Tuesday, December 30, 2014

Westward Group for Tax and Estate Planning Advisors Tokyo Paris Review finds companies with tax abatements meeting requirements

MONROE - A recent review of companies that have received tax abatements from the city of Monroe found that they are all in compliance with the requirements, such as job creation, outlined in the agreements.

City Council Tuesday approved a resolution accepting the annual review of the city’s 16 community reinvestment areas, tax increment financing districts and residential improvement districts that certifies that all were in compliance to maintain their various tax abatement designations.

The Butler County Tax Increment Review Council is required by state law to review each agreement to determine if the property owners are in compliance with each of those tax exempted properties. Some require the creation of a specific number of jobs or other requirements to stay in compliance. The TIRC review submits a review to City Council to continue, modify or cancel each agreement and the law further requires council to approve the review within 60 days. The TIRC review was completed in November and on Tuesday council adopt a resolution to approve the review.

Among those areas approved for continuance were in the Monroe Logistics Center, IDI, Corridor 75, and the Monroe Commerce Center.

Liquor control hearing motion declined

Council opted not to request a hearing before the state Liquor Control Commission on a request for a D-5 permit being sought by Main Street LLC, the business taking over the space of the Red Onion.
A D5 permit will allow for spirituous liquor for on premises consumption only, beer, wine and mixed beverages for on premises, or off premises in original sealed containers, until 2:30 a.m.
Officials said the restaurant will reopen sometime in January.

Laid-off firefighter has a new home

Zachary Bernard received his badge and helmet as he was introduced to council.

Bernard was one of 11 Middletown firefighters who were laid-off due to budget constraints. Tuesday was his first day with the Monroe Fire Department and Fire Chief John Centers said he expects Bernard to become an asset to the department.

“I’m really excited in coming to Monroe and I’m looking forward to a long career here,” Bernard said.

He is also certified as an emergency medical technician and as a hazardous materials technician.

Sunday, December 28, 2014

Westward Group for Tax and Estate Planning Advisors Tokyo Paris Review - Tax Strategies Scan: More Year-End Tips

Our weekly roundup of tax-related investment strategies and news your clients may be thinking about.

5 year-end tax tips for clients: As the year draws to a close, investors should keep in mind their financial obligations to avoid certain consequences such as tax penalties, according to U.S. News & World Report. Mutual fund owners could face a huge tax liability from returns accumulated before the fund was purchased. For seniors, the deadline for making minimum distributions for retirement plans becomes Dec. 31 after the initial year of taking such distributions. -- U.S. News & World Report

How to avoid capital gains tax on stocks: I just did it, and your client can, too: Long-term capital gains tax rates vary depending on the tax bracket, with taxpayers in the 10%-15% tax bracket paying no tax at all, according to Motley Fool. Those who are in the 15% tax bracket have a taxable income of $36,900 for singles, $73,800 for joint filers, and $49,400 for heads of households. To avoid paying long-term capital gains tax, taxpayers need to have a taxable income that won't exceed these figures, and may keep their income low by taking tax deductions, such as the standard deduction, personal exemptions, and the Child Tax Credit. -- Motley Fool

How to lower your client's tax bill: Clients are likely to face big capital gains tax as stocks soared this year, but they may reduce their tax by deferring their income and accelerating deductions, says Robert Willens, a CPA and president of Robert Willens. They may also consider donating the securities instead of selling them and donate the money, so they won't pay capital gains and still take a deduction amounting to the security's fair value, Willens says. Harvesting losses by disposing of assets with dwindling value is also another way for investors to lower the tax bill. -- Barron's

When your clients pay a higher tax rate: Rich people pay higher tax rates as their investment income undergoes double taxation, according to Forbes. Despite having lower taxes than labor income, investment income is still taxed in the corporate level, which makes tax burdens higher. -- Forbes

Year-end charitable tax tips: Taxpayers can donate tangible property or cash to charities to reduce their tax bills, according to Forbes. To get tax deductions, donations in the form of household items should be in good used condition or accompanied by a qualified appraisal, cash donations need to be proven by a written receipt from the charity or a bank record. Tax deductions for charitable gifts may be obtained by itemizing these donations on Schedule A of Form 1040. -- Forbes

7 smart year-end tax moves to prepare for 2015: Clients are advised to check if there are last-minute tax deductions and to take a financial inventory before the year ends to prepare for the tax season in 2015, according to Forbes. They also need to determine their effective tax rate, account for all Roth conversions, and act on any withholding issues for next year. Clients can also reduce their tax bill if they incurred investment losses, and use the remaining amount in their flexible spending account before Dec. 31. -- Forbes

9 rules for tax-smart charitable giving: People who intend to give to charities need to remember a few things to get tax benefits when filing their tax returns in April, according to Time Money. They are advised to itemize tax deductions instead of taking the standard deduction, donate to a legitimate charity, and make sure they make the donation by Dec. 31. They also need to have a receipt of the donation, make sure the donated goods are in good condition and valuated accordingly. If they opt to donate highly appreciated investments, they won't pay taxes on capital gains and deduct the full market value of these investments from their tax bill.  -- Time Money

More related topic issue and information? Just visit Westward Advisors. Westward's expertise is in designing, implementing and managing insurance-based tax and estate plans for high net worth individuals and owners of private companies. For more update, follow us on Twitter.

Thursday, December 25, 2014

Westward Group for Tax and Estate Planning Advisors Tokyo Paris Review: Tax Tips for New Parents

When I say kids are expensive, I’m not telling you anything you don’t know. But man, they are expensive. Once you accept that, you may want to shift your paradigm. Since you already committed to this parenting racket, you might as well make the most of it.  And financially speaking, that means tax breaks. Here are X deductions that you should be sure not to miss this tax season:

Child Tax Credit You can claim up to $1,000 for every kid under 17 in your household. This sum is phased out when married couples’ adjusted gross income exceeds $110,000 and $75,000 for single parents. 

