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[…]

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%[…]

The latest round of stimulus payments, on top of the backlog left from the 2020 IRS slowdown in processing 2019 returns and the constant new tax rules coming out of the legislature, has produced a “HOT MESS” resulting in the extension of the federal income tax filing deadline for the second year in a row, this time to May 17th.   Last week we cautioned that some sates might not follow suit, so be sure to check and see whether  or not your state is following suit.  A few things are now more clear: If you have already filed and had unemployment benefits taxed, there is no need to amend your return.  The IRS will do a fix sometime this Summer[…]

Last year, 41 states that have a personal income tax postponed their April 15 filing and payment deadlines due to the fallout from the pandemic, but that hasn’t officially happened this time, at least not yet.  The IRS has moved the deadline for filing 2020 federal income tax returns from April 15 to May 17, 2021.  This will also give the tax agency, which already has a backlog of unprocessed tax returns, more time to adjust its computer systems and forms to account for tax changes made by the recently enacted American Rescue Plan Act – most notably, the $10,200 federal exemption for unemployment compensation received in 2020, that might be only federal AND NOT STATE TAX EXEMPT. Oklahoma has delayed their state[…]

Lately we’ve seen a historic amount of spending, due of course to the pandemic and trying to keep the economic ship righted.  So, who’s to know whether what we’ve done is right or wrong?  Only time will tell, but for now, especially for those retired or about to retire, this is a blind crossing moment that takes some forethought and reflection to navigate.  In the future, taxes are likely to go up.  Biden targeted only people earning over $400,000 in his campaign promises, but as we all know, even with the best intentioned candidates, Republican or Democrat, once they get into the reality of “the books and the art of compromise,” promises are not always kept.  The country has been on a bad path from a spending perspective for a[…]

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.  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 when they plan on working past 70.  There was an inequity in the tax system for some time, because if someone was employed[…]

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 .  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, with enough time for them[…]

It’s hard to keep up with all the tax code changes that have come about due to COVID-19, and of course the change in the White House will bring even more tax code tweaks.  A lot of what’s been in the news and talked about are PPP loans, changes to payroll tax rules, deferrals and ways to not pay in or to get more back. All complex issues. The smaller, simpler things are not as newsworthy perhaps, or not seen as economic “life support” items, which has been the medias focus (and rightly so) for many businesses and individuals who are suffering deeply. With all this discussion, one tax change seems to have fallen through the cracks and people are[…]

IRS Notice 2021-10, which automatically extends several IRS deadlines, has just been updated again!! How does that benefit you, the taxpayer?  Any gain (sale of stock, sale of property etc.) that you created by selling after October 4, 2019 but before October 2, 2020 can still have the taxation delayed by using a “QOZ” or Qualified Opportunity Zone investment. The new IRS notice extends the 180-day investment period for many investors to March 31, 2021.  Now, for any 180-day period that ends on or after April 1, 2020 and before March 31, 2021, the deadline is automatically extended to March 31, 2021.  Effectively, this means that for any gain recognized by an individual on or after October 4, 2019 and before October[…]

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.[…]

We talk a lot about people not doing tax planning and not spending more time creating the tax outcomes they want.  We urge people to understand that it’s within their own control and that tax outcomes can be legally and ethically manipulated.  We go on and on about the benefits.  BUT…we understand why it’s so rarely done! It is because almost nothing in people’s lives has more constant change than taxes, and keeping up with all the changes can be an overwhelming challenge.  What if every four years your banking rules changed, “Oh I’m sorry John, we no longer pay you interest, now you pay us interest to keep money here.”  Or “Now you have to send in your mortgage[…]

The PROPOSED new tax code changes from Biden would change a great deal  of what was installed by Trump. That’s not necessarily a bad thing, as the Trump tax reductions were meant to stimulate the economy to the point that we started reducing the national debt load (which for many reasons did not happen, and the annual deficit grew even greater).  Biden’s plan includes changes to the payroll tax, individual income tax, and estate and gift taxes: The people earning over $400,000 would pay more in several different ways; Increases  individual income tax rate for taxable incomes above $400,000 from 37 percent back to 39.6 percent. Taxes long-term capital gains and qualified dividends at the ordinary income tax rate of[…]

