The gravity of the COVID-19 pandemic has forced a multitude of Americans to confront many issues they had previously put off because the topics are uncomfortable. Mortality has become a central concern due to the rise of the Coronavirus, so estate planning has become a priority for many individuals who currently have no plan in place and face the outlook of their probate estate distributed by the court rather than their own wishes. There are a few important documents you should have in place to handle unexpected situations such as illness, incapacitation, or death that make up a solid, basic estate plan.

One of the most obvious issues is the improper distribution of assets after a loved one’s death. It is not easy to talk or think about, but as they get older, a plan needs to be in place. If not, there is no guarantee that their assets will be handled properly after they die. More importantly, planning ahead can help protect accounts in special circumstances. For example, for those who fall ill and need expensive care and facilities, naming a legal beneficiary in advance can make sure that they can access money to help pay for the necessary treatment. Beneficiaries can also create a barrier from scammers, as with the right documents set up, there is a second source of control over accounts to prevent them from being drained without approval.

While the topic may not be easy to approach, there are a few tips to make starting a conversation easier. The first and most important tip is to be honest and respectful when bringing it up. It seems self-explanatory, but this is often the hardest part of the whole process. Just keep in mind that things will be a lot better when a plan has been created rather than leaving it until it is too late. In cases with multiple beneficiaries, tensions can run especially high. A good way to mediate these tensions while also ensuring things are handled correctly, is to hire a fiduciary. Fiduciaries, unlike other financial advisors, are legally obligated to conduct all business with their clients’ best interest above everything else. The most important tip is to stay dedicated to the process of getting an estate handled and taking the proper steps to make sure it is done correctly.

Even though COVID-19 has created a sense of uncertainty in many areas of our lives, creating or updating an estate plan is a huge step in taking back control and gaining some peace of mind. Though your options are virtually limitless, proper estate planning, deciding on the “who, what, when, and how”, and executing this with the least amount paid in taxes, legal fees and court costs possible can be a challenging and emotional affair to wrestle with alone. For more information, contact Talley LLP today.

As companies pursue success, avoiding fatigue should be a priority for employers and employees alike. According to the National Safety Council, sleep deprivation effects over 43% of workers, which ultimately deteriorates workplace productivity and safety. They estimate per year the loss per employee to be between $1,200 and $3,100, a large sum considering the size of a workforce. To combat this problem, here are three tips that can help you and your business battle fatigue.

Evaluate your lifestyle.  Lack of sleep is the most significant contributor to fatigue, and a few updates to your routine can make a world of difference. Temperature, bedding, nearby electronics, and lighting are all factors that can influence the way you sleep. Making gradual adjustments can help you determine which changes improve your quality of sleep and will leave you better rested. In addition to sleep, factors like diet and exercise have a considerable influence on your energy levels. To establish a baseline, keep a lifestyle log over a few weeks to determine which foods or activities make you feel better and worse. You may find that your most tired days are directly linked to certain foods or workouts that drain you.

Go see your doctors. Sometimes fatigue can be rooted in a deeper cause that no amount of sleep or habit tracking can help. It is essential to maintain your yearly checkups at the doctor to assess your health, but if your fatigue is affecting you long term, seeing your doctor again can only help you. Simple blood work or allergy tests can point to common biological and environmental causes preventing sleep. If the problem is more serious, a doctor can best help you find out why. Either way, a checkup can help you get treatment and get back on your feet.

Listen to your body. If your body needs something, do not feel bad about giving it that. Personal health is something many overworked business professionals may be ignoring, risking long term consequences. Taking a day or two off when you are too stressed or tired will allow your system to reset and recharge. Whether you are a boss or an employee, fatigue can affect you, so being mindful of your well-being will help you not only be more effective but improve your overall happiness.

Talley shares the same entrepreneurial spirit that has helped propel our clients to their current levels of success. With over 25 years of experience assisting high net worth individuals and business owners, Talley has the expertise necessary to help entrepreneurs throughout their entire journey, from formation to succession.

The Internal Revenue Service will start examinations of several hundred high-net-worth (HNW) taxpayers beginning July 15. These audits will address partnerships, private foundations (PFs), trusts and other matters for sophisticated individual taxpayers. With a coordinated IRS campaign, HNW taxpayers can expect aggressive IRS audits.

Partnerships and Other Passthroughs. The IRS will likely target HNW taxpayers with partnerships and other pass-through entities. Exams will address taxpayers with pass-through structures, such as partnerships, S corporations and disregarded entities. The Bipartisan Budget Act of 2015 overhauled the partnership audit rules to make it easier for the IRS to audit partnerships and collect tax from those audits.

Private Foundations. IRS examinations are expected to include individuals with PFs. HNW individuals and families utilize PFs to facilitate charitable giving and charitable activities. The tax rules governing PFs are complex. PFs are subject to several excise taxes and compliance requirements to ensure that PF assets are devoted to charitable purposes and to ensure that disqualified individuals don’t obtain certain prohibited personal benefits.

