When planning your vacation be sure to familiarize yourself with the business travel rules to see if you can qualify some of your costs as business expenses. HOW TO DEDUCT YOUR VACATION TRAVEL As A Business Expense Taking a vacation can be expensive, so naturally the idea of deducting your vacation expenses on your tax return is an appealing idea. However, before you get carried away planning a lavish vacation with the hopes of writing off the entire cost, make sure to familiarize yourself with the requirements to qualify your expenses as business travel. To qualify for a tax deduction the trip needs to serve a legitimate business purpose. Handing out business cards on the beach does not count. There are 5 criteria your trip must meet to be a qualified business expense: 1. Profit motive. The trip must serve a legitimate profit motive. This means that you can reasonably expect the trip to create profit either now or at some point in the future. 2. Stay overnight. You can only deduct meal and lodging expenses when you are away from home overnight. 3. “Rational Businessperson” test. Your trip will only qualify as a business expense if the business motive is strong enough that a rational businessperson would make the trip if business was the only motive. 4. Primary purpose test. You can only deduct your travel expenses when your trip is primarily for business. This is determined by calculating the number of business days vs personal days of the trip. This may sound like a deal breaker, but it is easier to meet this requirement than you think. 5. Maintain good records. If you do not properly document the business purpose of your trip, your travel expenses, or your actual business activities on the trip you will risk losing your entire deduction. Your trip expenses can be broken down into two general categories with different requirements to be deductible: Transportation Expenses Transportation costs include airfare, train tickets, or the cost of a rental car to get to your destination. These expenses are all-or-nothing, if the majority of your trip days are business days you can deduct all of your transportation costs. If the majority of your trip days are personal you cannot deduct any of these costs. Life Expenses Life expenses include your daily meals and lodging. Unlike transportation expenses you do not need to meet the majority of business days threshold to take life expenses. Instead you simply take the life expenses for each business day of the trip. What Counts as a Business Day? It may be easier than you think to qualify most of your trip as business days. Each day of the trip only needs to meet one of these criteria to qualify as a business day: Work more than four hours. You have a workday when you spend more than half of normal work hours pursuing business. Since a normal workday is eight hours you only need to work for more than four. Presence-required day. If you are required to be at a destination on a specific day for a legitimate business purpose. For example, if you have a meeting with a client in another city on Tuesday, then Tuesday qualifies as a business day even if that is your only business activity for that day. Travel day. Days you spend traveling to or from your business destination count as business days as long as you are traveling in a reasonably direct route. Weekends and holidays. If a weekend or holiday falls in between two business days you can count those days as business days as long as it would not be practical to return home in between the two business days. If you live in California and have meetings in New York on Friday and Monday, it would not be practical to return to California for the weekend. Therefore, all four days count as business days. Saved-money-on-travel days. If you arrive at a destination a day early or leave a day late in order to save on your travel expenses you can count the extra day as a business expense as it served a legitimate business purpose of reducing your travel costs. Summary The rules governing business travel allow for some freedom to deduct vacation time as business expenses, but do not provide a blank check to write off an entire vacation simply because you spent a few minutes discussing business. You need to find the right balance between work and relaxation, properly document your work activities, and maintain records of all your expenses.

