With only a few weeks left in 2019, now is a great time to review your personal situation and consider any year-end adjustments to minimize your short and long-term tax liability. We have identified six year-end planning strategies you can use to minimize your tax burden. Maximize Your Retirement Account Contributions If you have a 401(k), 403(b) or 457 retirement account you can contribute up to $19,000 ($25,000 if you are over the age of 50) for 2019. Contributions to any of these plans must be made before January 1st to apply to 2019. You can also contribute up to $6000 ($7000 if you are over the age of 50) to a traditional or Roth IRA for 2019 depending on your income. Contributions to traditional or Roth IRAs can be made up until April 15th of next year and still be applied to your 2019 contributions. If you qualify for a Health Savings Account you should max out your contributions to the HSA before making further contributions to your other retirement accounts. This is because HSAs allow for a tax deduction for your contributions, tax-free growth of the assets in your account, and tax-free distributions when used for medical expenses. With significant medical expenses almost guaranteed later in life, an HSA combines the best of both traditional and Roth retirement accounts. For more on HSAs read “Six Myths About Health Savings Accounts ” Take Advantage of Tax-Free Capital Gains If your taxable income is below $39,375 ($78,750 if you file a joint return) then your long-term capital gains tax rate is 0%. If your taxable income is below these thresholds and you own stocks or other investments that have appreciated in value you can take advantage of this 0% tax rate to sell your investment without paying any federal income taxes. If the sale of your investment pushes your taxable income above the thresholds for the 0% bracket you will pay 15% on the amounts above the threshold but will not pay taxes on the amount up to the threshold. While capital gains below these income thresholds are tax-free, the proceeds from the sales will still increase your taxable income for the calculation of certain tax credits such as the premium tax credit for health insurance. If you are currently receiving the premium tax credit, selling your investments could reduce the amount of the credit that you qualify for. Set Up a Donor Advised Fund The Tax Cuts and Jobs Act doubled the standard deduction while also limiting or removing various itemized deductions. As a result of these changes a much greater percentage of taxpayers will be taking the standard deduction between now and 2025 when the tax cuts expire. This also means that meaningful charitable donations may have little impact on your tax return. This is because a much larger portion of your charitable deduction is being used to reach the standard deduction threshold before you can realize any tax savings. One way you can work around this new limitation is to set up a donor advised fund. With a donor advised fund you can make a large contribution to the fund in one year and then make donations out of the fund to your charities of choice over the course of several years. With a donor advised fund you get a tax deduction in the year you contribute to the fund, regardless of when the fund distributes money to a charity. For example, if you typically give $5,000 each year to your church you can instead contribute $15,000 now to a donor advised fund and then pay $5,000 out of the fund each year for the next 3 years and then refill the fund at the end of the 3rd year. By bunching your contributions into every 3rd year you can prevent the bulk of your charitable donations from being absorbed by the standard deduction threshold. Consider a Roth Conversion Contributing to a traditional IRA or 401(k) provides tax savings today by pushing the tax liability into your retirement years. This strategy can make sense when you are likely to be in a lower tax bracket in retirement. But with the Tax Cuts and Jobs Act, we are currently in one of the lowest tax environments our country has seen in decades. With that in mind there is no guarantee that you will be in a lower tax bracket at retirement. And with our national debt growing at an accelerating pace you could be in a higher tax bracket when you retire even if your income is lower than it is today. With higher tax rates likely in the future, you may want to consider converting some of your 401(k) or traditional IRA funds into a Roth IRA, paying taxes now in today's low tax environment in order to realize tax-free distributions later in retirement. You can convert your traditional IRA into a Roth IRA even if you are above the income limit to make a normal contribution to a Roth IRA. You will also not be subject to the 10% early withdrawal penalty you would otherwise face when taking early distributions from a traditional IRA. Take out Your Required Minimum Distributions Once you turn 70 ½ you are required to take a minimum amount out of your traditional IRA, 401(k) or other retirement account each year based on your age and the balance of the account. Roth IRAs are the sole exception to RMDs. The IRS provides a worksheet to calculate the amount of your Required Minimum Distributions . Failure to take out the RMDs will result in a 50% tax on the amount that was not taken out. In the year that you turn 70 ½ the deadline to take your RMDs is April 1 of the following year. Each year after that the deadline is December 31 of that year. If you are over the age of 70 ½ you should take the time to review your RMDs and make sure you have taken enough out to avoid these substantial penalties. Use Your RMDs to Make Your Charitable Donations Once you turn 70 ½ you can begin making charitable donations directly out of your traditional IRA. When you make a charitable donation directly from your IRA you will not pay any income taxes on the distribution. This will allow you to fully deduct your charitable donations even if you do not itemize your deductions. You can also use qualified charitable donations to satisfy your required minimum distributions. Summary December is a great time to review your financial situation and determine if there are any year-end adjustments you should make, as there should be very few income surprises between now and year-end. Taking the time to review your situation and applying some of the strategies we just shared could help you significantly reduce your short and long-term tax liabilities. YEAR-END TAX PLANNING STRATEGIES Read more articles Failing to order your affairs to minimize your tax burden could cost you significant money - so don't wait to take action. If you have additional questions or need some planning help, please reach out to us.

