All around the country, there are people in an absolute panic because the real tax deadline for personal tax return extension filers is approaching and they are running out of time.  A few blogs ago, we talked about how to possibly deal with not being ready for the corporate deadline on September 15th .  We don’t have an amusing anecdote for the October 15th deadline like we did for the corporate deadline.  The deadline is the deadline. The exception would be for those who have been affected by flooding or other natural disasters and may be given an extended deadline by the IRS.  Those people may now have until December 31st to file, but would need to check the IRS website to see if they are in an affected area[…]

If you have an S Corp based business then you are just a few days from your filing deadline.  You can’t extend the extension, so what if you’re still just not able to file?  What do you do?  Technically, you should be ready to file, so you’ll get no sympathy from Uncle Sam unless you fall under very rare special circumstances.  In a nationally declared disaster area, deployed in the military under certain special circumstances and a few other super rare groups.  Chances are very high that you don’t get more time, so what to do?  The penalty for not filing is substantial.  However, the penalty for making an error and having to amend later is zero.  S Corp returns give their[…]

With fall in the air, it’s time to start thinking about things that need to be done to prepare for winter.  The garden harvests are rolling in, fresh vegetables are everywhere and it’s really, really great.  Time to fill up your oil tanks before the price change, and at least know where those snow tires are in the back of the garage.  It’s also time for tax planning. There are so many things in the tax code that have time limitations.  It’s really time to check in with yourself if you want to actually participate in your bill with the IRS.  Taxes can be very much within people’s control, even though they don’t feel that way.  If you’re still out on extension, heads up — you[…]

When people save for retirement they almost automatically use accounts that avoid tax now.  IRAs, 401(k)s, 403(b)s, 457s, all pretax retirement savings plans.  Certainly, long term savings uninterrupted by withdrawals and the effect of compounding interest on interest earned is unarguably valuable, but doing that in pretax accounts is NOT the only way to have that happen!  Non-qualified annuity and Roth IRAs allow the same mechanics of compounding to happen, and in retirement both can be as valuable depending on the circumstances and actions of the retiree.   Annuities are underappreciated as a tax planning tool, because of the way earnings are treated as ordinary income upon withdrawal.  However if annuitized at retirement (an option the advisors that distribute them[…]

We use the term “Tax Planning” often, but we are aware that many people are not sure what it really is.  Some people think “That means off shore accounts and citizenship shell games ending with jail time.  No thank you!”.  That is not tax planning, that’s tax evasion, and it’s not at all what we recommend.  Others think only the wealthy need a tax planner, and for regular folks it can mean paying a 30 year mortgage off 12 years early or having a college fund with actually enough in it to pay for college.  It’s not for the wealthy, though.  Tax planning can be a useful tool for anyone is aware of the opportunities.  Our tax code is complex[…]

It’s human nature, of course.  We complain about our weight in the line at the ice-cream stand.  We complain about being tired, then stay up late playing the latest game on our smart devices. Humans are funny and contradictory animals. Have you ever noticed that when you’re in a conversation, people are quick to complain about their taxes?  Many people who complain about their tax bill are actually paying very little compared to most folks.  However, some people pay a lot of unintended or surprise taxes.  An example we see a great deal are self-employed folks.  They will tell us “I pay too much in federal or state income taxes”, but on review of their 1040, they actually paid no[…]

Summer is a popular time for people planning a move to put their home on the market.  It happens all year long of course, but the “hot season” is May-September.  There are many reasons.  School is out and if you have kids of that age it’s easier to change schools between grades.  Often, it’s when summer vacation schedules come around and except for tourism many industries slow down and moving done well takes at least a week and two weekends.  It’s easier to move without snow, so for some of the country that’s also a factor.  There’s are many more reasons, but Summer is when a “wave” takes place.  It’s hard work, stressful and a pain in the neck (and other[…]

