We frequently speak with new retirees that are shocked to know that
their Social Security Benefits are taxable. The formulas for determining
your taxable Social Security benefits can be complicated, but with a bit
of effort, you can figure out what your tax liability will be. In some
cases, you can even take steps to reduce the amount of tax you’ll owe on
your benefits.

The IRS lists income limits above which a portion of your Social
Security will be subject to tax. For single recipients, income above
$25,000 subjects as much as 50% of your benefits to taxation, while
income above $34,000 leaves as much as 85% of your benefits subject to
tax. For joint filers, the two analogous threshold amounts are $32,000
and $44,000, respectively. So at first glance, it would seem as if
figuring out your taxable Social Security benefit amount is fairly easy.
However, an initial complication comes when determining income for
purposes of Social Security taxation. You first start by taking your
ordinary taxable income from your tax return. But you also have to make
a couple of additions such as interest from municipal bonds, which is
ordinarily tax-free at the federal level. You also take one-half of your
Social Security benefits and add it to the total in order to come up
with a final income figure.

The language in the IRS description of taxable Social Security benefits
is that “as much as” 50% or 85% of your benefits can be subject to tax.
That doesn’t mean that as soon as you move a single dollar over the
income thresholds that suddenly the full percentage of your benefits
gets included in taxable income. Instead, there is a more incremental
approach to increasing your taxable income.
Let’s assume that you’re single and had Social Security benefits of
$15,000 and other income of $17,500. In that case, half of your Social
Security comes to $7,500, which, when added to your other income, puts
you right at the threshold of $25,000, so none of your benefits are
taxable. But, if you change that example slightly so that your other
income rises by $1,000 to $18,500, your total income for determining
Social Security taxation becomes $26,000, $1,000 above the threshold
amount. Now you will find that your taxable benefits come out to just
$500 — far less than the $7,500 that would represent 50% of what you
got from Social Security.

This example shows that even though up to 50% is subject to tax, the
actual amount is typically 50% of your taxable Social Security income
above the threshold. A similar situation applies to the higher
threshold for 85% inclusion — each dollar of income above the threshold
puts another $0.85 into the taxable Social Security category, but you
won’t see any huge one-time impact simply by hitting that 85% line.
Retirees have a bit of latitude in affecting whether their Social
Security benefits will get taxed. By being smart about selling
investments and taking taxable distributions out of IRAs and 401(k)s,
you can have more or less taxable income that will count against you in
determining taxable Social Security benefits. Taking advantage of
eligible deductions can also help make less of your benefits taxable.

Are you considering making an investment in a start-up, an early stage
company, or even a franchise? We would recommend you follow these nine
steps to avoid becoming a victim:

1. Understand the business plan:
You need to understand the business. If you don’t understand it, should
you be investing in it? Before you think about writing a check, ask:
What is the company going to do with your money?
Does the company have enough cash to operate?
What does the company sell?
Who is going to buy?
Who is competing in this market?
How does the company make money?
When do you get to see some profits?
If the company succeeds, when do you get to sell your equity?
The business plan should make sense to you. If it doesn’t make sense,
don’t assume that you’re not smart enough to “get it.”

2. Don’t get stampeded into investing before you’re ready.
Promoters/Franchisors of legitimate ventures will encourage you to take
your time, consult your lawyer, and ask questions. They should want to
have a perceptive, sophisticated investors as part of their circle.
Invest when you’re ready and not a moment before.

3. Seek out other investors/franchisees.
Ask the promoter/franchisor for other investor/franchisee contact
information.
Here are just a few questions to get you started:
How do you know the promoter/franchisor?
What can they tell you about the business?
When did they invest?
What about this company convinced them to invest?
If the promoter/franchisor won’t let you talk to other
investors/franchisees, or if the other investors/franchisees seem
sketchy, be wary!

4. Ask common-sense questions.
When a promoter/franchisor tells you about the awesome returns his
venture is going to earn, ask some common-sense questions:
Why haven’t 100 other companies rushed into this market?
Why haven’t the big private equity firms snapped up this deal?
Why doesn’t the promoter simply borrow the needed funds from a bank?

5. Don’t get shamed into investing.
It is human nature to crave the admiration and approval of others. Scam
artists prey upon basic human nature. Always remember, when someone
wants your money, you get to ask any questions you want. If you get the
sense that the promoter/franchisor is trying to make you feel stupid for
asking questions, you’re probably about to get scammed.

6. Resist the “Fear of Missing Out.”
Scammers prey upon this fear. They’ll convince you that this is a “once
in a lifetime” chance to get rich. Most scams, in retrospect, are
painfully obvious. Scams work because they cause your brain to shut off
for just long enough to write a check.

7. Meet the promoter/franchisor in person.
Talk to him and find out what his story is. Have him tell you about
himself. Does the story make sense? Does he know the kinds of things
that a person with his background ought to know? Do you get a good vibe?
Do you trust him? This is not 100% fool proof because scammers are
quite persuasive. However, if you use a meeting to tease out a lot of
biographical information, it will put you in a position to go back, do
some more diligence, and see if the guy checks out.

8. Engage a smart business lawyer.
If you’re going to invest a meaningful amount of money, paying for a few
hours of a lawyer’s time can save you from a very expensive mistake. You
want a lawyer who has seen a lot of deals, who has the capability to
investigate the promoter and make inquiries into his background and
reputation, and who knows how to spot a scam.

