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 have less than four weeks so it’s time to finish whatever you have been putting off, and get that stuff into a tax office.

Some people might say “Well, I have until October 15^th”. Remember, October 15th is the final filing day, so October 13th is the last day you should attempt to e-file, in case there are problems.  And that means you probably should have your stuff at your CPA done and reviewed by the 10th.  Well, there you go, it’s 30 days, not 45 days away.

Also, if you’re planning on funding any business related retirement accounts — SEPs, Keogh Plans, anything other than an IRA — those documents have to be in place very, very soon.  You don’t have until April 15th of 2017 to do anything other than fund personal IRAs.  If you’ve been thinking about setting up an account for your business that you can fund with much more than an IRA contribution, the paperwork has to be done and in soon, and the funding often has to happen before the end of the year!

Also, there is the overall common sense that if you do a pro-forma return based on nine months’ income, you can now start to look at just how much tax you may owe by the end of the year, with time to make adjustments.  Like start shopping for equipment for your business that you can fully deduct, or other proactive business purchases.  Problem is if you don’t know you need to make the adjustments, then how are you going to make them with confidence and with time to think about what you’re about to do?

At our firm, we like to do pro-forma returns on everybody before October 31st.  Put the numbers in to the tax software based on what you know about yourself up to now. It’s not hard to do those. As to missing tax documents that come in the mail, we can call the HR department, call the bank, call the broker, and get an up to date set of numbers very easily, plug them into the pro-forma tax return, and take a look at the damage. Then we’ve got time to think about repairs, discuss options. You have time to think and then do something that will help you with your tax burden, rather than just waiting until next year and seeing what happens.

Call us and set an appointment to come in. Let’s talk about any or all tax planning items, and be proactive this year, instead of simply full of regret in April.

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 no repairs to fleet vehicles, no staff turnover, and to have every job bid go perfectly.  Why am I giving you all these examples of businesses, good, more likely, and fantastic?  Just to put a framework around phantom income, because we see phantom income reported like other tax preparing firms every year.

People, of course, when they come to us for the first time, have come from somewhere else.  They left the CPA, or they used to be a do-it-yourselfer with TurboTax, they decided not to go back to H&R Block etc.  They went somewhere else and have decided to do something different and decided to give our firm a try.  When we ask for the copy of last year’s returns, we often see a schedule C business, not incorporated, simply run as a personal business on a personal return, with unbelievable amounts of phantom income.

What is phantom income and how does it happen?  Well, phantom income generally is the deposits of a company were accurately reported, because those people get sent 1099s from their jobs.  They deposit money in their checking account.  It’s not hard to track the income of a company from deposits and tax records that are mailed to them by the people that pay them so that part’s almost always right.  The problem is people don’t know how to properly categorize, document, nor do they even think about expenses being a business expense rather than a personal expense when they are a sole proprietor.  They simply don’t claim the deductions, the offsets that are supposed to go against those gross revenues before they report their profit to the IRS.

A $58,000 business consulting income, because a teacher retires from a school district and helps a struggling school district to set up new management and work flows as an independent contractor, gets his 1099 from the two schools that he worked for totaling $58,000.  He did most of the work from his home computer and his cell phone.  He drove to each one of the schools a couple of times a week.  He claimed a few dollars in mileage, but reports $45,000 of profit after expenses against the 58K on schedule C on his tax return.  That escalated the teachers’ pension and other incomes up to the 33% tax bracket.  That’s phantom income that we at our tax planning firm see over and over again, because nobody on earth has a business that returns a 500% profit.  They simply didn’t know how to deduct or properly categorize or document the things that they considered personal expenses, but by the IRS’ guidelines could have easily been actual expenses against that income.  They said yes and did the consulting, but then they didn’t take a course in properly documenting use of vehicles, meals and entertainment, travel, personal education, legal fees, office expenses, and all of the other things that they took for granted and did not deduct.

