Go to any party, any backyard BBQ, baseball game or the yacht club on race day and you are likely to hear someone complaining about taxes.   People love to hate them, but they act as if they have no control over them!  Taxes are not a storm over the ocean that “at God’s will” might or might not come to shore and wipe out a town.  They are a known, published set of taxes on various income types, with rules.  Like a chess game, if you want to win you can study the rules and the game and when the opponent makes a move you can make the appropriate counter move and win.  There are offsets and credits in the[…]

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 401(k) at work.  Well, you’re playing the game.  However, you might not know that even though you’re contributing everything you can to your 401(k) at work, you’re still allowed to open an additional private IRA, and take another several thousand dollars off of your taxable income.  That trick is “knowing the rest of the rules[…]

With every new president, we hear that taxes are going to be changed.  Some promise to lower them in order to get elected, even though there is no way for them to go down while we spend the way we do, service our huge debts and keep the lights on.  Some say they are going up, but only on “corporations, or the rich, or”…and they pick out a villain for everyone to hate.  Those people, however, are the people that give politicians hundreds of millions of dollars in order to help them get elected.  Those promises fade, get changed and loopholes that are plugged get unplugged. Most of what actually gets passed affects the people or industries that have the[…]

Many people are looking at their calendar and realizing that June has passed, and although they had 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 who 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 feeling remorse, often say “Oh well, too late again this year”, since mentally, “the damage[…]

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, they proactively paddle like crazy toward the oncoming wave crest, well ahead of its arrival.  This allows them to meet the wave on their own terms, rather than seeing what they get when it arrives, as they sit and do nothing.  Because of this action, they turn in time to ride the wave, and show off their ability to plan and execute. Taxes, of course, can often be watched on the horizon and anticipated, especially if it’s a big wave.  You know you are retiring in November and you have built up[…]

It seems like everywhere I go, 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 nice to see some post pandemic normalcy. It’s always been a summer ritual, and as badly as 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 code is much[…]

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 Frappuccino, not Dunkin, cause I’m on vacation!”. What if next vacation you could upgrade to fly[…]

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[…]

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 often[…]

Although currently very little has actually changed tax rules wise, many things are proposed.  Under an executive order a few things have actually changed around child credits, so if you have children there are benefits starting now for many Americans in the lower tax brackets.  Also, one item that affects many small business owners is a change in the premium tax credit.  In the past, when people receiving subsidies from the insurance market place earned over 400% of the poverty level in income (around $40,000), they had to start paying back some or all of that premium subsidy. That amount for the next year has been raised, allowing most to not pay back any premium.  These changes are in affect[…]

It’s May and the 2020-2021 tax filing season is finally coming to an end, and for many with a familiar recurring moooooan and grooooooan of having paid too much in taxes.  Now is the time to take your preventative medicine and avoid the pain next year! 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’m not going to pay this much again.  I`m going to keep better records and search[…]

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 rush”  masks,  rushing to see what hot deals they can find.  It’s a Spring/Summer ritual and its back.  A welcome sign of things slowly getting back to normal.  But the biggest yard sale we have ever seen has been open and running for almost a decade now (the IRS is hosting), 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[…]

Generally speaking, there are three “waves” of tax filers. The first contains the people with W-2 jobs, kids and daycare and they have had taxes withheld that when refunded are a big part of their income. They generally file in late January and early February, as soon as possible so they can get their refund, and who could blame them? That job is done, those folks have filed. The second wave contains people with more complex assets and it’s a flip of the coin for them, sometimes they owe and sometimes they get refunds.  So, they still want to file as soon as possible, but when the return is done it’s like waiting for cancer test results, they say, “well,[…]

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 enough in it to actually pay for college.  It’s not just for the wealthy, though.  Tax planning can be a useful tool for anyone who is aware of the opportunities.  Our tax code[…]

It goes without saying that the amount of new tax rules and programs that are now in force because of the pandemic is astounding.  Preparers are stressed as the programs have come out during the active tax season so that extra time to slow down and read and comprehend just is not available, and people are stressed and want answers.   What should you do to get help and or make sure you dont miss out on programs that you can qualify for and that can help you recover or survive?  For many the answer is to file an extension!  Even though the IRS is allowing until May 17th to file, your preparers need time to read, think, run different options[…]

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[…]