More Than Ever You Need to Go See a Proactive Tax Planner!

Posted onDecember 1, 2017

by William Wolk

By the time you read this we may know for sure the fate of the tax bill in the Senate, and we already know and have reviewed the tax bill in the House. The headlines at 3:50 PM ET on November 30th read “G.O.P. Lines Up Tax Bill Votes in Senate; Analysis Says Cuts Add $1 Trillion to Deficit” I would scream and hide under the bed, except for the fact that the national debt is already at 20 trillion and change already, and also if that was the biggest problem. The unfunded Social Security obligations of $32 trillion* and massive Medicare obligations make the deficit a small problem, as according to many sources and articles too numerous to list, the range for the two together (Social Security & Medicare) is $70 Trillion to $124 trillion in the red.

No wonder the country also finds itself over-medicated.

Knowing all that, the approach that is being attempted by the Trump tax cut plan is simply to cut taxes on companies and cut taxes on mega wealthy families (elimination of estate taxes), and in my humble opinion, it can be boiled down to: Companies will stay in the U.S. and not move to other countries and they will hire more people. I would take the bet myself, as the problem we are trying to solve is arguably a $100 trillion problem, and we are betting $1 trillion. Then, we are betting that the new-age Rockefellers of the world will stay in the U.S. and not move to Cypress or Ireland if we don’t take $400 million of their billions for permission to die, by applying a death tax. I also will take that bet, people with a billion dollars are smart enough or lucky enough to have made a billion dollars, they will leave the U.S. to keep it…let them stay. Perhaps some overall good will come of that, simply on blind faith.

All the simplification part of the bill does is make it simpler for us to file and for them to collect, but it will shift dollars and who wins and losses on their own personal 1040. But, for the country it does little. Most of us will pay more, but at least we won’t have to keep receipts and records, and we can spend the time lost on that work with a family member (hey, maybe even outdoors and without your cell phone in your hand!).

If you want to actually cut your personal taxes, the only thing that’s going to do that is planning with a tax planning advisor, CPA, CFP or MBA. There are people all around you saying, “Hey, come see us and we’ll help you plan your taxes and proactively try to reduce your tax bill”. They can help. This bill is not the easy button, it’s a “Hail Mary” football throw.

8 Smart Tax Tips — With a Few Twists

NEW YORK – One of Marty Murray’s clients in his practice as a CPA made a decision to sell a piece of art, only to find herself waking up in the middle of the night in a cold sweat.

“She realized she would pay income tax,” Murray told a room of about 40 planners at the FPA’s spring retreat in New York, and she called Murray up.

“I said, ‘Well, have your son sell it,'” Murray said, explaining that having the son complete the transaction allowed it to be taxed in his much-lower bracket rather than her higher one.

The downside, the CPA explained, is the client had to pay Murray to fill out a gift tax return to show the piece had moved out of her name and into her son’s name. But, in the end, this strategy saved her money.

