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Test your financial literacy

Posted by Admin Posted on July 18 2019

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How early 20th century technology helped boost employee productivity

Posted by Admin Posted on July 11 2019

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You may have to pay tax on Social Security benefits

Posted by Admin Posted on July 03 2019

 

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During your working days, you pay Social Security tax in the form of withholding from your salary or self-employment tax. And when you start receiving Social Security benefits, you may be surprised to learn that some of the payments may be taxed.
 
If you’re getting close to retirement age, you may be wondering if your benefits are going to be taxed. And if so, how much will you have to pay? The answer depends on your other income. If you are taxed, between 50% and 85% of your payments will be hit with federal income tax. (There could also be state tax.)
 
Important: This doesn’t mean you pay 50% to 85% of your benefits back to the government in taxes. It means that you have to include 50% to 85% of them in your income subject to your regular tax rates.
 
Calculate provisional income
 
To determine how much of your benefits are taxed, you must calculate your provisional income. It starts with your adjusted gross income on your tax return. Then, you add certain amounts (for example, tax-exempt interest from municipal bonds). Add to that the income of your spouse, if you file jointly. To this, add half of the Social Security benefits you and your spouse received during the year. The figure you come up with is your provisional income. Now apply the following rules:
 
If you file a joint tax return and your provisional income, plus half your benefits, isn’t above $32,000 ($25,000 for single taxpayers), none of your Social Security benefits are taxed.
 
If your provisional income is between $32,001 and $44,000, and you file jointly with your spouse, you must report up to 50% of your Social Security benefits as income. For single taxpayers, if your provisional income is between $25,001 and $34,000, you must report up to 50% of your Social Security benefits as income.
 
If your provisional income is more than $44,000, and you file jointly, you must report up to 85% of your Social Security benefits as income on Form 1040. For single taxpayers, if your provisional income is more than $34,000, the general rule is that you must report up to 85% of your Social Security benefits as income.
 
Caution: If you aren’t paying tax on your Social Security benefits now because your income is below the floor, or you’re paying tax on only 50% of those benefits, an unplanned increase in your income can have a significant tax cost. You’ll have to pay tax on the additional income, you’ll also have to pay tax on (or on more of) your Social Security benefits, and you may get pushed into a higher tax bracket.
 
For example, this might happen if you receive a large retirement plan distribution during the year or you receive large capital gains. With careful planning, you might be able to avoid this tax result.
 
Avoid a large tax bill
If you know your Social Security benefits will be taxed, you may want to voluntarily arrange to have tax withheld from the payments by filing a Form W-4V with the IRS. Otherwise, you may have to make estimated tax payments.
 
Contact us to help you with the exact calculations on whether your Social Security will be taxed. We can also help you with tax planning to keep your taxes as low as possible during retirement. © 2019

PAID PARENTAL LEAVE - Employers respond to increased worker demand

Posted by Admin Posted on June 27 2019

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How to handle an inheritance

Posted by Admin Posted on June 20 2019

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Donating your vehicle to charity may not be a taxwise decision

Posted by Admin Posted on June 13 2019

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Let’s say you’re buying a new car and want to get rid of your old one. You’ve heard ads claiming you can get a tax deduction for donating a car to charity. But this may not result in a big deduction — or any at all. It depends on whether you itemize and what the charity does with the vehicle. For cars worth more than $500, the deduction is the amount for which the charity sells the car. However, i f a charity uses the car in its operations or materially improves it before selling, your deduction is based on the car’s fair market value at the time of donating. You also must itemize deductions. You can’t claim a deduction if you take the standard deduction. Contact us for more details.

Thinking about moving to another state in retirement? Don’t forget about taxes

Posted by Admin Posted on June 07 2019

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If you’re thinking about relocating to another state in retirement, consider the impact of state and local taxes. It may seem like a state with no income tax is a smart choice, but you also have to factor in property and sales taxes, as well as any state estate tax. If you make a move to a new state and want to escape taxes in the state you came from, it’s important to establish legal domicile in the new location. How? Take steps such as buying a new home, changing your mailing address, registering to vote and getting a driver’s license in the new state. Before deciding where to live in retirement, do some research and contact us. We can help you avoid unpleasant tax surprises.

Making the best of BAD DEBT

Posted by Admin Posted on June 03 2019

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Check your withholding and make changes, if necessary

Posted by Admin Posted on May 24 2019

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Did you receive a refund this year that was smaller than you were expecting? Or did you wind up owing additional tax when you filed your return? That might mean it’s time to check and adjust your withholding. This might be necessary due to changes in the Tax Cuts and Jobs Act or because something in your situation is different this year (for example, you got married, divorced, purchased a home or had changes in your income). The IRS has a withholding calculator where you can perform a paycheck checkup. You can access the calculator at https://bit.ly/2aLxK0A. Contact us if you need help determining whether you should adjust your 2019 withholding.

VETERANS ARE AMERICA’S ECONOMIC WEAPON

Posted by Admin Posted on May 21 2019

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Still working after age 70½? You may not have to begin 401(k) withdrawals

Posted by Admin Posted on Mar 28 2019

If you participate in a qualified retirement plan, such as a 401(k), you must generally begin taking required withdrawals from the plan no later than April 1 of the year after which you turn age 70½. However, there’s an exception that applies to certain plan participants who are still working for the entire year in which they turn 70½.

The basics of RMDs

Required minimum distributions (RMDs) are the amounts you’re legally required to withdraw from your qualified retirement plans and traditional IRAs after reaching age 70½. Essentially, the tax law requires you to tap into your retirement assets — and begin paying taxes on them — whether you want to or not.

