SMALL BUSINESS TIPS Quarterly: Oct 17 Putting Your Self-Employment Income Away for Retirement If you are self-employed or own a small business you have the potential to put up to $61,000 per year towards your retirement by setting up a solo 401(k) ($67,500 per year if you are over 50). Of that $61,000 you can put $20,500 into a Roth 401(k) where all of your distributions will be tax-free at retirement. The Tax Cuts and Jobs Act has created a unique opportunity to maximize your retirement cash-flow by utilizing our current low tax rates to save in an individual Roth 401(k) account where your funds will never be taxed again. Before we get into the gritty details of the solo 401(k), be aware that the rules governing these accounts are a bit complex. If you are interested in setting up a solo 401(k) please reach out to us and we will help you determine if you qualify for one and how much you can contribute on an annual basis. Qualifications To qualify for a solo 401(k) you need to operate either a sole-proprietorship or an incorporated business and have no full-time employees other than your spouse. A full-time employee refers to any employee over 21 years of age who works 1,000 hours or more annually. You can utilize the solo 401(k) if you have part-time employees or independent contractors. One advantage of the solo 401(k) over a traditional 401(k) is that as the business owner you are considered both the employer and the employee. This allows you to make employer contributions to your account on top of your traditional deferrals or Roth contributions. The employer contributions cannot be made to a Roth account. They must be made to the traditional 401(k), so they will be tax-deferred when they are made and taxable when you withdraw them in retirement. Contribution Limits Employee Contribution Limits: As the employee of your business you can contribute up to $20,500 ($27,000 if you are over 50) or 100% of your “earned income,” whichever is less. If you are a sole-proprietorship or a single-member LLC your “earned income” is the net profit of your business after deducting your business expenses. If your business is a C-Corp or S-Corp your “earned income” would be the amount of your W2 wages. Employer Contribution Limits: As the employer you can also contribute an additional 25% of your adjusted earned income. If you are a sole-proprietorship or a single-member LLC the formula to calculate your allowed employer contributions is a bit more complicated but works out to roughly 18.5% of your net profits. If your business is a C-Corp or S-Corp your allowed employer contributions are 25% of your W2 wages. Combined Annual Limits: For 2022 the combined limit on employee and employer contributions is $61,000 ($67,500 if you are over age 50). This means if you contribute the full $20,500 as an employee the most you can contribute as the employer for 2022 is $40,500 regardless of how much earned income you have. Summary With the potential to put away up to $67,500 per year towards your retirement, the solo 401(k) is a powerful tool to help you prepare for your future. While 401(k) plans have historically been very costly to set up and maintain, increased popularity has significantly reduced the administration costs in recent years. If you are interested in setting up a solo 401(k) for your business, we would be happy to direct you on how to get started. Previous Article Next Article

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

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.

Quarterly: Oct 17 Our Planning Process Our Objective A financial plan with the optimal tax efficient strategies that help you meet your short and long-term goals. Our Process Discovery: The first and most important step in the process is to understand our client's long-term goals and their short-term cashflow needs. It is also designed to identify how the short-term cashflow needs can impact the long-term goals. Assessment: The main objective of the assessment phase is to identify what needs to be done to achieve each goal and provide context around our client's time horizon and risk tolerance. Expectations may need to be reset based on long-term goals, the resources and assets available to reach those goals and your capacity to take risk over time. Evaluation: This is the phase where we present our findings, show you the steps needed to move you toward your long-term goals, and get agreement on which option best suits your needs. Implementation: Once the financial plan has been established and agreed upon, the implementation phase turns the plan into reality, with each component of the plan designed to align with your short and long-term goals. Monitoring: The monitoring phase is designed to check on the progress toward your long-term goals and make any minor adjustments needed to move you toward your desired outcome. If circumstances change or life-changing events take place, we will move back into Discovery phase, reassess the new circumstances and adjust the plan as needed. Our "Why" Monotelo is a combination of two Greek words: Mono (meaning one) and Telos (meaning purpose). Monotelo's "One Purpose" is to make a difference with meaningful and actionable financial solutions that positively impact our client's lives.

