Taxes and Investing

Is it possible to turn non-deductible personal travel expenses into tax deductible business travel expenses? Yes! You can deduct your vacation as a business expense. . .

They call it flyover country, that central part of America people overlook on their way to another destination. The thought is that there is nothing to see down the backbone of America. But you would be wrong if thought that way. And the best way to see the heart of America is with a road trip.

Tax-loss harvesting is often bandied as a no-lose way to reduce taxes. Unfortunately, there are many pitfalls and under certain circumstances could actually increase your tax liability. Paying a service like Betterment to increase harvested losses only really works in a few limited situations.

Finding qualified employees is getting harder in the tax and accounting industry. You can either reduce your number of clients, outsource or increase automation. Gruntworx is a powerful tool automating much of the data entry process on a tax return. Tedious work is reduced so you can focus on the value added part of tax preparation: review and consulting.

Even before the Affordable Care Act people were looking for alternatives to traditional health insurance. The biggest desire to change was insurance premiums that were getting out of control. Some also wanted to cut a middleman out of the equation. Payment of claims is an even more important consideration, however.

Beating the average is “not” about finding the best of the best winners every year! It is about avoiding the clunkers. (Remember Buffett’s two rules!!! The secret is buried in there when you understand what he was saying.)

Winners are harder to find. But losers? Some are hard to spot and others stand out like a sore thumb. These deadbeats will break the Buffett rules and put you in the position of catchup. Hard to beat the indexes coming from behind.

Personal factors, your tax bracket, expected future income and when you plan on retiring all play a role. The answer isn’t as simple as playing the tax bracket game (convert be low a certain tax bracket only).

Other considerations can affect you taxes down the road. Even Medicare premiums are an issue. A high required minimum distribution (RMD)(currently starts at age 72, but pending legislation will gradually raise that to 75, if passed) can cost more than just a tax bill. It can also increase your cost for Medicare.

The best way to handle a Roth conversion discussion is to break it into two parts: the conversion phase and the retirement phase.

It has been a long time since developed nations have tasted serious inflation. Unless you are near 60 or older you will not have experienced the last time inflation was a serious issue in the 1970s into the early 1980s. 

Coupled with low inflation is low interest rates. It is hard to miss the pattern of interest rates since 1982. Each increase in interest rates was followed by a new low in interest rates until we bumped against zero and stayed there for much of the past decade. 

The stock market loves low interest rates. The constantly declining interest rates gave us a stock market that has relentlessly climbed. In the early 1980s the price/earnings (p/e) ratio for large capitalization stocks was in the single digits and the dividend yield was in the 6% vicinity. Now the p/e multiple is closer to 30 and the dividend yield is below 2%.