Personal, Small Business, and Real Estate Taxes

Greetings all, 

April is here and taxes are at the top of most people’s minds. For this newsletter, we are going to keep things on the light side with some info and tips for optimizing your tax situation for 2022. Before we get into that, we would like to give you a heads up on a new development on the student loan front. Recently announced by the Biden administration, the pause on federal student loan repayments will be extended through August 31. This means the soonest a person would have to make a payment would be late September/early October. This can change the calculus on a number of planning opportunities, so be sure to reach out if you have any questions. If you are a client and this affects you, we will be in touch with you to advise on what to do.  

Read –
Have you heard of Tax Freedom Day? It was conceived in the 1940s to help people understand how long they have to work each year until their tax burden is met and their money becomes their own, AKA Tax Freedom. This year, on average, Tax Freedom Day is on Monday, April 18th which coincides with the regular tax filing deadline. That means, most taxpayers need to work for about four and a half months just to cover their taxes for the year. Now, with this out of the way, what are some ways to optimize your taxes for the year?

Watch – 
One of the best ways to reduce your tax burden is to claim expenses as a self-employed individual. This video by Lyfe Accounting details some of the most common and effective tax reduction write-offs available to small business owners. These include the home office deduction, using your personal vehicle for business driving and writing off the mileage, and writing off $5,000 in startup costs in the year you start a business. All of these can really add up to reduce your taxable income if you are self-employed. If you are a business owner or aspire to be one, make sure to reach out if you have any questions about your situation. If you are a W2 worker, check out this video which goes into some of the ways to lower your taxes by taking advantage of all the employer-sponsored tax benefits available to you. The biggest switches you can hit are using your retirement plans, HSA, and FSA plans available to you. 

Listen – 
These days, it seems like everyone is interested in or already owns a rental property. The problem is, most people have no idea have to deal with this in a tax-compliant and efficient way! We are in the thick of tax season and the number one most common mistake is rental owners not taking depreciation on their property from day one. This can be an extremely expensive mistake down the road, so make sure to reach out if you are unsure if you are in this group. For a really great listen, check out this episode of The Rental Income Podcast with CPA Sean McNamara who goes over some higher-level tax planning tips for rental owners. There is a lot of good advice here to get you started on how to handle your rental property. 

Taxes can be daunting whether you are a small business owner, a wage employee, or an aspiring rental property tycoon. The most important thing is to have good information at your disposal and advisors you can rely on to have your best interests at heart. We pride ourselves on being able to advise across all of these situations. Through careful planning, we make sure our clients don’t leave any of their hard-earned money in Uncle Sam’s pockets and are able to celebrate their Tax Freedom Day as early as possible each year. 

Best wishes, 

The Bona Fide Family 

Stimulus and Taxes

Greetings! This year is flying by and it is hard to believe we are already in April! With the coming of spring, we are also in the midst of tax season (yay!) and the beginning of the new Biden administration. As with most Presidents, Biden has signed into law some pretty serious legislation during the first months of his term. The links in this newsletter will help you understand the American Rescue Act and the points that may affect you.  

  • ReadOur first link is a slide show giving an overview of 12 key tax points to keep in mind when thinking about the impact the American Rescue Act may have on you and your family. Some key points to pay attention to; income amounts in 2019, 2020, and 2021, Child and Dependent tax credits, and ways to adjust AGI if you are on the cusp of being phased out of stimulus money. There are key planning issues here, so get in touch with us if you have any questions. Additionally, check out this article from Michael Kitces, for a deeper understanding of the act and its ramifications from the High Nerd of all-things-planning.
  • Watch: Continuing with our tax focus, this video from Yahoo Finance, does an excellent job of breaking down the American Rescue Act’s effects. This video touches upon the Unemployment Benefits (expanded and partially tax-free), the Child Tax Credit (also expanded and now able to be prepaid), and the Dependent Care Credit which has been greatly expanded to help parents cover child care costs. The video also touches upon some great benefits for employers, so if you’ve got employees, you’ll want to watch until the end for sure. 
  • Listen: Our last link may be our favorite. It focuses on the nitty-gritty of how to make sure you get the largest stimulus check possible. It is also chock full of other resources including a stimulus check calculator, a Child Tax Credit calculator, and state-to-state tax guides for middle-class families and retirees. The beginning of the episode also focuses on various state plans for adjusting their taxes. If you only check out one of our links in this newsletter, then this is the one to click.  

