People love to vacation. Some do it often, while others hold on all year for that one great week and live day by day until that magical start date on the calendar! A new wave in our digital age is to only take three or four day weekends, but do it more often. However you “vacation”, they do have one common thread, and that is that they are not free. Furthermore, when you are officially vacationing (which becomes a mind set as well….I am officially on vacation as of right now!) you spend more freely, often with a disregard for cost shopping. “I’m stopping at Starbucks for the Mocha Frappuccino, not Dunkin, cause I’m on vacation!”. What if next vacation[…]

This time it’s clarification of the home equity mortgage deduction, and as with the business meals issue, it’s not as bad as it had first seemed!  The more the details from the broad rules last February have come out, the more we are liking the news!  When business meals were first named as no longer deductible, we thought it would be changing the landscape of the power lunch.  But, details released later softened the blow and it came to light that what the IRS was actually after was a much more targeted class of meals inside entertainment and around employee cafeterias and the like. Now, the details have come out on another headline item that made people groan when first announced:[…]

Part of giving good tax planning advice is understanding short term emergency needs, but also human nature.  Often, before TCJA (Tax Cuts & Jobs Act) people in a cash crunch or in other emergencies would look to their 401(k) for a loan.   After all, that’s where a great deal, if not all, of their “savings” are accumulated.  However, there are several problems with that thought.  First, a 401(k) isn’t “savings”, it’s a “retirement” plan, and the structure of the assets inside are not generally cash, so taking a loan could mean selling an asset and losing growth opportunity that could be critical to the fund’s objectives.  Secondly, the rules on repayment to the 401(k) account might be fine while you[…]

In a few months the U. S. will begin filing tax returns again, and at tax firms all over the country people will be making the “E-Trade” Shocked Baby Face (remember him?) when they see they are being charged penalties and interest for under paying their taxes due. Even if they made a 941 payment in the last quarter to cover ALL the tax due for the year, they can still find themselves fined by Uncle Sam as a penalty for not paying equally over the four quarters of the year. A last quarter over payment simply means they underpaid for three quarters and overpaid for one quarter, and no, it’s not “good enough” for the IRS. People also argue[…]

Some do it often while others hold on all year for that one great week and live day by day until that magical start date on the calendar! A new wave in our digital age is to only take three or four day weekends, but do it more often. However you “vacation”, they do have one common thread, and that is that they are not free. Furthermore, when you are officially vacationing (which becomes a mindset as well….I am officially on vacation as of right now!) you spend more freely, often with a disregard for cost shopping. “I’m stopping at Starbucks for the mocha frappe latte, not Dunkin, cause I’m on vacation!”. What if next vacation you could upgrade to[…]

  Late last year the government changed the tax code substantially and, among other things, created a new code section 199A for small business owners.  This created a buzz as many business owners were made aware they would be getting a huge tax break.  They also announced simplifications, like doing away with personal exemptions and instead increasing standard deductions.  In the long run, it should make it easier for people to understand their numbers, although for many it will mean an uptick in what they are paying in tax. One of the perceived losses was the deduction for many kinds of business meals and entertainment, which was generally “shoulder shrugged” off as a “cost” of simplification.  “If we are getting[…]

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[…]

Every year the IRS gets together and starts looking at economic news and forecasts and works with several departments of the government to tweak our tax code.  They look at the leading economic indicators, they decide what they need to change, and the collection of tax revenue often changes by year end.  Will they do that this year after the most sweeping changes in a very long time?  In the past, they would create a lot of  temporary tax rules to steer the ship, but it’s a new course and we have only been sailing a short time! These new rules will be a very big surprise to many Americans, both winners and losers, as next year’s tax collection shakes[…]

If you have an S Corp based business then you are seven short days from your last deadline.  You can’t extend the extension, so what if you’re still just not able, 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 owners a K-1,[…]

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[…]

Many people don’t really think about their taxes until the snow is flying and the first document arrives in the mail.  Why would you, right?  Year in and year out people often get into a set of habits around getting things together for their preparer.  That`s usually not a bad thing, but in a year like 2018 when so many things have changed we see on the horizon a sea of surprised faces when they find out their usual $1,200 refund is now a $500 balance owed to the IRS.  Or their usual $1,000 tax bill is now $1,900.  Of course, like any changes there will also be winners receiving happy surprises.  But what side will you be on?  If[…]

