Thursday, January 11, 2018

Tax-Time Review

Now is the perfect time to review your financial affairs. You have to gather information to prepare your tax return at this time. Why not take one more step and do something positive for the wellbeing of your wallet?

The following suggestions will help you with your financial review:

  • Talk to your family. You should factor in the financial decisions and goals of your spouse and children.

  • Put your financial goals in writing. Figure out how much money you’ll need to meet each goal, when you’ll need it and how you’ll get it.

  • Create a net worth statement. Create a list of your assets and debts, and compare it to last year’s statement. Are you gaining ground or losing it?

  • Review investment performance. Weigh your investment performance minus the effects of inflation, and compare your progress with your goals. Determine what investments are worth it and what may need to change this year.

  • Protect what you have. Consider the risks of your financial strategies. Your long-term goals may be unobtainable if you lose your present assets or your income potential.

  • Determine if you need the insurance you have — or if you’re missing something. Don’t duplicate employer-provided coverage. Review your coverage annually; don’t just automatically renew policies.

  • Review your will and your estate plan. Did your situation change during 2017? Make appropriate changes to your will and estate plan if it did. Stay informed about the 2018 tax reform changes that affect your plan.

Need help creating an effective 2018 tax strategy for your situation? BAS can help! Give us a call today.
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Saturday, January 6, 2018

Is it time to update your beneficiary list?

It’s not uncommon to lose track of your beneficiaries, including which accounts have them, and who you designated. However, it is important to keep them current.
Make your beneficiary designations a priority
When you designate a beneficiary for an account, that person inherits the assets in the account, regardless of what your will says. That’s why updating your will periodically may not be enough.
Typically, you’ll have beneficiaries for each of your IRAs, your 401(k) or other retirement plans, annuities and insurance policies. Your designations could be out of date just because of life’s changes. Since you made your initial choices, you may have married, had children or divorced. Some of the beneficiaries you chose could have died, divorced or married. Their circumstances could have changed so you no longer want them to be the beneficiary.
Tax laws change frequently as well, and they can have an impact on your choices. Choosing the wrong beneficiary, or failing to name a contingent beneficiary, can affect the long-term value of your IRA assets after you die. That’s why it’s important to review your choices with tax consequences in mind.
How to update your designations
At a minimum, you should have copies of your beneficiary designations in one place. If you don’t, call the trustees of your retirement accounts and your insurance agent and request copies.
Then review the documents and decide what changes you’d like to make. Make an appointment to review your decisions with your tax- and estate-planning advisor. Discuss matters such as naming secondary beneficiaries and whether to name your estate as a beneficiary (which is sometimes not a good idea).

Finally, send your changes to the account trustee, ask for a confirmation, and keep copies in your records. If you have questions about tax consequences or other tax matters related to your estate, call our office.

Monday, January 1, 2018

Your Business’ Annual Health Check

Business owners and managers spend most of their time monitoring operations and dealing with everyday problems. But just as an annual checkup from your doctor helps monitor and manage your personal health, an annual checkup can do the same for your business.
Here are seven checkup tasks that you should make time to do every year. These are important for your long-term business health and personal success:
  1. Review your business insurance coverage. Don’t just automatically write a check to renew your insurance policies when they come due. Instead, you should sit down with your insurance agent every year. Review your business operations, focusing on any changes. Discuss types of risk that could arise. And ask about new developments in business insurance.
  2. Look at your business tax strategy. Consider adjusting taxable earnings for the year, perhaps by accelerating expenses or delaying income at year-end. If you’re a cash-basis taxpayer, you could boost 2017 deductions by declaring and paying bonuses in December rather than in early January. Also, you may be able to defer invoices or make early purchases to reduce your 2017 tax bill.
  3. Survey your customers. An annual customer satisfaction survey is a great way to assess performance, get insight on potential new products or services and to let your customers know how much you value their business.
  4. Determine your marketing effectiveness. Are your current methods and channels working well, or are you simply doing what you’ve always done?
  5. Update succession planning for your business. Review your succession planning annually. You should have a specific plan for each key manager position, including yourself. Be prepared for a short-term absence or a permanent vacancy. Your plan may include promoting from within or recruiting externally.
  6. Review your business banking relationships. Every year you should go over your cash balances and banking relationships with your controller, CFO or accountant. Then meet with your banker. Ask about new products or services that could help your company. Address any service concerns or problems you might have had. And look for ways to boost interest earned and improve cash flow.
  7. Update your personal estate planning (if needed). If you’re a business owner, your company is likely to be a significant part of your estate. Your company, your personal circumstances and the tax laws are continually changing. You should take time each year to make sure your plans are current.
If you are serious about improving your business, consider a yearly assessment of your operation. Give us a call to learn more about how you can put your business in the best tax position possible for 2018.
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Monday, December 25, 2017

5 Year-End Tax Tips

The clock is ticking down to 2018 … but you still have a few weeks left to make some last-minute tax moves. Take a look at these five tips and save a little more this year.

