Family Taxes, General Information, retirement planning, Self Employed, Uncategorized

12 Things you need to know about your parent.

senior

While I am focused on helping small businesses grow by reducing their taxes, and organizing their books, I firmly believe that health of body and mind leads to wealth. To help you be better prepared in the event of an emergency involving your parents/loved ones, below (in order of importance) is a list of 12 things you need to know about your aging parents’ health.  If you have any questions, comments, or concerns, please don’t hesitate to call us!

WHAT ARE THE NAMES OF THEIR DOCTOR’S & SPECIALIST? If you don’t know anything else, this is probably the most important piece of information. Why? Chances are good that your parents’ doctors can provide much of the rest of the information needed as well as more details about your parents’ specific health histories.

Do they have any major medical problems? This includes such conditions as high blood pressure, diabetes, heart disease, etc.

What Medications are they on? Have a list of medications and supplements. It’s especially important that a doctor know if your parent uses blood thinners. It’s also important for your doctor to know if your parents take any vitamin or herbal supplements (as these might interact with medications given in an emergency situation.

What is their previous medical history? Have they had any surgeries and major medical procedures? List past medical procedures including implanted medical devices such as pacemakers.

What is their insurance information? Know the name of your parents’ health insurance provider and their policy numbers.

What Are their End-of-Life Wishes? For instance: Would you want a ventilator and feeding tube used to keep you alive even in an irreversible coma? Do you want CPR initiated if your heart stops, even if you are terminally ill? Make sure the health care proxy is aware of your parent’s decisions.

Do they have any ADVANCE DIRECTIVES? An advance directive (living will, Do Not Resuscitate aka DNR, etc) is a legal document that outlines a person’s decisions about his or her health care, such as whether or not resuscitation efforts should be made and the use of life-support machines.

Have they named a durable power of attorney to manage their finances, or healthcare?
The first step is to find out if they have named a Durable Power of Attorney (POA). Without a POA in place, you’ll have to go to court to get guardianship of your parent in order to access accounts on their behalf.

Where do they keep their financial records and important documents?
Whether they keep their money and documents in a bank, a safe, or under the mattress, you need to know where to find records when you need them. What is the location of keys or codes to lock boxes or safes?

What are their bank account numbers and names of their financial institutions?
In addition to knowing where they keep their money, you need specifics on all account numbers. What banks do they use? Who is their mortgage company? Do they have an investment firm?

What are your parent’s monthly expenses?
Gather information on their mortgage, car payment, credit card debt, electric bill and other expenses.

How do they pay their bills currently, ESPECIALLY THEIR LIFE INSURANCE!!
If there are automatic deductions being taken out of a checking account, you need to know about it. Do they use online banking, or are they mailing in paper checks? DO NOT ASSUME!

This list was provided to us by our partner nonprofit agency  Senior Resource Group Inc. The mission of Senior Resource Group Inc.

is to remove access barriers to service, empower seniors through education, lower prescription drug cost, consolidate resources, and mobilize assistance.

Senior Resource Group Inc. services range from locating no cost insulin for diabetics; applying clients for prescription drug grants; locating local/state/federal and private assistance programs; explaining Medicare; and identifying the lowest cost Medicare supplements, health plans, & insurance solutions. Each of our clients are given an extensive individual interview so that our advocates can uncover every transportation, tax, food, and medical discounts he/she may qualify for.

Business Taxes, cannabis, Chicago cannabis, Family Taxes, General Information, General Tax Topics, Self Employed, Small Business, Tax Debt, Tax Deductions, Tax Planning, Tax Reduction, Uncategorized

Impact of Death, Retirement, & Disability on the 179 Tax Deduction

hospital work process

What tax effect would death, retirement, or disability have on you or your business?

Here’s an easy example to illustrate.

Let’s say that in 2017, you purchased (for business use) a pickup truck with a gross vehicle weight rating greater than 6,000 pounds. Asserting that you use the pickup 100 percent for business, you expensed the entire $55,000 cost.

What happens to that $55,000 expensed amount if you die, retire, or become disabled before the end of the vehicle’s five-year depreciation period?

Death

If your heirs are not going to pay estate taxes, your death is about as good as it gets. Here’s why:

  • You get to keep your Section 179 deduction. (It goes to the grave with you.)
  • Your pickup truck gets marked up to fair market value. (Remember, you expensed it to zero, but now at your death, the fair market value is the new basis to your heir or heirs.)

