Don’t replace common sense with technology

Posted Leave a commentPosted in Tax Planning, Taxes

Tax filing is like grocery shopping Technology has transformed the annual tax filing ritual but far too many people are replacing good judgement with purely online mechanical tools. The result is a recent spike in errors leading to costly tax penalties and higher tax payments over the long-term. The most important part of the tax […]

Sample deferred compensation plan

Posted Leave a commentPosted in Employee Benefits, nonprofit, Tax Planning

Following is an annotated copy of the model truck language for a deferred compensation plan under  Rev. Proc. 92-64. TRUST UNDER ____ PLAN OPTIONAL (a) THIS AGREEMENT MADE THIS ___ DAY OF ___, BY AND BETWEEN ____ (COMPANY) AND ____ (TRUSTEE); OPTIONAL (b) WHEREAS, COMPANY HAS ADOPTED THE NONQUALIFIED DEFERRED COMPENSATION PLAN(S) AS LISTED IN […]

What the heck is a 501(k) plan?

Posted 4 CommentsPosted in Financial Planning, Retirement, Tax Planning

The financial services industry has a long history of creating new marketing terms to help sell its products. Certainly this is a productive and useful part of consumer financial service communications. The latest term gathering attention is a “501(k) plan”. The increased use of this term coincides with marketing of an already existing alternate tool […]

Questionnaire to determine the potential to save taxes

Posted Leave a commentPosted in Tax Planning

My business adviser, a data scientist, asked me to compile a list of questions necessary to determine the tax saving potential of an individual person. The intent is to keep the list as short as possible but allow us to calculate an estimate of the amount of tax savings that are possible through comprehensive financial […]

Four steps to cut income taxes

Posted Leave a commentPosted in Tax Planning

A successful tax reduction plan typically involves the same four steps for every person who tackles this aspect of financial planning. The rewards for taking on the financial goal of ending or reducing income taxes are substantial; wealth accumulates exponentially faster without the drag of taxes. Yet relatively few incorporate comprehensive tax planning into their […]

“from whatever source derived”

Posted Leave a commentPosted in Tax Planning

What exactly is tax planning? Internal Revenue code section 61 defines gross income broadly as coming “from whatever source derived”. However, the following code section 62 begins to differentiate the sources eligible for exclusion from taxable income. Volumes of tax authority follow behind this basic law defining these two concepts to further define the distinction […]

Five reasons to not extend your business tax return due date

Posted Leave a commentPosted in Accounting, Small Business, Tax Planning

As a tax planner and an advocate of automated accounting systems, I’ve said many times that preparation of the tax return is the least important and certainly least valuable service that I provide. I’ve used the phrasing, even over the objections of tax preparers, that the business tax return should almost effortlessly “fall out” of […]

Unreimbursed partnership expenses revisited

Posted Leave a commentPosted in Accounting, Employee Benefits, Law firm, Small Business, Tax Planning

The Tax Cuts and Jobs Act triggers changes to the tax treatment of unreimbursed partnership expenses for 2018. Partnerships should revisit their policies to ensure that partners and employees maximize tax savings under the new law. Under former law a partner could deduct the expenses of the partnership on his or her individual income tax […]

IRS issued more guidance on wage tax withholding

Posted Leave a commentPosted in payroll, Small Business, Tax Planning, Taxes

Yesterday the IRS issued more guidance on wage tax withholding rules in response to changes triggered by the Tax Cuts and Jobs Act.  Notice 2018-14 provides guidance to both individual taxpayers and employers on tax withholding requirements for wages. One of the most significant changes is the default rate of withholding on bonuses or supplemental wages is […]