News About IRS And Tax

Thursday, 7 December 2017

Absolute Zero – Free TurboTax Absolutely No Strings Attached

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source https://blog.turbotax.intuit.com/turbotax-news/absolute-zero-free-turbotax-absolutely-no-strings-attached-18720/

Wednesday, 6 December 2017

Sports Gambling and How Your Winnings are Taxed

You may be headed to the racetrack, casino or to make your sports bet, hoping to win big. But you might be surprised that Uncle Sam has his fingers crossed for your good fortune as well.

source https://blog.turbotax.intuit.com/income-and-investments/sports-gambling-and-how-your-winnings-are-taxed-2-17916/

Strategies To Minimize Or Delay Required Minimum Distribution (RMD) Obligations

The benefit of contributing to pre-tax retirement accounts like IRAs and 401(k) plans is the opportunity to receive an upfront tax deduction, and enjoy the growth that remains tax-deferred as long as the investments remain in the retirement account. For those accumulating towards retirement, this provides additional tax-deferred compounding growth that can help bridge the gap towards retirement itself. With the expectation that once someone reaches retirement, they will begin to take distributions – and Uncle Sam will finally get his share of the tax-deferred account.

To ensure this final outcome, the Internal Revenue Code requires that retirement account owners begin liquidating their accounts upon reaching age 70 ½. Of course, for those who actually need to use their retirement account to fund their retirement lifestyle anyway, distributions will likely be occurring already. However, for those who don’t need the funds, the Required Minimum Distribution (RMD) obligation ensures that at least some money is distributed – and taxed – every year.

For those who don’t actually need to use their retirement accounts – yet, or at all – the mandatory withdrawals of the RMD obligation presents a substantial tax challenge, as the forced distributions not only trigger taxes on the RMD amount itself, but also risks driving the retiree up into a higher tax bracket when stacked on top of all of his/her other retirement income as well.

Fortunately, though, the reality is that there are numerous strategies that can be leveraged to manage and minimize required minimum distributions – both for those who have already reached the RMD phase, and also those still accumulating towards it, who want to plan ahead to minimize the bite of RMDs in the future.

Ultimately, it’s impossible to completely and indefinitely avoid the requirement to distribute retirement accounts – if only because, even to the extent the account isn’t liquidated during life, the beneficiaries will be subject to additional RMD obligations after the death of the original account owner. Nonetheless, the potential exists to at least partially manage and minimize RMDs, and mitigate some of their tax bite!

Tuesday, 5 December 2017

#FASuccess Ep 049: Getting Paid For (Hourly) Financial Planning By Packaging Financial Advice with Anna Sergunina

Welcome, everyone! Welcome to the 49th episode of the Financial Advisor Success Podcast!

My guest on today’s podcast is Anna Sergunina. Anna is the owner of MainStreet Financial Planning, an hourly-based financial planning firm founded under the Garrett Planning Network that has grown to more than $600,000 of revenue, all from simply getting paid to provide hourly financial planning advice (with no income from insurance products or managing investment portfolios at all).

What’s fascinating about Anna’s business, though, is the way that she’s figured out how to communicate the value of hourly financial planning – by creating very specific financial advice packages for various types of prospective client profiles – and then using her website to both explain the value of financial planning packages to prospects, and to screen out those who aren’t really likely to take the process seriously.

In this episode, we talk in depth about Anna’s 5-meeting process for financial planning, why she charges $100 as an upfront deposit just to have an Initial Inquiry approach meeting with prospects, the way she focuses first on the client’s spending to help them understand what they can save and what kinds of goals might be possible, and then proceeds to an interactive financial planning session using MoneyGuidePro, all of which leads up to a final meeting where she ultimately presents financial planning recommendations and then helps clients to implement them.

We also talk about how Anna sets the level for her financial planning fees, the sources of new business that has her firm on track to add more than 100 new financial planning clients this year, the way she re-engages existing clients for ongoing financial planning updates to generate a level of recurring revenue, and why and how she built extensive workflows in her Wealthbox CRM to manage the financial planning logistics with her ever-growing 6-person team.

And be certain to listen to the end, where Anna shares her own path into the industry, how she actually bought out MainStreet Financial Planning from its original founder, the way she’s decided to structure her week with some days dedicated to working in the business and others solely for working on the business, and why she thinks it’s so crucial that even fiduciary financial planners learn how to sell. Because you can’t get paid for your knowledge and expertise until you can sell someone on its value and why they should pay you.

So whether you have been trying to figure out how to better communicate your financial planning services, have been contemplating providing hourly services and wanting to know how to do it successfully, or are interested in more effectively using CRM to manage workflows, I hope you enjoy this episode of the Financial Advisor Success podcast!

source https://www.kitces.com/blog/anna-sergunina-podcast-jim-ludwick-main-street-financial-planning-hourly-fee-only-garrett-planning-network/?utm_source=rss&utm_medium=rss&utm_campaign=anna-sergunina-podcast-jim-ludwick-main-street-financial-planning-hourly-fee-only-garrett-planning-network

Monday, 4 December 2017

IRS Provides Guidance on the Taxation of Bitcoins and Virtual Currency

Yesterday the IRS answered this long standing question about the taxation of virtual digital currency, announcing that virtual digital currency like Bitcoins should be taxed as property instead of currency for federal tax purposes and the same rules that apply to property transactions like the sale of stocks apply to virtual currency. So what does this mean for you if you’re a tech savvy taxpayer dabbling in trading this form of currency?

source https://blog.turbotax.intuit.com/tax-news/irs-provides-guidance-on-the-taxation-of-bitcoins-and-virtual-currency-16630/

The Latest In Financial Advisor #FinTech (December 2017)

Welcome to the December 2017 issue of the Latest News in Financial Advisor #FinTech – where we look at the big news, announcements, and underlying trends and developments that are emerging in the world of technology solutions for financial advisors and wealth management!

