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SMALL BUSINESS TIPS Quarterly: Oct 17 Deducting Your Business Travel If you travel as part of your business or you have employees who travel you have several options for how you deduct those travel expenses. Typically you can either track and deduct the actual cost of travel or you can use standard allowance amounts provided by the IRS to simplify the record-keeping requirements. If you choose to use standard allowance amounts to deduct your travel expenses it is important to keep up-to-date on what the allowance rates are as they are typically updated on an annual basis. Vehicle Expenses If you use your personal vehicle for business-related travel you can deduct either a portion of your actual vehicle expenses or a standard rate per mile driven. Actual vehicle expenses would include gas, insurance, repairs and depreciation on the cost of the vehicle. For 2022 the standard mileage rate is 58.5 cents per mile, up from 56 cents in 2021. For more information on the vehicle expenses deduction read Deducting the Business Use of Your Vehicle . Meal and Lodging Expenses If you travel overnight for a business-related trip you can deduct your meal and lodging expenses as well as other miscellaneous travel expenses. If you would like to deduct the actual cost of meals, hotel rooms and other miscellaneous expenses you will need to keep copies of receipts for each expense in your records as well as document the business purpose of the trip. If you would prefer not to keep track of each receipt you can instead use the IRS per diem rates to deduct a standard amount for meals and lodging expenses for each day of your trip. You will still need to document the destination, length and business purpose of your trip but will not need to maintain receipts for your expenses. The per diem rates vary depending on your travel destination. You can lookup the rates for your destination at https://www.gsa.gov/travel/plan-book/per-diem-rates . These rates are typically updated every October. The current rates will be effective until September 30, 2022. If you choose to use per diem rates to deduct your business travel, do not have your business directly pay the cost of meals, lodging, etc. Instead, pay for these costs personally and then submit an expense report to your business using the per diem rates and reimburse yourself. If your business is structured as a sole proprietorship, you do not need to reimburse yourself through an expense report. Instead you can simply use the per diem rates to claim a business travel deduction on your tax return at the end of the year. Please note that if your business is a sole proprietorship you can only use the per diem rates for meal expenses, not lodging. Summary Traveling can be expensive. But if you know how to maximize the tax benefits of your business-related travel you can reduce some of that cost. Using the standard mileage and per diem rates can simplify your record-keeping requirements and in many cases can provide a greater tax benefit than deducting your actual costs. To maximize your business-travel deductions read How to Deduct Your Vacation Travel as a Business Expense . Schedule Your Tax-Planning Call Previous Article

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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 Section 4 Helpful small business articles. New Provisions for the Paycheck Protection Program Deduct your Medical Expenses by Hiring Your Spouse Deducting 100% of Your Business Meals 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

Retirement Readiness Our Retirement Readiness series is four separate webinars designed to address today's most important retirement issues. Each 20 minute webinar is designed to provide 15 minutes of value-packed content and close with 5 minutes for Q&A You can use the links below to watch the recorded webinars "When Will I Be Ready and What Should I Do Today to Prepare for Retirement?" When Will I Be Ready and What Should I Do Today To Prepare for Retirement is a 20 minute webinar that will walk through the three most important steps you can take to get yourself on track to safely retire on your time frame. In addition to the three specific action steps, all attendees will receive our Safe Retirement Zone calculator as a valuable tool that they can use to help take control of their future. View On-Demand Video Social Security Claiming Strategies - How to Maximize Your Lifetime Benefit The Social Security Claiming Strategies module can have a profound impact because most people don't understand the different options they have when claiming Social Security, and they don't understand the financial implications of the different options. If you are married, your options have doubled, and if you are divorced you may still have the option of a spousal claim. Understanding the spousal benefits and the delayed benefits may not only significantly increase your monthly income, it could change the trajectory of your retirement years. Our Social Security Claiming Strategies module is invaluable if you or someone you care about is in or near retirement. View On-Demand Video Tax Efficient Retirement Planning in Light of the Recent Tax Cuts and Jobs Act The Tax Efficient Retirement Planning module will address the massive shift in the tax code that took place last January. These changes radically impact how individuals should be preparing for retirement, and they provide significant opportunities to take action between now and December of 2025, when the tax cuts are set to expire. The Tax Efficient Retirement Planning module will empower you with the tools to take full advantage of the current compelling, but temporary opportunities created by the new tax laws. View On-Demand Video Small Business Retirement Planning The Tax Cuts and Jobs Act recently passed by congress enacted the most significant tax legislation changes that our country has seen in over thirty years. These changes have a significant impact on how small business owners should prepare for retirement - and that is why we put together our Small Business Retirement Planning module. If you are a small business owner or independent contractor and your financial plan was put in place prior to December of 2017, there is no way you are taking advantage of the new opportunities. Our Small Business Retirement Planning module will help small business owners take full advantage of the recent changes to maximize a lifetime of savings that are currently available. But there is a sense of urgency, because the current tax cuts are set to expire in 2025. View On-Demand Video

