"Back to School” Tax Planning beats an apple for the teacher!

School is back in session. If you have children in school, you’ve probably already met the teachers. You may have even watched a football game or two.

 

It’s probably been a long time since you’ve sat in a classroom yourself. However, school is never out if you’re looking to make the most of your money in today’s challenging economy.

 

What classes would you take to keep more of your income in your pocket? Try these: 

• Math 1040: Where are tax rates headed?
• History 2010: Lessons from last year’s mistakes?
• Social Studies 463: Write off meals and entertainment
• Chemistry 162: Is there a “secret formula” for paying less?
• Anatomy 213: What’s the best strategy for healthcare benefits?

If you want to keep the most of what you make, you can’t wait until finals for answers. You need to study now. Putting tax-wise ideas and strategies in place today could help avoid an ugly surprise when “report cards” come due April 15!

Call me today at (260) 348-5633 for your free Tax Analysis. I’ll find the mistakes and missed opportunities that may be costing you thousands today, and show you how “back to school” tax planning can save thousands more tomorrow. I guarantee you’ll leave with valuable new lessons, or I’ll donate $25 to your alma mater. So call now to schedule your analysis!


The time is now to strategically plan to stop wasting money on taxes you are not required to pay. Most changes need to be in place by December 31 to reduce your current year taxes, and sooner implementation results in greater savings, so act now!

Pick your poison - paying your taxes with credit or debit cards

If a taxpayer is paying tax liabilities with a credit card, he probably has not strategically planned for reducing his taxes. Sometimes, however, this method of payment may be the only way to pay the taxes. The companies that process the payment charge the taxpayer a convenience fee of 2.49% of the tax payment for credit card payments. That's a $25 fee on a $1,000 tax bill.

The same service providers process debit card payments of tax liabilities, but for those they charge only a flat fee of $3.95, regardless of the amount of the tax payment.

The time is now to strategically plan to stop wasting money on taxes you are not required to pay. Most changes need to be in place by December 31 to reduce your current year taxes, and sooner implementation results in greater savings, so act now!

Nov. 30 is the deadline to reverse, replace or reinvest any unwanted 2009 Required Minimum Distributions (payouts) from retirement plans.

The time is now to strategically plan to stop wasting money on taxes you are not required to pay. Most changes need to be in place by December 31 to reduce your current year taxes, and sooner implementation results in greater savings, so act now!

Is your tax planning impacted by how many public employees and retirees are on the state dole?

Who pays the benefits for public employees and Medicaid benefits in your state? These authors (http://www.forbes.com/2009/11/11/taxes-employment-government-business-beltway-tax-burdens.html) argue that private sector employment pays and the ratio of private employment to public employees and beneficiaries is an indicator of your state's financial health and future prospects. New Mexico and Mississippi have almost a 1:1 ratio. Increases in benefit enrollment and government pensions coupled with decreases in private employment would further impact state budgets and ability to pay contractural obligations. Tax strategies should consider this indicator among other inputs; for example, are some states' tax-free municipal bonds going to be adversely impacted by these conditions in poor economic times?


The time is now to strategically plan to stop wasting money on taxes you are not required to pay. Most changes need to be in place by December 31 to reduce your current year taxes, and sooner implementation results in greater savings, so act now!

The worst states for taxes

The Tax Foundation in Washington, D.C., has released its annual State Business Tax Climate Index. Based upon 112 variables in five component indexes, the best rankings reward those states that more completely and consistently apply the following principles:

•Good state tax systems levy low, flat rates on the broadest bases possible, and
•they treat all taxpayers the same. Variation in the tax treatment of different industries favors one economic activity or decision over another.
•The more riddled a tax system is with politically-motivated preferences the less likely it is that business decisions will be made in response to market forces.

The ten worst states (from least worst to ultimate worst) are: Vermont (#41),
Wisconsin, Minnesota, Rhode Island, Maryland, Iowa, Ohio, California, New York, and New Jersey (#50).

Anyone in any state would benefit from pro-active tax planning, but if you live in these states, you stand to benefit the most from tax strategies that minimize the amount of tax that you legally owe. If you live in those states, you stand to lose the most as you continue to postpone active strategies that could reduce your overall tax burden.

Tea party protests don’t reduce your taxes – pro-active tax strategies do!

The full study can be found on the Tax Foundation website: www.taxfoundation.org/files/bp59.pdf.

The time is now to strategically plan to stop wasting money on taxes you are not required to pay. Most changes need to be in place by December 31 to reduce your current year taxes, and sooner implementation results in greater savings, so act now!

