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Posted on Friday, December 07, 2018
Ask anyone if they “pay too much income tax” and the knee jerk reaction is almost always, “yes!” and without much hesitation. Why do we call that a knee jerk reaction? Because if you then follow the question up with two more questions, “What did you pay in federal tax last year? And/or what bracket are you in?” they almost as quickly say, “I don’t remember, or I’m not sure”. Or they might guess at a bracket percentage, but usually not correctly. I’ve even had people profess the pain of paying too much in tax only to discover that not only did they get back all of their withholdings, but were given tax credit refunds of money they did not...

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Posted on Friday, November 30, 2018
There are only three weeks left to make something great happen with this year’s tax bill. If you are over 70, save the time you would have spent getting clothes together and boxing them and driving in the holiday traffic to a charity for the tax deduction (this can be done January 3rd), and instead have your investment advisor set up a direct gift from your IRA to the same charity. It still satisfies “RMD” (minimum IRA withdrawal requirements) but takes that amount completely off your taxable income total! If you’re a small business owner that files on a Schedule C , set up your kids to receive payroll from your company and get checks issued and then cashed from...

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Posted on Friday, November 16, 2018
It’s that time of year again and many businesses with fat bottom lines, or even just with joy in their hearts, are getting ready to rinse and repeat what they have always done; buying tickets and food (perhaps adult beverages also) to celebrate and appreciate their work force. The new rules generally allow the holiday party if it’s at the office, but the IRS has set new nondeductible guidelines for entertainment. It’s not clear, for instance, if you usually take you entire office to a holiday show, sporting event or concert, whether that part will still be deductible. More time and guidance will shake that all out, but at the moment it’s possible that it’s not, so you may want...

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Posted on Friday, November 09, 2018
People love to vacation. Some do it often, while others hold on all year for that one great week and live day by day until that magical start date on the calendar! A new wave in our digital age is to only take three or four day weekends, but do it more often. However you “vacation”, they do have one common thread, and that is that they are not free. Furthermore, when you are officially vacationing (which becomes a mind set as well….I am officially on vacation as of right now!) you spend more freely, often with a disregard for cost shopping. “I’m stopping at Starbucks for the Mocha Frappuccino, not Dunkin, cause I’m on vacation!”. What if next vacation...

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Posted on Friday, November 02, 2018
This time it’s clarification of the home equity mortgage deduction, and as with the business meals issue, it’s not as bad as it had first seemed!  The more the details from the broad rules last February have come out, the more we are liking the news!  When business meals were first named as no longer deductible, we thought it would be changing the landscape of the power lunch.  But, details released later softened the blow and it came to light that what the IRS was actually after was a much more targeted class of meals inside entertainment and around employee cafeterias and the like. Now, the details have come out on another headline item that made people groan when first announced:...

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Posted on Friday, October 26, 2018
Part of giving good tax planning advice is understanding short term emergency needs, but also human nature.  Often, before TCJA (Tax Cuts & Jobs Act) people in a cash crunch or in other emergencies would look to their 401(k) for a loan.   After all, that’s where a great deal, if not all, of their “savings” are accumulated.  However, there are several problems with that thought.  First, a 401(k) isn’t “savings”, it’s a “retirement” plan, and the structure of the assets inside are not generally cash, so taking a loan could mean selling an asset and losing growth opportunity that could be critical to the fund’s objectives.  Secondly, the rules on repayment to the 401(k) account might be fine while you...

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Posted on Friday, October 19, 2018
In a few months the U. S. will begin filing tax returns again, and at tax firms all over the country people will be making the “E-Trade” Shocked Baby Face (remember him?) when they see they are being charged penalties and interest for under paying their taxes due. Even if they made a 941 payment in the last quarter to cover ALL the tax due for the year, they can still find themselves fined by Uncle Sam as a penalty for not paying equally over the four quarters of the year. A last quarter over payment simply means they underpaid for three quarters and overpaid for one quarter, and no, it’s not “good enough” for the IRS. People also argue...

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Posted on Friday, October 12, 2018
Some do it often while others hold on all year for that one great week and live day by day until that magical start date on the calendar! A new wave in our digital age is to only take three or four day weekends, but do it more often. However you “vacation”, they do have one common thread, and that is that they are not free. Furthermore, when you are officially vacationing (which becomes a mindset as well….I am officially on vacation as of right now!) you spend more freely, often with a disregard for cost shopping. “I’m stopping at Starbucks for the mocha frappe latte, not Dunkin, cause I’m on vacation!”. What if next vacation you could upgrade to...

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Posted on Friday, October 05, 2018
Late last year the government changed the tax code substantially and, among other things, created a new code section 199A for small business owners.  This created a buzz as many business owners were made aware they would be getting a huge tax break.  They also announced simplifications, like doing away with personal exemptions and instead increasing standard deductions.  In the long run, it should make it easier for people to understand their numbers, although for many it will mean an uptick in what they are paying in tax.   One of the perceived losses was the deduction for many kinds of business meals and entertainment, which was generally “shoulder shrugged” off as a “cost” of simplification.  “If we are getting...

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Posted on Friday, September 28, 2018
All around the country, there are people in an absolute panic because the real tax deadline for personal tax return extension filers is approaching and they are running out of time.  A few blogs ago, we talked about how to possibly deal with not being ready for the corporate deadline on September 15th .  We don’t have an amusing anecdote for the October 15th deadline like we did for the corporate deadline.  The deadline is the deadline. The exception would be for those who have been affected by flooding or other natural disasters and may be given an extended deadline by the IRS.  Those people may now have until December 31st to file, but would need to check the IRS website to see if they are in an affected area...

Click here to view the full article on Tax What If Doctor.