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Frequently Asked Questions Monotelo Quarterly Tax Tips White Papers How To Avoid An Audit Do you have a PTN? EAs and CPAs What is your tax background? What records? Fees File electronically What if I get audited? Who will sign my return? When will I receive a copy of my return? How do I find you? Do you have a PTIN (preparer tax identification number)? What is your tax background? What records and other documentation will you need from me? How do you determine your fees? Can I file electronically? What happens if I get audited? Who will sign my return? When will I receive a copy of my return? How do I find you if I have a question or a problem after tax season is over? Do you have a PTIN (preparer tax identification number)? All of our tax preparers and client-facing staff who are involved in the return preparation process have their PTINS. Feel free to ask for the PTIN of any staff member involved in return preparation. What is your tax background? Most of our tax preparers are either CPA's or Enrolled Agents. A Certified Public Accountant (CPA) is certified by the state to act as a public accountant. A CPA is the only licensed qualification in accounting. To be certified, candidates are required to pass an exam. Most states also require an ethics exam or course as well as continuing education credits. A CPA may specialize in tax but not necessarily: there's a wide range of CPA services including accounting, auditing, financial planning, technology consulting and business valuation. An Enrolled Agent (EA) has earned the privilege of representing taxpayers before the Internal Revenue Service by passing a three-part comprehensive IRS exam. The EA status is the highest credential the IRS awards. EA's must adhere to ethical standards and complete 72 hours of continuing education courses every three years. What records and other documentation will you need from me? We will need all your W-2's, 1099's, 1098's and other verification of income and expenses in order to prepare your return. We do not need individual receipts. Please do not send any individual receipts unless we request them. You must retain all your receipts in case of an audit by the IRS. How do you determine your fees? Our fees are completely transparent - you can view our fees on our Fee Schedule . Can I file electronically? Yes, after your return is completed, you will receive E-file consent forms (Form 8879) and be given the option to have us electronically file on your behalf after you review and approve the return. What happens if I get audited? As Enrolled Agents and Certified Public Accountants, we are authorized to represent our clients before the Internal Revenue Service. We can respond to questions and represent you in front of the IRS. If there is an error on your return and it is our fault, we will fix the error, file an amended return on your behalf and you will not be charged for any amended return preparation fees. Who will sign my return? Your tax return will be signed by the person who performs the final review of your return. This person will have a PTIN and the PTIN will appear next to their signature. We can give you the name of the person who will be reviewing and signing your return at the time we receive your tax documents. When will I receive a copy of my return? You will receive a complete copy of your return after we finish preparing the return and the tax preparation fees have been paid. You can choose to receive an electronic copy, a physical copy or both. You will need a copy of your return to review it prior to filing or having us E-file on your behalf. How do I find you if I have a question or a problem after tax season is over? Our offices are open twelve months a year. If you receive a request from the IRS or your state department of revenue, we are available to meet in person, or connect by phone or email. Click Here to check out the IRS website for more resources in choosing a tax preparation firm

When planning your vacation be sure to familiarize yourself with the business travel rules to see if you can qualify some of your costs as business expenses. October 2018 MONOTELO QUARTERLY Quarterly: Oct 17 HOW TO DEDUCT YOUR VACATION TRAVEL AS A BUSINESS EXPENSE Taking a vacation can be expensive, so naturally the idea of deducting your vacation expenses on your tax return is an appealing idea. However, before you get carried away planning a lavish vacation with the hopes of writing off the entire cost, make sure to familiarize yourself with the requirements to qualify your expenses as business travel. To qualify for a tax deduction the trip needs to serve a legitimate business purpose. Handing out business cards on the beach does not count. There are 5 criteria your trip must meet to be a qualified business expense: Profit motive. The trip must serve a legitimate profit motive. This means that you can reasonably expect the trip to create profit either now or at some point in the future. Stay overnight . You can only deduct meal and lodging expenses when you are away from home overnight. “Rational Businessperson” test. Your trip will only qualify as a business expense if the business motive is strong enough that a rational businessperson would make the trip if business was the only motive. Primary purpose test. You can only deduct your travel expenses when your trip is primarily for business. This is determined by calculating the number of business days vs personal days of the trip. This may sound like a deal breaker, but it is easier to meet this requirement than you think. Maintain good records. If you do not properly document the business purpose of your trip, your travel expenses, or your actual business activities on the trip you will risk losing your entire deduction. Your trip expenses can be broken down into two general categories with different requirements to be deductible: Transportation Expenses Transportation costs include airfare, train tickets, or the cost of a rental car to get to your destination. These expenses are all-or-nothing, if the majority of your trip days are business days you can deduct all of your transportation costs. If the majority of your trip days are personal you cannot deduct any of these costs. Life Expenses Life expenses include your daily meals and lodging. Unlike transportation expenses you do not need to meet the majority of business days threshold to take life expenses. Instead you simply take the life expenses for each business day of the trip. What Counts as a Business Day? It may be easier than you think to qualify most of your trip as business days. Each day of the trip only needs to meet one of these criteria to qualify as a business day: Work more than four hours. You have a workday when you spend more than half of normal work hours pursuing business. Since a normal workday is eight hours you only need to work for more than four. Presence-required day. If you are required to be at a destination on a specific day for a legitimate business purpose. For example, if you have a meeting with a client in another city on Tuesday, then Tuesday qualifies as a business day even if that is your only business activity for that day. Travel day. Days you spend traveling to or from your business destination count as business days as long as you are traveling in a reasonably direct route. Weekends and holidays. If a weekend or holiday falls in between two business days you can count those days as business days as long as it would not be practical to return home in between the two business days. If you live in California and have meetings in New York on Friday and Monday, it would not be practical to return to California for the weekend. Therefore, all four days count as business days. Saved-money-on-travel days. If you arrive at a destination a day early or leave a day late in order to save on your travel expenses you can count the extra day as a business expense as it served a legitimate business purpose of reducing your travel costs. Summary The rules governing business travel allow for some freedom to deduct vacation time as business expenses, but do not provide a blank check to write off an entire vacation simply because you spent a few minutes discussing business. You need to find the right balance between work and relaxation, properly document your work activities, and maintain records of all your expenses. Previous Article

