Tax day
might seem far away, but waiting until year-end to make your tax moves
may prove costly to you. Maximizing your tax savings starts with an
effective mid-year strategy! Detailed here are some ideas to kick-start
your summer tax planning. This issue also includes some unique and free
summer travel destinations, an infographic with key IRS audit
information, and five steps to help your business set the right salaries
for your employees.
Call if you would like to discuss how this information relates to you. If you know someone who can benefit from this newsletter, feel free to send it to them.
In this issue:
- Effective Tax Planning Starts Now!
- Can’t Miss Stops for Your Summer Road Trip
- What You Need To Know About IRS Audits
- Make Setting Salaries Easier With These 5 Steps
Effective Tax Planning Starts Now!
With summertime activities in full swing, tax
planning is probably not on the top of your to-do list. But putting it
off creates a problem at the end of the year when there’s little time
for changes to take effect. If you take the time to plan now, you’ll
have six months for your actions to make a difference on your 2019 tax
return. Here are some ideas to get you started.
- Know your upcoming tax breaks.
Pull out your 2018 tax return and take a look at your income,
deductions and credits. Ask yourself whether all these breaks will be
available again this year. For example:
- Are you expecting more income that will bump you to a higher tax rate?
- Will increased income cause a benefit to phase out?
- Will any of your children outgrow a tax credit?
Any changes to your tax situation will make planning now much more important.
- Make tax-wise investment decisions.
Have some loser stocks you were hoping would rebound? If the prospects
for revival aren’t great, and you’ve owned them for less than one year
(short-term), selling them now before they change to long-term stocks
can offset up to $3,000 in ordinary income this year. Conversely,
appreciated stocks held longer than one year may be candidates for
potential charitable contributions or possible choices to optimize your
taxes with proper planning.
- Adjust your retirement plan contributions.
Are you still making contributions based on last year’s limits? Maximum
savings amounts increase for retirement plans in 2019. You can
contribute up to $13,000 to a SIMPLE IRA, up to $19,000 to a 401(k) and
up to $6,000 to a traditional or Roth IRA. Remember to add catch-up
contributions if you’ll be 50 by the end of December!
- Plan for upcoming college expenses.
With the school year around the corner, understanding the various tax
breaks for college expenses before you start doling out your cash for
post-secondary education will ensure the maximum tax savings. There are
two tax credits available, the American Opportunity Tax Credit (AOTC)
and the Lifetime Learning Credit. Plus there are tax benefits for
student loan interest and Coverdell Savings accounts. Add 529 college
savings plans, and you quickly realize an educational tax strategy is
best established early in the year.
- Add some business to your summer vacation.
If you own a business, you might be able to deduct some of your travel
expenses as a business expense. To qualify, the primary reason for your
trip must be business-related. Keep detailed records of where and when
you work, plus get receipts for all ordinary and necessary expenses!
Great
tax planning is a year-round process, but it’s especially effective at
midyear. Making time now not only helps reduce your taxes, it puts you
in control of your entire financial situation.
Can’t Miss Stops for Your Summer Road Trip
School is out, the weather is warm, and it’s time to
head out on a summer road trip! Tired of the same old locations? Every
state has a number of unique destinations for the every day explorer.
Here are some free ideas for the creative vacation seeker in all of us:
- The World’s Largest Yard Sale.
Stretching 690 miles through six states, the World’s Largest Yard sale
includes over 2,000 vendors. Every year at the beginning of August, you
can drive for four days (from Addison, Michigan to Gadsden, Alabama) in
search of second-hand treasures. Along the route are more than 35 major
vendor stops. These stops include groups of at least 25 sellers
clustered together. But you can also find sales in individual yards,
garages, parking lots or even right on the side of the road.
- The Wave Organ.
Located in San Francisco, California, the Wave Organ is a sprawling
sculpture that incorporates multiple pipes that enter the ocean at
different levels to create musical tones when they’re struck by the
waves. The sculpture itself is made of granite and marble from an old
cemetery. When planning a visit, shoot to be there during high tide when
the organ is at its best.
