A Powerful Example of Tax Planning For The Woodlands Families And Individuals

It’s wild to think that there are only four more months in 2019.

As we get older, time sure does fly. And unfortunately, many get stuck in a rut from year to year. Specifically related to taxes — many do not look at, or even think about, their tax situation until the winter or early spring. But if you can take just one piece of advice from today:

Not only can you start planning your taxes in advance, it is by far the wisest thing you can do for an accurate, stress-free April (or at least less stress than usual).

And if planning ahead is the first item of importance, having someone to plan with is a close second. If you are planning your taxes alone, please give me a call so we can meet and discuss everything from strategy to accuracy when addressing your taxes.

Let’s examine a hypothetical situation, and the kind of strategy we could put in place together…

A Powerful Example of Tax Planning For The Woodlands, Magnolia and Conroe Families And Individuals

“Stop setting goals. Goals are pure fantasy unless you have a specific plan to achieve them.” -Stephen Covey

Pretend you were considering taking money out of a pension (401k) to finance a down payment on a house. This kind of strategy happens all the time. However, to complete the transaction without consulting a knowledgeable The Woodlands, Magnolia and Conroe professional beforehand might result in a four- (or five-) figure mistake.

In this specific situation, I would ask you a few simple, necessary questions. And then, depending on the answer, would likely advise you to roll the money ($10,000) into a Traditional IRA. That way, you could withdraw the money at a savings of $1,000. This is because money used for a first home, up to $10,000, is penalty-free when taken from an IRA but not a 401K.

That’s called strategy. When you benefit from that kind of strategy, it’s called tax planning. It’s not only related to housing, 401K or IRA allotment — I want to help you experience all-around financial success moving forward.

While we’re on the topic, here are other “penalty-free” retirement account withdrawal opportunities (Note: these are NOT “tax-free” — only penalty-free):

* Unreimbursed Medical Bills
* Total and/or Permanent Disability
* Health Insurance Premiums After 12 weeks of Unemployment
* Death
* Higher Education Costs
* Pending Senate Approval: Qualified Birth And Adoption Expenses

Also note that there are specific caveats to each of these options. We can discuss your best route when we talk about your individual situation. There are a few other obscure situations available, but again — these decisions are best made under consultation.

Although, when working with us, there’s no certified promise of saving money (because every situation is so nuanced and unique to each The Woodlands, Magnolia and Conroe client). But I can guarantee this: If you don’t speak with us in advance, we won’t have the chance to save you all we possibly could on your 2019 taxes.

Don’t wait until winter. Please don’t wait until spring. Let’s get some strategy started … right now.

Warmly,

 

Aurelia Weems

(936) 273-1188

Aurelia E Weems, CPA

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Two Ways Towards Making Money In Marriage Harmonious For The Woodlands Couples

Summer is nearing an end. Which also means, well, wedding season is slowing down.

If you’ve been married, you know that there is a big difference between the “wedding show”, and the real work of being married. One of the best pieces of advice I’ve seen for newlyweds is that they put just as much planning (if not far more) into the marriage, as they do the wedding.

It’s worth it, because the support gained from a good marriage far outlasts the rightful excitement of wedding days and honeymoons. And, putting on my green shades here, dual income is a HUGE bonus to getting married. Should it be one of the main reasons you get married? Of course not.

Is it okay to capitalize on its advantage and plan accordingly? Absolutely.

So let’s discuss two steps for the maturing process of managing your money in marriage. Because after the wedding, it really isn’t always easy to merge two financial lives.

Two Ways Towards Making Money In Marriage Harmonious For The Woodlands, Conroe and Magnolia Couples

“Money, like emotions, is something you must control to keep your life on the right track.” -Natasha Munson

Whether you’ve been married for years, aren’t married but talk regularly with married couples, or have kids who will soon enter into matrimony, please think about these things and how they could help.

Way #1: Your Money Story

A great exercise for The Woodlands, Conroe and Magnolia married couples is to write separate autobiographies on the relationship between you and the money you have acquired over the years. No matter how you’ve both earned money, there is a meaningful story behind each record.

This could be in paragraph form (no novels please) or just a bulleted list with some additional info. Regardless of how you write your “Money Story”, ask yourself a few key questions in the process:

  • What fears do you have about money?
  • Who helped you learn about money?
  • How do you envision two incomes (or one income) affecting marriage?
  • Other than the obvious needs (pay rent, etc.), why is money important to your marriage?