We hope you have enjoyed these links and as usual, please feel free to forward this to your friends and family. Feel free to reach out with any questions or comments. We love hearing from you! Lastly, if we are doing your taxes and you haven’t uploaded your documents yet, please do so :)! Have a great day!

Make it an amazing month!
The Bona Fide Family

Charitable Giving

During this holiday season, it is the most common time of year during which folks spend not only large amounts of money on presents to celebrate Christmas with loved ones, but also on charitable giving. You may find yourself giving spare change in the red kettle for Salvation Army, providing gifts for a family in need through a Giving Tree, or gifting a large year-end sum to an organized charity of choice for both the pleasure of providing assistance as well as the tax benefits.

The following three resources provide information on starting the process of designating charitable beneficiaries, as well as how to plan your donation, and what steps you can take to develop the character of being a giver: 

  • Read: A successful charitable giving plan involves three steps: determine when to give, what to give, and how to give. This article from Vanguard examines some common charitable giving strategies, discusses the advantages and disadvantages of each, and presents examples to show their effects. 
  • Listen: In this 20-minute clip I’m Richly Blessed by the Social Economy, Joshua Sheats shares some simple thoughts around the social giving economy and some encouragement for you to focus on being a “Go-Giver” towards others.
  • Watch: Patrick Renn is a 35-year veteran of financial planning industry, and is the author of Finding Your Money’s Greater Purpose: How to Make Your Legacy Count. He runs a wealth management firm in Atlanta, GA and specializes in helping his clients develop well-designed charitable giving programs. This brief interview gives an overview of his book and how to give with the most benefit to your family, your charity(ies) of choice, and minimizing the amount of money the IRS will take.

If you find the information provided valuable, please pass this email along to your family and friends! Better yet, recommend them to subscribe to this monthly newsletter by signing up on our website!

You can click on the links below to access this month’s resources. Thanks for reading, listening, and watching!

Resources for Comprehensive Financial Planning

Bona Fide Finance has exciting news to share this month! We now have a resource page available to use as a reference as needed. It’s creatively called the Resources page (original, I know!); we have numerous links to all the major subjects of personal finance. Within each subcategory you will find a number of links to other blogs, articles, websites, books, interviews, etc., all with the aim to help you be as informed as possible regarding these topics. Take a gander when you have a moment; we hope you are able to put it to good use. Enjoy!

  • Investments: Mutual funds, asset allocation, fixed income instruments, annuities, socially responsible investing, trivia
  • Taxes: Payroll tools, online tax preparation, 1031 exchanges, state tax rates
  • Budgeting: Software, debt management, managing money, saving and spending, credit cards, financial spreadsheets
  • Student Loans
  • Behavioral Finance
  • Insurance: Life, disability, health, auto, long term care, home, umbrella liability, trip, pet
  • Estate Planning: Trusts, executor, legal documents, ethical will, digital lockbox
  • Home Ownership: Mortgages, insurance, determining your home’s basis, reverse mortgages, homestead exemption
  • Car Buying
  • Retirement: Early retirement, retirement accounts and contributions, retirement calculators, social security
  • Lifestyle Design
  • Financial Independence

If you find the information provided valuable, please pass this email along to your family and friends! Better yet, recommend them to subscribe to this monthly newsletter by signing up on our website!

Tax Time

Happy New Year!

As we begin 2018, I’d like to highlight the following to consider in preparing your 2017 taxes:

  • Read: This 2-page brief gives a summary of the new tax bill (the Tax Cuts and Jobs Act) and how to consider its implications for you and your family. 
  • Listen: Are you a do-it-yourself-er when it comes to your own taxes? Listen to Joshua Sheats explain the structure of the IRS form 1040 and how to fill it out.
  • Watch: The average tax refund is around $3,000. If you find yourself sitting on a pile of cash courtesy of your 1040, resist the urge to treat it like play money. Instead, put the windfall to work for you using these recommendations.

If you find the information provided valuable, please pass this email along to your family and friends! Better yet, recommend them to subscribe to this monthly newsletter by signing up on our website!

You can click on the links below to access this month’s resources. Thanks for reading, listening, and watching!