My Items I'm a title. Click here to edit me.

JULY 2016 MONOTELO QUARTERLY ARE YOU PROTECTING YOURSELF From Your Corporate Income? While there are potential tax savings with a corporate structure in place, it is critical that the corporation be the entity that actually earned the income. WHAT DOES THAT MEAN? A fundamental principle of tax law is that income is taxed to the entity who earns it; and any attempts to divert the income away from its true earner are not recognized by the IRS. AND WHAT DOES THAT MEAN? It means the corporation (not the business owner) must be the entity that contracts for the services that it will have you (the business owner) provide. It means the corporation needs to be the entity that gets paid (not the business owner) for the services provided. It means the corporation must have control over the income it receives. Once it receives the income, it can then direct it to the business owner via payroll or a shareholder distribution. WHAT ARE THE MAIN TAKEAWAYS HERE? If you have self-employment income, you should consider the potential tax benefits of a corporation At Monotelo, we believe that clients who have self-employment income should consider the potential benefits of structuring their business as a corporation. That is because a corporation can provide asset protection and potential tax benefits that are not available to the self-employed individual who files a Schedule C with their tax return. 1. Have your clients or customers write their check directly to the business. Do not accept checks written to you personally. A check made out to you and signed over to the business puts the business owner at risk of double taxation and penalties. 2. Have the corporation pay you a salary for the services you are providing to the corporation. 3. Make sure that all contracts and agreements with clients are between the client and the corporation, not between the client and the business owner. Save as PDF October 2016

Second Act Retirement Planning Week 3 Video doesn't play? Click to watch on YouTube Download Workbook

What sets Monotelo Advisors apart is our unique focus on planning ahead to reduce your tax burden every year. File Online File online File your taxes online form your home. Upload your documents, and get started. Schedule a Meeting Schedule An Appointment Need additional tax help? Schedule an appointment to get started. Get your tax return started at Monotelo Step 1: Upload you documents, or schedule an appointment. Step 2: One of our experienced tax professionals will process your return, and maximize your refund. Step 3: Once your return is complete, we will contact you to sign the consent forms. Step 4: After signing the consent forms, you should receive your tax refund in 1-3 weeks. How the process works. Get started Have tax questions, or need more information? Schedule an appointment Give us a call One of our experienced tax experts would be happy to answer your questions, and get your tax return started Social Security Changes for 2026: A Complete Guide for Retirees and Working Beneficiaries Social Security plays a crucial role in the financial security of more than 70 million Americans. For 2026, the Social Security Administration has announced several important updates affecting retirees, workers claiming early benefits, SSI recipients, and individuals with disabilities. Below is a comprehensive overview to help you stay informed and plan financially for the year ahead. 1. A 2.8% Cost‑of‑Living Adjustment (COLA) The biggest change for 2026 is the 2.8% COLA appl Key Tax Season Deadlines for Monotelo Small Business Clients in 2026 As the 2026 tax season gets underway, our goal is to ensure that all of our small business clients experience an easy and stress-free filing. The following dates highlight essential deadlines for S-Corps, partnerships, and C-Corporations—these are intended to keep you organized, help you avoid penalties, and clarify what you can expect from us. Feel free to bookmark this page or revisit it during the season; it's your key resource for the most important tax milestones. Key Important Tax Dates for Small Businesses in 2026 As a small business owner, staying on top of tax deadlines is essential to avoid penalties and keep your operations running smoothly. Below is a clear timeline of key dates for the 2026 tax season, along with an important update on 1099 reporting requirements. January January 15, 2026 – Fourth-quarter 2025 estimated tax payment due (Form 1040-ES). January 31, 2026 – Deadline to issue W-2 and 1099 forms to employees and contractors. Since January 31 falls on a Saturday Helpful tax tips and articles. View More Small Business Tax Services We will help you minimize your short-term and lifetime tax liability to free up the cashflow needed to help you grow your business and build for your future. Learn more Retirement Planning Our Values-Based planning service will build the road map so you can have confidence that all the pieces of the puzzle are working together for you to live your best life possible. Learn more More services from Monotelo