The Fallacy of the Formula Quarterly: Oct 17 What do Circuit City, Fannie Mae and Pitney Bowes all have in common? If you answered that they have all been remarkable failures in the past eighteen years, you would be half-right. If you answered that they have all been remarkable failures AND were three of the eleven “Great Companies” identified in Jim Collins’ Good to Great book, you would be more-right. Good to Great: Why Some Companies Make the Leap... and Others Don't took the business management community by storm when it was published in October of 2001. Like the latest Hallmark movie, the book follows the same pattern of past business books: create a list of great companies based on some “quantifiable” measure and then identify the formula that brought these companies to greatness. And imply that your readers can apply the same magic formula to achieve greatness within their own organizations! Ignore luck, randomness and good fortune, and over-attribute all the greatness to the formula and the management team. Oh, and one more thing – make sure you have a BHAG! (a big, hairy, audacious goal) It doesn’t matter if the BHAG is a good one, it matters that it’s HAIRY and AUDACIOUS! The core message of Built to Last is that good management practices can be identified and implemented, and once implemented good results will follow. The fallacy of this logic is that Collins was essentially comparing successful firms with less successful firms and attributing the success to something other than luck and randomness. Of the 5,000+ publicly traded companies that existed from 1986 to 2001, there was a reasonable probability that eleven of them would outperform over a 15-year period! “Knowing the importance of luck, you should be particularly suspicious when highly consistent patterns emerge from the comparison of successful and less successful firms. In the presence of randomness, regular patterns can only be mirages.” Daniel Kahneman. Nassim Taleb touched on this human tendency when he introduced the narrative fallacy in The Black Swan. The narrative fallacy describes how flawed stories of our past shape our views and expectations of our universe. Driven by our need to make sense of our world, narrative fallacies are the simple, compelling stories that create meaning and assign larger roles to things like talent and intelligence rather than luck or randomness. Focusing on the few significant events that actually happened, rather than the countless number of events that could have happened, we wrap our view around a nice clean narrative and fail to account for the randomness that exists in our world. People have a deep need to be reassured that actions have consequences. And we all want to believe that success will be the rewards of courage and good decision-making. Books like Good to Great provide a nice clean message about the determinants of success and failure by offering a sense of understanding. But their logic is faulty and misleading. The reality is that the world (and especially stock prices!) operates in a more-random fashion than most people care to recognize. The recognition that our world has a randomness to it does not however, leave us powerless. It can actually empower us to make better decisions when we recognize that fact. We will address how to make better decisions in light of a random world in next week’s Insight, but before we wrap up this week, let’s look at how Collins’ eleven “great” companies have performed since Good to Great was published 18 years ago: On a cursory look, the end results show three remarkable losers in Circuit City, Fannie Mae and Pitney Bowes; four weak performers in Kimberly Clark, Kroger, Wells Fargo and Walgreens; two market performers in Gilette and Wells Fargo and three winners in NuCor, Philip Morris and Abbot Labs: Remarkable Losers 3 Market Performers 2 Underperformers 4 Winners 3 That doesn’t sound like “greatness.” Some underperformed, some outperformed and some were right in the middle. It sounds more like randomness and a reversion to the mean from former greatness.