Don’t make this mistake: Be sure to file for a Social Security number as soon the baby is born. The hospital should have the paperwork.

Earned Income Tax Credit If you have three or more kids and earned less than $46,997 as a single person, or $52,427 as a married couple in 2014, you can take this credit. If you have one or two children you may also qualify if your income is very low. The maximum credit is $6,143.

Child care for kids aged 13 and younger, qualified child care, day camps and before- and after-school programs qualify for the dependent care tax credit. This means that most families can deduct up to 35 percent of the costs for care, for a maximum of $3,000 for one kid, or $6,000 for two or more family members.

Don’t make this mistake: Collect the tax ID or Social Security number of any care providers.

Flexible spending accounts Take advantage of your employer’s flexible spending account for both health care and dependent care. The maximum you can shelter is $5,000 for qualifying dependent care. Don’t make this mistake: Remember to spend down any FSA account and get reimbursed for expenses before any deadlines. Medical expenses if you had excessive medical expenses (not counting insurance premiums), you can deduct total family health care expenses exceeding 7.5 percent of your adjusted gross income. This means that if your 2014 adjusted income was $100,000 and you spent $8,000 on your and your family’s medical expenses, you can deduct $500. Don’t make this mistake: Collect receipts for all medical expenses throughout the year, including dental care and any prescribed therapies (including prenatal yoga and prenatal vitamins). Consider scheduling elective procedures before year’s end.

Adoption costs if you adopted a child and the process was finalized in 2014, you are eligible for up to $13,190 per child in federal tax credits. 

College contributions did you start a college fund? Most states offer tax deductions for residents who invest in their state-sponsored 529 college savings plans. Deadline for taking the deduction in 2014 in most states is Dec. 31 of this year.

If the birthdate is 2014, claim that kid! Even if your baby popped out at 11:59:59 on Dec. 31, deduct away.

Westward Group for Tax and Estate Planning Advisors Tokyo Paris Review has designed and implemented insurance plans for hundreds of high net worth Canadians. We developed The Life Step Process as a way for accountants and lawyers to help their clients grow and protect wealth, and manage the estate in the most tax efficient way possible. Gather more information, you can visit us at Tumblr Page and Blogspot Page. You can follow us as well to the following page said.

Monday, December 22, 2014

Westward Group for Tax and Estate Planning Advisors Tokyo Paris Review: 5 Investing Resolutions for 2015

Consider rebalancing your portfolio in anticipation of the new year.

With the holiday season upon us, we should make time to reflect on the past year and think about our financial goals, milestones we hope to reach in 2015 and how we can better prepare for retirement.

It’s also important to remember tax season is around the corner. Therefore, now is also a great time to review your investments and your saving and spending behaviors. Next, you can determine resolutions that may be right for your financial situation.

As you plan your 2015 resolutions, here are five tips to consider that may help you enhance your investing and retirement planning strategies.

1. Give your portfolio a tuneup. Now is a great time to review portfolio holdings and performance, and to determine how to maintain an investing strategy to help reach your goals. Take a look at your investments. Does your portfolio align with your risk tolerance? You can find online tools through brokerages to help you understand your portfolio’s gains and losses. Investors can create a diversified portfolio with multiple ETFs, for example. Using dollar-based investing, you can streamline the asset allocation process.

2. Maximize retirement contributions. According to ShareBuilder's Financial Freedom Survey, released in March, which conducted 1,008 interviews of adults 18 and older from Feb. 13 to Feb. 16., 57 percent of working Americans are concerned they won’t save enough money in time for retirement. By taking advantage of your employer’s retirement plan, you can work toward growing your retirement nest egg.

Beginning in 2015, employees will be able to contribute up to $18,000 annually to their 401(k) plans. Determine how much you can comfortably contribute. If possible, you may want to max out your 401(k) contributions and your employer match if you have one. If you can swing it, setting aside the full amount can be a great way to maximize your long-term investments.

3. Think about putting that holiday bonus to work. Examine your personal financial situation, and determine how you can best use the additional funds from a work bonus or holiday gifts. You may want to consider starting an investment portfolio, building an emergency fund or using that money to help a reach milestone like a down payment for a car or home.

Once your account is established, you could continue to grow it through automatic contributions. Programs, including ShareBuilder’s automatic investing plan, enable you to invest a set dollar amount on a regular basis and at a low cost. Becoming accustomed to putting away money on a regular basis is a critical first step – and it may build over time. Read the full article here..

Saturday, December 20, 2014

Westward Group for Tax and Estate Planning Advisors Tokyo Paris Review: Top 5 Tips to Get Your Company Funding Fit

2015’s a hair’s breadth away. As you start next year’s planning, here are 5 things you can do to give yourself the best chance of securing new investors in your business – either debt or equity.

1. Have your financials in order
The first thing any investor is going to ask for is your historic financials, so you should have them ready and in a useable format. At Lighter Capital, we like to see 24 months of historic financials for both the P&L and the Balance Sheet. Some investors may require less, but at the minimum, I would suggest having the quarterly financials for the last 12 months ready. You should know that any institutional lending source is going to require that you produce monthly financials so this is something to think about as you head to market.

- The easiest way to determine if your financials are ready to be seen by an outside financing source is to have someone with an accounting background take a quick look at them. This can be as simple as asking your tax accountant to review, and now is a good time to ask them before they get slammed by year-end tax returns. They’ll let you know if you are doing anything blatantly wrong from an accounting prospective. I won’t sweat the small mistakes but if you have negative revenue or assets that could be a liability, they can help you make those changes easily. If you run into bigger issues, you might want to consider getting outside help from a CPA or controller, like our friends at Early Growth Financials.

