Mesa Money Minute

Amended Returns

What happens if you make a mistake or receive new information after you have filed your tax return? You may need to file an amended return. Amended individual returns are filed on Form 1040X and in some circumstances can be submitted electronically, though frequently they need to be submitted via regular mail. The simplest way to file an amended return is to go back to where you filed the original, whether it was on a do-it-yourself software or through a professional, so that all your origin...

How Long Should I Save My Records?

In the accounting profession, one of the most frequent questions we get is: how long should I keep my financial records? The answer is, it depends. You should keep your tax returns indefinitely. For tax return supporting documentation such as medical or charitable receipts and other tax documents, you should keep them for seven years. Keep other personal documents such as credit card statements, utility records and expired insurance policies for three years. You can toss your pay stubs once ...

Getting Started with Bookkeeping

So you're starting a new business, or perhaps you've already started one and need to get your books and records in order. Where to start? The first step is to get yourself an accounting package. Some popular ones include QuickBooks Online and Xero. Next, use the features in the accounting software to log into your business bank and credit card accounts. The software will allow you to choose how far back you want to download transactions. Depending on your situation, you may want to choose al...

What is a Stock Market Sector?

What is a Stock Market Bubble?

Today on Mesa Money Minute "What is a market bubble and are we in one?"  I'm Donna Morrall, a Certified Financial Planner with Clear Waters Financial Network.How is inflation measured?  

Bear Markets vs Bull Markets

Recommended Bookkeeping Apps

How can you use technology to help you keep excellent books and records, which are critical when running a small business? First off, you'll need an accounting package. Some popular packages include QuickBooks Online and Xero, both of which offer web based access and mobile apps. Next, you need a way to keep your backup documentation organized. We like Dext and Expensify, which both allow you to snap a photo of your receipts, then archives them for future categorization. Another useful type ...

How Does the Stock Market Work?

American Rescue Plan Act

In March, the President signed the American Rescue Plan Act or ARPA into law. This bill made unprecedented mid-tax-season changes retroactively effective to 2020. Among other things, this Act provided $1,400 per person stimulus payments, extended an enhanced unemployment benefit of $300 per week through Labor Day, and made the first $10,200 of unemployment benefits for 2020 not taxable for householders with incomes below $150,000. The Act also expands certain tax credits for individuals, suc...

PPP Deadline Extension

The Small Business Administration announced that it has extended the deadline to apply for Payroll Protection Program loans through May 31. This means you have until May 31 to submit your application for a PPP loan, whether it is your first time or your second time receiving a PPP draw. The SBA has until June 30 to process applications. However, there have been some predictions that the funds will run out before the May 31 deadline arrives, so if you think you are eligible, get your applicat...

Extended Due Dates

The Internal Revenue Service, citing unusual circumstances related to the pandemic, has extended the 2020 filing deadline for individuals to May 17. No late filing or late payment penalties will accrue between the original filing deadline of April 15 and the new deadline of May 17. If you still aren't able to file by May 17, you should file a Form 4868 Request for Extension by May 17. This gives taxpayers until October 15 to file, but it does not grant an extension of time to pay taxes. Taxp...

Why are good books and records critical?

Many small business owners are overwhelmed by the prospect of keeping their books, and often let this important task fall by the wayside. However, it is critical to keep excellent books and records for several reasons. First, good books and records allow you to monitor the progress of your business and make sound business decisions. Secondly, accurate books allow you and your CPA to prepare an accurate tax return, which is critical to ensure you are calculating and paying the correct amount ...

Budgeting Apps

Today on Mesa Money Minute "Budgeting Apps"  I'm Donna Morrall, a Certified Financial Planner with Clear Waters Financial Network.  Do you have a budget?  In my youth, my budget was to get my paycheck, pay my bills and stop spending when I ran out of money for the month.  In graduate school, that sometimes meant having to cash in my aluminum cans to buy my last weeks groceries.  What that worked at the time, it's definitely not optimum.  And now there are lots of apps for your smartphone tha...

Net Operating Losses - 2

The CARES act passed in March last year reinstated a provision that allows NOL's to be carried back five years. This means that you can deduct your NOL against your income from five years prior. This will require a form be filed with the IRS to re-calculate your tax liability for that year. If there is still NOL left after carrying the loss back five years, you can take it back four years, three years, and so on. You can elect out of carrying the loss back if, for example, you had no income ...

