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If you pay attention and plan your tax outcomes proactively, there are many things you can do to reduce your tax bill. But the planning and the resulting activities that you need to engage in to achieve those outcomes are all year-round actions you must take, not just things to do the week before you file. Start by opening your calendar and marking a day each month to spend an hour on your taxes. That’s 12 hours a year. If when you file your taxes those year-round activities saved you $1500, then you were “paid” $125.00 an hour, which is worthwhile! If you saved $10,000.00 in taxes, that would be $833 per hour. Sign me up for that job! Start...

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When planning ahead, or just engaging in their day to day operations, most business owners at least occasionally think about tax deductions. A business dinner that can be partially deductible, or a new machine that can be depreciated. However, they often don’t think about or plan how to acquire other tax credits, which can often be much more valuable. Tax credits are often transitory, with the benefits increased or reduced from year to year, or sometimes eliminated altogether, only to be brought back again several years later. Over the last few decades we have seen some popular credits renewed or in some cases even made a permanent part of the tax code. Small business owners seem to often not be...

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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...

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Many times business owners have come into our office and with our help have found that they were doing things incorrectly regarding their bookkeeping and taxes. Occasionally, the errors add to the tax burdens that they have been under-reporting. That never feels good, but it is always better to fix those issues prior to any audit. Often, errors discovered “pre-audit” can be fixed by simply amending the return, and no IRS issues follow, and everyone just moves on. But quite often, the errors made were not in their own favor. In those case, we help them file amended returns that net them large additional refunds for up to three years back, and that always feels great! So, how do these...

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When people are contemplating selling an asset like a house, an investment property, stock or a business asset, it’s usually to make a profit or to raise cash. Sometimes, a house is sold in order to buy bigger (or smaller), to move to a different town to take a new job. In the case of stocks, it might be for the taking of profits, stopping further loses, or again to raise cash.  One common thread among all of these decisions is that people generally think about them for some time before they act, as usually these are among the largest assets they have. What we see often in the tax planning world is that people sell the asset, and then...

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Tax policy and rates have always been fluid, much more so than most people realize, as they only focus on it for short periods one time a year. You also don’t see many high school or college classes on the history of taxes and tax planning, unless you’re in accounting school. Like a distant relative you see at an occasional wedding, you forget most of the prior experiences and conversations and simply repeat them as an act of convenience. It’s the lack of personal taxation understanding and the continuous ebbs and flows that allow the tax authorities to keep things the same just long enough to let people form habits, then change the tax rules to penalize the habits created....

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Many estate plans were built around the old “stretch IRA” rules that allowed beneficiaries to take withdrawals over their lifetimes. However, under the SECURE Act, most non-spouse beneficiaries must now withdraw the entire balance of an inherited IRA within 10 years of the original owner’s death. While the 10% early withdrawal penalty does not apply to inherited IRA distributions, the withdrawals are still taxed as ordinary income. For many beneficiaries—especially children, partners, or other non-spouse heirs—this can mean taking large taxable distributions during their highest earning years. In some cases, beneficiaries may also be required to take annual distributions during years one through nine if the original owner had already begun required minimum distributions (RMDs). Either way, the account must...

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It’s human nature, of course. We complain about our weight while 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...

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Have you 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 from...

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Don’t let your stockbroker off the hook when it comes to tax planning. Many people work with brokers when they buy and sell stocks. Many people now, because of the internet, also have become their own stockbrokers, doing their own research and trading on various platforms. Whether you use a professional or do your trades yourself, you still need to hold your stockbroker accountable. What do I mean? If a broker is helping you buy and sell, they had to take a Series license of some kind. Sometimes, an RIA (Registered Investment Advisor) has taken a Series 65 exam. If it’s a representative of a broker/dealer, perhaps they’ve taken a Series 6 or a Series 7 exam. There are other possibilities, but the point is, these exams are...

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