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rmation, see the Individual Tax tab or Business tab or use the Search Box.
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CONTRACTS: don't use form agreements and don't sign agreements that you don't understand. I negotiate contracts that last because they are win-win. They benefit all parties. For more information, see the Business tab or use the Search Box.
This website shows you thousands of ways to save thousands of dollars. So read on.
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This and the next WealthWISe will open your eyes and fill your pocketbook!
Tax Reform is generally good news for small businesses but in most cases, you have to know about a deduction and act to qualify for it. One exception is the 20% deduction on the lower of business profits or taxable income. It works as long as you don't make too much. Oh, and don't incorporate without discussing it with me.
+ vehicle deductions, + new equipment, + home offices, + hiring the kids, + charitable contributions as business expenses, + tax preparation costs for your business, + home equity credit lines used for business purchases. + Itemized deductions that do more good as business deductions. Most taxpayers shortchange themselves on these deductions. Read on!
The IRS has issued 184 pages in proposed regulations explaining the new 20% deduction for domestic income from pass-throughs, which includes one-man businesses and landlords. If your taxable income does not exceed a threshold of $315,000 (joint filers), or $157,500 (all other taxpayers), there are no further limits to this deduction.
Think twice about incorporating — you may be taxed twice!! Now that corporations qualify for a 21% tax rate, everyone is wondering whether they should incorporate. Most taxpayers are better off not incorporating, because corporate earnings can be taxed twice: first on the corporation's earnings, then to the shareholder when it takes those profits out!
Business vehicles: Clients often underuse their auto deductions. They keep poor records and then they underestimate their business mileage. They overlook additional deductions, like parking and interest on their car loan. Ask me about extra mileage with a home office. Certain large vehicles (more than 6000-pound gross vehicle rating) produce spectacular deductions, using the §179 deduction and bonus depreciation.
Buy and use the equipment before year end. The §179 deduction is available to write off furniture and equipment placed in service before year-end but it cannot exceed profits from the business.
Bonus depreciation. If the §179 deduction is available you may deduct instead up to 100% of assets placed in service this year if first used by the taxpayer.
My Advice: You can save taxes if you depreciate these costs over several years if your income is increasing.
Entertainment. Generally under tax reform entertainment expenses are not deductible. However, business meals in which business is discussed remain at least 50% deductible and may be 100% deductible if included in the price of a business presentation.
My advice: Look for normally personal expenditures that help your business, such as cell phones, cable, furniture, and computers.
My advice: Hire the kids. I am a longtime advocate of legitimately hiring your children. You deduct what you pay them. A minor child can earn up to $12,000 without paying taxes and is exempt from FICA and FUTA taxes. If they are older, put them on the payroll. Another advantage, hiring your child can allow you to fund Roth IRA contributions for the child.
The next issue will get into Schedule A Itemized Deductions gambits — when itemized deductions become business deductions.
Are you throwing away tax savings?
I bet you are. There is a saying about taxes: "You don't know what you don't know." Most clients miss tax benefits, so I pay for myself. How?
I spend thousands of dollars on daily updates on taxes, so take advantage of it here. With my custom designed TAX MASTERY© software, I apply over 350 factors to find ways that you can save taxes. I show you how to save, how much you can save, how to prove your tax savings and how to put them in your pocket before tax season by adjusting withholding or estimated tax payments. I can even forecast your 218 taxes.
My advice: pay for the holidays with tax savings! Come in for a free 1/2 hour consultation or pay a little more for a written plan. The earlier you act the more you can save. This article is packed with examples.
For example, the new "standard deductions" are $12,000 for singles and $24,000 for joint returns. However, I can often show you how to beat the standard deductions with actual itemized deductions. My TM report shows you how to beat the standard deduction with medical expenses, sales taxes, mortgage interest, investment interest, and charitable deductions. If you want to know more, read on.
Medical deductions. Medical deductions are deductible only to the extent they exceed 7.5% of your adjusted gross income, but higher health insurance premiums may do the trick. Don't forget Medicare premiums. Some home improvements qualify.
State and local taxes. These are now limited to $10,000 per year but you can combine, sales, real estate, and income taxes. Most of my clients spend a lot more on sales tax than the IRS table amount. Do you? Many clients can save $1,000 or more by calculating their actual sales tax and maintaining records to prove it. Don't forget the sales tax on a new vehicle. One client proved over $10,000 in sales tax by getting receipts for materials used to build an addition to their house. Don't forget real estate taxes on second homes. f you have a business or rental property.
My advice: Come on in and let me help you calculate your actual sales tax and show you how to prove it.