Monotelo Advisors Inc Tax Planning Engagement Letter Heading 1 Thank you for choosing Monotelo to assist you with your tax planning needs. Tax planning is a strategic approach to managing finances that aims to minimize tax liability and maximize savings. By organizing income, expenses, investments, and expenditures efficiently, individuals and businesses can take full advantage of tax benefits, deductions, and credits. Effective tax planning not only reduces the amount of taxes owed but also contributes to better financial health by freeing up resources for savings, investments, and future growth. This engagement letter outlines the scope of our services, your responsibilities, and our commitment to providing you with accurate and timely solutions. By agreeing to this letter, you authorize Monotelo to prepare a tax plan that will help to reduce your short-term and lifetime tax liability. We look forward to working with you to ensure that you retain more of your hard-earned money.

Monotelo Advisors Inc Tax Planning Engagement Letter Heading 1 Thank you for choosing Monotelo to assist you with your tax planning needs. Tax planning is a strategic approach to managing finances that aims to minimize tax liability and maximize savings. By organizing income, expenses, investments, and expenditures efficiently, individuals and businesses can take full advantage of tax benefits, deductions, and credits. Effective tax planning not only reduces the amount of taxes owed but also contributes to better financial health by freeing up resources for savings, investments, and future growth. This engagement letter outlines the scope of our services, your responsibilities, and our commitment to providing you with accurate and timely solutions. By agreeing to this letter, you authorize Monotelo to prepare a tax plan that will help to reduce your short-term and lifetime tax liability. We look forward to working with you to ensure that you retain more of your hard-earned money.

WHAT WILL HAPPEN When Social Security Runs Out? At the end of August 2021, a new report was released that showed Social Security is projected to run out of money in 2033, one year earlier than previous calculations. With that deadline only 12 years away it is likely to impact everyone who is not already enrolled in Social Security as well as many who are. What will happen when the fund runs out? You may have heard that benefits will stop being paid once the fund runs out, but that is not likely to happen. We have laid out some of the changes that are likely to be made to Social Security over the next 12 years or after the fund runs out around 2033. Reduced Benefits If no changes are made before the fund runs out, the most likely result will be a reduction in the benefits that are paid out. If the only funds available to Social Security in 2033 are the current wage taxes being paid in, the administration would still be able to pay around 75% of promised benefits. While a 25% reduction in benefits could significantly hurt the retirement plans of those who are relying on their Social Security benefits, it is far less damaging than the program being shut down entirely. With the potential for benefits to be reduced, some retirees may be tempted to apply for their benefits early to receive as much as they can before the fund runs out. However, if you start taking your benefits as soon as allowed, they will be reduced to 70% of your full-retirement age benefit. Comparing this to the 75% that could be received even after the fund runs out, you would still be hurting your retirement by applying early. Increased Wage Taxes To avoid benefit reductions, congress may vote to increase the Social Security taxes charged on employee wages. If the increase were put in place immediately, the employee portion of the tax would need to increase from 6.2% to 8%. This would represent an additional $900 in taxes paid annually for an employee making $50,000 per year. Another proposal in wage taxes that has become popular in recent years is an additional tax on high earners. Rather than increasing the social security tax of 6.2% on all payers, this would implement a new tax on wage income above $400,000 to help stabilize the social security fund. Increased Full Retirement Age Even if the fund does not run out, the full retirement age needed to receive your full Social Security benefit is likely to go up in the future as life expectancies increase. Since the Social Security program was first started the average life expectancy has increased 7 years and yet the full age retirement for Social Security has only increased 2 years. As the fund begins to run out, it is likely that the full retirement age will be raised even further, along with harsher benefit cuts for those who apply early. Summary While Social Security benefits are unlikely to be completely eliminated 12 years from now, there is a strong possibility that they will be reduced significantly if revenues are not increased in the next few years. To make sure that your retirement plan is secure, you should analyze your retirement income stream under the assumption that your Social Security benefits will be reduced and determine what changes need to be made if that happens. Schedule a Meeting to Learn More 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.

