One Significant Habit Of The Wealthy In South bay — Generous Charitable Contributions

One Significant Habit Of The Wealthy In South bay — Generous Charitable Contributions

Now that we have a divided Congress again, we can all sit back and enjoy the gridlock that is headed our way.

Or something.

I don't blame you if you tune out from politics — and I also don't blame you if you find yourself jumping more intentionally into the fray. There's lots to be frustrated by, and plenty to fight for.

But, as I always like to say, the MOST important thing you can be doing is tending to the state of your own mind, so that you are able to be focused on those things that most concern your family and financial world.

And yes, I know that's "easy to say" as somebody who has built a business in South bay, and is making certain progress … but it's also because I have chosen to focus on these things that we are even having this conversation right now.

So, if you want to add focus to those more private matters and you need somebody to pay attention to how upcoming Congressional actions will be affecting your finances … well, that's exactly what we're here for. We pay attention to these things so you don't have to. It's just what we do.

With all of that said (and speaking of habits that will help you), I'm returning to one of my favorite topics today. Would love your thoughts…

One Significant Habit Of The Wealthy In South bay — Generous Charitable Contributions

"My best friend is the one who brings out the best in me." – Henry Ford

We're into the final quarter of 2018, and since this is the biggest quarter of the year for giving, I'd like to take the opportunity as one of your financial advisers to make a few points about giving to charity.

Because with more taxpayers taking the standard deduction than has been done in years past (at least in terms of what people are projecting for this upcoming year), there are some who might be wondering if they should be as aggressive about charity as they have been in the past.

In which case, allow me to posit a question:

Why do you give to charity? Is it for the tax deductions … or for a different reason?

Now, as someone who prepares tax returns (and who figures out all the many new ways we can keep more of your money in your pocket), much of what we do revolves around tax avoidance strategies. I have ZERO problem whatsoever in helping my South bay clients use all available strategies to their utmost, ethical advantage. But I love it when I see my clients and friends make giving decisions which seem to run counter to immediate, short-term self-interest.

And, I believe it's actually enlightened self-interest in the long run. And not just in our sense of feeling good.

I also see the balance sheets of people from every walk of life and every kind of income class, and over the years I've noticed an interesting phenomenon: individuals and families who make giving a priority, even when they aren't "wealthy" by others' standards, seem to eventually do better in the long run. And I do mean financially — not just in their state of mind.

(Though, there are great "state of mind" reasons for giving. Have you seen, as I have, that those who freely give seem to be much more pleasant company?)

In my line of work, I have made it a point to observe how money works. And, for some reason, money gets attracted to those who aren't in hot, desperate pursuit of it. It's almost like in romance — potential lovers are usually turned off by the overly-aggressive seeker.

So, because of (and not despite) the shifting nature of how charitable contributions might be counted on your taxes, may I suggest that you consider increasing your giving? You might be surprised by what happens in your heart. And, dare I say, in your balance sheets.

Lastly, let me also say that just because you give — you don't have to be a dunce! We can help you determine the most tax-advantaged way under the "new" tax code for you to do your giving, if you want that advice.

We're only an email or phone call away.

Until next week,

 

Andre Sugars

(310) 327-1985

Champion Tax Service

 

What To Do When You Experience A Sudden Income Increase In South bay

What To Do When You Experience A Sudden Income Increase In South bay

I don't know about you, but I am *celebrating* the end of all of the automated phone calls and ads, now that this election is behind us. And no matter how you feel about the results, I hope we can all agree that it's good to put all the shouting behind us.

Er, well … maybe the shouting never ends. But at least we can change the topic now.

And if there's one topic that is nice to dream about, it's the sudden windfall. Like for the South Carolina individual who purchased the winning Mega Millions ticket last month (still wisely anonymous), or more realistically, if we get a sudden raise or an inheritance … or, really, any kind of windfall.

It's nice to consider — though I don't recommend "considering" it for too long, lest you become overly dissatisfied with your current circumstances.

I spend a lot of time writing about what you should do if things suddenly turn south … and we are right here for you should that occur. We specialize in helping people in South bay dig out of holes.

That said, we've had a number of clients who have come to us because their incomes have suddenly taken a different, much higher turn. And aside from the new tax considerations, there are a number of things you should consider when your income takes leaps that you're not accustomed to.

What To Do When You Experience A Sudden Income Increase In South bay

"It is wrong to assume that men of immense wealth are always happy." – John D. Rockefeller

Inheritance and sudden income increase are not nearly as uncommon as you might imagine. There was recent data from the Fed I saw in which more than nine million households in the U.S. reported getting an inheritance of at least $100,000. And there is other data which suggests that baby boomers stand to receive over $8 trillion in inheritance over the next few decades.

