In May, people will be filing there 2017 Tax Return in another 7 months with a recurring Moooooan and Grooooooan. Now is the time to take your preventative medicine and avoid the pain!

We all form habits, we are human. 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 years promise to oneself, “I not going to pay this much again, I`m going to keep better records and search out a Tax plan or some professional help and get smarter about this!” Then summer comes and the golf clubs, fishing gear or other hobby peaks up its head and says to you… ”what are you crazy, we are gonna spend this beautiful day at a Tax Office planning next year’s outcome when we could be on the greens??”

Here is what you do to have your cake and eat it too! Watch the weather forecasted for the week on Monday. Figure out if there is an afternoon after 4 pm looks like rain. Tell your boss you’re leaving early or if your retired don’t say yes when asked to tonight’s dinner gathering. Instead, call your local Tax Planning office and get your last years return and your current financial statements and make an appointment.

With six months to change behavior, read and self-educate and take baby steps with your planner it’s not too late to have real success. Procrastinate and the summer will be gone and your chances of real success will be greatly diminished.

Post messages like this into your Tax Office Blogs and you will likely get some prospects.

Every election that we can remember there are promises of change to Taxation, most of the time for less tax but always Big Reform is one of the topics that seems to attach itself to every political candidate. Then after the new blood gets into the “Big Chair”, or the old guard settles back down the budget gets opened and the talks begin, and usually, taxes are added or deductions get eliminated. Many people expected the corporate tax rates to already be 15% from the election rhetoric of late but no surprise the changes to cut tax are always way harder to implement that changes to increase tax.

It is also common that because of promised change that we have a somewhat harder time getting people to engage in Tax Planning as they are “waiting to see what happens.”  It’s very human, but often a vailed excuse for procrastination instead. Most Tax Planning is not directly attached to a tax change, for instance; A common personal tax plan might include adding an HSA account as a tool so people will stop paying for health care with after-tax dollars and instead pay those same bills with pre-tax dollars. If the latest Trump tax code changes did happen how will it affect the advice to open an HSA? Answer IT WOULDN’T! If the new code lessens your tax bill from 25% to 15% than the HSA advise would look like this, do the HSA now and pay your doctor’s co-pays with a pre-tax dollar and save 25% and after Trump pushes through the tax cuts you are waiting for you’ll only save 15%. Why are we waiting to open an HSA until after Trumps tax cuts go in? Ohhhhhh so we can save 10% less!  Wait…. what?

We could give example after example but the point is Tax code change is constant and so are planning ideas but waiting until change happens so you can see, means never doing anything!

Come in now and let’s talk about how we can save you taxes now and we will tell you the current savings and if those savings change when and if new planning goes in.

Call us at ___ ____ or e Mail us at ________________

As Always, You`re Welcome!

The Tax “What if” Dr;-)

Post this on your Tax Website Blogs…

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 and logic because its complicated and would require that they educate themselves, so the next best thing we can get them to do is ( insert substandard advice here).  If advisors did not decide in advance what people are capable of they would explain the math and the tax code and most people would be better off managing their home mortgage as an asset, and many people would also be better off never paying off a house, but instead building an equal value or even more equity outside their home.

How does this relate to wasting time and money?

People will spend countless hours talking to many banks and other lenders trying to find the best rate and see 3.75% and 3.60% and 4% but no points because they feel they understand that part, so they can help themselves without outside advice.  What they should do is spend that time learning how to manage their mortgage as part of their financial plan, and decide whether to build equity in a home, or the same equity outside a home.  Then when it’s time to shop the rate, simply go to a broker they can trust and say, “find me the best rate and prove it” and then spend their time on the bigger picture instead of spending all their time on what they do know, which can be delegated.

Business owners are also very often guilty of this as well.

“I know tires, that’s why I opened a tire store!”  “I don’t want to learn everything the accountant knows, I hate taxes!”  This is human , understandable and SUCH A SHAME! They will spend countless days and nights trying to grow revenue and work their fingers to the bone, and then pay little to no attention to what they pay all their business partners: THE IRS, THE STATE, WORKERS COMP, accounting, payroll, HR and many more, because they aren’t comfortable with the subject matters.  We understand, but we also BEG that you change your behavior.  We can help home owners and business owners learn in small bites the things they should be spending time on instead of what they are currently wasting time on.  We can save you time and money, but we will need to start to educate you on how to act logically about money, instead of emotionally.