Murray, of Murray & Josephson, CPAs in New York and Boca Raton, Fla., offered a review of basic tax strategies with a few twists at his conference session this week. Other recommendations included:
•Focus on reducing your clients adjusted gross income. While an obvious goal, it’s a central one that can get lost in other tax-planning strategies.
•To that end, have your clients put as much money as they can and will need for future medical expenses into health savings accounts, if they have them. “It’s a great way to save for retirement,” a woman in the audience said. Murray agreed, saying, “I look at it as more of a retirement thing. I don’t think a lot of people are using that, but it’s a great tool for reducing AGI.”
•Try other ways to reduce AGI: Take an adjustment for student loan interest, both for your clients’ loans and for those they are servicing for their children. Deduct moving expenses, although bear in mind that certain rules apply. (For instance, clients have to move at least 50 miles from their old house and closer to their work.) Deduct payments for self-employed health insurance. Urge clients to max out contributions to their retirement plans, including IRAs, simplified employee pensions (SEPs) and SIMPLE retirement plans. And if your clients sustain a loss due to a disaster like Hurricane Sandy, they can deduct that loss if it exceeds more than 10% of their AGI in a given year. Keep in mind that Congress may choose to change this rule to reduce that percentage.
•Convince your clients it’s better that they write out a big check to the government as opposed to getting a large refund on the back end, so they can keep their money for as long as possible. To make that point, Murray says he keeps a refund check the IRS sent him for $1 (that he never cashed) to prove to his clients how he manages his own finances.
•If a client’s child is making more than $15,000 a year and that client makes too much money to qualify for certain education and other child tax credits, consider having the child removed as a dependent. That way the child can qualify for the credits, and the family overall saves money.
•Manage your clients’ tax brackets. Accelerate income in a low-earning year if you know the next year will bring a windfall, and push income into the next year when the windfall is this year. Strategies might include paying January’s mortgage interest in December, making regular charitable contributions early and deferring income to the extent possible.
•Accelerate as much of a client’s income as you can when the client falls under the AMT (alternative minimum tax) in a given year but knows he or she will escape the AMT by virtue of falling into a higher tax bracket the following year. “Accelerate it to the point where you are no longer in the AMT this year,” Murray says.
•When it would benefit a client to have a Roth, have that client urge his employer to offer one. It costs companies very little to offer this as a benefit.

For ADA Anniversary: IRS Spotlights Tax Benefits and Services for People With Disabilities

WASHINGTON — Sunday, July 26th, is the 25th anniversary of the Americans With Disabilities Act, and the Internal Revenue Service is marking the occasion by spotlighting a number of tax benefits and services that can help taxpayers with disabilities.

ABLE Accounts

This new program was passed by Congress in December. Under the law, states can offer specially designed, tax-favored ABLE accounts to people with disabilities who became disabled before age 26. Recognizing the special financial burdens faced by families raising children with disabilities, ABLE accounts are designed to enable people with disabilities and their families to save for and pay for disability-related expenses.

Any state can offer its residents the option of setting up one of these ABLE accounts, or if it chooses, contract with another state that offers such accounts. Contributions totaling up to the annual gift tax exclusion amount, currently $14,000, can be made to an ABLE account each year, and distributions are tax-free if used to pay qualified disability expenses.

Tax Credits

Low-and moderate-income workers and working families often qualify for the Earned Income Tax Credit (EITC), a refundable credit that varies by income, filing status and family size. Although many eligible taxpayers with disabilities get the EITC, the IRS estimates that as many as 1.5 million others miss out on it each year because they fail to file a federal income tax return.

But there’s still time to get the EITC. Generally, eligible taxpayers can still file a return claiming the credit for tax year 2012, 2013 or 2014. People can see if they qualify by visiting and answering a few questions using the EITC Assistant.

Another credit, the credit for child and dependent care expenses, can help working taxpayers paying the cost of caring for a spouse or dependent who is physically or mentally unable to care for themselves. Use Form 2441 to claim the credit. For further details, see Publication 503.

Deductions Available

Taxpayers with disabilities can deduct various impairment related work expenses on their federal income tax return. Both employees and self-employed individuals may qualify.

In addition, various unreimbursed disability-related expenses qualify as deductible medical expenses. However, to get a tax benefit, an eligible taxpayer must itemize their deductions on Schedule A, and their total medical expenses must exceed 10 percent of their adjusted gross income (7.5 percent for taxpayers who are at least age 65). Eligible expenses include:
•Artificial limbs, contact lenses, eyeglasses and hearing aids
•Cost and repair of special telephone equipment for people who are deaf or hard of hearing
•Cost and maintenance of a wheelchair
•Cost and care of a guide dog or service animal
•Within limits, premiums for qualified long-term care insurance.

For a detailed list of qualifying medical expenses, see Publication 502.