  1. Check the amount of 2017 tax you have prepaid through withholding and quarterly estimates ASAP.If you’ve underpaid, consider increasing your withholding before year-end. Withholding is considered to have been paid evenly throughout the year. This is to help prevent you being charged underpayment penalties for 2017.
  2. Make sure you have the correct tax status. If you got married or divorced this year, be aware that your marital status as of Dec. 31 determines your tax status for the whole year. If you are in the process of a marital status change, know that altering the dates of a year-end event to the new year may affect your taxes.
  3. Plan for losses. Check your basis in any S corporation in which you are a shareholder and where you expect a loss this year. Be sure you have sufficient basis to enable you to take the loss on your tax return.
  4. Use this year’s annual gift tax exclusion. If you make annual gifts to family members or others, make sure you complete your gifts for 2017 by Dec. 31.
  5. Consider equipment purchases before Dec. 31. Taxpayers must usually deduct the cost of business property over several years. The Section 179 election allows taxpayers to expense up to $510,000 of new and used property purchased and put into service in 2017. Property such as machinery, equipment and furnishings usually qualify. Be careful with special rules that apply to vehicles and personal computers.
Contact our office today if you’d like more tips or have questions about year-end tax savings.
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Wednesday, December 20, 2017

The holidays: A time for mistletoe and … fraud?

It’s not surprising that identity thieves and con artists love the holidays. More shoppers, more deals and more buying motivation makes the season rife with opportunities to steal. But you don’t have to let the holiday spirit cloud your shopping safety judgment.

Here are a few tips to avoid fraud, whether you’re shopping online or at your local mall:

  • Shop on websites you trust. During the holidays, your e-mail inbox may be filled with unsolicited messages urging you to “click here.” Don’t. Scammers set up websites that mimic legitimate stores. They want your personal information so they can steal from you. Stick to reputable stores and sites and you’ll be better off.
  • Background-check your choice charities. Many legitimate church groups and nonprofit organizations engage in fundraising activities during the holidays. If you’re confident that the group is above-board, go ahead and donate. But if something seems off – hold on to your money.
  • Be attentive — especially at the mall. Large shopping centers offer scammers ample opportunities to steal. Don’t be fooled by someone selling a typically expensive product for way less money than it’s worth. Make sure you keep track of your purse, wallet and shopping bags. And be aware of your surroundings when you leave the mall. If you don’t feel completely safe walking alone through a dark parking lot, ask a security guard to escort you.
  • Purchase gift cards wisely. These little pieces of plastic can be great stocking stuffers, but they’re also prime targets for crooks. Scammers have been known to copy numbers from gift cards hanging in store displays. They then call a toll-free number to learn when the card is activated and use the card number to make purchases. One way to avoid this is to buy from retailers who keep gift cards behind the checkout register.
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Monday, December 11, 2017

Keep Your Kids Occupied During the Upcoming Holiday Break Teach Them These 4 Smart Money Lessons

 Personal finance is often learned through experience. Fortunately, you can give your kids a hand-up on their journey to becoming financially responsible adults.

Preschoolers and teenagers obviously have different financial concerns and abilities. But there are a few basic lessons that all children should learn by the time they enter college or start a career:
  • Money = choices. Teach your child how to choose between spending and saving, and how to do both intelligently. A regular allowance will help your child gain real-world financial experience.
Make sure they spend some of their break doing chores and earning money.
  • Money requires planning. At about age 9 or 10, start to show your child how to develop a simple spending plan. In later years, demonstrate how to plan for larger expenditures.
Sit down and set up a holiday spending plan with them, how much will they spend on each gift they want to purchase for family, friends, teachers, and neighbors?
  • Responsibility comes with money. Inevitably, your child is going to make some money mistakes. Try to avoid criticism, but don’t automatically fix every problem and let your child off the hook.
Has your child make a financial mistake recently? Sit down and help analyze the reason for the mistake, and suggest how to avoid it in the future.
  • Good money management skills are priceless. Specific lessons might range from how to compare interest rates on savings accounts, to the pros and cons of mutual fund investing. But there should be one common element to all of your teaching in this area: money doesn’t take care of itself.
Ask your kids what they want to do with their money or how they want to earn it to direct the conversation and know what it is your child really needs to hear.
The way you handle your money may be the most powerful lesson of all for your children. For your child’s sake, as well as your own financial wellbeing, it’s important to practice what you preach.

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Monday, December 4, 2017

Savvy Generosity: Do it the right way

Giving on a yearly basis could trim both your estate and income taxes. First, there’s the annual exclusion for gifts. Currently, you can give $14,000 annually to any number of recipients without paying federal gift tax. Married couples can double this amount by gift-splitting – a gift of $28,000 from one spouse is treated as if it came half from each.

Why giving is a two-way street

Gifts do more than help out children who need the money. They also reduce your estate so your estate will pay less estate tax upon your death. Apart from annual gift giving, you can currently transfer (during your lifetime or through your estate) a total of $5.49 million with no estate or gift tax liability. On amounts above this threshold, you or your estate will be faced with taxes at the current top rate of 40 percent. So a consistent program of annual gift giving might create substantial tax savings.

Note that gifts to individuals do not entitle you to an income tax deduction. A gift isn’t a charitable contribution. Conversely, a gift doesn’t constitute taxable income to the recipient. Gifts of income-producing property may, however, reduce your taxable income. Once you’ve given the property away, the recipient (not you) receives the income it produces and pays any income tax due on it.

Giving can be easy

One advantage to annual gift giving is that it is relatively simple to do, especially if you’re giving away cash. Another advantage is flexibility. You’re not locked into anything; you can see how much you can afford to give away each year. You can give away anything – cash, stock, art, real estate, etc. Valuation is the fair market value on the date of the gift. Subsequent appreciation, if any, belongs to the recipient’s estate (not yours).

Before you give away assets, be sure you will not need them yourself to provide income in later years. Consider the impact inflation will have on your resources.

Proper planning is essential in this area; get professional assistance before you do any gift giving. Contact our office if we can help.

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