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Posted on Wednesday, May 29, 2024
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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Posted on Wednesday, May 22, 2024
Tax Planning is a constant stream of adaptation to the new rules that the government and IRS come up with annually. One year we have a tax credit for new windows, the next year it goes away, but a new credit for heat pumps is added. The only constant is change. Occasionally, policies that are popular are extended and made permanent when the IRS has enough time and data that they can see that the tax break is having the expected effect in their budget for other government agendas. The new LIQCD (Legacy IRA Qualified Charitable Contribution) is one of those items that was added during the Secure 2.0 tax package in late 2022 that has yet to become mainstream,...

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Posted on Wednesday, May 15, 2024
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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Posted on Wednesday, May 08, 2024
There is nothing permanent except change!  Stated by a Greek philosopher over 2500 years ago and it still stands true, especially in the tax code. Sometimes there are big changes, like the one coming in 2025/2026 with the expiration of TCJA, and sometimes small changes, but it’s a good bet that every year something for business owners that was deductible is not and something that was not deductible now is. It is an accountant’s job of course to keep track of all that, but the proactive communication between the accountants of the world and their clients is often lacking. A good example of this is entertainment. For a very long time entertainment was deductible for business owners while prospecting with...

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Posted on Friday, May 03, 2024
Current tax rules now require that the entire balance of a non-spousal participant’s inherited IRA account to be distributed or withdrawn within 10 years of the death of the original owner. The 10-year rule applies regardless of whether the participant dies before, on, or after the RMD (required minimum distribution) age at which they had to begin withdrawals. In other words, you must withdraw the inherited funds within 10 years and pay income taxes on the distributed amounts. Since the withdrawals are required, you won’t pay the 10% penalty if you’re under the age of 59½. But you must pay income taxes on the distributions, and you must eventually empty the account. Children of IRA holders, same sex partners in some...

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Posted on Wednesday, April 24, 2024
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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Posted on Wednesday, April 17, 2024
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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Posted on Thursday, April 11, 2024
Some people have filed their tax return, received a refund and already spent it. Others have filed and paid and the “pain is over” for another year. But for many who have not filed and are looking at the calendar and saying “Oh, no!”, here are some tips. If you haven’t filed because of a natural disaster in your area, you may not have to do anything. The IRS gives a state by state accounting of any special things going on around the country that might affect filing deadlines. Click this link, go to your state and see: https://www.irs.gov/newsroom/around-the-nation.   If you don’t have anything under special rules then you may extend the filing of your paperwork by submitting form...

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Posted on Thursday, April 04, 2024
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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Posted on Thursday, March 28, 2024
With tax season in 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...

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