President Trump is promoting his tax reform as a tax break for the middle class. We conducted an analysis to see how this reform would impact our clients. HOW COULD THE PROPOSED TAX REFORM AFFECT YOU? President Trump announced his proposal for tax reform last month. Similar to the changes he was proposing last year while on the campaign trail, this plan is being promoted as a tax break for the middle class. Hoping this might be true, we ran some analysis to see how the proposed changes would affect you, our clients. A typical Monotelo client is a married couple with one child making $115,000 per year. Experts differ on how much you have to earn to fall into this camp, but a wider definition would simply exclude the poorest 20% and the wealthiest 20% of earners. If you accept the definition of the middle class as the "middle 60%," that would describe families making between $50,000 and $140,000 per year. So we feel that our typical client fits pretty well into the middle class. Our analysis showed that the proposed changes would negatively impact 80% of our clients by causing a significant tax increase to our families. The average increase would be an additional $2,300 in federal income taxes paid to the government. It should also be noted that we had to make a few assumptions to conduct the analysis, as various aspects of the plan have yet to be finalized. CHANGES AFFECTING OUR CLIENTS So why is a proposal that is intended to lower taxes for the middle class actually raising them for our small cohort of taxpayers? We have highlighted a few of the proposed changes below: ITEMIZED DEDUCTIONS AND THE STANDARD DEDUCTION One of the biggest promises of this plan is the nearly doubling of the standard deduction to $12,000 for single filers and $24,000 for married filers. While this means a bigger deduction for those who claim the standard deduction, the plan would hinder those who choose to itemize their deductions by eliminating the lions' share of these tax breaks, including deductions for state and local taxes, real estate taxes, and job-related expenses. This means that a majority of our clients will now no longer be able to itemize and will instead need to rely on the standard deduction. EXEMPTIONS AND THE CHILD TAX CREDIT The current tax code provides an additional deduction of $4,050 for the filer, spouse, and each dependent listed on the return. This "Personal Exemption" deduction would be eliminated altogether under the proposed reform. To help mitigate the loss of this deduction, the proposal would increase the child tax credit from its current maximum of $1000 per child. Although the exact amount of the increase has yet to be announced, most estimates predict an increase of $500. While this would lessen the blow of the lost exemptions, it would not fully offset the tax increase for most individuals. TAX BRACKETS Currently there are 7 tax brackets, with 10% being the lowest and 39.6% being the highest. Under the proposed model the brackets would be simplified to 12%, 25% and 35%. While the income ranges for these new brackets have not been specified, it is likely that the 12% bracket would replace the current 10% and 15% brackets, with the 25% bracket being extended to a higher income range. These simplified brackets are unlikely to make a material difference for anyone currently at or below the 25% bracket. The largest difference for individuals in this range will be the changes to itemized deductions and personal exemptions. IT REMAINS TO BE SEEN what aspects of this plan will actually become law, but in the meantime you should be aware of the possible ramifications if it goes through in its current form. If the plan gets passed as it is currently proposed, we expect four cohorts of taxpayers to be negatively impacted: Families with two or more children who own their home Taxpayers who have a significant mortgage payment Taxpayers in high income tax states like New York and California Generous taxpayers who give a meaningful portion of their income to charity If you are in this category, then tax planning may be a necessary component of your future plans..... 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.

Monotelo Advisors Inc FinCEN Beneficial Ownership Engagement Letter Heading 1 Thank you for choosing Monotelo to assist you with the preparation and filing of your FINCEN Beneficial Ownership Information (BOI) report. This engagement letter outlines the scope of our services, your responsibilities, and our commitment to providing you with accurate and timely compliance solutions. By agreeing to this letter, you authorize Monotelo to gather, prepare, and submit the required information on your behalf to ensure compliance with FINCEN regulations. As part of this process, please ensure that you upload a valid driver's license for each shareholder and manager. This step is essential for verifying their identities and completing the report. Additionally, all fields marked with a red asterisk (*) are required and must be completed to proceed. Once all necessary documents are uploaded and required fields are filled out, a blue "FINISH" button will appear, indicating that you are ready to submit the report. We look forward to working with you and ensuring that your reporting obligations are met with precision and professionalism.