Simplify Your Crypto Tax Filing Expert Help for Crypto Investors Struggling to manage transactions across multiple exchanges and wallets? Finding it hard to consolidate data without clear platform reports? Confused about how trading, staking, mining, and NFTs are taxed? Worried about staying compliant with evolving IRS crypto rules? Missing deductions for mining expenses or operational costs? Having trouble calculating the cost basis for your positions? Our Process Sign Up: Create your account in two minutes. Upload Your Data: Easily upload all your tax documents to your secure portal. Review and File: We handle the rest to ensure accuracy and compliance. We will start your return as soon as all your tax documents have been uploaded to your secure portal and we have your authorization to begin working on the return. If you trade on a non-traditional platform (ie. platforms other than Coinbase or Robinhood that do not provide tax information), we will need the basis information from your transactions. We will follow up with questions if we believe there is missing information. We will notify you when your tax return is complete and give you the option to review it with one of our tax experts. Expertise Specialists in crypto tax regulations Accurate Reporting Technology combined with experience to recognize taxable income from crypto trades Maximize Your Deductions Our advanced planning strategies will help you minimize your tax liability Get Started Today!

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TAX ISSUES LIBRARY TAX CREDITS AND DEDUCTIONS FOR COLLEGE TUITION An overview of the tax credits and deductions available to you for qualified college expenses. Download TAX IMPLICATIONS OF TRANSFERRING A VEHICLE TO YOUR BUSINESS What you should know about deducting vehicle expenses for a personal vehicle vs. a vehicle owned by your corporation Download I’m Ginger Add your content or connect to a database. Adopt Me

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 124 N West St Carlinville, IL 62626 Phone: 217-854-9530 Fax: 217-854-5206 Tue-Thu: 9:00 AM - 3:00 PM Get Directions Call Office Gillespie Office 112 S Macoupin St Gillespie, IL 62033 Phone: 217-839-4226 Fax: 217-839-4039 Mon-Fri: 7:00 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

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

Save as PDF Read more articles Share 1 2 WILL VS TRUST: WHICH IS RIGHT FOR YOU? Have you ever thought about who you would like to give your money, real-estate, or that special family heirloom to after you pass away? Most of us have, but have you taken the necessary steps to ensure that your belongings are received by that person or persons? The two most common methods of transferring your assets to your loved ones after your death are a will or a living revocable trust . What is the difference between them, and which one is right for you? WILL A will is a written document that allows you to establish how you would like your personal assets to be distributed amongst your family and friends after you have passed away. You can also dictate, within reason, how you would like your assets to be used by their recipient. A will can be changed at any time throughout your life but becomes irrevocable at the time of your death. A will also allows you to designate a guardian for any minor children you may have. Without such guidance in your will, it will be up to a judge to appoint a guardian as they see fit. Advantages Easier to set up. A will is generally easier and cheaper to set up than a trust as it does not need to be actively managed or funded. Can be used to designate a guardian for your minor children Disadvantages More restrictive. A will does not provide as much freedom as a trust to control the distribution of your assets after your death. Court intervention. Transferring your property through a will requires the beneficiaries to go through probate court, which can be a time-consuming process and makes your financial affairs part of the public record. LIVING REVOCABLE TRUST A living revocable trust is a legal entity that you set up in order to manage your assets while you are alive and transfer them to your beneficiaries after your death. Unlike a will, there is no court intervention required to transfer property to your beneficiaries. One of the major differences between a will and a trust is that a trust must be funded in order to be valid. A trust can only be used to transfer property that was placed in it before your death. Advantages Greater control. A trust allows you to dictate how and when a minor child will receive any money left to them. It can also be used to set up specific funds such as for a child’s education. Avoid court. Transferring your property through a trust allows you to bypass the time-consuming process of probate court and allows for your financial affairs to remain private. Any assets placed in a trust can be transferred immediately to your beneficiaries after your death. Disadvantages More costly to set up. Trusts are more expensive than wills because they require continued management after the initial setup and they can only control assets that have been placed into them. Cannot be used to designate a guardian for your minor children. Summary You should consider the unique circumstances in your life to determine if a will or a trust would be more beneficial. In some circumstances it may make sense to have a trust but to supplement it with a will. For example, if you have one or more minor children you may consider setting up a trust so that you can establish college funds or hold money for them until they reach a certain age, and then you may want to supplement that trust with a will to designate a legal guardian for your children if you pass away before they reach adulthood. 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.