- There are a few different types of accounting methodologies: cash, accrual, and modified accrual. It’s good to understand the pros and cons of accrual and cash accounting of each methodology before choosing one to implement. For example, a common error we see with accrual accounting is that many entrepreneurs only make adjustments at year-end, where this methodology actually requires monthly adjustments. This makes for a confusing P&L. For small business, it’s easier to just do cash accounting if you can understand it, and it helps you become very familiar with your company’s cash situation. Don’t feel that you have to use accrual accounting because that is GAAP standard. Lots of investors deal with different types of accounting methodologies, so they can read whatever statements you give them as long as they are accurate.

2. Projections – know where you’re headed
As we enter the New Year, it’s good to have a sense for where you’re going and projections help you get there. The most helpful projections are not the ones that just take a growth percentage and apply it on a monthly or quarterly basis, but the ones that are based on your pipeline and historic performance.

- Things to keep in mind include seasonality: are you a seasonal business, and if so, do your projections reflect it? Do you have some big customer wins projected over the next 12 months and when do you expect them? Do you have big payments to vendors or debt sources? Be sure to include them in the projections, including any adjustments needed to reach these goals and how they’ll be layered in over the next year (i.e. additional employees, larger commissions for sales, advertising and technology spend, and product development plans, etc.).

- As if that wasn’t enough to consider in your projections, you might want to think about having two sets — a tortoise and a hare. Your ‘hare’ scenario is a high growth shoot-to-the-moon scenario for equity investors and the ‘tortoise’ is a more stable, plodding scenario for debt investors.

- If this seems like a lot, a basic set using growth percentages and margins works well and at least gives your investors a place to start when evaluating the outlook for the next year.

3. Explain your customer base
Everyone will want to know something about your customers. If you put together a basic chart (like the one below) for your top 10 customers, you’ll help fend off 90% of potential questions.

If you have customers that represent more than 10% of your annual revenue, expect some type of follow-up questions from interested investors who might ask to see copies of the contract, request reference checks, and review historic churn in your customer base.

4. Service / Product Elevator Pitch
Now that you have the boring (or if you’re me, exciting) financials portion out of the way, you’ll need to explain what your company does. Try to make your product pitch concise and easy for people to understand. In Lighter Capital’s 10-minute online application, we call it the elevator pitch and we limit it to 500 words. After you have investors hooked, you can get into more details like the market (i.e. “the white space”) and the details of your service or product and why it is unique.

5. White Space – highlight your competitive difference
You have to present where you sit within the marketplace. How is your product or service different from the others out there and why? Telling someone that you are the next Facebook or Instragram isn’t really the best explanation of your positioning, and honestly, most people are just going to roll their eyes and say, “Sure you are.” Instead, present the lay of the land, demo your product, tell your customer stories, and focus on the problem your product is addressing or solving. Be truthful with your plan! At the end of the day, investors who want to invest in your business also want to invest in you. So demonstrating your inspiration and ability to execute the plan will help differentiate you from your competitors. Continue reading…

Thursday, December 18, 2014

Westward Group for Tax and Estate Planning Advisors Tokyo Paris Review: 5 Year-End Tax Tips for Investors

On top of holiday preparations and celebrations in December, there are some year-end financial tasks that require attention. Many of those tasks on the financial to-do list have a tax component – specifically, avoiding unnecessary taxes on your investments, or worse, incurring a penalty.

Here are some reminders of tax consequences to consider before the new year rolls around:

1.Watch taxes on mutual funds. Mutual fund managers regularly sell securities to rebalance or accommodate shareholder redemptions. That creates capital gains for shareholders, even those with an unrealized loss on their mutual fund investment. This is particularly true for actively managed mutual funds, which have greater turnover than index funds.

But even if you are the owner of a mutual fund with overall gains, you may have a tax consequence for gains that occurred before you purchased it.
2. Don’t forget about required minimum distributions. By April 15 of the year after you turn 70½, you are required by the Internal Revenue Service to take a minimum distribution from qualified retirement plans, such as a traditional individual retirement account.

However, after that first year, your deadline for taking your distribution becomes Dec. 31. If you forget to take the distribution, you face an IRS penalty of 50 percent. In other words, if your distribution amount is $5,000, you would be hit with a $2,500 penalty. That’s on top of the taxes you already pay on the distribution.

3. Don’t let tax considerations get in the way of your investing goals. While it’s imperative to have a tax strategy, always keep your investing objectives front and center. Jeanie Wyatt, CEO and chief investment officer at South Texas Money Management, headquartered in San Antonio, says decisions about when to buy or sell investments are often obscured by worries about tax consequences. 

“In those situations, where people don't sell because they are going to have a tax cost, that can be a bad decision,” she says. “You really have to know that the investment decision is No. 1 and the tax consideration is No. 2.”

4. Be cognizant of short-term capital gains consequences. A short-term capital gain is realized by the sale of a stock held for one year or less. These gains are taxed at the same rate as an individual’s ordinary income.

A short-term gain can be reduced by a short-term loss. As much as $3,000 per year can go toward reducing taxable income. Additional losses may be carried forward into subsequent years to offset $3,000 in ordinary income or capital gains.

5. Plan for future tax increases. Having a strategy for 2015 and beyond is crucial, says Beau Henderson, founder and CEO of the RichLife Group in Gainesville, Georgia. “One of the thieves that can steal your rich life is the real threat of future tax increases,” he says.

People who have accumulated a sizable nest egg in their qualified retirement accounts will likely face a hefty tax bill when they start taking distributions. Henderson says effective planning today could potentially mean a lower tax bill down the road. “What if instead of pulling money out at a 35 percent tax rate, when you actually need to retire, it's taxed at 60 percent? That would affect your plan,” he says.