On August 8th President Trump signed a presidential memorandum deferring the employee share of Social Security taxes due on wages paid between September 1st and December 31st. The intent of this memorandum was to provide employees with a temporary increase in cashflow in response to the COVID-19 pandemic. However, since this memorandum only defers the taxes and does not forgive them, they will need to be repaid at some point. Since the memorandum was signed we have been waiting for the Treasury to issue guidance on how this deferral will be implemented so that we could inform our clients on what they can expect. When the Treasury finally released their guidance this past Friday they left many questions unanswered. Per the Treasury guidance employers who do not withhold the employee’s Social Security taxes during the deferral period will need to pay the deferred taxes between January 1st and April 30th or be subject to penalties and interest. The guidance states that it will be the responsibility of the employer, not the employee, to pay the deferred taxes at the end of the deferral period. However, the guidance also states that employers may then make arrangements to collect the applicable taxes from the employees. What this means is that if your employer does not withhold Social Security taxes from your paycheck during the deferral period then you will see a small increase in your net paycheck until the end of the year. But in January you will either see one lump sum deducted from your paycheck or see your paychecks decrease for the first few months of the year as your employer collects back the Social Security taxes that are due. One question that the guidance did not answer was who decides whether to participate in the deferral, the employer or the employee? Some employees may welcome a short-term increase in their net paycheck while others will not want to deal with the hassle of repaying those taxes in a few months. It remains to be seen if employees will be able to choose if they want their taxes deferred or if they will have to go along with what their employer decides. Our Recommendation to Employees As we have already said, this is NOT forgiveness of your Social Security tax obligation, it is only a deferral until January. To avoid an unwelcome tax bill in January it is our recommendation that you reach out to your employer and let them know that you do NOT want to participate in the payroll tax deferral. Your paycheck will remain unchanged through the rest of the year and you will not be faced with a large tax bill in January. If you employer chooses to implement the deferral across the board and does not allow you to opt out then we would recommend setting aside the additional money in each paycheck to pay back the deferred taxes when they become due next year. Our Recommendation to Employers We are now one day from the start of the social security deferral period and there are still many questions that the Treasury has not answered regarding how employers will report taxes that have been deferred and if employers will be responsible for taxes when they are unable to get them from employees in January. Due to all of this uncertainty our recommendation is that employers do not participiate in the deferral for the time being and continue to withhold taxes as normal. Read more articles SOCIAL SECURITY TAX DEFERRAL Failing to order your affairs to minimize your tax burden could cost you significant money - so don't wait to take action. If you have additional questions or need some planning help, please reach out to us.

One step away to save on your taxes. Schedule a quick 10-minute, no-obligation consultation. ARE YOU PROTECTING YOURSELF From Your Corporate Income? While there are potential tax savings with a corporate structure in place, it is critical that the corporation be the entity that actually earned the income. WHAT DOES THAT MEAN? A fundamental principle of tax law is that income is taxed to the entity who earns it; and any attempts to divert the income away from its true earner are not recognized by the IRS. AND WHAT DOES THAT MEAN? It means the corporation (not the business owner) must be the entity that contracts for the services that it will have you (the business owner) provide. It means the corporation needs to be the entity that gets paid (not the business owner) for the services provided. It means the corporation must have control over the income it receives. Once it receives the income, it can then direct it to the business owner via payroll or a shareholder distribution. WHAT ARE THE MAIN TAKEAWAYS HERE? If you have self-employment income, you should consider the potential tax benefits of a corporation At Monotelo, we believe that clients who have self-employment income should consider the potential benefits of structuring their business as a corporation. That is because a corporation can provide asset protection and potential tax benefits that are not available to the self-employed individual who files a Schedule C with their tax return. 1. Have your clients or customers write their check directly to the business. Do not accept checks written to you personally. A check made out to you and signed over to the business puts the business owner at risk of double taxation and penalties. 2. Have the corporation pay you a salary for the services you are providing to the corporation. 3. Make sure that all contracts and agreements with clients are between the client and the corporation, not between the client and the business owner. Save as PDF