Are there other important questions to keep in mind while writing your “Money Story”? Yes, but here are a few to get started. Now go tell your spouse about this week’s new money exercise — and get writing!

Way #2: Dream Scenario

Think about this for a moment:

“Imagine you are fully financially secure, that you have enough money to take care of your needs now and in the future. How would you live your life?”

That first sentence sounds like a bad intro to some sort of pyramid scheme, but true and honest financial independence is closer than you think! And if you’ve already gotten off to a great start, help others with this frame of mind.

With pen (still) in hand, complete another exercise: write down your “dream scenario” in regard to money in marriage. And use your imagination. Don’t hold back. Do you two want to own a lake house someday? Start a business? Travel the world? Have kids? Start a charity?

All of those decisions in marriage are huge financial commitments, but if you don’t write down your goals, you are less likely to pursue and complete them. That’s a fact.

Both of these simple-yet-effective exercises will create some great conversations in marriage — regardless if you’re engaged, newlyweds, or married for years. You just can’t communicate enough about money in marriage. Don’t view it as greediness; view it as marital readiness for whatever the future throws your way.

I am always a call away if you’d like to discuss ways to aid your marital financial situation.

Although “here comes the bride” is a beautiful occasion in life, it’s inevitably followed with “here comes the bills”.

And cake of course.

Warmly,

 

Aurelia Weems

(936) 273-1188

Aurelia E Weems, CPA

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Four Online Security Moves For The Woodlands People Right Now

Firstly, our hearts are broken for the victims of the shooting at the Garlic Festival in California on Monday (one of whom was a six-year-old boy). These events accumulate to paint a picture of deep pain buried within our modern culture, and it’s important, in my opinion, that we never go numb to them.

+++

There’s no good way to move on from such a topic, but it is the nature of these things that we must, and so we do.

I had queued up the topic of online security for this week, and somehow it does seem pertinent.

Intrusions can feel like such a violation, and while there is no substantive comparison between personal and online security, the sense of violation is present in both.

It’s the sort of thing that is so easy to let slide, and allow your computer usage to proceed along in negative habits simply from inertia.

Well, let’s fix that, shall we? With so many of our sensitive financial, tax, and personal details now to be found (and stolen) online, we must see online security the same as locking the door of your car when you leave it in a public parking lot.

So, here are four things you can do right away.

Four Online Security Moves For The Woodlands People Right Now

“Passwords are like underwear. Don’t leave them out where people can see them, change them regularly, and don’t loan ’em out.” -Chris Pirillo

Recently, Equifax FINALLY reached a $700 million deal as a result of their data breach in 2017. But even with the publicity of that breach, it’s alarming how many Americans still neglect steps toward cyber safety: changing passwords, backing up information and stopping “share location” features on mobile apps.

Let’s look at four other ways you can protect your personal, tax, and financial data this year.

1. Install Antivirus Software

One of the easiest steps you can take TODAY is downloading antivirus software on your computer. Antivirus software will scan your computer for malicious software (aka “malware”). Think of antivirus like the CIA for your computer — it will track down suspicious and potentially illegal activity on your computer.

To help, here is a list of the top-rated antivirus programs.

For Mac users:

For PC users:

Purchasing antivirus security is an investment in your tax and personal safety.

2. Firewall Installation

The definition of firewall: “a part of a computer system or network that is designed to block unauthorized access while permitting outward communication.”

If antivirus acts as the CIA for your computer, view firewall as a team of bodyguards who won’t let imposters access your data.

Your computer’s operating system might include firewall software. But you can take extra precaution with additional firewall protection. Check out a few options from Lifewire’s updated list of firewall security programs.

3. Back Up Your Data

Store important tax information on an external hard drive.

If you don’t take active steps like installing antivirus software or firewall protection, your information might be compromised. Unfortunately, we now live in an internet age where that happens every day.

But if you “insure” your data, you will be less devastated one day when/if a breach happens.

And we all realize that sometimes computers crash — an unfortunate reality that happens far too often. Store your personal tax info in folders that you can store on an external hard drive, then bring the hard drive to our meetings throughout the year. View your hard drive as a virtual, mobile “file cabinet” for all your important tax files.

Another option: purchase Dropbox Plus (or Professional), and change out your main document folders and shortcuts to use the ones that are synced with Dropbox. That way, ANY file you save will automatically be backed up to your Dropbox account.

Just keep that Dropbox password secure. 🙂

4. Take Password Precautions

Use complex passwords! It seems like a pain, but once you have a program like LastPass or 1Password in place, it becomes much more doable.