My advice. You can deduct real estate taxes paid this year once they are due.
My advice: If your taxes exceed $10,000, ask me if you can deduct any of the excess under your Business or Rental.
Mortgage interest. I have one client who saves more than a thousand dollars per year by deducting home mortgage interest on his sailing yacht since it has living quarters.
HELOC: Normally not deductible under the new law, interest on a HELOC can be deducted in some cases if used for a home addition, for a rental property or for a business.
My Advice: Mortgage insurance premiums. Did you know that you can deduct mortgage insurance premiums on the purchase of your principal residence?
My advice: "Points" on the refinancing of your home that were not deductible when paid can be deducted when you pay off that loan.
My advice: One client was surprised to find that the margin interest in his year-end investment statement could be deducted to the extent of investment income.
The next WealthWISe will talk about my favorite deductions, charitable contributions.
I bet you can't guess how many ways there are to transfer real estate at death. You can do it with or without a will, with a defective will, with a tenancy by the entirety, with joint ownership with survivorship, with a muniment of title, holographic will and finally my favorite, a revocable living trust.Which way is best for you?
1. With a will. With a will, the property goes to whoever you specify in the will. Of course, the will must be approved by the Probate Court, which means the Executor is subject to the Probate Process. The Executor must follow the Probate Court's rules and procedures. This takes time and money. Clients are never happy with the Probate Process.
2. With a will, without full Probate. Muniment of title. If an estate contains nothing but real estate, I can file the decedent's will with the Probate Court but not open a Probate estate. The will is called a "Muniment of title," and it acts like a deed to pass the home to the beneficiary named in the will. This saves most of the cost of probate. A recent client was very pleasantly surprised to find out how easy this was.
3. Without a will. In Tennessee, if you die with no will, things get worse for your family. State law controls and the Probate Court supervises the transfer of your property, so your family is subject to Probate requirements. In this case, the Court appoints an "Administrator" to manage the estate instead of an Executor. Your real property is inherited by your heirs according to state law. For example, if you are married with one child, the property goes equally to your surviving spouse and child. If the child is a minor, the Court will appoint a guardian. This situation is much easier with a good lawyer, which is where I come in.
4. Without a will, using Affidavits of heirship. If the decedent has only a few heirs, this is not too bad. I establish that the heirs own the decedent's real estate by preparing sworn "affidavits of heirship." Signed and sworn by a friend of the decedent this document proves that the heirs are the sole heirs and therefore own the property. I file these with the Shelby County Register. The heirs can then transfer the property. You don't need a deed.
5. Tenancy by the entirety. Property that you buy with your spouse is held as "tenants by the entirety." If either of you die the survivor owns the property. That is fine when the first spouse dies, but what happens after the surviving spouse dies?
6. Joint with right of survivorship. This is similar to the tenancy by the entirety but the property is not owned by spouses. Bank and brokerage accounts can also be set up this way.
7. Holographic Will. A holographic will is one in which all of the material provisions are in the person's handwriting and with his signature. It is valid under Tennessee law, so it is the same as With a Will, but I advise against it. If you have ever had a misunderstanding as the result of a poorly drafted text or email, you can just imagine how difficult it could be to interpret a ten-year-old will in handwriting when no one knows what the writer's intentions were. My father made one of the largest fees ever, hundreds of thousands, in a lawsuit trying to interpret a holographic will.
8. Defective will. Unless your will states that it revokes prior wills it will be read together with the previous will. Very Confusing! We could end up in litigation here.
9. Revocable Living Trusts ("RLT"). I advise deeding property into your RLT in most situations. Then Probate is not required when you die because you are not the owner. This likewise avoids Probate on property in other states. Furthermore, all the other advantages of RLT's are available so you can make sure your family is taken care of.
This article gives you just a taste of what happens to your assets at death. Do your family a favor and plan your estate.
I bet you are. There is a saying about taxes: "You don't know what you don't know." Most taxpayers miss thousands of dollars in tax benefits and I find them, so I pay for myself.
I spend thousands of dollars on daily updates on taxes, so take advantage of my knowledge. With my custom designed TAX MASTERY© (TM) software, I apply over 350 factors and give you a written report on how to save taxes and how much you will save.
For example, the new "standard deduction" is $12,000 for single and $24,000 for joint returns. My TM report shows you how to beat the standard deduction with actual deductions for medical expenses, sales taxes, mortgage interest, investment interest, and charitable deductions. If you want to know more, read on.