How to manage debt

Today on Mesa Money Minute "How to manage debt"  I'm Donna Morrall, a Certified Financial Planner with Clear Waters Financial Network.  There's good debt, there's bad debt, and sometimes there's just too much debt.  Bottom line, debt can be expensive.  If you borrow $10,000 and pay the minimum every month, it will take you about 8 years and $13,000 to pay it off.  That means you payed 30% more for the goods you received.  So, how do you go about paying off debt as fast as you can.  First, cr...

Net Operating Losses - 1

2020 was a difficult year for many businesses and some business might be wondering how their losses will impact their taxes. Small business owners know what happens when their business turns a profit - they pay taxes on that profit at a rate dependent on their total income. But what happens when a business shows a loss? A business showing a loss from its normal operations is said to have a Net Operating Loss, or NOL. If your business has an NOL for a particular year, you can generally deduct...

Local Budgeting Help

Today on Mesa Money Minute "Local Budgeting Help"  I'm Donna Morrall, a Certified Financial Planner with Clear Waters Financial Network. There are lots of resources on the internet on budgeting.  But sometimes, you want to sit down with a person and get help tailored to you.  Whether you need general budgeting help or help budgeting to afford rent or buying your first home, there are local resources here in the Grand Valley.  Housing Resources of Western Colorado provides free housing counce...

Financial Planning in your 60s and beyond

 | Today on Mesa Money Minute "Financial Planning in your 60s and beyond"  I'm Donna Morrall, a Certified Financial Planner with Clear Waters Financial Network.

Bonus Depreciation

What is bonus depreciation? The tax code generally requires businesses to deduct the cost of a large purchase, like a vehicle, equipment, or building, over it's useful life, rather than at the time of purchase. This can cause difficulty for some business when they've paid out the cash for the large purchase, but aren't allowed to deduct those expenses until a future year. This is where accelerated depreciation comes in. Bonus depreciation is one type of accelerated depreciation which allows ...

Psychology of Money

Today on Mesa Money Minute "Psychology of Money"  I'm Donna Morrall, a Certified Financial Planner with Clear Waters Financial Network.  Are you rational or emotional with your money?  We all fall somewhere on the spectrum between emotional and rational.  I've yet to meet anyone who is 100% rational with their finances and I'm not sure that being 100% rational would be a good thing.  Emotions such as fear, guilt, shame, and envy play into our decisions.  How we handle these emotions can affe...

High Deductible Healthcare Plans

Today on Mesa Money Minute "High Deductible Healthcare Plans"  I'm Donna Morrall, a Certified Financial Planner with Clear Waters Financial Network.  Many people have High Deductible Healthcare Plans.  These plans typically have a lower monthly premium but a higher deductible.  In other words, you pay more for healthcare services before your insurance starts to pay.  HDHPs do cover 100% of preventitive care with no deductible.  They can be a good option for healthy people, small businesses, ...

Financial Planning in your 50s

 | Today on Mesa Money Minute "Financial Planning in your 50s"  I'm Donna Morrall, a Certified Financial Planner with Clear Waters Financial Network.

Purchasing a Business Vehicle

Do you need a vehicle for your business to drive to job sites, visit clients, or make deliveries? You can purchase a vehicle for business purposes and deduct the cost of the vehicle (subject to some limitations), fuel, repairs, maintenance, and insurance. Even if the vehicle is 100% business use, you should still keep a mileage log to support your deductions. Purchase the vehicle in the business' name and put the loan in the business' name, if possible. But don't purchase the vehicle just fo...

Medicare

Today on Mesa Money Minute "Medicare"  I'm Donna Morrall, a Certified Financial Planner with Clear Waters Financial Network.  Confused by the Medicare alphabet soup?  Here are a few important points.  Set a reminder when you turn 64 1/2 to start learning about Medicare.  You can sign up 3 months before you turn 65 until 4 months after you turn 65.  If you are already receiving social security you will be signed up for parts A and B automatically.  However, you may need to buy a Medicap polic...

Financial Planning in your 40s

 | Today on Mesa Money Minute "Financial Planning in your 40s"  I'm Donna Morrall, a Certified Financial Planner with Clear Waters Financial Network.

Coronavirus Relief - 2

Enhancements to the Child Tax Credit and the Earned Income Tax Credit for low-income families.  Restoration of the 100 percent business meals deduction for two years to help the restaurant industry.  Allowing COVID-19-related expenses to qualify for the above-the-line educator expense deduction.  Clarification that certain financial aid received by college students and forgiveness of Economic Injury Disaster Loans to small businesses are excluded from income.  Extension of the credit for pai...