Why 401k Plans Are Sub-Optimal

Monotelo Advisors spoke at (PFFW) Professional Firefighters of Wisconsin's bi-annual meeting held in February at the Hilton City Center Hotel in Milwaukee, WI. Monotelo Speaks To The Professional Firefighters of Wisconsin Monotelo Advisors spoke at (PFFW) Professional Firefighters of Wisconsin's bi-annual meeting held in February at the Hilton City Center Hotel in Milwaukee, WI. Monotelo was invited to speak because of their unique knowledge of the firefighting profession and how they apply that knowledge to help firefighters retain a higher percentage of their income. "We find that career firefighters are overpaying anywhere from a few hundred dollars per year to over one thousand dollars per year on their tax bill" - shared Jim Allen, Director of Monotelo Advisors. In their presentation to the PFFW, Monotelo offered a no-obligation "Look-back'' for IAFF local members. The "Look-back'' starts with a brief discussion to review job related expenses. Monotelo then compares the expenses identified in the discussion with the expenses that were used on the prior tax returns. When there is a meaningful difference between the two, Monotelo will "We find that career firefighters are overpaying anywhere from a few hundred dollars per year to over one thousand dollars per year on their tax bill" correct the past three years and recover money that was left on the table. About the PFFW - The Professional Firefighters of Wisconsin represents 60 locals with over 4,000 career firefighters across the state of Wisconsin. "Every two years we bring in key leaders from around the state, elected officials, and companies like Monotelo that we believe can help our members. I am very particular as to who I let speak to our guys, and Monotelo did a great job," said Mahlon Mitchell, president of the PFFW. "My local affiliation is IAFF Firefighters Local 311," explained Mitchell. "We invited Monotelo to come meet with our members. We had a full day filled with our members coming in to have Monotelo review their past returns and prepare their current year's return. I've heard nothing but good things; so we're really appreciative of what they did for us." In addition to Local 311, Monotelo has had the opportunity to impact the entire state of Wisconsin using technology. Coming into local meetings via the web, Monotelo offered guidance, answered questions and gave local members the opportunity to recover some of their hard-earned money. For questions about how Monotelo can help your local, contact Jim Allen at jallen@monotelo.com . ARE YOU GETTING BEAT? Don't pay the federal government more tax than the law requires. Call Monotelo today for a NO-COST, NO-OBLIGATION, tax review designed to minimize your tax bill and maximize your take home pay. MONOTELO.COM | 800.961.0298

Retirement Readiness Our Retirement Readiness series is four separate webinars designed to address today's most important retirement issues. Each 20 minute webinar is designed to provide 15 minutes of value-packed content and close with 5 minutes for Q&A You can use the links below to watch the recorded webinars "When Will I Be Ready and What Should I Do Today to Prepare for Retirement?" When Will I Be Ready and What Should I Do Today To Prepare for Retirement is a 20 minute webinar that will walk through the three most important steps you can take to get yourself on track to safely retire on your time frame. In addition to the three specific action steps, all attendees will receive our Safe Retirement Zone calculator as a valuable tool that they can use to help take control of their future. View On-Demand Video Social Security Claiming Strategies - How to Maximize Your Lifetime Benefit The Social Security Claiming Strategies module can have a profound impact because most people don't understand the different options they have when claiming Social Security, and they don't understand the financial implications of the different options. If you are married, your options have doubled, and if you are divorced you may still have the option of a spousal claim. Understanding the spousal benefits and the delayed benefits may not only significantly increase your monthly income, it could change the trajectory of your retirement years. Our Social Security Claiming Strategies module is invaluable if you or someone you care about is in or near retirement. View On-Demand Video Tax Efficient Retirement Planning in Light of the Recent Tax Cuts and Jobs Act The Tax Efficient Retirement Planning module will address the massive shift in the tax code that took place last January. These changes radically impact how individuals should be preparing for retirement, and they provide significant opportunities to take action between now and December of 2025, when the tax cuts are set to expire. The Tax Efficient Retirement Planning module will empower you with the tools to take full advantage of the current compelling, but temporary opportunities created by the new tax laws. View On-Demand Video Small Business Retirement Planning The Tax Cuts and Jobs Act recently passed by congress enacted the most significant tax legislation changes that our country has seen in over thirty years. These changes have a significant impact on how small business owners should prepare for retirement - and that is why we put together our Small Business Retirement Planning module. If you are a small business owner or independent contractor and your financial plan was put in place prior to December of 2017, there is no way you are taking advantage of the new opportunities. Our Small Business Retirement Planning module will help small business owners take full advantage of the recent changes to maximize a lifetime of savings that are currently available. But there is a sense of urgency, because the current tax cuts are set to expire in 2025. View On-Demand Video