State and local taxes. These are now limited to $10,000 per year but you can combine sales, real estate, and income taxes. Most of my clients spend a lot more on sales tax than the IRS table amount. Do you? Many clients can save $1,000 or more by calculating their actual sales tax and maintaining records to prove it. One client proved over $10,000 in sales tax by getting receipts for materials used to build an addition to their house. Don't forget the sales tax on boats and cars.
My advice: If your taxes exceed $10,000, see my Business and Rental articles in this WealthWISe.
My advice: If you have a business home office deducting its portion of the real estate taxes may save self-employment tax.
Mortgage interest You may deduct interest on 2018 mortgage debt borrowed after 12/15/17 to buy a home up to $750,000. The $1,000,000 limit applies to former debt. I have one client who saves more than a thousand dollars per year by deducting home mortgage interest on his sailing yacht as a second home since it has living quarters.
My Advice: Mortgage insurance premiums you can deduct these on the purchase of your principle residence.
Heloc interest new or old is not deductible unless used to purchase your home, a rental property or a business property.
My advice: Make interest on a HELOC deductible by using it for a home addition, a rental property or a business.
Net investment interest. One client was surprised to find that investment interest, such as margin interest, is deductible up to investment income (reduced by investment expenses). You may elect to count capital gains and qualified dividends.
The next WealthWISe will get into Charitable and Miscellaneous deductions.
Miscellaneous deductions repealed. In 2018 you can no longer deduct employee deductions, tax preparation fees or investment expenses. I can help you determine if they qualify as business expenses.
Why come to me for estate planning as opposed to someone else? The answer is simple. Let's ignore the fact that I am one of a few Accredited Estate Planners in Memphis. Let's focus on your experience. Normally estate planning is difficult and expensive. Not mine. My estate planning system is so easy and effective that it is revolutionary. Why?
EASY FOR THE CLIENT? Yes. My system is easier. During my years of experience, I have created my own unique RLT Information Package ("RIP"). I give the client the RIP. The RIP contains two documents: (i) A short, understandable handout from my most popular seminar: "Revocable Living Trust – Where There's a Will There's a Waste," and (ii) my Questionnaire. The Questionnaire asks the right questions — progressive short questions that lead the client through his or her estate planning decisions.
EFFECTIVE? – Effectiveness comes with experience: My grandfather was a Tennessee Circuit Court judge for 37 years. My father practiced estate and probate law for more than 50 years, graded the Tennessee Bar Exam for ten years, and was a Shelby County Probate Court Judge. I have more than 35 years of experience. I learned from them and from my clients. Enjoy the benefits of my experience! I have solutions for your problems. The RIP saves time and money. I can generally produce your estate plan with a couple of meetings in less than a week.
EFFECTIVE PLANNING: After the client has completed the RIP, he/she is ready for a quick planning meeting with me in which we fine tune the estate plan. That meeting usually takes about an hour. The RIP usually cuts an hour or more from this meeting, saving the client money.
EFFECTIVE DOCUMENTS: After the planning meeting, I review extensive custom estate planning documents on my PC that I and my father developed over the years, documents that I have tested personally with my clients. My I seldom use online documents I own libraries of professional will and trust clauses to deal with unusual situations. Since I am so familiar with these documents, I can produce accurate documents quickly and inexpensively.
EFFECTIVE COMPLETION: Within a week or less I meet with the client, and we review and fine tune estate planning documents and execute the documents. I provide the client a closing letter and discuss steps to make the estate plan effective. The client pays for the estate plan and leaves my office with a great sense of accomplishment.
The client has spent only a few hours and we produced an estate plan that will do the job.
Posted in Estate Planning & Probate, What's New?
A reminder. As a former in-house counsel for an international software company, I can advise you on business transactions! In fact, I am working on two business sales even as we speak.
There are other traps for the unwary business.
DON'T make your spouse an officer!
No W-2's for LLC owners. The IRS has announced that if you own 100% of an LLC that is reported as a sole proprietor on Schedule C, then you may not treat yourself as an employee of the LLC and issue yourself a W-2. The LLC and you are considered one.
Posted in Business Law, Taxes, What's New?
Individual landlords and partners owning real estate should qualify for the new 20% deduction from Qualified Business Income. See the business article above. In the future I hope to have some examples for readers. Meanwhile Installment Sales and Qualified Contributions from IRA's to charities are two of the best ways to save taxes on appreciated assets.
IRA donation to charity is a Trick with a new Treat: If you're age 70½ or older, each year you can transfer up to $100,000 directly from your traditional IRA to a charity. It counts as a minimum distribution, but is not added to your taxable income or your adjusted gross income. Treat: you get this benefit even if you take your standard deduction in 2018 and so cannot deduct charitable contributions. If your investment adviser doesn't know how, call me.
