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The purpose of this update is to provide clarity on the Coronavirus Aid, Relief, and Economic Security (CARES) Act that was passed by Congress and President Trump last week. The Act was intended to provide relief to those suffering from the economic fallout of the Coronavirus. The amount of money each person will receive from the federal government will vary depending on your income, marital status and number of children. Individuals are eligible for up to $1,200 - plus $500 per child under the age of 17 Couples are eligible for up to $2,400 - plus $500 per child under the age of 17 Payments phase out for individuals with adjusted gross incomes of more than $75,000 and for couples with incomes above $150,000. The phaseout will reduce the payment by $5 for every additional $100 of adjusted gross income above your phase-out threshold. Individuals making more than $99,000 will not receive anything. Couples making more than $198,000 will not receive anything. Income will be based on your 2019 or 2018 tax return. The White House hopes to begin distributing cash quickly, but said that it may take a few weeks before the majority of the payments go out. The stimulus checks will be handled by the Internal Revenue Service, and they require you to have filed your taxes electronically to have the money transferred to your bank account via direct deposit. If the IRS does not have your bank account info, it will send out a check to the physical address that was on your last tax return. If you have filed a paper copy of your taxes or have closed the bank account used to receive previous tax refunds, the government will send a check in the mail. If you have moved since you last filed your taxes, remember to submit a change of address form with the IRS. This normally takes four to six weeks to process, and the IRS needs the correct address in order to have the check reach the correct destination. The best way to maximize your payment from the government is to have Monotelo prepare your 2019 tax return. If you made less money in 2019 than you made in 2018, we will file the return immediately. If you made more money in 2019 than you made in 2018, we will wait to file the return. However, there is no way to know this without completing the preparation of your 2019 tax return. Once the return is complete, we will let you know what filing schedule is in your best interest. Taxpayers are supposed to receive a note in the mail informing them of how the payment was made. This notice should arrive no more than a few weeks after the money was disbursed. If you have trouble locating your payment, there will be information regarding how to contact the IRS in the notice. Please reach out to us if we can assist you during these challenging times. ECONOMIC IMPACT PAYMENTS FROM THE CARES 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.

We all think we know about the cost of health care. According to Fidelity, the average 65-year-old couple in 2020 will need nearly $300,000 for medical expenses over the course of their retirement. And that number does not address the potential for long-term care needs. There is a common misconception that once you get on Medicare, your health care costs will be all taken care of. What most people eventually discover is that Medicare doesn’t cover everything. And what it does cover typically comes with a copay or a deductible. The Costs Behind Medicare There are 2 primary parts to Medicare. Part A covers hospitalization, while Part B covers doctors, therapies, chemotherapy, etc. While Medicare Part A is free, many people fail to realize that Medicare Part B comes with a monthly premium. Part B premiums for most people in 2021 are $148.50 per month and the premiums rise for higher-earners. The premium for higher earners is called the income-related monthly adjustment amount, known as “IRMAA”. If you get hit with IRMAA for Part B, you’ll also have to pay IRMAA for Part D, the private part of Medicare that offers prescription drug coverage if you are enrolled. You could end up paying an extra $434 per month ($356.40/month for Part B and $77.10/month for Part D), depending on your taxable income from two years ago. If you’ve had a life-changing event and your income has gone down from two years ago we can help you. Reach out to us and we should be able to make a difference for you on your IRMAA premiums. Once you’re on Medicare, you will have copays and deductibles for Parts A and B. On top of the copays and deductibles, there is no out-of-pocket maximum with Medicare. You heard that correctly! You can have unlimited expenses with original Medicare. This is where Medicare Advantage and Medicare Supplement Plans come into play. These plans can help by setting a limit on spending, but this is also where things can get confusing. And this is the point where most couples should turn to a Medicare expert to guide them to a wise course of action. Prescription Drugs It’s relatively easy to find the list of drugs that Medicare does not cover (go to Medicare.gov for this info). But what about drug costs? Many retirees fail to understand the impact that drug costs will have on their long-term financial plans because they fail to understand how the drug plans are set up. While many drugs are covered by Medicare, more costly drugs can cause a balloon payment after several months of coverage, sometimes referred to as the “donut hole.” With the “donut hole” and catastrophic coverage issues, there is no cap on prescription drug expenses. And some manufacturers’ programs become off limits once you go on Medicare. For Example: Part D deductible: $435. Initial coverage limit: $4,130. Catastrophic threshold: $6,550. You have a medication that costs $1,376.67 and your copay is $100. Your first three doses cost you $300, but the total spent was $4,130, and you are now in the “donut hole.” The next time you pick up your medication, your cost goes from $100 to $344.17 because you are now responsible for 25% of the cost of the drug (25% * $1,376.67 = $344.17). You only spent $300 on your first three prescription fillings, you are already into the “donut hole,” and you don’t get out of the donut hole until you’ve spent $6,550. After you’ve spent the entire $6,550, your costs will drop to 5% of the cost of the drug ($68.80 per dose). That means prescribed medications could cost over $10,000 a year, and that’s on the drugs that Medicare includes in the drug plan. So what should you do to help mitigate the costs of medical care today? A traditional asset manager might suggest you hold cash aside for these expenses. An insurance agent might tell you to buy a long-term care policy. An accountant may suggest that lowering your taxable income through medical expenses could help cover some of the costs of Medicare. Our job at Monotelo is to help you develop a Durable Cohesive Plan of Action, and take all of these issues into account to comprehensively address your healthcare needs in retirement. Read more articles THE COST OF HEALTHCARE IN RETIREMENT 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.