Tax Help

Publication 907, available on, highlights these and other tax benefits for people with disabilities, including special rules for reporting disability income. During the tax-filing season, trained community volunteers prepare tax returns for low-and moderate-income taxpayers, including many people with disabilities, at thousands of neighborhood tax help sites nationwide through the IRS-sponsored Volunteer Income Tax Assistance VITA and Tax Counseling for the Elderly (TCE) programs. Last year alone, more than half a million returns were prepared, and in most cases electronically-filed, for taxpayers with disabilities.

Year round, the IRS also offers a variety of helpful resources through the Accessibility link on These include accessible IRS forms, instructions and publications that can be downloaded or viewed online in text-only format, Braille-ready files, browser-friendly HTML, accessible PDF, large print and ePub for mobile devices. The IRS has also produced 100 YouTube videos in American Sign Language on topics ranging from the Taxpayer Bill of Rights to the EITC. In addition, taxpayers can request reasonable accommodations for services in any federally funded or federally assisted tax program

Review Your Taxes This Summer to Prevent a Surprise Next Spring

Each year, many people get a larger refund than they expected. Some find they owe a lot more tax than they thought they would. If this happened to you, review your situation to prevent another tax surprise. Did you marry? Have a child? Have a change in income? Some life events can have a major effect on your taxes. You can bring the tax you pay closer to the amount you owe. Here are some key IRS tips to help you come up with a plan of action:

  • New Job.   When you start a new job, you must fill out a Form W-4, Employee’s Withholding Allowance Certificate and give it to your employer. Your employer will use the form to figure the amount of federal income tax to withhold from your pay. Use the IRS Withholding Calculator on to help you fill out the form. This tool is easy to use and it’s available 24/7.
  • Estimated Tax.  If you earn income that is not subject to withholding you may need to pay estimated tax. This may include income such as self-employment, interest, dividends or rent. If you expect to owe a thousand dollars or more in tax, and meet other conditions, you may need to pay this tax. You normally pay it four times a year. Use the worksheet in Form 1040-ES, Estimated Tax for Individuals, to figure the tax.
  • Life Events.  Check to see if you need to change your Form W-4 or change the amount of estimated tax you pay when certain life events take place. A change in your marital status, the birth of a child or buying a new home can change the amount of taxes you owe. In most cases, you can submit a new Form W–4 to your employer anytime.
  • Changes in Circumstances.   If you are receiving advance payments of the premium tax credit, it is important that you report changes in circumstances, such as changes in your income or family size, to your Health Insurance Marketplace. You should also notify the Marketplace when you move out of the area covered by your current Marketplace plan. Advance payments of the premium tax credit help you pay for the insurance you buy through the Health Insurance Marketplace. Reporting changes will help you get the proper type and amount of financial assistance so you can avoid getting too much or too little in advance.

For more see Publication 505, Tax Withholding and Estimated Tax. You can get it on at any time.

Additional IRS Resources:

IRS YouTube Videos:

IRS Podcasts:

If You Get an IRS Notice, Here’s What to Do

Come see me in Newtown, if you get an audit letter from the IRS. They make mistakes also and our highly trained CPA’s will help you resolve the situation so you can enjoy your summer worry free.

Each year the IRS mails millions of notices and letters to taxpayers. If you receive a notice from the IRS, here is what you should do:
•Don’t Ignore It. You can respond to most IRS notices quickly and easily. It is important that you reply right away.

•Focus on the Issue. IRS notices usually deal with a specific issue about your tax return or tax account. Understanding the reason for your notice is important before you can comply.

•Follow Instructions. Read the notice carefully. It will tell you if you need to take any action to resolve the matter. You should follow the instructions.

•Correction Notice. If it says that the IRS corrected your tax return, you should review the information provided and compare it to your tax return.

If you agree, you don’t need to reply unless a payment is due.

If you don’t agree, it’s important that you respond to the IRS. Write a letter that explains why you don’t agree. Make sure to include information and any documents you want the IRS to consider. Include the bottom tear-off portion of the notice with your letter. Mail your reply to the IRS at the address shown in the lower left part of the notice. Allow at least 30 days for a response from the IRS.