Many retirees depend on a pension to cover day-to-day and unexpected
expenses, such as health emergencies or home repairs. Some retirees with
pensions are facing financial challenges and have responded to ads for
cash advances on their pensions. Although pension advances may seem like
a “quick fix” to your financial problems, they can eat into your
retirement income when you start paying back the advance, plus interest
and fees.
A pension advance is a cash advance in exchange for a portion, or all,
of your future pension payments. Pension advance companies typically
charge high interest rates and fees and often target government retirees
with pensions. Military retirees and veterans who receive monetary
benefits from the Department of Veterans Affairs (VA) have been offered
pension advances even though it’s illegal for lenders to take a military
pension or veterans’ benefits.

Here are 3 things you can do to protect your retirement pension:

1. Avoid loans with high interest and fees. Pension advance companies
may not always advertise their fees and interest rates, but you will
certainly feel them in your bottom line. Before you sign anything, learn
what you are getting and how much you are giving up.
2. Don’t sign over control of your benefits. Companies sometimes
arrange for monthly payments to be automatically deposited in a newly
created bank account so the company can withdraw payments, fees and
interest charges from the account. This leaves you with little control.
3. Don’t buy life insurance that you don’t want or need. Pension
advance companies sometimes require consumers to sign up for life
insurance with the company as the consumer’s beneficiary. If you sign up
for life insurance with the pension advance company as your beneficiary,
you could end up footing the bill, whether you know it or not.

A 529 plan is a tax-advantaged savings plan designed to encourage
savings for future college costs. 529 plans, legally known as “qualified
tuition plans,” are sponsored by states, state agencies, or educational
institutions.
There are two types of 529 plans: pre-paid tuition plans and college
savings plans. All fifty states and the District of Columbia sponsor at
least one type of 529 plan. In addition, a group of private colleges and
universities sponsor a pre-paid tuition plan.
Before the Obama administrations proposal to phase out 529 college
savings plans, many clients with young children had never heard of this
tax-advantaged financing tool.
Here are a few basic points and benefits:

1. Pay no income tax on earnings- Your 529 account money grows and is
postponed from federal and state income taxes if spent on qualified
education expenses. Qualified education expenses include tuition and
mandatory fees, such as: books, supplies, equipment, the full cost of
room and board, and certain additional expenses for special needs
students. Housing facilities must be owned or operated by the college,
however, off-campus room and board costs can be eligible expenses, and
are subject to certain limits.

2. Assets of the plan are controlled by the individual who establishes
the account (the owner of the account), not the beneficiary. If you’re
the account owner and you live in Missouri, you can deduct up to $8,000
($16,000 if you’re married filing jointly) of your 529 Plan
contributions when you file your state income taxes.

3. Plan beneficiaries can be changed by the account owner for any
reason. For example, if the original intended beneficiary receives a
full scholarship, a younger sibling can benefit from those funds.

4. There is a penalty for using the account for non-qualified purposes,
however, the 10% penalty is applied only to earnings, not the original
contribution amounts.

5. You can contribute up to $14,000 per year ($28,000 if married filing
jointly) without triggering federal gift tax. If you’re interested in
making a larger lump-sum contribution, you can contribute up to $70,000
($140,000 if married filing jointly) per beneficiary and then treat it
as though you contributed that amount over a 5-year period. However, you
can’t make additional gifts to the beneficiary during that time without
incurring gift tax. This opportunity can be beneficial to grandparents
seeking to remove assets from their taxable estate.

Let’s face it—as a small business owner you don’t have the time or
know-how to handle your own accounting. However, finding an accountant
can be tricky. If you’re like most small business owners, you may not
even know what to look for.
At Premiere Business Services we focus on what is important to YOU. We
train continually to stay up on current IRS tax law changes that will
affect how you run your business. There are five things you should look
for when choosing an accountant
1) Training:
We help small business owners pay the least amount of income tax
possible as allowed by law! To accomplish this task, our continuing
education (CE) is exclusive to income tax. Our staff is required to take
50 CE hours annually of which 48 must be in taxation and 2 must be in
ethics. To maintain an Enrolled Agent (EA) designation, the IRS requires
a minimum of 16 hours of taxation CE credits and 2 hours of ethics must
be completed during each enrollment year. In Missouri, a CPA must take
at least 120 CE hours every three years. NONE OF THESE HOURS ARE
MANDATED TO BE IN TAXATION!
2) Experience:
Premiere Business Services was established on July 15, 1999. We
currently have two operating partners, Larry & Matt Simpson, and an
outstanding support staff. We are very knowledgeable in SMB’s, our
focus is on entrepreneurial companies who are concerned with tax issues
as their priority.
3) Reliability:
Premiere Business Services help owners to succeed in their business. To
do so, we have to be intimately involved with their financial, profit
loss, balance sheet, owner goals, business and personal. Office hours
are Monday through Friday, 9 am – 5 pm with access to information or
requested documents as needed.
4) Initiative:
At Premiere Business Services we will meet with you once per quarter to
discuss your business’s financials. At this meeting you will learn:
-How your business is performing compared to others in your industry,
-What steps can be taken to improve cash flow
-Long-term planning for the success of your business
And many other topics that will help you grow a successful business!
5) Affordability:
At Premiere Business Services we offer affordable prices based off your
businesses structure. Call us today for price information!

“Your Success is our Business”
We would be honored to work with you and your company. Call to see how
we can help you succeed!