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.

TAX ISSUES LIBRARY TAX CREDITS AND DEDUCTIONS FOR COLLEGE TUITION An overview of the tax credits and deductions available to you for qualified college expenses. Download TAX IMPLICATIONS OF TRANSFERRING A VEHICLE TO YOUR BUSINESS What you should know about deducting vehicle expenses for a personal vehicle vs. a vehicle owned by your corporation Download I’m Ginger Add your content or connect to a database. Adopt 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

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 feelings of excitement and camaraderie firefighters get when you finish a good call. We understand the lifelong commitment you have made to staying physically fit and mentally sharp for anything that comes your way. Our monthly publication shares tips and strategies to reduce your federal and state tax liabilities. Tax Tips and Strategies Use our tax season checklist to make sure you have everything needed to file an accurate return while maximizing your potential deductions. Learn More Tax Season Checklist Get Started with Monotelo Start your free review of your past three years of tax returns Testimonials Hear what our public servants have to say about their Monotelo experience.

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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.

WHITE PAPER INTRODUCTION COULDA-WOULDA-SHOULDA!!! This case was more of a “could have, would have, should have” than it was an opportunity to go back and correct the mistakes of the past. We are choosing to share this case because we think it demonstrates why it’s so important to pursue wise counsel when making big financial decisions. The case involved a high-earning couple. He was a highly paid executive and she was a high-producing realtor. They were planning to make some improvements to their home while also investing in a few income properties. THE CHALLENGE Having a high percentage of their nest egg wrapped up in their retirement accounts, they decided to pull $200,000 out of one of their IRA’s to fund their purchases. When this couple decided to pull the money out of their IRA, they were fully aware of the 10%, $20,000 penalty they would have to pay on the early withdrawal. Given the size of their retirement accounts, it seemed harmless at the time. They, however, had no idea how this decision would come back to haunt them. In creating another $200,000 of taxable income for that year, they not only incurred the $20,000 early withdrawal penalty, they also • Moved themselves into the highest tax bracket (39.6%) • Lost all their exemptions (which cost them over $5,000) • Lost a significant portion of their itemized deductions (which cost them $2,000) When all was said and done, they paid about $95,000 in federal income tax and penalties on their early withdrawal, and netted about $105,000 of the $200,000 they withdrew. THE SOLUTION If this family had sought our advice at the time, we would have recommended that they avoid the $95,000 tax bill by simply choosing to take out a small home equity line of credit. In doing so, they would have retained the full $200,000 in their retirement account and paid no additional taxes. Had this family not been able to borrow against their home we would have encouraged them to do two things: Split the IRA distribution over two years: Not make the $40,000 contributions that they were making to their 401K and IRAs, and use the additional cash flow to reduce the amount needed from the retirement account. This course of action would have enabled them to use their itemized deductions and more of their personal exemptions. They would have put themselves into a lower tax bracket, reduced their tax liability by around $20,000 over the two years, and had another $10,000 in their retirement accounts when all was said and done. Not all decisions lead to this kind of negative outcome, but in this case, the lack of wise counsel caused this family to go down a road that was less than optimal. Having the right advisory team in place would have saved them over $30,000. Coulda-woulda-shoulda! Save as PDF More White Papers WLW: Win One, Lose One, Win One JSZ: Junior Sam Zell SOO: Starting Over, And Over

SMALL BUSINESS TIPS PANDEMIC PROVISION FOR TAX-FREE PAYMENTS TO YOUR EMPLOYEES During a federally declared disaster, such as the COVID-19 pandemic, the tax code allows you to make payments to your employees that are deductible by you, the employer, but not taxable to your employees. If your business is an S-Corporation then you qualify as an employee of the business eligible for these tax-free payments . This provision provides a great limited-time opportunity to pull money out of your business tax-free! These tax-free payments are a provision of Section 139 of the Internal Revenue Code which was passed following the September 11th terrorist attacks. How Does it Work? Normally, payments of cash to your employees are considered taxable income to them by the IRS unless it is to reimburse them for qualified business expenses. Under this provision for disaster relief payments you can reimburse your employees for personal expenses that are incurred because of the disaster as long as they are reasonable and necessary. For the COVID-19 pandemic this can include: Out-of-pocket medical costs not covered by health insurance Expenses for working from home such as a computer, office equipment, supplies & utilities Funeral costs for an employee or an employee’s family member Childcare costs so that your employees can continue to work while children are home from school These are the most common costs that could be reimbursed, but others may qualify for the same tax-free reimbursement if they are reasonable and incurred because of the pandemic. What Does not Qualify? You cannot use this provision as a substitute for your employee’s wages to provide them with tax-free income. In other words, do not reduce an employee’s wages by $1,000 and then reimburse them for a $1,000 medical expense. You can also not reimburse employees for lost wages, or as a form of unemployment compensation. What Should You Do? To take advantage of these tax-free disaster relief payments to your employees we recommend that you put together a written plan for payments that identifies: Starting and ending dates of the program A listing of the expenses you will pay or reimburse The maximum payment per employee A procedure for your employees to request reimbursement We would advise using a form similar to an employee expense report for your employees to request their disaster relief payments. To make things a bit easier, the IRS does not require that your employees provide documentation to support the expenses claimed as long as the amounts are reasonable. Summary With COVID-19 declared a federal disaster, you can take advantage of the disaster relief payment provision of the Internal Revenue Code to provide tax-free payments to your employees to cover their personal expenses that were incurred because of the pandemic. If your business is structured as an S-Corporation you as the owner are considered an employee and can reimburse your personal expenses with tax-free payments from the business. If you would like help determining what expenses are eligible for disaster relief payments or would like guidance on implementing this program for your employees please reach out to us.