September 2019 SMALL BUSINESS TIPS Quarterly: Oct 17 How Will Your Real-Estate Sale Be Taxed? When you sell real estate property other than your primary residence, the tax implications of that sale depend on whether it qualifies as dealer or investor property. Each of these classifications is taxed differently and carries its own benefits and drawbacks. Dealer Property: Property you hold for sale to customers in the ordinary course of a trade or business is considered Dealer Property. House flipping is a common example of dealer property because you purchase the property with the intention of fixing it up and selling it for a profit. Profits on dealer sales are taxed at your ordinary income rate which can be as high as 37 percent and are also subject to the self-employment tax of 15.3 percent. Dealer sales cannot be used in 1031 exchanges to defer taxes by reinvesting in another property. One advantage of dealer sales is that any losses on a property are considered ordinary business losses which can be fully deducted in the year of the sale as opposed to capital losses on investment property which are limited to $3,000 per year. Investor Property: Property that is held to produce income or long-term appreciation is considered Investor Property. Rental properties are the most common type of investor properties. Profits on investor sales are taxed at capital gains rates which are capped at 20 percent if you own the property for more than one year. Investor property sales are also not subject to the 15.3 percent self-employment tax. The cost of investor properties can also be depreciated over the useful life of the property, although the depreciated cost will need to be recaptured at the time of the sale. Investor properties qualify for 1031 exchanges which allow you to reinvest the profits from the property into a similar property and defer the taxes on the sale until you sell the new property. One disadvantage of investor property sales is that the deduction for capital losses is capped at $3,000 per year unless you have capital gains from another sale to offset the losses. Generally speaking, if you sell a property at a gain you will receive favorable tax treatment if the property is classified as investor property and if you sell a property at a loss you will receive favorable tax treatment if it is classified as dealer property. Classifying Your Property Sale Identifying the correct property classification is not as simple as determining which will give you better tax treatment. In classifying your property sale the IRS will look at multiple attributes of the individual sale and your overall situation: Intent: One key area the IRS will look at when classifying your property sale is your original intent in purchasing the property. If you purchase a property with the intent of fixing it up and reselling for a profit, then that property is considered dealer property. If you buy a property with the intention of fixing it up to operate as a rental property it will be considered investment property. Even if you sell the property before collecting any rent you can classify it as an investment property if you can demonstrate that your original intent was for it to be a rental property. Documenting your intent at the point of purchase is critical to defend your position before the IRS. Holding period: Generally speaking, the less time you own a property before selling it the greater the chance the IRS will classify the property as a dealer property. Frequency of property sales: If you are regularly buying and selling properties you are likely to be classified as a dealer. “Making a Living:” If a significant portion of your income is made through buying and selling properties you are more likely to be classified as a dealer. These attributes are examples of what the IRS looks at to classify your property sale but not a definitive list. There is no standard formula to follow and you need to evaluate the characteristics of each property sale on its own. Understanding the distinction between a dealer and investor property can help you avoid surprises in tax season. Proper planning and record-keeping can also ensure that you receive the best tax treatment available to you when you sell your property. For help determining how your property sale should be classified, please reach out to us. Previous Article

