Today the IRS announced they are working on changes to the 1040 tax forms. The IRS said that “this new approach will simplify the 1040 so that all 150 million taxpayers can use the same form. The new form consolidates...
source https://blog.turbotax.intuit.com/tax-reform/irs-announces-they-are-working-on-a-new-1040-tax-form-intuit-turbotax-has-got-you-covered-41221/
Friday, 29 June 2018
Weekend Reading for Financial Planners (Jun 30 – Jul 1)
Enjoy the current installment of “weekend reading for financial planners” – this week’s edition kicks off with the announcement that the CFP Board is launching a new “Standards Resource Commission”, a 13-person panel that will be tasked with creating guidance on the CFP Board’s new Code of Ethics and Standards of Conduct to help CFP professionals know what they actually need to do to comply with the new rules.
Also in the news this week was a controversial internal memo at Wells Fargo that going forward, clients will be given the option to “opt out” of permitting their broker to take their contact information if the broker leaves, in what critics are calling an effort by Wells Fargo to end-run the Broker Protocol without formally dropping out of it. And the IRS provided a preview of its new Form 1040, which – in light of all the deductions and credits eliminated by the Tax Cuts and Jobs Act of 2017 – is aiming to consolidate the 1040 itself, the short-form 1040A, and the 1040EZ, into a new shortened postcard-sized tax return… albeit with what will still be a lot of new worksheets to calculate the deductions and credits that remain.
From there, we have a number of marketing and business development articles, from a look at how improving at sales and business development first requires a mindset shift that it’s about trying to share services that help (and why would you not be persistent in trying to offer real help to a prospect!), to advice on how to get better at networking, and some insights about what prospective clients actually want to see (and don’t want to see) on an advisor’s website.
We also have several retirement planning articles, including: a way to separate financial independence into multiple tiers depending on the nature of the lifestyle it can afford, and whether or how many trade-offs must still be accepted to make it work; how to think about and talk to clients whose struggle is not failing to save enough for retirement, but having saved “too much” yet being unwilling to spend and enjoy their wealth; and how to plan for and frame the cost of health (Medicare) insurance and medical expenses in retirement.
We wrap up with three interesting articles, all around the theme of the business of advice itself: the first explores how often the best “advice” that we can offer is simply to listen, help clients be heard, and only occasionally, maybe offer some tidbits of guidance if and when they truly ask for it; the second looks at how the shift to more behaviorally-oriented advice (as opposed to traditional investment and financial advice) can fundamentally change the nature of the questions we ask clients; and the last looks at research finding that perhaps there’s such thing as being too empathetic with clients, and that the better way to connect with and help clients while avoiding burnout is not to empathetically feeling with them (and sharing their pain), but simply trying to extend kindness and compassionately feel for them, instead.
Enjoy the “light” reading!
source https://www.kitces.com/blog/weekend-reading-for-financial-planners-jun-30-jul-1/
Thursday, 28 June 2018
Undeclared Overseas Assets? Beware the ‘Requirement to Correct’ Deadline!
What does this mean for me?
If you are a taxpayer with overseas assets which are undeclared as regards income tax, capital gains tax or inheritance tax, you have an obligation to sort things out by 30 September 2018. People who ignore this requirement and whose income or assets subsequently come to light will face much, much higher penalties and sanctions after the deadline.Why bother now?
The United Kingdom has signed up for information exchange with a whole host of other countries. The information it receives from them will be input into its intelligence system known as Connect. This increases the likelihood of undeclared sources coming to light.What if I do nothing?
After the deadline date, if your undeclared sources of income or gains come to light, you will face potential penalties as follows:- A tax geared penalty of between 100% and 200% of the tax due;
- A potential asset based penalty of up to 10% of the asset value where the relevant tax at stake is over £25,000 in any one tax year;
- Adverse publicity from being publicly named as a tax cheat where the tax is over £25,000;
- A further potential penalty of 50% of the standard penalty if the Revenue show that assets or funds have been moved in an attempt to avoid the requirement to correct.
