sign up for Part B because having COBRA benefits is not a valid reason for not signing up for Part B.

The rules for Medicare are complex and care should be used when deciding when and which plans to choose.


What Tax Records to Keep and For How Long


When organizing your files, please remember these general rules concerning your records:

• Income Tax Returns and Related Items: Keep all federal and state income tax returns and supporting documents (i.e., those items confirming your income and/or deductions) for a minimum of three years after the return's filing date. The more prudent route is to keep these returns and documents for six years. Why? The IRS can assess additional taxes within three years of its filing date, but has up to six years in which to make a tax assessment if the IRS determines that a substantial amount of income has been omitted from the return.

• Mailing Receipts: Keep with your file copy of each tax return the U.S. Postal Service receipt — i.e., the registered mail receipt —showing the date the return was mailed. In the event the return is misplaced or lost, this documentation will save you from penalties.

• Residential Property Records: Keep settlement records from all of your home purchases and sales in a safe place. This will help you determine basis for any future sale and gain determination. In addition, keep records of the amounts that you spend for home improvements with this file. These records will supplement other documentation you have showing your basis in the house if and when it comes time to compute your taxable gain.

• Stock and Bond Records: Keep records of your investment purchases (e.g., stock, mutual funds, and bonds) that show the purchase price, sales price, and commissions. Besides providing you with a date for determining the type of gain — long term versus short term — these records establish your basis in the investment and help to compute the gain/loss when you sell. In addition, keep records that show a return of capital on your investments.

• Depreciation Records: For any rental real estate or depreciable business property that you own, keep records of the property's cost, the purchase date, the method used to calculate depreciation, and a schedule of all depreciation claimed on the property in previous years. Maintain these records until you sell or dispose of the property. Once you sell the property, keep these records with the tax return on which you report the sale.

• Personal Records: Keep a permanent file of personal records — such as divorce agreements, copies of estate and gift tax returns under which you received property, etc. - - since they can provide a basis for determining your tax liability when you dispose of the property.

• Other Records: There are other situations in which you will benefit from keeping records. For example, if you have made nondeductible contributions to an IRA or Roth IRA, maintaining records of these contributions will facilitate proving your tax liability when funds are withdrawn from the IRA.