5 MIN READ
As we look straight in the eyes of this year's tax season, you likely (and totally understandably) have some tax questions. Don't fear! The tax professionals on Team XY Tax Solutions take time throughout the year to offer up their tax expertise in blog posts that cover an impressive amount of tax territory.
To lend a helping hand, we've rounded up our top ten tax blogs of 2021 that you can refer to as you navigate all things taxes. Enjoy, and happy tax season!
1. Your Guide to Tax Preparation and Tax Planning as an Advisor
Tax preparation and tax planning are two processes that help you plan to file your individual and business tax returns. Depending on your tax situation, having tax preparation and tax planning done by a professional can help eliminate your tax burden when the time comes to file your returns. Although they are closely related, it’s important to understand the difference between tax preparation and tax planning.
Tax preparation is a service done by a professional that assists you in filing your personal and business tax returns based on the financial events that occurred in the current tax year. Tax preparation is reporting financial events that have already occurred and ensure that they are being reported so that they comply with federal and state tax laws. Tax planning, on the other hand, helps to optimize your tax situation based on financial events that have not yet occurred but are expected to in the upcoming tax years. Tax preparation is a consideration of your financial projections and goals. Let's dive into more detail about each.
2. The Ultimate 2021 Guide to Year-End Tax Planning as an Advisor
Though it may seem that we’ve just put last tax season to rest, the time is now to make final contributions and adjustments to optimize your client’s 2021 taxes. As there is never a dull moment in the tax world, 2021 offers a few unique (and temporary) items to be aware of. Let's review everything you need to think about as we wrap up 2021 and prepare for the upcoming tax season.
3. Roth Conversions: Everything You Need to Know as an Advisor
“Should I do a Roth conversion?” is a question financial advisors tend to get a lot from their clients. The short answer? It depends, and a lot of factors come into consideration, including current tax situation, current tax bracket, future tax situation, future projected tax bracket, financial goals, age, filing status, state of residence, estate planning wishes, projected tax rates due to possible future legislation, and the list goes on. Ultimately, an analysis would need to be done. Where do you start when doing a Roth conversion analysis? Let’s dive in and review the basics.
4. Everything Independent Financial Advisors Need to Know to File Their Taxes
The most wonderful time of the year is here! At least for those of us here at XY Tax Solutions, where we prepare all year round to hit the ground running and make tax season as seamless and stress-free as possible for advisors. But we realize not everyone virtually no one feels the same excitement we do about this time of the year.
We get it. Tax season can feel overwhelming at best, especially if you're a business owner. Throw in a global pandemic and subsequent tax changes and the thought alone of prepping taxes this year is enough to send any firm owner into a panic. That’s why we compiled a handy list of all the necessary information and documentation you’ll need to prepare your individual tax return this year.
5. Your Guide to Stock Compensation Plans and Taxes
You’ve probably noticed that stock compensation has become a popular way to pay employees in addition to a traditional salary. This form of compensation gives an employee a stake in the success of the company. When the company does well and the stock price increases, the value of the stock compensation that the employee received increases as well. Tesla, Google, and Snowflake are a few examples of successful companies whose employees have benefited from stock compensation plans.
Given the increased popularity of stock compensation, as an advisor it’s important to gain an understanding of how the different types of stock compensation plans work—there are often misunderstandings, especially when it comes to taxes. Today, we’ll go into detail about the different types of stock compensation, the tax implications, and how a tax professional might help you implement some tax planning strategies to maximize the benefits of stock compensation for your clients.
6. Your Guide to Form 8606 as an Advisor
Occasionally illusive but equally as intriguing (you are hearing from a self-proclaimed tax nerd, after all), Form 8606, or a related topic, comes up often in conversations with advisors. Often, it surfaces in conversations related to Roth conversions, but the form plays other key roles in reporting individual retirement arrangement (IRA) activity. Let's take a deep dive into Form 8606 and get into all the details you need to know.
7. Choosing a Small Business Retirement Plan from a Tax Perspective
At the risk of sounding like I'm preaching to the choir—retirement planning is essential for small business owners. Whether you are making the transition from being a W-2 employee to starting your own firm or if you already own a business and are implementing a retirement plan, it is important to decide which retirement path best suits your needs. There are many retirement avenues available to small business owners. In this blog, we will compare the Simplified Employee Pension Plan (SEP) with the Savings Incentive Match Plan for Employees (SIMPLE Plan) from a tax perspective. Each retirement plan has unique pros and cons that are important to understand prior to making an educated decision on which plan is best for you—so let’s dive in.
8. The Four Steps to Conquering Self-Employment Taxes as an Advisor
There are countless benefits to being your own boss. As a self-employed individual, freedom and autonomy are as consistent in your life as are Monday and Tuesday. Yep, you were wearing pajamas to work even before it was the new normal. What else comes along with self-employment? Alongside all the perks comes a variety of nuanced tax implications that can be difficult to navigate. But don’t worry—today, we’re here to offer a guiding light. Whether it be for tax planning or tax preparation, there are four fundamental elements to filing a self-employed tax return that should be understood and checked off your list one by one. Let’s walk through each.
9. How State Conformity to Federal COVID-19 Relief Measures Impacts Your Taxes
COVID-19 relief measures brought rapid-fire tax law changes and provisions that rained down from the federal level like an especially judicious new form of precipitation. While these new policies were issued at the federal level, the actual impact they will have on your filing this tax season is primarily shaped by your state’s conformity (or non-conformity) to these measures.
Flashback to your high school government class and you’ll remember that because state governments have a certain level of autonomy, things like state tax codes can differ substantially from the federal tax code. Regarding COVID-19 relief measures, states had to weigh their priorities and decide whether or not to adopt these federal provisions.
Now that we find ourselves face to face with tax season, it’s time to dig in to understand how our states responded to federal COVID-19 relief measures and, subsequently, how our tax liabilities may have changed. This guide outlines how different states have navigated these new federal provisions and the resulting tax landscape. Don’t worry—no more high school flashbacks required.
10. What You Need to Know When Selling Your House from a Tax Perspective
Since the pandemic hit, more and more companies are allowing remote work, giving people the opportunity to move around and live places they normally wouldn’t have been able to because of their job. Moving can be both exciting and stressful at the same time, but how does packing things up, selling your house, and moving away affect your tax return? Well, just like all things tax, that really depends on your situation. You may be eligible to exclude the full gain from the sale, or you may be eligible to exclude part of the gain from the sale. So, let’s go over it and find out!
There you have it, folks! Thanks for revisiting the best of 2021 with Team XY Tax Solutions. Stay tuned for more tax blogs this year, and if you want to learn more about incorporating tax prep and planning into your service offering as an advisor, check out this free on-demand webinar—How to Incorporate Tax Prep & Planning Into Your Firm's Service Model—that will teach you everything you need to know.