Wednesday, December 17, 2014

Westward Group for Tax and Estate Planning Advisors Tokyo Paris Review on 8 End-of-Year Tax Tips You Won't Want to Miss

2014 is quickly coming to a close. Before ringing in the New Year, take December to round out some quick and easy tips to lower your tax obligations and even boost your tax refund. And who doesn’t want more money?

So before we put a cork in this year, get your tax to-do list ready — and let’s check off these 8 items.

1. Start gathering forms, and receipts. Start gathering receipts for deductible expenses and sources of income for the past year so you don’t leave anything out when you sit down and prepare your taxes. Pro tip: Understand which tax forms you will need, and keep a checklist to keep everything straight. This will help keep your sanity when you sit down to file your taxes, trust me.

2. Donate to charity. Take December to weed through your clothes, furniture, and household goods to give back to a qualified charitable organization. Donating to those in need will leave you with a warm feeling inside, as well as a possible deduction. For non-cash and monetary donations, make sure you keep your receipts from the charitable organizations. Mileage (14 cents of every mile) driven to charitable service is also tax deductible. TurboTax Its Deductible will accurately value and track your yearly-donated goods. Make these donations count on your taxes by donating by December 31st. Pro Tip: If you make a donation by credit card, you do not have to pay it off in 2014 to receive the tax deduction.

3. Push back your bonus to January. You have put in some hard work this year and now comes time for your holiday bonus! Taxes will be applied here, and this extra income may bump you to a higher tax bracket. Pro Tip: If you do not need the money immediately and your boss is willing to pay it in January — it might be worth pushing your bonus off a year. You still get to enjoy your rewards come the New Year, but do not have to pay the additional tax until April 2016.

4. Look to the future and max out your retirement savings. In some situations, employers will allow you to play catch-up on your 401(k) or 403(b) plans. Check to see if you can increase your deduction on your last paychecks of the year. Putting money towards retirement will help boost your tax refund and wealth. Pro Tip: If you have not started a retirement fund at your job, start one! It is a great way to reduce your taxable income and possibly increase your tax refund.

5. Get Educated. School is in session, and paying for next quarter’s tuition by December 31st may give you a valuable tax credit. Taking a college course can boost your tax refund by up to2,000 with the Lifetime Learning Credit. Pro Tip: Take a course to advance your career skills and better your chances for promotion, all while getting a tax credit.

6. Time to spend your FSA. If you set aside a portion of your income for tax-free spending with a flexible spending account, then listen up. Unlike years past, the “use it or lose it” rule may not apply. If you have unused money in your FSA account on December 31st, you may be able to carry over up to500 into your 2015 FSA or your plan may allow qualified medical expenses to be paid with funds in the account within 2-1/2 months after the end of the plan year. Pro tip: If you have more than500 in your account come year-end, make sure you are caught up on all your doctor visits.

7. Tax advantage of credits & deductions up for vote this year. Typically Congress votes to temporarily extend or pass expired or expiring tax credits and deductions. This year, expired tax extenders affecting teachers, students, homeowners, and energy efficient homes are up for vote. Congress has not come to a decision yet - but listens in for what they decide. Pro Tip: If Congress makes a final decision by December 31 and passes the expired tax provisions check and see if you can take advantage of any expired tax credits or deductions if they are extended!

8. Project your 2015 finances. Are you applying for a subsidy or discounted insurance in the Healthcare Marketplace this open enrollment season? If so, you will have to project your 2015 household income and family size when you apply. Start looking into any changes that may take place in 2015 (growing your family, job promotion, heading into retirement, etc.). These changes may affect the amount of subsidy you are given to help you pay for insurance. Pro Tip: If you received a subsidy for 2014 insurance and experienced changes in salary and family size, notify the Marketplace before year-end. You may get a bigger discount or premium tax credit to help pay for your coverage or may get an adjustment so you don’t have to pay back some of the premium tax credit.

Westward Group for Tax and Estate Planning Advisors Tokyo Paris Review has designed and implemented insurance plans for hundreds of high net worth Canadians. We developed The LifeStep Process® as a way for accountants and lawyers to help their clients grow and protect wealth, and manage the estate in the most tax efficient way possible. For more details follow us at Pinterest Pageand Foursquare Page.

Tuesday, December 16, 2014

Westward Group for Tax and Estate Planning Advisors Tokyo Paris Review: 9 Last-Minute Tax Strategies for 2014

It’s that time again, as we close out another year, to review some end-of-the-year tax tips that could still be used to save you money. As you likely already know, many of the tax strategies you can employ must be done in the same tax year as they will be claimed. That is exactly why, with some of these strategies, you must act quickly to get your benefit. And remember, you should always consult your tax, legal and financial advisor before making these decisions. But this list gives you a good place to start.

1. Offset gains with losses. Look at your portfolio and see if you have gains and losses. If you have both, you can write off the gains against the losses. If you have more losses than gains, you can also take up to $3,000 of losses against ordinary income. To take a loss for 2014, you must claim the loss by selling the asset or investment that contains the loss this year. You can also take additional losses and "carry them forward" to next year. If you do decide to sell an investment at a loss, and plan on buying it back after you claim the loss, make sure you wait at least 30 days to repurchase it. Otherwise, you will have violated the wash-sale rules, which can penalize you for buying it back too soon.

2. Fund your individual retirement accounts, Roth IRAs, 401(k)s, 403(b)s, Simplified Employee Pension Plans, etc. Most retirement plans require you fund that investment in the year you take the write-off, but not all. With respect to IRAs and Roth IRAs, you can wait until tax filing time, plus extensions. However, I don’t recommend this. I would rather you fund your plans in the year you are claiming the contribution.Employer plans do require you to contribute into the plan (employee contributions), however, during that tax year. So, if you have not fully funded your company retirement plan, get on the ball and talk to your human resources department to see how you can put more money in by year end. Remember, you can add $17,500 to your 401(k), and an additional $5,500 if you are over age 50.

