If you own any size business, now is the time to review your business return to make sure you are receiving the maximum allowable “QBI” deduction.  The public and many preparers still don’t have their arms wrapped around how this deduction works and many mistakes are being made!  Whether you file as a sole proprietor, S corp, partnership or PLLC; if your business income ends up flowing through to your 1040, you should be paying attention to this.  Some trust returns and C corporations have different tax rates and they pay their entity taxes directly, but the majority of businesses in the U.S. are eligible to at least try to receive a qualified business income (QBI) deduction. There are more[…]

Well, investors aren’t going to have a very good weekend.  Many are losing net worth, and fear of the real economic effects of a major national or international event, such as the looming possibility of a coronavirus pandemic, is not a topic that anyone likes to deal with.  We have seen these kinds of events precipitate market crashes several times in the past few decades.  September 11th,  the invasion of Iraq and the 2008 melt down of the mortgage and financial markets, to name a few.  Big news events happen and the markets take a dive.  The savvy tax planner can make lemonade from the lemons now presented to them by shifting away from only conversations about investors fears and[…]

A lot of things have changed in the last two years when it comes to tax rules.  Every year, the IRS tweaks things a little.  Since Trump has been in office, there have been some substantial changes to things that people have been use to for many years.  Old habits die hard, so some of these new tax rules will probably slip by many for some years to come, until they realize they’ve lost an opportunity or pay a penalty.  It’s not everybody’s favorite topic, right? That being said, there are a lot of good things in these changes.  One good thing is that the IRS has finally stopped unfairly not allowing people to put money away for their retirement[…]

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 who have not paid their estimated tax by January 15th must file by March 2nd (yes, just two weeks away) .  The deadlines for pass-through business entities is March 16th.   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,[…]

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[…]

People who are worried about the 10 year rule, requiring beneficiaries of inherited IRAs to withdraw the entire balance within 10 years, can double that time with a CRT beneficiary in front of inheritors.  What if you really have a big IRA and the 10 year rule just isn’t enough of a stretch to help your beneficiary stay out of the top tax bracket?  Or any other reason you care about reducing the negative tax impact from the 10-year rule?  You could use other remaining tax rules to your benefit by setting up a charitable trust.  A charitable trust allows the retirement assets to continue growing tax-deferred, even once the assets are distributed from the retirement account into the CRT.[…]

Since they are only done once a year, the little things regarding the tax code are often overlooked or forgotten.  In some cases, this can lead to unintended penalties and fines.  As a sole proprietor, it’s not enough to just include a Schedule C on your personal tax return.  Before January 31st, you must remember to complete and send 1099-MISC forms to anyone you paid more than $650 to last year, and transmit copies of those forms to an IRS office.  But where do you get 1099-MISC forms and what information has to go on them?  Among other things, you need to include the payee’s Social Security number and address.  That’s the first problem.  For many people that you might hire, such as a[…]

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!). Tax planners’ offices often don’t look like a franchise[…]

In the “old days”, you went to the general store for your dry goods, the blacksmith for your horseshoes 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 rep 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 stock ticker pumping out tape[…]

Just before the end of 2019, the Setting Every Community Up for Retirement Enhancement Act, better known as the “SECURE Act”, went into effect as a new law.   It brings another round of interesting changes to the U.S. tax code, but especially around the rules regarding Required Minimum Distributions (RMDs), which dictate when and how much people must withdraw from their retirement accounts to avoid tax penalties.  Beginning Jan. 1, 2020, the new law pushes the age at which you need to start withdrawing money from your traditional IRA retirement accounts from age 70 ½ to 72.  If you turn 70 ½ in 2019, you will still need to take your RMD for 2019, no later than April 1[…]

As another year comes to an end, we wanted to take a moment to wish you a great 2020!

The only constant in life is change, but some of these possible tax code changes will affect advisor planning in BIG WAYS! Three health care taxes that were originally enacted as part of the 2010 health care reform legislation are slated for repeal as part of this year’s budget from Congress.  As currently written, the new legislation provides changes to retirement plan rules, extends several expired tax provisions, provides disaster tax relief, and repeals the provision that taxed exempt organizations when they provided parking to their employees. Highlights in that bill awaiting Trump’s signature; Increases the age after which required minimum distributions from certain retirement accounts must begin to 72 (from 70½); Modifies requirements for multiple-employer plans to make it[…]

Ask anyone if they “pay too much income tax” and the knee jerk reaction is almost always, “yes!” and without much hesitation. Why do we call that a knee jerk reaction? Because if you then follow the question up with two more questions, “What did you pay in federal tax last year? And/or what bracket are you in?” they almost as quickly say, “I don’t remember, or I’m not sure”. Or they might guess at a bracket percentage, but usually not correctly. I’ve even had people profess the pain of paying too much in tax only to discover that not only did they get back all of their withholdings, but were given tax credit refunds of money they did not[…]

It’s that time of year again and many business owners with fat bottom lines, or even just with joy in their hearts, are getting ready to rinse and repeat what they have always done; buying tickets and food (perhaps adult beverages also) to celebrate and appreciate their work force. The new IRS rules generally allow deduction of the holiday party expense if it’s at the office, but the IRS has set new nondeductible guidelines for entertainment. It’s not clear, for instance, if you usually take you entire office to a holiday show, sporting event or concert, whether that part will still be deductible. More time and guidance will shake that all out, but at the moment it’s possible that it’s[…]

Not everyone is familiar with Schedule A on a 1040, especially healthy younger people with mortgage interest debt from owning a home.  Schedule A is a deduction that reduces your total income before taxes are assessed against it. The IRS gives you two choices when it comes to deductions.  You can take a “Standard Deduction” which is a flat rate that everyone can elect and has no paperwork or reporting requirements.  Or you can use a “long-form” and add up certain expenses in hopes that what you spent in those areas adds up to more than what the IRS allows you with the Standard Deduction.  If it does, you can claim the higher amount, which again is subtracted from your[…]

  My strategy?  Doesn’t this just happen?  NO!  And you need to pay attention! Weather changes and holiday gear up often take people’s eyes off the ball.  Everyone over the age of 70 with money in IRA accounts of many kinds are penalized at 50% by the IRS if they do not properly withdraw the correct amounts from those accounts before year end. Why would the IRS care if I take money out of my account? BECAUSE they get to tax it this year!  If, for instance, you are in the 10% tax bracket and you “should” take $10,000 from your IRA before the end of the year, then they would charge you $1,000 more on your taxes when filed,[…]

No trick! Opportunity zones are your treat this Halloween.  Year-end tax planning, the stock markets, and opportunity zones are all on a high speed merge around the country. Hopefully, the information is getting to the correct people, but even if you are seeing this for the first time, you still have time to get educated and perhaps take advantage.  Let’s break it down. Opportunity zones are a new governmental offensive to bring targeted areas around the country jobs and investment in infrastructure. There are many layers and details, but for this purpose, we will stick to a high-level discussion and focus on two parts. Part one:  What are they?  They are specific, clearly defined geographic areas around the country.  Opportunity[…]

After October, trick-or-treaters are done banging on your doors, the fall wrap up begins around the house.  Any remaining lawn chairs, storm windows and et cetera, all go into place ahead of the first storm.  Sure, for some places, like Arizona, winter is just a nice break from the heat.  Wow, this summer it was 110 degrees on many days!  Crazy.  But, for a majority of the country that lives in the snow belt, November means batten down the hatches. The same is true for finance and tax planning.  People start looking at their holiday shopping budgets and looking at their end of year projections (if they’re financial goal setters) to see where they are at.  We often talk about[…]

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[…]

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[…]

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%[…]