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The tax deductions that are available to the average taxpayer have shifted over the years. What was available a few years ago may not be available today and what is available today may shift in the coming years. For taxpayers who itemize deductions, you can deduct the medical expenses you paid for yourself, your spouse or your dependents to the extent that they exceed 7.5% of your 2019 adjusted gross income (AGI). WHAT EXPENSES ARE DEDUCTIBLE IN 2019? For example – if you and your spouse’s combined income was $110,000 last year and you contributed $10,000 to your IRA, your AGI would be $100,000. You could deduct any medical expenses that exceed $7,500. But you could only deduct those medical expenses if you are itemizing (not taking the standard deduction). * Note- the threshold jumps from 7.5% to 10% in 2020. One of the changes under the recent Tax Cuts and Jobs Act is that you can no longer deduct miscellaneous employee business expenses. This change has a more-significant impact on union members, public servants and sales professionals who are not fully reimbursed for their travel, cell phone or entertainment expenses. For small business owners and independent contractors, your business expenses must be ordinary and necessary to be deductible. This means they must be common and accepted in your industry and they must be helpful and appropriate for your specific trade or business. Here is a more in-depth summary of what you can and cannot deduct on your 2019 tax return: Medical Expenses Deductible Preventative Care, Treatment, Surgeries, Dental and Vision Care: You can also deduct visits to psychiatrists, psychologists, prescription medication, glasses, contacts and hearing aids. Alcoholism Treatment: Amounts paid for inpatient treatment to a therapeutic alcohol addiction center are deductible. This includes meals and lodging provided by the center during treatment. Fertility Enhancement: The cost of the following infertility treatment procedures are deductible: In vitro fertilization, including temporary storage of eggs or sperm. Surgery, including an operation to reverse prior surgery that prevented you from having children. Guide Dog and Service Animals: The cost to purchase, train and maintain a guide dog or service animal to help a visually impaired, hearing disabled or physically disabled person are deductible. These expenses include food, grooming and veterinary care. Stop Smoking Programs are deductible, but the cost of non-prescription drugs is not deductible. Not Deductible Any Reimbursed Medical Expenses that were paid by your employer or insurance company are not deductible. Weight Loss Programs that focus on general health are not deductible. However, if the weight loss treatment is for a specific disease diagnosed by a doctor (obesity, heart disease, etc), the expense is deductible. Nonprescription Drugs and Medicine (except for insulin) are not deductible: Only prescription drugs are deductible. Health Club Dues: Any expenses paid to improve your general health that are not related to a medical condition are not deductible. Cosmetic Surgery: Any surgery that does not meaningfully promote the proper function of the body, prevent or treat an illness or disease is not deductible. You can, however, deduct cosmetic surgery if it is necessary to improve a deformity arising from a congenital abnormality, personal injury or disfiguring disease. Miscellaneous Deductions Deductible Gambling Losses to the Extent of Gambling Winnings: Gambling losses can include wagers, or other expenses incurred in connection with the gambling activity; but they are limited to the extent of the gambling winnings. In other words – you cannot take a net gambling loss, but you can use your losses to wipe out any gambling winnings. Casualty Losses: ”Generally, you may deduct casualty and theft losses relating to your home, household items, and vehicles on your federal income tax return if the loss is caused by a federally declared disaster declared by the President.” IRS Website Theft Losses – The amount of your theft loss is generally the adjusted basis of your property because the fair market value of your property immediately after the theft is considered to be zero. Losses from Ponzi-Type Investment Schemes: Deductible as theft losses from income-producing property. Home Office: You can take a home office deduction if you are self-employed and you use part of your home regularly and exclusively for business purposes. Club Dues: Club dues (as we state below) are not deductible. The following organizations, however, are not treated as clubs organized for business, pleasure, recreation or social purpose (unless one of the main purposes is for entertainment): Boards of trade Business leagues Chambers of commerce Civic or public service organizations Professional organizations Real estate boards Trade associations Not Deductible Unreimbursed Employee Expenses are no longer Deductible under the new tax code , unless you are a performing artist or serve in the Armed Forces as a reservist. Commuting Expenses: The cost of traveling from your home to your work is not deductible. There is an exception is for qualified performing artists and Armed Forces reservists. They can deduct the cost of hauling tools or instruments to and from work. Fines and Penalties: Any amounts paid to settle a liability for a fine, a civil or criminal penalty or a parking tickets are not deductible. Club Dues: Membership in any club organized for business, pleasure, recreation or social purpose is not deductible – this includes athletic, luncheon, sporting, airline, hotel and country clubs. Campaign Expenses: This applies to a candidate for any office and includes qualification and registration fees and legal fees. Lobbying Expenses and Political Contributions: According to the IRS: “You can’t deduct contributions made to a political candidate, a campaign committee, or a newsletter fund. Advertisements in convention bulletins and admissions to dinners or programs that benefit a political party or political candidate aren’t deductible.” Political Action Committees (PACs) are included in this list as well. 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.

