Tag Archive for taxes

Your Year End Tax Planning Starts Now!

Think you can wait until December 31st to do tax planning for 2016?  Think again!  Starting your tax to-do’s earlier in the year makes life easier for your CPA, financial advisor, AND you.


Thanks so much to Elizabeth Moore, CPA and Partner at Ryan, Gunsauls & O’Donnell, LLC (http://www.rgo-cpa.com) for these top 5 actions to take NOW.


  • Get your books and records in order for the year (i.e., record all of your cash receipts and disbursements in QuickBooks or the software of your choice, reconcile your bank and credit card accounts, update your mileage logs, gather receipts to document expenses, etc.).


  • Donate to your favorite charity including churches, schools, or other 501(c)(3) public charities.  You can even donate up to $100,000 directly from your IRA to a charity of your choice which counts toward your Required Minimum Distribution (RMD) for the year and isn’t includable in your adjusted gross income for the year, which is a huge tax benefit.


  • If you haven’t met your deductible, get all of those medical and dental appointments out of the way and PAID for by check or credit card prior to year-end.


  • Start researching the business vehicle of your choice, NOW, instead of on 12/31.  To establish adequate business use (i.e. 50% or more) of a vehicle to get the maximum amount of depreciation deductions, buying well before year-end is a must.


  • Take inventory of your business fixed assets (i.e. furniture, fixtures, equipment, vehicles, etc.) NOW and determine what you need to buy this year, instead of waiting until 12/31.  Not only must the purchase occur prior to 12/31, it must be placed in service prior to 12/31 to be eligible for depreciation.


Remember, if you spend New Year’s Eve on last minute tax deadlines, who will be wearing that lovely lamp shade at the neighbors’ party?


Top 3 Reasons to Use a Roth IRA – Part 1 Tax-Free Withdrawals

Einstein Tax quote

That’s right, folks.  Albert Einstein thought the tax code was too complex to understand.  Where does that leave us mere mortal non-physicists?   Hopefully, reading the Sullivan Financial Planning blog!

When anyone is talking to you about investment ideas, the question you need to be asking is simple:  What’s in it for me?

 In the case of deciding what kind of IRA to use, you want to know what benefits are there for using a Roth vs. the old Traditional.  This week, we discuss the first of the top 2 reasons people choose a Roth IRA:  Tax-free withdrawals in retirement. 

 Brainy advisers will try to tell you to figure how much your tax rate is now vs. how much you think your tax rate will be in retirement.  If you think the now tax rate is higher than the retirement tax rate, you should NOT use a Roth IRA – so goes the conventional wisdom.

 I say differently.  In retirement, taxes become a bill that you have to pay along with food, utilities and medicine.  Every time a you take money from a Traditional IRA, 401(k), 403(b), SEP IRA, or other tax-deferred account, you generate a tax bill.  Ugh!


Having a Roth IRA means there is one glorious account from which a retiree can take money and not have a tax bill on the withdrawal.   As that retiree, you are not going to be doing the math of whether or not you paid more taxes in your working years to get that pool of money.  You’ll just be glad to have it.

I tell people that having a Roth IRA in retirement is like having life insurance at your spouse’s death.  No one ever said there was too much life insurance money and regretted the premiums when it came time to collect.  And I’ve never seen a retiree regret his Roth IRA pool of money.

 Next week, we talk about reason #2 to use Roth IRAs – passing along income tax-free assets to your heirs.