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Posted on Wednesday, July 01, 2020
It’s July but the big fireworks are a victim of COVID-19. Although true, small local and personal fireworks will likely be everywhere as people adapt. That fireworks habit is ingrained in us so the fun will find a way. Another behavior or habit that’s ingrained into people is spending more time on “staycation” vacation plans than time spent fixing next year’s tax problem when now is the time to take your preventative medicine and avoid the pain! In being humans, we all form habits. Some are good, most are bad. We try to develop good ones to replace the bad and often we are successful. However, most successes don’t come without a coach, cheerleader, or some kind of support system. Tax...

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Posted on Friday, June 26, 2020
Often people will have one-time “Income Events” and so planning and especially the tax aspects are the motivation. In these cases, you can consider setting up a Charitable Lead Trust (CLT) in order to receive an upfront income tax deduction. A person who has significant and unusual taxable income in a particular year can establish the grantor lead trust and use the charitable income tax deduction to mitigate the impact of taxes in his or her situation. An example might be someone who has received the proceeds from selling a business, or a stock option at work is coming due. A far more common and likely example is someone who has inherited an IRA. These situations will trigger an unusually...

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Posted on Monday, June 15, 2020
A Donor Advised Fund or “DAF” is defined as “an account at a sponsoring organization, generally a public charity, where an individual can make a charitable gift to enjoy an immediate tax benefit and retain advisory privileges to disburse charitable gifts over time.”  But what does that mean in practical terms?   You can set up a “DAF” through a financial adviser or directly with some charities, and like giving to a charity itself, simply deduct that gift on Schedule A of your 1040 tax return.  However, many people under the new tax code no longer file a Schedule A.  Many people give to charities every year, and report those donations to the accountants.  However, since the new standard deduction...

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Posted on Friday, June 05, 2020
Charitable planning has always allowed some great tax benefits for clients with tax trapped assets, and the second benefit, the charitable deduction.  What’s a tax trapped asset? Why is the charitable deduction the second benefit and not the first?  What are the one-time 2020 rules?  Well, that’s the point.  Most people don’t understand why these trusts are so often the “go to tool” for so many tax planners.  They have many often misunderstood benefits and aren’t really primarily about benefitting the charity at all, but the donor in most designs.  Over the next few weeks we will discuss the Charitable Planning Toolbox, starting next week with Donor Advised Funds, and will continue to explore more about these great partnerships between...

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Posted on Friday, May 29, 2020
The people who have filed and paid too much tax again this year, as they did last year, almost always make themselves a promise that they “will do better from now on.”  They will keep better records; maintain a mileage log.  They will learn more about work options and increase their 401(k) or 403(b).  They will start a hobby job, or purchase a rental property and on and on.  Then Summer comes and it all fades into the background as the beach, golf course or woods call to them.  Family starts getting together, concerts are abound and all of a sudden it’s Fall.  Then work picks up and kids are back to school or off to an out of state...

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Posted on Friday, May 22, 2020
That’s what you often hear from a sneaker manufacturer or a car company to create a feeling of scarcity for a product in order to drive desire or cost up.  This is not a typical tactic of the IRS.  COVID-19 and the reaction to it has created a path of human misery, but like cutting up broccoli and stirring it into your kids’ mac and cheese, there are some hidden benefits for a few people unlucky enough to have had the virus, but fortunate enough to have recovered.  One such benefit is the ability to take up to $100,000 from a 401(k) or other retirement account without penality and without full taxation in one year, as would normally be the...

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Posted on Friday, May 15, 2020
Think again.  Of course, human life is more important, especially when it’s yours!  That being said, many of us have a worry list that is growing and if taxes were on that list, they have been pushed down by all the new concerns.  There is a growing divide in the U.S. between the people who have been able to keep working and those who have free fallen through the abyss of instant lack of income.  Those who own companies and those who work for them.  Taxes in most cases for those poor souls that stopped working are not a concern normally, other than having proper withholding, so even less now.  For those who kept working however, spending is often down...

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Posted on Friday, May 08, 2020
Many self-employed and small business owners who did not get applications in before the money ran out the first time around, are now getting them in during this second round of PPP funding, and the frantic level of requests seen previously seem to be a bit more orderly now.  Many people we have spoken to say that they are still working in some limited capacity, or had savings and so are getting by and have avoided taking PPP funds, as they don’t feel “as affected”, although they don’t know what will happen in the future.  That’s the rub.  What if they don’t take the funds today, since they are above water, but the funds again run out, and in August...

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Posted on Friday, May 01, 2020
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...

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Posted on Friday, April 24, 2020
The tax planning world has been evolving very quickly in the last few months.  Needless to say, anyone who felt they had a handle on being proactive is now working with at least one hand behind their back (maybe even two).  Accountants that are proactive (a small subset of the overall group) have been very actively communicating with clients who own businesses; self-employed, independent contractors, partnerships and formal corporations.  The non-planners have been taking phone calls, the planners have been making phone calls.  Later, when the PPP and SBA applications are finished, those same proactive accountants will start working with charitable clients around the new rules that allow for up to 100% of AGI to be taken as deductions.  Then,...

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