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With the House and the Senate both passing their own version of tax reform, there is a high chance that next year's tax rates will be lower for most taxpayers. YEAR-END TAX PLANNING STRATEGIES With the House and the Senate both passing their own versions of tax reform, there is a reasonably high probability that the United States will see a dramatic shift in tax policy in 2018. While no one knows what will be included in the final bill, there is an equally high probability that next year's tax rates will be marginally lower for most tax payers. With that thought in mind, we break down our year-end tax planning strategies into three main categories: Acceleration of deductions into 2017 Shifting of income to 2018 Best Practices ACCELERATION OF DEDUCTIONS Accelerating your deductions in 2017 could make sense for two reasons: Tax brackets may be lower in 2018 than in 2017 (hence the deductions could become more valuable in 2017 than in 2018) Itemized deductions may get phased out in 2018 Four ways to accelerate your deductions in 2017: If you are not at risk of paying the AMT (the alternative minimum tax), consider paying your 2018 property tax bill in 2017. Consider moving up medical procedures into 2017 that have significant out-of-pocket expenses. If you are planning to make significant contributions to your church or a 501c(3) organization, consider making the gift in 2017 rather than 2018. If you are a small business owner, consider making your 2018 purchases this year. This could include new and used personal property such as equipment, computers, desks, chairs, etc. Just be sure that these items are purchased and put in service by the end of the year. 1 Don't forget to review your portfolio gains and losses for tax-harvesting opportunities. SHIFTING INCOME TO 2018 IF YOU HAVE THE ABILITY TO MOVE INCOME TO 2018, THIS COULD BE A GOOD YEAR TO DO IT! If you are self-employed, one simple way to do this is to wait to bill your customers until after January 1st. Small business owners on a cash-basis can also prepay and deduct qualifying expenses up to 12 months in advance. This could include: Lease payments on business vehicles Rent payments on a commercial property lease Insurance premiums If you are not self-employed, you can do the same thing if you have the ability to move a year-end bonus into January. 401K contributions - if you do not max out your 401K each year, consider making both 2017 and 2018 retirement contributions in 2017. While this may create a challenging cash-flow situation, it may be worth the effort as the deferral could become more valuable in 2017. Distributions from retirement plans - 2017 could be the year to take the minimum required distribution from your IRA. Consider waiting to 2018 to take additional distributions. Roth conversion: 2017 could end up being a bad year to do Roth conversions. Consider re-characterizing your Roth conversion if the underlying assets performed poorly or wait until 2018 to do the conversion. Save as PDF Read more articles Share BEST PRACTICES Make sure you are contributing to your company 401k if your employer matches your contribution If you are not self-employed, make sure you are using the right plans for additional savings, whether an IRA, a Roth IRA, a non-deductible, or some other deferral option, such as annuities, cash-value life insurance and tax-efficient investments If you are self-employed, make sure you are maximizing your retirement savings opportunities using the optimal plan design; and don't overlook the opportunities to defer up to $100,000 in a Defined Benefit/401(k) combo Be methodical about gifting, and find tax-efficient methods of helping family members. This can include: Charitable gifting: Outright gifts to charities Gifts to family: Annual exclusion usage, outright gifts, gifts to a trust for the benefit of a family member. Educational savings: Tax-efficient vehicles include 529 plans Coverdell savings accounts and education IRAs. 3 2 There is little risk to implementing these tax maneuvers, and there is additional upside to you, the tax payer if there are changes to the tax code. Failing to tax plan in 2017 could cost you significant money - so don't wait to set your plan in motion! If you have additional questions or need some planning help, please reach out to us at 800-961-0298

Making a difference with meaningful and actionable financial solutions that positively impact our clients' lives. Get Started SMALL BUSINESS OWNERS If you are a small-business owner, there is a high probability that you are paying more tax than what is required. The key to lowering your tax bill is not in finding a competent CPA to file your tax returns, it's in finding an expert with a disciplined process to help you plan your future. LEARN MORE Financial Planning If you are a small-business owner, there is a high probability that you are paying more tax than what is required. The key to lowering your tax bill is not in finding a competent CPA to file your tax returns, it's in finding an expert with a disciplined process to help you plan your future. LEARN MORE Tax Expertise Click here to access the tools and articles designed to help you manage your taxes and your finances while giving you confidence to take the steps needed to prepare for a future filled with peace, hope, and financial security LEARN MORE CONTACT US Submit