But sometimes such "blessings" end up as curses to those who aren't prepared.

Consider former baseball star Lenny Dykstra, who filed for bankruptcy years ago, and was eventually imprisoned for financial crimes — after once having a net worth estimated at $58 million. And, of course, the stories of lottery winners have become so pervasive that Hollywood has even begun using them as a regular plot device.

I would highly recommend that you not follow those examples. When your income suddenly rises, whether through windfall or the sale of a business or home or some such, well, here's what I suggest…

Don't move too fast.

Take some time to let it sink in and get through the emotion. Most poor decisions made with sudden wealth usually occur within the first couple of months.

So lock it up in a low-yield savings account for three months, proceed as normal, and use that time productively.

While you have your new buffer locked away…

Take the time to create specific life goals, and evaluate how the money will help you achieve them.

You've suddenly been given some cushion, but that doesn't have to mean your life needs to radically change. It might get easier … but if you leave behind the goals you created BEFORE this change, it's more likely that it will get harder.

And to properly do this, you need…

A "disinterested" advisor.

It's often best to work with someone who already has experienced handling the finances for people with means. That way they, too, won't get caught up in the emotion of it. Be very careful to whom you give fiduciary responsibility, and perhaps split what you are able to under the auspices of more than one financial advisor, so you can get a feel for what works best for you.

And then you can allow one of these advisors to be your gatekeeper from that suddenly-interested cousin or high school friend from South bay with those "can't miss" investment ideas.

An important step: Immediately, give a portion of it away.

I've written about this dynamic before, but there's something special which happens inside your mind when you give away your money: it loses its grip on you, ever so slowly. And, far from turning you into a profligate (and unwise) giver, what can happen is that you aren't as affected in your character by the sudden influx of funds. Which means that you don't become more flashy, nor do you become a tightwad.

And of course, assess your tax strategy.

Coming from me, this should be a no-brainer, but every gift has a variety of ways by which it can affect your taxes. This is something that we are especially prepared to help you with, and you should ALWAYS plan the tax implications of how you receive large sums of money.

There is obviously more that can be covered in one note here, but again, whether your circumstances have improved OR taken a turn for the worse, we really are in your corner.

Until next week,

 

Andre Sugars

(310) 327-1985

Champion Tax Service

 

One Trump Tax Plan Mistake That Andre Sugars Wants You To Avoid

One Trump Tax Plan Mistake That Andre Sugars Wants You To Avoid

The internet can be a confusing, anxiety-inducing space.

The national news is downright scary (and tragic), and places that used to be the province of baby pictures and goofy status updates are becoming increasingly divided over cultural questions and differences.

But on top of it all, finding good information about how to rightly handle your finances in light of the Trump tax plan is another shaky proposition. There are so many contradictory articles, confusing jargon and “explainer articles” that only leave you scratching your head.

Oh, and then there’s the fact that the IRS STILL hasn’t released full guidance for every component of the plan. Oh yeah, and Congress might change a bunch of it before the end of the year (you might have heard — there are elections coming up).

Which is why we make it our mission to be your port in the storm in South bay. To provide you personalized recommendations and guidance through the chaos of all of it.

Because the fact is that there are some strategies that, on the face of things, might *seem* like they would be super-smart.

That is, of course, until you dig into the details.

Which is what we do for you.

We’re only a phone call ((310) 327-1985) or an email away. Don’t make this kind of scary mistake…

One Trump Tax Plan Mistake That Andre Sugars Wants You To Avoid

“All adventures, especially into new territory, are scary.” – Sally Ride

One of the big changes to come down the pike this year is the limit placed upon how much you can deduct for state and local taxes (the SALT deduction).

As it was before,  you could deduct all of your property taxes, and all of your state and local taxes. In most situations, you could deduct almost all of your mortgage interest paid.

This policy was put in place to spark a greater percentage of us to opt for homeownership, because as the value of your house (presumably) went up, you could get the deductions on your interest and property taxes.

But now things have changed.

And this has especially struck those who live in high tax states. California is tops on most lists (depending on how you calculate it, with or without sales tax — this list includes sales tax and has New York as the highest, with CT, NJ and CA not far behind).

But really, if you have a higher income, or a larger mortgage, this is something we should consider for you, because as of 2018 (that would be this year), you can only deduct $10,000 TOTAL in SALT. (There are separate, new caps on mortgage interest as well.)

Some of these states sprung into action by enacting provisions that would allow taxpayers to contribute to charity at a higher level instead of property tax, but the IRS nixed that.