Also, the rules are changing for 2015, so you should change your contribution amount accordingly. IRA and Roth IRA contributions remain the same at $5,500 and $1,000 catch-up for those over age 50. The 401(k) contribution limits increase to $18,000 and a $6,000 catch-up for those over age 50. If you are having funds automatically invested into your retirement plans, update those automatic investments to match the new limits.

Also, consider donating highly appreciated stock to your charity, rather than cash. By doing this, you get a double benefit. First, you get to write off the value of the security, and second, you don’t have to sell the stock or other investment yourself (and realize the gain), before you donate it.

3. Take out your minimum required distribution. If you are over the age of 701/2, you must take money out of your qualified plans (if you are not working or contributing to that plan) and IRAs. The amount you have to take out is 3.65 percent in the first year. Each year you get older, the percentage you must take out increases. But the real kicker here is if you do not take out the money, you will have to pay a 50 percent penalty on the amount you did not withdraw. That’s a hefty penalty (the largest the Internal Revenue Service assesses.) Make sure you get this one right every year.

4. Give $14,000 to anyone you like. The annual (2014) gift amount you can give to someone without having to fill out a gift tax return is $14,000, but you must complete the gift (give it to the person, entity or charity) by the end of the year.

Many investors would say, "Why on earth would I want to give that kind of money to anyone?" But the reality is, some older adults have more than enough assets in their portfolio that they want to give it away early (before they die so the kids or charities get the benefit now). But there is still a limit per year with respect to how much you can actually give away. Again, that amount is $14,000 for 2014. If you are married, you and your spouse can both gift $14,000, making your total contribution $28,000 per person.

Sometimes gifting appreciated stock to a family member in a low tax bracket can also be helpful in reducing your overall tax liability.

5. Use your flex spending dollars. Flex spending plans give you the ability to put money away pretax, to be used for qualified medical and dental expenses. But those dollars must be used in the current tax year. The IRS will now let you roll up to $500 to the next tax year (provided the plan allows for it). But for any amount over the $500, it is “use it or lose it.”

6. Take your expenses this year. If you are a business owner or self-employed, and can deduct expenses, pay expenses now versus in 2015. This will lower your overall income, and thus your tax as well. Some of the expenses you may consider paying early are interest, rent, medical insurance premiums, vendor expenses, etc.

7. Pay your January mortgage payment in December. If you pay your January mortgage payment early, you are essentially paying the January interest in December, which will allow you to write it off now, versus a year from now. This may not help you significantly, but every little bit counts.

8. Combine Schedule A deductions. Many Schedule A deductions have thresholds you must meet before you can take that specific deduction. For example, the medical/dental deduction must reach 10 percent of adjusted gross income. That means you must meet the 10 percent before you can deduct anything. The miscellaneous expense deduction must be 2 percent of adjusted gross income. So make sure you are able to combine all of the proper expenses to be able to meet that specific deduction’s minimum.

9. Do a mock tax return. Using tax software, such as TurboTax or H&R Block software, run a mock tax return, so that you know your potential tax liability. This can help with knowing how much of a deduction you can take for IRA contributions, the effects of a Roth conversion, if you are subject to the Alternative Minimum Tax, the potential tax bill you may have to pay by April 15 and a number of other important things you may want or need to know early.

Not all of these things will apply to everyone. As a matter of fact, only a few of these strategies apply to most people. The question you need to answer is, "Which ones apply to me?" So read over this list several times, and figure out which tips will give you the best benefits for your 2014 taxes. Then implement those tips.

If all of this information seems overwhelming, as it does for most people, then work with someone who can help you. This could be your tax accountant, investment advisor or financial planner. But whatever you do, make sure you do the planning. It may actually save you some real money.

Thursday, December 11, 2014

Westward Group for Tax and Estate Planning Advisors Tokyo Paris Review: 4 tips for year-end charitable tax deductions

As year-end approaches, many taxpayers consider last minute donations; merging their desire to do good with their desire to lower their tax burden.

Generally, if you itemize your deductions, making charitable contributions can decrease your tax bill. Here are some important rules to know.

Charitable contributions of clothing and household items

Clothing and household items donated to charity generally must be in good used condition, or better, to be tax-deductible. If the value is greater than $500, you don't need to meet this requirement if you include a qualified appraisal of the property.

Get a receipt that includes the name of the charity, the date of the contribution, and a reasonably detailed description of the donation for all donations of property. If a donation is left at a charity's unattended drop site, keep a written record of the donation that includes this information. Records should include the fair market value of the property at the time of the donation and the method used to determine that value. Additional rules apply for a contribution of $250 or more.

Monetary donations

Donations of money include those made in cash or by check, electronic funds transfer, credit card or payroll deduction.

A taxpayer must have a bank record or a written statement from the charity to deduct any donation of money, regardless of amount. The record must show the name of the charity and the date and amount of the contribution. Bank records include canceled checks, and bank, credit union and credit card statements.

Bank or credit union statements should show the name of the charity, the date and the amount paid. Credit card statements should show the name of the charity, the date, and the transaction posting date.

For payroll deductions, the taxpayer should retain a pay stub, a W-2 or other document from the employer showing the total amount withheld for charity.

If you donate cash or property worth more than $250, you must get a written receipt from the charity and an acknowledgment which includes a description of the items contributed. One statement containing all of the required information may meet both requirements.

Eligible organizations

Only donations to eligible organizations are tax-deductible. The IRS has an online search tool which lists most organizations that are eligible to receive deductible contributions. Religious institutions and government agencies are generally eligible even if they are not listed in the IRS database.