Expenses like a home office deduction, cost of a new laptop, all sorts of things that were supposed to be taken as deductions against that gross income but simply weren’t because they walked into a tax office and said, “Oh, I earned this consulting this year”, to which preparer asked, “do you have any expenses to go against this?” and they said, “hmmmm, not really, some mileage I guess”,  not realizing how detrimental the lack of caring about the deductions would be on their personal tax return until it was too late.
Go onto Google and look how much average percentage of profit does the owner of a restaurant make?  How much profit does the owner of a tire store make?  You won’t see 100% profit, 50% profit, as industry averages of Fortune 500 companies, the margins are much smaller.  When you see it happen on a personal tax return, out of the lack of taking deductions, make them think in these same terms.

Most of the time it’s deductions that make phantom income go away.  They’re legal, they’re applicable, and they’re so often completely missed.  Unfortunately reported to the IRS by preparer`s that didn’t want to force the conversation and say “no” to filing an incomplete tax return.

Bring in your returns without deduction and we will give you tools to help you keep track, education on what to do and file an amended return and get you that tax you should not have paid back!

Post items like this with your call to action and you`ll be getting contacted by good prospects!

As Always, You`re Welcome!

The Tax “What if” Dr;-)

This kind of post should bring in a great prospect or client who would like to take action, but has not, because they are not current on how taxation of capital gains works. Post the information below and give them a heads-up or reminder.

Does the IRS really have “Yard Sales?”  Yes, all the time!

The tax code is much more fluid than the public is truly aware of and deductions and credits come and go all the time. Deductions like mileage for business owners change with the cost of gasoline, for instance, and can go up and down annually. Often it is actual programs that come and go, like energy tax credits or being able to transfer an IRA to a charity directly without paying income tax but still satisfying RMD requirements. Often these programs are temporary, and depending on whether the government believes that they have met their objectives, sometimes expire, or may become permanent.

Capital Gains Tax

Capital gains taxation is one of those items.  It’s been changed over the years, but under the original Bush tax cuts was dramatically reduced, and then what was intended to be temporary has been extended again and again, with only one small alteration last year effecting the very top income earners. A totally misunderstood gem, most of the public thinks the tax would be substantial, so they are not taking action on capitalizing a gain, even though for the most part the tax would be less than what they imagine, often resulting in no tax at all! Real estate, stock portfolios (which are at an all-time high range) that likely should have some profit taking and other items that receive capital gains treatment should be closely examined, and a tax forecast completed to calculate the actual gain for clients, to replace what is imagined with a real number!  Even people in “zero tax brackets” should do this to step up the cost basis on items, potentially free of tax!!

Although this may sound complicated and expensive, it is actually EASY AND FREE!

Call our office and make an appointment, and we will have one of our CPAs calculate the tax on any item you have if sold and we’ll give you the tax forecast to take with you to show your current preparer or planner to have them verify the number. We want to educate our community so they can make good decisions based on fact, not fiction!

Call______________ or e-mail_______________ and let’s get you informed!

Advisors, you should also do this for yourself!

As Always, You`re Welcome

The Tax “What-if” Dr;-)

Sometimes a simple, short message about a single topic will catch a prospect at “just the right moment.” Post this message below from our Do it yourself Cabinet.

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.

Call us today at ________________ or E Mail us at ________________________ for more information without obligation.

You`ll likely be at the right place with the right message!

As always you`re welcome,

The Tax “What if” Dr;-)

Advisors can accomplish a lot by doing the right thing by clients and prospects even when it does not include compensation. What goes around comes around as they say! Here is a blog post for clients that does just that, just helps them to start. Many will have a lot of extra cash in the house hold budget after they accomplish the steps in managing their mortgage!

Time flies is something you might parrot when you are young, and agree with when you’re middle aged, but you feel it when on the second half of your century. The only constant is a surprise…its change!

From three channels on the TV and payphones, a mimeograph machine at work and a smoking room, to the end of connected phones and the cloud, things have changed. I fought some changes, I paid for a land line phone that I never dialed in two years before letting it go. Others I thought “wow how awesome” and jumped right in with both feet. Letting my Garmin tell me where to turn, ended the fight with my spouse over the map! Progress is Cool!