Call us and let’s have a 30 minute meeting to discuss a path to getting you from where you are to where you want to be!

Call ______________or e-Mail us at _______________

Let’s get started today!

That should make the phone ring!

As Always,

You’re Welcome!

The Tax “What if” Dr;-)

Well, at least the basic outline of what Trump would like to change in the Tax code is out, and for many Americans, it’s very good news. But we say that tongue in cheek.  It’s good news if you hire or become a pro-active tax planner. Why do we say that you have to be a tax planner for this to be good news? What Trump is saying is he’s going to substantially cut taxes for businesses and for regular taxpayers.  He’s going to “simplify” the tax code. Nowhere in the word simplify is there even a hint of lower personal income tax for most, although doubling the personal exemption would be a tax coup; for the working poor.

Currently we already have a 10% rate and we already have a 25% rate, so simplification simply means the 15% rate that was in-between 10% and 25% in the current tax system goes away.  What that means for average Americans is if they are just over 10%, they had enjoyed a fairly substantial stretch of income that was only taxed at 15%; and instead in the proposed plan, as soon as you leave the 10% tax bracket, you will immediately be paying 25%, not 15%.  For many Americans, it means a tax increase of a fairly substantial amount.  He also wants to “simplify” schedule A by taking away deductions, such as for many Americans that have issues like “unreimbursed work expenses”.  Many sales people, construction workers, a lot of W-2 employees that are without a company vehicle but asked to go to different locations and wear certain kinds of clothes like nurses, airline stewardesses etc. will now simply not be able to take those deductions.  The only deductions he plans on leaving in the new schedule A are home mortgage interest and charitable deductions.  Medical expenses, property taxes, state income taxes and excise taxes, all currently deductible on schedule A, are to be done away with.  Now, the devil is in the details, so maybe some of these things get left alone or put back.  After all, at this point, it’s just a proposal with no details; but Americans need to realize that he’s cutting taxes for businesses not people.  What it means for most Americans that have had a sole proprietor or schedule C businesses on their personal 1040, they’re now going to have to incorporate, pay payroll taxes, FICA and FUTA taxes, and learn everything there is to learn about the next level of business, in order to continue to take normal deductions and pay a reasonable rate of tax. That’s not necessarily a bad thing for the tax and accounting industries.  It means more work for us in explaining to people how they incorporate, when they incorporate, how much they should pay themselves under payroll, and the myriad of new ways of doing the accounting for their businesses that they’ll need to learn.

Thumbs-up for Trump wanting to lower the tax rates for corporations to make us more competitive in the free world; but hey folks, don’t be confused by simplification of the tax code for people.  For the common person, it means stepping up your education.  It means making a next-level effort in and around planning your outcomes in advance.  For our firm, it’s a bump in business that we welcome.  But America, this is not lowering taxes for people.  You need to come in, and we need to talk and change some things just to keep moving sideways.

As always, you’re welcome!

The Tax What-If Doctor

With tax season behind us, we have started to reflect on the amount of people that we saw in our office and some of the stark realities that we discovered while serving the public.  Estate planning is not a sexy topic.  But, that’s why, as we’ve been preparing people’s tax returns this year, we came to realize that because it’s not a sexy topic, it’s almost completely non-existent in our community.  How do we know that from doing tax returns?  Because estate planning is all about titling.  There are many, many options for estate planning, but generally speaking, there are three basic options that most people fall under.

Option 1: No plan at all.  Option 2: A Last Will and Testament.  Option 3: Some form of Trust.  Usually a Living Revocable Trust.

