Ann Hartz’s Nine Can’t Miss Questions For Year-End Tax Planning

Ann Hartz’s Nine Can’t Miss Questions For Year-End Tax Planning

With the Thanksgiving leftovers mostly consumed by this point, we are turning our eyes to year-end matters.

And this year, there are LOTS of things to consider as we approach 12-31-18.

Because yes — the standard deduction this year has been significantly increased, and it might make sense for you to take that.

Or, it might not.

There are so many factors to consider in this “new” tax code, that it can be a little overwhelming. In fact, I know that there are plenty of tax pros and taxpayers in Des Moines who will opt for the “simplest” solution and just take that standard deduction. In some cases, that’s smart, and offers true savings.

But it’s not always wisest to go the simplest route.

Which is why it might make sense for us to have a chat. In fact, there may be a few moves we can make that can make a big difference — even in this next month — before we’re forced into “reaction mode”, which is the only mode in which after-the-fact tax work can be done.

So, if at all possible, I’d like to figure out if there are things we can do NOW to prepare 
by having you answer a few short questions for me…

This isn’t our “official” tax preparation questionnaire, it’s simply designed to help us figure out if we can do something before year-end to make a real difference … before we can’t anymore. To send me your answers please click the email button at the top of the page.

*****

1) Have you had a significant change in your wage income this year?

<Put YOUR answer here in your email reply>

2) Have you taken capital gains or losses this year? Are you planning to?

<Put YOUR answer here in your email reply>

3) Did you start or sell a business this year?

BONUS QUESTION: Do you know anyone who did, that would like input on their tax situation?

<Put YOUR answer here in your email reply>

4) Did you purchase real estate?

<Put YOUR answer here in your email reply>

5) Did you make your full contributions to retirement accounts?

<Put YOUR answer here in your email reply>

6) Have you considered a Roth IRA?

<Put YOUR answer here in your email reply>

7) Did you withdraw from retirement accounts, and for what purpose?

<Put YOUR answer here in your email reply>

**8) Have you sent your family and friends our way — and, if not, is there a way we can help to make this easier?

<Put YOUR answer here in your email reply>

9) Are there any other tax or financial (or other) issues you think we should know about?

<Put YOUR answer here in your email reply>

*****

Now — your answers to these questions form the “tip of the iceberg”, and they will help us to know which direction to take as we work with you over the next two months to prepare for year-end tax planning. With your permission, we’ll contact you back, once you email us your answers, as appropriate, and set up a time to discuss them further with you, whether by phone or other method.

Hope to see you in here soon…

 

Ann Hartz

(515) 259-7779

Ann M. Hartz, CPA

Ann Hartz’s Reflections On Lincoln’s Thanksgiving Proclamation While Our Country Is In Chaos

Ann Hartz’s Reflections On Lincoln’s Thanksgiving Proclamation While Our Country Is In Chaos

Is it just me, or does it feel like Thanksgiving week arrived suddenly this year? And how did it get here so fast?

With so many momentous events over the past few weeks (elections, shootings, wildfires, and more), it feels a bit surreal — and incongruous, even — to think about pausing for the sake of giving thanks.

But, as it is here, I have some thoughts, which are perhaps a bit more meditative than normal, because of how this holiday works for tax professionals.

You see, the December holidays are wonderful, of course — but they are a calm before a big storm (tax season). We’re usually furiously prepping for the season, and seeking to understand the last-minute tax code changes that Congress often foists upon us, even this year on top of (still) receiving guidance from the IRS about everything Congress passed LAST year.

But such is our life.

And, I imagine, it might feel difficult for YOU to pause and give thanks. If you are tapped into our present cultural and political moment, it’s easy to find reasons for frustration and cynicism.

But, may I remind you of something?

It was right in the thick of horrendous civil war that President Lincoln proclaimed the fourth Thursday of November as a national day of Thanksgiving which should take place every year.