Under the tax code, RMDs must begin to be taken from qualified pension, profit sharing and stock bonus plans by a certain date. That date is April 1 of the year following the later of the calendar year in which an employee: Reaches age 70½, or retires from employment with the employer maintaining the plan under the “still working” exception.

Once they begin, RMDs must generally continue each year. The tax penalty for withdrawing less than the RMD amount is 50% of the portion that should have been withdrawn but wasn’t. However, there’s an important exception to the still-working exception. If owner-employees own at least 5% of the company, they must begin taking RMDs from their 401(k)s beginning at 70½, regardless of their work status.

The still-working rule doesn’t apply to distributions from IRAs (including SEPs or SIMPLE IRAs). RMDs from these accounts must begin no later than April 1 of the year following the calendar year such individuals turn age 70½, even if they’re not retired.

The law and regulations don’t state how many hours an employee needs to work in order to postpone 401(k) RMDs. There’s no requirement that he or she work 40 hours a week for the exception to apply. However, the employee must be doing legitimate work and receiving W-2 wages.

For a customized plan

The RMD rules for qualified retirement plans (and IRAs) are complex. With careful planning, you can minimize your taxes and preserve more assets for your heirs. If you’re still working after age 70½, it may be beneficial to delay taking RMDs but there could also be disadvantages. Contact us to customize the optimal plan based on your individual retirement and estate planning goals.

 

How ancient Incan bean counters counted... beans

Posted by Admin Posted on Mar 21 2019

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WHAT'S IN YOUR (VIRTUAL) WALLET?

Posted by Admin Posted on Mar 14 2019

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Americans abroad, living as locals

Posted by Admin Posted on Mar 07 2019

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Turn that frown upside down

Posted by Admin Posted on Mar 01 2019

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Some of your deductions may be smaller (or nonexistent) when you file your 2018 tax return

Posted by Admin Posted on Feb 22 2019

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While the Tax Cuts and Jobs Act reduces most income tax rates and expands some tax breaks, it may cause you to see these five itemized deductions shrink or disappear when you file your 2018 tax return: 1) state and local tax, 2) mortgage interest, 3) home equity debt interest, 4) miscellaneous, and 5) casualty and theft loss. The combination of a much larger standard deduction and smaller itemized deductions may mean that, even if itemizing has typically benefited you, you might now be better off taking the standard deduction. Contact us for details.

Because you believe in second chances

Posted by Admin Posted on Feb 15 2019

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Why you shouldn’t wait to file your 2018 income tax return

Posted by Admin Posted on Feb 07 2019

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The IRS opened the 2018 income tax return filing season on Jan. 28. Consider filing as soon as you can, even if you typically don’t file this early. It can help protect you from tax identity theft, in which a thief files a return using your Social Security number to claim a bogus refund. If you file first, it will be returns filed by any would-be thieves that are rejected by the IRS, not yours. Ot her benefits: You’ll get your refund sooner or, if you owe tax, you’ll know how much you owe sooner so you can be ready to pay it by April 15. Contact us with questions.

Is your nonprofit ready for a raffle?

Posted by Admin Posted on Jan 31 2019

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Raffles are popular fundraisers for not-for-profits. But they’re subject to strict tax rules. State laws on nonprofit-sponsored raffles vary, but you must comply with federal income tax requirements. First, you may owe unrelated business income tax unless your fundraiser is “substantially” staffed by volunteers. Second, raffle winnings must be reported to the IRS when the amount is $600 or more an d at least 300 times the raffle ticket price. Third, you need to withhold income tax from the winnings if the proceeds are more than $5,000. Contact us for details.

Taxpayers, start your engines!

Posted by Admin Posted on Jan 24 2019

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Movin' on up

Posted by Admin Posted on Jan 18 2019

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Charitable donations: Unraveling the mystery of motivation

Posted by Admin Posted on Jan 14 2019

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Americans support charities for a variety of financial, emotional and social reasons, and some of them aren’t so obvious. For example, wealthy donors may be motivated by not only tax and asset protection considerations, but also a desire to limit what they leave to their children to prevent a “burden of wealth.” Younger donors often want to “make a difference,” and donors of all stripes are motiva ted by a desire to make an altruistic impression. These individuals are more likely to give when asked by someone they know or when their gift will be publicized.

How to spend less, much less, in 2019

Posted by Admin Posted on Jan 03 2019

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You may be able to save more for retirement in 2019

Posted by Admin Posted on Dec 28 2018
Retirement plan contribution limits are indexed for inflation, and most have increased for 2019. So you may have opportunities to increase your retirement savings. Limits for 401(k)s, SIMPLEs and IRAs increase by $500, to $19,000, $13,000 and $6,000, respectively. Catch-up contributions (for taxpayers age 50 or older) remain unchanged, however. They’re $6,000, $3,000 and $1,000, respectively. Additional factors may affect how much you’re allowed to contribute. For more on how to make the most of tax-advantaged retirement-saving opportunities in 2019, contact us.
 

FIXED vs ADJUSTABLE RATE MORTGAGES

Posted by Admin Posted on Dec 20 2018

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Celebrate a successful year!

Posted by Admin Posted on Dec 13 2018

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There's still time to reduce your 2018 tax bill

Posted by Admin Posted on Dec 06 2018

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Accounting Day Parties Can Get a Little Crazy

Posted by Admin Posted on Nov 01 2018

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So you've received a letter from the IRS ...

Posted by Admin Posted on Sept 20 2018

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What it takes to be a Woman CPA

Posted by Admin Posted on Jan 22 2018

Welcome to Our Blog!

Posted by Admin Posted on Sept 24 2013
This is the home of our new blog. Check back often for updates!

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