And don’t use the same password for all of your online accounts!

All of this really should be seen as common sense precaution.

Although you can download antivirus, set up firewalls, AND back up your info, know that nothing is 100% foolproof. We’re dealing with two realities here:

  1. Most The Woodlands people live on the internet in some form or fashion, and a lot of their personal info is stored somewhere online.
  2. Hackers and scammers have gotten really good at using the internet to steal personal information.

So if you have yet to do so, make today the day you protect tax and personal information.

No one wants another Equifax situation (or worse) on their hands. But if it does, I want you to be in the clear. Please reach out if you would like to discuss more about keeping your information safe.

 

Warmly,

 

Aurelia Weems

(936) 273-1188

Aurelia E Weems, CPA

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Four Great Summer Tax Moves For Folks in The Woodlands

Summer is flying by. Do you feel that way?

It’s an exciting season with cookouts, vacations and extracurricular activities (my thoughts and sympathies for The Woodlands parents with multiple kids playing multiple sports among 100 other things). Before you know it and July is almost over. How does it all go by so fast?

But if you can find some time amidst the craziness, please consider these four tax moves for lowering your 2019 tax bill.

If some (or all) of these are unfamiliar to you, please reach out – we can tackle them together.These aren’t difficult items but do take some intentionality. Let’s meet before summer’s end and chip away at your tax bill.

(936) 273-1188

(or shoot me an email through the link at the top of the page)

Now, on with some advice . . .

Four Great Summer Tax Moves For Folks in The Woodlands

“We keep moving forward, opening new doors, and doing new things, because we’re curious and curiosity keeps leading us down new paths.” -Walt Disney

Let’s dive right in, since it really is hot out there…

Bunches & Bunches

If you’re not familiar with a bunching strategy, it helps you meet itemized deduction thresholds. Essentially, you bring in as many allowable expenses as you can into a taxable year.

If you itemize, we’ll want to pay careful attention to your medical expenses. In 2019, medical expenses must exceed 10 percent of AGI – a change brought about by the Tax Cuts and Jobs Act (TCJA).

Making an additional mortgage payment or two before year’s end can also be claimed as an itemized deduction. And, of course, your donations to IRS-approved charities are deductible.

Side: Speaking of donations, this is a great time to take some clutter (clothes, keyboards, etc.) out of those closets and donate to those The Woodlands charities!

Home Loans

This is one where it would be especially helpful to have someone like me walk you through it. Why? Because the TCJA strikes again.

The new law limits tax-deduction value of home equity loans. Therefore, interest is only claimed on Schedule A where the money borrowed is used to improve the home. If that’s confusing to you, I get it. Give me a call and we can go over it in-depth.

Re-Focus on Retirement Funds

Did you know, in 2019, inflation makes it so you’re able to add more to your workplace 401(k) and other retirement funds like a Roth IRA?

On that note, you might want to convert your IRA to a Roth since ordinary tax rates are lower than they have been in many years. But let’s chat before you do that . . . As of the TCJA, you cannot undo Roth conversions.

Adjust Withholding

I know . . . we’ve talked about this before. But it really is so important.

Whether you received a bigger refund this year or had to pay up, it’s important to make sure your withholding is accurate. Feel free to use this IRS Withholding Calculator or just reach out to me and we can sit down together and figure it out.

For many, summer means all those good things I mentioned earlier. And they are good.

But I can’t help but get excited thinking about a jump start on next year’s taxes. Especially if it means helping you lower your tax bill.

Warmly,

 

Aurelia Weems

(936) 273-1188

Aurelia E Weems, CPA

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Three FAFSA Tips to Help The Woodlands Taxpayers Get Their High School Grads Ready for College

Independence Day is this week. Bombs. Patriotism. Picnics. Barbecue. All those things.

I often write about “financial independence” this time of year (yes, I like the puns) … and when I do, invariably I get contacted by a few clients (or former clients), who communicate that they are pretty dispirited about their personal situation, that anything discussing “financial independence” really seems like a pipe dream — completely unrealistic for them.

Honestly, I LOVE these kinds of emails because firstly, I know that when a few people write about it, there’s likely even more that think about it. And secondly, I get the chance to speak a word of encouragement to those that need it.

Maybe that’s you?

Don’t give up.

With all of the local The Woodlands people and families out there who are going through hard times, it’s easy for them to believe that there isn’t a light at the end of the tunnel. Especially when social media and the media keep putting the glossy and wealthy in front of our faces, it can be hard to face a different kind of facts on the ground.