His entire Thanksgiving proclamation (written by his Secretary of State, William Seward) is worth taking in, or even reading aloud, but the opening is particularly powerful:

“The year that is drawing toward its close has been filled with the blessings of fruitful fields and healthful skies. To these bounties, which are so constantly enjoyed that we are prone to forget the source from which they come, others have been added …”

I believe Lincoln understood a fundamental truth in the human soul: how we choose to see our circumstances often dictates the state of our hearts — and, thereby, our future circumstances. After all, if a war-torn nation can turn its eyes upward — so can we.

For my part, I’m simply grateful for YOU.

I’m grateful for your trust, for your attention to my blog ramblings (which are taking on a bit of a different flavor this week), for your allowing us to serve you, for your referrals … for so many things.

I don’t forget that it’s people like you in Des Moines who enable me to do what I do — to breathe life and hope into families, and their financial situations. And to help them enjoy the fruit of their labors, while carrying the peace-of-mind that the ever-grasping hand of taxation reaching into their pockets is minimized.

So thank you. For everything.

And finally, on a “tax note”, allow me to remind you that although we are busy as we head into the end of the year, we will always make time to help you save on taxes. Give us a call at (515) 259-7779, and let’s get your 2018 tax return set up to save you the most that is legally and ethically possible.

There are lots of options, and we’re right here for you…

Until next week then,

Ann Hartz

(515) 259-7779

Ann M. Hartz, CPA

One Significant Habit Of The Wealthy In Des Moines — Generous Charitable Contributions

One Significant Habit Of The Wealthy In Des Moines — Generous Charitable Contributions

Now that we have a divided Congress again, we can all sit back and enjoy the gridlock that is headed our way.

Or something.

I don’t blame you if you tune out from politics — and I also don’t blame you if you find yourself jumping more intentionally into the fray. There’s lots to be frustrated by, and plenty to fight for.

But, as I always like to say, the MOST important thing you can be doing is tending to the state of your own mind, so that you are able to be focused on those things that most concern your family and financial world.

And yes, I know that’s “easy to say” as somebody who has built a business in Des Moines, and is making certain progress … but it’s also because I have chosen to focus on these things that we are even having this conversation right now.

So, if you want to add focus to those more private matters and you need somebody to pay attention to how upcoming Congressional actions will be affecting your finances … well, that’s exactly what we’re here for. We pay attention to these things so you don’t have to. It’s just what we do.

With all of that said (and speaking of habits that will help you), I’m returning to one of my favorite topics today. Would love your thoughts…

One Significant Habit Of The Wealthy In Des Moines — Generous Charitable Contributions

“My best friend is the one who brings out the best in me.” – Henry Ford

We’re into the final quarter of 2018, and since this is the biggest quarter of the year for giving, I’d like to take the opportunity as one of your financial advisers to make a few points about giving to charity.

Because with more taxpayers taking the standard deduction than has been done in years past (at least in terms of what people are projecting for this upcoming year), there are some who might be wondering if they should be as aggressive about charity as they have been in the past.

In which case, allow me to posit a question:

Why do you give to charity? Is it for the tax deductions … or for a different reason?

Now, as someone who prepares tax returns (and who figures out all the many new ways we can keep more of your money in your pocket), much of what we do revolves around tax avoidance strategies. I have ZERO problem whatsoever in helping my Des Moines clients use all available strategies to their utmost, ethical advantage. But I love it when I see my clients and friends make giving decisions which seem to run counter to immediate, short-term self-interest.

And, I believe it’s actually enlightened self-interest in the long run. And not just in our sense of feeling good.

I also see the balance sheets of people from every walk of life and every kind of income class, and over the years I’ve noticed an interesting phenomenon: individuals and families who make giving a priority, even when they aren’t “wealthy” by others’ standards, seem to eventually do better in the long run. And I do mean financially — not just in their state of mind.

(Though, there are great “state of mind” reasons for giving. Have you seen, as I have, that those who freely give seem to be much more pleasant company?)

In my line of work, I have made it a point to observe how money works. And, for some reason, money gets attracted to those who aren’t in hot, desperate pursuit of it. It’s almost like in romance — potential lovers are usually turned off by the overly-aggressive seeker.

So, because of (and not despite) the shifting nature of how charitable contributions might be counted on your taxes, may I suggest that you consider increasing your giving? You might be surprised by what happens in your heart. And, dare I say, in your balance sheets.