If I’m going to adopt apparently isn’t the question, just how long I can hold off change because I’m tired and don’t feel like learning something now that I will eventually learn and adopt. HMMM why do I wait when its better?!?

Why the build up? Because what our parents told us about buying a house and what the banks sold us as the way to do it is for the most part now nonsense! A 30 year traditional mortgage is a great deal for a bank, savings accounts paying ZERO and CD`s paying .75% might not be a good deal for the bank but they are for sure not a good deal for you; but that’s what people do.  Until they decide to learn and adopt, then they change to a managed mortgage package!  There is a lot of detail to discuss, but the short version is that many people will pay a 30 year mortgage off in 8-12 years or less and earn mortgage rates on savings!

Let us show you what we are talking about and remember our motive. WE AREN’T IN THE MORTGAGE business and we will gain nothing no matter what you do. We are just spreading the word that progress has happened. This time it could make a huge difference in your financial life and as we are a Tax Office, the subject matter is you keeping and making money!

If you’d like to be educated we will refer you to someone we have vetted and we think trustworthy!!  The rest is up you. If there is a twisted knotted 12 foot cord hanging from your wall phone, we won’t expect a call.  If you have a computer, cell phone or personal message delivering drone, then get in touch with us!

Call us at _____________or text us, or e-mail us ______________

You are Welcome,

The Tax “What if” Dr;-)

Go post something like this, SEND IT OUT BY E-MAIL or even mail it if that’s what you do, but get your summer phone ringing!

Hopefully, you have family that you love and that loves you.  It’s the greatest asset any of us could have.  If it’s not the family you were born to, then we hope you have a family you put together for yourself…..sometimes those are even better.  Summer time seems to lead us all to gathering families of all kinds together at events, to have BBQ`s or other “get-togethers” and it’s during that time that it wouldn’t hurt for any or all of us to reflect on our plans for helping them to help us in our time of crisis.  After all, none of us are going to get out of this life unharmed!

Death and taxes are the only certainties in life, yet at our tax office we ask in our questionnaires if folks have a financial power of attorney, health care directives and healthcare power of attorney, will & testament or living trusts; and those answers are usually “No”.  It’s OK, it’s human nature not to want to think about all the bad that can happen to us, let alone make an appointment with a lawyer and plan to talk about it for hours and pay a legal bill as desert!

This is just a quick reminder that we work with a national network of attorneys and have pre-negotiated pricing that’s really great for those legal documents for our clients.  We can also assist you in formulating your choices, in plain English (not Latin), so it’s quick and easy.

Would you rather a have a judge of probate or a hospital employed doctor make your choices for you when in crisis, or have good documents already in place that specify the people you have chosen to make those decisions?

Call us and we will help you knock it out fast and affordably, so you can smile at those family members at the next gathering, rather than thinking about the burden ahead for them that you didn’t mean to leave…but did!

Call me at ___-____ or e mail me at _________________ or text me at ___-____ and let’s get it done this month!

If you get just a few responses, the people they choose to put in the documents become a quick referral as well….and so on and so on!

As always, you are welcome!

The Tax “What if ” Dr;_)

Tax Office Ownership Marketing is so powerful when you can use all the experts in the cloud and all those special areas of expertise. If you only collaborate with your local talent than you might never find a firm that does 412I plans or Private Insurance Company`s or CRT`s or a host of other specialties. In the cloud you have it all and you do it all!

Below is an example of a message you could send out today, if you`re in our community.

Many of our clients are business owners and we often have conversations with them in and around the value of their business. It’s easy to pin a number on a business based on emotion; after all if you have built a business from scratch or bought somebody else`s business and made it your own, it becomes your baby.  Family is worth more to you than anything on earth, but your business ends up coming in a close second.  But your emotional value doesn’t have any bearing on the actual value, and when dealing with banks, insurance companies, and the various other people that help your business grow and operate, they often need a number based on a formula.  Sometimes it’s quite a surprise when we do have business evaluations, and find that it’s actually worth more than a business owner imagines. “Can’t see the forest through the trees.”  Business owners are so busy operating and growing their business that they don’t realize what it’s really worth, or how big it has become.