Everything you need to know about the new 20% deduction available to you as a pass-through business owner. SMALL BUSINESS TIPS Quarterly: Oct 17 NEW DEDUCTION for Pass-Through Businesses The Tax Cuts and Jobs Act signed into law by President Trump at the end of last year included numerous changes to both individual and corporate taxes. One of the most notable changes was a new 20% deduction for pass-through businesses. This new deduction was created to ensure that pass-through entities were not penalized relative to the tax cut provided to C Corporations. A flat 20% deduction for any pass-through business sounds pretty simple, but things are rarely simple when it comes to the tax code. And that is why we are here, to handle the more technical aspects of this new deduction. For now, here is a brief overview of the deduction requirements. WHO QUALIFIES FOR THIS DEDUCTION? The simple answer to this question is that any "trade or business" that is not a traditional C Corporation qualifies for this 20% deduction. That includes self-employment income from a sole proprietorship or a single-member LLC. It also includes income from a partnership or a S Corporation, as well as income from a rental property. What it does not include is any wages you receive as an employee, even if those wages are paid by a partnership or S-Corporation that you own. HOW IS THE DEDUCTION CALCULATED? This is where things start to get a bit more complicated. The deduction is calculated as 20% of your net business income. This means you must first deduct all of your normal business expenses, including any salary you pay yourself, before determining the deduction. This also means that your business must show a profit in order to receive the deduction. INCOME LIMITATIONS ON THE DEDUCTION Like most deductions and credits in the tax code, the deduction is subject to various restrictions based on income and field of work. If your total taxable income for the year is less than $157,500, or $315,000 if married and filing a joint return (MFJ) then you will receive the full benefit of the deduction. Note that this income threshold is based on your total taxable income, not just the income of your business. It includes any other form of income you or your spouse receive. However, if your taxable income is greater than $157,500 ($315,000 if MFJ) your deduction may either be reduced or eliminated entirely. If your business qualifies as a "specified service trade or business " then your deduction will begin to phase out above these thresholds and will be completely eliminated at taxable income of $207,500 ($415,000 if MFJ). If your business does not fit the definition of a "specified service trade or business" then you will continue to receive the deduction although it may be limited based on the amount your business pays in wages, or the value of the business assets. SUMMARY With the introduction of this new 20% deduction for pass-through businesses, business owners are likely to see a reduction in their tax bill for 2018. The extent of the benefit you receive will depend on your total taxable income as well as the type of business you operate. If you expect your taxable income to be above $157,500 (or $315,000 if MFJ) then call us to help you determine how the tax law changes will impact you. Previous Article Save as PDF

At Monotelo, we use our unique knowledge of the job-related expenses of our public-servant clients to reduce what they are paying in taxes. We Understand We understand the challenges that teachers face - the challenge of sharing your knowledge and making progress when so many variables are outside your control. Our monthly publication shares tips and strategies to reduce your federal and state tax liabilities. Tax Tips and Strategies Learn More Tax Season Checklist Use our tax season checklist to make sure you have everything needed to file an accurate return while maximizing your potential deductions. Fee Schedule View our competitively priced tax services. Testimonials Hear what our public servants have to say about their Monotelo experience.

