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Tax Efficient Retirement Planning Schedule Your Retirement Planning Call

If your taxable income is between $315,000 and $415,000, you could be paying a higher tax rate than any other taxpayer. July 2018 MONOTELO QUARTERLY Quarterly: Oct 17 STAYING OUT OF THE "DANGER ZONE" OF THE NEW SMALL-BUSINESS DEDUCTION The Tax Cuts and Jobs Act introduced a 20% deduction for small business owners. You can read our overview of this deduction in our last quarterly article. The gist of this new deduction is it will allow small-business owners to deduct 20% of their business income from their taxable income on their personal return. While this new deduction provides some welcome relief for small-business owners, there are restrictions on the deduction that highlight how critical proper tax planning is in 2018. If your business qualifies as a “specified service trade or business ” then your deduction will start to be phased out at taxable income of $157,500 ($315,000 if married filing a joint return) and entirely eliminated at taxable income of $207,500 ($415,000 if married filing a joint return). While this means any service business owner with taxable income above $415,000 will receive no benefit from the deduction, the toll is heaviest for any business owner who lands in the middle of the phaseout range. Example: John and Mary own a small consulting business and have taxable income of $315,000. Since they are right at the lower phaseout threshold they will receive the full deduction and their taxable income will be $252,000 ($315,000 x 80%). The tax they will pay on this income is $49,059. Now if their taxable income increases by $100,000 they will be completely phased out of the deduction and their taxable income will jump from $252,000 to $415,000, increasing their tax bill to $96,629. That is $47,500 in federal taxes alone on $100,000 of income. With what is effectively a marginal tax rate of 48%, small-business owners with taxable income between $315,000 and $415,000 are paying a higher tax rate than any other taxpayer! To avoid this heavy tax burden, proper tax planning is critical to reduce your taxable income and stay out of this “danger zone” of high taxes. Strategies to Reduce Your Taxable Income Contribute to a retirement plan. As a small-business owner, you have several options to save for retirement while simultaneously avoiding the heavy tax burden of this phaseout range. By setting up a SEP IRA you can contribute up to $55,000 per year (subject to earned income limitations). A SEP IRA is a simple way to defer significant income for retirement and works best when you are the sole employee. If you have other employees in your business, be aware that you will need to contribute an equal percentage of wages for each eligible employee. Make the most of your medical expenses Take advantage of the deduction for self-employed health insurance premiums . Unless you or your spouse are eligible to receive subsidized health insurance through your employer, you can reduce your taxable income by paying your health insurance premiums through your business. Set up a Health Savings Account . If you have a High-Deductible Health Plan then you can contribute up to $6,900 per year to save for future medical costs. Your contributions will lower your taxable income in the year they are made, and as long as your distributions are for qualified medical expenses they will be tax-free. Increase your charitable donations. If you find yourself in the middle of this phaseout range after an exceptionally successful business year, then you may already be considering increased charitable donations. With the large tax burden you could be facing in this phaseout range, the tax deduction from your donations will be more valuable than ever. These are just a few of the options available to you to lower your taxable income and avoid this danger zone of high taxes. Even if you don’t expect your income to reach the phaseout level for the new deduction, you can still realize significant tax savings by taking advantage of these strategies to lower your taxable income. Previous Article Next Article