•Premium Tax Credit. The IRS may send you a letter asking you to clarify or verify your premium tax credit information. The letter may ask for a copy of your Form 1095-A, Health Insurance Marketplace Statement. You should follow the instructions on the letter that you receive. This will help the IRS verify information and issue the appropriate refund.

•No Need to Visit IRS. You can handle most notices without calling or visiting the IRS. If you do have questions, call the phone number in the upper right corner of the notice. You should have a copy of your tax return and the notice with you when you call.

•Keep the Notice. Keep a copy of the notice you get from the IRS with your tax records.

•Watch Out for Scams. Don’t fall for phone and phishing email scams that use the IRS as a lure. The IRS first contacts people about unpaid taxes by mail – not by phone. The IRS does not initiate contact with taxpayers by email, text or social media.

•The Right to Retain Representation. The Taxpayer Bill of Rights, or TBOR, takes many of your rights in our tax laws and groups them into 10 broad categories. For instance, you have the right to retain an authorized representative to represent you in your dealings with the IRS. You also have the right to seek assistance from a Low Income Taxpayer Clinic if you can’t afford representation. For more, visit and type TBOR in the search box.

IRS Tips about Vacation Home Rentals

IRS Summertime Tax Tip 2015-03, July 8, 2015

If you rent a home to others, you usually must report the rental income on your tax return. However, you may not have to report the rent you get if the rental period is short and you also use the property as your home. In most cases, you can deduct your rental expenses. When you also use the rental as your home, your deduction may be limited. Here are some basic tax tips that you should know if you rent out a vacation home:

  • Vacation Home.  A vacation home can be a house, apartment, condominium, mobile home, boat or similar property.
  • Schedule E.  You usually report rental income and rental expenses on Schedule E, Supplemental Income and Loss. Your rental income may also be subject to Net Investment Income Tax.
  • Used as a Home.  If the property is “used as a home,” your rental expense deduction is limited. This means your deduction for rental expenses can’t be more than the rent you received. For more about these rules, see Publication 527, Residential Rental Property (Including Rental of Vacation Homes).
  • Divide Expenses.  If you personally use your property and also rent it to others, special rules apply. You must divide your expenses between the rental use and the personal use. To figure how to divide your costs, you must compare the number of days for each type of use with the total days of use.
  • Personal Use.  Personal use may include use by your family. It may also include use by any other property owners or their family. Use by anyone who pays less than a fair rental price is also personal use.
  • Schedule A.  Report deductible expenses for personal use on Schedule A, Itemized Deductions. These may include costs such as mortgage interest, property taxes and casualty losses.
  • Rented Less than 15 Days.  If the property is “used as a home” and you rent it out fewer than 15 days per year, you do not have to report the rental income. In this case you deduct your qualified expenses on schedule A.

Summer (Now) is the Time to Fix your 2016 Income Tax Problem!

May people will be filing there 2015 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 years 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 4pm looks like rain. Tell your boss your 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 its not to late to have real success. Procrastinate and the summer will be gone and your chances of real success will be greatly diminished.

To quote a great American, “Get er done”

You`re Welcome, Bill Wolk;-)

Everyone with real estate or retirement accounts or bank accounts need a Living Trust to avoid Probate.

I have a special arrangement with an estate planning attorney. You can watch a video on the trust package and/or read below. You can do a living trust package in my office for a very reasonable price. Call me for the details.  Virtual Brochure for Living Trust Package 


– The Basics of Living Trusts –

NOTICE:  The following information is intended for educational use only and not to replace or supplement any tax or legal advice.  Personal tax and/or legal counsel should accompany the implementation of any planning methods described in this article.  Gender is meant to be cross referenced and singular can mean the plural.

Regardless of the estate size, a Revocable Living Trust (RLT) addresses virtually every basic estate planning need in providing the privacy, convenience, practicality, safety and control that everyone wants.  The cost savings and administrative efficiencies associated with a fully funded RLT are well established, undisputed facts.  A living trust should be the foundational estate planning device for every family with legitimate planning needs.

