Tax Planning

  • Tax Planning For the Self-Employed

    Self-employment is the opportunity to be your own boss, to come and go as you please, and oh yes, to establish a lifelong bond with your accountant. If you’re self-employed, you’ll need to pay your own FICA taxes and take… Read More

  • Am I Having Enough Withheld?

    By: Susan Horne | MST | Tax Advisor Form W-4 helps you determine the proper withholding amount Two factors determine the amount of income tax that your employer withholds from your regular pay: the amount you earn and the information… Read More

  • Estate, Gift, and GST Taxation and Trusts

    HOW ARE TRUSTS TREATED FOR FEDERAL ESTATE, GIFT, AND GST TAX PURPOSES? A trust is created when you (the grantor) transfer property to a trustee for the benefit of a third person (the beneficiary). The act of transferring property to a trust is generally treated no… Read More

  • Top 10 Tax Strategies

    Filing your tax return is a once-a-year event, but there are things you can do throughout the year to help reduce your tax burden and protect your assets. BOOST YOU RETIREMENT SAVINGS One of the best ways to lower your… Read More

  • Taxes: Where We All Stand…Where Do You Stand

    By: Benjamin Dorsey, CPA, CFP®, CDFA™, MST | Director of Ta x Services Each year after September, the IRS releases preliminary data for the previous filing year’s tax returns. The most recent publication reports tax return data for returns processed for tax year 2013 (2014 preliminary data… Read More

  • Fun Tax Facts

    April 15 is our annual “anti-holiday”—the date we love to hate. Many Americans dread that day each year because of the misconception that individual tax returns must be filed by then. Actually, only a rough estimate of what you owe… Read More

  • Who Will Buy Your Business?

    By:  Brian MacMilllan | Managing Director Mergers & Aquisitions Selling a privately held business is complicated. If you are a business owner, understanding the options available to you when selling your business can make a huge difference both in how much you receive from the… Read More

  • Bundling Services: The Best Way To Maximize Value From Financial Professionals

    By:  Benjamin Dorsey,CPA, CFP®, CDFA™, MST | Director of Tax Services Professional financial advisors work with clients on investment, planning, and/or tax strategies. Unfortunately, when financial advisors of different disciplines are not in sync and/or not working with the entire set of goals and information,… Read More

  • Corporate Report Card: Reviewing a 10-K

    By early March, most public companies have to file their 10-Ks. (For those who are unfamiliar with the term, a 10-K is an annual report required by the U.S. Securities and Exchange Commission (SEC) that gives a comprehensive summary of a company’s… Read More

  • IRS Creates “Mega-Sale” on Employer Retirement Plan Taxes

    By:  Mark Stinson, CPA , CFP ®, MBA | Director of Planning I am putting all my money in taxes—the only thing sure to go up. – Henny Youngman The IRS has proved Henny Youngman wrong—at least in one case. If… Read More

  • Planning for Digital Assets

    By:  Thad Ismart, CFP ® | Financial Planner Many of us do much of our communicating and shopping online. Our email and social media accounts, along with many of the things  that  we  purchase—songs, books, movies—exist only in electronic form, often… Read More

  • Being Prepared: The Best Kept Secret To Low-Stress Tax Return Filing

    By:  Benjamin Dorsey,CPA, CFP®, CDFA™, MST | Director of Tax Services “In this world nothing can be said to be certain, except death and taxes” — famous words from Benjamin Franklin that have stood the test of time (and likely… Read More

  • Planning for Required Minimum Distributions

    BWFA Tax Manager Joe Hill was recently featured in the November issue of The Business Monthly magazine, discussing how to plan for a required minimum distribution (RMD). Follow this link to read the article: Planning for a Required Minimum Distribution

  • Planning for RMDs

    By:  Joseph Hill, Jr., CPA, MBA, MSF | Tax Manager After investors reach age 70 ½, “the tax man cometh.” That’s when the IRS requires mandatory withdrawals from traditional Individual  Retirement Accounts  (IRAs), employer-sponsored retirement plans such as 401(k)s, 403(b)s,… Read More

  • Start Planning Now for Next Year’s Tax Return

    By:  Sharolyn Hockey – Tax Manager Filing their income tax return is a chore most Americans dread. Once that return is filed, you probably stop thinking about your taxes, don’t you? But there’s no better time to start your tax… Read More

  • Taxes: Who You Gonna Call?

