Whether you are just starting out, or are a seasoned veteran, you need someone who will work with you to ensure that you are set up for success. Real Estate Agents At Monotelo we start every relationship with a tax conversation. We work hard to free up cash flow by helping you minimize your federal tax liability. That's because every dollar you pay the federal government is one less dollar available for you to reinvest back into your business, or one less dollar available for you to reinvest into your future. Learn More This video provides a brief summary on how we reduce the tax liability for our real estate agents. Why Monotelo? Tax Tips and Strategies Strategies that you can implement in your business to simplify the filing process while reducing your tax burden. How We Work With Clients The biggest enemy to the accumulation of wealth is the 23-43% cut the government is going to take on your income. That is why we start every relationship with a tax conversation. Monotelo White Papers Read about some of our previous cases, the challenges we faced, and the solutions we developed to help our clients make better financial decisions.

One step away to save on your taxes. Schedule a quick 10-minute, no-obligation consultation. INTRODUCTION Realtor Sam, while a real person, is not the actual name of this real estate agent. We have changed the name to protect the innocent! The Realtor Sam case is a case we examined in 2015, which had similarities to cases that had come across our desk in the past. Realtor Sam had been in the real estate business for nearly twenty years. He was not only selling real estate, he also owned several residential properties that were generating significant cash flow and taxable income. Realtor Sam had incorporated his commission-based business as a C-Corp ten years prior to our interaction with him. Apart from a bad year in 2013, his gross commissions were generally around ninety-five thousand dollars per year and his commission-based business was generating around forty-thousand per year in free cash flow after all his expenses were paid. What made Realtor Sam’s case unique was the fact that his investment properties were generating significantly more income than his commission-based business. THE CHALLENGE By incorporating his commission-based business, Realtor Sam had taken the first step towards a tax-efficient business structure. However, there were additional steps he should have taken when he first set up his business ten years earlier. Because of the way Realtor Sam had structured his compensation from his C-Corporation for his commission-based income, he was regularly generating losses on his corporate tax returns. Worse, because he was set up as a C-Corporation, those losses could not be used to offset the income he was generating from his rental properties. These issues were causing Realtor Sam to significantly overpay on his tax returns every year. THE SOLUTION Fortunately, we were able to put a plan together for Realtor Sam to help get him back on track. Our first goal was to take advantage of the accumulated losses on his corporate tax return. To accomplish this, we made some adjustments to how he was compensating himself through the business. Our second goal was to help him efficiently pull profits out of his business by taking advantage of some provisions in the Internal Revenue Code that were available to him as an officer of a corporation. These changes reduced his tax bill in the first year by $9,000 and by $5,500 in each of the subsequent years. These results were beyond what we had expected, and beyond what we generally see for someone with Realtor Sam’s taxable income, but they do demonstrate what can happen when we apply a deep understanding of the tax code as it relates to real-estate centered businesses. At Monotelo our focus is more than tax preparation, it is to make a difference with actionable and meaningful financial solutions that positively impact our clients’ lives. Save as PDF

Be aware of the special situations that could cause you to owe when you file your taxes next year. Save as PDF Read more articles Share 1 2 AVOID SURPRISES ON YOUR 2018 TAX RETURN According to the IRS, the number of taxpayers who owe at the end of the year has increased 40% in recent years. To make matters worse, if you owe money on your tax return you will also likely be charged penalties and interest for not paying the correct amount throughout the year. The best way to avoid this is to make adjustments to your federal withholdings with your employer or to make estimated tax payments throughout the year. To get started you should determine if you are likely to have a balance due when you file your 2018 tax return next year. WHY DO I OWE? When you are paid by your employer they are required to withhold federal taxes to cover your expected liability. However, these withholdings are not always sufficient to cover your final tax bill due to various factors that can affect your tax liability. Several of these factors include: More than one source of income . If you work more than one job, or if you have a spouse that also works, you have an increased chance of owing on your tax return. This is because each employer only accounts for the wages they are paying you when determining how much taxes to withhold. When you have more than one source of income you could be in a higher tax bracket than your employer expects. Significant increase in income. When you start making more money you run the risk of being phased out of various tax deductions that you may have qualified for in the past. And if you receive a large pay raise in the middle of the year, your withholdings in the first half of the year may no longer be sufficient for that portion of your income when you move into a higher tax bracket. No longer claiming your child. Claiming your child on your tax return can reduce your tax bill by $2,000-3,500 per year. So when you child moves out on their own, or when you cannot claim your child due to divorce, it can take a heavy toll on your tax bill. Major life changes. Getting married, getting divorced, or retiring. These are all major life changes that can have a dramatic impact on your tax return. When you go through one of these changes you should be prepared for significant changes to your tax bill. WHAT TO DO? If any of the above situations apply then you are at increased risk of having to pay when you file your 2018 tax return. To avoid this you can change your withholdings with your employer. If you have more than one job we recommend claiming zero allowances with your second employer. You can also request that an additional specified amount be taken out of each check and put toward your federal tax liability. You can also estimate your final tax bill and make quarterly estimated payments to reduce or eliminate your bill at the end of the year. If you still owe, making quarterly payments can help you avoid paying additional penalties when you file your return. If you would like help determining if you should adjust your withholdings or make estimated payments please give us a call. 1 2 3 4 Save as PDF 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.