Installment Sales. If you sell real estate in return for a note under which you receive payment in later years, you generally report the sale on the installment method (using Form 6252). This method taxes you on gain in proportion to the principal you are paid each year so it reduces gain in the year of sale and moves gain to later years. You can elect out of it. It offers many tax advantages. This technique is also a great way to sell your business.
Are you paying excessive fees? Investors, have you ever noticed that your preparer filed over 4 pages of Form 1116 to get you a $25 tax credit? That's not effective!
My advice: If you have appreciated you are planning to sell ask me about your tax choices.
Posted in Real estate, investing, What's New?
Full service: reminder. As a former in-house counsel, I can advise you on business transactions! In fact I am working on two business sales even as we speak.
Much of what I said about withholding above applies as well to quarterly estimated taxes, which the IRS requires from self-employed business owners. If you are a sole business owner or a partner or LLC or S corporation owner, suggest that you get a forecast of your tax liability. Some of the biggest questions regarding Tax Reform concern the taxation of businesses, particularly pass-through entities. For example, many small businesses are "pass-throughs" and will be enjoying a 20% deduction from their business income. Read more.
Tax traps for the unwary business.
Tax Reform is going to help most of my clients, but it is also going to have unexpected consequences for most everybody. To make taxes "easy and effective" for my clients I included a forecast of 2018 taxes with each 2017 tax return that I prepared. What did I find out? Taxes are generally lower but unexpected. There's a big withholding problem! Most taxpayers are having too much withheld. If you want to find out more and how to get the most out of your taxes.
What did Tax Reform do to you? All tax rates dropped 2-3 points under Tax Reform, helping most everybody. Tax Reform doubled most taxpayers' standard deductions so many taxpayers will not have to deduct mortgage interest or taxes. However, Tax Reform took away the $4,050 dependent deduction, but added a $2,000 per child tax credit. This works against childless couples. State and local taxes are limited to $10,000 per year. Mortgage loans on which you can deduct mortgage interest are limited to $750,000. No longer deductible are employee's job expenses and investment related expenses like investment management fees. All of these changes affect your withholding or estimated taxes.
In changes after Tax Reform, Congress renewed the law that allows the write-off for private mortgage insurance, which is treated as home mortgage interest deduction. Taxpayers who can use this deduction will need to adjust their withholding.
The W-4 form tells employers how much federal taxes to withhold from each employee, and it is based on the deduction for dependents, which no longer exists. In January the IRS let employers use old W-4's, and the IRS knew it was inaccurate. The IRS have been trying to correct the errors ever since. Recently the IRS issued a 2018 update to Publication 505, Tax Withholding and Estimated Tax and offered the IRS Withholding Calculator on their website so taxpayers could correct earlier mistakes. The IRS admits that there are problems.
Unless you want an unpredictable refund or tax due, I advise you to get a 2018 forecast so you can compare actual tax liability with withholding. If I prepare your tax return, I will provide you that forecast. For an hour or so fee, I will provide you a 2018 Forecast. Otherwise you are going to have to spend a lot of time with the IRS Withholding Calculator.
MY TAX MASTERY© PROGRAM is an added benefit of my forecast. It will suggest tax strategies to lower your taxes and then tells you your savings. You can then decrease your withholding to increase your paycheck. THAT's easy and effective!
Posted in Individual Tax, What's New?
WHAT DID TAX REFORM DO TO YOU?
Tax Reform increased the estate and gift tax exemption for individuals to $5.6 million (up from $5.49 million). So a married couple can shelter $11.2 million between them. This means 99% of my clients need not focus on death taxes and so can focus on their true desires, like their families. How can you help your family with sensitive estate planning?
First, consider what estate planning documents you already have. If you have no will or trust you can probably save thousands of dollars just by executing a will. You may save tens of thousands of dollars with a revocable living trust so that is generally what I recommend. In less than a week I can prepare an RLT that is customized for your family. To get started, check out my Estate Planning Organizer.
Not convinced? Do you want to know why a majority of estate planning professionals recommend revocable living trusts? Why I wrote RLT's for my own father and mother even though my father was a Probate Court Judge at one time? Read on.
Maybe you have a will or trust. If it is more than a couple of years old you need to have it reviewed and I will review it for nothing. If your documents were drafted to avoid taxes by an excellent estate planning lawyer a few years ago, get it reviewed. The vast majority of older trusts and wills are obsolete and will complicate your family's lives and cost unnecessary money. If you want to relieve your family of a lot of cost and aggravation, you need to replace older documents with something simpler. You will enjoy getting professional advice that focuses on your true family goals.