Lastly, let me also say that just because you give — you don’t have to be a dunce! We can help you determine the most tax-advantaged way under the “new” tax code for you to do your giving, if you want that advice.

We’re only an email or phone call away.

Until next week,

 

Ann Hartz

(515) 259-7779

Ann M. Hartz, CPA

What To Do When You Experience A Sudden Income Increase In Des Moines

What To Do When You Experience A Sudden Income Increase In Des Moines

I don’t know about you, but I am *celebrating* the end of all of the automated phone calls and ads, now that this election is behind us. And no matter how you feel about the results, I hope we can all agree that it’s good to put all the shouting behind us.

Er, well … maybe the shouting never ends. But at least we can change the topic now.

And if there’s one topic that is nice to dream about, it’s the sudden windfall. Like for the South Carolina individual who purchased the winning Mega Millions ticket last month (still wisely anonymous), or more realistically, if we get a sudden raise or an inheritance … or, really, any kind of windfall.

It’s nice to consider — though I don’t recommend “considering” it for too long, lest you become overly dissatisfied with your current circumstances.

I spend a lot of time writing about what you should do if things suddenly turn south … and we are right here for you should that occur. We specialize in helping people in Des Moines dig out of holes.

That said, we’ve had a number of clients who have come to us because their incomes have suddenly taken a different, much higher turn. And aside from the new tax considerations, there are a number of things you should consider when your income takes leaps that you’re not accustomed to.

What To Do When You Experience A Sudden Income Increase In Des Moines

“It is wrong to assume that men of immense wealth are always happy.” – John D. Rockefeller

Inheritance and sudden income increase are not nearly as uncommon as you might imagine. There was recent data from the Fed I saw in which more than nine million households in the U.S. reported getting an inheritance of at least $100,000. And there is other data which suggests that baby boomers stand to receive over $8 trillion in inheritance over the next few decades.

But sometimes such “blessings” end up as curses to those who aren’t prepared.

Consider former baseball star Lenny Dykstra, who filed for bankruptcy years ago, and was eventually imprisoned for financial crimes — after once having a net worth estimated at $58 million. And, of course, the stories of lottery winners have become so pervasive that Hollywood has even begun using them as a regular plot device.

I would highly recommend that you not follow those examples. When your income suddenly rises, whether through windfall or the sale of a business or home or some such, well, here’s what I suggest…

Don’t move too fast.

Take some time to let it sink in and get through the emotion. Most poor decisions made with sudden wealth usually occur within the first couple of months.

So lock it up in a low-yield savings account for three months, proceed as normal, and use that time productively.

While you have your new buffer locked away…

Take the time to create specific life goals, and evaluate how the money will help you achieve them.

You’ve suddenly been given some cushion, but that doesn’t have to mean your life needs to radically change. It might get easier … but if you leave behind the goals you created BEFORE this change, it’s more likely that it will get harder.

And to properly do this, you need…

A “disinterested” advisor.

It’s often best to work with someone who already has experienced handling the finances for people with means. That way they, too, won’t get caught up in the emotion of it. Be very careful to whom you give fiduciary responsibility, and perhaps split what you are able to under the auspices of more than one financial advisor, so you can get a feel for what works best for you.

And then you can allow one of these advisors to be your gatekeeper from that suddenly-interested cousin or high school friend from Des Moines with those “can’t miss” investment ideas.

An important step: Immediately, give a portion of it away.

I’ve written about this dynamic before, but there’s something special which happens inside your mind when you give away your money: it loses its grip on you, ever so slowly. And, far from turning you into a profligate (and unwise) giver, what can happen is that you aren’t as affected in your character by the sudden influx of funds. Which means that you don’t become more flashy, nor do you become a tightwad.

And of course, assess your tax strategy.

Coming from me, this should be a no-brainer, but every gift has a variety of ways by which it can affect your taxes. This is something that we are especially prepared to help you with, and you should ALWAYS plan the tax implications of how you receive large sums of money.

There is obviously more that can be covered in one note here, but again, whether your circumstances have improved OR taken a turn for the worse, we really are in your corner.