At Monotelo Advisors we work hard to free up cash flow by helping you minimize your federal tax liability, giving you more money to reinvest into your future. Welcome to Monotelo Advisors Tax expertise that delivers. CHOOSE YOUR DESTINATION SMALL BUSINESS PUBLIC SERVANTS TAX EXPERTISE Our Mission: To make a difference with meaningful and actionable financial solutions that positively impact our client's lives.

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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.

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

WHITE PAPER INTRODUCTION STARTING OVER, AND OVER (SOO)! The SOO case is about a young Realtor who started her real estate career right out of college. With a strong desire to be in the industry, she began her real estate career as an administrative assistant, and worked her way into a sales position at a local real estate office in the Northwestern corridor of the US. After building a successful business in the Northwest, she had to make a life changing decision. Should she follow her fiancé to the Midwest, while he attended medical school? Or should she stay in the Northwest and continue to grow her business? Judy decided to take the challenge and build a second real estate business in the Midwest. She joined a traditional platform with a 60/40 split. Her business grew quickly, but she did not like the idea of giving such a large percentage of her commissions to her broker. Judy found a niche office with minimal overhead expenses where she was able to switch to a 90/10 commission split. She now had two locations that were generating significant income for her, and because of her ambition and hard work, Judy was recognized with the Rising Star Award in 2016. THE CHALLENGE Within three years of her move to the Midwest, her business was grossing $150K in revenue annually, and she was paying 32% of her income in state, federal income and wage taxes. On top of her growing tax bill, her fiancé’s school loans were rapidly increasing and there was growing concern over how long it would take to pay back the loans when the government was taking such a large piece of her commissions. Was there anything they could do to increase their cash flow and start paying down his school loans? In the middle of our dialogue over how Monotelo helps Realtors® reduce their tax liability, Judy and her fiancé got married and decided to move back to the Northwest as soon as he finished school. Her new husband had a nice position lined up in the medical field, and Judy was planning to pick up her Northwest-based real estate business where she left off. With the addition of her husband’s new salary, the likelihood of being pushed into a higher tax bracket was high. Combining the high federal income tax bracket with the self-employment tax and state income tax, they were going to be paying close to 50% of every marginal dollar to the federal government as her business income grew. Save as PDF THE SOLUTION Judy and her husband struggled with the decision to implement our strategy, because of the added complexity of their move back home. After considerable thought, they decided to move forward and implement our recommendations in the fall of 2016. The Monotelo team made sure Judy’s real estate business was properly structured to apply the tax code in the most efficient way possible. By changing the way Judy received income and structuring her new business to take advantage of provisions in the revenue code, Monotelo reduced her tax liability by $8,000. The increased cash flow had a significant impact on their ability to start paying down her husband’s outstanding student loans. What a relief! More White Papers WLW: Win One, Lose One, Win One CWS: Could-A-Would-A-Should-A JSZ: Junior Sam Zell