Example. Using Section 179, you expensed the entire cost of your $55,000 pickup truck. You die. Your daughter Amy inherits the pickup at its fair market value, which is now $31,000, and sells it immediately for $31,000. Here are the results:

  • You get to keep your Section 179 deduction—no recapture applies.
  • Amy pays zero tax on her sale of the pickup truck.
  • Your estate includes the $31,000 fair market value of the pickup, and if your estate is less than $11.4 million, your estate pays no estate taxes.

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Disability

This is ugly. If you become disabled and you allow your business use of the pickup to fall to 50 percent or below during its five-year depreciable life, you must recapture and pay taxes on the excess deductions generated by the Section 179 deduction.

To make matters worse, you must use straight-line depreciation in making the excess-deduction calculation.

Retirement

With retirement, you have exactly the same problem as you would have if you became disabled. In fact, with retirement, you disable your business involvement, and that makes your pickup truck fail the more-than-50-percent-business-use test, resulting in recapture of the excess benefit over straight-line depreciation.

Takeaways

You need to consider what happens should you become disabled, or retire, or die.

Although we’ve given you the basics, this is not an all-inclusive article. Should you have tax debt help questions, need Chicago business tax preparation, business entity creation, business insurance, or business compliance assistance please contact us online, or call our office toll free at 1-855-743-5765 or locally in Chicago or Indiana at 1-708-529-6604. Make sure to join our newsletter for more tips on reducing taxes, and increasing your wealth.

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Business Taxes, Family Taxes, General Information, General Tax Topics, Self Employed, Small Business, Tax Deductions, Tax Planning, Tax Reduction, Uncategorized

How to Handle Multiple Rental Activities and the 199A Deduction

apartment

In our  Chicago tax preparation office we often prepare real estate investor taxes. With the fairly new tax laws, there’s still a lot of confusion out there around your rental activity and Section 199A. Your Section 199A considerations multiply when you have multiple rental activities. Here’s what you need to consider:

  • Are your rental activities multiple trades or businesses, or one trade or business?
  • Can you aggregate the rentals for Section 199A purposes? Do you want to?
  • How does the Section 199A rental safe harbor impact your Section 199A deduction if you use it?

Whether your rental activities are each a trade or business, or they constitute one trade or business, is inherently based on the facts of your particular situation. The IRS also believes that multiple trades or businesses will generally not exist within an entity unless it can use different methods of accounting for each trade or business under the Section 466 regulations. These regulations explain that you can’t consider a trade or business separate and distinct unless you keep a complete and separable set of books and records for that trade or business.

This determination is an important factor for you if any one rental activity (taken individually) doesn’t rise to the level of a trade or business, but all the rental activities (viewed collectively) do rise to the level of a trade or business. One of the factors the IRS looks to when determining whether a rental activity is a trade or business is the number of properties rented.

Aggregation

The Section 199A regulations allow you to aggregate multiple trades or businesses such that you treat the aggregated group as one trade or business for determining your Section 199A deduction. This is an important consideration if one or more of your rental businesses have insufficient wages or unadjusted basis in assets (UBIA) to get the maximum Section 199A deduction for that property.
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The final regulations tell us you can aggregate, in most circumstances, provided that the rental activities share centralized administrative functions, such as accounting, legal, and human resources functions. The big wrinkle is the type of rental business: you generally can’t aggregate residential rental businesses and commercial rental businesses with each other because they aren’t the same type of property.

Rental Safe Harbor

Along with the final regulations, the IRS gave you an optional safe harbor to deem your rental activities as qualifying for the Section 199A deduction. The safe harbor isn’t the best strategy because most rentals qualify as a trade or business anyway.
Although we’ve given you the basics, this is not an all-inclusive article. Should you have tax debt help questions, need Chicago business tax preparation, business entity creation, business insurance, or business compliance assistance please contact us online, or call our office toll free at 1-855-743-5765 or locally in Chicago or Indiana at 1-708-529-6604. Make sure to join our newsletter for more tips on reducing taxes, and increasing your wealth.

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Business Taxes, Family Taxes, General Information, General Tax Topics, retirement planning, Self Employed, Small Business, Tax Planning, Uncategorized

Backdoor Roth IRA Opportunities Still Available After TCJA

backdoor

Good news. The Tax Cuts and Jobs Act (TCJA) did not harm the backdoor Roth strategy.