YEAR END Tax Planning With roughly 6 weeks to go until we can say goodbye to 2020, now is a great time to review your personal situation and consider any year-end adjustments to minimize your short and long-term tax liability. We have identified five year-end planning strategies you can use to minimize your tax burden. Maximize Your Retirement Account Contributions If you have a 401(k), 403(b) or 457 retirement account you can contribute up to $19,500 ($26,000 if you are over the age of 50) for 2020. Contributions to any of these plans must be made before January 1st to apply to 2020. Before you contribute to your 401(k) you should watch our 4-minute video Why 401k Plans Are Sub-Optimal . You can also contribute up to $6,000 ($7,000 if you are over the age of 50) to a traditional or Roth IRA for 2020 depending on your income. Contributions to traditional or Roth IRAs can be made up until April 15th of next year and still be applied to your 2020 contributions. If you qualify for a Health Savings Account you should max out your contributions to the HSA before making further contributions to your other retirement accounts. This is because HSAs allow for a tax deduction for your contributions, tax-free growth of the assets in your account, and tax-free distributions when used for medical expenses. With significant medical expenses almost guaranteed later in life, an HSA combines the best of both traditional and Roth retirement accounts. For more on HSAs read “Six Myths About Health Savings Accounts ” Take Advantage of Tax-Free Capital Gains If your taxable income is below $40,000 (80,000 if you file a joint return) then your long-term capital gains tax rate is 0%. If your taxable income is below these thresholds and you own stocks or other investments that have appreciated in value you can take advantage of this 0% tax rate by selling your investments with long-term capital gains and not pay any federal income taxes. If the sale of your investment pushes your taxable income above the thresholds for the 0% bracket you will pay 15% on the amounts above the threshold but will not pay taxes on the amount up to the threshold. While capital gains below these income thresholds are tax-free, the proceeds from the sales will still increase your taxable income for the calculation of certain tax credits such as the premium tax credit for health insurance. If you are currently receiving the premium tax credit, selling your investments could reduce the amount of the credit that you qualify for. Set Up a Donor Advised Fund The Tax Cuts and Jobs Act doubled the standard deduction while also limiting or removing various itemized deductions. As a result of these changes a much greater percentage of taxpayers will be taking the standard deduction between now and 2025 when the tax cuts expire. This also means that meaningful charitable donations may have little impact on your tax return. This is because a much larger portion of your charitable deduction is being used to reach the standard deduction threshold before you can realize any tax savings. One way you can work around this new limitation is to set up a donor advised fund. With a donor advised fund you can make a large contribution to the fund in one year and then make donations out of the fund to your charities of choice over the course of several years. With a donor advised fund you get a tax deduction in the year you contribute to the fund, regardless of when the fund distributes money to a charity. For example, if you typically give $5,000 each year to your church, you can choose to contribute $15,000 now to a donor advised fund and distribute $5,000 out of the fund each year for the next 3 years. Then refill the fund at the end of the 3rd year. By bunching your contributions into every 3rd year, you can prevent the bulk of your charitable donations from being absorbed by the standard deduction threshold. Consider a Roth Conversion Contributing to a traditional IRA or 401(k) provides tax savings today by pushing the tax liability into your retirement years. This strategy can make sense when you are likely to be in a lower tax bracket in retirement. However, the Tax Cuts and Jobs Act has created one of the lowest tax environments our country has seen in decades. With that in mind there is no guarantee that you will be in a lower tax bracket at retirement. And with our national debt skyrocketing, you could find yourself in a higher tax bracket when you retire, even if your income is lower than it is today. With higher tax rates likely in the future, you may want to consider converting some of your 401(k) or traditional IRA funds into a Roth IRA, paying taxes now in today's low tax environment in order to realize tax-free distributions later in retirement. With the results of the 2020 election, time could be running out to take advantage of the low tax rates. For more information on why a Roth conversion may be a limited time opportunity watch our 3-minute video Tax Efficient Retirement Planning. Converting your traditional IRA into a Roth IRA is an option for everyone, even if you are above the income threshold to make a normal contribution to a Roth IRA. You will also not be subject to the 10% early withdrawal penalty you would face when taking early distributions from a traditional IRA. For more information on why a Roth IRA could be the right choice watch our 4-minute video The Big Picture . Return Your Required Minimum Distributions If you are over the age of 70 ½ then you are required to withdraw a certain amount from your traditional IRA each year through Required Minimum Distributions (RMDs). These RMDs can create an unwelcome tax liability. Fortunately, as part of the CARES Act, all RMDs for 2020 have been waived. This means that if you have not yet taken your RMDs for 2020 you can choose not to take any for the year. If you already took your RMDs for the year then you have a few potential options to undo them. Option 1: Indirect Rollover When you take funds out of your IRA you have 60 days to either return the funds to the original IRA or invest them in another IRA through what is referred to as an indirect rollover. If you return the funds or reinvest them in another IRA within the 60 days you can avoid any taxes or penalties that would have otherwise been due on the distribution. You can only complete one indirect IRA rollover per year. Option 2: Coronavirus-Related Distribution If you took your RMDs earlier in the year and can no longer qualify for a 60-day rollover, you may still be able to undo your RMDs by qualifying them as a coronavirus-related distribution (CVD). With CVDs you can take up to $100,000 from your traditional IRA at any point in 2020 and you have 3 years from the date of the distribution to recontribute the funds and avoid paying income taxes. If you don’t recontribute the funds you can also choose to spread the tax liability over the next 3 years instead of paying it all on your 2020 return. To qualify a distribution as a CVD you must meet at least one of the following criteria: You are diagnosed with COVID-19 using a test approved by the CDC Your spouse or dependent is diagnosed with COVID-19 using a CDC-approved test You are experiencing adverse financial consequences as a result of being quarantined, being furloughed or laid off or having work hours reduced due to such virus or disease, being unable to work due to lack of child care due to such virus or disease, closing or reducing hours of a business owned or operated by you due to such virus or disease, or other factors as determined by the secretary of the Treasury. As you can see, even if you do not meet either of the first two criteria, just about anyone in the United States should be able to qualify under the third criteria given that almost every state issued a shelter-in-place order earlier this year. By reclassifying your RMD as a CVD you can either avoid the taxes altogether by recontributing your distribution within the next 3 years, though we would recommend recontributing before the end of the year to keep everything simple, or spread the tax burden of the distribution over a 3-year period. Summary Now is a great time to review your financial situation and determine if there are any year-end adjustments you should make, as there should be very few income surprises between now and year-end. Taking the time to review your situation and applying some of the strategies we just shared could help you significantly reduce your short and long-term tax liabilities. Read more articles 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.

