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[…]

Like many people, we look hopefully at the New Year and all its potential.  The changes in the tax code are still not out in full detail which is something the IRS has often done, but enough is out to safely say that one New Year’s resolution will need to be to change some old habits around both financial behavior and record keeping. Structurally, many things remain the same.  There are still seven tax brackets, and where you land in those brackets will dictate how much of your income you will owe the government.  The numbers have changed from 10% to 12% and 15% to 22% but the standard deduction almost doubling for many will mean that although you might[…]

Here are 3 things you can easily do before the end of the year! Tip #1 For those people with capital gains from sales of stock or from mutual fund distributions, many know that they can offset those gains with a loss, but few actually sit down and do the annual exercise. It is a good idea to meet with a Tax Planner to look at your losses or winnings. By selling those losing assets, you can offset your other investment gains and end up with an equivalent of no capital gains. Many people would rather not sell their underperforming assets, because they believe they’re about to “come back” and wouldn’t dare wait the 31-day waiting period to repurchase the[…]

With tax code changes in the air, like the sweat smell of fresh cut grass in the spring, we are hopeful. However, whether the tax code gets overhauled, or change somehow slips through the cracks, it is ultimately our own behaviors and choices all year that will save us the most in tax, not the rules around it. The government isn’t talking about taking away IRA, 401K or other pretax accounts.  They may allow a larger amount or lessor amount to be contributed in the new package.  It doesn’t really matter, as a large number of people who need to be contributing now…..don’t!  If the new tax rules go into effect, and they have $2,000 more in their pocket at[…]

By the time you read this we may know for sure the fate of the tax bill in the Senate, and we already know and have reviewed the tax bill in the House. The headlines at 3:50 PM ET on November 30th read “G.O.P. Lines Up Tax Bill Votes in Senate; Analysis Says Cuts Add $1 Trillion to Deficit” I would scream and hide under the bed, except for the fact that the national debt is already at 20 trillion and change already, and also if that was the biggest problem. The unfunded Social Security obligations of $32 trillion* and massive Medicare obligations make the deficit a small problem, as according to many sources and articles too numerous to list,[…]

Every year all around America almost every tax preparer asks the question, “Do you have charitable deductions like donations?” The answer is often, “yes 500.00 at Goodwill, Salvation Army and others.” That answer although widely excepted is not defensible at audit so why not use the pre-holiday season to send your clients a few tips on how to easily and properly document those gifts in order to prove your value as a planner that cares about them. It`s a great excuse to dove tail that call into a request for an appointment between Thanksgiving and the end of year to talk about other more valuable tax saving opportunity that expire atmidnight when the new year’s eve ball drops! Cash is Cash[…]

  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 2017, then they would charge you $1000 more on your taxes when[…]

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[…]

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[…]

First, right out of the gate, let us make it clear that we aren’t beating up on your CPA or Accountant.  The industry is perhaps the most honorable one!  That being said, there’s a misconception that they are going to be proactive when advising clients by nature, and that’s just not part of the training most have received.  Certainly some surely are, but the majority who know things about steps a business could take to perhaps be more aggressive, don’t feel it’s their responsibility to pursue a client in engaging in accounting choices or behaviors. A good example is “Bob” whom owns a tire shop that has grown from two employees to three locations and 32 full and part time[…]

IRS Gives Tax Relief to Victims of Hurricane Irma; Like Harvey, Extension Filers Have Until Jan. 31 to File; Additional Relief Planned WASHINGTON –– Hurricane Irma victims in parts of Florida and elsewhere have until Jan. 31, 2018, to file certain individual and business tax returns and make certain tax payments, the Internal Revenue Service announced today. Today’s relief parallels that granted last month to victims of Hurricane Harvey. This includes an additional filing extension for taxpayers with valid extensions that run out on Oct. 16, and businesses with extensions that run out on Sept. 15. “This has been a devastating storm for the Southeastern part of the country, and the IRS will move quickly to provide tax relief for[…]