Often though, business owners are unpleasantly surprised to learn that because of certain factors, a business is worth less, which causes a problem with financing, insurance, and other key issues.  When they find a business is worth less, often they find they also get the information as to what changes would need to be made for it to increase in value.  So what’s our point?  Well, we’re proud to announce that because of the partnerships with our national CPA offices and the new advances in “big data,” business evaluations are much easier and much less expensive to obtain than ever before.  When businesses in the past looked to our CPA`s, the answer was often a commitment of quite a bit of time answering a great deal of questions, which is hard for a business to give up, even harder to give up than their capital.  Then they wait for anywhere from eight to 16 weeks for the data to be compiled, and then the bill for all that time and effort could be $5,000, $6,000, $10,000, often resulting in a business owner that would really like to have an accurate evaluation being unable to do so.

We are announcing the change of those circumstances.  With our service, if you want a business evaluation, with three hours of your time, copies of your tax return, and the ability to now go and utilize big data, we can deliver a quality business evaluation in one week, and usually for less than $1,200.  No, you didn’t read that wrong.  A real business evaluation in seven days and usually for less than $1,200.  Call or email today, and let’s get a real evaluation into your hands that will help you and your business make the right choices and continue on a good path.

This makes advisor`s phones ring!  Should you call us and have a demo?

We are standing by and here to serve!

www.ucloudps.com

Post things that remind people of the emotions they had just a few weeks ago and give them a good call to action!

Example;

Many times during a person’s financial planning life, they look back with regret. “I should have sold my stock portfolio the week before.”  “I should have bought that stock that is now at a billion.”  “My buddy told me to buy X and I didn’t.”  “I should have bought long-term care insurance.”  Etc, etc, the list goes ON AND ON, but people don’t seem to have the same regret over tax planning errors or things they could have done strategically, and in most cases it’s the easiest thing for them to do, and the thing that’s going to have a more predictable outcome versus speculative things that they think about. You could retroactively wish that you had bought Disney when it was at 34, now that it’s at 65, but all you’re doing is dreaming about being a better guesser.

With the tax code, it’s cut and dry.  There are things that you can do right now that you absolutely know the total result of after they’re accomplished.  They provide real savings all the time.  For instance, if you have a lower income, don’t contribute to your company’s 401k with pretax dollars.  If you’re in the 15% bracket or lower, you’re smarter to take advantage of the company’s Roth 401k, not avoid the tax now, but take the match in a place where the growth will be free forever of tax and then let it grow a lifetime.  Later in your life when you’re in the 25% or higher tax bracket, you’ll enjoy a large portfolio of tax free cash to tap into.

These are the kinds of regrets that we can help you avoid because our tax office does proactive tax planning.  It’s Spring, and it’s time to plant tax planning strategies and let them grow, just like you’re planting bulbs in your garden.

Call, text, e mail or walk in our door today for a fifteen minute tax review, and if we can’t show you at least one tax strategy that you agree would be good for you to execute, then we’ll give you a $50 summer savings Visa card to enjoy purchasing some beach towels or whatever!

Just keep sending regular and interesting information and invite them to call you and come in! Social Media is powerful , free and more and more prospects are listening!

As Always, you`re welcome!

The ‘Tax What-if” Dr;-)

Now that spring is sprang? sprung? It’s easy for people and advisors alike to drop the subject and not want to think about taxes for a while. That is unfortunate, as most tax advice needs to be given by May or June to have long enough to help your clients when it’s time to file their 2016 tax return. Send them a contact like this one below and help them plant tax saving seeds they will enjoy next new year!