So some “smart” tax professionals that I’ve seen started pushing a different strategy: set up an LLC, put your home under that entity, and then “rent” it from that LLC.

On the face of it, this seemed super smart. You now have a “business”. You can deduct your mortgage interest and property taxes as a business expense. You MIGHT even be able to take the QBI deduction!

But there is a significant catch to this strategy that I’m not sure everyone has thought through.

And this is why it pays to have somebody in your corner who is paying attention to this stuff (so you don’t have to): it keeps you from making a possibly-frightful mistake.

Because in this scenario, if you EVER sell your home, and it has increased in value, you are no longer eligible for the gain exclusion of $500K (if you’re married filing jointly) or $250K (if you’re single).

Now, if you know FOR CERTAIN that your property won’t sell at a gain, or only a negligible one, this might make sense for you. We can help you run those numbers.

But consider…

Let’s say you’re at the 24% tax bracket (which is for incomes between $82,501 to $157,500 as a single, or $165,001 to $315,000 when filing jointly) and your property tax is $10,000/year. And we’re assuming you sell at a gain, let’s say of $250K. It will take almost 20 YEARS of this strategy for you to have made up the difference that you would lose from the gain exclusion.

If your property taxes are lower, it would take even longer.

The point is this: there is a downside to every tax strategy. And you need to have somebody in your corner in South bay who is looking at things from every angle to make sure you are making the smartest decision for YOU.

There are ways around many problems. But sometimes following the advice from the “guru of the day” can bite you in the rear. And you could make a frightening mistake.

But remember … we’re in your corner.

Is there anything more that we could do for you, to help?

Until next week,

 

Andre Sugars

(310) 327-1985

Champion Tax Service

Champion Tax Service’s Guide to Nailing this Year’s Holiday Budget

Champion Tax Service’s Guide to Nailing this Year’s Holiday Budget

Plans, plans, plans.

We're all about those plans.

These days, we're working with a fair number of our South bay clients to get ahead of all of the changes to the tax code. Yes, there's a larger standard deduction next year, and that might make sense for you.

But I'll tell you what DOESN'T make sense: not taking action now when you can actually affect your current year taxes. A few things have made this even more pressing (for example, you can no longer recharacterize a Roth IRA after 12/31 for the previous year, as you used to be able to).

But the primary reason we should take a look at things now (instead of in February, March, or — perish the thought — April), is so we can take tangible, money-saving action instead of trying to clean things up after the fact.

So give us a call: (310) 327-1985, or shoot me an email through the button at the top of the page and let's get something on the calendar.

(Maybe we'll make a suggestion for you to MOVE if you live in one of these states. Alright, probably not, but those are some interesting numbers.)

Now, speaking of planning, I just saw holiday swag is available in stores … and I'm not talking about Halloween.

Yes, holiday creep is REAL … and budget creep is a big part of it.

So, WELL in advance … because I am a compulsive planner after all, here's how to avoid getting sideswiped by going overboard during the holidays…

Champion Tax Service's Guide to Nailing this Year's Holiday Budget

"A year from now you may wish you had started today." – Karen Lamb

The best place to begin when it comes to planning for this year's holiday spending is to examine what you did last year.

Dig up the credit card statements online (and maybe the checkbook registers if you still roll with those!), and add up how much money you spent. You'll also want to take notes regarding where you spent it. Don't forget to include money used to purchase gift wrapping supplies, cards, postage, food while shopping, entertainment costs, decor, and special-occasion clothing.

Now that the numbers are in front of you, it's time to form an opinion.

How do you feel about last year's spending? Did you spend a realistic and appropriate amount, or did you go overboard? Try to be objective. This analysis will serve as the backbone of your plan.

Look at the Present … And That Pun Is Intended

Financially speaking, how have you fared this year compared to last year? Be sure to look at any changes in income as well as expenses. If your finances haven't changed and you're happy with last year's spending, then you're starting off in very good shape. If your overall financial status has declined, or if you were less-than-pleased with last year's performance on your holiday budget, then you've got some work to do.

Begin by looking at the number of purchases you made a year ago.

Which ones would you make again, and which ones leave you scratching your head? It may be time to reduce your gift-buying list or change the amount you spend on each purchase. The obvious way to accomplish this is to be less extravagant with your selections. A less obvious but often effective approach is to research your potential purchases. Sometimes you end up paying extra for the convenience of one-stop shopping, so look through the newspaper to find which stores are offering deals.

Then check online to see if you can beat their prices by purchasing somewhere else. This practice will cut down on last-minute shopping, which can be an expensive proposition.

