Alliance Financial & Income Tax

Qualified tuition plans (QTPs) provide a means for family members and others to save for the future educational needs of children. Investment earnings within a QTP account are tax deferred and not taxable when withdrawn if used to pay qualified tuition and certain other expenses. Learn more here https://www.afitonline.com/blog/gift-tax-treatment-of-tuition-plans?utm_source=facebook&utm_medium=url-shortener

Welcome! We start with an interview. It takes about 30 minutes and we discuss prior year tax returns, current year tax info, and any other issues you might be concerned about. Next, we prepare the tax return and it goes through a quality control check. When the return is finalized we give you call for pick up or portal upload. Taxpayers must sign an 8879 & engagement letter before we can electronically file the return. Once these documents are signed we e-file for you and send you notification when the return has been accepted. If you owe we will give you a voucher or a link to pay your income taxes. All payments are due by April 15th. Tax preparation fees are due when you pick up the tax return. All this takes about 5 days if we have all of your tax documents!

The IRS will set up payment plans! The important thing is to file. Extensions are for additional amount of time, it does not extend the amount of time you have to pay.

Yes. We have clients who live in other states. Most of our clients use our client secure portal . They scan their documents into a folder and then share it with us.

No, you cannot do any of the above transactions with your IRA. You cannot engage in self dealing with your IRA. This means that you cannot enter into a transaction in your IRA that benefits you in any way other than your potential benefit from investment gains in the IRA. You also cannot transfer assets you own to your IRA. So you cannot put your house, or stocks or other assets that you already own into your IRA in exchange for IRA assets. IRA contributions must be made in cash (unless the assets going into the IRA have come from another retirement account) which is another reason why you cannot put assets you currently own into your IRA or Roth IRA.

A missed distribution, even if it isn’t your fault, is subject to a 50% penalty on the amount not distributed. You should take the distribution as soon as you realize it was missed. The penalty is reported on Form 5329 for the year of the missed distribution. IRS can waive the penalty for good cause. To get the penalty waived, you must take the distribution, file Form 5329 without the penalty payment, and include a letter to IRS requesting the waiver of the penalty.

Any remaining amounts of the year of death required distribution MUST go to the beneficiary. The distribution never goes to the decedent or to the estate, unless the estate is the beneficiary. The RMD for the year of death is what the deceased IRA owner should have taken. Any required distributions that are not taken will be subject to the 50% penalty and are reported on Form 5498 by the beneficiary for the year the distribution was missed.

Yes, you can name a trust as the beneficiary of your IRA or Roth IRA. BUT, do not do this unless you understand all of the ramifications of having a trust instead of an individual inheriting the IRA. Always consult with an expert IRA advisor before taking this step. NEVER, NEVER, NEVER move your IRA assets into the trust or retitle your IRA into the name of the trust. Both of those actions are taxable events and you will owe income tax on the entire balance in your IRA and you will no longer have an IRA!! The trust should simply be named as the beneficiary on the beneficiary form.

You can take your basis out of a Roth IRA at any time. Your basis is amounts you have contributed, amounts you have converted, or certain amounts you have rolled over from an employer Roth account. Distributions of your basis will not be taxed as you paid tax on those amounts when they went into your Roth. A distribution from your Roth is considered to first come from contributions, then converted amounts, and lastly from earnings. You cannot take a tax free distribution of earnings until 5 years after you have established your first Roth IRA AND are over the age of 59 ½, are dead, disabled, or are taking out the funds under the first time home buyer exception. In addition, if you are under the age of 59 ½, the 10% early distribution penalty will apply. You could also be subject to the 10% early distribution penalty on the distribution of converted amounts if the conversion was done less than five years ago AND you are under the age of 59 ½ at the time of the withdrawal. The penalty

All funds in traditional IRAs, SEP IRAs, and employer plans such as 401(k)s are eligible to be converted to a Roth IRA. Funds in a SIMPLE IRA can also be converted AFTER the employee has participated in the SIMPLE plan for two years. A conversion before that date will be subject to a 25% penalty tax on the amount withdrawn AND the funds are not eligible for transfer to any other type of retirement account except another SIMPLE. To do a conversion of employer plan funds, you must be eligible to take a distribution from the plan.