The Reality of Probate –

When someone dies with assets titled in his name alone, as happens when using a “stand-alone will” (only) to transfer assets at death, such deceased person becomes a decedent property owner.  A decedent is obviously unable to transfer his property to anyone.  Consequently, the primary purpose of probate then arises which is to transfer title of assets from a decedent to the decedent’s heirs.  This proxy retitling/transferring of assets – to the decedent’s personal representative who then conveys the retitled assets to the decedent’s heirs – requires a surrogate court procedure called probate.

Problems with Probate –

Inherent complexities usually accompany probate.  Detailed paper work and filings, formal hearings, asset appraisals, multiple agency fees, attorney fees, court fees, lengthy holding periods, and even unwanted litigation can all be a part of any probate process – consuming time and resources (compounded with ancillary probate required for real estate located in a non-domicile jurisdiction).  In addition, privacy is completely forfeited since probate is a public matter.  Because of the lack of privacy and control, and the imminent shrinkage of the estate due to improper planning, the decedent’s family is now subjected to yet another negative factor – stress!  Indeed, it is a worthwhile objective to avoid probate entirely regardless of the size of the estate.  And that can surely be accomplished with proper planning.

Conservatorship… Probate for the Living –

Conservatorship is the legal requirement and procedure of a court to supervise the management and administration of an incapacitated person’s assets.  An ill or aged person may demonstrate erratic behavior and/or decision making, or be unable to make any decisions at all.  At that point, family members must petition to have that loved one adjudicated as being legally incapacitated.  It should be noted that conservatorship requires a public declaration of an individual’s incompetence.

A Durable Power of Attorney (DPA) may help avoid the conservatorship process; however, powers of attorney bestowed upon a DPA agent can be controlled or even terminated by any court-appointed conservator.  The reason is because the DPA agent was never “titled” the property that he was appointed to control.  Moreover, although DPAs have a place in the estate planning process, they do not operate under contractual law (as do trusts) and are thus limited in functionality.  (NOTE: A fully funded living trust will normally avoid all conservatorship problems including the limitations of a stand-alone DPA arrangement.)

The Operations of a Living Trust –

In simple terms, a living trust is an agreement between the trustor, also called the settlor/grantor, and the trustee.  The trustor transfers title of assets to the “office” of the trustee.  The (successor) trustee can then manage and eventually distribute those assets on behalf of the beneficiaries of the trust.  Remarkably, with a living trust, one person or a married couple can function as all three parties – trustor, trustee and beneficiary – at the same time!

When the trustor/trustee dies, the successor trustee (who was originally appointed by the trustor) immediately assumes the office and duties of the trustee without the requirement of any outside approval or supervision.  Trustee succession to the title of trust assets simply occurs by operation of law through the legally binding terms of the trust.  Thus, probate court is not needed to accomplish the (re)titling of assets to the successor trustee for the eventual transfer to the heirs.  After the death of the trustor, the trust becomes irrevocable; that is, it cannot be changed.  Per the terms of the trust, the successor trustee will then either manage the trust assets on behalf of the beneficiaries and/or distribute the assets outright to them.  It’s that simple!

The Primary Benefits of a Living Trust –

In addition to avoiding probate with its inherent complexities and problems, a revocable living trust offers many other benefits.  The following is a partial list of reasons why essentially anyone owning assets should establish a living trust:

Estate Tax Planning.  When structured properly, a living trust can help maximize the full use and value of a married couple’s transfer tax credits (estate tax exemption equivalent amounts) to help avoid or even eliminate unnecessary taxation.  Improper transfer tax planning can be very costly to an estate.  Optimal transfer tax avoidance can be fully realized with a proper marital trust format when utilizing the most suitable tax-shelter formula clauses and other applicable language regardless of the current estate tax laws then in place.