Small-Business Provisions of the CARES Act Access Presentation Slides

SMALL BUSINESS TIPS Small Business Tips Deducting 100% of your Business Meals In the past, the tax deduction for business-related meals has generally been limited to 50% of the cost of the meal. However, to help the restaurant industry recover from the Covid-19 pandemic, the relief bill signed into law at the end of last year temporarily increased the business meal deduction to 100% for tax years 2021 and 2022. This means that you can now fully deduct the cost of your business meals provided they meet a few requirements. What Qualifies as a Business Meal? The first step is to make sure your meal qualifies as a business expense. Deductible business meals include: Meals for yourself while out of town on a qualified business trip. Note that you cannot deduct your own meals while working unless you are either out of town on an overnight business trip or meeting with a potential business associate. To substantiate your meal as a qualified business expense you should save the receipt as well as document who you met with or the purpose of your out-of-town trip. Meals shared between you and a person with whom you could reasonably expect to engage in business activity, such as a customer, supplier, employee, partner, or professional advisor. How Do You Qualify for the 100% Deduction? In the past, the tax deduction for business-related meals has generally been limited to 50% of the cost of the meal. However, to help the restaurant industry recover from the Covid-19 pandemic, the relief bill signed into law at the end of last year temporarily increased the business meal deduction to 100% for tax years 2021 and 2022. This means that you can now fully deduct the cost of your business meals provided they meet a few requirements. What Doesn't Qualify for 100% Deduction? Businesses that are not qualified restaurants include any that primarily sell pre-packaged food or beverages not for immediate consumption, including: Grocery Store Specialty Food Store Liquor Store Drug Store Convenience Store News Stand Vending Machine Meals purchased from any of the places mentioned above would still be limited to the 50% deduction. If you choose to use federal per diem rates to deduct your meals during business trips or to reimburse your employees for business meals, you are also limited to the regular 50% deduction. To qualify for the 100% deduction you must use the actual cost of the meals. Read More Articles Summary Business meals have traditionally been a sore spot for business owners due to the limited tax benefits relative to other business expenses. With this temporary increase you can now fully deduct your business meals as long as they are a qualified business expense and are provided by a qualified restaurant.

