News

Now Might Be a Good Time for a Roth Conversion
Individual Tax, Personal Finance Ben Schultz Individual Tax, Personal Finance Ben Schultz

Now Might Be a Good Time for a Roth Conversion

One silver lining in the current bear market is that this could be a good time to convert assets from a traditional IRA to a Roth IRA. Converted assets are subject to federal income tax in the year of conversion, which might be a substantial tax bill. However, if assets in your traditional IRA have lost value, you will pay taxes on a lower asset base when you convert. If all conditions are met, the Roth account will incur no further income tax liability for you or your designated beneficiaries, no matter how much growth the account experiences.

Read more about the Tax Trade-Off, Lower Values, More Shares, Two Time Tests, and More Favorable RMD Rules.

Read More
Watch Out for These Common Tax Scams
Individual Tax Ben Schultz Individual Tax Ben Schultz

Watch Out for These Common Tax Scams

Watch Out for These Common Tax Scams. According to the Internal Revenue Service (IRS), tax scams tend to increase during tax season and/or times of crisis. Now that tax season is in full swing, the IRS is reminding taxpayers to use caution and avoid becoming the victim of a fraudulent tax scheme. Here are some of the most common tax scams to watch out for.

Read More
Attributes of different entities - Choosing a Business Entity

Attributes of different entities - Choosing a Business Entity

When launching a new venture, one of the first decisions you will make is determining which structure, or "entity," your business will assume. Depending on which entity you choose, the decision may affect your own and your business's tax situation, the level of protection your personal assets (including your home) receive, and the amount of control you have over the business.

Following is a brief primer to help guide you in your choice. You may want to consult a qualified attorney or financial professional before making your final decision.

Formalities of existence Some types of entities are simple and inexpensive to form and maintain, while others must meet specific requirements. If you want to keep the overall management of your business as simple as possible, you might choose an entity with few formalities.

Read More
The latest $1.9 trillion federal relief package is now law.
Business Tax, Individual Tax Ben Schultz Business Tax, Individual Tax Ben Schultz

The latest $1.9 trillion federal relief package is now law.

While the COVID-19 pandemic is finally slowing down, the economic damage that it caused lingers on. In order to relieve the financial burdens facing many taxpayers and accelerate recovery, Congress has passed the American Rescue Plan Act (the Act). The Act is a $1.9 trillion relief package that will affect millions of individuals and businesses.

A summary of the Act's key tax provisions follows.

Read More
SECURE Act provisions affecting individuals

SECURE Act provisions affecting individuals

Congress recently passed, and the President signed into law, the Setting Every Community Up for Retirement Enhancement Act (SECURE Act), landmark legislation that may affect how you plan for your retirement. Many of the provisions go into effect in 2020, which means now is the time to consider how these new rules may affect your tax and retirement-planning situation.

Here is a look at some of the more important elements of the SECURE Act that have an impact on individuals. The changes in the law might provide you and your family with tax-savings opportunities. However, not all of the changes are favorable, and there may be steps you could take to minimize their impact. Please give us a call if you would like to discuss these matters.

Read More

Thoughts on 2019 Year-End Planning for Individuals

As we move into the fourth quarter, now is an excellent time to review your current tax planning strategies to ensure they’re still meeting your needs and develop plans for 2020. It’s also a good time to take advantage of last-minute planning opportunities that could save you money now and in the coming year.

With all that in mind, please contact us at your earliest convenience to discuss your tax situation so we can develop a customized plan. In the meantime, here’s a look at some of the issues we’re recommending clients consider as they begin their end-of-year review.

Read More
Tax Treatment of Fringe Benefits
Business Tax, Individual Tax Ben Schultz Business Tax, Individual Tax Ben Schultz

Tax Treatment of Fringe Benefits

The term “fringe benefit” refers to any benefit provided to an employee that is in addition to money. All benefits provided to an employee are taxable unless the law specifically excludes or defers tax on the benefit. Thus, a fringe benefit can either be taxable, tax-deferred, or excluded from taxation.

The personal use of an employer-provided vehicle is an example of a taxable fringe benefit. An employer contribution to a qualified retirement plan on behalf of the employee is an example of a tax-deferred fringe benefit. Employer-provided health insurance for an employee is an example of a tax-free fringe benefit.

Read More
New Business Income Deduction
Business Tax Ben Schultz Business Tax Ben Schultz

New Business Income Deduction

The Tax Cuts and Jobs Act is the biggest federal tax law change in over 30 years. This is a significant change affecting qualified business income from a partnership, S corporation, LLC, or sole proprietorship. Note: Except where noted, the change is effective for tax years 2018–2025.