    Because the federal government and the states are in difficult financial shape, they’re stepping up efforts to collect tax revenue. We’ve seen a large increase in letters from the IRS and state governments requesting more information or more tax dollars,… Read More

  • New Tax in 2013 Affects Investment Income

    Beginning in 2013, there will be a new 3.8% tax on investment income that exceeds certain limits. The tax came about to provide revenue for the 2010 Patient Protection and Affordable Care Act, which was upheld by the US Supreme… Read More

  • College Education Expenses, Credits, and the New Graduate

    Congress and the last two presidents have put legislation into effect that makes the payment of college education expenses a potentially lucrative tax savings tool. Parents and college students should plan carefully so that they maximize these tax savings. Unfortunately,… Read More

  • Planning for Taxes in 2012 and Beyond

    This will be a challenging year for BWFA’s tax team. A lot has been written about 2012 and 2013 tax law. Here’s a selected summary of the changes and the planning opportunities as they exist now.   Retirement plan contributions… Read More

  • New Tax Law Offers Tax Saving Opportunities

    The Accountant�s Full Employment Act of 2003 (also referred to as the Jobs and Growth Tax Relief Reconciliation Act of 2003) has been signed. But before you groan, there is quite a bit of good news for our clients, including… Read More

  • Can I Use My IRA to Loan Money?

    From time to time clients ask, “How can I use my IRA to help my children or others? Can I use my IRA to loan money to my children to buy a home or start a business?” Unfortunately, the short… Read More

  • Considering Taxes in Retirement Location

    Everyone knows the story of the Titanic. The “unsinkable” ocean liner struck an iceberg at 11:40 p.m. on April 14, 1912, and sank before dawn on the next day, resulting in the deaths of 1,517 people in one of the… Read More

  • Potpourri of Tax Changes

    This article is a potpourri of tax changes that are affecting many of our clients. We’ve divided the changes into two main categories: 1) those affecting retired clients; and 2) those affecting our young accumulators. Some of these changes occur… Read More

  • Tax Reporting Just Became Easier

    Starting with stock sales made this year, there will be a change in the way that brokers (such as TD Ameritrade) are required to report the transactions. Investors will receive more information, which will make recordkeeping and tax accounting easier…. Read More

  • BWFA Already Surpasses New IRS Standard for Tax Preparers

    It’s about time. Beginning in 2011, all paid tax preparers will need to register with the IRS and will be subject to a standardized set of educational, training, and ethical requirements. As an Enrolled Agent, I support the higher standards… Read More

  • Lower Mortgage Interest Rates Could Mean Higher Taxes for You

    Lower mortgage interest rates are good news for homeowners who are seeking to refinance and for those who are looking to purchase a home. Lower rates add flexibility to the negotiation of loan terms, mortgage interest, points, financed amount, and… Read More

  • Attention Students: 
You Might Need to File a Tax Return

    Alert to college and high school students working a summer job. If your total income goes over $5,700 for the year, you’ll need to file a tax return for 2010. If you earn less than $5,700 but also have investment… Read More

  • Budget Shortfalls at the State Level Can Have Impacts on Individuals

    Many people who live in the Mid-Atlantic region consider moving to lower-cost areas when they retire. BWFA has clients who have done so. These days, with the financial pressures on individual states, it is worth considering both the tax burden… Read More

  • Congress Proposes Tax on Investment Transactions: Bad News for Mutual Funds

    In December 2009, U.S. Sen. Tom Harkin (D-Iowa) introduced legislation that would create a financial transaction tax on purchases and sales of securities in the U.S. markets. U.S. Rep. Peter DeFazio (D-Oregon) proposed similar legislation in the House. Mutual funds… Read More

  • Taxes Take a Bite—Would You Believe 43% of Your Taxable Income?

    Most of us think we pay a lot of taxes, probably too much, but what does your total tax burden look like? Of course there is state and federal income tax, calculated and paid now at tax time, but there… Read More

  • What Is Going On With Estate Tax Laws?

    Last week, our client, Early Retiree, heard that estate tax laws were changing in 2010, and she called S. Tate Planner, to discuss the new law. The following is a transcript of the conversation. Is it true that there is… Read More

  • Saving Tax Dollars on Your Roth Conversion

    One of the “hot” tax topics for 2010 is the Roth Conversion. Beginning in 2010, Congress will permit anyone, regardless of income level, to convert money from retirement accounts and traditional IRAs to a Roth IRA. Much has already been… Read More

  • Tax Preparation Checklist

    Personal Data Social Security Numbers (including spouse and children) Child care provider: name, address, and tax ID or social security number Alimony paid: name and social security number of former spouse     Employment & Income Data W-2 forms for… Read More

  • It’s Easy to Start a Business of Your Own

    Over the years, many of our clients have started small businesses. This may have come about as a result of an offer through the company they worked for, or it may have been the realization of a long-time personal goal…. Read More

  • The Biggest Tax Story Ever

    In all well-run households, we make decisions about what we can afford and what we cannot afford. When we overspend at home, we live with the consequences. But when our elected officials overspend public money, they gain votes. This is… Read More

  • Your Largest Expense in Retirement

    What is your largest expense in retirement? Is it the one you thought it would be? Our newsletter editor brought to our attention a survey done by the Spectrem Group in August 2008 for retirees age 70-75 who have about… Read More

  • Mary is in Good Hands at BWFA

    We have always told our clients that they benefit most when they use all three of our services: Retirement and Estate Planning, Investment Management, and Tax Services. Here is an example of how our services work together. Meet Mary Client…. Read More

  • Tax Preparation Checklist

    Personal Data Social Security Numbers (including spouse and children) Child care provider: name, address, and tax ID or social security number Alimony paid: name and social security number of former spouse     Employment & Income Data W-2 forms for… Read More

  • Would You Like to Pay Zero Capital Gains Taxes?