Details Five Planning Steps To Improve Your Retirement Years Join us as we share five simple steps you can take to reduce your tax bill and improve your retirement years: Address these critical items in your IRAs, 401(k)s and other retirement accounts Three ways to maximize your 2020 deductions and reduce your tax bill One easy step to reduce taxable income in 2020 How to take advantage of today's historically low tax rates How to proactively address the potential reduction in social security benefits in 2033 When January 25, 11:30 AM - 12:30 PM Where Prairie Lodge Cedar Room 12880 Del Webb Blvd Huntley, IL 60142 Details

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No events at the moment 2020 Strategies for a Lifetime of Tax Savings Join us as we share a clear durable plan of action that cohesively addresses each area of your financial life to: Maximize the productivity of your assets and improve your retirement income stream Minimize the drag from your long-term tax liabilities Potential for over $350,000 in lifetime savings on a $500K retirement portfolio Potential for over $2M in lifetimes savings on a $5M retirement portfolio Minimize the risk of rising tax rates in retirement Address the risk of low interest rates and stock market corrections in retirement Synchronize your values with your charitable giving desires and your legacy goals Provide a quiet confidence that your financial affairs are arranged to meet your long-term goals Help you live the life you want to life

A 529 college savings plan or a Roth IRA can help you realize tax-free earnings to fund your child's college education. Save as PDF Read more articles Share 1 2 HOW TO SAVE HOW TO SAVE FOR YOUR CHILD'S COLLEGE EDUCATION The cost of a college education is rising by three to four percent a year, so it is never too early to start saving for your child’s future college tuition. Before you start saving however, make sure to consider the options that will maximize your savings while minimizing your tax burden. 529 Plans A 529 plan allows you to contribute to a tax-advantaged account in order to fund college tuition. While contributions to a 529 plan do not provide a federal tax deduction, you may qualify for a deduction on your state tax return for your contributions. Additionally, you can pull out your contributions and earnings from the account tax free when you use them for qualified education expenses. Qualified education expenses include tuition, fees, books, supplies, and equipment required for enrollment. If your child is enrolled at least half-time (6 or more credit hours per semester), room and board are also considered to be qualified expenses. 529 plans come in two varieties: Prepaid tuition plans and college savings plans. Prepaid Tuition Plan With a prepaid tuition plan you can pay for your child’s tuition ahead of time, based on the current rates. For example, if your child is 8 and one year of qualifying college tuition is $10,000 today, you can contribute $10,000 to the fund today and your child’s first year of tuition will be fully covered when they start college in ten years - regardless of the cost of tuition at that time. You are not required to prepay a full year at once, you can pay into the fund over multiple years but each year the required amount will increase. With a prepaid tuition program, you do not need to worry about how well the fund is performing, or about tuition costs. The fund bears the risk, not you. College Savings Plan A college savings plan operates more like a traditional investment account such as an IRA or 401K. You contribute funds to the plan that grow over the years until you are ready to withdraw them to cover education expenses. While a college savings plan does not provide the same guarantee as a prepaid tuition plan, it provides more flexibility on how the funds are used. It also has the potential to provide a greater return on investment than the prepaid tuition plan where earnings of the account will be no greater than the rise in tuition cost. Roth IRA as a Last Resort If your child is about to enter college and you do not have a 529 plan in place to cover the tuition, you can pull funds from your Roth IRA without incurring the early penalties and taxes that you would normally face when taking early distributions. We caution against using a Roth IRA to cover your child’s college expenses, because the Roth IRA is one of your best retirement tools. It is however a valid option. If you choose to tap into your Roth IRA to cover education expenses you need to meet two requirements to avoid taxes on the distributions: Wait Five Years: You need to wait at least five years after first funding your Roth IRA before you withdraw any of the earnings of the account. Qualified Expenses: You must use the entire distribution for qualified education expenses. Be sure that you do not take out more than what is needed to cover these qualified expenses. Failure to meet these two requirements will result in you paying the normal tax rate on the earnings of your account, effectively eliminating the tax benefit of your Roth account. Additionally, you will pay a 10% early withdrawal penalty on any distributions that don’t meet these requirements. Takeaway A 529 plan provides a tax-efficient way to save for your child’s college education. A Roth IRA can also provide tax-efficient savings for education, but your goal should be to not touch your Roth until you retire. You should consider all the options with the following priorities: In an ideal world, you would first max out your Roth IRA contribution of $5,500 per year (if you are married your spouse can contribute another $5,500 per year to their Roth). You would then contribute to a 529 college savings or prepaid tuition plan. (You should not contribute to a 529 plan if you have not already maxed out your Roth IRA as the 529 Plan creates more restrictions). If you cannot contribute to a Roth IRA due to income limitations, you can still contribute to a 529 plan. Be sure to reach out to Monotelo if there are any questions about how to fund your children’s college education or the tax implications of an existing account. We are here to help you keep more of what you earn. Read more articles Share 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.