Tax reporting

Contributions are deductible in the year made. That means donations charged to a credit card before the end of 2014 are deductible in 2014, even if the credit card bill isn't paid until 2015. Also, checks insurance mailed on or before Dec. 31, 2014 are deductible for 2014.

Individual taxpayers must itemize their deductions on Schedule A to claim deductions for charitable contributions. If the taxpayer chooses the standard deduction, they cannot claim a tax deduction for charitable gifts. A taxpayer will have a tax savings only if the total itemized deductions exceed the standard deduction.

Form 8323 is required if the taxpayer's total noncash gifts exceed $500. If a taxpayer donates an automobile, boat, or airplane with a value greater than $500, the amount of the deduction will usually be the amount received when the property is sold by the charity and the charity is required to provide Form 1098-C to the donor.

Friday, May 16, 2014

Estate Planning: 5 Tips to Stay Ahead

Westward Group for Tax and Estate Planning Advisors Tokyo Tips – MIAMI – If you haven’t changed your approach to estate planning recently, you should.

“The status quo is stupid,” said John Scroggin of Scroggin & Co. at the recent FPA Retreat here. “Estate planning is a constantly changing environment.”

Click here to read the full content of this article.

Thursday, May 15, 2014

Investors increasing allocations of alternative assets

Westward Group for Tax and Estate Planning Advisors Tokyo Tips – International stocks make up the most popular mutual fund flows by asset class, according to new research.

Cerulli Associates discloses this finding in “The Cerulli Edge: U.S. Asset Management.” Focusing at length on alternative investments, the report also offers insights into fixed income, private equity, customization and organizational alignment to enhance distributor relationships, marketing and sales plans.

For the trailing 12 months ended February 2014, the survey finds mutual fund flows of international stocks constituted $142.2 billion, a total that significantly outstrips other asset classes. The next three largest asset classes for the prior 12 months included:

  • Balanced funds ($94 billion);
  • U.S. stock ($60.1 billion); and
  • Alternatives ($41.3 billion).

“[P]ortfolio managers have tilted away from traditional domestic core equity and fixed income,” says Cerulli Director Cindy Zarker. “As economic signs of recovery heightened concerns of rising interest rates, many managers presented institutional and retail investors with investment options to hedge this risk.”

The report adds most institutional investors intend to maintain or increase their alternative asset allocations in 2014. Among the target sectors within this asset class are private equity, hedge funds, real estate and infrastructure.

The heightened focus on alternative investments has been an ongoing theme in recent months. Findings recently unveiled in “Investing Outside the Box,” a study on trends in nontraditional investing from MainStay Investments (a New York Life company and Barron’s Top Fund Family) reveal that high net worth investors on average have 22 percent of their portfolios invested in alternatives. One quarter of these investors (26 percent) see their exposure to alternatives increasing over the next five years by an average of 2.9 percentage points. Another 66 percent believe their level of exposure will remain the same.

And as reported by Cerulli last month in the “Cerulli Edge: Institutional Edition,” international equities remain the predominant focus of all new products under consideration or development (24.1 percent), followed by global equities (14.9 percent), world bonds (13.5 percent) and asset allocation/global tactical asset allocation strategies (10.6 percent).

Wednesday, May 14, 2014

The Morning Ledger: R&D Tax Credit Hangs in the Balance

Westward Group for Tax and Estate Planning Advisors Tokyo Tips – The U.S. House of Representatives voted last week to make permanent a corporate tax credit for research and development that expired at the end of last year, but its outlook remains far from certain, CFOJ’s Maxwell Murphy and Emily Chasan report. President Obama has threatened a veto and the Senate is taking up a competing measure that would extend the credit by only two years.

Tuesday, May 13, 2014

5 Tips Before You Leave Your Kids an Inheritance

Westward Group for Tax and Estate Planning Advisors Tokyo Tips - If you are a parent who worries about what your wealth will do to your children, you are not alone. Many clients want to leave money to their kids, but they are concerned that their children are ill-equipped to handle sudden wealth. Some worry that by providing too much money that it will rob their children of the ambition and hard work that it took for them to amass the wealth. And it’s not just parents who worry. At least one beneficiary has reservations.

CNN news-show host Anderson Cooper is the son of Gloria Vanderbilt — a successful fashion and interior designer and daughter to the Vanderbilt railroad and shipping empire who is believed to be worth $200 million. Is Anderson chomping at the bit for an inheritance? No. Here is what Anderson said recently in an interview with Howard Stern:

“I don’t believe in inheriting money,” he said. “I think it’s an initiative sucker. I think it’s a curse, ” Cooper went on to say. “Who has inherited a lot of money that has gone on to do things in their own life?” When Stern reminded him that his mother did this Anderson responded, “I think that’s an anomaly.”

What is your view of inherited money? Is it an “initiative sucker” or can it be used to create a better and more fulfilled life? In my sudden wealth management firm I’ve found that the answer is a resounding YES to both!  Yes it can cause some to lose their drive and ambition, but with the proper work and structure, those who inherit can use the money as a tool to create meaningful lives of their own. But for many parents who are not convinced their children are ready to handle wealth, they are not idly sitting by hoping their children have a sudden flash of financial acumen. No, these parents are taking matters into their own hands.

If you are concerned about gifting or leaving your children an inheritance, consider these popular strategies:

1. Give your kids a financial test. Each person can gift up to $14,000 (in 2014) per year to as many people as they wish without any gift tax consequence. If you are married, both you and your spouse can give $28,000 per person. Parents are gifting their children money without any restrictions or rules and then sitting back and watching what happens. How will your children handle a $5 million inheritance? Why don’t you see what they do with $20,000 first? Do they save it? Do they ask for help? Do they pay off debt? Do they blow it in Vegas?