Save as PDF Read more articles Share According to the IRS' most recent Data Book, the IRS audited nearly 1.4M tax returns in 2014, approximately 0.8 percent of all individual tax returns filed in calendar year 2014 and 1.3% of corporation income tax returns filed in that same year. IRS examinations (otherwise known as audits!) are done to determine if income, expenses, and credits are being reported accurately. Of the exams that take place, the most common method is a correspondence audit (examination by mail), but the IRS also does field exams (face-to-face audits). ONE QUESTION WE HEAR ASKED QUITE OFTEN IS WHAT CAUSES THE IRS TO AUDIT A RETURN? While there is no simple answer to that question, the IRS uses several different methods to select their audits: random selection and computer screening, and related exams. RANDOM SELECTION AND COMPUTER SCREENING Sometimes returns are selected based solely on a statistical formula. They will compare your tax return against "norms" for similar returns. The IRS develops these "norms" from audits of a random sample of returns. RELATED EXAMINATIONS The IRS may also select your return when it involves issues or transactions with other taxpayers, such as business partners or investors, whose returns were selected for audit. "CAN YOU MAKE THAT A LITTLE MORE SIMPLE FOR ME???" We would break down the audit triggers into two categories: Individual 1040 Triggers and Business Triggers. ON THE INDIVIDUAL SIDE: 1) Not reporting all income 2) Making more than $200,000 a year 3) Claiming "Hobby" activities as a business activity 4) Filing a schedule C or E with your tax return 5) Excessive business deductions on your schedule C 6) Large schedule C losses ON THE CORPORATE SIDE: 1) Unusually low salary of an S-Corp Officer 2) Large meal and entertainment expenses 3) Claiming 100% business use of a vehicle We are also asked about the risk of filing an amended return. According to the IRS website: "Filing an amended return does not affect the selection process of the original return. However, amended returns also go through a screen process and the amended return may be selected for audit." ADDITIONAL AUDIT NOTES Should your account be selected for audit, the IRS will notify you by mail, they never initiate an audit by telephone. They will provide you with a written request for the specific documents they want to see. The law requires you to keep all records you used to prepare your tax return for at least three years; so be sure to keep all records for three years from the date the tax return was filed. Generally, the IRS will not go back more than three years. The IRS tries to audit tax returns as soon as possible after they are filed. Accordingly most audits will be of returns filed within the last two years. An audit can be concluded in three ways: NO CHANGE: an audit in which you have substantiated all of the items being reviewed and results in no changes. AGREED: an audit where the IRS proposed changes and you understand and agree with the changes. DISAGREED: an audit where the IRS has proposed changes and you understand but disagree with the changes. If you agree with the audit findings, you will be asked to sign the examination report or a similar form depending upon the type of audit conducted. If you owe money, there are several payment options available. If you disagree with the audit findings you can request a conference with an IRS manager. The IRS also offers mediation or you can file an appeal if there is enough time remaining on the statute of limitations. WHY AM I BEING SELECTED FOR AN AUDIT? Failing to order your affairs to minimize your tax burden could cost you significant money - so don't wait to take action. If you have additional questions or need some planning help, please reach out to us.

Second Act Planning Retirement Readiness Course Join us for one of the following weeks where we review the steps to prepare and thrive in your "Second Act," where your retirement can be so much more than a life of leisure. Week 1: Highlight Your Passions, Skills, and Gifts. Famous baseball player Yogi Berra once said, “If you don’t know where you are going, you will end up somewhere else.” This course focuses on identifying your desired outcomes for the next phase of life and the preparation needed to get there. Topics include change/transition, articulation of personal values, and an understanding of your current and potential financial reality. Week 2: Engage Your Mind and Body According to Socrates, “the secret of change is to focus all of your energy not on fighting the old but on building the new.” This course focuses on how to optimize Social Security and Medicare to increase the security of your retirement years. We will also explore how to establish new physical, intellectual, emotional, and social habits for this next phase of life. Week 3: Reflect on Your External and Internal Codes Intellectual elite, Albert Einstein, once said the hardest thing in the world is to understand the income tax code. The course focuses on how to navigate the US tax code to your advantage with tax-efficient planning and tax-efficient retirement distributions. We will also address estate planning issues and end with an assessment of the internal codes (e.g., rules) that might be limiting all you are intended to be. Week 4: Originate Your Next Act Today American tennis groundbreaker, Arthur Ashe, said: “Start where you are, use what you have, do what you can.” This course focuses on investing what you have to generate a viable return for the future. Subjects discussed include investment risk/return, fixed-income security features, and articulation of the concepts that will inform your decisions in the future. To participate in one of the four classes, email Michael Baumeister at michael@monotelo.com and indicate which class you would like to be a part of, or submit the form below.

Secure File Upload Upload your tax documents One moment please...