Five Things Every IRA Owner Should Know Schedule Your Retirement Planning Call

TO BE AWARE OF UNDER THE 2018 TAX REFORM At the end of last year President Trump signed the Tax Cuts and Jobs Act into law, signaling the largest tax reform in over three decades. We have received a lot of questions recently on how this law will affect our clients. With the tax season now behind us it is time to address how these changes will impact you in 2018. There are many aspects to this law and there is no "one size fits all" explanation for how it will impact our clients. Some of our clients will win and some of them will lose under the new law. With that in mind we have outlined the five changes that we believe are most relevant to you. Personal exemptions historically represented a $4,000 reduction in taxable income for each dependent listed on the tax return. Under the new law these exemptions have been eliminated. However, to help mitigate the loss of these exemptions, the law also made changes to the child tax credit and has added a new credit for non-child dependents. Starting in 2018 the Child Tax Credit has been doubled to $2,000 per child, $1,400 of which is refundable. The phaseout threshold for the Child Tax Credit has also been drastically increased to $200,000 for single filers and $400,000 for joint filers. This means that most taxpayers who were previously prevented from claiming the full Child Tax Credit will now be able to claim the entire credit. Additionally, the law has introduced a new $500 credit for any dependents who are over the age of 17, allowing parents to continue to receive a tax benefit for children in college or other adults residing in their home. SUMMARY There are many moving parts in the new tax law, with a lot of them working to balance one another out. Some of our clients will see a decrease in their tax bill while others will see it increase. Overall, we do not expect any of our clients to see drastic changes, good or bad, with the new code. We expect the majority of our clients to see an increase or decrease in their tax bill of less than $1,000. If you would like to know how the tax reform will directly impact you, please call our office. Read more articles Share Tax Brackets The number of brackets remains at seven. And the percentage charged at each of these brackets has been reduced, with the notable exception of the lowest bracket of 10% which remains unchanged. The majority of our clients who were previously in the 15% or 25% tax bracket will now find themselves in the 12% or 22% bracket respectively. You may have already noticed the impact of these new brackets when your employer adjusted your withholdings earlier in the year, increasing your take home pay. UNREIMBURSED EMPLOYEE EXPENSES The change that could have the greatest impact on our public servant clients is the elimination of the deduction for unreimbursed employee expenses. As the law currently stands, employees will no longer be able to deduct their union dues, work uniforms, tools, or any other expenses related to their employment. The only exception to this is the special $250 allowance for teacher's expenses which remains unaffected. There is currently a bill in congress which seeks to reinstate the deduction for unreimbursed expenses. The "Tax Fairness for Workers Act" would not only bring back the itemized deduction for employee expenses but would go a step further and allow for specific deductions to be taken above-the-line, meaning they would not be subject to many of the limitations that currently restrict their use. It remains to be seen how far this bill will go but we strongly recommend that you keep track of your job expenses until a decision is reached. If the bill passes, this will cause job related expenses to have a greater impact on your tax return. ITEMIZED DEDUCTIONS AND THE STANDARD DEDUCTION One of the most promoted aspects of the new tax law is the nearly doubling of the standard deduction to $12,000 for single, $18,000 for head of household, and $24,000 for joint filers. While the standard deduction amounts are receiving significant increases, many of the allowed itemized deductions are either being handicapped or removed entirely: The deductions for state and local income taxes as well as property taxes are capped at a combined total of $10,000. This means that homeowners in high income-tax states are likely to lose a portion of this former deduction. The deduction for home mortgage interest remains but is limited to mortgages that do not exceed $750,00, down from the previous threshold of $1,000,000. All miscellaneous itemized deductions (including tax preparation fees, casualty losses and all unreimbursed employee expenses) have been eliminated entirely. The increased standard deduction amounts combined with the additional restrictions on itemized deductions increases the chances of the standard deduction being more beneficial than itemizing deductions in 2018. 1 ABOVE THE LINE DEDUCTIONS Above-the-line deductions are more beneficial than itemized deductions as they have far fewer restrictions. The new tax law retains many of these deductions including educator expenses, student loan interest, and contributions to Health Savings Accounts. Two deductions that have been changed are expenses for a job-related move, and alimony payments. Starting in 2018 expenses for a job-related move will only be deductible by active members of the military. Starting in 2019 alimony payments will no longer be deductible. However, this will only apply to divorce agreements settled after the start of 2019. This means that alimony payments from divorce agreements that were already in place prior to 2019 will continue to be deductible. FIVE CHANGES 3 PERSONAL EXEMPTIONS AND THE CHILD TAX CREDIT 2 4 5 At Monotelo, we exist to make a difference with meaningful and actionable financial solutions that positively impact our client's lives. If you have questions about what steps you can be taking to prepare for your retirement years, call us at 800-961-0298

