Tag: Tax Planning

Tax Day Countdown: Five Overrated Tax Planning Ideas

There is plenty of tax advice floating around this time of year but the problem, as you may expect, is that not all of it is useful for everyone. Sure, you can throw read every piece of advice out there but some of that advice is worth ignoring or at the very least, investigating further so you can find out for yourself if it will actually benefit you.

We asked Mike Callahan, tax director at Spicer Jeffries LLP in Greenwood Village, CO, to pay us another visit, this time with ideas or strategies that he thought were overrated so that you can sort out some of the noise.


• Buying a car for the “write-off” – Mike told us that deductions related to depreciation on cars are extremely limited. He said, “If you need a new car, fine. But don’t expect a huge tax benefit.”

• Maxing out your mortgage – According to Mike, borrowing as much as possible to purchase a home because of the interest deduction is not worth it. “If your combined federal and state tax rate is 30%. 70% of your interest payments are going out the door.”

• Check your W-4 – Withholding a lot of taxes during the year so you can get a big refund is not the way to go. Mike puts it this way, “You just gave Uncle Sam an interest free loan. Adjust your withholding so you come close to breaking-even at tax time.”

• Running up a credit card on deductible expenses before year-end – This one should be a face-slap moment but, “Using a credit card to prepay expenses before year-end if you can’t afford to pay the balance when the bill comes next month.”

• Don’t sock money in an IRA away if you need it now – Mike said that saving money doesn’t do much good if you plan to withdrawal it later, “[Don’t] contribute to an IRA when you need the money. You’ll end-up withdrawing the funds andsubjecting yourself to a 10% penalty,” and more taxes. And by “need” Mike isn’t referring to your Range Rover payment. Good choices people.

More tax advice:
Six Small Business Tax Strategies for the Entire Year
Tax Day Countdown: Five Tax Planning Ideas for Individuals

Six Small Business Tax Strategies for the Entire Year

March 15th is just four days away so many of you amped for this first corporate deadline of the year. Tax planning gets a lot of attention during January – March time frame but what about the rest of the year? Should you be thinking about planning for three lousy months out of the year? Please.

But because the timing is not lost on us, we reached out to a CPA who has been around the block a time or two for some tax advice as we approach the corporate filing deadline.


Mike Callahan is a tax director at Spicer Jeffries LLP in Greenwood Village, Colorado. Mike has been sharing his tax wisdom with clients for over thirteen years with an expertise in securities taxation, organizational structure and international taxation of investment partnerships. Mike has been involved in many areas of tax research and planning, including advising broker-dealers and hedge funds, international taxation, multi-state tax planning and compliance and estate and financial planning.

Mike will be paying us a visit with some tax advice or the next week or so as the we head down the stretch in tax season 2010.

Starting off, he gave us six strategies for small businesses that you can keep in mind for yourself or your clients throughout the year, just not for year-end planning:

• Consider a 401(k) safe harbor – If your pension contributions are limited because your employees don’t contribute much to their accounts, contributing 3% of your employees’ compensation to their accounts allows you to maximize your contributions.

• Retirement Plan Credit – Small employers are eligible for a credit of up to $500 for 50% of the administrative cost of setting up a retirement plan.

• Section 179 – Deduct (instead of depreciating) the cost of equipment and furniture on up to $134,000 of additions in 2010 ($250,000 in 2009) under Section 179.

• Hire your children since you give them money anyway – Of course they do have to actually work. Their tax bracket is probably less than yours, some of the income is tax free and they are eligible for traditional or Roth IRA contributions.

• Watch out for the alternative minimum tax (AMT) – It impacts more and more people each year. Tax projections by your CPA are a must! It may be beneficial to defer some deductions until next year instead of paying them this year.

• Work from home? – If your home office is your principal place of business for administration and management of your company, a portion of your rent, utilities, maintenance, etc… are deductible. This also helps reduce your self employment tax.

Estate Tax Planning with the Exuberant Accountant

The Exuberant Accountant isn’t the spamming type so when he sent out an email to, presumably, all of his blog’s email subscribers as a warning about new estate tax rules in 2010, it was clear this wasn’t a casual tax issue. Scott Heintzelman was kind enough to give me a few minutes to break down what this means for estates and why we should care.

Disclaimer: I took an estate tax class no less than two months ago and have since forgotten everything I learned so I needed a refresher anyway. As always, if you need advice on actually planning your estate, don’t listen to me and get yourself a CPA and/or tax lawyer. “We are accountants, ultimately we don’t draft agreements,” says Scott and he’s absolutely right. Get a trained mine-sniffer on that particular cluck mission.


Scott pointed to a recent post from his firm’s McKonomics blog called “No Estate Tax is a Good Thing, Right?” and it goes without saying he doesn’t believe this “no estate tax thing is good” by any means.

He gave the example of getting hit by a bus (awww, don’t run over the Exuberant Accountant!): If he walks out of his office tomorrow and dies, certain language in his will might leave a trust with $0 for poor Mrs Exuberant Accountant. What about the little Exuberant Accountant Jrs?! The humanity! Don’t worry, we’d start a charity drive.

Anyway, from McKonly & Asbury:

[M]any estate planners wrote wills with such language that the bypass trust would be funded with an amount equal to “the current lifetime exemption amount.” Since we currently have no estate tax, and no lifetime exemption amount, if a spouse dies in 2010, we could potentially have an unfunded bypass trust. This is especially alarming since we can all assume the estate tax will come back and we may have a taxable estate once the second [spouse passes] away.

Thanks for the heads up Scott, here’s to hoping you don’t get smashed by a bus this year. Look on the bright side, the estate tax goes up to 50% next year!

Earlier: Five Questions with The Exuberant Accountant

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