Category Archives: Year-End Tax Planning

Advisers Say Investors Should Not Panic Even When Stock Market Shows Signs Of Dropping

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Jeff Vahanian of Vahanian & Associates in Saratoga Springs.
©2018 Saratoga Photographer.com

By Jill Nagy

Sit still. Hold tight. Don’t panic. That sums up the advice of some financial advisors to investors feeling a bit seasick in a volatile market. 

From 1980 to the late October 2018 market drop, there have been 36 corrections in which the market fell 10 percent or more, said Jeff Vahanian of Vahanian & Associates in Saratoga Springs. In each case, the market recovered and continued moving upward.

The worst thing an investor can do is to sell when the market drops and then miss the upswing that is likely to follow, he said. 

Tim Pehl of Luther Forest Wealth Advisors agreed. 

“We try to keep our clients on the straight and narrow,” Pehl said. His advice to nervous clients: “Stick to your plan.”

 “People with good rules, good discipline, and good habits do well,” noted Vahanian.

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Business Report: Closing Out 2018 Finances

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Stephen Kyne is a partner at Sterling Manor Financial in Saratoga Springs.

By Stephen Kyne

The end of another year is rapidly approaching, and just as you cross items off your checklist and prepare your home for the winter, it’s also important to complete maintenance items to prepare your finances to close-out 2018.

An often-overlooked task is to review your beneficiary declarations each year. Families grow, as new members are added, and shrink with death and divorce, which means that beneficiary and transfer-on-death declarations can easily become outdated and no longer reflect your true wishes. 

Since these declarations are a matter of contract, they will overrule what your will may say. So, even if you’ve updated your will to exclude an ex-spouse, but you left them as beneficiary on your IRA, your new spouse won’t be able to inherit those assets, but the ex will, and it can’t be challenged in probate. 

Another piece of financial housekeeping is to begin to gather documents you’ll be needing just after the new year to prepare your taxes. Compile receipts for medical bills, tuition payments, child care and charitable contributions, among others.

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Business Report: Tax Saving Chances For Capital Investments

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Frank Mayer is a member of Bond Schoeneck & King.

Frank C. Mayer

On Dec. 22, 2017, President Trump signed into law the Tax Cuts and Jobs Act. The Act has effectively reduced the acquisition cost of certain capital assets by making significant changes to the rules for bonus depreciation and capital expenditures, commonly known as Internal Revenue Code Section 179 Expensing and certain other depreciation.

Prior to the Act, taxpayers were allowed to deduct 50 percent of the cost of most new tangible personal property and most new computer software in the year that an asset was placed in service. Because of the bonus depreciation deduction allowed in the year an asset was placed in service, there was a corresponding reduction in the amount of regular depreciation allowed in that year and later years.

For qualifying property placed in service after Sept. 27, 2017, and before Jan. 1, 2023, the Act raised the 50 percent bonus depreciation deduction rate to 100 percent.

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Savings Plan Options

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Kevin M. Hedley is a partner with Hedley & Co. PLLC. Courtesy Hedley & Co. PPLC

As Congress and the White House debate tax plans, there have been much discussed changes to the traditional 401(k) plan. The proposed plan to adjust the maximum limit for contributions has been tabled but we still have a long way to go before we have a tax plan in place.

That does lead to the questions—What are the limits for various retirement plans and what are some options for a small business owner to save for retirement?

Depending on your immediate and long term goals there are plenty of options. There are defined benefit plans, Defined contribution plans and other retirement savings plans such as SEPS, SIMPLES and IRAs to name a few. All of these plans allow a deduction from current income if a contribution is made according the respective plan terms. The differences between them include the amount of contribution and the costs of administering each plan

Benefits are paid from these plans in most cases at retirement, death, disability, or separation from service. Distributions from plans that do not fall into one of the allowed categories are also subject to penalty ranging from 10 percent to 25 percent.

Under a defined benefit plan, an employer makes annual contributions to the plan to provide each participant with a set benefit at retirement. Contributions to the plan are actuarially determined, and the plan can be integrated with social security. An integrated plan reduces the contribution for the lowest-paid employees and still allows for a significant contribution on behalf of the owner and key executives. Benefits under the plan are fixed using a definite formula. Typically, the formula expresses the benefits in one of the following ways:

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With Uncertainty In Congress About Tax Plans, There Are Ways For Businesses To Plan For 2018

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Steve Ellwanger, a CPA in Saratoga Springs, offers a range of accounting services.

By Maureen Werther

Between now and the end of the year, financial planners, advisors and CPAs will be busy working with clients to ensure their future financial security and minimize their tax liabilities for the coming year.

However, this year is fraught with more uncertainty than any other time in recent memory, some advisors say.

With tax reform still being negotiated in Washington, D.C., financial professionals will be waiting to see what the coming months will mean for the year ahead.

According to global financial giant, Wolters-Kluwer, year-end strategies will become clearer as the legislation moves forward. For the time being, they advise flexibility and preparedness. In other words, an accountant should be ready to adjust to whatever changes are brought about and they should be ready to execute effective strategies for clients as late as December.

For larger, well-established companies or high-wealth individuals, their team has already been planning for several different scenarios. For smaller and younger companies, there are also basic strategies they can employ to ensure them from unnecessary vulnerability.

Stephanie Mumford, CPA and partner at Teal, Becker and Chiaramonte, said that on some level everyone can benefit from financial and tax planning.

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Business Report: Federal ‘Tax Extenders’ Provide Relief

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Tina Suhocki is a CPA at Teal, Becker & Chiaramonte CPAs, PC.Courtesy Teal, Becker & Chiaramonte CPAs, PC

By Tina Suhocki and John McCann

CPAs in public accounting firms do their fair share of yearend tax planning services. The past several years, have been particularly challenging due to Congress not acting on the Bush-era and other “tax extenders” until so late in the year, most tax planning was already completed.

However, with the passage of the Protecting Americans from Tax Hikes Act of 2015 (PATH Act) in December 2015, Congress made some of the significant tax extenders permanent or extended them for several years, making the task a breath of fresh air.

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Business Report: Understanding Retirement Savings Options

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Stephen Kyne is a partner at Sterling Manor Financial, LLC in Saratoga Springs.Courtesy Sterling Manor Financial LLC

By Stephen Kyne

As we begin to close out the year, we should be mindful that we are doing all we can do take advantage of the opportunities for retirement savings that are available to us. When doing so, it is important to note the different types of accounts we may have access to, as well as the varying benefits that each provides.

Traditional IRA:

The Traditional IRA provides a very basic avenue for contributing to a retirement account in a tax-advantaged way. Savings are made on a pre-tax basis, and your contributions are generally tax-deductible to you in the current year.

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