Multi-jurisdictional Families. Individuals with non-U.S. assets and income are subject to special tax and reporting requirements for offshore accounts and assets. The IRS has focused enforcement efforts on taxpayers with offshore bank accounts, assets and structures for several years. Reporting and compliance for these assets can be a trap for the unwary, especially for taxpayers living outside the United States, globally mobile individuals and multi-jurisdictional families. The IRS maintains a voluntary disclosure practice for individuals to regularize non-compliance with US international tax and reporting obligations.

TCJA Examinations for Individuals. The 2017 Tax Cuts and Jobs Act (TCJA) made major changes to the taxation of HNW individuals with international assets and activities. Many of the changes had a disproportionate impact on HNW individuals, including the rate structure of the Internal Revenue Code Section 965 transition tax, global intangible low taxed income and limits on available deductions. In May, the IRS announced a TCJA campaign and stated that “[t]he goal of this campaign is to identify transactions, restructuring and technical issues and better understand taxpayer behavior under the new law.” HNW individuals should be prepared to address TCJA tax issues and related planning during the coming cycle of examinations.

How Can Taxpayers Prepare? HNW individuals should be prepared to address issues relating to their sources of income, estate planning, foreign financial accounts, gifts to family members, assets transferred to PFs or charitable organizations and to identify assets they own both within and outside the United States. Increased scrutiny of IRS audits of HNW individuals make it extremely likely that the IRS will consider increasing enforcement measures.

Talley’s experienced team of tax professionals provide comprehensive tax compliance and consulting services so you can preserve, enhance and pass on to the next generation the assets and wealth that you’ve worked hard to build. We welcome the opportunity to discuss with you the current opportunities available to you. For more information, contact us today.

We’ve heard of artificial intelligence in movies like Terminator and I, Robot. But the real applications of artificial intelligence include analyzing complex data sets, driving vehicles, providing more insightful user experiences, and even setting dinner plans or weeding out spam callers. While these applications have grown incredibly in the private sectors, government agencies like the IRS have also started to employ artificial intelligence as a utility for improving communication, taxpayer assistance, and even detecting tax evasion.

Several government tax agencies have already employed the use of chatbots to answer taxpayer questions. The most recent example comes in the form of Canada’s Charlie the Chatbot. A similar system is no doubt in the works for the IRS, which will hopefully help taxpayers avoid long wait times on the phone and get clarification on confusing documentation on the IRS website. Artificial intelligence has a consumer-facing goal of making lives easier, so it’s not far off to expect time-saving applications like chatbots.

While this appeals to taxpayers and consumers, the ideal application for an agency like the IRS is in tracking tax evasion, and increasing the likelihood of collecting tax payments from delinquent tax payers or non-filers. Such an application comes into the picture as the Internal Revenue Service ramps up data collection and analysis by using artificial intelligence to create graphs and present relationships between data to identify people who may be avoiding their taxes. But the usability goes as far as analyzing the scripts between IRS agents and taxpayers in order to find out how to effectively solicit tax payments, and ultimately “get a check sent.”

In an effort to fulfill these objectives, the IRS has even engaged in relationships with data firms to investigate potential tax evasion. IRS commissioner Charler Rettig even reveals the benefits of these new partnerships with this quote: “If I get a first name and a cell phone number, you’d be shocked how much information Palantir can provide.” Palantir refers to Palantir Technologies, a private data analytics company based in California. The initiatives are still fairly new and uncertain considering the budget of the IRS.

Additional implications come from the already detached nature of the organization becoming more automated, pushing human interaction even further from the taxpayer. Often, taxpayers are already confused as to the reason for IRS notifications, and making the communication process automated could become frustrating and ultimately leave taxpayers even more uninformed.

While the involvement of artificial intelligence in tax processes remains uncertain, human interaction will always be close by. Taxpayers should be wary of the fact that the evolution of technology within agencies like the IRS makes it much harder to conduct nefarious actions like tax evasion.

Talley’s experienced team of tax professionals provides comprehensive tax compliance and consulting services so you can preserve, enhance and pass on to the next generation the assets and wealth that you’ve worked hard to build. We welcome the opportunity to discuss with you the current opportunities available to you, your family and business. For more information, contact us today.

With tax season in full swing, it’s a great time to address tax savings strategies that apply to everyone. No matter what your age or what capacity you are employed in, if you are making money then these tips apply to you. We wanted to focus on retirement, not only because it’s relevant in the current self-help-centered social climate, but because saving for retirement is one of the most crucial investments in your future that may also serve as a tax-saving tactic.