The tax code is much more fluid than the public is truly aware of and deductions and credits come and go all the time.  Deductions like mileage for business owners change with the cost of gasoline, for instance, and can go up and down annually.  Often, it is actual programs that come and go, like energy tax credits or being able to transfer an IRA to a charity directly without paying income tax but still satisfying RMD requirements.  Often, these programs are temporary, and depending on whether the government believes that they have met their objectives, sometimes expire, or may become permanent.  Capital Gains has remained on sale!  It’s been changed over the years, but under the original Bush tax[…]

It’s June.  In a few short months people will be filing their 2019 tax returns with a familiar recurring Moooooan and Grooooooan. Now is the time to take your preventative medicine and avoid the pain! Being human, we all form habits.  Some good.  Most bad.  We try to develop good ones to replace the bad ones and often we are successful, but most successes don’t come without a coach, cheerleader or some kind of support. Tax time is usually a time of regret over not being successful at last year’s promise to oneself, “I not going to pay this much again.  I`m going to keep better records and search out a tax planner or some professional help and get smarter[…]

The answer to that might surprise you.  Because, for the most part, the answer is yes.  However, sometimes they are only fair if you know how to “play the game”.  Most people think only the wealthy can avoid paying income tax because they know how to play the game.  Well, at a much lower level, everybody knows some of the tricks to “playing the game”.  For instance, you might be contributing to your 401k at work.  Well you’re playing the game.  However, you might not know that even though you’re contributing everything you can to your 401k at work, you’re still allowed to open an additional private IRA, and take another $6,000 or $7,000 off of your taxable income.  That trick is “knowing the rest of the rules[…]

Taxes, like rain in the Spring, are a constant, but you can open an umbrella.  Many people are looking at their calendar and seeing the end of June, and although they have great intentions in March and April of getting proactive in and around learning how to mitigate this year’s tax outcomes, the time has slipped by.  People that should be storing capital differently in that stock brokerage account have already been paid six months in dividends that are coming to them as a 1099 next tax season.  Those people that meant to move the funds out of the bank are going to receive six months of interest now.  People who see the calendar, see the date, and are already[…]

Do you like losing weight because you want to look more attractive or fit in an expensive wardrobe you already own? You also often lower blood pressure or lower A1C. It might not be the primary motivation but the extra benefit is of course welcome! If you are a business owner than we pose this question. Some time ago you had an idea, over the years your turned that idea into a successful and profitable business. Have you protected what you worked so hard to build?  An unexpected turn of events could put your biggest asset at risk. Did you know that moving business dollars into a qualified plan could protect your assets as well as provide a current tax[…]

Everywhere I go, like the dandelions popping up all over my lawn, no matter hard I work at their extermination, there are cars on the side of the road and the unmistakable buzz of people with “yard sale face” rushing to see what hot deals they can find.  It’s a summer ritual, and as badly we all crave summer, a welcome sign.  The biggest yard sale we have ever seen has been open and running for almost a decade now and still not many people are parking out front and rushing in and THEY SHOULD BE!  It’s the capital gains tax rate and it’s a big sale. Does the IRS really have “Yard Sales?”  Yes, all the time! The tax[…]

Don’t let your stockbroker off the hook when it comes to tax planning.  Many people work with brokers when they buy and sell stocks.  Many people now, because of the internet, also have become their own stockbrokers, doing their own research and trading on various platforms.  Whether you use a professional or do your trades yourself, you still need to hold your stockbroker accountable.  What do I mean?  If a broker is helping you buy and sell, they had to take a Series license of some kind.  Sometimes, an RIA (Registered Investment Advisor) has taken a Series 65 exam.  If it’s a representative of a broker/dealer, perhaps they’ve taken a Series 6 or a Series 7 exam.  There are other possibilities, but the point is, these exams are[…]

It’s hard to be logical all the time about everything.  The most financially successful tax clients we serve at least attempt to force themselves to be logical, for their own benefit.  For instance, our parents, as well as a subset of the economy including some popular radio show based advisors like Dave Ramsey, say you should pay off your home and have a “free and clear” deed as a goal (they are wrong in most cases by the way).  That kind of thinking is emotional thinking, mixed perhaps with some presumptive attitude about what the general populous is capable of.  “Well, we know we can’t get people to do what would really be best for them based on pure math[…]