Until next week,

 

Ann Hartz

(515) 259-7779

Ann M. Hartz, CPA

One Trump Tax Plan Mistake That Ann Hartz Wants You To Avoid

One Trump Tax Plan Mistake That Ann Hartz Wants You To Avoid

The internet can be a confusing, anxiety-inducing space.

The national news is downright scary (and tragic), and places that used to be the province of baby pictures and goofy status updates are becoming increasingly divided over cultural questions and differences.

But on top of it all, finding good information about how to rightly handle your finances in light of the Trump tax plan is another shaky proposition. There are so many contradictory articles, confusing jargon and “explainer articles” that only leave you scratching your head.

Oh, and then there’s the fact that the IRS STILL hasn’t released full guidance for every component of the plan. Oh yeah, and Congress might change a bunch of it before the end of the year (you might have heard — there are elections coming up).

Which is why we make it our mission to be your port in the storm in Des Moines. To provide you personalized recommendations and guidance through the chaos of all of it.

Because the fact is that there are some strategies that, on the face of things, might *seem* like they would be super-smart.

That is, of course, until you dig into the details.

Which is what we do for you.

We’re only a phone call ((515) 259-7779) or an email away. Don’t make this kind of scary mistake…

One Trump Tax Plan Mistake That Ann Hartz Wants You To Avoid

“All adventures, especially into new territory, are scary.” – Sally Ride

One of the big changes to come down the pike this year is the limit placed upon how much you can deduct for state and local taxes (the SALT deduction).

As it was before,  you could deduct all of your property taxes, and all of your state and local taxes. In most situations, you could deduct almost all of your mortgage interest paid.

This policy was put in place to spark a greater percentage of us to opt for homeownership, because as the value of your house (presumably) went up, you could get the deductions on your interest and property taxes.

But now things have changed.

And this has especially struck those who live in high tax states. California is tops on most lists (depending on how you calculate it, with or without sales tax — this list includes sales tax and has New York as the highest, with CT, NJ and CA not far behind).

But really, if you have a higher income, or a larger mortgage, this is something we should consider for you, because as of 2018 (that would be this year), you can only deduct $10,000 TOTAL in SALT. (There are separate, new caps on mortgage interest as well.)

Some of these states sprung into action by enacting provisions that would allow taxpayers to contribute to charity at a higher level instead of property tax, but the IRS nixed that.

So some “smart” tax professionals that I’ve seen started pushing a different strategy: set up an LLC, put your home under that entity, and then “rent” it from that LLC.

On the face of it, this seemed super smart. You now have a “business”. You can deduct your mortgage interest and property taxes as a business expense. You MIGHT even be able to take the QBI deduction! 

But there is a significant catch to this strategy that I’m not sure everyone has thought through.

And this is why it pays to have somebody in your corner who is paying attention to this stuff (so you don’t have to): it keeps you from making a possibly-frightful mistake.

Because in this scenario, if you EVER sell your home, and it has increased in value, you are no longer eligible for the gain exclusion of $500K (if you’re married filing jointly) or $250K (if you’re single).

Now, if you know FOR CERTAIN that your property won’t sell at a gain, or only a negligible one, this might make sense for you. We can help you run those numbers.

But consider…

Let’s say you’re at the 24% tax bracket (which is for incomes between $82,501 to $157,500 as a single, or $165,001 to $315,000 when filing jointly) and your property tax is $10,000/year. And we’re assuming you sell at a gain, let’s say of $250K. It will take almost 20 YEARS of this strategy for you to have made up the difference that you would lose from the gain exclusion.

If your property taxes are lower, it would take even longer.

The point is this: there is a downside to every tax strategy. And you need to have somebody in your corner in Des Moines who is looking at things from every angle to make sure you are making the smartest decision for YOU.

There are ways around many problems. But sometimes following the advice from the “guru of the day” can bite you in the rear. And you could make a frightening mistake.

But remember … we’re in your corner.

Is there anything more that we could do for you, to help?

Until next week,

 

Ann Hartz

(515) 259-7779

Ann M. Hartz, CPA

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