As you likely know, the Roth IRA is a terrific way to grow your wealth with a minimum tax downside because you pay the taxes up front and then, with the proper holding period, pay no taxes after that.

But if you earn too much, you’re completely barred from contributing to a Roth IRA unless you can use the backdoor Roth technique, which involves making a nondeductible contribution to a traditional IRA and then rolling that money into a Roth.
Schedule-button-nbThe backdoor Roth strategy has been around for a good nine years, and it has experienced no trouble that we are aware of, so we think it’s a good strategy. We also like the recent notations in the legislative history and the comments from the IRS spokesperson that show approval of the strategy.

Keep in mind that with some planning, you can avoid any taxes on the rollover. For example, if you have an existing traditional IRA, you can move those monies to your qualified plan to avoid having the backdoor strategy trigger some taxes. And if you have no traditional IRA, the nondeductible contribution to the traditional IRA and the subsequent rollover to the Roth IRA triggers no taxes.

Although we’ve given you the basics, this is not an all-inclusive article. Should you have tax debt help questions, need Chicago business tax preparation, business entity creation, business insurance, or business compliance assistance please contact us online, or call our office toll free at 1-855-743-5765 or locally in Chicago or Indiana at 1-708-529-6604. Make sure to join our newsletter for more tips on reducing taxes, and increasing your wealth.

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Business Taxes, Family Taxes, General Information, Self Employed, Small Business, Tax Debt, Tax Deductions, Tax Reduction, Uncategorized

Owe the IRS? Find out what your credit report tells them.

 

man in white shirt using macbook pro

Author: Trudy M. Howard

In our Chicago tax debt office you’ll often hear me say “the IRS is worse than the FBI.” Of course this is simply my opinion (based upon years of research, tax debt cases, education, and government documents), but if the IRS isn’t worse than the FBI, they surely are a close 2nd!

When I tell you that the IRS can find out anything,  I mean they can find out anything (except for your blood type, but I’m sure that’s pending)! The IRS has access to systems that you wouldn’t believe existed. For example, did you know that the IRS receives a weekly file of new movers? It’s true. “The United States Postal Service (USPS) provides an address update product — the National Change of Address Linkage (NCOALink), and the IRS receives a weekly NCOALink file from USPS. The file contains all of the reported changes of address in the United States for the week.” Not only does the IRS use this system, along with several others, the IRS also has the authority to pull a debtor’s credit report! Keep reading to see what your credit report tells the IRS.

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There are 6 key things that an IRS collections representative is looking for when they access your credit report.

  • Previous residences along with old/current employers.
  • Other lien holders to see how much you owe, and how much you’ve paid.
  • Property that may not have been disclosed during your collections interview.
  • Leads to hidden assets by identifying other creditors.
  • Financial institutions that you have done business with in the past and currently.
  • Entities and associations with foreign banks and corporations.

Hopefully, by viewing this list you see that it is important to disclose all financial information when dealing with the IRS. Once you submit all of your financial information,  Howard Tax Prep LLC, located in the South Loop of Chicago, can help you with an IRS tax debt settlement, a tax debt payment plan, removal of tax lien, and IRS wage garnishments in Chicago, and all 50 states.

Although we’ve given you the basics, this is not an all-inclusive article. Should you have tax debt help questions, need Chicago business tax preparation, business entity creation, business insurance, or business compliance assistance please contact us online, or call our office toll free at 1-855-743-5765 or locally in Chicago or Indiana at 1-708-529-6604. Make sure to join our newsletter for more tips on reducing taxes, and increasing your wealth.

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Family Taxes, General Information, General Tax Topics, Self Employed, Small Business, Uncategorized

7 KEYS TO SETTING & STICKING TO A BUDGET!

group of women sitting in front of table

Author Trudy M Howard. 

In our South Loop Chicago Tax Office, we not only help clients with tax planning to reduce their taxes, but we also draft personalized financial wellness plans.  If you want to eliminate debt, be prepared for an emergency, and retire with confidence, you must learn how to budget your finances. Not only do you want to set a budget, but you need to STICK TO YOUR BUDGET in order to be successful. Keep reading to find out the 7 KEYS TO SETTING & STICKING TO A BUDGET.