But did you know that most self-made billionaires were previously bankrupt at some point in their lives? (Just Google it, you’ll see.)

In fact, it’s often the “fire” of these times of trouble which serve to clarify things — and get you making smarter financial decisions, perhaps for the first time.

So, if you’re feeling the financial heat right now, look out for the blessings in the midst of pain. I know it’s hard — but chances are, you’re being reminded of what’s REALLY important … and often, seeing this again can be a launch pad for living the kind of life that you really want to live.

And we’ll be right here in your corner.

Now … on a different note, but a similar theme. Rather than write about financial independence today (I’ve already given my sermon for the week), I thought I’d offer some pointers about when your children become more independent, i.e. go to college, and how to handle the taxes and financial aid part of it all.

Three FAFSA Tips to Help The Woodlands Taxpayers Get Their High School Grads Ready for College

“An investment in knowledge always pays the best interest.” -Benjamin Franklin

Sending your kids off to relative independence in college is one of the scariest, most exciting times for a parent.

You do what you can, as a loving disciplinarian, for roughly 18 years and then after one weekend of stuffing a car full-to-the-brim and unloading it the next day … it’s all up to them. It’s so bittersweet.

Today, I want to help you (or any friend you know with kids heading off to university), to experience more sweet than bitter this season with a few FAFSA tax tips.

The Free Application for Federal Student Aid (FAFSA) is becoming increasingly in-demand with ever-inflating tuition fees.

Here are three FAFSA tips that might benefit students you know and love.

1. FAFSA Data Retrieval

This first tip is arguably the most important, because it will help long you after you’re done reading this article.

The IRS Data Retrieval Tool (DRT) will help college parents IMMENSELY when it comes to retrieving FAFSA tax info. The U.S. Department of Education recommends this IRS-backed service to conveniently access items like family earnings online.

You can share this service with anyone using this FAFSA website link which contains the IRS DRT.

 

2. FAFSA Questions. You Answer.

There are many financial details FAFSA will call for, and I want to make sure you and your college-prep people are prepared.

Here are a few FAFSA non-negotiables:

  • Social Security Number
  • The parents’ SSNs (if a dependent student)
  • Driver’s license number
  • Alien Registration Number (if not a U.S. citizen)
  • Federal tax info and returns
  • Records of untaxed income
  • Cash, savings and checking account information

In regard to the information listed above, I’ll say this: gathering such info is one thing, but understanding how each piece correlates to FAFSA is another. I would love to help any college-ready family with this process, and it starts with us sitting down to meet. Please give me a call or contact me using the email at the top of our site, so we can get that first meeting on the textbooks ASAP. (See what I did there?)

3. Transcript Access

One of the first items we’ll go over is a tax transcript. This document possesses most of the line items necessary to complete the FAFSA. It will also serve as an alternative to your original tax return.

This document will offer adjustments the IRS made AFTER you filed your return, and are therefore updated and accurate. To receive your tax transcript, you can get it online at Get Transcript, or pick up the phone and dial (800) 908-9946 to order one by mail.

Although there are some tedious tasks involved in completing the FAFSA, remember you’re taking one more step in chipping away at that unfortunately-high tuition cost ahead of you.

A little work will go a long way when it comes to paying for student education. And if those students don’t appreciate all the hard tax work now, one day they (hopefully) will.

 

Again we would love to help any college-ready family with this process so please reach out if you have any more questions, and best of luck to all of the college-bound kids you know!

Warmly,

 

Aurelia Weems

(936) 273-1188

Aurelia E Weems, CPA

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Tax-Smart Ways to Run a Savvy The Woodlands Side Hustle

I’m so old, I still remember the days when “hashtags” were only about a particular button on your phone.

Yep, the world has shifted massively underfoot. You know it; we all know it.

And one of the developments we’ve all seen is the proliferation of news feed gurus, ready and willing to help you start your new business — for the low, low price of three payments of $5,997.

What once was a sanctuary of grandkid photos and food pictures, has now become another marketplace for more barkers to shout their wares at you.

But it’s all for good reason … because lest I come across as TOO much of a cynic, the proliferation of onramps for (truly) ANYONE to start a business is a net positive for our culture, in my opinion.

There are so many great tax reasons to have a real business, even if it’s just a “side hustle” like the kids say.

And today I want to clear some of the fog around this topic, especially for your wallet — and your taxes.

