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  • Profiting From the Failure of Active Managers

    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.

  • 123 | Monotelo Advisors

    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

  • 5 Things For Retirement | Monotelo Advisors

    5 THINGS YOU CAN DO RIGHT NOW to Help Improve Your Retirement Years When most people think about retirement planning, they focus on growing their money, but they often overlook other critical issues. Eventually you will be shifting gears to preserve what you saved over the years. Taking a few simple steps today can help equip you for the time when that shift takes place. 1. THE INCOME PLAN Build a plan so that you don't run out of money for yourself and your spouse during your lifetime. ​ While this is easier said than done, you can start by figuring out how much money you'll need to cover your living expenses. This would include fixed expenses (mortgage, rent payments, insurance premiums, etc.), variable expenses (food, clothing, car maintenance), outstanding debt (car payments, student loans, credit cards, etc.) and any predictable large purchases (a second home, a new addition, vacations, etc.). ​ Your guaranteed sources of income, such as Social Security or a pension, will be used to pay those expenses. If they aren't enough, you will need to find other income sources. 2. THE PROTECTION PLAN While the odds of your house burning down are less than 3%, most people wouldn't consider going without fire insurance for their home. ​ It's equally, if not more important to address the risk of "burning down" your income plan. For example, the chances are fairly high that you or a spouse will have some kind of long-term care need. These expenses tend to be high and tend to carry on for extended periods of time. As a result, you need to consider this risk. ​ Another risk to consider is the risk of a pension payment getting reduced. For those who plan to retire on a significant pension, this is a very real and present risk that should be addressed in your plan. 3. THE APPRECIATION PLAN Once you have addressed the income and protection needs, it's time to address how to continue growing your money. Conservative, aggressive, moderately aggressive.... You need to identify your capacity to take risk. Once you have properly identified your risk tolerance, you can then begin to focus on portfolio appreciation. ​ The reason this step is crucial is that you do not want to sell at market bottoms when your emotions get the best of you. This happens when you set your portfolio to take more risk than what your emotions can handle, and this is a recipe for disappointment. 4. THE TAX PLAN Keeping your taxes as low as possible should be front and center, and there are a variety of ways to do this. ​ One example would be to focus on asset location, as opposed to asset allocation. Asset location focuses on WHERE you choose to do your retirement saving (IRA, 401K, 403B, Roth IRA, whole life insurance, etc.), while asset allocation focuses on WHAT you choose to invest in inside the account. Asset location matters because this will have a direct impact on the tax implications when you need to access your money saved for your retirement years. 5. THE ESTATE PLAN Some estate planning may also be in order to protect yourself from taxes - particularly in states that have an estate tax, as the exemption levels are usually much lower than the federal level. ​ Taking care of loved ones in the future can also be a primary concern for many. Consult with an attorney to understand the legal documents necessary to ensure the efficiency of your estate, including a health care power of attorney, financial power of attorney, health care directives, wills and trusts. 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

