August 10, 2017

Achieving Charitable Desires While Increasing You Net Gain

When it comes to philanthropic giving business owners are often at the top of the list. Giving allows them to experience personal satisfaction as well as shelter some of their proceeds from Uncle Sam. Not only do they give on a regular basis, but many of my clients want to give a portion of their proceeds to their favorite charity upon the sell of their business. These donors/business owners are firm believers that they need to give some of the proceeds to a charity. Those charities run the gamut. Some are based on religious beliefs, while others are merely philanthropic desires. Typically, the number that seems to always get tossed around is about 10%. So if they sold their business for $5 million, they’d give $500k of the sale to the charity of their choice. This is definitely a noble and altruistic action. It is also important to note that a lot of people take different approaches to accomplishing this. I’m going to give you a little insight on how you can do just that. All the while, maximizing the money that you end up pocketing. Let’s look at some numbers to give you an idea. Here’s an example of […]
August 1, 2017

How to Get Tax Transcripts and Copies of Tax Returns from the IRS

Taxpayers should keep copies of their tax returns for at least three years. Those who need a copy of their tax return should check with their software provider or tax preparer. If all else fails though, here how getting tax transcripts and copies of returns from the IRS works. Tax Transcripts A transcript summarizes return information and includes Adjusted Gross Income (AGI). They are available for the most current tax year after the IRS has processed the return. People can also get them for the past three years. When applying for home mortgages or college financial aid, transcripts are often necessary. Mortgage companies, however, normally arrange to get one for a homeowner or potential homeowner. For people applying for college financial aid, see IRS Offers Help to Students, Families to Get Tax Information for Student Financial Aid Applications on IRS website for the latest options. Taxpayers can get two types of transcripts from the IRS: Tax Return Transcript. A tax return transcript shows most line items including AGI from an original tax return (Form 1040, 1040A or 1040EZ) as filed, along with any forms and schedules. It doesn’t show changes made after the filing of the original return. This transcript […]
August 1, 2017
Estate and Gift Tax Limits

2017 Estate and Gift Tax Limits

We all want to leave a legacy. When it comes to money though, the IRS has some say so, meaning there are some tax ramifications to transferring your wealth. Here are the estate and gift tax limits you may need to know. The Changes For individuals, the estate and gift tax exemption jumped from $5.46 million in 2016 to $5.49 million this year. That means you can leave your heirs a hefty sum and not pay federal estate or gift tax. If the money is left by a couple, that amount is almost $11 million ($10.98 million). The annual gift exclusion is still $14,000 for 2017. Inflation played its role by initiating the increase by the IRS. Changes to the estate tax especially matter to those in the upper tax brackets. Whittling down your estate can help you avoid the 40% estate tax. The increase is especially helpful for those that used every dollar of their exemption. They now have an extra $80k to work with. Which means starting a funding a GRAT or starting up a trust could be viable options to sheltering the money.  The federal gift tax and estate tax are married to one another, so the inflation […]
June 16, 2017
should i use a roth or traditional

How a Properly Planned 401k Can Lower Your Taxes?

If you participate in a qualified 401k plan, you’re among millions of Americans utilizing this option for retirement planning. These plans are a great way to stock away pre-tax dollars to fund your future lifestyle once you retire. A properly planned 401k can also represent an excellent benefit for a business owner as well. Here’s how. The Scenario We recently met with small business clients, along with their CPA. This particular client generates around two-and-a-half million dollars in gross revenue a year. The owners, a husband and wife team, each earn $75,000 a year in W-2 wages, and the business saw a profit of just over $297,000, which is split 50/50 between them. They’re frugal with their money, carrying no debt and spending roughly $6,000 a month on living expenses. This has been the key to their success. The Before and After They’re making almost $450,000 a year in taxable income. Before they incorporated 401k planning into their business model, it wasn’t unusual for them to get tax bills ranging from $150,000 to $180,000 a year. Now, with their 401k plan in place, their combined tax bill was $63,000. We placed $106,000 of their income into the plan. Utilizing employee […]