Quarterly: Oct 17 Profiting From the Failure of Active Managers If you were to Google “Active vs Passive Management” you would see a multitude of articles debating the value of high-fee active managers verses low-fee passive ETF sponsors. Instead of sharing our two cents on the fee debate, we would rather spend our time addressing the failure of the models behind most active managers and how to profit from their mistakes. The reason most active managers fail to outperform their benchmarks is not simply due to their higher fee structure. They fail because they fail to recognize that the markets are random. In their refusal to recognize the “randomness” of the markets, they put their trust in their “expert” ability to predict the future, but the future is not predictable because the markets are random. That is why Tamco spends zero effort attempting to predict which companies will grow earnings next year. Why spend resources in an attempt to predict something that is unpredictable? Rather than basing our stock selection on a model that tries to predict the future, we buy stocks based on their characteristics at the time of purchase. As an example, let’s take the earnings trends of BlueCo and RedCo (below). If these two companies existed today, BlueCo is likely to trade at a high valuation while RedCo is likely to trade at a low valuation. And the difference between these valuations will be driven by the “experts” and their assumptions about the future earnings of these two companies. But academic studies have shown that experts are very bad at predicting the future and historical trends tend to revert back to their mean. This principle is called “Reversion to the Mean.” So the primary focus of our analysis is on the data point of today. What do these companies look like today? What are their current earnings? What are they currently doing with their free cash flow? And how does their valuation compare with other opportunities in the marketplace? Because today’s earnings and today’s capital allocation decisions give us the best insight into what these two companies will look like tomorrow; and the probability of their earnings reverting back to the mean is higher than most would think. This type of analysis not only keeps us from overpaying for BlueCo, it also helps us identify the opportunity with RedCo; because there is a reasonable probability that each of these companies will end up with similar earnings and similar valuations over time. And the valuations are likely to be somewhere between where they are each priced today.

WHITE PAPERS The purpose of our White Papers is to give our prospective clients the opportunity to hear the solutions we have recommended to address complex problems and to help people understand the issues to consider when making complex financial decisions. While the situations are real, the names have been changed to protect the innocent! WLW Win One, Lose One, Win One... This was a fun case for our team. There was complexity due to the types of income this family was generating and the stakes were high because they were in the 39.6% tax bracket in the prior tax year. They were also paying the alternative minimum tax. Read More JSZ Realtor Sam This case had similarities to cases that had come across our desk in the past. However, what was unusual about this case was the ratio of investment property income to commission-based income being generated from home sales. Due to this we were initially not sure if we would be able to reduce his tax burden, but in the end we were able to save him $7,000 per year. Read More CWS Coulda-Woulda-Shoulda This case highlights a situation where a client's failure to consult with us prior to making a large financial decision ended up costing them $30,000 in taxes. Read More SOO Starting Over, And Over Our SOO case deals with a young Realtor client who had to repeatedly start her business over from the beginning as her life took her across the country. Amidst this repeated reset we were able to reduce her tax bill by $8,000 and increase her cash-flow. Read More

REGISTRATION CLOSED FOR AUGUST 18TH Our webinar on August 18th has reached the maximum number of registered attendees. To accommodate additional attendees we have added a second presentation on September 8th at 7:30 pm. REGISTER FOR SEPTEMBER 8TH

