Lake Orion, Michigan (248) 834-4511

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Posted on Thursday, March 28, 2024
With tax season in full swing and documents from broker/dealers and other investment companies coming out later and later, you can definitely smell the tax “angst” in the air. The amount of pressure that tax offices and their clients seem to be under is palpable. Why is this all happening and what about this is important to you? It’s happening because, over the years, although the IRS has stood firm at mid-January to April 15th as the filing season for 1040 filers, on the other side of the equation are the vendors themselves that have to send documents to the IRS: The banks, the mortgage companies, the investment companies, etc. The companies have managed to lobby and get extensions of time to...

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Posted on Thursday, March 21, 2024
The answer to that might surprise you. Because, for the most part, the answer is yes.  However, sometimes they are only fair if you know how to “play the game”. Most people think only the wealthy can avoid paying income tax because they know how to play the game. Well, at a much lower level, everybody knows some of the tricks to “playing the game”. For instance, you might be contributing to your 401(k) at work. Well, you’re playing the game. However, you might not know that even though you’re contributing everything you can to your 401(k) at work, you’re still allowed to open an additional private IRA, and take another several thousand dollars off of your taxable income. The trick is “knowing the rest of the rules...

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Posted on Thursday, March 14, 2024
When people save for retirement they almost automatically use accounts that avoid tax now. IRAs, 401(k)s, 403(b)s, 457s, all pretax retirement savings plans. Certainly, long term savings uninterrupted by withdrawals and the effect of compounding interest on interest earned is unarguably valuable, but doing that in pretax accounts is NOT the only way to have that happen! Non-qualified annuities and Roth IRAs allow the same mechanics of compounding to happen, and in retirement both can be as valuable depending on the circumstances and actions of the retiree. Annuities are underappreciated as a tax planning tool, because of the way earnings are treated as ordinary income upon withdrawal. However if annuitized at retirement (an option the advisors that distribute them don’t...

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Posted on Thursday, March 07, 2024
When you start tax planning with a new client, the first thing people often ask is why the accountant or CPA they are using doesn’t think or act the way you do in discussing the hunt for possible tax savings. After all, the current CPA is smart, trustworthy, running a successful accounting business and well respected in the community. So, why are you telling them all these wonderful new tax savings ideas that their CPA has never mentioned? There are many explanations, but the simplest is how the accountants themselves view the job that they do. Often, accountants think that the profession of accounting in its simplest form is the job of telling the story of money that has already...

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Posted on Thursday, February 29, 2024
At this time of year many people who were getting a refund have already filed their tax return. It leaves the remaining majority of folks who, despite having withholdings, are still going to owe additional tax. We talk a great deal about tax planning and changing behaviors to achieve better outcomes in the future, but many are faced right now with a tax bill for last year. So, what can be done? Anything? The answer is YES! It’s actually simple and easy for most folks to substantially reduce the tax liability they are facing by opening a prior year IRA! It is one of the very few ways the IRS allows you to retroactively affect your taxes. What if you...

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Posted on Thursday, February 22, 2024
People often struggle with record keeping and are typically so busy that they are simply unaware of tools or services that have been developed that could greatly improve the recording of tax deductible expenses, mileage, etc. There are many topics we could cover here, but two that are universal. If you are in business, you have a phone and a car. Cell phones are pretty typical for smaller companies. What we usually see is a personal cell phone bill of about $150-200 a month, and of course the business owner wants to deduct it all. When you start asking questions however, it’s almost always a family plan with the spouse and kids on it, so 80% of the cost and...

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Posted on Thursday, February 15, 2024
An often overlooked tax savings opportunity comes from not fully understanding how you can use your cars as a deduction on your tax return.  It is very common for people who have a Schedule C sole proprietor type business to claim their mileage on automobiles. But the privilege of using personal deductions on a tax return is not limited to someone who is filing a Schedule C.  For instance, a landlord might own three apartment buildings and file a schedule E on his personal tax return and not feel like he is “self-employed” as he has a full-time W-2 job. However, the use of his personal car on that schedule E is just as deductible as it is for the...

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Posted on Thursday, February 08, 2024
Often people will have one-time “Income Events” that greatly increase the income tax due in that year. Finding ways to mitigate that additional tax, especially for younger people, can be challenging. In some cases, setting up a Charitable Lead Trust (CLT) in order to receive an upfront income tax deduction might be viable option. A person who has significant and unusual taxable income in a particular year can establish the grantor lead trust and use the charitable income tax deduction to mitigate the impact of taxes in his or her situation. An example might be someone who has received the proceeds from selling a business, or a stock option at work is coming due. A far more common and likely...

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Posted on Thursday, February 01, 2024
As weather interrupts some parts of the country and business owners have to scramble and fill in the gaps of employees, supplies, deliveries and the like, it’s easy for them to worry about taxes later, after all, there’s “plenty of time.” That often comes back to bite them though, sometimes hard. If they run their business as a sole proprietorship then yes, they have until mid-April to file, and until mid-October if they file an extension.  However, the majority of small businesses under pay tax estimates, if they pay them at all, and the first filing date (mid-April) is when the taxes are due, even with an extension to file. The penalties and interest are based on what’s owed and...

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Posted on Thursday, January 25, 2024
People who are worried about the 10 year rule, requiring beneficiaries of inherited IRAs to withdraw the entire balance within 10 years, can double that time with a CRT beneficiary in front of inheritors.  What if you really have a big IRA and the 10 year rule just isn’t enough of a stretch to help your beneficiary stay out of the top tax bracket?  Or any other reason you care about reducing the negative tax impact from the 10-year rule? You could use other remaining tax rules to your benefit by setting up a charitable trust.  A charitable trust allows the retirement assets to continue growing tax-deferred, even once the assets are distributed from the retirement account into the CRT....

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