TAX IMPLICATIONS of the AMERICAN JOBS PLAN President Biden recently unveiled his new infrastructure plan which includes significant tax hikes for corporations and higher-net-worth families. While the plan has not been passed through congress, we thought we would share a quick overview of what is likely to come if there is a shift in tax policy. The plan includes over $2 trillion in proposed infrastructure spending over the next 15 years. To offset this additional spending the plan imposes significant tax hikes on corporations and higher-net-worth families. The plan also includes a number of changes to corporate tax law while modifying the Tax Cuts and Jobs Act that was passed in 2017. Increased Corporate income tax rate from 21% to 28%... While the 7% corporate tax hike may translate into lower stock prices, reduced 401(k) matching, fewer bonuses, fewer raises and fewer stock grants for employees, another impact is likely to come from the income phaseouts on Roth and traditional IRAs. In addition to these proposed changes is a significant tax increase on those making over $400,000 a year. Higher income, capital gains and estate taxes… President Biden campaigned on taxing the wealthy and he’s now beginning to deliver on that promise. White House press secretary Jen Psaki said that the $400,000 threshold for higher taxes would be for families. That implies that individuals surpassing the $200,000 threshold are also likely to face higher taxes. The changes that U.S. taxpayers are facing provide Monotelo with a significant opportunity to demonstrate our value. By getting creative and thinking outside the box, we can equip you to take proactive steps to reduce your short-term and lifetime tax burden. If you would like to learn more about the specific changes that are being proposed, please see below. Warning! There is a fair amount of tax speak here! The proposed tax plan includes the following changes: Imposes a 12.4 percent Old-Age, Survivors, and Disability Insurance (Social Security) payroll tax on income earned above $400,000, evenly split between employers and employees. This would create a “donut hole” in the current Social Security payroll tax, where wages between $137,700, the current wage cap, and $400,000 are not taxed. Reverts the top individual income tax rate for taxable incomes above $400,000 from 37 percent under current law to the pre-Tax Cuts and Jobs Act level of 39.6 percent. Taxes long-term capital gains and qualified dividends at the ordinary income tax rate of 39.6 percent on income above $1 million and eliminates step-up in basis for capital gains taxation. Caps the tax benefit of itemized deductions to 28 percent of value for those earning more than $400,000, which means that taxpayers earning above that income threshold with tax rates higher than 28 percent would face limited itemized deductions. Restores the Pease limitation on itemized deductions for taxable incomes above $400,000. Phases out the qualified business income deduction (Section 199A) for filers with taxable income above $400,000. Provides renewable-energy-related tax credits to individuals. Expands the estate and gift tax by restoring the rate and exemption to 2009 levels. Expands the Child and Dependent Care Tax Credit (CDCTC) from a maximum of $3,000 in qualified expenses to $8,000 ($16,000 for multiple dependents) and increases the maximum reimbursement rate from 35 percent to 50 percent. For 2021 and as long as economic conditions require, increases the Child Tax Credit (CTC) from a maximum value of $2,000 to $3,000 for children 17 or younger, while providing a $600 bonus credit for children under 6. Reestablishes the First-Time Homebuyers’ Tax Credit, which was originally created during the Great Recession to help the housing market. Biden’s homebuyers’ credit would provide up to $15,000 for first-time homebuyers. Source: www.taxfoundation.org If you would like to learn more about how these changes will directly impact you or how to proactively address these changes so your financial security is not put at risk, please reach out to us at info@monotelo.com or 800-961-0298. 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.

