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August 2020

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Tax Tips

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Any accounting, business or tax advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties. If desired, we would be pleased to perform the requisite research and provide you with a detailed written analysis. Such an engagement may be the subject of a separate engagement letter that would define the scope and limits of the desired consultation services.


Dirty Dozen Tax Scams: 2020 Edition

The "Dirty Dozen" is a list of common tax scams that target taxpayers. Compiled and issued annually every year by the IRS, this year it includes many aggressive and evolving schemes related to coronavirus tax relief, including Economic Impact Payments. The criminals behind these bogus schemes view everyone as potentially easy prey and everyone should be on guard, especially vulnerable populations such as the elderly.

While tax-related scams usually increase at tax time, this year, scam artists are using pandemic to try stealing money and information from honest taxpayers. As such, taxpayers should refrain from engaging potential scammers online or on the phone.

Here are this year's "Dirty Dozen" tax scams:

1. Phishing

Taxpayers should be alert to potential fake emails or websites looking to steal personal information. IRS Criminal Investigation has seen a tremendous increase in phishing schemes utilizing emails, letters, texts, and links. These phishing schemes are using keywords such as "coronavirus," "COVID-19" and "Stimulus" in various ways.

These schemes are blasted to large numbers of people to get personal identifying information or financial account information, including account numbers and passwords. Most of these new schemes are actively playing on the fear and unknown of the virus and the stimulus payments.

Don't click on links claiming to be from the IRS and be very wary of emails and websites as they may be nothing more than scams to steal personal information. As a reminder, the IRS will never initiate contact with taxpayers via email about a tax bill, refund or Economic Impact Payments.

2. Fake Charities

Criminals frequently exploit natural disasters and other situations such as the current COVID-19 pandemic by setting up fake charities to steal from well-intentioned people trying to help in times of need. Fake charity scams generally rise during disaster times like these.

Fraudulent schemes normally start with unsolicited contact by telephone, text, social media, e-mail, or in-person using a variety of tactics. Bogus websites use names similar to legitimate charities to trick people to send money or provide personal financial information. They may even claim to be working for or on behalf of the IRS to help victims file casualty loss claims and get tax refunds.

Taxpayers should be particularly wary of charities with names like nationally known organizations. Legitimate charities will provide their Employer Identification Number (EIN) if requested, which can be used to verify their legitimacy. Taxpayers can find legitimate and qualified charities using the search tool on IRS.gov.

3. Threatening Impersonator Phone Calls

IRS impersonation scams come in many forms such as receiving threatening phone calls from a criminal claiming to be with the IRS where the scammer attempts to instill fear and urgency in the potential victim. These types of phone scams or "vishing" (voice phishing) pose a major threat. Scam phone calls, including those threatening arrest, deportation or license revocation if the victim doesn't pay a bogus tax bill, are reported to the IRS year-round and are very common. These calls often take the form of a "robocall" (a text-to-speech recorded message with instructions for returning the call).

The fact is, the IRS will never threaten a taxpayer or surprise him or her with a demand for immediate payment. Nor will it threaten, ask for financial information over the phone, or call about an unexpected refund or Economic Impact Payment. Taxpayers should contact the real IRS or consult a tax and accounting professional if they are worried there is a tax problem.

4. Social Media Scams

Social media enables anyone to share information with anyone else on the Internet. Scammers use that information as ammunition for a wide variety of scams. As such, taxpayers need to protect themselves against social media scams, which frequently use events like COVID-19 to try tricking people. These methods of trickery include emails where scammers impersonate someone's family, friends or co-workers.

Social media scams have also led to tax-related identity theft. The basic element of social media scams is convincing a potential victim that he or she is dealing with a person close to them that they trust via email, text or social media messaging.

Using personal information, a scammer may email a potential victim and include a link to something of interest to the recipient which contains malware intended to commit more crimes. Scammers also infiltrate their victim's emails and cell phones to go after their friends and family with fake emails that appear to be real and text messages soliciting, for example, small donations to fake charities that are appealing to the victims.

5. Economic Impact Payment or Refund Theft

Great strides have been made against refund fraud and theft in recent years, but they remain an ongoing threat. Due to the coronavirus pandemic, this year, criminals turned their attention to stealing Economic Impact Payments as provided by the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Much of this stems from identity theft whereby criminals file false tax returns or supply other bogus information to the IRS to divert refunds to wrong addresses or bank accounts.

Recent victims of this type of scam include residents of nursing homes and other care facilities when concerns were raised that people and businesses may be taking advantage of vulnerable populations who received the payments. Economic Impact Payments generally belong to the recipients, not the organizations providing the care.

As a reminder, economic impact payments do not count as a resource for determining eligibility for Medicaid and other federal programs They also do not count as income in determining eligibility for these programs.

6. Senior Citizen Fraud

Seniors are more likely to be targeted and victimized by scammers than other segments of society and fraud targeting older Americans is pervasive. Financial abuse of seniors is a problem among personal and professional relationships but seems to be less of a problem when the service provider knows that a trusted friend or family member is keeping an eye out and taking an interest in the senior's affairs.

Also, as older Americans become more comfortable with evolving technologies, such as social media, scammers have moved in to take advantage. Phishing scams linked to Covid-19, for example, have been a major threat this filing season. Seniors need to be alert for a continuing surge of fake emails, text messages, websites, and social media attempts to steal personal information.

7. Scams Targeting Non-English Speakers

IRS impersonators and other scammers also target groups with limited English proficiency. These scams target those potentially receiving an Economic Impact Payment and request personal or financial information from the taxpayer.