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TAXPAYERS IN ILLINOIS can maximize the tax benefits of their charitable donations by giving to Scholarship Granting Organizations (SGOs). SGOs are non-profit organizations that are approved by the Illinois Department of Revenue to receive qualified contributions from individuals and businesses to be disbursed to qualified, non-public schools in Illinois in the form of scholarships to eligible Illinois students. The Invest In Kids scholarship program offers a 75 percent income tax credit to individuals and businesses that contribute to SGOs. This tax credit provides a significant benefit over traditional charitable giving. Read More View Examples of How This Credit Works Schedule a Free Consultation View on Form Schedule Your No-Obligation Consultation on How To Increase The Impact and Tax Benefits of Your Charitable Giving

WHAT PARENTS NEED TO KNOW About Back-To-School Expenses August can be an expensive month for families with children heading back to school... and some of these expenses may serve you on your tax return. So we are going to spend five minutes summarizing a few of the expenses worth paying attention to. Tax Deductions for School Fundraisers If you make donations to your child's public school, you may be able to deduct the donation amount from your taxable income as a charitable donation. If you receive something in return for your donation, then the reasonable value of the property you receive must be subtracted before you take the deduction. For example: you donate $250 to your child's sports team, and you receive a sweatshirt that sells for $25. In this situation, you would subtract the $25 value of the sweatshirt and use the remaining $225 as a charitable deduction. After-school activities and Child Care Credit For a child under the age of 13, the cost of before or after school care may qualify for a tax credit. Your child must be attending the program so that you can work, look for work, or go to school. The program must also be considered "child care," so hour-long tutoring sessions don't qualify. American Opportunity Tax Credit The American Opportunity Tax Credit can amount to $2,500 in tax credits per eligible student and is available for the first four years of post-secondary education. Eligible expenses include tuition, books and required supplies. Room and board, medical expenses and insurance do not qualify for the AOTC. Income limits apply and the credit requires a 1098-T. The American Opportunity Tax Credit for education expenses can reduce your tax bill by up to $2,500 Lifetime Learning Credit The Lifetime Learning Credit can create up to $2,000 in tax credits for qualified education expenses. The credit is for 20% of the qualified education expenses (up to $10,000 in tuition and fees). There is no limit on the number of years this credit can be claimed and you may be able to deduct qualified education expenses paid for yourself, your spouse, or your dependents. The deduction phases out after certain income ranges. Tuition and Fees Deduction The tuition and fees deductions can reduce the amount of your taxable income by $4,000. This deduction is claimed as an adjustment to income, so you can claim this deduction even if you don't itemize deductions on your Schedule A. This deduction may help you if you don't qualify for the American Opportunity or Lifetime Learning credits. The qualified expenses are for undergraduate, graduate or post graduate courses. There is no limit to the number of years the credit can be claimed and you may be able to deduct qualified education expenses paid for yourself, your spouse, or your dependent(s), but the deduction phases out after a certain income range. You must file jointly with your spouse to claim this credit. At Monotelo, we exist to make a difference with meaningful and actionable financial solutions that positively impact our client's lives. If you have questions about what steps you can be taking to prepare for your retirement years, call us at 800-961-0298