    We often see eye-catching e-mail advertisements that promise to divulge strategies that will help us (and our clients) reduce our taxes. Often, the e-mails are scams or propose illegal schemes. However, there is an opportunity created by the Jobs and… Read More

  • Why We’re Planning for Higher Taxes

    We thought it would be interesting to look at the presidential candidates’ positions on taxes. As you might expect, Senators Obama and McCain propose very different solutions. Looking at the table below, which we obtained from the non-partisan Tax Policy… Read More

  • BWFA Rescues You from Dreaded Estimated Tax Payments

    We’ve written several articles on the subject of estimated taxes. These tax payments are required when you do not have enough taxes withheld from your salary, self-employed income, or retirement payments. By making these payments on time, you avoid the… Read More

  • Estate Planning: Tax Deductions Sometimes Get Lost

    As you think about your estate and the assets that your heirs will inherit, it is very important to understand that different items will be taxed differently after they are inherited. One of our jobs at BWFA is to help… Read More

  • It IS Easy Being Green(e)

    Every once in a while we hear something from one of our clients that we just have to pass along to all of our newsletter readers. Thanks to the Energy Policy Act of 2005 (EPACT) and incentives offered by Maryland… Read More

  • Pay Quarterly Taxes Now, or Pay Penalties Later

    Nobody likes to pay income taxes. The tax bite seems even more painful if you are writing the checks instead of having taxes withheld from each paycheck. However, retirees and the self-employed who ignore quarterly tax payments will wind up… Read More

  • Searching for Opportunity in New Federal Tax Laws

    Every time Congress changes federal tax law, Baltimore-Washington Financial Advisors analyzes how the new rules might affect our clients. The Pension Protection Act of 2006, signed into law in December, is the latest such tax law change that provides new… Read More

  • Required Minimum Distributions — A Milestone Not to Be Ignored

    The tax deferral you enjoy in your IRA or 401(k) cannot go on forever. The IRS ensures this money will eventually get taxed by requiring you to make withdrawals over your lifetime, beginning at age 70½. Making the withdrawals is… Read More

  • Employee Stock Options: When to Cash In

    Employee stock options are a very valuable form of employee compensation. They are also one of the most complicated. To develop a strategy for cashing them in, you must consider many factors, including the tax consequences of exercising, the outlook… Read More

  • To Trust or Not to Trust?

    There are three primary goals in estate planning, 1) to promote family harmony, 2) to ensure that your estate passes according to your wishes, and 3) to avoid estate taxes. Trusts are often used to meet one or more of these goals. However, trusts can make… Read More

  • How Far Can You Stretch? Getting the most out of your IRAs

    The shift from company-provided pensions to self-funded retirement plans has created a unique estate planning problem. When people retired with pensions, there was little estate planning necessary because the pension died with you. Today, people accumulating large pre-tax balances for… Read More

  • Buying Real Estate in Your IRA

    We often get questions from our clients about buying real estate in their IRAs, such as: Can we help our children buy a home using IRA money? Can we buy a vacation home in an IRA? Can we buy an… Read More

  • What Are the Tax Consequences of Selling Your Home?

    Our planning article in this issue addresses options you face when you consider moving into a retirement community. But first you have to sell your home. What are the tax consequences of that sale? Yes, you may have taxes to… Read More

  • What Are the Tax Consequences of Selling Your Home?

    With the incredible appreciation in real estate values over the past few years, many people are wondering about the tax consequences of selling their homes. Yes, you may have taxes to pay. But, due to a very generous tax law… Read More

  • The Tax Consequences of Social Security and Privatization

    It is certainly not clear whether privatization of Social Security will become a reality. It is also not clear how this privatization will affect your overall tax bill. However, from the proposals currently being considered, it appears that changes to… Read More

  • Inherited an IRA? Here’s what you should do!

    Individual Retirement Accounts (IRAs) often are the largest asset passed on to heirs. The biggest advantage of IRAs is tax deferral. The good news for beneficiaries is that you can S T R E T C H the advantage out over your… Read More

  • State Death (Estate) Tax Changes—What Should You Do?