  • 2020 Year-End Tax Planning

    YEAR END Tax Planning With roughly 6 weeks to go until we can say goodbye to 2020, 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 five 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 $19,500 ($26,000 if you are over the age of 50) for 2020. Contributions to any of these plans must be made before January 1st to apply to 2020. ​ Before you contribute to your 401(k) you should watch our 4-minute video Why 401k Plans Are Sub-Optimal . ​ You can also contribute up to $6,000 ($7,000 if you are over the age of 50) to a traditional or Roth IRA for 2020 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 2020 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 $40,000 (80,000 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 by selling your investments with long-term capital gains and not pay 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 choose to contribute $15,000 now to a donor advised fund and distribute $5,000 out of the fund each year for the next 3 years. 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. However, the Tax Cuts and Jobs Act has created 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 skyrocketing, you could find yourself 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. With the results of the 2020 election, time could be running out to take advantage of the low tax rates. ​ For more information on why a Roth conversion may be a limited time opportunity watch our 3-minute video Tax Efficient Retirement Planning. Converting your traditional IRA into a Roth IRA is an option for everyone, even if you are above the income threshold to make a normal contribution to a Roth IRA. You will also not be subject to the 10% early withdrawal penalty you would face when taking early distributions from a traditional IRA. ​ For more information on why a Roth IRA could be the right choice watch our 4-minute video The Big Picture . ​ Return Your Required Minimum Distributions If you are over the age of 70 ½ then you are required to withdraw a certain amount from your traditional IRA each year through Required Minimum Distributions (RMDs). These RMDs can create an unwelcome tax liability. Fortunately, as part of the CARES Act, all RMDs for 2020 have been waived. This means that if you have not yet taken your RMDs for 2020 you can choose not to take any for the year. If you already took your RMDs for the year then you have a few potential options to undo them. ​ Option 1: Indirect Rollover When you take funds out of your IRA you have 60 days to either return the funds to the original IRA or invest them in another IRA through what is referred to as an indirect rollover. If you return the funds or reinvest them in another IRA within the 60 days you can avoid any taxes or penalties that would have otherwise been due on the distribution. You can only complete one indirect IRA rollover per year. ​ Option 2: Coronavirus-Related Distribution If you took your RMDs earlier in the year and can no longer qualify for a 60-day rollover, you may still be able to undo your RMDs by qualifying them as a coronavirus-related distribution (CVD). With CVDs you can take up to $100,000 from your traditional IRA at any point in 2020 and you have 3 years from the date of the distribution to recontribute the funds and avoid paying income taxes. If you don’t recontribute the funds you can also choose to spread the tax liability over the next 3 years instead of paying it all on your 2020 return. To qualify a distribution as a CVD you must meet at least one of the following criteria: ​ You are diagnosed with COVID-19 using a test approved by the CDC Your spouse or dependent is diagnosed with COVID-19 using a CDC-approved test You are experiencing adverse financial consequences as a result of being quarantined, being furloughed or laid off or having work hours reduced due to such virus or disease, being unable to work due to lack of child care due to such virus or disease, closing or reducing hours of a business owned or operated by you due to such virus or disease, or other factors as determined by the secretary of the Treasury. ​ As you can see, even if you do not meet either of the first two criteria, just about anyone in the United States should be able to qualify under the third criteria given that almost every state issued a shelter-in-place order earlier this year. By reclassifying your RMD as a CVD you can either avoid the taxes altogether by recontributing your distribution within the next 3 years, though we would recommend recontributing before the end of the year to keep everything simple, or spread the tax burden of the distribution over a 3-year period. ​ Summary Now 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. 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.