Tax and Financial Planning | Monotelo Advisors | 800-961-0298 2205 Point Boulevard, Suite 175, Elgin, IL 60123 Find the location that works best for you. Elgin Office 2250 Point Boulevard Suite 210 Elgin, IL 60123 Phone: 847-923-9015 Fax: 847-929-9134 Mon-Fri: 9:00 AM - 5:00 PM Get Directions Call Office Site Title Carlinville Office 260 Alton Rd Carlinville, IL 62626 Phone: 217-854-9530 Fax: 217-854-5206 Wed/Thurs: 8 AM - 3 PM Get Directions Call Office Gillespie Office 112 S Macoupin St Gillespie, IL 62033 Phone: 217-839-4226 Fax: 217-839-4039 Mon-Fri: 8:00 AM - 3:00 PM Get Directions Call Office West Brooklyn Office 2508 Johnson Street West Brooklyn, IL 61378 Phone: 815-628-3500 Fax: 815-628-3600 Mon-Fri: 8:30 AM - 5:00 PM Get Directions Call Office Get Directions Call Office

Going to an office is no longer a requirement of conducting business in the age of the internet, cell phones, Skype and GoTo meetings. OCTOBER 2017 MONOTELO QUARTERLY Quarterly: Oct 17 UNLOCKING the Missed Deductions of a Home Office Small-business owners should not miss the benefit of a home office deduction out of fear of a tax audit. Going to an office is no longer a requirement of conducting business in the age of the internet, cell phones, Skype and GoTo meetings. This means an increasing number of small-business owners are working from home, and eligible to claim a home office deduction. When Properly implemented, this deduction can make a significant difference in your tax liability. WHAT CONSTITUTES A HOME OFFICE? In order to claim a deduction for a home office the IRS requires that a designated space be used exclusively and regularly for business. Going to an office is no longer a requirement of conducting business in the age of the internet, cell phones, Skype and GoTo meetings. Exclusively used for business means it cannot ever be used for personal reasons during the tax year, this includes any type of storage for personal items. Although the office is to be used only for business, the tax code does not mandate that it be a separate room, it can be part of a room - walls are not a requirement. The office must also be used on a regular basis for business. HOW TO DEDUCT EXPENSES FOR THE HOME OFFICE There are two different methods you can use to claim a home office deduction, the actual expense method and the simplified method. ACTUAL EXPENSE METHOD The actual expense method allows you to deduct all direct expenses and a portion of any indirect expenses. Direct expenses are any expenses incurred specifically for the home office, such as painting the office or putting in new carpet. Indirect expenses include any expenses incurred for the home such as mortgage interest, property taxes and utilities. To claim these indirect expenses you need to determine the portion of the expenses that relate to the home office. This can be calculated by dividing the square footage of the office by the square footage of the house. You can also claim depreciation or a rent deduction for the part of the home used for business purposes. On the downside, when you sell the home any depreciation taken needs to be recaptured. This can be an unpleasant surprise come tax time. When using the actual expense method, detailed records and supporting documentation must be kept for all expenses. SIMPLIFIED METHOD If you prefer not to maintain records of these expenses, you can still take a home office deduction using the simplified method. The simplified method is calculated by simply multiplying the square footage of the office by $5 per square foot (up to 300 sq. ft.). The advantage to this method is the IRS does not require you to keep any records that are required by the actual expense method. The main drawback of the simplified method is that you will not be able to deduct your actual expenses if they exceed the allowance of the simplified method. The best solution is to keep track of all of your expenses and then determine at the end of the year which method will provide the greater deduction. MILEAGE Regular commuting to and from work is not a deductible expense, however travel between your primary office located in your home to your second office is classified as business miles that are deductible. This does not mean that you can set up a "home office" to deduct your regular commuting miles. It means that if your home office is where you conduct the majority of your business, you can deduct any mileage to a secondary location. Setting up a home office can potentially create several thousands of dollars in deductible mileage each year. TAKE AWAY Even the smallest home office can unlock significant deductions if the expenses are properly accounted for using either the actual or simplified method. It is very important that the space be used exclusively for business purposes. July 2017 Save as PDF May 2018

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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.