ECONOMIC RELIEF FROM THE SMALL BUSINESS ADMINISTRATION If your business is struggling, you may be able to get some help from the federal Small Business Administration (SBA), which is authorized to provide loans to small businesses on an as-needed basis. There are two types of relief you can apply for: Economic Injury Disaster Loans Traditionally, low-interest SBA Economic Injury Disaster Loans (EIDLs) have been available to small businesses following a disaster declaration; these are authorized by Section 7(a) of the Small Business Act. EIDLs are commonly granted on a local level following a natural disaster (such as a hurricane or a tornado). But right now they are authorized for small businesses in all U.S. states and territories due to the COVID-19 pandemic. Currently, each disaster loan provides up to $2 million to pay fixed debts, payroll, accounts payable, and other bills. The interest rate is fixed at 3.75 percent for small businesses and 2.75 percent for non-profits. EIDLs can be repaid over a period of up to 30 years. Additionally, due to COVID-19, the SBA is providing advances of up to $10,000 on EIDLs for businesses experiencing a temporary loss of revenue. Funds are available within three days after applying, and the loan advance does not have to be repaid. Small business owners can apply for an EIDL and advance here: https://covid19relief.sba.gov/#/ . New Paycheck Protection Program The Paycheck Protection Program (PPP) is an expansion of the existing 7(a) loan program, authorized by the recently passed Coronavirus Aid, Relief, and Economic Security Act (CARES Act). Who’s Eligible? Employees. According to the SBA, you are eligible if your business was in operation as of February 15, 2020, and you had employees for whom you paid salaries. (The CARES Act includes as eligible payroll your payments to 1099 independent contractors, but the SBA guidance says no—you can’t include the 1099 payments. And since this is an SBA loan, the SBA guidance likely rules for now.) No employees. You qualify the PPF loan even if the only worker is you. Thus, both the sole proprietor with no employees and the single-member LLC with no employees qualify. Small businesses that employ 500 or fewer employees are eligible for PPP relief. In this small business category, you find S and C corporations, sole proprietors, partnerships, certain non-profits, veterans’ organizations, and tribal businesses. How Much Aid Is Available? Small businesses can borrow 250 percent of their average monthly payroll expenses during the one-year period before the loan is taken, up to $10 million. For example, if your monthly payroll average is $10,000, you can borrow $25,000 ($10,000 x 250 percent). At $1 million, you can borrow $2.5 million. The law defines “payroll costs” very broadly as Employee salaries, wages, commissions, or “similar compensation,” up to a per-worker ceiling of $100,000 per year; Cash tips or the equivalent; Payment for vacations and parental, family, medical, or sick leave; Allowance for dismissal or separation; Payment for group health benefits, including insurance premiums; Payment of any retirement benefit; or State or local tax assessed on employee compensation. What’s specifically not included in payroll costs: Annual compensation over $100,000 to any individual employee Compensation for employees who live outside the U.S. Sick leave or family leave wages for which a credit is already provided by the Families First Coronavirus Response Act (P.L. 116-127) How Much of the Loan Is Forgiven? Principal amounts used for payroll, mortgage interest, rent, and utility payments during an eight-week period (starting with the loan origination date) between February 15, 2020, and June 30, 2020, will be forgiven. If the full principal is forgiven, you are not liable for the interest accrued over that eight-week period—and, as an added bonus, the canceled amounts are not considered taxable income. Warning: Payroll Cuts Affect Loan Forgiveness Because the whole point of the PPP is to help keep workers employed at their current level of pay, the loan forgiveness amount decreases if you lay folks off or reduce their wages. 1. If you keep all your workers at their current rates of pay, you are eligible for 100 percent loan forgiveness. 2. If you reduce your workforce, your loan forgiveness will be reduced by the percentage decrease in employees. Example: Last year, you had 10 workers. This year, you have eight. Your loan forgiveness will be reduced by 20 percent. You are allowed to compare your average number of full-time equivalent employees employed during the covered period (February 15, 2020, to June 30, 2020) to the number employed during your choice of 1. February 15, 2019, to June 30, 2019, or 2. January 1, 2020, to February 29, 2020. 3. If you reduce by more than 25 percent (as compared to the most recent full quarter before the covered period) the pay of a worker making less than $100,000 annually, your loan forgiveness decreases by the amount in excess of 25 percent. Example: Last quarter, Jim was earning $75,000 on an annual basis. You still have Jim on the payroll but have reduced his salary to $54,750 annually. Jim’s pay has decreased by 27 percent, so the amount of your PPP loan forgiven is reduced by the excess 2 percent. The good news: If you have already laid workers off or made pay cuts, it’s not too late to set things right. If you hire back laid-off workers by June 30, 2020, or rescind pay cuts by that date, you remain eligible for full loan forgiveness. When Are Payments Due? Any non-forgiven amounts are subject to the terms negotiated by you and the lender, but the maximum terms of the loan are capped at 10 years and 4 percent interest. Also, payments are deferred for at least six months and up to one year from the loan origination date. What If You Already Applied for an EIDL for Coronavirus-Related Reasons? No problem—if you took out an EIDL on or after January 30, 2020, you can refinance the EIDL into the PPP for loan forgiveness purposes, but you can’t double-dip and use the loans for the same purposes. Any remaining EIDL funds used for reasons other than the stated reasons above are a regular (albeit low-interest) loan that needs to be repaid. How to Apply for a PPP Unlike EIDLs, which run directly through the SBA, PPP loans go through approved third-party lenders. Talk to your bank or your local SBA office (given the current demands on the SBA, your bank may be a better place to start). There’s no fee to apply, and your burden for demonstrating need is low. In addition to the appropriate documentation regarding your finances, you need only make a good-faith showing that the loan is necessary to support your ongoing business operations in the current economic climate; the funds will be used to retain workers and maintain payroll or make mortgage payments, lease payments, and utility payments; and you do not have a duplicate loan already pending or completed. If You’re Going to Apply, Do It Now The law allocates $349 billion for PPP relief—a huge amount, but one that will presumably be in very high demand given the devastating effects of the COVID-19 pandemic. There’s no guarantee that more funding will be forthcoming, so act now to claim your share if you are eligible. It may be a while before the processes to grant these loans are actually up and running, but get things rolling at your end ASAP. If you are in dire straits right now, you may also want to go ahead and apply for an EIDL loan and advance, as the process is already in place to apply.

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