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Tax Planning and Estate Planning Are a Lot Alike, and Ignored By Most!
Posted on Wednesday, December 18, 2024
People try, but “adulting” is hard! Kids, pets, job, relatives, friends, bills, medical problems, car problems, work problems all in the last day, so when I have time I will start tax planning. Same as….so when I have time I will start estate planning, it’s just so far down on most peoples’ day to day list of things to do that all the other issues just cycle in some complex order that nobody understands and the last two items never seem to bubble up to the top…UNTIL THEY DO! If you are a business owner, thoughts of tax planning might bubble to the surface a couple times a year, perhaps March 15th and April 15th (or later if you have...
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Tax What If Doctor
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Your Tax Planning Christmas Letter (replace Santa with the IRS)
Posted on Wednesday, December 11, 2024
Dear Santa, I feel like you put me on the naughty list every year. When I file my tax return you impose taxes on me that I don’t want to pay. It feels like tons of coal are being unfairly put into my very little stockings. I try to be a good person all year, so I’m not sure why you are singling me out and treating me this way. Dear Suzie, You are not on the naughty list. In fact, you’re not on any list at all. You’re not being watched by me or my elves, unless you are doing things you ought not be doing. Every year I actually provide you with lots of presents, the following just...
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Tax What If Doctor
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They Zig, We Zag
Posted on Wednesday, December 04, 2024
People who are worried about the 10 year rule, requiring beneficiaries of inherited IRAs to withdraw the entire balance within 10 years, can double that time with a CRT beneficiary in front of inheritors. What if you really have a big IRA and the 10 year rule just isn’t enough of a stretch to help your beneficiary stay out of the top tax bracket? Or any other reason you care about reducing the negative tax impact from the 10-year rule? You could use other remaining tax rules to your benefit by setting up a charitable trust. A charitable trust allows the retirement assets to continue growing tax-deferred, even once the assets are distributed from the retirement account into the CRT....
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Tax What If Doctor
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Happy Thanksgiving!
Posted on Tuesday, November 26, 2024
From our family to yours, have a safe and happy holiday weekend!
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Tax What If Doctor
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Income Taxes Surprising People is Surprising! Empower Yourself!
Posted on Wednesday, November 20, 2024
Most people feel like their taxes are a sleeping giant. They tiptoe around them as if staying away from the topic will keep it from waking up. Then at tax time when the giant awakens, they often act as if the final tax refund or bill is a surprise. Many working people try to change their withholding to get their tax outcome “dialed in”, but that joy of having a refund of “XYZ” coming is so often way off from what was expected and they are shocked. That’s because taxes are dealt with one time a year for most and their scenarios that lead to a consistent outcome change. For example, they go from no kids, to having kids. Children...
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Tax What If Doctor
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If You Give to Charities or Have Plans to In the Future, It’s Not Too Late to Reduce Your Current Tax Bill!
Posted on Wednesday, November 13, 2024
Many people have the intention of doing a better job of “tax planning” in order to start having more favorable outcomes, but busy lives and life interruptions can leave them little time. If this is you, you’re not alone. Time flies even in normal times, but with the current stressful environment, everyone is scrambling even more, so you look at the calendar and think, “I can go see my accountant or financial advisor, or I can get my shopping done”, and the next thing you know it, it’s Thanksgiving and the end of the year is upon us. Most advanced tax planning requires communication about concepts, takes reams of paperwork and time to submit to custodians, so it would be...
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Tax What If Doctor
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Tax Planning Boost is Likely Due to Election Results
Posted on Thursday, November 07, 2024
Many people in the tax planning industry were expecting a democratic win and big changes in tax policy. With Trump’s victory, many of those same tax planners are expecting no changes and extensions of the policies that were going to expire in 2025. Although some things will likely continue as they are now, it will not be as simple as an automatic extension of all policies. The reason that the policies were going to expire at the end of 2025 is that any time the government reduces projected revenues (tax reduction) they have to also have planned in a replacement to that revenue or have plausible growth because of tax policy that will balance the budget. When Trump placed the...
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Tax What If Doctor
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Simple or Complex, Tax Planning is Important!
Posted on Wednesday, October 30, 2024
Sometimes “tax planning” can be easy: “Open an IRA and it reduces your taxable income.” Other times it can be quite complex: “Cost segregation” on a building means hiring an engineering firm and having a structure broken down into its many components on paper, with each value separately listed; the frame, wiring, heating systems, etc., and taking write-offs, generally much faster than simply taking a standard approach. These are both ways to lower federal or state taxes. For the people who have made large amounts of money or have larger estates, the year to year tax bill is not as much of a concern as the “Death Tax Bill.” Planning for them can be simple or complex as well,...
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Tax What If Doctor
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Fix the Underpayment Tax Penalty You’re Headed For with A Simple Halloween Trick
Posted on Wednesday, October 23, 2024
In a few months the U. S. will begin filing tax returns again, and at tax firms all over the country people will be making the “E-Trade” Shocked Baby Face (remember him?) when they see they are being charged penalties and interest for under paying their taxes due. Even if they made a 941 payment in the last quarter to cover ALL the tax due for the year, they can still find themselves fined by Uncle Sam as a penalty for not paying equally over the four quarters of the year. A last quarter over-payment simply means they underpaid for three quarters and overpaid for one quarter, and no, it’s not “good enough” for the IRS. People also argue that...
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Tax What If Doctor
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The Only Constant is Change (Especially with Taxation)
Posted on Wednesday, October 16, 2024
We talk a lot about people not doing tax planning and not spending more time creating the tax outcomes they want. We urge people to understand that it’s within their own control and that tax outcomes can be legally and ethically manipulated. We go on and on about the benefits. But…we understand why it’s so rarely done! It is because almost nothing in people’s lives has more constant change than taxes, and keeping up with all the changes can be an overwhelming challenge. What if every four years your banking rules changed, “Oh I’m sorry John, we no longer pay you interest, now you pay us interest to keep money here.” Or “Now you have to send in your mortgage payment daily,...
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Tax What If Doctor
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