Read More
New Medicare Cards Are Coming
Ben Schultz Ben Schultz

New Medicare Cards Are Coming

If you receive Medicare, you will be getting a new Medicare card in the mail. To help prevent fraud and fight identity theft, Medicare is removing Social Security Numbers from Medicare cards. Your new card will have a new Medicare Number that's unique to you.

Read More
IRS Releases Updated Form W-4 and Withholding Calculator
Ben Schultz Ben Schultz

IRS Releases Updated Form W-4 and Withholding Calculator

 

The IRS has released a new version of Form W-4 and a revised Withholding Calculator on irs.gov (IR-2018-36). These updated tools can help you check your 2018 tax withholding to determine if it's still appropriate following passage of the Tax Cuts and Jobs Act in December 2017. The IRS urges taxpayers to use these tools to make sure they have the right amount of tax withheld from their paychecks, taking into account significant changes to the tax law for 2018.

Read More
Working With a Financial Advisor
Personal Finance Ben Schultz Personal Finance Ben Schultz

Working With a Financial Advisor

The world of 50 years ago was a lot different than it is today. An individual often worked at the same job all his or her adult life, lived in the same house, and stayed married to the same spouse. In those days, too, one spouse could support a family, paying for college ordinarily didn't require taking out a second mortgage, and people could look forward to retiring on Social Security and possibly a company pension.

Today, your hopes and dreams are no different. Like most people, you probably want to buy a home, put your children through college, and retire with a comfortable income. But the world has become a more complex place, especially when it comes to your finances. You may already be working with financial professionals--an accountant or estate planner, for example--each of whom advises you in a specific area. But if you would like a comprehensive financial plan to help you secure your future, you may benefit from the expertise of a financial advisor.

Read More
Taxation of Investments
Tax Planning, Individual Tax Ben Schultz Tax Planning, Individual Tax Ben Schultz

Taxation of Investments

It's nice to own stocks, bonds, and other investments. Nice, that is, until it's time to fill out your federal income tax return. At that point, you may be left scratching your head. Just how do you report your investments and how are they taxed?

Is it ordinary income or a capital gain?

To determine how an investment vehicle is taxed in a given year, first ask yourself what went on with the investment that year. Did it generate interest income? If so, the income is probably considered ordinary. Did you sell the investment? If so, a capital gain or loss is probably involved. (Certain investments can generate both ordinary income and capital gain income, but we won't get into that here.)

If you receive dividend income, it may be taxed either at ordinary income tax rates or at the rates that apply to long-term capital gain income. Dividends paid to an individual shareholder from a domestic corporation or qualified foreign corporation are generally taxed at the same rates that apply to long-term capital gains. Long-term capital gains and qualified dividends are generally taxed at special capital gains tax rates of 0 percent, 15 percent, and 20 percent depending on your taxable income. (Some types of capital gains may be taxed as high as 25 percent or 28 percent.) The actual process of calculating tax on long-term capital gains and qualified dividends is extremely complicated and depends on the amount of your net capital gains and qualified dividends and your taxable income. But special rules and exclusions apply, and some dividends (such as those from money market mutual funds) continue to be treated as ordinary income.

The distinction between ordinary income and capital gain income is important because different tax rates may apply and different reporting procedures may be involved. Here are some of the things you need to know.

Read More
I'm marrying someone with bad credit. How will this affect me?
Ben Schultz Ben Schultz

I'm marrying someone with bad credit. How will this affect me?

You are not responsible for your future spouse's bad credit or debt, unless you choose to take it on by getting a loan together to pay off the debt. However, your future spouse's credit problems can prevent you from getting credit as a couple after you're married. Even if you've had spotless credit, you may be turned down for credit cards or loans that you apply for together if your spouse has had serious problems.

You're smart to face this issue now rather than wait until after you're married to discuss it. Attitudes toward spending money, along with credit and debt problems, often lead to arguments that can strain a marriage. Order copies of both of your credit reports from one or more major credit reporting bureaus. Then, sit down and honestly discuss your past and future finances. Find out why your future spouse got into trouble with credit.

Next, if there is still outstanding debt, consider going through credit counseling together. Credit counseling may help your future spouse clean up his or her credit record and get back on track financially. One nonprofit organization, Consumer Credit Counseling Services (CCCS), offers one-on-one credit and debt counseling that may help you learn how to better handle your joint finances. Visit credit.org to learn more.

Finally, seriously consider keeping your credit separate, at least until your spouse's credit record improves. You don't have to combine your credit when you marry. For instance, apply for credit by yourself instead of applying for joint credit after you're married. You can have separate "associate" cards issued for your spouse to use. Even if your spouse has bad credit, your credit rating will remain unaffected. However, keeping separate credit can be complicated. For one thing, your spouse may resent that you control all of the credit in the household. It's also possible that you'll have a harder time qualifying for loans (e.g., a mortgage) alone than if your spouse's income could also be counted.

Read More