- Miss Crustacean Hermit Crab Beauty Pageant.
Do you have a hermit crab that really likes to flaunt its shell? Then
Ocean City, New Jersey is the place for you! Every August, contestants
vie for the Coveted Cucumber Rind Cup by showcasing their elaborately
decorated hermit crabs. Registering your charming hermit crab is free —
just make sure you get there early.
- Carhenge.
If you don’t have time to travel across the ocean to see Stonehenge,
you’re in luck! Head to Alliance, Nebraska to visit Carhenge instead.
Built in 1987 as a replica of the iconic stone circle in England,
Carhenge uses vintage cars as building blocks instead of the 25-ton
stones used in the original. It’s located in the middle of farmland and
includes a walking path with some other, let’s just say, interesting
sculptures.
- The Austin bats.
Hidden under the Congress Avenue Bridge in Austin, Texas from late
March until early fall lives the largest urban colony of Mexican
free-tailed bats in the world. At its peak, (sometime in August) the
colony has as many as 1.5 million bats! Every night around sunset,
onlookers pack the bridge, sidewalks and river below to experience the
colony taking flight in search of insects. If you decide to watch from
the water, you might want to bring an umbrella — unprepared spectators
are known to be hit with guano (AKA bat poop)!
Hitting the
road is a great way to spend some time with loved ones this summer.
Adding quirky stops that will be remembered for a lifetime make it even
better!
What You Need To Know About IRS Audits
The IRS recently released its 2018 Data Book,
including information on its audit activities for the last fiscal year.
This infographic details what you need to know regarding your audit
risk, how to prepare for and what to expect in an IRS audit.
Make Setting Salaries Easier With These 5 Steps
Whether you are hiring for the first time, filling an
open position, or conducting annual performance reviews, finding a
salary range that attracts and retains valued employees can be a
difficult task. Here are some suggestions to help make the process a bit
easier for you and your company:
- Know what your business can afford.
Like any business expense, you need to know how it will affect your
budget and cash flow. Make a twelve-month profitability and cash
forecast and then plug in the high end of the annual salary range you
are considering to see if it’s something your business can absorb. After
all, the greatest employee in the world can’t help you if you don’t
have the money to pay them. Don’t forget to account for increases in
benefit costs, especially the escalating cost to provide healthcare.
Once you establish a budget, you can allocate your spending plan to your
payroll.
- Understand the laws.
In general, the federal government sets the minimum requirements
(minimum wage of $7.25 per hour, overtime rules and record keeping
requirements). States and localities often add their own set of rules.
For example, the state of Illinois, Cook County and the city of Chicago
all have different minimum wage requirements. If you are located in
Chicago you need to adhere to the highest rate. So research all payroll
rules that apply to your location at the beginning of the process. When
reviewing the rules, don’t forget that different rules often apply
depending on the number of employees in your business.
- Review and update job descriptions.
Take some time to review key jobs and update them as appropriate. With
new positions, note the exact tasks and responsibilities you envision
for the role. Then, think about the type of person that will succeed
performing these responsibilities. Once you have a clear picture of who
you are looking for, you can begin to build a detailed job description
and narrow in on a specific salary range.
- Establish value ranges and apply them.
Value is key when determining the perfect salary amount. Define the
range of value for the position and then apply that valuation to the
current person’s performance within the defined pay range. Use websites
and recruiters to establish the correct range of pay, then apply
experience and employee performance to obtain a potential new salary
amount. Remember, size of company, location and competitiveness of the
job market are all factors to consider.
- Factor in company benefits.
A strong suite of employee benefits is a powerful tool to couple with a
competitive salary. Don’t be afraid to communicate their value to
prospective and current employees (they help with retention, too!).
According to Glassdoor, health and dental insurance are the most
important, but flexibility is close behind – over 80 percent of job
seekers take flexible hours, vacation time and work-from-home options
into consideration before accepting a position.
Finding the
right salary can be tricky, but with some preparation and research, you
can find the balance that satisfies the needs of your business and your
employees.
As always, should you have any questions or concerns regarding your tax situation please feel free to call.