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[…]

For many Americans the bad news surrounding the current crisis is all consuming.  Even for those not living check to check, it can still be very stressful.  Employers struggle with using savings, loan lines or selling assets to keep afloat.  Others face layoffs of workers that are practically family members.  There is a lot of heartache out there, as everyone knows.  When you find any silver lining you almost hate to even bring it up.  How dare you be positive about anything right now?  Well I’m going to risk it.  Now is an excellent time if you have an IRA and have been planning (or should be planning) to do a Roth Conversion.  If your IRAs have shrunk like mine,[…]

This tax law became permanent but it’s still very underutilized.  Many others are as well! I know on first read this probably sounds complicated, but it’s very simple.  It’s better to take the income off your tax return than to take the deduction. It’s a win and it’s now permanent. There are numerous other tax planning opportunities to take advantage of, some of which are listed below.  To utilize these deductions properly does take some forethought and planning. Permanent, now in the tax code; Qualified charitable distributions (QCDs) from IRAs Deduction for state/local sales tax is limited Even higher education credits (American Opportunity Tax Credit) Teachers’ classroom expense deduction Code Section 179 deduction is even bigger Because these have been[…]

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[…]

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[…]

We are nearing the October 15th filing deadline, so all the crying is almost over 2018 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 2019 tax liability.  Only a few things can be done in 2020, 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, 2020, that can reduce your 2019 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[…]

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[…]

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[…]

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[…]

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[…]

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[…]

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

It’s human nature, of course.  We complain about our weight in the line at the ice-cream stand.  We complain about being tired, then stay up late playing the latest game on our smart devices. Humans are funny and contradictory animals. Have you ever noticed that when you’re in a conversation, people are quick to complain about their taxes?  Many people who complain about their tax bill are actually paying very little compared to most folks.  However, some people pay a lot of unintended or surprise taxes.  An example we see a great deal are self-employed folks.  They will tell us “I pay too much in federal or state income taxes”, but on review of their 1040, they actually paid no[…]