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. Focus on growing your business, we'll handle the rest. Any competent firm can help you file an accurate tax return, prepare your payroll or manage your monthly bookkeeping needs. And yes, we do that for our clients. But there is so much more to having the right financial partner. At Monotelo, we bring together our deep understanding of the Internal Revenue Code and how that intersects with you as business owner to arrange your affairs to mitigate short-term and lifetime tax liabilities to help you reach your long-term goals. Get started Learn More What we offer Entity Structuring C-Corp? S-Corp? LLC? Or Sole Proprietorship? Monotelo will meet with you to get an understanding of your unique financial situation, your short and long-term business goals, and the implications of your business income on your personal tax return. Then we will guide you to the right solution and walk with you step-by-step to secure the optimal corporate structure for your business. Learn more Get started All In One Business Owner Package You are more than just a business owner. Y our business is just one component of your personal financial picture. And that's why a comprehensive understanding of your personal balance sheet and your other income sources is so essential to helping your achieve your long-term goals, so there's no disconnect between you, your business, and where you want to go in life. Learn more Get started Small Business Service Bundles Monotelo will meet with you to understand your unique needs as a business owner, and suggest a level of service that best fits your growing business and your long-term goals. From there we will guide you through the process to get started, and take away the distractions that keep you from growing your business and building your best life possible. Learn more Get started How Monotelo can help your business. Heading 1 Minimize your tax liability Easy year-end tax filing Monotelo makes year-end tax filing easy. By asking the right questions and ensuring your taxes are filed on time, Monotelo will give you the confidence that things are getting done right. Grow your net bottom line Monotelo will help you structure your business so that you minimize your taxable income, and reduce your lifetime tax liability by eliminating the tax inefficiencies. Minimize your tax liability Monotelo will bring our expertise to the table to help you maximize your tax credits and tax deductions to minimize your taxable income and maximize what you keep in your pocket. Year-round support If you wait to see your accountant until tax time, there is no way they can strategically help you. Our team is a vailable year-round to come along-side you, to help you plan strategically and to answer any questions that you have . Get started Section 3 Schedule a free consultation. Monotelo Advisors will meet with you to get to know your business needs and understand your unique situation. Select your service. Monotelo will prepare a proposal and help you determine the service package that is best for your business. Sign the engagement letter. Yes. It's that simple. Get back to business. We will handle the finances, so you can focus on growing your business. How the process works Get started Helpful small business articles. Turning Your Residence into a Legitimate Tax Strategy For self-employed professionals and business owners, making the most of available tax strategies can significantly impact your bottom... Are Hidden Human Resource Risks Costing Your Business? Here’s How Assessing Your People Practices Can Protect Your Bottom Line Debbie Rabishaw is a consultant who works with small and medium-sized businesses ranging from 2 to 200 employees. She has seen firsthand... Critical Deadlines and Tax Changes for Small Business Owners As the 2024 tax season approaches, small business owners must stay ahead of critical deadlines and be aware of key tax changes to ensure... View More Retirement Planning. Our Values-Based planning will build the road map so you can have confidence that all the pieces of the puzzle are working together for you to live your best life possible. Learn more Year-End T ax Filing Services. We will help you minimize your taxable income by capturing all the deductions and credits available to maximize your refund. Learn more More services from Monotelo Checkout our book written for small business owners!

We are living in interesting times. While it is important to review the retirement and tax planning aspects of your situation on a regular basis, it is equally imperative to review the risk side of your balance sheet as well. In times like today, unaddressed risks can result in a negative impact on an otherwise healthy financial plan. That is why we created our Crisis Checklis t, designed to help families navigate a rapidly changing world. We realize some of the topics are somewhat personal, but our role as advisors is to make sure you have the proper plans in place, both in good times and in times of crisis. More than just identifying potential risks, this checklist will help you create a roadmap of areas exposed to risks that may need to be addressed. We do not want you, your family, or your financial future to be exposed to unexpected risk due to the uncertainty caused by the COVID pandemic. If you would like us to help you assess and mitigate your financial risks please complete the checklist and then schedule a complimentary 20-minute strategy call with us. We look forward to speaking with you soon, Read more articles FINANCIAL PLANNING CHECKLIST 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.