Yes. An IRA, SEP or SIMPLE owner must begin taking distributions in the year they turn age 70 ½. It does not matter if you are still working or if you do not want to touch the money, you still must take a required distribution. Your IRA custodian is required to notify IRS that you have to take a distribution but they are not required to tell IRS how much you should withdraw. The custodian is required to tell you how much you should withdraw or they must offer to do the calculation for you. You will get that letter from your IRA custodian in January each year. A non-spouse IRA beneficiary who is named on the beneficiary form (not one who inherits through the estate) must generally begin taking distributions in the year after the IRA owner’s death although some beneficiaries may have only 5 years to distribute the entire IRA. A spouse beneficiary (one who does not move the IRA funds into an IRA in their own name) does not have to start taking distributions until the IRA owner would have

If neither you nor your spouse is covered by an employer retirement plan, your IRA contribution will be 100% deductible, regardless of your income. If either one of you is covered by a plan, your contribution may not be deductible or it may be partially deductible. The deductibility limits change each year. See IRS Publication 590-A for the current deductibility limits. There is a box on your W-2 Form from your employer that will tell you if you are considered to be covered by an employer plan. You will need to report any non-deductible traditional IRA contributions on Form 8606 which is filed with your tax return.

Yes, you can contribute on behalf of a non-working spouse. The contribution rules are the same for the non-working spouse as they are for the working spouse.

You must have earned income in order to make a contribution. The safe harbor definition of earned income is W-2 income. You can contribute the amount of your earned income or the contribution limit, whichever is less. Any taxpayer with earned income can make an IRA contribution with the following two exceptions. If you are 70 ½ or older during the year, you cannot make a traditional IRA contribution. If your income exceeds certain limits you will not be able to make a Roth IRA contribution. The income limits will increase each year for inflation. See IRS Publication 590-A for the current contribution and income limits. If you are age 50 or over you are eligible to make an additional catch-up contribution in the amount of $1,000.

You may ask, what is tax alpha? It's the value that is added to a client's financial plan by optimizing sound tax strategies. If "alpha" is the return generated by an advisor's skill in picking and managing investments, then "tax alpha" protects that return and generates a boost by making sure that taxes don't eat away more of a client's wealth than absolutely necessary. HD Vest Advisors deliver tax alpha through their ability to gain insights from your taxes and leverage that information to provide you with a holistic view of your financial plan.

Mike can provide you with valuable information to help you make important financial decisions, such as planning for retirement, buying a home, financing a college education, or investing for your family's future. Mike may assist you with 401k rollovers, Traditional and Roth IRAs, Brokerage Accounts, Variable Annuities, Educational IRAs, Mutual Funds and Term Life Insurance.

Federal law requires you to maintain copies of your tax returns and supporting documents for three years. This is called the "three-year law" and leads many people to believe they're safe provided they retain their documents for this period of time. However, if the IRS believes you have significantly under reported your income (by 25 percent or more), or believes there may be indication of fraud, it may go back six years in an audit. To be safe, use the following guidelines. https://www.afitonline.com/p/record-retention-guide

Enrolled agents (EAs) are America's tax experts. They are federally-licensed tax practitioners who both specialize in tax preparation and have unlimited rights to represent taxpayers before the Internal Revenue Service. If you get a letter from the IRS, or worse, are audited or are the target of a collection action, your EA can speak directly to the IRS on your behalf. The enrolled agent license is the highest credential the IRS issues. To become an EA, a tax professional must either pass a stringent and comprehensive three-part examination covering individual tax returns, business tax returns, and representation, practice and procedure, or have relevant experience as a former IRS employee. All candidates are subjected to a rigorous background check conducted by the IRS. To keep their licenses, EAs must complete annual continuing education reported to the IRS, which keeps them on top of the most current tax laws. Unlike attorneys and CPAs, who may or may not choose to specialize in ta

The first and usually the least severe is a Correspondence Audit. Generally speaking, a correspondence audit comes about if there are missing documents in your tax return. Often these include W-2's, and 1099 income items or interest expense items. The IRS Service Center will request that you send in copies of canceled checks or receipts so as to verify certain deductions. This type of audit is usually reserved for simple tax returns. The need for correct documentation is usually handled through the mail. https://www.afitonline.com/irs-audit-help

Financial coaching means providing regular one-on-one sessions with clients in order to 'coach' performance improvements to meet goals mutually set by the coach and client. ... Coaching is well suited to asset building programs because clients often need encouragement and support to adhere to positive financial behaviors. https://www.afitonline.com/p/debt-freedom-coaching

The United States federal earned income tax credit or earned income credit is a refundable tax credit for low- to moderate-income working individuals and couples, particularly those with children. The amount of EITC benefit depends on a recipient's income and number of children.