Bloomberg News Service reports that the Internal Revenue Service will audit 6,000 U.S. companies to determine whether they pay all their required employment taxes.
The IRS said the audits will show how often companies (a) misclassify workers as contractors in order to reduce tax obligations, (b) fail to pay taxes on fringe benefits such as personal use of company cars, and (c) improperly pay taxes for company executives.

The IRS is especially suspicious of Sole Proprietorships. Expect the bulk of the audits to hit unincorporated small businesses.

Part of strategic tax planning is taking action that will increase your chances of surviving an audit.

The time is now to strategically plan to stop wasting money on taxes you are not required to pay. Most changes need to be in place by December 31 to reduce your current year taxes, and sooner implementation results in greater savings, so act now!

BusinessWeek Magazine (Sept 10, 2009) says, "investors have turned away from anything remotely risky."

The next big risk is not declines in portfolio value, it's TAXES. Taxes will devour retirement savings if not planned properly.

The time is now to strategically plan to stop wasting money on taxes you are not required to pay. Most changes need to be in place by December 31 to reduce your current year taxes, and sooner implementation results in greater savings, so act now!

2010 will be the year for Roth conversions.

In 2010, previously ineligible taxpayers will qualify to convert traditional IRA funds to Roths. And, the resulting tax can be spread over two years. However, there are always traps and landmines in the tax code and this process is easy to mismanage. If you have traditional IRAs, get professional advice about whether it is advantageous for you over the long run to convert in 2010 and, if so, how.

The time is now to strategically plan to stop wasting money on taxes you are not required to pay. Most changes need to be in place by December 31 to reduce your current year taxes, and sooner implementation results in greater savings, so act now!

The IRS's Inspector General, in a report released July 20, said the IRS does a poor job overseeing the paid tax preparers used by more than half the nation's taxpayers.

Most tax preparers in most states are not subject to any special regulations or prerequisites. In those jurisdictions, anyone can operate as a paid tax preparer. There is a special class of nationwide tax preparers that the IRS does regulate closely - they are Enrolled Agents (EA). EAs have passed a rigorous two-day, four part test conducted by the IRS. Then, EAs maintain their certification through continuing education that is subject to IRS approval. In tax court, EAs have equal status with lawyers and CPAs.

I am an Enrolled Agent who welcomes IRS oversight and scrutiny. It makes sense to include the advice of an Enrolled Agent in your tax planning.

The time is now to strategically plan to stop wasting money on taxes you are not required to pay. Most changes need to be in place by December 31 to reduce your current year taxes, and sooner implementation results in greater savings, so act now!

“There are 2 sets of tax laws in this country, one for the informed, and one for the uninformed”
Judge Learned Hand, Supreme Court Justice

You owe it to yourself to get good, forward-looking advice that will put you in the "informed" category of taxpayers - who pay only the required tax, as based upon solid, court-tested tax regulations.

The time is now to strategically plan to stop wasting money on taxes you are not required to pay and stop overpaying your taxes by taking advantage of every potential tax incentive. Most changes need to be in place by December 31 to reduce your current year taxes, and sooner implementation results in greater savings, so act now!

Buy a primary residence before December 2, 2009

Buy a primary residence before December 2, 2009 in order to receive a refundable tax credit of 10 percent of the purchase price or $8,000, whichever is lower. Restricted to buyers who haven't owned principal residences for three years prior to making the purchase. The full credit is restricted to taxpayers with adjusted gross income of $150,000 (Married Filing Jointly) or $75,000 (others). A refundable credit creates a refund to you, even if you paid no tax or had no withholding.

The time is now to strategically plan to stop wasting money on taxes you are not required to pay and stop overpaying your taxes by taking advantage of every potential tax incentive. Most changes need to be in place by December 31 to reduce your current year taxes, and sooner implementation results in greater savings, so act now!

Double-dipping encouraged

Some tax incentives reward expenditures in certain tax-favored categories of expenses or investments. Even greater tax efficiency results when you combine tax strategies: Use the savings from one tax strategy to implement the second tax-savings strategy.

The time is now to strategically plan to stop wasting money on taxes you are not required to pay. Most changes need to be in place by December 31 to reduce your current year taxes, and sooner implementation results in greater savings, so act now!

Congress passes Worker, Retiree and Employer Recovery Act of 2008

A lame-duck Congress has passed the "Worker, Retiree and Employer Recovery Act of 2008." The act, which President Bush is expected to sign, includes more than 40 major provisions and
over 130 tax code changes.

With this many changes in one bill alone, if you don't think you need a tax specialist to help you minimize your taxes, you're fooling yourself.

The time is now to strategically plan to stop wasting money on taxes you are not required to pay.

When to begin taking Social Security benefits

A common way of deciding when to begin taking Social Security benefits has been to calculate the break-even age. That's the age the client must live beyond in order for the highter, delayed benefits to provide a higher lifetime income.