Privacy for the Estate.  By inherent design, a living trust is a private arrangement.  Generally, an estate owner utilizing a living trust can maintain privacy regarding the affairs of the family estate both during life and after death.  Conversely, a probate estate is a different matter, a subject of public record.  Probate records must usually disclose (a) the particular assets of the estate, (b) the names and ages of all the estate heirs including the amounts and times of asset dispositions made to them, (c) the outstanding debts of the estate, and (d) other sensitive information deemed pertinent to the decease of the asset owner.

Maximum Control.  A living trust allows an asset owner to exercise prudent control over his/her estate that can be maintained even after death.  A large sum of money suddenly acquired by a young and/or financially unsophisticated family member may cause more problems than it solves.  An incremental, age-based allocation formula is an example of one of many methods that can be incorporated into a trust to exercise asset control.  In fact, to the extent a beneficiary’s inheritance is being held in a trust, it is usually protected from any creditor claims against that beneficiary, including (in most states) divorce settlements.

Recipient of Insurance Proceeds.  A living trust is an ideal receptacle for life insurance proceeds (unless estate tax issues would warrant the use of an Irrevocable Life Insurance Trust).  Insurance proceeds payable to a trust can be managed and administered just as the other assets of the trust estate.  Also, if a named beneficiary of a life insurance policy does not survive the insured, the proceeds may be assigned to the deceased beneficiary’s probate estate – a potential occurrence to always avoid.  Additionally, if minor children (or grandchildren) become direct recipients of insurance death benefits without the benefit of a living trust, then a surrogate court will be required to create and supervise a statutory trust to receive and manage the proceeds on behalf of the dependent children.  That will incur management and administrative fees otherwise avoidable with proper planning, and may also impose restrictions or other conditions not in each individual beneficiary’s best interests.

Maximizing Stretch IRA Rules.  IRAs (and other qualified retirement plans) can be payable to living trusts under the new “stretch-IRA” and “see-through” rules.  Taxpayers can generally benefit their (financially unsophisticated) IRA beneficiaries by imposing limited withdrawal sanctions on IRA funds.  That can be best accomplished by having IRA withdrawal rights payable to a living trust, rather than being payable directly to the IRA beneficiary, and therefore completely controlled by the terms of the trust.  Without that control, an IRA beneficiary can demand and receive an immediate and full withdrawal of the IRA the day after the account owner’s decease.

Special Needs Children.  Parents with an incapacitated child currently receiving SSI benefits have special planning conditions to consider.  If a distribution from the parent’s will or trust is directly allocated to such a child, then a partial or even full disqualification of the child’s governmental entitlement may occur.  However, a properly drafted Special Needs Trust contained within a living trust can provide funds to benefit that child, after the parent’s decease, under a statutory standard and therefore not disqualify the child from continuing to receive SSI benefits.

Business Continuation.  Transferring the management duties of a closely held family corporation or other limited liability entity(s) is often a concern for the owners.  A post-mortem management structure in such case should always be arranged in conjunction with a family trust.  That will allow the trustee to be the effective manager of the family corporation where corporate interests have been allocated to children or grandchildren.  When a closely held business interest is controlled by a trust, the courts will not need to be meddling in the managerial operations because it was not subjected to probate in the first place.  In addition, a living trust can be an ideal entity to serve as a succeeding general partner of a family limited partnership and trustee of a charitable trust.

Deterrent to Contestations.  A living trust seems much more impervious to contests against an estate than a will.  I have witnessed enough first hand experiences to verify this fact.  We have seen our trust formats hold up perfectly in litigated situations caused by a disinherited or disgruntled child.  Wills are more frequently targeted for contestations resulting in undesirable, adjudicated terms.

Avoids the Joint-Tenant-Survivorship Trap.  A living trust, because of its probate avoidance capabilities, precludes the necessity to own property jointly with another to avoid probate.  If a parent recasts personal property ownership into a joint-tenancy-with-right-of-survivorship (JTWROS) deed or any asset/account with a child, then the control of that property has been forfeited.  Each respective tenant in a JTWROS ownership arrangement may be deemed to own 100% of that property for purposes of satisfying a creditor claim against a tenant.  In other words, if the JTWROS donee/child gets sued, the parent could end up losing the property to a legal judgment.  Additionally, JTWROS-held property between spouses forfeits beneficial transfer tax planning otherwise available with a Marital “A/B” Trust.

