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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The Trump Shutdown Is Over And Tax Filing Season Has Begun For The Woodlands Taxpayers

Politics aside, I think we can all breathe just a little easier knowing that the federal government is no longer in shutdown mode.

And on top of that, this morning, as I write, the IRS has begun accepting filed tax returns. Which means, well … it’s about to get real.

Now, leaving aside the fact that the IRS will probably be dealing with the ramifications of the Trump shutdown for quite some time, we are all going to be busy around here at Team Aurelia E Weems, CPA.

Which is why I wrote last week about the importance of filing early. Not procrastinating. Not putting this thing off…

Getting after it. Now.

I have a favor to ask of you for the week ahead, in my note below, but before I get to it, a word:

I want you to play the tape forward: it’s the day before tax day, April 14th, and other The Woodlands taxpayers around you are scrambling. My phone will be going wild of course, and my email inbox will overheat … but I’ll take pleasure knowing you’re enjoying the space that our services provide for you — sipping on something delicious and enjoying the turn of Spring.

How good will it feel to know you took care of business a month or two before? (Keep me in your thoughts when that time comes.)

This is why we’re here! To help you process tax season. Shutdown or not.

Every year, tax season brings us dozens of gifts in the form of great individuals like you. We get to use skills that we’re passionate about to help you handle something you … might not be passionate about.

And that’s exactly as it should be. We understand you have unique gifts and passions yourself, and need to be active in your community and business, doing things that drive you. That’s why we love what we do: we get to free you up to be your best self.

Often, our The Woodlands clients acknowledge the mutual benefit that comes from such a relationship, and year after year that verbal affirmation keeps us going, so we encourage you to keep it coming. If we’ve helped you in the past, thank you for your generous feedback! It really means the world to us.

In addition, we can’t express enough how grateful we are for your trust in us. We don’t take that lightly.

Now, to help earn the trust of others as we grow our client base, we have one request of you…

Well, perhaps two.

If you have filed your taxes with us before, would you:

A) Write about how our team has helped you in the past? You can find us on Google, and we’d love to have your feedback!

https://goo.gl/maps/f83MJaYdZ422

If you haven’t filed your taxes with us before…

Find us on that platform to read about client experiences in the past. The proof is in the internet-review-pudding. We’d love for you to be next in line.

https://goo.gl/maps/f83MJaYdZ422

(And if for some reason you weren’t satisfied with our service, please write me back personally. I will do everything within my power to make it right, and will make it a priority, even this week.)

B) Would you forward this note to anyone you think would benefit from help with their taxes? Especially if it’s someone you think would prefer to file with a personable touch.

You can let him or her know we are willing to review their previous years tax return to make sure that everything was done right for them. They can call us anytime at (936) 273-1188 and mention you referred them. We’re excited to hear from some of your friends and family!

So again…

Fast forward to a month or two from now, when you can relax, knowing that TODAY you took the steps toward financial responsibility for the good of you or your family, that you saved a bunch of money on your taxes, and (perhaps even better) that you didn’t have to deal with the dirty tax details. At the end of the day … that’s our job.

Lucky for you, we happen to love it. 🙂

With a grateful heart…

Warmly,

 

Aurelia Weems

(936) 273-1188

Aurelia E Weems, CPA

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Six Key Year-End Tax Moves That The Woodlands Folks Should Consider

Do you see that train barrelling towards the station? The one with “2018” all over it? This calendar year is about to change in under three weeks, and most people I know couldn’t be happier about the fact.

But what that means for our The Woodlands clients and friends here at Aurelia E Weems, CPA … well, ye olde clock is ticking LOUD.

And so this week, I thought I’d dive right in to our particular area of expertise and offer you some generalized considerations for the kinds of things that you can do NOW (i.e. in the next three weeks, before 12/31/18) that can ONLY be done now, and which will reduce your state and federal income tax bill.

Which is always a good thing.

So, without further ado, let’s dive in, shall we?