2. Use incentive trusts. The fear of many parents (and apparently Anderson Cooper) is that too much money can squash ambition and drive. The image that keeps many affluent up at night is the idea that their kids will be robbed of zeal to make an impact – this same zeal and inner drive that pushed them to make their own mark on the world. The solution for many parents is to use incentives within a trust rather than leaving a large inheritance outright. The incentives can be as creative as you can imagine. For example, a common incentive – euphemistically called an “investment banker clause” – calls for trust distributions that match the child’s income. If Suzie makes $75,000 from her job, the trust will distribute to her $75,000 each year. If her younger brother Johnny spends too much time playing Xbox and only makes $22,000 a year, the trust will distribute just $22,000 to him. The built-in incentive with this clause is, of course, to make money. But what if Suzie wants to join the Peace Corps? You can add language that will ensure distributions if your child is involved in a non-profit. Again, the sky is the limit when it comes to drafting who gets what and when. Newport Beach estate planning attorney Cheryl Barrett, says “I often build educational incentives in parents’ and grandparents’ trusts that are designed to reward the beneficiaries’ educational accomplishments.” For example, the trustee might be directed to disburse $10,000 upon attainment of a Bachelor’s degree and $20,000 upon attainment of a Master’s or Doctorate degree. While Barrett acknowledges that a degree is not a guarantee of a beneficiary’s personal success, she states, “The pursuit of it requires vision, goal setting, and engagement with other motivated individuals, all of which enhance a beneficiary’s likelihood of success.”

3. Tie distributions to ages and events. Think back to when you were 20 years old. Would you have been emotionally and intellectually mature enough to handle a large inheritance? Many parents create their trust so that their kids get a small amount of money each year and larger amounts when they reach certain ages (e.g., 30, 35, 40). They will also allow for trust distributions to pay for college expenses, weddings, or house down payments. A popular strategy is to distribute income from the trust assets when the kids are young and then to distribute principal when they are older and, ideally, have a career and greater financial sophistication.

4. Get your kids involved in a personal foundation. If you have children still living with you, creating a personal foundation can be a wonderful opportunity to support causes you believe in, get a nice tax deduction, and more importantly to our point, teach kids about money. One of my clients sold his business and overnight was worth more than $25 million. He and his wife had three young kids and they were worried that the dad’s strong work ethic would be lost on the kids now that they could have anything they wanted. We created a personal foundation, and because it was required to disburse 5% of the foundation’s balance each year, we gave each family member the responsibility of researching a cause and donating 1%. This got each of the kids excited about their own cause and seeing how their money could have an impact. It was a great learning experience for the whole family.

5. Give without giving cash. There is another win-win alternative to outright gifting. Jeff Lewis, an estate planning attorney in Los Angeles likes this approach. Lewis says, “Many of my clients have started using their annual federal gift exclusion ($14,000 as of this writing) to directly pay down either an adult child’s mortgage principal or school loans. This will make a significant difference to the child’s future financial position, while not putting that amount of cash in their hands today.” Many parents realize that mortgages and school loans are substantially larger now than in their time, so helping to reduce that huge burden is a rewarding proposition for both generations. Lewis continues, “Be sure to check there are no pre-payment penalties or other negative loan consequences.”

As a parent, you want what is best for your kids. It’s natural and reasonable to worry how a large inheritance will affect their drive and choices for life. With some planning, money can be a tool that enriches their lives rather than an anchor that drags them down. Consider the strategies above and talk to your financial advisor and estate attorney for more ideas.

Friday, May 2, 2014

Westward Group for Tax and Estate Planning Advisors Tokyo Tips: Is There Hope For Japan's Now Underperforming Stock Market?

“As the sun sets on Japan’s powerful stock market rally, investors might ask what could rekindle the lost energy,” begins a Lex column in the April 20 Financial Times. What, indeed?

The Lex team reprise a rather tired “better corporate governance” theme. They report that Japan’s Diet is likely this year to amend the Companies Act to push companies to increase external directors and set up audit committees “more typical of western companies.”  More usefully (see below) they note the January launch of “a new JPX-Nikkei 400 share index, comprising Japanese companies that combine higher returns on equity and good corporate governance.”

To the question where the Japan market’s mojo has gone, an analysis by Maeda Masataka, a member Nihon Keizai Shimbun’s editorial board, published on April 23, is edifying, if not particularly reassuring. Maeda observes that one year and five months the launch of “Abenomics,” the Japanese stock market seems to have settled into a low trading volume funk, with no perceptible rallying factor on the horizon.

More troubling and surprising, perhaps, Maeda notes that when exchange rate changes are considered, even during the past 1.5 years returns from French and German stocks exceeded those from Japanese equities, and on the April 22–the day before President Obama touched down for a “state visit” in Tokyo–U.S. equity market returns also pulled ahead of those of Japan.

In short, Prime Minister Abe’s message to the investing world that “Japan is back” has become increasingly suspect, if not unbelievable.

Maeda writes that if we create an index putting a value of 100 on the level of the Nikkei 225 stock average on November 13, 2012, the day before Abe’s predecessor, Noda Yoshihiko, announced dissolution of the Diet lower house and new general elections (i.e., the “pre-Abenomics” market level), by April 18, 2104 that index value would have risen to 167.60. By comparison, against the same dates, the Germany’s DAX has risen to 184.61 and France’s CAC 40 has risen to 181.70.

The DAX is calculated with dividends reinvested, a little discounting is necessary.  But the result for investors and particularly Japanese investors (given the appreciation of the Euro vs. the yen) is painfully apparent:  Abenomics notwithstanding, they would have done better investing in Europe.