Asset Location and Creating Tax-Free Retirement Income

The SECURE Act was signed into law by President Trump in December and went into effect on January 1st of this year. The new law was intended to expand opportunities for individuals to increase their retirement savings, but also brings about some significant changes to retirement and financial planning. Here are the two most important changes along with six notable provisions that you should know about regarding the SECURE Act: 1) Increased Access to Retirement Plans for Small Business Owners and 2) The Elimination of the Stretch IRA. 1. Increased Access To Retirement Plans For Small Business Owners: The SECURE Act expands the ability for small businesses to offer retirement plans because it allows small-businesses to pool resources with other small businesses to offer 401(k) plans at lower costs. This piece of the legislation could help more small businesses take advantage of employer-sponsored plans. This is good policy. If you are a small business owner, we encourage you to reach out to us to see how this may affect your business. 2. Elimination Of The Stretch IRA: One of the biggest changes from the Secure Act comes from the elimination of the “stretch” IRA on inherited retirement accounts. This means that younger beneficiaries can no longer stretch the distributions over their lifetime, but now must distribute the entire account within 10 years of the account owner’s death. This does not apply to spouses who inherit their deceased spouse’s IRA or minor children of a deceased account owner. The elimination of the stretch provision presents significant changes, including the need to review current estate plans to avoid unintended consequences. This change may require you to look at other options for giving retirement accounts to your beneficiaries. Roth Conversions, life insurance and charitable trusts may now look a lot more attractive in light of the new laws. In addition to what we just shared, there are six notable provisions from the new law: 1. Age Limit Removed For IRA Contributions: There is no longer an age cap on contributions to a traditional IRA. Before the SECURE Act, there was an age cap of 70 ½ for contributing to a traditional IRA. Individuals who continue to work can now continue to save for retirement in an IRA, regardless of their age, as long as they have earned income. 2. Required Minimum Distribution (RMD) Age Extended to 72: The SECURE Act delays RMDs from retirement accounts until age 72 (up from 70½). Anyone who is over 70½ must continue taking RMDs. For those under 70 ½. this extension basically means that investors have a longer time horizon to keep their investments tax-deferred in their IRAs… and this has direct implications on how you should be investing your taxable assets to produce income in retirement. 3. Penalty-Free Withdrawals For New Parents: The SECURE Act now allows new parents to pull up to $5,000 from their retirement plans penalty-free, if they do it within a year of the birth of a child or adoption. Income taxes will still apply to any withdrawals from a traditional retirement account, but this provision allows new parents to pull money from their retirement plan to pay for some of those first-year child expenses and not incur any penalties. 4. Student Loan Repayment Through 529 Savings Plans: Individuals can now withdraw up to $10,000 from 529 savings plans to make student loan payments. This is a small step forward in helping Americans manage the growing costs of college education by empowering the 529 plan with one more tool to help students. 5. Retirement Plan Conversion To A Lifetime Annuity: Retirement accounts can now be converted to a lifetime annuity. Essentially, this piece of the legislation gives investors the ability to lay off their longevity risk onto an insurance company who will gladly take on that risk for a healthy annual premium that they collect from investors. This is good in that it gives investors another option, but it also puts them at risk of being taken advantage of by insurance companies. 6. Lifetime Income Disclosure For Defined Contribution Plans: Employers are now required to disclose to employees the amount of sustainable monthly income their balance could support in their 401(k) statements. This is not a big deal, but it could be a helpful resource for investors as they look for guidance on how to prepare for retirement. If you take away anything from this article, take away this: The Secure Act has essentially pushed you to review your retirement and estate plans to make sure they take advantage of the good provisions of the new law while employing strategies to mitigate the bad provisions of the new law. If you have additional questions, or need help putting together a holistic plan that takes the Secure Act into account, please reach out to Monotelo Advisors at 800-961-0298. WHAT YOU SHOULD KNOW About The SECURE Act Read more articles Failing to order your affairs to minimize your tax burden could cost you significant money - so don't wait to take action. If you have additional questions or need some planning help, please reach out to us.

At Monotelo Advisors our accountants work hard to free up cash flow by helping you minimize your federal tax liability, giving you more money to reinvest into your future. Simplify Your Taxes with Trusted Experts Accurate, stress-free tax preparation for individuals and businesses. Learn More Schedule Meeting Start your 2025 Tax Return Tax Season Resources Social Security Changes for 2026: A Complete Guide for Retirees and Working Beneficiaries Jan 15 4 min read Key Tax Season Deadlines for Monotelo Small Business Clients in 2026 Jan 13 2 min read Important Tax Dates for Small Businesses in 2026 Jan 8 3 min read Social Security Changes for 2026: A Complete Guide for Retirees and Working Beneficiaries Key Tax Season Deadlines for Monotelo Small Business Clients in 2026 Important Tax Dates for Small Businesses in 2026 Looking for Financial Planning Help? Our values-based retirement planning will give you the quiet confidence that everything is on track for you to achieve your life goals. Get Started Learn More Run your business, we'll handle your finances. Small business owner? Yes, we can help you with your tax, bookkeeping and payroll needs. But there is so much more to having the right financial partner. Get Started Learn More