First, let’s say upfront that a business that has sources of income and expenses and leaves 25% profit on the table is an awesome business!  Example: A Plumber makes $400,000 a year and spends $300,000 a year on plumbing tools, trucks, repairs, staff, insurances, etc., and walks away with $100,000 at the end of the year that he can put in his pocket; great business!  It would be rare that it’s that easy.  More likely, he puts $60,000 in his pocket and sneaks a few personal expenses into his plumbing books.  In a very rare case in the other direction, 50% in expenses and 50% profit, but he probably wouldn’t do that every year.  That would be a “magic year” with no repairs to fleet vehicles, no staff turnover,[…]

The IRS just gave guidance that a nondeductible IRA may still in fact be converted into a Roth IRA.  For those who didn’t know about that planning strategy in the past, at a certain level of income people were no longer allowed to deduct their IRA contributions.  Many advisors thought that the rule was that the higher income earner could not open an IRA, which was incorrect.  You simply lost the ability to deduct them. Why would I open an IRA that I could not deduct?  It was still tax deferred growth after it was opened, so a “tax deferred annuity” that could be invested in any way an IRA could be.  Later, with the creation of a Roth IRA[…]

There is so much good in the business world from the new tax laws that we feel bad to even mention this, but we did lose some deductions that had become automatic in so many minds that we feel we must! As business people ourselves and for as long as we can remember, taking a client or prospect out to eat or to a round of golf or a concert has always been how business is done!  Then tax deducting it is also how business got done…NOT ANY MORE!  It’s time to review the old and new tax rules, and perhaps nothing changes, as business getting done first always trumps (no pun intended), and deducting it was a pleasant after-effect.  Perhaps the fact that deducting meals with prospects was allowed you to splurge[…]

It is soon to be celebration time all across the U.S.  Our Independence Day, our birthday is on the horizon.  It is summer, Veterans day and Memorial Day and even the 4th of July make us all think about all of the sacrifices that were made to get us here.  We are very, very thankful.  Everyone should be.  When celebrating most folks focus more about everything that happened in the Colonial period.  The Revolutionary War was the gateway to our independence.  The desire for independence was fought over many things but mainly about taxation.  The Boston Tea Party and many parts of the revolution were spurred in part from being levied and taxed on every single thing that we did.  The quote “taxation without representation is tyranny” was[…]

It’s June, and people will be filing their 2018 tax return in another 7 months with a recurring moan and groan. Now is the time to take your preventative medicine and avoid the pain! We all form habits, we are human.  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’m not going to pay this much again, I’m going to keep better records and search out a tax plan or some professional help and get smarter about this!”  Then, summer[…]

Now that spring has sprung, it’s easy for people and advisors alike to drop the subject and not want to think about taxes for a while.  That is unfortunate, as most tax advice needs to be given by May or June to have long enough to help your clients when it’s time to file their next tax return.  Send them a contact like this one below and help them plant tax saving seeds they will enjoy next New Year!   Tax Planning has often been misunderstood because the advice that our parents gave us is theoretical and absent the consequences from the tax code.  What do I mean by that?  There are general principles in life that have been passed down[…]

With tax season now behind us, except for all of those who are on extension, tax planning takes a new turn.  People are going to senior fairs, home shows, boat shows.  It’s great to get out of the house and start getting out into the world again and everybody has some kind of wish list and plan for the summer; it is so short after all.  If you’re about to invest in a boat (I use the word invest with tongue in cheek as a boat as a whole and the ocean that you pour money into) or in landscaping for your home, new windows, new roofs, whatever you’re up to, there just may be a tax component involved.  Many[…]

There’s a lot going on in the world right now, and a lot of new platforms to look at it on, but the best policy is to focus on tasks and don’t get distracted.  Since the invention of the Internet, people have become overloaded with information, and much of it is not necessarily true, or at least it’s slanted to create an opinion that has a business purpose behind it; fake news and many other ways that people can twist the truth.  Meaning that you have to be very careful about taking action on something after you hear about it without a little further digging.  This is especially difficult to do when people’s attention spans have shortened.  The other day, I had a[…]

There are a lot of things that have changed about the tax code.  Things that were deductible before that will no longer be, as well as things that could not be done in the past that now can be.  There’s a lot of confusion and it will take time for the public to slowly get used to things that they have turned into habits, keeping medical receipts, keeping traveling expenses, deducting moving expenses.  There is a lot that has changed, but the most important things haven’t changed  Organizing and record keeping are more than ever extremely important, and that’s the place that most of the people who are confused about the new tax rules have already got an ongoing deficit that they should[…]