Tax-Exempt Organizations Affected by Hurricanes Harvey and Irma Granted Tax Relief Tax-exempt organizations in parts of Texas, Florida, Puerto Rico and the Virgin Islands may qualify for tax relief from the IRS.  Organizations may get some extra time to file returns if they: are in the Hurricane Harvey and Hurricane Irma disaster areas, and have a filing due date after the hurricane hit and before Jan. 31, 2018. These organizations now have until Jan. 31, 2018 to file. The relief applies to original and extended due dates in this period. The start date of the relief varies by area. Texas: Aug. 23, 2017 Florida: Sept. 4, 2017 Puerto Rico and the Virgin Islands: Sept. 5, 2017 About annual information returns for tax-exempt organizations: Most organizations[…]

Like Harvey, Retirement Plans Can Make Loans, Hardship Distributions to Victims of Hurricane Irma WASHINGTON —The Internal Revenue Service today announced that 401(k)s and similar employer-sponsored retirement plans can make loans and hardship distributions to victims of Hurricane Irma and members of their families. This is similar to relief provided last month to victims of Hurricane Harvey. Participants in 401(k) plans, employees of public schools and tax-exempt organizations with 403(b) tax-sheltered annuities, as well as state and local government employees with 457(b) deferred-compensation plans may be eligible to take advantage of these streamlined loan procedures and liberalized hardship distribution rules. Though IRA participants are barred from taking out loans, they may be eligible to receive distributions under liberalized procedures. Retirement plans[…]

Seven days from now is the real tax filing deadline for 1041 (trust), 1065 (partnerships), 1120S (S Corps) returns that requested an extension in 2016. We often sift through our client and sometimes even prospects lists in our office and reach out on the 8th of September to “check in” and remind folks that a week from now we must be filing a tax return. People with trust income, run businesses and or have partnerships are often busy folks, and the date can sneak up on them. Then, you throw in distractions like Harvey, Irma (way more than simple distractions!) and yesterday EQUIFAX being hacked and everyone scrambling to protect their credit, and it’s not hard to imagine someone looking[…]

When you start tax planning with a new client, the first thing people often ask is why the accountant or CPA they are using doesn’t think or act the way you do in discussing the hunt for possible tax savings. After all, the current CPA is smart, trustworthy, running a successful accounting business and trusted in the community. So, why are you telling them all these wonderful new tax savings ideas that their CPA has never mentioned? There are many explanations, but the simplest is how the accountants themselves view the job that they do. Often, accountants think that the profession of accounting in its simplest form is the job of telling the story of money that has already come[…]

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, 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[…]

Many times business owners have come into our office and with our help found that they were doing things incorrectly. Occasionally, the errors ad to the tax burdens that they have been under reporting. That never feels good, but it is always better to fix pre-audit. Often, errors discovered pre-audit can be simply fixed by amending the return and no IRS issues follow, and everyone just moves on. Even more often, the errors made were not in their own favor and we file amendments that net them large additional refunds for up to three years back and that always feels great. How do these mistakes happen? First, let us tell you a story. A young girl was watching her mother[…]

When I see the first back to school ad on TV or on the internet, I sigh…. I’m well past my school years so why do I care? Because back to school is code for “It’s time to do the last 15% of America’s tax returns.” Don’t get me wrong, that’s the business we are in and we love it!!! But for some of our clients it creates a great deal of stress as October 15 is the real deadline. On April 15, the IRS demands the tax dollars, but October is when the paperwork to prove it is due! People on extension often have complex situations, complex assets, or both. It is a really serious time thief for many.[…]

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 deduction? Money in a qualified plan is generally protected from creditors. That means no one can take away what you have earned. Let us help you protect what you have created. It could be one of the most important business decisions you ever make.

With summer time in full gear, the business world takes a noticeable slow down as key employees that drive productivity are finally taking a few well deserved days off. Vacations have changed over the last 20 years in that the 10-14 days off at one time seems to have faded away and shorter more frequent “action style” vacations are trending. Planning and Google searches for vacation locations and activities are reportedly 38 searches per vacation, so if you spent 5 mins on just 20 of those 38 searches you’ve spent over an hour and a half. Multiply this by 3 short vacations a year (2015 AARP said boomers planned 4-5 a year) and a boomer spends at least 5 hours[…]