Tax-Smart Ways to Run a Savvy The Woodlands Side Hustle

“The struggle you’re in today is developing the strength you need for tomorrow. Don’t give up.” -Robert Tew

Despite having full-time employment, many Americans need some sort of work on the side to supplement month-to-month living expenses. In fact, a recent MarketWatch survey says one-third (!) of Americans depend on a side hustle.

Do you fall into that category? If so, I’m here to help you figure out the (multiple) tax ramifications for self-employment. Whether it’s you or someone you know, I love to come alongside any endeavor that helps pay the bills. There’s no reason that tax questions should hinder all that hustling.

Here are a few tax tips, whether you’re in the middle of a The Woodlands side hustle or thinking about starting one, that will help keep your taxes in order.

Research and Report

There are a few basic differences between W2 and 1099 employees. And if you’re doing some freelance work for another The Woodlands business, they’re not required by the IRS to send you a 1099 unless they’ve paid you $600 or more. HOWEVER, even if you earned less than that, with no documentation required, your money is still taxable income.

I can’t overstate this enough: if you are earning money on the side, you are still responsible for keeping track of and reporting all earnings.

By Tax Day, you’ll need to report all earnings, with or without a 1099, to the IRS.

Many freelancers end up filing Schedule C as sole proprietors. You and I can tackle this document together, but it’s imperative your numbers are accurate for filling out each box.

Pay Up

A side hustle is just that: a hustle.

But these gigs aren’t as simple as a childhood lemonade stand. That ice-cold cash is (sadly) not all yours. Unfortunately, this is taxable income we’re talking about and it’s vital to pay those estimated taxes…

…four times a year (April 15, June 15, Sept. 15 and Jan. 15). That’s right, things like self-employment taxes are required from all the strenuous (but fun!) work you complete throughout the year.

But don’t get discouraged! This is another part of the hustle, yet it has to be accurate for continued success. Just one more reason I’m in your corner all year round.

Stay Healthy. Stay Hungry.

The IRS also wants to help the self-employed in regard to health insurance and retirement benefits. Those contributions can be deducted, but are filed on your personal tax return as an adjustment to personal income.

Now, I can help you with any of the aforementioned items. I know the tax side of self-employment can seem like a lot, but there are many benefits of self-employment if you can make it through tasks like filing your taxes.

Please reach out so we can get our first meeting on the books. No one should have to hustle alone, for it can quickly lead to burnout.

You need a team around you, and I’d love to join.

Warmly,

 

Aurelia Weems

(936) 273-1188

Aurelia E Weems, CPA

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Key Tips For The Woodlands Newlyweds On Marriage and Taxes

Do you know what the number one month is for weddings? Check today’s date and there it is: June.

With that fact in mind, I’m not sure where you currently fall on the wedding spectrum…

Are many of your friends getting married? Are your friends’ kids getting married? And if you or someone close to you is getting married soon, congratulations! Weddings are a huge deal (for obvious reasons) and, as a bonus, can often act as mini “family reunions” to gather with loved ones.

But, once the dust has settled…

And the honeymoon is over and the boxes are unpacked and the thank you’s have all been written, there are some tax implications for the newlyweds in your life. Marriage and taxes may not be the most exciting topic, but messing up your taxes is not fun either.So whether the following tips are useful for you personally, or something you can forward to others, there’s no reason these tax changes should damper anyone’s newlywed bliss.

Key Tips For The Woodlands Newlyweds On Marriage and Taxes

“A successful marriage requires falling in love many times, always with the same person.” -Mignon McLaughlin

Perhaps the most obvious change after the big day is a new surname for one or both parties. If that’s the case, then it’s imperative the person changing their last name reports it to the Social Security Administration.

This is key because, during filing season, the IRS will look to the SSA for your personal data, and if the new surname is not accounted for, your tax refund will be delayed.

A change in marital status will also directly affect your filing status with your The Woodlands employer. Make sure you connect with HR at work to adjust your workplace withholding. Failing to do so may result in inaccurate payments from each paycheck, which may mean an unexpected tax bill come filing time.

New Home. New Status.

Upon marriage, there is usually at least one party who has a change of address. In addition to notifying the post office of the change, it’s important the IRS knows the address change occurred as well. The reason being, so that they can mail any important documents to the right address moving forward.

As married couples think about the tax year ahead, it’s their marital status on December 31st which will determine how they file — jointly or separately.

This is where I step in to help many newlyweds determine which is the right filing status for them. Figuring out marital tax implications is tricky enough as it is, so I don’t recommend doing it all alone.