Connect for Health Colorado

Today on Mesa Money Minute "Connect for Health Colorado"  I'm Donna Morrall, a Certified Financial Planner with Clear Waters Financial Network.  Connect for Health Colorado is Colorado's official heathcare marketplace.  Open Enrollment begins Nov. 1st, 2020.  But if you have a life changing event such as getting married, having a baby, or loosing health insurance from job loss for example, you are eligible for a special enromment period.  If you need healthcare or want to cost compare, check...

Financial Planning in your 30s

 | Today on Mesa Money Minute "Financial Planning in your 30s"  I'm Donna Morrall, a Certified Financial Planner with Clear Waters Financial Network. 

Coronavirus Relief - 1

The $900 billion coronavirus relief package signed by the President on December 27 included many provisions to support individuals and businesses impacted by the pandemic. We've already discussed the economic impact payments and the second round of PPP funding. Some of the other major provisions include:  Simplified forgiveness (one-page certification) for PPP loans under $150,000 (application to be made available within a few weeks).  Allowing the deduction of business expenses paid for wit...

Social security for older parents

Today on Mesa Money Minute "Social security for older parents"  I'm Donna Morrall, a Certified Financial Planner with Clear Waters Financial Network.

Biden Tax Plan

President-elect Joe Biden released a tax plan before the election with the following major provisions:  Repeal the TCJA components for high-income filers  Impose 12.4% Social Security payroll tax for wages above $400k  Repeal the TCJA components for high-income filers  Increase the corporate income tax to 28%  Establish a corporate minimum tax on book income  Temporarily increase the generosity of the Child Tax Credit and Dependent Credit  Taxes long-term capital gains and qualified dividend...

When to take social security

Today on Mesa Money Minute "When to take Social Security"  I'm Donna Morrall, a Certified Financial Planner with Clear Waters Financial Network.

PPP Round 2

The $900 billion coronavirus relief package signed by the President on December 27 authorizes a second round of Paycheck Protection Program (PPP) loans.  PPP loans are SBA loans that are forgiveable if spent on certain allowed expenses, mostly payroll. Businesses who took the PPP loan during its first round last summer can apply for another PPP loan if they meet certain requirements. They must have fewer than 300 employees and a 25% reduction in gross revenue for any one quarter of 2020 as c...

Setting up your social security account

Economic Impact Payments

On December 27, the President signed a $900 billion coronavirus relief bill. One measure in the bill is a second round of economic stimulus payments of $600 to individuals and qualifying children. Your payment will be reduced if your income exceeds certain thresholds ($150,000 married and $75,000 single). The IRS has already begun issuing these payments. If you received your 2019 tax refund or your first stimulus payment via direct deposit, you shouldn't need to do anything. Your payment wil...

Frequently Overlooked Deductions

As a CPA I try to think of all possible deductions my clients are eligible to take to minimize their taxable income. There are several deductions that are frequently overlooked. Sometimes people don't want to go to the trouble of the recordkeeping to claim the deduction. Other times people are just not aware the deduction is available. But with a little organization and education, you can ensure you are taking every possible dollar of write-offs and minimizing your tax bill. Some deductions ...

Business Use of Personal Vehicle

One of the most popular and misunderstood business write-offs is the vehicle deduction. You can take expenses for business use of your personal vehicle if you are self-employed. There are two methods to determine the amount of the deduction you can take: the actual expense method or the mileage method. Both methods require you to track your business mileage. The mileage deduction is a per-mile deduction for every business mile you drive your vehicle. For 2020, that rate is $57.5 per mile. In...

Home Office Expenses

An often-overlooked deduction for self-employed people is the home office deduction. You can take a portion of your whole-home expenses as a business write-off. You must use an area in your home exclusively for business (you cannot also use it for personal business). There are two methods of calculating the home office deduction: the actual expense method and the safe harbor method. The safe harbor method allows you to take a flat $5 per square foot of your home office, up to 300 square feet...

Tax Write-Offs

I frequently get asked about "write-offs" by new business owners. What are write-offs and how do you get them? First of all, just because something is a write-off, doesn't mean it's free. A write-off is simply an item that is tax deductible so by spending on that item, you are lowering your taxable income. How much does that write-off save you? Simply multiply the deductible amount by your marginal tax rate, also known as your tax bracket. You will notice that no matter how much the write-of...

Medical Deductions

Medical expenses are frequently a major portion of a household budget. One of the most common questions I get as a CPA is about medical expenses. In most cases, medical expenses must be significant before they are dedcutible.  What is significant? There are two hurdles to jump before medical expenses are deductible. The first is the medical expense floor - that is, only medical expenses that exceed a certain threshold amount are deductible. In 2020, that threshhold is 7.5% of your income; af...