Simplify Your Crypto Tax Filing Expert Help for Crypto Investors Frequently asked questions: 1. Do I need to report crypto transactions on my taxes? Yes, the IRS requires reporting of crypto transactions, including trades, staking, mining, and airdrops. 2. What happens if I don’t report my crypto activity? Failure to report can lead to penalties, interest, or audits from the IRS. 3. How does your service work? We simplify the process by consolidating your data, calculating your gains/losses, and ensuring IRS compliance. 4. What types of crypto activities do you handle? We cover trading, staking, mining, airdrops, DeFi, NFTs, and more. 5. Do you work with international exchanges? Yes, as long as you receive a correct 1099 from your exchange, we should be able to handle transactions from all major global exchanges. 6. How do I upload my crypto data? Download the full 1099 form from your exchange API or CSV file and upload to your secure portal. 7. What if I’ve lost transaction records? We can help estimate and reconcile missing data to the best extent possible. 8. What is cost basis, and why is it important? Cost basis is the original value of your asset. It determines your taxable gain or loss when you sell. 9. Are your services compliant with IRS regulations? Yes, we stay updated on all crypto tax rules and ensure accurate, compliant filings. 10. Can you handle high-volume trading accounts? Yes, we specialize in managing data for frequent traders. Pricing and Support 11. How much does your service cost? Our pricing is based on the complexity and number of transactions. See website for pricing or contact us for a quote. 12. What if I have questions during the process? Our team is available for support via phone, chat, or email. 13. Is my data secure with your service? Absolutely. We use bank-grade encryption to protect your information. 14. Do you offer a satisfaction guarantee? Yes, we stand by our service with a full guarantee that your return will be filed in compliance with IRS regulations, as long as we have 100% of your required tax documents. 15. When are taxes due for crypto transactions? The tax deadline is typically April 15th. Extensions may apply in certain cases. 16. Can you amend previous tax returns with crypto activity? Yes, we can assist in filing amended returns if needed. 17. Do I need to submit a copy of last year’s tax return? It is not required, but we strongly recommend that your provide last year’s tax return to us. Next Get Started Today! © 2025 by Monotelo Inc. info@monotelo.com 800-961-0298

Set up user access in Chase Bank for accountant view-only access: 1. Navigate to the account management section after logging in to your Chase Bank account. 2. From there, select the "Access and Security Manager" option. 3. Next, choose "Add Authorized User." 4. You will then be prompted to input the necessary information for the new user. Enter the first and last name of your Monotelo accountant, as well as the email address and phone number. First & Last Name: John Smith Email: john@monotelo.com Phone number: 800-961-0298 5. Then, on the next page, select only limited access, remove travel, and full access. Hit submit. 6. You can select the appropriate permissions for the new user. In this case, your Monotelo accountant only needs to see activity and check images, documents, and statements. 7. After you select the appropriate permissions, you should review and confirm the information entered and then submit the request. 8. Chase Bank will then email your accountant at the provided email address with instructions on accessing your account at Chase. 9. Your accountant should check their email for the invitation and follow the instructions to accept it. The invitation may expire after 24 hours, so your accountant should accept it immediately. 10. Once your accountant has accepted the invitation and set up their login credentials, they can access your account with view-only access. Congratulations! You have successfully set up user access in Chase Bank for your accountant with view-only access.