Six Key Year-End Tax Moves That The Woodlands, Conroe And Magnolia Folks Should Consider

“The work of the individual still remains the spark that moves mankind ahead even more than teamwork.”  – Igor Sikorsky

Firstly, I should say that the following moves that I suggest are intended as generalized advice — which is to say that your particular situation might call for different moves. As such, I am a bit restricted in how strongly I can make certain suggestions.

So shoot me an email through the button at the top of the page if you want to discuss a private tax planning appointment for these year-end tax moves, and we’ll see what is available. Or you can also call us: (936) 273-1188

All that aside, here are some possible tax moves to consider before 12/31/18…

1) Double-check withholding and estimated taxes. Because the individual federal tax changes can either be reducing or increasing your particular situation, it’s hard to know how the various changes will interact with the rate reductions. But, if you are at risk of incurring penalties for underpayments, consider increasing your withholding rate in your December paychecks or bumping up an estimated tax payment. The IRS offers a withholding calculator that can help you evaluate your situation: https://www.irs.gov/individuals/irs-withholding-calculator. Regardless, if you are behind, a big jump in your final withholding can reduce penalties (which are NEVER advisable).

2) Evaluate where you are with charity giving. If you are itemizing, and you plan to give year-end gifts, there are a whole host of strategies that can deepen your charitable impact AND more pronouncedly help your tax bill at the same time. Gifts of appreciated securities can be great because the recent tax bill (the TCJA) retained the “fair market value” deduction for charitable contributions of appreciated property (like stock and real estate), and you can still avoid capital gain tax on the appreciation when you contribute appreciated property to charity outright. That way, you can avoid part of the gain tax and defer the rest if you use the property to create a life income gift.

And if you have a big chunk to give, you can “bunch” your contributions and indicate that you want the contributions to count for more than one tax year — which helps the charity, and might help your FUTURE tax bills at the same time.

3) Be careful about mortgage moves. In the past, making an additional mortgage payment was an easy way to reduce your tax, but the new tax laws lowered the amount of debt taxpayers can use to claim a mortgage interest deduction — from $1.1 million to $750,000. But there are grandfathering rules for some pre-existing mortgages in that range, and we can help you if it applies to you.

4) Catch up on retirement savings. Contributions can still be made pre-tax, which reduces taxable income dollar-for-dollar. The 2018 contribution limits are $18,500 for qualified plans and $5,500 for IRAs, with additional catch-up contribution amounts permitted for taxpayers age 50 or over at the end of the calendar year. However, what did change was that we cannot “recharacterize” a Roth conversion after 12/31 … so let’s make sure you are clear on if you want the Roth benefits or not for your IRA.

5) Consider making large purchases before online sales tax fully kicks in. If you have some large items to purchase online, here’s a good place for you to look to determine when your state will begin to require sales tax for online purchases: https://taxfoundation.org/post-wayfair-options-for-states/. Many states kick in on January 1, but others already have.

6) Don’t forget to give tax-free gifts and use your FSA funds. Both of those options reset on 1/1/19, so remember that you can give up to $15K tax-free to individuals before 12/31. And if you have FSA funds to use, make sure you take full advantage before the year ends.

That’s all I have for now from a generalized point of view. Though, of course, I reserve the right to offer you MORE advice in the next couple weeks. 🙂

And if you want to get more granular about your particular situation, well, we’re only an email or phone call away.

Until next week,

 

Aurelia Weems

(936) 273-1188

Aurelia E Weems, CPA

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Aurelia Weems’ 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 The Woodlands 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…

 

Aurelia Weems

(936) 273-1188

Aurelia E Weems, CPA

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One Significant Habit Of The Wealthy In The Woodlands — 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 The Woodlands, Conroe, and Magnolia 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 The Woodlands, Magnolia, and Conroe — 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 The Woodlands, Conroe, and Magnolia 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,

 

Aurelia Weems

(936) 273-1188

Aurelia E Weems, CPA

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What To Do When You Experience A Sudden Income Increase In The Woodlands

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 The Woodlands 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 The Woodlands, Magnolia or Conroe

“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 The Woodlands, Conroe, or Magnolia 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,

 

Aurelia Weems

(936) 273-1188

Aurelia E Weems, CPA

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