Think About Future Years

So, you've figured out how many purchases you need to make, as well as which ones need scaling back in terms of price. Now it's time to create a holiday budget. Once again, there is no magic formula. Creating a budget and sticking to it requires two main things: common sense and commitment. Let's take a closer look.

A budget should always be based on the money you have, not the money you can borrow. If you are still paying off charges from last year, then you need to avoid using credit cards to make gift purchases this year. The amount of money you decide to allocate toward holiday spending should be based solely on what you've saved or what you will save from now until the time you start shopping.

When drafting your budget, start by creating a list of recipients, along with columns for the gifts you intend to buy and the dollar amounts you expect to spend. (Is that too uptight? No, I don't think so.)

As you make purchases, keep track of the results. If you overspend on one gift, it is imperative that you make it up somewhere else. Your diligence is one of the keys to staying within your budget.

It's also important that you watch out for potential pitfalls, including impulse shopping. Getting into the spirit of the holidays is one thing, but spending frivolously based on a last-minute decision is something else. You've got a list, and your job is to stick to it!

One final thing that may need an adjustment is your overall philosophy. It's easy to look at the budget you've created as a restriction. After all, it's nothing more than a set of rules. The flip-side is that these rules are there for your protection. Sticking to them will not only help you feel comfortable about your finances before and after the holidays, it will free you from the stress that comes from accumulated debt. When you look at it this way, a holiday budget can be downright liberating. Give yourself the gift of a financially stress-free holiday, by planning in advance.

And is there anything more that we could do for you, to help?

Until next week,

 

Andre Sugars

(310) 327-1985

Champion Tax Service

 

What Is The Proper Role Of A South bay Small Business Owner?

What Is The Proper Role Of A South bay Small Business Owner?

Firstly, I gotta say — we're past the midpoint of October, and, well … the calendar is speeding up.

Sure, looking back from an historical perspective might still enable us to find some deductions. But by the time the end of the year hits, it'll be too late to fix problems like missing the new 20% QBI reduction, lost MERP deductions, lack of basis for losses, and the wrong entity designation.

If you do wait until December … well, technically it's not too late. But for practical purposes, by that point in the year, it's too late to establish a new entity type. It's probably too late to fund a C-Corp. Most likely it's too late to decide what type of pension plan you have and get it put in place by year-end.

We get real busy in December with year-end concerns, so I want to put a burr in your saddle now to make sure that we get ahead of the game with you and your South bay business. Let's take full advantage, together, of the possibilities available in this year's tax code.

Now, leaving aside these tax issues for a moment, I'd like to have the chance to lift your vision about how you conceive of YOUR primary task as a business owner. This is something I've picked up along the way which has definitely benefited the growth of our firm. And it's worth thinking through.

You see, you need to see yourself as having the resources that are able to take care of the "details", while you focus on marketing and positioning your business. This has to be your primary task as a business OWNER (not to be just a "do-er").

What Is The Proper Role Of A South bay Small Business Owner?

"If a man does not keep pace with his companions, perhaps it is because he hears a different drummer." – Henry David Thoreau

I'm curious. What drove you to start your own small business? A passion for the product or service you provide? A desire to be your own boss? A chance to dust off some ambition? A drive to stick it to "the man"?

Did you become a small business owner because you enjoy marketing or management? Probably not. But, if you're going to continue to grow your business you have to realize this important fact: Unless you want your South bay business to forever stay in the category of "side hustle", you must move on from seeing yourself as a service or product provider.

Let me quickly show you the difference between an OWNER and a service/product provider.

A Service/Product Provider:

Has products or services

Talked to prospects

Has customers

Owns a business

Hopes they'll stay in business                  

An OWNER:

Sells products/services

Continually talks to a list of prospects

Builds relationships with customers

Grows their business

Is building their business' future

So how do you make this shift? Well, here are a few questions you should be thinking about…

* Do you have a plan to move your "service-oriented" tasks off your plate?

* Are you building your prospect and customer lists in an ongoing, systematic basis?

* Does your business have a marketing "system" in place?

* If you stopped "doing your job" … would your business immediately shut down?

What I'm learning: smart marketing and owner positioning can make the difference between doing "alright", and creating something of growing, ongoing value.

Yes, I'm an accountant — but you must understand, I'm a business owner too, and these are hard-won lessons.

I want your business (and mine) to grow, and grow RIGHT.

I'm grateful for your friendship.

Feel very free to forward this article to a South bay business associate or client you know who could benefit from our assistance — or simply send them our way? While these particular articles usually relate to business strategy, as you know, we specialize in tax preparation and planning for families and business owners.

 

Warmly,

 

Andre Sugars

(310) 327-1985

Champion Tax Service

 

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