Health Premium Tax Credit

The Affordable Care Act (ACA) put in place a Health Premium Assitance Credit, which can help you pay for your health coverage if you are under certain income limits. To qualify, you must not be eligible for a health plan through your employer that is affordable for you and you must purchase your plan through the marketplace (Connect for Health in Colorado). If your income is below 400% of the federal poverty level for your household size, you will receive a tax credit for a portion of your i...

Health Savings Accounts

It is usually challenging to get enough medical expenses in one year to be able to deduct them. This is because there is a 7.5% floor (10% floor starting next year) that you must reach before you even can start counting your medical expenses. For example, if your adjusted gross income is 100,000, the first $7,500 of medical expenses are not deductible. Once you top that threshold, your medical expenses plus your other itemized deductions such as state and local taxes, mortgage interest, and ...

What is GDP and why does it matter to you?

Today on Mesa Money Minute "What is GDP and why does it matter to you?"  I'm Donna Morrall, a Certified Financial Planner with Clear Waters Financial Network.How is inflation measured?  GDP is an important economic indicator for both economists and investors because it is a measure of all goods and services produced by an economy over a specific time period.  It can be used to meausre the size of the economy and whether the economy is growing or shrinking.  Investors use it to make investmen...

Self Employed Health Insurance

The IRS gives a unique benefit for self-employed individuals who pay for their own health insurance. If you are self-employed, you can deduct the health care premiums you pay for you and your family "above the line" even if you don't itemize deductions . The plans that qualify include any commercial health care plan, vision and dental plans, and Medicare premiums. The deduction cannot exceed your net income from self employment. Net income from self employment includes income, after deductio...

Why is international trade important?

Today on Mesa Money Minute "Why is International Trade Important?"  I'm Donna Morrall, a Certified Financial Planner with Clear Waters Financial Network. How is inflation measured?  International trade allows countries to use resources that are abundant and specialize to improve efficiency.  When these resources and goods are traded it increases standards of living and the diversity of available goods. The theory of comparative advantage says that countries should specialize in making those ...

Colorado Pension Subtraction

The State of Colorado entices retirees by offering tax free retirement of up to $24,000 per year. Known as the Pension and Annuity subtraction, you get to subtract up to $20,000 if you are age 55 to 64, and up to $24,000 if you are age 65 or older, of your taxable retirement income from your federal taxable income. If you have inherited a retirement plan, you can take the subtraction at any age. This applies to annuity payments, pension plan payments, IRA withdrawals, and the taxable portion...

Opportunity Cost

Today on Mesa Money Minute "What is Opportunity Cost?"  I'm Donna Morrall, a Certified Financial Planner with Clear Waters Financial Network.  Opportunity cost is a favorite concept for economists.  I know at least one that thinks of everything in terms of opportunity cost even if money isn't involved.  It is the cost incurred from choosing one alternative over another.  Every choice you make has an opportunity cost.  For example, if you take 2 hours to go for a hike, you can't use that 2 hr...

Qualified Charitable Distributions

If you are subject to required minimum distributions from your IRA and also like to give to charity, a Qualified Charitable Contribution (QCD) might be a good option for you. Frequently people lose their tax benefit for charitable giving due to not reaching the standard deduction. This is especially true since the Tax Cuts and Jobs Act took effect in 2018. The standard deduction is now $24,800 for joint filers, so you have to spend that much on itemizable deductions like state and local taxe...

Main street vs wall street

Today on Mesa Money Minute "Main Street vs Wall Street?"  I'm Donna Morrall, a Certified Financial Planner with Clear Waters Financial Network.How is inflation measured?  When people talk about Wall Street they are typically talking about the stock market, large corporations and the very wealthy.  When they talk about Main Street they are typically referring to small businesses, the middle classs and the working class.  Main Street is sometimes thought of as the real ecomony.  So, doesn't Ma...

Required Minimum Distributions

Individual Retirement Accounts are a popular retirement saving vehicle and allow people to put off paying taxes sometimes for decades. The IRS doesn't allow you to put off paying taxes forever, though. That is where Required Minimum Distributions (RMD's) come into play. In the year you turn 70 1/2 (or 72 if you turn 70 1/2 in 2020 or later), you must begin taking RMD's. The amount of the required RMD is based on your age and the account balance at the end of the prior year. Your financial in...