Health Benefits

Reassessing healthcare options is another key change that accompanies newlywed tax status. The move requires a proactive attitude, as it’s not necessarily fun stuff to change. But it will make a difference when one least expects it.

Although I’m no marriage expert, I know marriage usually comes with plenty of unexpected twists and turns.

If you’re insured through the Affordable Care Act (ACA), you might qualify for the premium tax credit. And if that’s the case, a change in marital status will affect the credit you receive.

Again, reconfiguring healthcare, and the tax implications as a result, is one more (tricky) area I’d love to help you or someone you know navigate in the future.

With all that being said … marriage is a joyous occasion (with many logistics to follow). Many couples out there don’t see the tax ramifications as a fun new change, but there are some, like me, who love to explore how to maximize its benefits.

Even though June is great for weddings, we all know April is when things really heat up.

Let’s start planning for that dance ASAP.

Warmly,

 

Aurelia Weems

(936) 273-1188

Aurelia E Weems, CPA

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Aurelia E Weems, CPA Sheds Light on Some of the Highest State Sales Tax Rates

No, the IRS is not shutting down their operations — there is still (and probably ever will be) a federal income tax.

But states are a different story…

This being travel season, and the season during which some of our clients turn their eyes towards making a move, I thought I’d give you some info on how state and local The Woodlands taxes might affect your decisions.

Oh, but back to federal taxes (and state) — consider this your quick reminder that estimated taxes for the second quarter are due June 15th.

This one always feels as if it came a little quick (two months since last payment instead of the normal three), so if this applies to you, you’ll want to make sure you have that all set up in time.

Secondly (and relatedly), I think I’m still in denial that we’re already into June. Our busiest season is behind us, and I always seem to expect that everything will slow down in a massive way afterwards … but this year has seen so much energy and growth around our practice that I still find myself in the midst of some very full days.

This, of course, is a very good thing. We are so grateful to be able to play such a meaningful role in the lives of our clients in The Woodlands and beyond. We continue to work with some clients who are on extension and we’re helping clients who are (wisely) already making changes to their financial lives in order to proactively save on taxes. It’s all fun, because we really do love what we do around here.

So, speaking of proactive planning, if you’re considering travel or a move, keep this stuff in mind…

Aurelia E Weems, CPA Sheds Light on Some of the Highest State Sales Tax Rates

“Individual commitment to a group effort – that is what makes a team work, a company work, a society work, a civilization work.” -Vince Lombardi

WARNING: What I’m about to share might make you salty.

The topic is state and local taxes (SALT … ba dum, ching), and if there’s any condolence … it’s that nobody is exempt from paying their part.

But where exactly do your SALT dollars go?

With the Tax Cuts and Jobs Act (TCJA), answering that question got a little trickier this year. In short, SALT includes income taxes from taxing jurisdictions as well as real estate and personal property taxes. Where the TCJA altered things was its limiting of the amount which is potentially deductible from federal tax returns.

Let’s take a look at some more SALT ramifications. (Other than high blood pressure, that is. 🙂 Okay, I’ll quit the salt puns now. Maybe.)

Higher Price to Purchase

Paying sales tax has become so woven into our economic fabric that we hardly recognize it on a day-to-day basis.

But states depend heavily on sales tax to make it through the year (see list below of which states truly rely on sales tax). The revenue generated plays a foundational role in the maintenance of cities, counties, schools and other initiatives within our state.

Do you like the state you live in? I hope so. Most every purchase you make goes toward its cause(s).

The Few and the Proud

HOWEVER, if you live in one of the five states that doesn’t apply a statewide sales tax — Alaska, New Hampshire, Montana, Delaware, Oregon — there are some other laws that apply to you.

In Montana, tourist-heavy populations can add up to 3% in state sales tax on their goods sold. Delaware (yes Delaware) is often called a “tax shelter” because of its individual tax laws, but businesses do pay more via gross receipts tax. New Hampshire will add a 9% state sales tax to hotel rooms, rental cars and restaurant meals, but is otherwise (mostly) sales tax-free so that you can “Live Free or Die”. Neither Alaska nor Oregon collect state sales tax either, but all is subject to change through the vote.

Top Ten Taxed for Sales

The list below is the percentage, in state revenue, comprised of total sales tax collections by state. Although Washington doesn’t collect corporate or individual income tax, they lead this sales tax charge with 46.4% of state revenue coming from sales tax.