THE AMERICAN RESCUE PLAN ACT We apologize in advance for the tax speak in this update. Sometimes it’s hard to remove the tax language and maintain accuracy. Please stay with us for the next three minutes and reach out if there are any points that need additional clarity. This is part one of a series we are writing to keep you informed on the American Rescue Plan Act of 2021 (ARPA), the legislation that President Biden signed into law on March 11, 2021. While we are planning to provide more insight over the next few months on how this legislation impacts you, in today’s article we will attempt to summarize the most important components of the new legislation. The Quick Summary: The American Rescue Plan Act of 2021 (ARPA) is an extensive relief bill that includes changes to income and payroll taxes, expansion of unemployment benefits, and another round of stimulus payments. Like the two relief bills that preceded it, this new law is extensive, with significant implications on businesses and tax payers. Partial Exclusion of 2020 Unemployment Compensation – The ARPA provides an exclusion from income on the first $10,200 of unemployment compensation received per taxpayer if the taxpayer’s adjusted gross income (“AGI” – remember this term for today’s update!) is less than $150,000. Once AGI reaches $150,000, all unemployment compensation will be taxable. This cutoff at AGI of $150,000 applies to all taxpayers, regardless of filing status. Recovery Rebates and Stimulus Payments - One of the most important provisions of the ARPA relates to additional stimulus payments that will be sent to individuals. These payments are $1,400 ($2,800 for joint filers) plus $1,400 for each dependent on the taxpayer’s return. Unlike the prior stimulus payments, all dependents claimed on a return will be included, regardless of age. Just like the prior recovery rebate checks, there is a phase-out range based on AGI. The AGI phase-out ranges are: Joint filers: $150,000 to $160,000 Head-of-household filers: $112,500 to $120,000 All other filers (single, married-filing-separately): $75,000 to $80,000 Checks will be issued based on the latest tax return that has been filed and processed. This rebate check will be reconciled on your 2021 individual income tax return in the form of a credit . In other words, if you do not receive the third stimulus check and you qualify to receive it, you will receive it through your 2021 tax return. Individual Changes - Some of the more significant tax law changes from the ARPA relate to the child tax credit. For 2021 the credit has been increased to $3,000 per child ($3,600 for a child under the age of six) and is now fully refundable. The new law also increased the age of qualifying children from 16 to 17. As with many other provisions, there is a phase-out based on AGI in excess of threshold amounts. It is important to note that half of this credit will be paid out in the form of an advance starting on July 15, 2021 and will be made monthly through the second half of the year. If the advanced payments you receive exceed the amount you qualify for on your 2021 tax return you will need to repay any excess amount. We will have more details on this later in the year once the IRS puts the system in place to handle these advanced payments. Other provisions in ARPA that also impact individual filers include: Expanded Child Dependent Care Credit – For 2021 only, the credit was made fully refundable and it was increased to 50% of qualified expenses. The credit will be reduced gradually down to 20% of qualified expenses as your AGI exceeds $125,000 and gradually phased out completely after your AGI reaches $400,000. The amount of eligible expenses qualifying for the credit have been increased to $8,000 for one individual and $16,000 for two or more individuals. Premium Tax Credit – The change in ARPA applies to 2021 and 2022 for the premium tax credit for health insurance. The credit is now available to individuals with higher incomes and increases the credit amount for those already qualified. For 2021 only, advance premium tax credits will be available for individuals receiving unemployment compensation. If you have any questions about how these changes will impact you please reach out to us. 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.

How to Save for Your Child Education Year-end Review of Your Retirement Accounts Will VS Trust: Which is Right for You Beware of Hedge Fund Managers Bearing Gifts The Fallacy of the Formula Five Things That Every IRA Owner Should Know Roth vs Traditional IRA: Which One Is Right For You Six Myths About Health Savings Account RETIREMENT ARTICLES Avoid the Hidden Traps of Retirement Plan Loans 5 Things You Can Do Right Now to Help Improve Your Retirement Years Financial Planning & Long-Term Tax Reduction in Light of the Tax Cuts and Jobs Act Profiting From the Failure of Active Managers Overcoming Our Cognitive Biases Our Planning Process We are always researching for tax tips and strategies that our clients can implement to lower their tax liability and improve their financial position. See below for a few simple tips that can be applied to your individual situation. Avoiding the 10% Threshold for Medical Expenses

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.