As we reviewed people’s documents, bank statements, mortgage statements, savings accounts, brokerage accounts, etc., it became clear which people had some start to their estate planning.  For instance, a couple brings in a bank account during tax preparation and the title on the account is “John Smith and Mary Smith JWTOS”.  This means that the account is owned together, and if one should become disabled, the other would not have any issue with going to that bank and withdrawing funds.  Or, if one should pass away, the other need not have to go to the probate court or some other means in order to get permission to receive the dollars.  Without such titling, even being married, many people find themselves having to go through some form of court procedure to touch funds that are titled singly in their spouse’s name.  Most couples don’t ever do this sort of thing on purpose, here’s an example: Mary is at the bank alone, needs to open an account, and without her husband there for the signature on the card, the bank will only set up the account in her name. “We’ll get around to getting my husband’s name on that account when it’s convenient.”  And of course, it is then forgotten, and the update never happens.  As we reviewed tax return after tax return, (which, by the way, we had an awesome season, and thank you so very much for using us), we realized that our work here is far from done!

Tax season, except for those on extension, may have come and gone, but at our office, we declare it “help people with their estate planning” season!

We will work diligently through April, May, and June to try to schedule appointments with all of our clients and anyone else reading this blog who cares to review estate planning options and titling so they don’t find out by accident that their access to their own capital is somehow different after a crisis than the way they would have it if they had a few minutes to reflect.  When it comes to estate planning, it’s only obvious when you have a trust, but many people may have a Will and Testament and you wouldn’t know from the tax documents.  Even though we’re not attorneys, we work with a network of attorneys closely in our practice, and we know that when somebody has a complex family asset like a business, or a second marriage, a divorce, a prenuptial agreement, etc., that the titling of assets needs to reflect those estate planning goals, and so it becomes obvious who should probably consider having a living trust but does not.  Married couples with a second home, sometimes in another state, multiple accounts, or each having children from a previous marriage, with very few exceptions, are generally better served by a living trust, according to most of the attorneys that we work with. If you have a trust, the titling would reflect it.  For instance “John and Mary Smith RLTR”, or “John and Mary Smith TTEE” (which means they are the trustees of a trust document and the trust), owns the savings account, checking account, property, etc.

Long story short ( too late) , we want anyone and everyone that has just completed their tax return or put themselves on extension to take us up on this free offer:  Let us review your current estate plan, determine what you need to have happen, and then look through the titling on your accounts to make sure that what you want to have happen, if you’re disabled, or if you die, will actually happen, in real time.  Then we will help guide you as to any paperwork that can be done to correct issues that we find.  If we determine that you should see an attorney, we will definitely make the recommendation as well.  You can find a local attorney or we can provide one from our national network.  Either way, we realize during tax season that estate plan is not sexy, and that it’s often ignored, so this is your call to action.  Get in touch with us today.  Take us up on this offer.  Don’t come back in our offices a year from today with the same lack of estate planning clarity.  You never know when something is going to happen; when it’s going to be your turn.  This is an easy thing to fix, and this review is free!

Call us at ___________________ or E Mail us at ___________________

As always, you’re welcome!

The Tax What-If Doctor

Get this message out!

That’s actually a good thing!  Many people this time of year, the busiest season, are rushing to try to throw their taxes together.  They’re doing so with regret in their heart because they promised themselves last year that they would be in better shape to get their taxes filed on time.  Yet, here they are, files here, files there, a general idea of where everything they’ll need is, but no time to properly compile it, and gosh, look at the calendar.  “I will never be able to get my return filed by the deadline.”  We feel that this is actually a good thing for those people — the entrepreneurs or the busy folks — because rushing to put tax items together almost always puts a “win” in the IRS side of the column.  You’ll miss deductions if you rush!  You’ll under estimate mileage.  You won’t think things through, if you do it in a mad rush.

What to do?

Filing an extension is a “big win” because it will give you time to decompress, relax about the process, and take time to get it right.  And contrary to popular belief, the paperwork deadline has never been April 15th.  An extension of time to file is automatically granted — no one has ever been refused an extension to file with the IRS.  It isn’t a decision; it’s just a formality.  You request more time to file, and it is automatically granted with no exceptions.  Then you have until October 15th to get your records together.  Of course, that would create an opportunity to procrastinate again and end up at the same kind of pressure deadline in October, so the correct way to handle this running out of time issue is to set an appointment for the first or second week of May, at the latest.  Then, take your time to organize your information without being in a mad rush, and bring it into our office.  We’ll compile a list of things that could improve your tax situation, some homework, if you will, and then you can calmly take a couple of weeks to gather together the bits and pieces that would have been lost if you had rushed to hit the April filing deadline.