  • Building a Durable Cohesive Plan of Action

    Building a Durable Cohesive Plan of Action

  • Tax Planning and Preparation | Monotelo Advisors | Elgin

    Let us help you plan for retirement. Planning for retirement can be stressful, but it doesn’t have to be when you have a step-by-step process in place to guide you. Schedule An Appointment and get started Want to get started or learn more? Schedule a meeting, over the phone, Zoom or in person. Schedule an Appointment Learn More What We Offer Values-Based Retirement planning When your values are clear, your decisions are easy. That’s why your financial plan needs to start with your values, continue with your life goals, and wrap up with a clearly-defined road map to get you there. Explore how our planning process will provide you with a road map to having all your financial decisions in perfect alignment with your most deeply held values and life goals, by scheduling a no-obligation introductory call. Get Started what we offer Bring Alignment to All Your Financial Decisions When your values are clear, your decisions are easy. Peace of mind begins when you have clarity about your values and goals. Peace of minds arrives when there is complete alignment between your values, your goals, and all your financial decisions. Reduce your lifetime tax liability Health care and taxes are two of the largest expenditures for retirees. You have little control over one, but enormous control over the other. Our planning process will help you reduce your lifetime tax liability so your money is freed up to allocate in ways that bring you the most joy and fulfillment in retirement. Increase the productivity of your assets Having a partner who can come alongside you to help you maximize the productivity of your assets and navigate the changing phases of retirement can empower you to live your best life possible and leave a meaningful legacy to the people and organizations you care about. Peace of mind up to and through retirement Having a comprehensive financial plan in place brings you confidence that all the pieces of the puzzle are working together for your best life possible. Once your personal retirement plan is complete, we will walk with you to implement and monitor your plan. How We Help Get Started Schedule a Meeting and Prepare Your Financial Documents Schedule a meeting for a day and time that work for you. Prepare to spend 90 minutes with us and bring all your financial information to that meeting, including your tax returns, investment statements, mortgage information etc. Your Financial Road Map Meeting The road map process begins with the initial meeting. In this meeting we will help you will identify your most deeply held values and life goals. We spend the time necessary to discover the things that matter most to you so we can bring perfect alignment between your most deeply held values, your life goals and the all your financial decisions. The Plan A comprehensive financial plan is so much more than a risk tolerance survey and an asset allocation model. You plan will start with your values and your goals, and it will be designed to maximize the productivity of your assets so you can live your best life possible and leave the legacy you want to leave to the loved ones and organizations you care about. Relax and Enjoy Peace of Mind After the discovery and values-based planning process is complete, our team of advisors will come alongside you to help you navigate the changing face of retirement. From the savings and accumulation phase, to the distribution and lifestyle phase, to the health care needs and legacy phase, we will monitor your plan to keep up with your changing needs. How The Process Works Get Started Helpful retirement tips and articles. The Inflation Reduction Act Student Loan Forgiveness: Your Questions Answered Are We In a Recession? View More More services from Monotelo Small Business Tax Services We will help you minimize your short-term and lifetime tax liability to free up the cashflow needed to help you grow your business and build for your future. Learn more Year-End T ax Filing Services We will help you minimize your taxable income by capturing the deductions and credits available to maximize your refund. Learn more

  • Tax Planning & Preparation | Monotelo Advisors | Elgin

    TAX EXPERTISE Monotelo believes there is a better way to help you secure your financial future. It starts by improving your cash flow, then focusing on the budget and retirement savings to help you take charge of a future filled with peace and financial security. ​ Our mission is to make a difference with meaningful and actionable financial solutions that positively impact our client's lives. We do this by integrating the tax component into all our discussions - freeing up cash flow that allows our clients to live the lives they want to live. SMALL BUSINESS OWNERS If you are a small-business owner, there is a high probability that you are paying more tax than what is required. And the key to lowering your tax bill is not in finding a competent CPA to file your tax returns, it's in finding an expert with a disciplined process to help you plan your future. LEARN MORE PRIVATE CLIENTS With the opportunities and challenges of the Tax Cuts and Jobs Act, Monotelo's unique blend of expertise in tax law, retirement planning and wealth management can be a critical factor in helping you reach your short and long-term goals. LEARN MORE RETIREMENT PLANNING The Tax Cuts and Jobs Act has made proper tax planning more critical than ever when it comes to preparing for retirement. Monotelo's unique blend of expertise and wealth management can help you reach your retirement goals. LEARN MORE TAX EXPERTISE Click here to access the tools and articles designed to help you manage your taxes and your finances while giving you confidence to take the steps needed to prepare for a future filled with peace, hope and financial security. LEARN MORE