Most Americans are not prepared for retirement. Consider the fact that almost 300,000 baby boomers are set to retire each month until 2030 with less than 10% of the suggested minimum retirement savings. The unfortunate reality is that the lack of retirement investments and savings coupled with active debt (e.g., a mortgage), many baby boomers are not in a position to enjoy a stress-free retirement. Many may even be forced out of retirement or kept from retiring altogether. That is why it is so important to take advantage of financial planning options like retirement accounts and leveraging tax-saving strategies that are available to you.

Most workplaces offer options like a 401(k) or 403(b), which are effectively savings accounts that allow you to invest your money while deferring any taxes until a later time. Although there is more to it and the details are generally pretty complex, it’s not hard to set up automatic contributions every month. As a bonus, if you are utilizing a 401(k) offered by your company, they may even offer to match what you put in up to a certain amount.

Traditional IRAs are also an option because you are taxed at the time of withdrawal. As such, these contributions may be considered tax deductions when you file your taxes. Roth IRAs are an interesting alternative because you pay taxes upfront, so the benefits come later on. Either way, the best part is that you can maintain both a 401(k) and IRA at the same time.

In conjunction with money management and financial planning, long-term tax planning can help both you and your family protect your hard-earned money. No matter your situation, consulting with your wealth advisor and tax advisor is a good start.

Talley’s experienced team of tax professionals provides comprehensive tax compliance and consulting services so you can preserve, enhance, and pass on to the next generation the assets and wealth that you’ve worked hard to build. We welcome the opportunity to discuss the current options available to you. For more information, contact us today.

California’s groundbreaking Assembly Bill 5 (AB 5) went into effect on Jan. 1st, becoming the standard for determining whether workers should be classified as employees or independent contractors. All companies using independent contractors in California will be put through a three-part test to determine whether they must reclassify their workers. If they don’t pass that test, they’ll have to turn their workers into employees.

The debate that raged around the bill for months focused mainly on its effects on Big Tech and gig economy companies such as Uber, Lyft and Postmates. But by the time the legislation became law last year, its scope broadened to encompass an array of industries, from transportation/trucking to journalism. Proponents of the bill say that it forces companies to replace gigs with jobs that entitle employees to state-mandated protections like paid time off, coverage for job injuries, and unemployment insurance. Critics of AB 5 say despite its good intentions the legislation has boomeranged on contractors, making it harder for tens of thousands of them to make a living in a tight economy.

The three-part AB 5 “ABC classification test” requires businesses to use the following test in determining whether a worker is an employee or an independent contractor:

(A) The person is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.

(B) The person performs work that is outside the usual course of the hiring entity’s business.

(C) The person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.”

If even one of the conditions is not met, then the worker is classified as an employee. As concerns grow over the new law, large companies and third-party organizations like Uber and Airbnb are looking for ways to avoid having to take on a rush of new “employees” under this classification.

Our assessment of AB 5 is that it will have major tax implications across a wide variety of businesses and industries. Talley welcomes the opportunity to discuss what AB 5 may mean for you and your business. For more information, feel free to contact us

This year alone, Americans are estimated to inherit over $750 billion while only paying an estimated 2.1% in taxes, according to the Brookings Institution. In comparison, the estimated taxes on work income and savings is 15.8%. While plenty of people advocate for higher taxes on the wealthier population, Lily Batchelder, who advised Barack Obama during his presidency, is proposing an inheritance tax that could raise approximately $1.4 trillion over the next ten years in taxes.

Currently, wealthy Americans and their estates are required to pay a 40% tax on bequests and gifts to their heirs. However, there are many ways to avoid the tax. For example, the first $23.2 million in inheritance is tax-exempt for married couples, and there are many other methods to transfer wealth to heirs tax-free using trusts and other strategies.

Batchelder’s plan would eliminate the current estate tax system and require heirs to pay income and payroll tax on inherited money. Also included in her plan is a proposed lifetime threshold that would make certain heirs exempt, taxing only the richest heirs. The estimate is still not representative of the actual number raised by the new “inheritance tax” due to the fact that it does not include additional funds raised through the closing of certain tax loopholes also enacted by the new plan.

Batchelder wrote that the proposal would “soften inequalities, strengthen mobility, and more equitably allocate taxes on inheritances among heirs,” while also cutting any distortions in the labor market and increasing work among heirs.

Though your options are virtually limitless when it comes to estate planning, deciding on the “who, what, when, and how” and executing this with the least amount paid in taxes, legal fees, and court costs possible can be a challenging and emotional affair to wrestle with alone. For more information, contact Talley LLP today.

If you have followed the news in regards to retirement, you know that multiple sources have referenced the lack of retirement savings among retirees and older people. While this isn’t isolated to America, the Fed reports about 25% of Americans don’t have a retirement plan in place. With declining policies in place to take care of Americans post-retirement, retirement accounts and financial knowledge is more important than ever. While the SECURE Act doesn’t specifically address all the financial issues when it comes to retirement, it does allow some solid options for Americans.