Also, note the more “touristy” locations — Vegas, Mardi Gras, Nashville, Maui — embedded into this list. Going on vacation to any of these locations soon? Be on the lookout for extra pennies (and dollars) to pay.

  1. Washington 46.4 percent
  2. Tennessee 41.5 percent
  3. Louisiana 41 percent
  4. South Dakota 39.6 percent
  5. Nevada 39.4 percent
  6. Arizona 38.7 percent
  7. New Mexico 37.8 percent
  8. Arkansas 37.5 percent
  9. Hawaii 37.2 percent
  10. Texas 35.4 percent

It’s a Catch 22, right? Do you want to pay extra for a better place to live, or pay less for the things only you need?

And if you’d like to schedule a meeting for us in Hawaii, go ahead and buy us some plane tickets. I’d be quite happy to cover the sales tax. 🙂

Warmly,

 

Aurelia Weems

(936) 273-1188

Aurelia E Weems, CPA

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Making Children Less Costly For The Woodlands Families With Kids Through The Child Tax Credit

To be clear, children are costly in the best way possible.

Once the dust settles from changing diapers, sweeping floors, slapping bandaids on booboos, driving to sports practice, attending back-to-school meetings, saving for college, and buying countless goldfish crackers … you realize children are a lot of work.

They’re also monetarily costly. Depending on your income, you could be spending over $300K on each child, not including college.

But they’re worth it.

How are they worth it? Because they are your children, and in many ways they are the closest expression of eternal legacy that we can find on this side of our mortal coil.

Now, without a doubt, it takes money to raise a child. Amidst the aforementioned tasks, there’s gas money, sign-up fees, insurance premiums, and maybe most of all: grocery costs.

But there are a few crucial tax breaks I hope you’re aware of — a couple of these might serve as a refresher, and a couple might be new to you.

Regardless, the government apparently wants to help you chip away at child costs (at least for now). But first you need to know which tax levers to pull.

Making Children Less Costly For The Woodlands Families With Kids Through The Child Tax Credit

“Having a child is like getting a tattoo … on your face. You better be committed.” -Elizabeth Gilbert

Because raising children truly does “take a village”, know that I’d love to help walk you through some of these steps in greater detail. Everybody’s childcare costs look different, and together we can plan for child-based tax breaks. Don’t hesitate to give me a call today. (936) 273-1188

Child Tax Credit (CTC)

Over the last few months, we’ve spent some time discussing the Tax Cuts and Jobs Act (TCJA), and although some of its outcomes have altered The Woodlands taxpayers’ refunds in a negative way, there are indeed some perks. In this case, the signed law meant a CTC increase from $1,000 to $2,000.

Not bad, huh?

Just a few rules apply for the parent’s eligibility:

  1. Child less than 17 years old at the end of the tax year.
  2. You, as the taxpayer, claim the child as a dependent.
  3. Child lives with you, as the taxpayer, for at least six months of the year.

In addition, the dependent’s family must earn at least $2,500 a year.

The CTC is something you should definitely take advantage of if you have children.

Child and Dependent Care Credit (CDCC)

Do you, or someone you know, pay for childcare? This is arguably the largest amount of money The Woodlands parents will spend on their children (once education is said and done).

The CDCC is crucial in giving you a break from childcare costs. In fact, the break will cover up to $3,000 in childcare costs for one child; $6,000 for two or more children.

Such a tax break might be crucial if you’re a single parent. In that case, filing as Head of Household (HoH) is imperative. This law applies to parents who are not married while raising children on their own.

The HoH offers a larger standard deduction than a single filing status. You would also receive more favorable tax brackets and applicable tax rates. If, during the tax year, you pay more than half the costs of keeping a home for yourself and a dependent, you will qualify as HoH.

Adoption Help

If you’ve adopted a child, or know someone who has, it’s important to note there are specific tax breaks you can claim.

In 2019, it’s possible to claim a tax credit up to $14,080 in an effort to cover adoption costs (which, if you don’t know, get expensive quick). Side note: Employers can offer a similar tax break if one of their employees chooses to adopt.

Having children, biologically or through adoption, is one of the greatest gifts a human will experience. But, like we stated before, it’s important to lean on others for help. In this case, it just so happens to be the government.

According to a 2016 report from the United States Department of Agriculture, raising a child, from birth to age 18, averages out to around $233,610. That’s around $14,000 a year … sheesh.

If you need some help purchasing all those goldfish crackers, you might need to pick up a side hustle. But as far as your taxes go? It’s vital to have a proven strategy.