Tax Planning has often been misunderstood because the advice that our parents gave us is theoretical and absent of a tax code. What do I mean by that? There are general principles in life that have been passed down since they were first penned, “Neither a borrower nor a lender be!” Ben Franklin

The advice is about more than money.  It’s about a financial life philosophy. The problem with much of it is that because of the US tax code, it often should not be followed. Pay your mortgage off early; don’t have debt; pay cash for a car; don’t finance; and buy solid dividend paying stocks from good companies. All sound advice in theory, but in practice it depends on your tax bracket and whether you own a company or work for others as well as many other factors as to whether or not you should follow the advice of your elders.

Pay extra on principle or pay your mortgage off early, depends on the rate you are paying and whether you file long or short form 1040. People often take general advice and apply it to everyone in this area. The bank trying to sell a “tax deductible” home equity loan to a young couple does not often say, “well, after reviewing your tax return we can see that you are taking the standard deduction and even if we add this mortgage interest to your other schedule A expenses you are still going to be better off with taking a standard deduction so this HELOC will not save you any tax at all.” Then that couple shows up at our tax office in February with the interest statement and their W-2, about to be enlightened that the tax bill is the same!

The advice I question the most now is “buy dividend paying stocks.” Not wanting to turn this into financial advice, I state with my “Owner of a Tax Office” hat on, that people in retirement should perhaps only take the advice up to the 25% tax bracket?! Now with the 3.8% net investment surtax on dividends and the Medicare .09% surtax that is also already triggered on the majority of the dividend surtax payers, AND the fact that dividends often help trigger social security income being taxed as well, it is no longer clear that the advice is really appropriate! Especially because the need for income from the dividends is usually not part of the equation when people are at these income levels.  From a TAX perspective, growth stocks can cut out the tax applied to dividends and help stop the THREE additional hidden taxes that are also often   unknowingly paid. If the retiree needs the income, that is a different story, but most don’t.

OK, so I’ve blabbed on as usual!  What’s the message I’m trying to have you walk away with?

Call our office and make a tax planning appointment, as unsexy as that is compared to the beach or golf course, and we will look at what you have done purely from a tax perspective, and perhaps we will tell you that you are perfect and shouldn’t change a thing!  We might, however, tell you to change some habits that your well-meaning parents, teachers and coworkers have told you to follow.  Not because they were wrong, but because the IRS changed the rules in the middle of the game!

Call us today at ____________________ or E Mail is at _____________________

Get a message out and watch what grows in your office!

And as always, you are welcome!

The Tax “What if” Dr;-)

Get the spring cleaning message out to your prospects, suspects and clients as they are thinking spring but might not be thinking about the fact that a few minutes in your office could pay for all the spring plans they have and more. Here is an example of a simple but effective touch to Tweet, post, e blast or even put in the mail with an appointment card.

Spring Cleaning of your financial and tax plan.

With spring in the air almost everywhere, people move their thoughts to the yard and start going to home shows. Plans that developed over the winter go into action and spring cleaning begins.

Don’t just rake up the leaves you missed last fall and unwrap the outdoor grill, let’s take a 45 min meeting and clean up your ineffective investments, plant the tax changes that will lessen the tax bill for next year and give your finances the chance to grow properly in 2016 as well as the tulips. My spouse will fill the SUV with flowers and I need to replace the lawn mower and I also want to buy a new hammock, we will likely spend $800.00 or more in the next ten days. You likely are going to spend that amount or more on something similar.

Here is our financial and tax spring cleaning challenge to you:  Book a review appointment in the next ten days and bring in your spring spending wish list and we will either in tax reduction or income increase find you the amount you wish to spend. There are some new tax penalties that you likely just paid that we can help you avoid next year. There are expensive asset classes that we can show you an alternative to, while keeping you in the same asset class with a similar Alpha and Beta but a better outcome. Let’s us “clean up your tax and financial yard” and then we can have a burger and a beer together and sit back and look at what we have done, after all its spring!

Call us at __________________or E Mail ____________________

Get the message out and capture a few new prospects that want to change things to grow!

As Always, you`re welcome!

The Tax “What if” Dr;-)