A tax extension is a request for more time to send returns to the federal and/or state taxing authorities in which you owe tax.  A request for more time is not an extension of more time to pay any tax due.  The federal and/or state taxing authorities need to receive 100% of all tax due by April 15th (or the actual filing deadline, if adjusted by weekend/holiday) each year in order to avoid penalties and interest charges.  Therefore, you the taxpayer has the responsibility of estimating whether you might owe tax. How could people know how much they will owe before the taxes are calculated? You are the only one who knows what you have earned, what has changed about[…]

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 (2017 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’s is one of the very few ways the IRS allows you to retroactively affect your taxes.[…]

The deadline for filing Partnership and S-Corporation tax returns is approaching quickly.  The deadline to file your business returns is March 15th, 2018 and unless they are filed by then they will be subject to fees and penalties. An extension will give you an additional six months to file business returns, so a business would not need to file until September 15th, 2018. The extension does not extend when the payment for taxes is due, if applicable in their state. The payment of the taxes from pass through filings is due no later than April 15th, 2018.

Today’s blog, though, is actually not part of the new rules, it’s part of the undoing of the thought process that comes with the tax collection and reporting system that we have created here in the U.S. (said tongue in cheek, as I had very little to do with it. In fact, nothing at all, I don’t believe).  This is the time of year where people are getting documents in the mail and the self-created mental pressure starts to build.  The required documents are mailed to you and the IRS says that you have to file your return by April 15th…hardly any time!!!!!!  However, they also offer you an extension, and the extension is: A. free, B. always granted under all[…]

Last week we looked at how businesses could potentially save more by tax planning changes than what they would get from the 20% QBI  (qualified business Income) deduction next year.  The week before that we talked about mortgage deductions and planning tips. This week we are getting down to the “core” of the changes (cute right?) and what the taxpaying public really needs to get their arms around.  The talking heads on CNBC and some of the other more neutral media outlets are talking about the signs we are already seeing of confidence in the economy.  People are starting to see a little more in their paychecks this week, which brings a nice warm feeling this time of year.   Even[…]

In our first Tax Code Changes blog, we spoke of IRA withdrawal behavioral changes, and last week we talked about mortgage planning tips under the new rules.  This week we will tackle something for the sole proprietor business owner who uses a Schedule C for business income reporting, as this applies to most small businesses in America.  The new rules have opened a window of controversy over a new IRS term of art called “QBI” or qualified business income.  Each pass-through business including sole proprietors will be able to deduct 20% of the net profit of their business before applying the tax when filing their personal return in 2019 for tax year 2018.  The rule limits that deduction to a[…]

We`ll have lots to discuss over the next few weeks and months about the actions you might need to take because of the sweeping tax code changes.  The last topic was changing how you make your contributions to charity by doing direct transfers rather than the traditional, now old fashioned and less effective, way. Today we want to “tackle” (yup super bowl Sunday influences the bloggers) something that affects a large part of the population: mortgages! Like our charitable conversation two blogs ago, the mortgage interest deduction is also claimed on schedule A, so the first observation is that many people will simply no longer get any value from their mortgage interest because the new standard deduction is twice as much as[…]

There are many ways a tax return can be done that are all OK with the IRS, but only  one of those ways nets the largest refund!  People need to understand this across America, and we talk about tax planning constantly.  We blog, tweet, post, e-mail and on and on, yet we as an industry are not even getting 10% of the public to take on tax planning!  The clients who do are often thrilled at the outcomes, and yet it’s just hard to get people to want to spend half the time that they spend planning their vacations on planning their own tax outcomes! (larger refunds would pay for those vacations?!?!) Planners  offices often don’t look like a franchise[…]

Well, there are so many nuances to the new tax rules that we thought we would break them down over the next few weeks and cover a rule change a week, and then practical examples.  The news has covered the doubleing of the standard deduction to death, but knowing it happened doesn’t really help much.  What do you do about it?  Anything at all or just enjoy?  One practical matter would be thinking about what got listed on Schedule A of the return, and can you shift any of those expenses to other places on the return so that you not only get the new higher deduction but some additional benefit?  Probably.  Take, for instance, your charitable contributions, which are[…]

  We have been reading about the 2017 Tax Cuts and Jobs Act for a week now.  OVER 500 new pages of code changes and even new sections of code, with much detail yet to be released.  Our advice to you?  Step one…take a breath and don’t feel like you need to make a mad dash to major changes.  It may be months before we get some of the most important details about our new reality.  Step two, take all the water cooler, social media and barbershop advice you receive with a grain of salt, and with a “note to self” that you will need to go find out the FACTS about the rumored item (and yes, I am saying[…]