Get Started:
If you think you might be affected or are in any doubt, we suggest you act now to avoid any problems before the deadline. Call Taxfile on 0208 761 8000 for a no-obligation discussion if you want to put things right. Alternatively, book an appointment here. We have a wealth of experience in dealing with voluntary disclosures and negotiating settlements with HMRC, so can definitely help you. We offer tax advice and accountancy services from our offices in Tulse Hill, Dulwich and Battersea in South and South West London along with tax experts in Exeter, Plymouth, Poole, Dorset, Devon, Yorkshire and Carlisle.source https://www.taxfile.co.uk/2018/06/requirement-to-correct-deadline/
Wednesday, 27 June 2018
QBI Deduction Strategies For High-Income Financial Advisors (And Other Small Business Owners)
For financial advisors, the new Qualified Business Income (QBI) deduction (also known as the IRC Section 199A deduction, or the pass-through deduction) presents not just many tax planning opportunities for small business owner clients, but also tax planning opportunities for financial advisors themselves. The reason being that financial advisors are classified as Specified Service Business owners, and, as a result, any “high income” advisors (defined as those whose taxable income exceeds $315,000 when filing a joint return, or $207,500 when filing otherwise), are subject to a phaseout of their potential full QBI deduction of up to 20% of certain business income.
In this guest post, Jeffrey Levine of BluePrint Wealth Alliance, and our Director of Advisor Education for Kitces.com, examines how high-income financial advisors (and other Specified Service Businesses) can utilize strategies to get the most benefit from their QBI deduction, including spinning off and renting back depreciable property, creating a PEO and leasing back employees, condensing lifetime giving via the use of a donor-advised fund, and other strategies!
While high-income advisors need to consider the impact of the QBI phaseout on their income going forward, notably, the concern does not apply to all advisors. In particular, advisors with income less than the QBI phaseout levels will still receive a full QBI deduction. But for high-income advisors, the QBI phaseout will apply. As a result, advisors may particularly want to look for strategies to convert an advisor’s specified service business income into income derived from a non-specified trade or service business. Advisors have many options for implementing such strategies. For instance, some may want to spin off any firm owned real estate into a separate entity and lease back the property at fair market value. By doing so, an advisor can reduce the amount of specified service business QBI generated from their practice (as rent is a deductible business expense), while simultaneously increasing the amount of QBI generated from the separate “rental real estate business”, which is not a specified service business. The end result of the strategy is that the rent the advisor pays on the building would be eligible for the 20% QBI deduction (albeit with a cap of up to 2.5% of the unadjusted basis of the office space).
Similarly, other QBI strategies look for ways to reduce QBI generated from an advisor practice while also increasing QBI generated by a non-specified service business. For instance, advisors may want to “spin-off” non-advisory employees and lease them back through a professional employer organization (PEO) (as a PEO would be eligible for a QBI deduction, so long as it is not deemed an advisory business), license intellectual property to an advisory firm through a different entity (as the intellectual property income may be eligible for a QBI deduction), or even cut back their workload or increase their investment in their firm through deductible expenses, given the marginal tax rates that can reach as high as 64% within the QBI phaseout zone!
Ultimately, the key point is to acknowledge that high-income financial advisors (and other specified service business owners) have considerable opportunity to plan around the new QBI phaseout zone… even if their total income is well beyond the QBI phaseout zone! While the new rules can be a bit tricky (and strategies could shift as the IRS provides more guidance going forward), it appears that QBI strategies will be a key focus going forward, and present a considerable planning opportunity for advisors (and their clients!) to reduce their overall tax burden!
source https://www.kitces.com/blog/high-income-threshold-qbi-deduction-strategies-financial-advisor-specified-service-business/
Tuesday, 26 June 2018
#FASuccess Ep 078: Understanding And Serving The Needs Of Truly Ultra-High-Net-Worth Investors with Charlotte Beyer
Welcome, everyone! Welcome to the 78th episode of the Financial Advisor Success Podcast!
My guest on today’s podcast is Charlotte Beyer. Charlotte is the founder and former CEO of the Institute for Private Investors, a private networking organization specifically for ultra-high-net-worth investors, and some of the advisors who serve them.
What’s unique about Charlotte, though, was the way she built a series of conferences, networking events, and online community for ultra-high-net-worth individuals before the world of social media and online communities became what they are today… and in doing so, demonstrated and proved that ultra-high-net-worth clients really do have a set of unique needs and challenges, for which they need both an organization, and advisors, dedicated to serve them.