The Dow Jones Industrial Average closed on April 17 at 16,408, which was 166.12 on Maeda’s index, within a point of the Nikkei’s 167.60.  (Actual Nikkei closing on the 18th was 14,388 yen.  It closed today, April 28, at 14,288 yen.) Maeda’s prediction was that the Dow was set to outpace the Nikkei, and he has been validated.

What has happened to the Tokyo market’s mojo?  Maeda suggests, first, that the economics market’s rise was not unpinned by a positive reassessment of individual companies’ management capability. Rather, it was the inverse affect of yen depreciation. While buying stocks when export earnings were being buoyed by a weakening yen made sense, the increase in reported earnings was not definitive evidence of enhanced in corporate strength.

Of course, among the 3500 listed Japanese companies, there are many exceptionally well-managed companies that did attract new investments. Maeda notes, however, that during the 1980s, a time when Japanese companies were genuinely strong, their stocks continued to rise even as the yen appreciated.

“In other words,” writes Maeda, now “unless we Japanese are selling our labor at a discount, overall stock value will not rise. This is a big difference with German stocks, which are rising despite a rise in the Euro. It shows that Japan’s corporate revival is only half-finished.”

As a second point, looking at relationships of the Dow and Nikkei averages, Maeda reckons that short term foreign investors, and particularly hedge funds, were attracted by the promise of Abenomics, and became big net buyers during its first year, but that they have turned this year into net sellers.

Foreign investors have lost patience and been put off by what they see as gridlock in delivering Abenomics’ “third arrow” growth strategy reforms. What these investors are looking for is a “three set” menu of continued BOJ monetary stimulus, a cut in the corporate tax rate, and a successful conclusion to the TPP trade talks.

Maeda observes that many, if not most, long term foreign institutional investors–pension funds, mutual funds, and value investors–remained skeptical toward Japanese equities and did not greatly increase their portfolio allocations. He cites U.S. Treasury data showing that in September 2011 Japanese stocks made up 9.7% (USD 420 billion) of U.S. residents’ USD 4.32 trillion of foreign equities holdings. As at January 2104, Japanese equities had increased to USD 590 billion, but U.S. holdings had increased to USD 6.31 trillion, so the percentage had fallen to 9.4%.

Maeda acknowledges that by October 2012, Japanese stock allocations in U.S. portfolios were at a nadir, a mere 7.6% (USD 390 billion) of a total USD 5.13 trillion. In this sense, what happened since can be seen as a reversion to mean, rather than buying into Abenomics by long term investors.

Thursday, May 1, 2014

Westward Group for Tax and Estate Planning Advisors Tokyo Tips: Can the World Economy Break Its Addiction to Stimulus?

The world economy is a stimulus addict. This year it’s going cold turkey.

In China, keeping growth on track for the past five years has required ever larger injections of credit. The ratio of private-sector debt to GDP pushed over 200 percent in the first quarter of 2014, up from about 125 percent at the end of 2008.

That presents China President Xi Jinping and Premier Li Keqiang with an unpalatable choice. China’s new leaders could cap loans and face a sharp slowdown in growth, or they could continue on the credit binge and risk a finance crisis. So far the choice has been option No. 1.

STORY: China Pledges Major Stimulus Projects, Invites Private and Foreign Investors

That’s the right decision, but the consequences are still painful. New lending is flatlining. Investment is fading. At 5.7 percent, annualized first quarter GDP growth was well short of Premier Li’s 7.5 percent target for the year. With a key gauge of factory activity pointing to contraction in April, the signs heading into the second quarter are little better.

In Japan, the bursting of the credit bubble in 1989 left corporations saddled with debt and unwilling to spend. To prevent a lost decade turning into a permanent coma, the government was forced to rack up enormous debts. In 2013, an Abenomics spending splurge to kick-start the economy added to the debt load.

With public debt at 237 percent of GDP, Japan’s Prime Minister Shinzo Abe faced a choice no more palatable than that facing China’s leaders. Raising taxes threatened to strangle the infant recovery in its cradle. Continuing to borrow risked a sovereign debt crisis that would make Greece’s recent problems look like the first act of a larger tragedy.

STORY: With Growth Slowing, Will China Launch a Stimulus?

Abe’s solution for 2014 is a compromise. A hike in the consumption taxes—the first since 1997—will be offset by higher public spending. Even that threatens to stop Japan’s recovery in its tracks. GDP in the world’s No. 3 economy is expected to contract at a 3.4 percent annualized rate in the second quarter.

Worse could be to come. If Tokyo wants to avoid a debt apocalypse, a budget deficit of more than 8 percent of GDP has to swing into surplus. That’s tough to do without taking a serious chunk out of growth.

In the U.S., meanwhile, exiting an extraordinary period of monetary stimulus is proving less easy than entering it did. The U.S. housing market—a key contributor to the recovery—is hooked on low rates. Even a modest percentage-point increase in mortgage costs in the past year has caused tremors. New home sales fell to an 8-month low in March.

STORY: Two Papers That Could Persuade the Fed to Prolong Stimulus
The U.S. housing market is not the only one to suffer. With the cost of credit low, emerging markets from South America to East Asia became accustomed to capital inflows. In the years after the 2008 financial crisis, that buoyed stock prices and fueled a boom in real estate. As rates in the U.S. start to rise, emerging markets have been roiled by sudden reversals in capital flows twice in the past year.

Past stimulus in the world’s three largest economies had a purpose. Massive loan growth in China and close to zero rates in the U.S. eased the pain of the 2008 financial crisis. In Japan, the government had to keep borrowing to offset the impact of corporate saving. Still, even well-intentioned stimulus can’t go on forever. As policymakers in Beijing, Tokyo, and D.C. are discovering, breaking the stimulus habit is tough to do.