    As a result of the Economic and Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), our federal estate tax system has changed greatly. As we noted in our Spring 2004 newsletter, changes in federal estate taxes caused an unexpected… Read More

  • The Advantages of Donor-Advised Funds

    Individuals who wish to make a commitment to philanthropy often consider establishing a private foundation. But Donor-Advised Funds offer significant advantages with no start-up costs, higher tax deduction limits, and less paperwork and expense. These funds are charitable organizations set… Read More

  • Wealthy or Not, Here Comes the AMT!

    In filing your taxes this year, you may have been hit with a nasty surprise — Alternative Minimum Tax (AMT). That’s because more and more people are being affected by this once esoteric tax. The AMT is a parallel tax… Read More

  • Turn Your Hobby into a Business and Save Taxes

    Why would you want to turn something you enjoy and do for fun into something that is intended to generate income? To save money on taxes, of course. In this article, we are going to explore the pros and cons… Read More

  • The Best Tax Breaks You Can Find

    With the recent appreciation in real estate values, many of us have significant gains in our personal residences and other properties. Fortunately, our tax laws provide special tax breaks for gains in real estate, especially compared with other types of… Read More

  • Frequently Asked Questions About Retirement Plan Contributions

    During the tax preparation process we are often asked questions that have to do with the timing of contributions, the most appropriate account, and the deductibility of contributions. So we’ve put together a list of FAQs (Frequently Asked Questions). We… Read More

  • It’s Time to ‘Fine-Tune’ Your Retirement Plan

    When was the last time you reviewed your retirement plan? We don’t mean the value of your investments, we mean the type of plan you are in, your contribution level, the elections you made, and the overall appropriateness of that… Read More

  • The Parade of Corrected 1099 DIVs – What should you do with them?

    Every year, many of our clients express displeasure about how they continue to receive “Corrected” Form1099s, even into late April. These corrected 1099s complicate and delay completion of tax returns, so people are understandably upset. We thought we might take… Read More

  • Should I Do My Own Tax Return?

    Have any of you walked into an Office Depot or Staples and not seen tax preparation software for sale? It�s everywhere. It�s so easy. You can even export your Quicken records directly into Turbo Tax. And, presto, a tax return!… Read More

  • New Educational IRA for 2002

    We have a new model for the education IRA. The old model�let’s call it the Yugo�is gone. You may remember the Yugo�it was a college savings vehicle with more faulty engineering than practical uses. It had very low horsepower; only… Read More

  • Tax Law Changes: How Can They Benefit You?

    We have another new tax act: The Economic Growth and Tax Relief Reconciliation Act of 2001. It appears as though we are never going to see the tax simplification that everybody wants. The new act is a positive piece of… Read More

  • Enlightened New IRA Rules!

    The proposed regulations on required minimum distributions of IRA_savings are a perfect example of a kinder, gentler, more user-friendly IRS. I believe that the changes are exactly what you and I would want if we had drafted them. How will… Read More

  • Playing the Marginal Tax Bracket Game

    When we look at the results of a freshly tailored financial plan, prepared by our firm, we are struck by the power that is placed in the hands of our clients. This power is the vision of a possible future… Read More

  • Required Distributions Begin at 70

    The age of 70½ is the age at which you must begin taking distributions from your qualified retirement accounts and Individual Retirement Accounts (IRAs). These required distributions present several planning opportunities and pitfalls. The tax rules are complicated and the… Read More

  • The Best Deal on Income Tax Deductions?

    It is only natural for you to worry that you are missing some tax deductions when you compile your tax records at the end of each year. There are a number of reasons why you may feel this way. It… Read More

  • To Rollover or Not To Rollover

    One of the most important decisions to be made concerning your Individual Retirement Accounts will be whether to roll your existing IRA into the new Roth IRA or not. The answer depends on your individual circumstances and may require some… Read More

  • Do I Hear a Cry for Tax Simplification?

    We have all heard a great deal of talk about simplifying the tax code. The prospect of filing your annual income tax returns on a post card must make many of you smile. Considering my position as tax advisor here… Read More

  • Don’t Get Me Started

    The disturbing testimony before Congress demonstrates the error in allowing the IRS to remain a self-governing body. The checks and balances that are in place for many other governmental bodies either do not exist for the IRS or are done… Read More

  • Capital Gains Tax Relief? Count On It!

    It sure looks like it will happen this year. The latest proposal we have seen is to lower the maximum capital gains tax rate to 20%, down from 28%. For people in the 15% bracket the capital gains rate would… Read More

  • “Simple” and “Not-So-Simple” Changes

    The Small Business Job Protection Act of 1996 provides a number of new planning opportunities. Beginning in 1997, a married couple will be able to contribute $2,000 to each of their IRA accounts, even if one spouse doesn’t work. Previously, the… Read More