The Dynamics of Trust Implementation –

As we examine the benefits of a living trust, we see the obvious.  A well-designed living trust is supreme in the basic estate planning arena.  However, no living trust plan will realize its intended effectiveness unless it is correctly implemented and fully funded.  After decades of experience and several thousands of trust estate plans generated by our system, my conclusion is that there is only one way living trusts can be consistently implemented/funded properly, and that is through the direct assistance of the trustor’s advisor/agent.  There is no substitute for a trained, third-party advisor providing the implementation/funding assistance for the trust creator.  The advisor-supported service model is what makes it all happen.

June is the month you meet with me your Tax Planning Advisor not January!!

I being a professional in financial planning services and the owner of a Tax Office feel an obligation to educate my clients as well as the public at large about using proper legal tax strategies to help accomplish after tax estate and financial planning goals.

The tax preparation cycle repeats itself year after year in the same way, which is human but unfortunate and unhealthy. People start getting tax documents in late January after wrapping up their own books and accounting. They gather documents that reflect the year they just lived, in review, and a small or sometimes larger dread starts to form in their mind, “oh my taxes are going to be terrible.”

They get the last document they expected  after waiting daily for it and finally it arrives and they call us to come in…… “WE NEED to get this done ASAP!”  Why is it urgent? Because they are in a hurry to pay the IRS and State?  No of course not…it’s the uncomfortable feeling of the unknown!

People don’t generally feel in control of their tax bill, even though ultimately they are in more control than they think, so it’s that fear that the bill will be a much larger amount than even they expected. To make it even worse, somehow, it’s also because it’s a TAX BILL…… UGGGGGGGH!

Think about it, if you dropped your car off at a garage with a transmission hesitation you think the same way as you do your tax bill. “This could be bad, new transmission was not what I was planning on this week!” What will this cost me?  It could be just low fluid or a seal (a few hundred) or the big one, complete replacement $1800. Plus $2500 in labor?

It’s the same pain of the unknown and often in the same ballpark as folk’s tax bills, “will I owe another $500.00 or $2000.00????  But instead of ugggh it’s AHHHHHHHHHHHHHHHHHHHHHHHHHHHH” No sleep is loss over the transmission, just standard adult dread. When it’s Taxes however it’s ten times worse and over the same dollars, WHY? Don’t know just because its taxes!

Here’s our point, your taxes are in your control to a much greater degree than you think but you need education as to the tweaks you could make and you need that information in JUNE so you also have time to put the plan in place. For instance, perhaps you’re planning on replacing a porch on your home in the fall after golf winds down for the season. You are going to take the funds from a short bond you own that was  yielding 4% and now is up to 4.75% but is going to mature next February so the great rate is over soon anyway!  Tax planning might be that you should use a home equity line of credit instead for several reasons. The materials are on sale now and in the fall will be 15% higher and you should hire the contractor you want now as the good ones always get booked up in the fall rush. The interest is 2.75% on the home equity line and so even though you will pay interest on money for 5 months, you leave the bond paying 4.75% and the 2.75% the bank is charging is tax deductible. The bond when cashed is taxable and at below par you’d loose value that you will not lose in February by allowing it to mature.

It’s all just a matter of doing the math and discussing plans, from grandkids education contributions you might make this fall to if you should roll IRA to Roth before taking that part time consulting job you have been offered. NOW IS THE TIME TO COME IN AND TALK ABOUT 2015!  NOT late fall or next year.

We’ll be calling you in a few days, PLEASE come in for at least 30 mins. Let’s fix the IRS bill for 2016 when we can which is NOW! End the cycle, lets do this correctly and together!