Call me today and let’s get one in place. Right after you go clean that stain up off the couch. 🙂

Warmly,

 

Aurelia Weems

(936) 273-1188

Aurelia E Weems, CPA

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Aurelia Weems’ Three Simple Steps For Better Information Security Management

Unless you’re a Patriots fan, the Super Bowl sure was a snoozefest, eh? The snarky tweets were in full force, and there were many sad bettors who might want to check this out (unless, of course, they just want to let us handle it for them, which is always wise).

Even the commercials weren’t very good. (I did like the Audi one, though.)

But all that aside, we’re diving in STRONG with tax returns. I know it’s early … but it pays (literally) to have us handle your return earlier rather than later.

(And though some of our The Woodlands clients will be taking the standard deduction on their federal taxes for the first time, unfortunately many states do NOT offer such a generous deduction, and so itemization could still pay off significantly on your state taxes. Some states require that you choose one method for both federal and state, but it varies state by state. Either way, it’s good to have a pro in your corner.)

In addition to tax saving strategies, one of our great efforts that we make on behalf of our The Woodlands clients is in the area of financial security. Because the allure of “free” can be quite strong … whether it’s “free tax preparation” (run away), to free food and free mobile apps.

Well, just because it doesn’t cost money, doesn’t actually mean it’s free…

Aurelia Weems’ Three Simple Steps For Better Information Security Management

“Privacy isn’t negotiable. It’s the right of every American.” – Jackie Speier

Today we are focusing on something unique from person to person: information security management as it relates to everyday technology.

In December 2018, The New York Times released a lengthy investigation which revealed an unnerving truth. Their findings center around mobile app companies who take “anonymous” information and use it to track individual data and whereabouts.

Have you ever knowingly or unknowingly agreed to let a company use the location services on your phone, never thinking about the ramifications? After all, society typically views apps as a way to “enhance” our lives in small ways (albeit to a fault … most apps distract us more than we’d like to admit).

There’s a lot to unpack here, and two groups of people you could argue are in the right: producers who utilize cell phone records to grow their businesses, and consumers who are protective of their personal information.

But instead of diving into the ethical-conundrum such an investigation presents (it’s a messy one), I want to give you a few tips to safeguard your technology use, and ways you can further protect your data.

1. Decide What’s Permissible

The first thing you should do is check which apps are enabled to know your phone’s location (often found in the “Settings” section of your phone).

In May 2018, the European Union’s revolutionary General Data Protection Regulation (GDPR) began enforcing stricter, more detailed requirements from companies who ask for your personal information. Those laws have not taken effect in the United States quite yet, but you better believe U.S.-based companies with large web presences started upping their privacy game after the GDPR went live.

However, if any or many of the apps you have on your phone ask for location services to aid the functionality of that app’s ultimate aim or intent — maps, restaurants, shopping, weather etc. — you should determine how useful that feature has been for you in the past. If your location is something you don’t find completely necessary, then turn it off to prevent that information being tracked (some apps, if given permission, will track even if the app is turned off).

2. “Who am I? 24601”

In Les Miserables, Jean Valjean’s name was literally reduced to a number.

And for a lot of businesses, you truly are just a number to them. However, this should actually alleviate your current worries. Many companies that do enable tracking through their apps on your phone store information under ID numbers … not your actual name.

Unlike the GDPR, which empowers EU citizens to ask companies for and acquire data which relates to their activity, U.S. companies are not obligated to deal out such information. Rest assured, it’s difficult for many companies to find your personal information filed under just another ID number. In short, they care more about the data than the person behind the data.

But if you would like to see the data stored about you, a site like mydatarequest.com will walk you through some simple steps to help download data from various companies.

3. Put the “Old School” Back in iOS

Remember the old days when there were only a few apps for your phone and most of them were mind-numbing games or various flashlights? Neither do we.

But now, with a plethora of options in any category of life, it’s easy to become inundated with apps you don’t need and seldom use. Look at this fresh new year as a chance to clean house and minimize the amount of companies who have access to your data.

And if you really want to go archaic, there is always the dumb-phone option. It may seem extreme, but if your profession does not require that you have a smartphone, resorting to a less high-tech mobile option might be your best bet in privatizing your information.

For many, findings from the Times’ investigation were not shocking, but for others it can serve as a wake-up call. I hope these suggestions acted as something similar for you, as I care about your personal and financial information being protected.

You’re definitely more than a number in my book. 🙂

Warmly,

 

Aurelia Weems

(936) 273-1188

Aurelia E Weems, CPA

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