However, the break-even method omits many factors that can influence the age at which benefits should begin, including cost-of-living adjustments (COLAs), taxes, and spousal benefits.

Contact me to help you decide when is the best age for you to start Social Security benefits.
Making the wrong choice could cost you more than $100,000 over a 30-year period.

The time is now to strategically plan to stop wasting money on taxes you are not required to pay.

Possible changes to Required Minimum Distributions

The Wall Street Journal is reporting that Congress is considering possible changes to the Retirement Account rules that require taxpayers to take minimum annual withdrawals after age 70 1/2 – perhaps allowing to delay the withdrawals or reducing the required amount. There may also be some tax relief for taxpayers who have have already received the required minimum distributions (RMD) for this year.

These are changes that I proposed to Indiana senators Bayh and Lugar, and retirement industry experts, several weeks ago.

RMDs reduce account balances. This is not a good strategy for taxpayers who don’t need the money to live on and who want to keep compounding the money in the account, but the government wants distributions to occur so that they can be taxed.

The amount of the RMD is calculated on your retirement account balance at the end of the previous year. In general terms, if your account is worth 40% less now than last December, your RMD would be 40% less if calculated on today’s balances as opposed to last year’s balance. A lower RMD would leave more in the account to compound and grow. A higher RMD further depletes an already devastated account.

The time is now to strategically plan to stop wasting money on taxes you are not required to pay.

Standard Mileage Rates

Many taxpayers prefer to use the Standard mileage rate for deducting their business, charity, medical or moving mileage, perhaps because they find it more convenient than tracking all actual expenses related to non-personal use of their cars.

However, it takes only slightly more discipline and time to substantiate Actual mileage expense, rather than Standard. And, in most cases, the Actual expense deduction will be greater than the Standard.

The time is now to strategically plan to stop wasting money on taxes you are not required to pay.


Here are the IRS rates for 2009 and prior tax years.

STANDARD MILEAGE RATES
_____Business___Med___Charity
_____________& Moving
2009 $0.550 $0.24__$0.14
Business rate includes $0.21/mile depreciation

Last
half
2008 $0.585 $0.27__$0.14
Business rate includes $0.21/mile depreciation

1st
half
2008 $0.505 $0.19__$0.14
Business rate includes $0.21/mile depreciation

2007 $0.485 $0.20__$0.14
Business rate includes $0.19/mile depreciation

Planning a business trip?

Planning a business trip? You can tack on one or more personal days and deduct the related costs as business expenses if staying the extra day(s) results in equal or less costs for the longer trip than the shorter duration (due to air fare pricing or package discounts, for instance).

The time is now to strategically plan to stop wasting money on taxes you are not required to pay.

Taking a deduction for IRA losses

Technically, it is possible to take an income tax deduction for an IRA loss. In practice, it's not easy.
If the loss is in a Roth IRA, then all Roth IRAs must be liquidated before you can take a loss deduction.
If the loss is in a traditional IRA, then all traditional IRAs must be liquidated before you can take a loss deduction. For most taxpayers, their entire annual IRA contribution was already deducted as an adjustment. Therefore losses arising from deductible, traditional IRA contributions cannot generate income tax deductions; only losses from non-deducted traditional IRA contributions can create income tax deductions.
If you have such a loss, the deduction is a miscellaneous itemized deduction only to the extent that it and similar deductions exceed 2% of Adjusted Gross Income.

The time is now to strategically plan to stop wasting money on taxes you are not required to pay.

When will you get your broker statements and 1099s?

It seems that you're always waiting for at least one broker, who is late, to send you a 1099 so you can complete your taxes.

Well, you'll be waiting longer. The due date is February 15 (or if that's a holiday or weekend, next business day). Don't expect to get all your 1099s until February 17, 2009. And, issuers can request or rely on waivers and get them out later with little or no penalty.

Meanwhile, don't overlook that fact that many 1099s don't look like IRS forms. Issuers can use substitute formats, so the same information is often buried deep within year-end account statements.

The time is now to strategically plan to stop wasting money on taxes you are not required to pay.

How is the IRS spending $7.5 million of your taxes?

The IRS is spending approximately $7.5 million in matching grants to support its Volunteer Income Tax Assistance grant program (VITA). The IRS is awarding matching grants to 111 organizations in 46 states and the District of Columbia that plan to offer free return-preparation sites in 2009.

The top locales: TX $590,400, NY $482,175, CA $462,860, and TN $292,585. The AARP Foundation will receive a $600,000 matching grant for its multi-state program.

The time is now to strategically plan to stop wasting money on taxes you are not required to pay.