Tax filing season is over (for most of us).  So, why even think about them?  Because you are taxed all 365 days of the year.  366 in a leap year!  You may only settle up with the IRS once a year, but taxes are assessed on you every day!  Gas taxes, sales taxes, property taxes, income taxes, payroll taxes, snack taxes, even milk taxes, and more.  All day, every day, like breathing.  Wow.  Ok, so what’s the point?  Usually, income tax is the largest tax you will pay.  And, unlike the others, it’s generally the only one you can actually control and change by planning ahead.  It’s already May, so you are almost at the 6 month mark for the year.[…]

People often struggle with record keeping and are often so busy that they are simply unaware of tools or services that have been developed that could greatly improve the recording and tax deductibility of expenses, miles and other useful things.  Tons of topics we could cover here, but two that are universal.  If you are in business, you have a phone and a car.  Cell phone are pretty typical for smaller companies.  What we usually see is a personal cell phone bill and of about $150-300 a month, and of course the business owner wants to deduct it all.  When you start asking questions however , almost always, it’s a family plan with spouse and kids on it, so 80%[…]

Some reflection after the push of the 2018 tax season.  Not who won and who lost, as that was all over the board.  Also speaking of “board”, I’m bored with all the finger pointing and blaming around the new tax rules.  Tax policy is fluid and always has been.  Like Fed policies and a hundred markets around the world, things will always change.  Like flying an airplane.  You take off with a flight plan, but you fly by your instruments, reacting to weather and other planes in your airspace.   The real question is, is there a great new inequity that wasn’t there before?  The answer in our opinion is, not really.  It changed the most for big companies being[…]

Many people this time of year are rushing to try to throw their taxes together.  They’re doing so with regret in their heart because they promised themselves last year that they would be in better shape to get their taxes filed on time.  Yet, here they are, files here, files there, a general idea of where everything they’ll need is, but no time to properly compile it, and gosh, look at the calendar.  “I will never be able to get my return filed by the deadline.”  We feel that this is actually a good thing for those people — the entrepreneurs or the busy folks — because rushing to put tax items together almost always puts a “win” in the IRS side[…]

With tax season in full swing and documents from broker/dealers and other investment companies coming out later and later, you can definitely smell the tax “angst” in the air.  The amount of pressure that tax offices and their clients seem to be under is palpable. Why is this all happening and what about this is important to you? It’s happening because, over the years, although the IRS has stood firm at mid-January to April 15th as the filing season for 1040 filers, on the other side of the equation are the vendors themselves that have to send documents to the IRS:  The banks, the mortgage companies, the investment companies, etc.  The companies have managed to lobby and get extensions of time[…]

Now that we are deep into tax season, it is becoming apparent that when people heard about tax simplification being passed under Trump they didn’t really pay a great deal of attention.  I guess the constant headlines of change to everything could have made it hard to focus, but we tax planners had a lot to learn and we dug in.  In March of last year we thought we had completely lost the business meal and home equity mortgage deductions and a bunch of other “Oh no, not that” items.  Over the summer, more details and clarification came out on each item and it became apparent that the cuts were more and more targeted and not as broad as first though.[…]

This tax law became permanent but it’s still very underutilized. Many others are as well! I know on first read this probably sounds complicated, but it’s very simple. It’s better to take the income off your tax return than to take the deduction. It’s a win and it’s now permanent. There are numerous other items which we’ll partiality list below as well. To utilize these deductions properly does take some forethought and planning. Permanent, now in the tax code; · Qualified charitable distributions (QCDs) from IRAs · Deduction for state/local sales tax is limited · Even higher education credits (American Opportunity Tax Credit) · Teachers’ classroom expense deduction · Code Section 179 deduction is even bigger Because these have been[…]