The Incredibles Tax Efficient Retirement Planning Year-End Tax Planning Tips

One step away to save on your taxes. Schedule a quick 10-minute, no-obligation consultation. AVOID THE HEADACHES and Penalties Associated with 1099 Reporting When a small business hires an employee, there are a number of expenses that are incurred in addition to the hourly wage. This could include the employer-provided benefits, office space, along with the technology and other tools required to do the job. The employer will also have to make required payments and contributions on behalf of employees, including: The employer's share of the employee's Social Security and Medicare taxes, which totals 7.65% of the employee's compensation State unemployment compensation Workers' compensation insurance Depending upon the industry, the additional contributions could increase your payroll costs by 20% to 30% - or more. You can avoid these expenses by hiring an independent contractor to do the same work. The additional contributions could increase your payroll costs by 20% to 30% - or more. However, there are certain requirements that must be followed in order to avoid the headaches and penalties associated with 1099 reporting. WHAT AND WHEN DO I HAVE TO FILE? Businesses are required to report all income to the IRS for its employees and any independent contractors. For employees, a W-2 is required to be filed. Independent contractors on the other hand, get a little more complex. To make matters worse, congress recently passed the Path Act, and moved up the filing deadline for W-2's and certain 1099's. The required date to provide W-2's and 1099's to employees and independent contractors is January 31. The deadline for submitting these forms to the government is also January 31. THREE STRATEGIES TO AVOID 1099 HEADACHES The easiest way to avoid the penalties, and filing headaches caused by issuing 1099's to independent contractors is to structure your business activities to minimize the number you must issue, and prepare them in advance, if you do have to issue them. STRATEGY #1: Choose contractors that operate as corporations. Your business is not required to issue 1099's for payments made to corporations, S corporations, or LLC's that elect corporate status for tax purposes (unless the corporation collects attorney fees or payments for health and medical services). STRATEGY #2: Make payments to independent contractors with a credit card, or a third-party payment network like PayPal. Shift the burden of reporting this income to the credit card company or the third-party network. They are required to report the payments on Form 1099-K. STRATEGY #3: Require the independent contractor to provide you with a W-9 upfront before making any payments to them. Here are the benefits: You will know if a 1099 filing is required, because their business type is disclosed on the W-9. You will know whether an LLC is classified as a corporation for federal tax purposes, and excluded from 1099 reporting. By getting the W-9 upfront, it eliminates the need to chase the contractor down for the required information if you need to file a 1099. Once the contractor is paid, your leverage for getting the information is gone. If an independent contractor refuses to provide you with a taxpayer identification number (TIN), and you pay the contractor more than $600 during the calendar year, then you are required to withhold federal income tax on payments made to that contractor. If you do not withhold, your business owes the tax, and it is on you to prove the contractor paid the tax. Save as PDF

At Monotelo, we use our unique knowledge of the job-related expenses of our public-servant clients to reduce what they are paying in taxes. Learn More Getting started with Monotelo Advisors As a firefighter, we know that there are unique deductions available to you that most accountants and tax software fail to capture. That is why we start all of our firefighter clients with a no-cost, no-obligation review of their last three tax returns. We have found that we can typically recover $800-$1,500 per year. To get started with your tax review you can upload your 2015, 2016, and 2017 tax returns using the link below. Upload Your 2015-2017 Tax Returns