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[…]

Many of you in the past have had to issue a 1099-MISC to people you hired and paid, but not as W-2 waged employees. These forms have changed for the first time in a very long time, so this is a courtesy heads up.  The 1099-MISC has a much more limited use, but has not gone away.  However there is no longer a Box 7 for nonemployee compensation on the 1099-MISC.  If you used Box 7 in the past, you will need to switch to the new IRS form 1099-NEC, which is specifically for people who you have hired, including Independent contractors, gig workers, or self-employed individuals who you have previously sent a 1099-MISC for Box 7. Remember, giving them[…]

Many people have the intention of doing a better job of “tax planning” in order to start having more favorable outcomes, but busy lives and life interruptions can leave them little time.  If this is you, you’re not alone.  Time flies even in normal times, but with the current stressful environment, everyone is scrambling even more, so you look at the calendar and think, “I can go see my accountant or financial advisor, or I can get my shopping done”, and the next thing you know its Dec 18th and the end of the year is upon us.   Most advanced tax planning requires communication about concepts, takes reams of paperwork and time to submit to custodians, so it would[…]

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[…]

There are only three weeks left to make something great happen with this year’s tax bill. If you are over 72, save the time you would have spent getting clothes together and boxing them and driving in the holiday traffic to a charity for the tax deduction (this can be done January 3rd), and instead have your investment advisor set up a direct gift from your IRA to the same charity. It still satisfies “RMD” (minimum IRA withdrawal requirements) but takes that amount completely off your taxable income total! If you’re a small business owner that files on a Schedule C , set up your kids to receive payroll from your company and get checks issued and then cashed from[…]

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[…]

With COVID at our heels again and Thanksgiving effectively canceled for many, it seems that a repeat of the first half of 2020 may be at hand.  The arrival of the vaccine should make it less scary soon, but we still need to dodge the virus and keep our businesses open between now and when “anyone with no priority” can get vaccinated. It’s all distracting us from the wave that will affect or infect us, to which there will never be a vaccine, higher taxes for most and very soon.  I can wear a mask, I can Zoom with grandma and owe her a hug, but I can’t change what’s about to happen to my tax bill.  The Biden campaign[…]

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,[…]

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[…]

The Small Business Administration (SBA) issued guidance on October 8, 2020, allowing Paycheck Protection Program (PPP) loans of $50,000 or less to self-certify that they used the money appropriately and receive complete forgiveness, although borrowers will still have to provide things such as payroll provider reports.  Now employers can use a further simplified form and a “check the box” paperwork process.  Borrowers can use the new SBA Form 3508S for their forgiveness application, or wait for their bank, credit union or other source to update their online applications.   The new rules remove the need to show that you did not reduce head counts or salaries and, therefore, suffer a reduction in loan forgiveness.  Previous regulations outlined that if an employer reduced[…]

COVID-19 has financially affected much more than it has infected, and our financial future as a country is tenuous as a result!  As Fall takes hold, there is still time to at least make one glass of lemonade from all the lemons, but people need to put time on their calendar in October to focus on their own opportunity or risk not benefitting from the one benefit they can receive from a global pandemic. There are many categories and levels of financial effects that have taken place, but for simplification in this case we will separate everyone into two groups.  People negatively affect (many ruined or greatly wounded) and those on the other side, people and companies that benefitted financially[…]

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[…]

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[…]

We are nearing the October 15th filing deadline, so all the crying is almost over 2019 tax return submissions.   We blogged throughout the summer on various topics, but now you’re down to a few weeks to effectively do 90% of what can be done to affect your 2020 tax liability.  Only a few things can be done in 2021, once you realize how big the bill actually is.  If you’re an individual making less than top wages, you can open and fund IRAs after January 1st, 2021, that can reduce your 2020 tax bill.  Other than that, there’s little that can be done once the ball drops on New Year’s Eve.  You have until then to get your act together, figure out where your tax[…]

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[…]