The deadline to file pass through entity business tax returns is today, and unless they are ready and filed by midnight, they will be subject to penalties and fees. An extension will allow an additional six months to file the business return, so it will not need to be filed until September 15th, 2019. The extension does not change when the actual taxes are due.  Since the taxes resulting from a pass through entity will ultimately be due on the personal return, the payment of the taxes is due no later than April 15th, 2019. You can prevent the late filing fees and penalties by submitting an extension request for the business return today (and if applicable, for the state[…]

At this time of year many people who were getting a refund have already filed their tax return.  It leaves the remaining majority of folks who, despite having withholdings, are still going to owe additional tax.  We talk a great deal about tax planning and changing behaviors to achieve better outcomes in the future, but many are faced right now with a tax bill for the past (2018 tax year).  So what can be done?  Anything?  The answer is YES!  It’s actually simple and easy for most folks to substantially reduce the tax liability they are facing by opening a prior year IRA!  It is one of the very few ways the IRS allows you to retroactively affect your taxes.[…]

Many people think of the IRS filing deadline as April 15th.  Simple right?  In fact, there are deadlines all year long, something different every month.  IRS Publication 509 has the outlines, if you want a quick search to look something up.  If you are in certain industries, you likely know you have different deadlines; like farmers and fisherman must file by March 1st (yes, today) each year in 48 states (Maine and Massachutes have until April 15th).  The deadlines for pass through business entities is March 15th.   If you think about it, that deadline makes sense, as an S Corporation or a Partnership return is prepared so that a K-1 from the entity can be issued to the owners, with[…]

In the great Northeast, three quarters of the way through February, the snow piles are getting higher and higher in the mall parking lots and at that intersection you can’t see around that everyone hates.  It didn’t happen all at once.  Our first snow was in October this year.  It didn’t stay, but it set the pace for five months of winter.  As each storm leaves it’s trace, some melts away, some gets rained away, but overall it accumulates.  We might get ten inches, but only three really ends up on the pile.   Then another five inches, but this time all five end up on the pile, etc.  Your tax burdens build up the exact same way.  And there isn’t some magical button you[…]

Ever had a “light bulb” moment?  I have been driving for many years.  I’ve driven at least a million miles and I own a few cars (I collect certain types), and when driving my spouse’s car or one from the collection that I haven’t driven in a while, inevitably it’s time to gas up.  I pull up to a pump and get out and realize that the gas cap is on the other side, back up the car, turn it around with a sigh and fill it up. Then this year the “light bulb” moment.  While trying to figure out the dashboard “iPhone” charger fuse location, I happened to be looking at the diagram of the fuel gauge in the manual[…]

Not that we get much surfing here in the Northeast, but we have seen plenty of footage all the way back to the competitions on ABC’s Wild World of Sports.  Yup I’m that old.  The surfers sit and look at the horizon and anticipate the size of the waves.  It’s not an exact science, but they make their choice and then, the most important part, the proactively paddle like crazy toward the oncoming wave crest well ahead of its arival.  This allows them to meet the wave on their own terms, rather than seeing what they get when it gets to them, as they sit and do nothing.  Because of this action, they turn in time to ride the wave, and show off[…]

In the “old days”, you went to the general store for your dry goods, the blacksmith for your horse shoes or tool repair and likely had your own cow and chickens for milk and eggs.  Fast forward, you went to a lawyer to get a will, an insurance man to get a policy and an accountant to get your taxes done.  There was no internet, so information was something you had to gather and organize yourself.  You would talk to a few co-workers, a family member, a mentor and then take actions based on the limited intel.  Back then, you would sit with a financial advisor, and if they were a big deal they might have a globed ticker pumping out[…]

There are many types of taxpayers, but three common categories are: A. Those who are getting a refund which is “our money” back. B. Those who are getting their own money back and think it’s a refund but it’s really not. C. Those who are paying in, and not getting a refund. The first are the group of Americans we support as a society and for whatever reason, and whether they are hard working or not are earning under a livable wage, so we supplement their annual income with credits. Depending on the number of children and other factors, we give them more back than they have paid or had withheld. The next group have worked and had withholding or[…]