By failing to plan ahead, you will find that most of your medical expenses are worthless on your tax return. With a little planning, you can prevent this. If you fail to plan ahead, you will struggle to claim your medical expenses as an itemized deduction when April 15th arrives. You will lose the ability to deduct the bulk of these expenses because they need to surpass 10% of your Adjusted Gross Income (AGI) to be usable as an itemized deduction . This means that taxpayers who make $100,000 during the year will not be able to deduct the first $10,000 in medical expenses. That handicap essentially means you will not be able to deduct any medical expenses, unless you incur heavy medical bills in a single year. And if you are paying AMT (the Alternative Minimum Tax) - don't even think about it. When it comes time to pay your income tax bill, most Americans want to pay the lowest amount possible. One of the ways taxpayers seek to do this is by increasing the number of deductions they take on their tax return each year. So it's not surprising that one of the common questions we receive from our clients is whether or not they can deduct their medical expenses. While the simple answer is "yes," the reality for most taxpayers is "no." However, with a little planning, that answer can be "yes." If you fail to plan ahead, you will struggle to claim your medical expenses as an itemized deduction when April 15th arrives. You will lose the ability to deduct the bulk of these expenses because they need to surpass 10% of your Adjusted Gross Income (AGI) to be usable as an itemized deduction . This means that taxpayers who make $100,000 during the year will not be able to deduct the first $10,000 in medical expenses. That handicap essentially means you will not be able to deduct any medical expenses, unless you incur heavy medical bills in a single year. And if you are paying AMT (the Alternative Minimum Tax) - don't even think about it. The best way to counteract this nasty little piece of the tax code is to set up an HSA (Health Savings Account) and contribute to it each year. When you contribute to an HSA you get the privilege of deducting the amount of your contributions from your income and you bypass the 10% threshold. You can do this even if you don't choose to itemize your deductions! And as an added bonus (do we sound like an infomercial?) - the money you put into your HSA, as well as the earnings of the account, can be taken out tax free as long as they are used for qualified medical expenses. While you cannot pay your health insurance premiums with funds from an HSA, you can pay most other medical expenses. Additionally, once you turn 65 you can use the HSA to pay your Medicare or other healthcare premiums. Requirements for an HSA In order to qualify for an HSA you must have a high-deductible health plan - defined as a healthcare plan with: 1 An annual deductible of at least $1,350 for individual coverage or at least $2,700 for family coverage. 2 Maximum annual out-of-pocket expenses of $6,750 for individual coverage and $13,500 for family coverage. Once you have your HSA set up you can contribute up to $3,500 per year for individual coverage and $7,000 for family coverage. If you are over the age of 55 you can contribute an additional $1,000 annually. 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. Avoiding the 10% Threshold for Medical Expenses How do you setup an HSA? If your employer offers a high-deductible health plan, they should also give you the ability to contribute to an HSA. You can also open an account on your own through a qualified HSA provider, such as a bank or insurance company (go to www.hsasearch.com for a list of qualified HSA providers). What happens if you don't plan ahead? So what is the solution? Key Takeaways If you don't plan ahead and contribute to a Health Savings Account then you will find that most, if not all, of your medical expenses will be ineligible for a deduction due to the 10% threshold that must be met before deducting medical expenses. By setting up and contributing to a Health Savings Account you can deduct your full contribution to the account and have the flexibility to pay your medical bills with tax-free withdrawals from the account.

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Mahlon Mitchell shares his experience working with Monotelo Advisors