This month’s edition kicks off with the big news that Lincoln Financial has decided to build its AdviceNext advisor workstation on Fidelity’s Wealthscape, as Fidelity’s investment into eMoney Advisor is starting to pay off by becoming the most holistic-wealth-management-oriented custody and clearing platform… a notable threat to both technology competitors like Envestnet, and custody-and-clearing competitors like Pershing. And with DoL fiduciary pushing more and more broker-dealers towards financial planning, Fidelity suddenly seems incredibly well positioned to gain market share in the shifting landscape!

From there, the latest highlights also include a number of major announcements of new capital for advisor FinTech startups, as well as new partnerships and big feature rollouts this month, including:

AdvicePay raises $500k of seed capital to provide custody-compliant payment processing for one-time and retainer financial planning fees
Gainfully raises $2.5M of seed capital for a content sharing platform for advisors to distribute client-friendly compliance-pre-approved content… paid for by asset managers and other product manufacturers!
Morgan Stanley partners with LifeYield to offer household-level asset location tax alpha tools
Morningstar launches its new Office Cloud, providing a deep integration of Morningstar research capabilities on top of a performance reporting portal for clients

Read the analysis about these announcements, and a discussion of more trends in advisor technology, in this month’s column, including a look at the evolving landscape of account aggregation as Fidelity launches Fidelity Access (allowing a direct API feed of client financial data without the need for screen scraping) and UBS begins to waive account fees for clients who agree to account-aggregate held-away accounts, MoneyGuidePro launches client-directed data-gathering and Discovery Lab tools (and a study that shows 2/3rds of clients would prefer to enter data and evaluate goals in the comfort of their own home), and a look at how even as advisor FinTech increasingly matches the capabilities of “robo-advisors” when it comes to onboarding, the robo-advisors continue to innovate, with robust new capabilities in financial planning software (Wealthfront), and new facilitate to more easily facilitate tax-savvy charitable giving (at least, until/unless the rules change with a new requirement for FIFO accounting!).

I hope you’re continuing to find this new column on financial advisor technology to be helpful! Please share your comments at the end and let me know what you think!

*And for #AdvisorTech companies who want to submit their tech announcements for consideration in future issues, please submit to TechNews@kitces.com!

Friday, 1 December 2017

Weekend Reading for Financial Planners (December 2-3)

Enjoy the current installment of “weekend reading for financial planners” – this week’s edition kicks off with the big news that UBS has exited the Broker Protocol, just three weeks after Morgan Stanley… but not before spiking the ball at Merrill Lynch and recruiting away several big Merrill teams as they left, which may just accelerate Merrill Lynch’s departure from the Protocol as the entire agreement unravels (to the detriment of both brokers and their clients).

Also in the news this week is the final and official announcement of the 18-month delay of the Department of Labor’s fiduciary rule… which may kick off a new spate of lawsuits by fiduciary advocates aimed at halting the delay (to compel the rule to take effect at the beginning of 2018 after all), and a surprise withdrawal of support from the White House of the SEC’s Administrative Law Judges, raising the possibility that the Supreme Court make take Ray Lucia’s case and strike down the SEC’s ability to appoint its own ALJs.

From there, we have several articles about life insurance, including a look at how life insurance companies are trying to develop new extension riders to avoid the otherwise taxable event of policyowners who reach age 100 (though it’s not clear that they can do so under the tax code), the issues with “guaranteed” whole life and why many common whole life strategies are not actually fully guaranteed (even though old-fashioned traditional whole life was/is), and a primer on the concept of “Private Placement Life Insurance” (PPLI) as a strategy to use the tax-deferral wrapper of life insurance to minimize the tax drag on high-income alternative investments for high-net-worth investors.

We also have a few practice management articles, including: a look at the rise of “predatory buyers” of advisory firms, who often leverage the limited closed market of their broker-dealer or RIA custodian to persuade advisory firm owners to sell on less-than-ideal (valuation or tax) terms; a reminder that growing a billion dollar (of AUM) advisory firm will require founders to transition from “just” being advisors into actually being “leaders” of their advisory firms (which in practice is a very uncomfortable transition for many!); and a look at how automation tools can be used to better engage clients and prospects… because even though the advisor knows it may have been automated, as long as the client receives value, they likely won’t care about how it was achieved!

We wrap up with three interesting articles, all around the theme of our rapidly changing world: the first is a fascinating in-depth look at the blockchain, the underlying technology that powers Bitcoin (and other cryptocurrencies), and why even if Bitcoin turns out to be a bubble or a fad, the blockchain technology itself is likely here to stay and could revolutionize a wide range of industries; the second explores the “dying art of disagreement”, and the idea that democracies are founded on our ability to have productive discourse with those we disagree with (which has become increasingly challenging with the polarization of today’s modern world); and the last raises the interesting question of whether the fiduciary debate has already be co-opted to the point that being a fiduciary is no longer a meaningful differentiator, and whether it’s time for leading advisors to take up a new battle to push the envelope around concepts like “integrity” or “stewardship” instead.

Enjoy the “light” reading!