  • Five Things That Every IRA Owner Should Know

    Five Things According to the Bureau of Labor Statistics, the average worker currently holds ten different jobs before age forty, and this number is projected to grow. The BLS also reported that the median employee tenure is between 4.0 and 4.3 years with men lasting a little longer than women. ​ Each job change brings the potential need to roll over retirement funds, which can be tricky with serious consequences if not done correctly. With job changes as frequent as they are today, it's important to understand how to roll over retirement funds correctly. Here are 5 things every IRA owner needs to know before they decide to roll over an IRA. Knowing this might get confusing, let us start with the end in mind: Rollover rules are complicated with a number of potential pitfalls. The best strategy is to use transfers and direct rollovers. The simplest way to think about this is "don't touch the money." 1. How rollovers work ​ An “indirect rollover” takes place when a distribution is made to you from your company retirement plan or an IRA and you take receipt of those funds with the intention of putting them back into a different or newly established IRA. ​ A "direct rollover" takes place when a company plan transfers your assets to another company plan or an IRA. While this transaction is called a "rollover," it is very different from an indirect rollover because you never take receipt of the funds. This type of rollover avoids the mandatory 20% withholding that applies to rollover-eligible distributions because this is not a taxable event to the IRA owner. ​ 2. The 60-day rule ​ There is a 60-day window to complete an indirect rollover, and the 60-day clock starts ticking when the distribution is received. You can use those funds for any purpose during that window, but the distribution becomes taxable and subject to penalties if the deadline is missed. While there are some very limited exceptions, if the deadline is missed, the rollover window is closed. To avoid this outcome, complete rollovers as soon as possible. ​ 3. The once-per year rollover rule ​ IRA-to-IRA or Roth-to-Roth rollovers are subject to a once-per-year rule. For purposes of this rule, traditional and Roth IRAs are combined. This means that a distribution and subsequent rollover between your Roth IRAs will prevent another rollover within a one-year period between either your traditional IRAs or other Roth IRAs. This rule limits you to only one rollover of IRA funds every 12 months. Rollovers from a company plan to an IRA or from an IRA to a company plan are not subject to the once-per year rollover rule because they are transfers. Roth conversions are not subject to the rule either. ​ 4. No Rollover of RMDs ​ Once you turn 70 ½ you must take out a required minimum distribution (RMD) from your IRA each year. RMDs cannot be rolled over and must be reported as income. You can take out distributions in excess of the RMD and roll them over but not until you have distributed the RMD. This rule does not apply to transfers between IRAs. You can transfer your entire account to a new IRA and then take the RMD later. 5. Other Rollover Pitfalls ​ There are other rollover pitfalls to be aware of. Non-spouse beneficiaries attempting to rollover retirement funds is not allowed. If a non-spouse beneficiary receives a distribution from an IRA or a company plan, they may not roll over those funds, they are taxable at the time of distribution. That Every IRA Owner Should Know Summary ​ Rollover rules are complicated. The simplest solution is to use transfers and direct rollovers, and not touch the money. If you never personally receive a distribution, and all moves are made between the old and newly established IRA, you have very little to worry about. That's because transfers avoid the 60-day rule and the once-per-year rollover rule, so there is no concern about missed deadlines or frequency of transfers. 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.

  • Tax Planning & Preparation | Monotelo Advisors | Elgin

    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 What We Offer 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 File your taxes online, over the phone, or schedule an in-person meeting to get started. Get Started Learn More Missed the tax deadline? It's not too late to get your 2022 tax return filed.

  • Tax-Efficient Planning for Real-Estate Agents

    Tax-Efficient Planning for Real-Estate Agents Schedule Your Free Tax Planning Call Tax Planning Meeting Back to Video

  • Pricing Options

    Three Pricing Options To provide our small-business clients with flexibility in how they work with us, we offer three different pricing options for our services. 1. Additional rental properties will be charged at $50/property ​ 2. Processing of monthly payroll includes Federal 941 Quarterly Payroll Filing State Quarterly Payroll Filing Year-End 940 Payroll Filing W2 Issuance to Employees 1099 Issuance to Independent Contractors ​ ​ 3. Our Tax Savings Manual includes strategies to lower your federal tax bill. Historically we have found that we can save small-business owners between $5,000 and $12,000 per year. ​ 4. Two conference calls throughout the year to discuss: Estimated Payments P&L Discussion Adjustments to Officer Compensation Misc. Business and Accounting Issues ​ ​ 5. Requires a three year agreement. ​

  • What Expenses are Deductible in 2019?

    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.

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