Social unrest, unemployment, COVID 19, the election… there are a multitude of items we could address in our October update. While there are a multitude of things we could address, I want to focus today’s discussion on the bond market. The reason why I want to focus on bonds is because bonds play a critical role in running a balanced portfolio. The inverse relationship that stocks and bonds have experienced in the past has allowed investors to structure portfolios with higher levels of stability. That’s because bonds have historically acted as a shock absorber. When stocks were down, bonds were usually up and when stocks were up, bonds were oftentimes down. However, the “shock absorber” role that bonds have played to offset stock market risk can no longer be relied upon, so this requires a major shift in our thinking. Executive Summary With stock market valuations near all-time highs, the risk of a stock market correction is heightened. The fixed income side of a balanced portfolio (the bonds) will no longer provide protection against a correction in the equity markets. Declining rates have removed most of the income from bond portfolios and have added significant risks if rates were to rise. Bonds (and “balanced portfolios” that hold bonds) may face significant headwinds in the future. Finding solutions to this real problem is key to achieving your long-term goals. What’s Changed? As global interest rates have declined over the past 12 months, the search for income has become incredibly challenging. We believe that one of the biggest sources of protection to the traditional 60/40 portfolio (60% stocks, 40% bonds), has now become a risk. A 40% allocation to a mixture of Treasury bonds and high-quality corporate bonds has historically served investors well. That’s because bonds were effective at creating income, providing a diversified source of return and providing capital preservation in times of uncertainty. But we believe core fixed income is not equipped to meet these goals going forward. After four decades of declining interest rates and the massive fiscal and monetary response to the health crisis, rates are hovering near zero throughout the world. Not only do low rates rob investors of needed income, the historic assumption that bonds will provide a form of protection is no longer valid. Income If you search for income in today’s bond market, prepare for a long, unfruitful journey. Domestic and global bond indices yield between .6% and 1.2% across the globe. Where exactly is the income in core fixed income? Rates have steadily declined for the past few decades, but have significantly declined over the past 12 months — and there is little room left for rates to fall much further Rates have been falling for nearly four decades, but the collapse in interest rates over the last 12 months have left little room for rates to fall much further. The end result is that bond prices have a limited capacity to rise. Not only is there little room for bond prices to rise, there is tremendous room for bond prices to fall, especially if interest rates rise in the future. In the interest of full disclosure, rising interest rates in the near term is not a major concern of ours. We are simply stating that there is significant downside risk with little upside reward. This can be observed by the chart below. If rates rise, all the return that was recently captured by the bond market from price appreciation (the black area), is likely to be given back by price depreciation. Interest rates can do three things in the future. They can go up. They can go down. Or they can stay the same. If rates stay the same, we collect a paltry 1% yield on our bond portfolio and our bond prices remain stable. If interest rates go down, we collect the 1% yield with a small amount of price appreciation (because rates cannot fall very far from 1% unless they go negative). And if they go up, we collect our 1% yield, but we are subject to significant risk of price declines. Not a whole lot of upside, but quite a bit of downside risk! Unlike stocks, which theoretically have unlimited upside potential, bond returns are capped by the amount of interest income they produce over the life of the investment. For example: If you bought a 10-year treasury with a 5% yield back in 2000, your bond would produce 50% income over the 10-year life of the bond (10 years of coupon payments * 5% yield = 50%). If rates were to go to zero, your bond would go from a price of par (100) to 150. It could not go above the 150 unless rates went below zero. If you bought a 10-year treasury bond in today’s world at a 1% yield, and interest rates dropped to zero tomorrow, your 10-year treasury would now be worth 110 (1% yield for 10 years in a 0% interest rate environment = 10 points of price appreciation). Your bond could not go above 110 unless interest rates dropped below zero. If instead of rates falling, rates began rising, that price change we just described would turn into price depreciation. And bond prices have way more room to move down rather than up when you are beginning at a 1% yield. That is why bonds have higher levels of risk today than ever before. But it’s not just bonds that have increased sensitivity to interest rates. The performance of the tech and consumer discretionary sectors have also benefitted from our low-rate environment. These sectors now make up a much larger portion of the overall market, and that means that equity portfolios may also be sensitive to rising interest rates. Diversification Bonds have been a pretty effective hedging tool against past stock market corrections. When equity markets experienced signs of turmoil, central banks generally stepped in to lower rates, and bond prices responded positively to the new, lower interest rates. We believe that this relationship can no longer be relied upon, because there’s very little room to lower rates further. That means one of the most-valuable diversification benefits of holding bonds is severely diminished. Inflation It’s very difficult to accurately predict future inflation, but we can say this: if inflation were to resurface, bonds will not do well. The paltry income will not offset the purchasing power risk, and bond prices will decline when interest rates rise. In Summary With interest rates near zero, the upside of holding bonds is low, and the downside of holding bonds is high. The one reason to hold high-quality bonds in today’s environment is that they will be one of the few assets to hold their value if we see another significant equity market correction. In times of uncertainty, high-quality bonds will always be the preferred asset. While that is a very good reason to hold bonds, the other risks of holding a traditional bond portfolio have become too great to ignore. Not only has income diminished significantly from a traditional bond portfolio, bonds may no longer provide the needed buffer during times of economic turmoil and they face greater downside risk in scenarios when interest rates rise. If core fixed income is no longer able to serve the role it has played in the past, investors will need to use different approaches to accomplish their goals. If you would like to explore options that can help reduce the risks we mentioned here, register for our November webinar or schedule a no-obligation 20-minute strategy call and we can provide more insight into potential solutions. Read more articles THE HIGH RISK OF OWNING BONDS TODAY 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.