You will get better tax deductions, pay less tax overall, feel calmer and more in control, and put a win on your own side of the column rather than on the IRS’s side! So, what do you do next? Well, simply file an extension.  It’s an IRS form 4868.  It is very easy to complete.  It asks five questions; your name, your spouse’s name, your address, your Social Security number, your spouse’s Social Security number, and then a few payment questions.  There isn’t even a signature required.  Although there are ways to do this online, a tax preparer is willing to do it by mail.  The best way to file an extension is to print it, fill it out, and send it certified mail to the IRS.  Their electronic processes aren’t perfect.  As you see in the news every day, sometimes data is hacked, lost, and so even electronically filing through a tax office or through a CPA or through the IRS website, you could still find yourself filing your taxes and getting a notification that you’re going to pay a penalty for failing to file your extension.  The proof and the receipt in your hand from the USPS for $4 to $6 is the only absolute way to guarantee yourself not paying a penalty for not filing the extension.

Then, like we said, simply call us, put a date on our calendar for the first two weeks of May, bring in and drop off your mad rush documents now, and then we’ll work with you calmly and professionally, and you’ll feel great about the process.

Call us at ____________ or E-mail ________________

You’re welcome!

The Tax What-If Doctor

If you do tax marketing its time to start bringing up extensions as an option and give it a little time to sink in. Here`s a Blog for you to start the process!

A tax extension is a request for more time in which to send returns to the federal 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 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 tax payer 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 your incomes.  If you want help in estimating, you can go to www.irs.gov or any state taxing authority’s websites who all have calculators to assist you. Most states and the fed also have call-in phone lines. It often takes quite some time and you could still end up guesstimating  (estimating on a guess) wrong. If you are truly averse to any possibility of any interest or penalty for under payment then you could/should over-pay estimates before the filing deadline.

For instance, if last year a couple had $8,000 of total taxation on $90,000 of income and this year they had already had withheld $8,000, but they have sold additional stock, inherited an IRA, or had a large gain in business income, and they are nervous about estimating correctly. They just send an additional $4,000 of estimated on top of the $8,000 they have already had withheld. 50% more than what they paid last year should keep them from owing or worrying about penalties. In a few weeks we will get the refund of over-payment back so, either way, it’s a few weeks of you owing interest for underpaying or a few weeks of the IRS having your money and paying no interest to you.

Always remember that any form being mailed by you to a federal or state taxing authority should be sent “return receipt requested” at the United States Postal Service. Anyone using e-file extensions online should also print a copy for themselves and possibly for the tax preparer.  Tax professionals all over the country will all continue to work hard to finish these returns in a timely manner, but the filing deadline is coming.

The paperwork you can have another 6 months to send, its just the tax itself that they want by the April deadline!

Need help with estimating your tax, filing an extension or any tax related topic for that matter? Call us at ________________or e-Mail us at ______________________

BTW we are not behind and getting even complex returns done in just a few days so come on in!

Post this and see if that doesn’t make your phone ring!

As Always,

You are Welcome! The Tax “What if” Dr;-)

With tax season under full swing and documents from broker/dealers and other investment companies coming out later and later, you can definitely smell the tax “angst” in the air.  The amount of pressure that tax offices and their clients seem to be under is palpable.

Why is this all happening and what about this is important to you?

It’s happening because, over the years, although the IRS has stood firm at mid-January to April 15th as the filing season for 1040 filers, on the other side of the equation are the vendors themselves that have to send documents to the IRS:  The banks, the mortgage companies, the investment companies, etc.  The companies have managed to lobby and get extensions of time to send their tax documents because their reporting is affected by other companies’ deadlines or complexities that are, as they argue, “beyond their control.”  When the IRS originally said January to April 15th, the majority of documents were in the mail to us, the “little people,” by February 15th, which gave us about eight weeks to receive those documents, get them to a preparer, and get the job done.  However, it’s not uncommon now to see brokers coming out with their statements in late February, even early March, and limited partnerships, and many other investments that issue K-1s even later than that.  Some clients that we see have received a letter saying their tax documents won’t be issued until April 1st. For those folks, it’s almost for certain that they’ll have to go on extension, whether they like it or not.

