Circle Roundup: It's... the Tax Code Show!

Liz Revenko / Apr 19, 2018 / Tax Planning / Women's Events

Most people wouldn’t expect a discussion about taxes to be as riveting as a Game of Thrones marathon.

But then again, don’t you want to know what the recent changes in the tax code may have in store for your wallet beginning this year?

In our first-quarter Women's Circles series, aptly titled “The Tax Code Show,” we discussed a broad array of the Tax Cuts and Jobs Act (TCJA) of December 2017, so that participants could start to answer the big question: “How does this apply to me?”


Tax Considerations for Self-employed Consultants

Mary Ballin / Apr 11, 2017 / Tax Planning / Retirement Planning

Nearly 15 million Americans were self-employed in January 2017, according to the Bureau of Labor Statistics

Being a self-employed consultant means you can work for more than one company, direct your own work, balance your own books, manage your business and be responsible for all of your own business expensessuch as technology, transportation, office materials, and the likepretty much, the buck stops with you. You are the employee of the month. Every month.

Under these conditions, the IRS would consider you a self-employed independent contractor.

But before taking your well-honed list of contacts and embarking on a new career as a consultant, you’ll want to understand the tax implications involved. The differences between your tax obligations as an employee and as a self-employed consultant can be significant.

A little knowledge and preparation now can save you a big headache down the road. Let's look into what you need to know.


Taxes: Ways to Prepare for the Marriage Penalty

Steve Branton / Mar 30, 2017 / Tax Planning

Henry and Sean had been living together for what seemed like forever to their friends—20 years and counting. They were partners long before Proposition 8, and they watched its saga unfold together. Now that civil marriage is an established right for same-sex couples, Henry and Sean have been discussing whether to take the big leap together.

Sean proposed, and Henry said yes. 

Although news of the engagement made their parents ecstatic (“Finally, some grandchildren!” was Sean’s mom’s reaction), some of their friends in the know were quick to point out a hiccup to making this change: the much misunderstood “marriage penalty.”

Under current law, a dual-income couple will likely pay more in taxes compared with two single people—especially if both are medium- to high-income earners. This is what is referred to as the marriage penalty. But it’s not always the case.


Trusts: Maximize Charitable Giving While Minimizing Estate Taxes

Mosaic / Feb 7, 2017 / Estate Planning / Tax Planning

Charitable remainder trusts (CRTs) and charitable lead trusts (CLTs) are two popular types of split-interest trusts commonly used by individuals and families for managing taxes in an estate plan while simultaneously supporting charitable organizations. 

Interested in how trusts maximize charitable giving while minimizing estate taxes? This article describes the key characteristics and potential benefits of two these types of trusts—charitable lead trusts and charitable remainder trusts. 



Lower Your Tax Bill with Year-End Tax Planning

Mosaic / Dec 13, 2016 / Tax Planning / Financial Planning

The end of the year is drawing near. Your thoughts are probably monopolized by gift ideas that may top what you got for Dad last year, or how to survive an evening with in-laws, or planning what you’re doing for New Year’s Eve. The last thing anyone probably wants to think about is taxes. But if you are looking for ways to minimize your tax bill, there’s no better time for tax planning than right now.

There are a number of tax-smart strategies you can implement now that will reduce your tax bill come April 15. So think of this as your most proactive New Year’s resolution ever, and consider how the following strategies might help to lower your taxes.


More Tax Today May be Your Best Alternative Minimum Tax Strategy

Geoff Zimmerman / Nov 22, 2016 / Tax Planning / Financial Planning

During your year-end tax planning, you might find that you’re going to be stuck paying the alternative minimum tax, an alternative method of calculating income tax that runs parallel to the regular tax system. If that’s the case, you should focus on reducing your income taxes in the years ahead.

Generally, you’d do that by increasing your level of ordinary income that is normally taxed at your highest federal marginal tax rate. This might seem like a counterintuitive way to reduce the sting of your tax liability, but it makes sense when you consider how the AMT works and the tax brackets associated with each tax system.