Set up user access in Chase Bank for accountant view-only access: 1. Navigate to the account management section after logging in to your Chase Bank account. 2. From there, select the "Access and Security Manager" option. 3. Next, choose "Add Authorized User." 4. You will then be prompted to input the necessary information for the new user. Enter the first and last name of your Monotelo accountant, as well as the email address and phone number. First & Last Name: John Smith Email: john@monotelo.com Phone number: 800-961-0298 5. Then, on the next page, select only limited access, remove travel, and full access. Hit submit. 6. You can select the appropriate permissions for the new user. In this case, your Monotelo accountant only needs to see activity and check images, documents, and statements. 7. After you select the appropriate permissions, you should review and confirm the information entered and then submit the request. 8. Chase Bank will then email your accountant at the provided email address with instructions on accessing your account at Chase. 9. Your accountant should check their email for the invitation and follow the instructions to accept it. The invitation may expire after 24 hours, so your accountant should accept it immediately. 10. Once your accountant has accepted the invitation and set up their login credentials, they can access your account with view-only access. Congratulations! You have successfully set up user access in Chase Bank for your accountant with view-only access.

WHITE PAPER INTRODUCTION Our 1-2-3 case involves a husband and wife client of ours who received an unpleasant surprise when they filed their 2017 tax return. The husband and wife are both public servants, between them they are earning $225K per year. On top of this they received another $40K in interest and trust income during 2017. Anticipating a large tax bill, they decided to purchase a rental property and use the expenses they incurred to offset some of their taxable income and reduce their tax bill. During the year they spent $40K on the property. Based on advice they received from coworkers as well as another accountant they consulted, they believed they would be able to deduct this entire $40K on their 2017 tax return. THE CHALLENGE Unfortunately, when they came to us we had to tell them that not only could they not deduct the full amount, they would not be able to deduct any of their expenses on their current year return. There were 3 reasons they could not deduct the $40K they had been led to believe they would be: Cap on Losses from Rental Properties. What this couple was not aware of when they decided to purchase this rental property to write off the expenses, is the $25K limit on rental property losses that can be deducted per year. This means that at least $15K of the $40K they spent would need to be carried forward to a future year. The only exception to this limit would be if one of them qualified as a real estate professional, which they do not as this property is the only activity they have in the real estate field. Capital Expenditures. A large portion of the $40K came from improvements to the property preparing it for rent. These expenses cannot be deducted in the year they are paid but must be capitalized and depreciated over the useful life of the property, in the case of a residential rental property 27.5 years. Income Limit on Passive Losses. The final nail in the coffin for this couple’s rental loss deduction is they failed to realize there is a phase-out threshold for passive losses. Once a married couple, filing a joint return, have adjusted gross income above $150,000 they cannot take a loss for passive activities. Instead those losses are carried forward to future years until their income drops below the phase-out threshold. THE SOLUTION This couple was understandably not happy when we informed them that they would not be able to deduct any of the expenses they had incurred on the property on their 2017 tax return. They explained to us that one of the primary drives behind their purchase of the property was the tax break they expected to receive. Had they consulted with us during the year before making this purchase we could have warned them they would not be able to realize any tax breaks in the short term from the property and could have provided them with some alternative methods to reduce their tax burden for the year. By maxing out their respective deferred compensation accounts they could have reduced their taxable income by $16,000. Contributing to a Health Savings Account could have further reduced their taxable income by $7000. By failing to consult with us before making this decision they missed 3 red flags that show they would not be able to reduce their taxable income by purchasing this property. To avoid missing your own red flags be sure to seek counsel from Monotelo Advisors before making major investment decisions. Save as PDF View More White Papers

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