So what do we do about it?

Well, there’s not much you can do about it except understand that this is the gathering and presenting of paperwork to the IRS, and it has very little to do with paying the tax or the money side of the equation in general.  What am I talking about?  Well, the IRS has already withheld money from paychecks, pensions, IRA rollovers etc…  They have your taxes, for the most part, already prepared; they’re just waiting for the paperwork that matches from you.

Why don’t they just file our taxes for us then?

Because people can do things that alter the amounts that the IRS has on file.  For instance, at work, you might have had a certain amount of money withheld from the W-2 that is pretty much a full amount of the tax liability, but then during the year you opened an IRA for yourself and your spouse, which is reducing your tax liability, forcing the IRS to return some of that withholding.  Whereas if you hadn’t opened private IRAs, they’d be keeping it all. The IRS already has the money, and they already have an expectation of the tax liability, they’re just waiting for you to turn in the final paperwork to let them know where things really stand.  The filing of that  paperwork from you can be extended beyond April 15th!!!!.

If you have angst about not getting tax documents in time, you can take the panic road, or you can take a more relaxed approach.  Step back and look at what’s really happening and maybe consider taking an alternate view.

Say to yourself:

1. I’ve already paid the majority of my tax.

2. I can send a check right now for any amount I want so that there will be no penalties and no interest whenever I do file.

3. The IRS allows me to file an extension for my corporation or my personal return, giving me six more months to file my actual return.

4. Again, as long as I paid my tax liability in advance there’s no penalty for turning in the paperwork later.

Why are we all in this mad rush to get the paperwork in on the first deadline?  Quite honestly, we don’t know!  They made it difficult to get the paperwork in on time, again because of the allowance of companies to send the documents that we need out later and later.

Our firm focuses on getting this all done as a “partnership” between you and the country, but without the angst that causes such heartburn for many Americans.  Let’s sit down and guesstimate how much you’ll owe in tax, send in that amount and send in an extension form, then not worry about when the documents come, not worry about the mad rush of the tax filing.  April 15th will come and go with no consequence. You can file your taxes in May or June, or even later.  As long as you paid your tax liability in advance, they don’t care when they get the paperwork.  Come on in and we’ll help you figure out how much to send in advance, and then put you on extension and you can go on a nice vacation.  After the smoke clears and you are sure you have all your needed documentation, we’ll file your return in May or June or July.

The deadline to filing Partnerships and S-Corporations is approaching quickly. The deadline to file your clients’ business returns are March 15^th, 2017 and unless they are ready by then they will be subject to fees and penalties.

An extension will give them an additional six months to file their business return, so they will not need to file until September 15^th, 2017.

The extension does not extend when the payment for taxes are due, if applicable in their state. The payment of the taxes is due no later than April 18^th, 2017. Your clients can prevent the late filing fees and penalties by filing an extension and paying the tax on their net sales in 2016, if applicable in their state.

We want to inform you now, so that you will not be penalized for late payment of taxes owed.

Your Tax Marketing Friends at Ucloud!

Advisors need to help the Tax clients understand some things that people often take for granted…and are wrong! Blog this!

During tax season a very common opportunity often missed comes from understanding how you use your cars as a tax deduction on your tax return.  It is very common for people who have a schedule C sole proprietor business to claim their mileage on automobiles, but the privilege of using personal deductions on a tax return is not limited to someone who is a schedule C.  For instance, a landlord might own three apartment buildings and file a schedule E on his personal tax return and not feel like they are “self-employed” as they has a full-time W-2 job.

However, the use of his personal car on that schedule E is just as deductible, and honestly, who can generate any passive income without having some expenses?  If you have an online eBay service, you drive to the post office to mail your packages, if you are a landlord, you drive to the hardware store to get nuts and bolts, and of course, drive to the properties when necessary.  There’s almost always an automobile component to everything in our lives.

