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Dec 30 2013 | Posted in General

A New Year's Wish - For All Four of My Readers!

Happy New Year to all of you – I was trying to think of an adjective to describe 2013 and all I can think of is “fast.” The year just flew by.

From a tax perspective, the adjective would have to be “complicated.” Although the Affordable Care Act (Obama Care) was passed a couple of years ago, the major provisions affecting taxes will start with the filing of the 2013 tax returns.

Those provisions include the new 3.8% tax on interest/dividends/rents for high income earners (those with AGI over $250,000). Also starting back in 2013 is the phase out of itemized deductions and the personal exemption. Add these to the higher tax rates, and you get more money in the hands of Uncle Sam.

So you have come to my blog looking for answers to these complicated and imposing tax changes. I can tell you that the answers are only found through a sit down with your CPA who can go over your exact situation. There is no universal magic wand I can wave.

I can say that the answer is not to move to another country (although the Bahamas still sound pretty inviting). We have a tax system that is still lower than many countries. I would not suggest making less money since the American Dream is to be all you can be. The answer is unique to you. Each person will make decisions both for tax and non-tax strategies.

Donations to charity have both tax and non-tax benefits and is a favorite option. Gifting to your kids now allows them to make use of the money they will eventually get and also transfers the earnings to their returns. Investing in stocks that appreciate but do not pay dividends wil increase your portfolio but not expose you to the new 3.8% tax. These are a few ways to help reduce your tax burden.

So for 2014 tax planning, come in and see me this year. Let me charge you a few extra dollars and give you some tailored tax planning information that could save you way more than the cost of that information. The additional benefit is that you and I get to have a chance to talk face to face. In this electronic world of emails and attachments, it is easy to avoid your accountant all together. I can certainly tell you that is not one of the answers to understanding and reducing your tax burden!

Thanks for listening and I will talk at you again.

Nov 19 2013 | Posted in General

Why Have We Abandoned Thanksgiving?

You’re asking yourself… “what does this have to do with taxes?”

After watching Saturday Night Live (SNL) last week, I was reminded of how quickly we move from Halloween to Christmas and just bypass Thanksgiving. You take down the scary spiders and the pumpkins and you put up the lights and the tree. It’s true, I know of many friends that are already good to go on their decorations.

It reminds me of how many clients tend to forget tax planning. They move from income earning to taxes paying and never stop and give thanks for the really smart CPA’s who want to help them keep the income they earn.

Time is your enemy—once the year is over, there are very few significant tax planning techniques available. We can still come up with some ideas to shave a few dollars off the final bill but we do our best heavy lifting in November and December.

On this holiday season, find the time to give thanks—not for a bountiful harvest—as was the case in the olden days, but for all those people around you that have given you or your loved ones a helping hand.

At the same time, give some thought to the overlooked “holiday” of tax planning.

Thanksgiving is one of my family’s favorite holidays—we invite people into our home to enjoy the day with us. My beautiful wife cooks all day, we watch football, have a feast—and we acknowledge our blessings.

So Happy Thanksgiving from all of us at Hutchinson & Walter. We appreciate your business and we try very hard to give you the best service we can. Stop by during the next six weeks just to say hello and if there is something going on in your tax life that we can help with, that is what we are here for.

Thanks for listening and I will talk at you again.

Oct 18 2013 | Posted in General

When are tax returns really due?

That is a very good question. I know; I’m complementing myself. The answer is actually very complicated.

If we are talking about individual tax returns, most people would say “April 15th” and they would be right. However…

You can file for an extension, and then most people would say “October 15th.” And they would be right. However…

Returns with refunds have three years from when they were due in order to get the overpayment refunded. So if you said “3 years”, then you would be right. However…

What if you weren’t ready by April 15th. And you filed an extension, so you had until October 15th. And you owed the IRS money? The answer would be both April 15th AND October 15th!! Bet you didn’t see that one coming!!

How can it be both? The taxes that you owe are due April 15th no matter what, and the tax return that you file is due October 15th. By sending in both the money and the return on October 15th, you are exposing yourself to a penalty. (I’m really not sure I should be using the words “Exposing” & “Yourself” in the same sentence).

Accountants would have a different rule if we ran the world. [ED. maybe a new blog??] We would divide up last names into five categories and your filing deadline would be either April for (A-E), May for (F-J), June (K-O), July (P-T) or August (U-Z); Sure glad I am a Walter – Hello August!!

Getting married and changing your name could get you an automatic extension on filing – being a Walter is looking even better!!

The important thing is to keep filing – we all have the responsibility to report our income and pay our taxes. So don’t worry so much about when to file them as much as just filing them.

Thanks for listening and I will talk at you again.

July 04 2013 | Posted in General

I am full of appreciation!

My beautiful wife and I just celebrated 25 years of marriage by flying to the Bahamas. We had such a great time and I talked with all the natives: Cab drivers, dealers (card dealers people – settle down); bartenders, etc. They really enjoy their little piece of heaven.

I do apologize if The Bahamas is a lousy place to live for the Bahamians but they didn?t indicate that to me and I am not offering a human rights platform here.

There is literally no taxes to pay in that country. No sales tax; No income tax; No corporate or individual; And no sneaky capital gains tax.

Add to all this, beaches that are unbelievable and weather that is balmy – and a little unpredictable. Seems to me it might not be the best idea to have a tax practice in downtown Nassau since no one is actually paying taxes.