1.) Set realistic amounts: If you know that you like to shop, or that you don’t like to cook, don’t set a budget of $25 a month for shopping and dining out.

2.) Use cash instead of a debit/credit card. Retailers know that consumers spend more when they use their card instead of spending cash. Every Sunday withdraw enough for your gas, lunch, groceries, and incidentals.

3.) Watch your funds: Balance your checkbook! Don’t rely on the online banking system to give you current balances, as some purchases may not show for 24-48 hours later. Balancing your checkbook also helps you avoid overdraft fees, and less overdraft fees equal more savings!

4.) Stick to your entertainment budget: Use a prepaid debit card for your entertainment cost. Once the card is empty, you’ll know that you’ve reached your entertainment budget for the week. Be prepared to say NO to invitations from friends, and don’t feel as if you need to provide a detailed explanation about your financial situation.

5.) Expect unexpected expenses. No matter how disciplined you are in sticking to your budget, just as sure as the sun rises in the East, and sets in the West, I can GUARANTEE YOU that some unplanned expense is going to come up. Whether it be an increase in fuel cost, an increase in your utilities, or an unexpected dental emergency, expect to spend an extra $100-$150 a month.

6.) Track every purchase for the next 30 days. In order to get a clear look at your spending habits, you need to track all of your purchases. From the gum that you purchased, to the car note that you paid, Record. Every. Single. Purchase. Although you can use your bank statements to track your spending, writing down the figures can help you identify and remember areas of your concern.

7.) Pay bills on time to avoid late fees and bad credit. Nothing, and I mean NOTHING, can destroy a budget faster than a late payment fee! If you don’t like having your bills set to auto pay, try using google calendar to set a reminder the day before a bill is due. Not only does paying your bills on time increase your credit score, but it also creates more wealth building opportunities.

Although we’ve given you the basics, this is not an all-inclusive article. Should you have questions, or need business tax preparation, business entity creation, business insurance, or business compliance assistance please contact us online, or call our office at 855-743-5765. Make sure to join our newsletter for more tips on reducing taxes, and increasing your wealth.

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General Tax Topics, Small Business, Tax Reduction, Uncategorized

5 last-minute strategies you can use to cut your 2018 tax bill!

accuracy afternoon alarm clock analogue

Trudy Howard

In my South Loop Chicago Tax Preparation office, I often see clients looking for tax savings at years end. Although December 26th is cutting it close, your year-end tax planning doesn’t have to be hard. I have outlined below five strategies that will increase your tax deductions or reduce your taxable income so that Uncle Sam gets less of your 2018 cash.

1.) Prepaying your 2019 expenses right now reduces your taxes this year, without question. While it’s true you kicked the can down the road some, perhaps you have an offset with a big deduction planned for next year. And even if you don’t have such a plan at the moment, you have plenty of time to create one or to put more big deductions in place for 2019.

2.) The easiest year-end strategy of all is simply to stop billing your customers, clients, and patients. Once again, this kicks the can down the road some and makes your 2019 tax planning more important.

3.) Thanks to the new tax laws With 100 percent bonus depreciation and increased Section 179 expensing in 2018, you can make significant purchases of equipment, machinery, and furniture and write off 100 percent of the value. Make sure you place the assets in service on or before December 31, 2018, to get the deduction this year.
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4.) Charges to your credit cards can create deductions on the day of the charge. This is absolutely true if you are a sole proprietor or you operate as a corporation and the credit card is in the name of the corporation. But if you operate as a corporation and the credit card is in your personal name, your corporation needs to reimburse you before December 31 to create the 2018 deduction at the corporate level.

5.) And finally, claim all your legitimate deductions. Don’t think you have too many, and don’t try to guess which of your too-many deductions could be a red flag. First, it’s unlikely you could have enough deductions to create a red flag. Second, no one knows what those red flags are. Third, if the deduction is legitimate, it doesn’t matter if the IRS audits it—you’ll win.

As you can see from the five strategies above, there’s much you can do to control your tax bite. Although we’ve given you the basics, this is not an all-inclusive article. Should you have tax debt help questions, need Chicago business tax preparation, business entity creation, business insurance, or business compliance assistance please contact us online, or call our office toll free at 1-855-743-5765 or locally in Chicago or Indiana at 1-708-529-6604. Make sure to join our newsletter for more tips on reducing taxes, and increasing your wealth.
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