There are also many jobs that are W-2 jobs but they require the personal use of a vehicle.  Some of those employers reimburse mileage to the employee, but the mileage reimbursed is not enough to actually cover the cost.  On the bottom of your schedule A for itemizing deductions, there’s a form 2106 where you can deduct items that you are required to have for a W-2 job.  Nurses need uniforms and shoes, construction workers need steel-toed boots and gloves.  There are many opportunities where an employer actually requires the personal use of an employee’s car and even if the mileage is reimbursed at $0.35, the IRS allows $0.54 per mile, so Form 2106 is where you can make up the difference and deduct the additional pennies per mile, which can add up to a lot of savings.

The topic of whether to actually claim mileage versus actual expenses is often overlooked as well.  Many people who put in mileage were simply given that option by a tax preparer initially when they started generating income that included business use of a vehicle.  The preparer didn’t think about the choice of actual expenses versus mileage.

What else do you need to know?

The IRS, when you first put a car into service on a 1040, gives you the option of using actual expenses or mileage, so what is the mileage deduction?  It’s basically “actual expenses EZ”.  Like many parts of the tax code, the IRS gives you the simple form method of keeping automobile expenses.  You can keep track of the tires, mufflers, and repairs, keep track of the insurance, the tags, the upkeep, and deduct those expenses at a certain ratio.  But many people at tax time have not kept the repairs, maintenance, gas, or receipts, and because that’s bookkeeping intensive, the IRS eventually came up with a methodology called “miles” where they are giving people a predetermined formula.  This year, $0.54 a mile for business deductions, which represents what the average person would spend on gas, tires, oil, repairs, maintenance, if they drive their car a certain number of miles.  In other words, $0.54 times 10,000 miles, $5,400 in deductions is what you would have spent driving 10,000 miles on gas, oil, mufflers, tires, etc.

Is it always smart to use mileage?  Not necessarily.  Often people with small businesses don’t really have to go many miles but they have older cars that require more repairs and maintenance than a brand new car.  For instance, a landlord lives six miles from two apartment buildings and nine miles from the hardware store.  His average week would be 35 miles round trip to the properties.  At $0.54 a mile, it’s a very small deduction against his taxes.  Let’s assume he owns a nine-year-old vehicle that’s starting to wear out.  When he puts that vehicle into service on his 1040, instead of using miles he could claim actual expenses.

He claims mufflers, tires, a transmission repair, for example, and spends $3,000 on that vehicle, a portion of which is deductible for the landlord business.  In this case, he would have three times the tax deduction by using actual expenses over miles.  However, if the same landlord buys a brand new vehicle that’s under warranty, which covers oil changes, maintenance, and all other expenses for the next three years, then he should claim miles because, under the actual expenses model, he would have zero dollars expended.  A deduction of $0.54 per mile for 30 or 40 miles a week is better than zero.

When you first put a car into service, trade cars, buy a new car, start a new business, you actually have to stop and think about how you’re going to use that vehicle, how the deductions work and whether you should use actual expenses or mileage.  Once you’ve made the determination, however, if your circumstances change, you cannot change the formula with the IRS.  They require that you continue to use actual mileage or actual expenses for the entire time that the vehicle is used in service for the business.

What If your situation changes?

Let’s assume that same landlord living a few miles away from an apartment building with a brand new car just started a common carrier business and is going to drive hundreds and hundreds of miles a week.  How do you fix the problem?  You could trade cars with your spouse, take the car out of service from your landlord business, put your spouse’s car in service under the new business, and then you can change from actual expenses to mileage or vice versa.

The point is that this takes some “strategerie”.   Yes, that’s a new word we just made up.  Going to a tax planning firm and not just a tax preparation firm can help you catch little things like the mileage versus actual expenses choice, which can make a difference of hundreds, even thousands of dollars of money back on your taxes, instead of somebody just automatically using mileage because it’s all they know.

Call us and let us review this and a multitude of other items that people simply are not informed enough about.  Call________________ or E Mail us at_____________

Get in front of tax prospects with simple subjects!

As Always, you are welcome!

The Tax “What if” Dr;_)