In this episode, we talk in depth about the two biggest worries of ultra-high-net-worth families – which is not necessarily about how to maximize their investment returns or even minimize their taxes, but how ensure that their children don’t grow up to be entitled or otherwise adversely impacted by the family wealth, and how to avoid the risk of being “taken” and conned or scammed out of their money – what Charlotte calls the five “Ps” that she counsels ultra-high-net-worth investors to consider when evaluating an advisor, including the firm’s People, Performance, Process, Philosophy, and Phees, why the future of working with the ultra-wealthy is all about high-tech and high touch, and what ultra-high-net-worth investors really want to hear from an advisor to connect with them in a world where they hear a ton of advisor “pitches” to them that all sound the same.
We also talk about how Charlotte herself built IPI as an organization, how the effort to create a community organization for ultra-high-net-worth investors almost failed out of the gate, the way she structured the organization’s meetings and established group norms to promote the interaction between ultra-high-net-worth investors and the advisor community, and the lessons that any advisor can draw in figuring out how to really listen to the clients you’re serving an adapt what you offer them to fit what they really want and need.
And be certain to listen to the end, when Charlotte provides her suggestions about what financial advisors should consider if they want to move “up market” into serving ultra-high-net-worth clients, and the way the ultra-high-net-worth space is shifting as wealth gets younger (with the rise of Gen X and Gen Y ultra-high-net-worth investors), as women control an increasing portion of ultra-high-net-worth wealth (and have different expectations of their advisors), and as the advisor value proposition itself continues to change as technology automates for free many of the things that we previously were paid for.
So whether you are interested in learning more about how to build a community around your niche, the unique challenges and goals of ultra-high-net-worth individuals, or what you should consider if you are interested in moving “up market”, I hope you enjoy this episode of the Financial Advisor Success podcast!
source https://www.kitces.com/blog/charlotte-beyer-institute-private-investors-podcast-ipi-wealth-management-unwrapped/
Monday, 25 June 2018
Announcing The First Kitces Research Survey On The Real Financial Planning Process
Financial planning, and the process of creating a financial plan, has changed extensively over the nearly 45 years since the first class of CFP certificants. While early on, the financial plan was used primarily as a Calculator to do Needs-Based Analyses for the products they had to sell, over time it evolved into a Comprehensive Financial Plan that advisors could actually get paid for independent of any product implementation, which advisors then in turn Customized even further, and are now increasingly delivering Collaboratively with clients (where the focus is on the planning experience, and The Plan itself is merely delivered after the fact to commemorate the planning decisions already made).
Yet unfortunately, remarkably little research exists on how, exactly, financial advisors are actually preparing and delivering financial plans today. How often do advisors charge separately for planning? What is it that they actually deliver to clients? When advisors complain that it is very “time-consuming” to do financial planning, which part, exactly, is so time-consuming? And to what extent does financial planning software expedite the process… or exacerbate the problem?
In this context, we’re excited to announce the first Kitces Research initiative – a comprehensive study on the process that financial advisors actually go through to create and deliver a financial plan. Think of it as a benchmarking study for the creation of the financial plan itself, with a focus on identifying best practices.
So whether you’re frustrated that financial planning software doesn’t “do” what you need it to in order to demonstrate its value, or are simply looking for ideas to refine your own financial planning process to be more time-efficient or cost-effective (or valuable and able to command a higher price!), I hope you’ll take a few minutes to participate in our Financial Planning Process survey and help the world better understand what real financial planners actually do!
source https://www.kitces.com/blog/kitces-research-survey-real-financial-planning-process/
Friday, 22 June 2018
Tax Reform 101: Will Getting Married Change My Tax Situation?
Are you planning to get married or are getting married soon? If so, congratulations! As you and your significant other plan for the big day and your life together, there is a lot to take into consideration. And as fun...
source https://blog.turbotax.intuit.com/tax-reform/tax-reform-101-will-getting-married-change-my-tax-situation-41112/
source https://blog.turbotax.intuit.com/tax-reform/tax-reform-101-will-getting-married-change-my-tax-situation-41112/
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