RMDs to start at age 72 instead of 70 ½. First and foremost, the SECURE Act increases the age in which you need to start required minimum distributions from traditional retirement accounts. While the change from 70 ½ years old to 72 is only 1 ½ years, this allows retirement accounts to continue gaining interest while also allowing the account holder to hold off on paying interest on the money.

You can contribute to traditional IRAs after age 70 ½. There is no longer an age cap on a traditional IRA, similar to a Roth IRA. After 70 ½ years old, participants can continue to contribute money to the retirement account, provided they have earned income. This is especially helpful for not-so-retired retirees.

More Annuity Options with 401(k) plans. Another positive note is the addition of improved legal coverage for employers with hopes that this will lead to more options in the annuity realm. Traditionally, the liability was too much for most companies to offer an option like this in a 401(k). They were even able to offer 401(k) options to part-timers as long as they fulfill a short list of requirements. Small businesses gained a boost as well, with potential to offer 401(k) options through economies of scale.

Your tax bill on inherited IRAs will come sooner. The bill also essentially eliminates the “stretch IRA,” an estate planning method that allows IRA beneficiaries to stretch out their distributions from their inherited account and the required tax payments that come with it. Under the new law, most beneficiaries will be required to withdraw all the distributions from their inherited account and pay taxes on it within 10 years.

Talley’s experienced team of tax professionals provides comprehensive tax compliance and consulting services so you can preserve, enhance, and pass on to the next generation the assets and wealth that you’ve worked hard to build. We welcome the opportunity to discuss the current opportunities available to you. For more information, contact us today.

What happens once your business has experienced initial success or substantial growth? Having “real” money can bring about complex problems that your business hasn’t yet encountered. With the help of professional advisors, there are a few ways to make sure you handle these issues effectively and ensure your successes only continue.

Be aware of burnouts. Burnouts are a big reason for business failure, especially in the first year and taking that time to appreciate your accomplishments can help prevent this.  Part of avoiding burning out is ensuring that you maintain your personal and mental health. All the business and productivity advice in the world won’t help you if you’re already stressed out, sleep-deprived, and running yourself into the ground before you take that first sip of coffee or tea in the morning.

Be mindful of taxes. While running your business, it’s easy to focus on the day to day operations, forgetting about important long-term details such as tax planning. Working with an experienced tax planning advisor can help you mitigate taxes and proactively plan for the future of your business.

Plan for your long-term future. There will always be more money to be made as an entrepreneur and reaching your first goal is only the beginning.  Although using your earnings to fund entertaining purchases is an earned right, investing your money in things that can appreciate will set you up for continued wealth. Having an expert counsel can help you make these decisions as they are familiar with the challenges that characterize an entrepreneur’s business ventures.

Form habits that create continued success. Specific motivators made you successful in the first place, so do not stop focusing on them. Running a business calls for ongoing work but managing your time effectively and forming useful business habits can help take the stress off you. Always set new goals for you and your business to ensure you achieve continued growth and success.

Talley shares the same entrepreneurial spirit that has helped propel our clients to their current levels of success. With over 25 years of experience assisting high net worth individuals and business owners, Talley has the expertise necessary to help entrepreneurs throughout their entire journey, from formation to succession.

Big data is only getting bigger as business usage increases and more companies change the way they look at their processes in 2020. More than analyzing buying patterns or customer relationships, big data can allow entrepreneurs to improve their financial forecasting and future trends.

Predicting company success and finding potential opportunities is a common goal for any entrepreneur. By leveraging real-time/big data metrics, finance teams can gain valuable insight into trends, improving their ability to take advantage of upcoming opportunities or mitigate risk. When considering the benefits, implementing big data metrics does not have to overcomplicate your existing financial reporting methods.

Utilize the resources you already have in place. Businesses big and small are already housing stores of information in their existing business or sales management systems. For example, customer relationship management systems hold valuable details about sales, sizing, markets, and more than can be referenced across departments. However, all that data means little without the ability to effectively distinguish between what is important and what is just white noise. These details, although large in quantity, can allow forecasts to adjust as events occur if properly utilized.

Don’t be afraid to let go of old technology. The typical Excel spreadsheet forecast focused on historical trends is very limiting when considering how extensive your decision-driving data may be and the way activities affect different parts of your business. These simple documents continue to emphasize the inefficiency of solely using historical data to make future business decisions. By embracing real-time metrics and overall real-time forecasts, entrepreneurs can gain a greater understanding of how specific actions affect their forecasts.

From technology-based accounting solutions to management information, analysis, and reporting, Talley LLP is the premier business consulting firm for entrepreneurs and their closely-held businesses. For more information on how to leverage your business’s data technology, contact Talley today.


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