Many public sector workers do not pay into Social Security because they pay into a separate state or local pension fund. Since Social Security benefits are based on the Social Security wages earned during working years, public-sector workers who do not pay into Social Security will not be eligible for Social Security benefits at retirement. There are other public sector workers however, who have paid into the Social Security pool because they work second jobs or began working in the public sector later in life or retired and began a second career. Public sector workers who have paid into Social Security can qualify for benefits on top of their pension, but those benefits may be reduced based on the number of years they paid into Social Security. How Are Social Security Benefits Calculated? Social Security benefits are based on your average wages for your 35 highest earning years. If you pay into Social Security for 29 years, your benefits will be calculated using the 29 working years plus 6 years of zero wages. Your annual wages are also adjusted for inflation to prevent your early earning years from hurting your benefits. After adjusting for inflation and averaging your 35 highest years, your annual wages are divided by 12 to produce your Average Indexed Monthly Earnings (AIME). Your monthly benefits are calculated using 3 percentage brackets of your AIME: 90% of the first $926 of AIME, 32% of the next $4,657 of AIME and 15% of AIME after that. Example: If you work for 35 years and have average adjusted wages of $72,000 per year, your Social Security benefit calculation will use $6,000 for your Average Indexed Monthly Earnings and calculate your benefits as follows: THE IMPACT OF YOUR PENSION On Your Social Security Benefits $926 x 90% = $833.40 + $4,657 x 32% = $1,490.24 + $417 x 15% = $62.55_____ $6,000 = $2,386.19 monthly benefits How Your Pension May Limit Your Social Security Benefits If you receive a pension from an employer that does not withhold Social Security taxes, your benefits may be reduced by the Windfall Elimination Provision (WEP). This provision reduces monthly benefits by reducing the first bracket benefits from 90% down to 40% in 5% increments depending on the number of years worked. If you paid into Social Security for at least 30 years with "substantial earnings," then the WEP limitation will not apply. But if you paid in for less than 30 years of substantial earnings the first bracket percentage will be reduced by 5% for each year under 30 until it bottoms out at 40% for 20 years of contributions . This limitation can reduce your base Social Security benefits by as much as $5,500 per year. Example: To demonstrate how this limitation reduces your benefits we have calculated the monthly benefits you would receive if your AIME was $6,000 under two scenarios: 1) where you have 30 years of substantial Social Security wages and 2) where you only have 20 years of substantial Social Security wages: The lower percentage applied to the first $926 of wages when the WEP limitation applies reduces your benefits by $463 per month or $5,556 per year. What Can You Do to Eliminate the Pension Penalty? The Equal Treatment of Public Servants Act of 2019 was recently introduced in congress to repeal the WEP limitations by replacing them with a new formula that treats public servants more favorably. With the bill’s future uncertain, we want to focus on steps you can take right now. The first step in the process is to determine your Social Security benefits by creating an account at www.ssa.gov . This account will allow you to view your estimated benefits based on your prior work history. Be aware that the estimates provided by the Social Security Administration will not account for any WEP limitation that may apply to you. After you find your estimated benefits you will need to subtract $46.30 per month for every year short of the 30-year window of substantial earnings. If you are more than 10 years short of the 30 year mark, only subtract amounts for the first 10 years that you are short. If you are short of the 30-year threshold, you may want to consider working a few extra years at a part-time job or starting a new career at retirement. These additional years of contributions will not only increase your potential Social Security benefit, they will also decrease the limitation put on those benefits by the Windfall Elimination Provision. What Constitutes "Substantial Earnings"? Substantial Earnings are a separate calculation from the calculation of year paid into Social Security. To qualify for a year’s worth of Social Security earnings, you only need to earn $5,880 of wages. To qualify for substantial earnings, you need a total of 26,550 of wages subject to Social Security. The table below will show the substantial earnings test. To discuss this further, please reach out to one of our team members at (847) 923-9015. 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.