What could work for me is if enough of you move to The Bahamas; then a satellite office is not unreasonable and I can handle your needs personally.

OK – this is all a little silly. However, I can?t help but admire a country that has no significant tax structure – has citizens who don?t seem unhappy. A government that only allows Bahamians to work in all job sectors (unless you really bring something to the table like Brain Surgeon), and an economy of fruits, vegetables and tourism.

Do you think I had a good time? So here are a couple of tax tidbits that you might be looking for:

Obama Care Penalties Delayed to 2015.

Foreign Bank Acct Reporting has to be Electronic next year.

Rick Walter applies for Dual Citizenship on the 4th of July.

Thanks for listening and I will talk at you again.

May 15 2013 | Posted in General

Another Tax Season Has Come and Gone!!

Please forgive me. It has been a while since I last blogged. Tax season does that to me. I try to decide if I should take the time to blog or keep drafting tax returns – tax returns always win out.

My readers were probably upset not getting a dose of my thoughts, so sorry to all three of you.

There were many reasons that this tax season was tougher than most. First, the IRS (or should I say Congress) had a tough time figuring out exactly what the laws were going to be. Once that was figured out (Ed. in January), the IRS had to make the forms match the rules. This caused delays in the service accepting returns.

Secondly, brokerage firms did not try to hide the fact that their first attempt at a 1099 was going to be wrong. They told their clients this so many of them decided not to bring their tax data in until the revision was received. Add to this the late filing of many partnership and Sub-S corporations and you ended up with a bottleneck in late March.

This has caused a “mini” tax season here at the office. Clients want and deserve their tax returns as soon as possible and we are trying to get them completed. If you are waiting for your return to be completed, thanks for your patience and hang in there.

This blog is being created on a Sunday so that I can get returns done during the week – is that dedication or what?

By the way, my beautiful wife and I did the train ride to Portland again this year. That’s either because we had such a good time last year or we have no imagination.

It’s Mother’s Day too, so happy M-Day to all of you out there. I should get off the computer and do something in honor of the day. Maybe staying out of the way is exactly what Stephanie really wants?

Thanks for listening and I will talk at you again.

Feb 11 2013 | Posted in General

Always In A Better Mood After a Vegas Trip

As has been my habit over the last six years, I took a few days off to watch the Super Bowl down in Vegas. This trip was the compromise my beautiful wife and I came up with after 20 years of me opening up over 25 storage containers of Super Bowl decorations.

We are not just talking balloons and steamers; we had blimps, 8-feet tall, lit-up football players, goal posts in the middle of the street, the front yard was spay painted the emblem of the current Super Bowl. It literally took a week to put up and a weekend to take down – and of course a lawn mowing.

The switch from a home party to a Vegas party was a good one since I come back refreshed and ready to dole out great tax advice and prepare complicated tax returns.

With all the new changes this year, returns are being held up at the IRS. There are forms they are not ready to accept yet. This will cause a small bottleneck at our office so please be patient with us. If you haven’t come in to meet with me in a long time, please think about stopping by. I want to have a chance of recognizing you if we bump into each other at the store. Visitation hours are from 9 to 5, six days a week. Just remember the month of April is come at your own risk!

I have had many of you ask why the engagement letter you sign has gotten to be 3 or 4 pages. This is a requirement of our insurance company and we try to stay out of trouble with them. If you have any concerns about what it says, let us know and we can go over it.

Have you seen the new HOT Topics on our website. Click on there and get some really great information. When enough clients ask us about a certain topic, we compose an article to assist.

That’s it for this blog – it is Sunday and I am going home. I think my family will still recognize me!!

Thanks for listening and I will talk at you again.

Jan 03 2013 | Posted in General

Fiscal Cliff - What the hell just happened??

WOW – that is my educated comment on what just happened. A budget that for some reason just can’t be balanced; hard decisions on spending cuts that just can’t be made; – and a national debt that just can’t be reduced.

Looking on the bright side, (as a good tax accountant should) we have an AMT patch so that the majority of taxpayers will not have this additional tax to pay. In addition, we will get our coveted sales tax deduction here in the state of WA, so keep those receipts.

Of course, I wanted a good outcome for my clients and this makeshift bill they passed addressed most of the tax issues my office has been dealing with for the past month. However, I was thinking big picture here and looking for some long-term solutions for the crisis we find ourselves in.

I do not have an economics degree from Harvard (well, there is that one I paid $50 by mail for) or a math degree from MIT, but it is my understanding that each year the government spends roughly $3.5 trillion. Each year they collect from us $2.5 trillion. Here comes that math from Northern State College: It looks like we miss by $1 trillion each year.

When my beautiful wife and I were in this same situation (remove a couple of zeros), we found a way to increase revenue (we begged for raises and made trips to the blood bank), and decrease spending, without starving or doing nothing. The amount of nights out decreased; I ironed my own clothes; she painted her own nails; the list goes on.

I had better get off of my soap box before I fall. You know what I am talking about. If you have ever seen the movie DAVE with Kevin Klein and Sigourney Weaver – there is a scene where the “President” brings in an ordinary CPA to look over the budget and he carves out 100’s of millions of dollars, without taking away needed services. I am for hire, Mr. President.

Thanks for listening and I will talk at you again.

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