How the AMT works

Under the regular system, in which taxable income largely determines your bracket, the highest tax rate is 39.6%. Under the AMT system, the highest rate is 28%. The AMT has fewer tax brackets, but is more complicated because certain types of income, exemptions and itemized deductions factor into your taxable income. What is AMTI?  You calculate both your regular federal taxable income (RTI) and your alternative minimum taxable income (AMTI) to determine your tax liabilityunder each system, and then pay the higher of the two.


Reducing Your Income to Escape the Alternative Minimum Tax

Geoff Zimmerman / Oct 26, 2016 / Tax Planning / Financial Planning

If you got hit by the federal alternative minimum tax last year or think you might get hit this year, now is the time to think about your tax planning. There may still be some ways you can escape the AMT; talk to your tax professional about the best strategy for you. One way to avoid the AMT is to reduce your alternative minimum taxable income (AMTI) to the point where the AMT is less than the ordinary tax.


Tax Tips for ESPP Stock

Geoff Zimmerman / Aug 30, 2016 / Tax Planning / Financial Planning

Tax rules for sales of Employee Stock Purchase Plan (ESPP) shares can be quite complex for ESPP plans that allow participants to purchase stock at a discount. This article outlines the rules of the road for dealing with ESPP stock purchases and sales, with several examples to help ESPP participants better understand the nuances of these plans. Our fictional sample ESPP participant is Jim Brook of Orange, Inc. We'll see how Jim's shares can be sold in several ways, and what happens in each scenario.


Money Crossing Borders Requires Special Planning

Steve Branton / Aug 18, 2016 / Tax Planning / Financial Planning

For those who want to retire abroad or move back to the U.S. after years working overseas, making the move is one thing — but figuring out how it will affect your finances is a much bigger challenge. Financial planning would require taking into account varying tax rules, currency fluctuations and even political instability.

The good news is that a new kind of financial planning is emerging to help people navigate the potential pitfalls: Cross-border planning can help you keep as much money as possible securely in your pocket as you move from country to country.



Alternative Minimum Tax: How to navigate that winding road

Geoff Zimmerman / Jul 14, 2016 / Tax Planning / Financial Planning

Tax season is over, but if you had to pay the federal Alternative Minimum Tax, the pain may linger long after you’ve filed.

Of course, the AMT is the road no one likes to travel — it’s the higher tax route. To develop appropriate planning strategies, it is important to first understand how the AMT works.


Year End Stock Option Strategies

Geoff Zimmerman / Dec 14, 2015 / Tax Planning

With the end of the calendar year upon us, now is the ideal time to update existing strategies around company stock options, stock appreciation rights and restricted stock. Because holders of these instruments frequently find their portfolios highly concentrated in their own company stock, proper planning and management of these assets is often the key to successful wealth accumulation and preservation.


Tax Loss Harvesting

Mosaic / Dec 10, 2015 / Tax Planning

One thing we have always done at Mosaic is take advantage of dips in the market to harvest losses for tax purposes. While no one likes to see the market go down, if we can convert that unpleasant experience into a tax deduction, at least Uncle Sam will share some of that pain. We sell the security at a loss and replace it with a similar security. You get to use that loss to offset current or future gains, or to a limited extent, to offset other income. This reduces your taxes.


Evaluating Charities

Mosaic / Nov 30, 2015 / Tax Planning

Many of us tend to just send a check to whichever organizations we happen to receive solicitations from.  But if you take some time to consider the impact you wish to have on the world, you will likely find the act of charity to be much more rewarding.  Here is a look at how to be more proactive with our gifts, by evaluating charities before making a donation. 


Avoiding Capital Gain Distributions

David Cowles / Nov 13, 2015 / Tax Planning

As you review your December monthly statements you may notice some large year end capital gain distributions from your mutual funds. Even if you did not sell any of your fund shares, these distributions must be reported on Schedule D of your tax return as taxable capital gains.


Mergers, Incentive Stock Options, (ISOs), and Unintended Consequences

Geoff Zimmerman / Sep 14, 2015 / Tax Planning

Incentive Stock Options (ISO’s) offer the potential for favorable tax treatment in the right circumstances.  However, the ISO landscape is a minefield of hidden traps, some of which arise when mergers or other changes in the control of a company occur.  In this article, we’ll review some of the considerations involving the vesting of ISO’s and some of the unintended consequences that can occur in situations involving an acceleration of vesting.