Phone scams are often threatening in nature and pose a major threat to people with limited access to information, including individuals not entirely comfortable with the English language. These calls frequently take the form of a "robocall" (a text-to-speech recorded message with instructions for returning the call), but in some cases may be made by a real person. These con artists may have some of the taxpayer's information, including their address, the last four digits of their Social Security number or other personal details, which makes the phone calls seem more legitimate.

One of the most common scams is the IRS impersonation scam where a taxpayer receives a telephone call threatening jail time, deportation or revocation of a driver's license from someone claiming to be with the IRS. Taxpayers who are recent immigrants often are the most vulnerable and should ignore these threats and not engage the scammers.

8. "Ghost" Tax Return Preparers

Selecting the right return preparer is important because they are entrusted with a taxpayer's sensitive personal data. Most tax professionals provide honest, high-quality service, but dishonest preparers pop up every filing season committing fraud, harming innocent taxpayers or talking taxpayers into doing illegal things they regret later.

Taxpayers should always avoid so-called "ghost" preparers who expose their clients to potentially serious filing mistakes as well as possible tax fraud and risk of losing their refunds. With many tax professionals impacted by COVID-19 and their offices potentially closed, taxpayers should take particular care in selecting a credible tax preparer.

Ghost preparers don't sign the tax returns they prepare. They may print the tax return and tell the taxpayer to sign and mail it to the IRS. For e-filed returns, the ghost preparer will prepare but not digitally sign as the paid preparer. By law, anyone who is paid to prepare or assists in preparing federal tax returns must have a Preparer Tax Identification Number (PTIN). Paid preparers must sign and include their PTIN on returns.

Unscrupulous preparers may also target those without a filing requirement and may or may not be due to a refund. They promise inflated refunds by claiming fake tax credits, including education credits, the Earned Income Tax Credit (EITC), and others. Taxpayers should avoid preparers who ask them to sign a blank return, promise a big refund before looking at the taxpayer's records or charge fees based on a percentage of the refund.

Taxpayers are ultimately responsible for the accuracy of their tax return, regardless of who prepares it.

9. Offer in Compromise (OIC) Mills

Taxpayers need to be wary of misleading tax debt resolution companies that can exaggerate chances to settle tax debts for "pennies on the dollar" through an Offer in Compromise (OIC). These offers are available for taxpayers who meet very specific criteria under the law to qualify for reducing their tax bill. But unscrupulous companies oversell the program to unqualified candidates so they can collect a hefty fee from taxpayers already struggling with debt.

These scams are commonly called OIC "mills," which cast a wide net for taxpayers, charge them pricey fees and churn out applications for a program they're unlikely to qualify for. Although the OIC program helps thousands of taxpayers each year reduce their tax debt, not everyone qualifies for an OIC. In Fiscal Year 2019, there were 54,000 OICs submitted to the IRS. The agency accepted 18,000 of them.

10. Fake Payments with Repayment Demands

Criminals are always finding new ways to trick taxpayers into believing their scam including putting a bogus refund into the taxpayer's actual bank account. Here's how the scam works:

A con artist steals or obtains a taxpayer's data including Social Security number or Individual Taxpayer Identification Number (ITIN) and bank account information. The scammer files a bogus tax return and has the refund deposited into the taxpayer's checking or savings account. Once the direct deposit hits the taxpayer's bank account, the fraudster places a call to them, posing as an IRS employee. The taxpayer is told that there's been an error and that the IRS needs the money returned immediately or penalties and interest will result. The taxpayer is told to buy specific gift cards for the amount of the refund.

The IRS will never demand payment by a specific method. There are many payment options available to taxpayers and there's also a process through which taxpayers have the right to question the amount of tax we say they owe. Anytime a taxpayer receives an unexpected refund and a call from us out of the blue demanding a refund repayment, they should reach out to their banking institution and the IRS.

11. Payroll and HR Scams

Tax professionals, employers, and taxpayers need to be on guard against phishing designed to steal Form W-2s and other tax information. These are Business Email Compromise (BEC) or Business Email Spoofing (BES). This is particularly true with many businesses closed and their employees working from home due to COVID-19. Currently, two of the most common types of these scams are the gift card scam and the direct deposit scam.

Gift card scam. In the gift card scam, a compromised email account is often used to send a request to purchase gift cards in various denominations.

Direct deposit scam. In the direct deposit scheme, the fraudster may have access to the victim's email account (also known as an email account compromise or "EAC"). They may also impersonate the potential victim to have the organization change the employee's direct deposit information to reroute their deposit to an account the fraudster controls.

BEC/BES scams have used a variety of ploys to include requests for wire transfers, payment of fake invoices as well as others. In recent years, the IRS has observed variations of these scams where fake IRS documents are used to lend legitimacy to the bogus request. For example, a fraudster may attempt a fake invoice scheme and use what appears to be a legitimate IRS document to help convince the victim.

The Direct Deposit and other BEC/BES variations should be forwarded to the Federal Bureau of Investigation Internet Crime Complaint Center (IC3) where a complaint can be filed. The IRS requests that Form W-2 scams be reported to phishing@irs.gov (Subject: W-2 Scam).

12. Ransomware

Ransomware is malware targeting human and technical weaknesses to infect a potential victim's computer, network, or server and is a rapidly growing cybercrime. It doesn't just affect individuals either. Recently, Garmin Ltd., a GPS, and fitness-tracker company was the victim of a ransomware attack and asked to pay $10 million in "ransom" to restore its systems.

Malware is a form of invasive software that is often frequently inadvertently downloaded by the user. Once downloaded, it tracks keystrokes and other computer activity. Once infected, ransomware looks for and locks critical or sensitive data with its encryption. In some cases, entire computer networks can be adversely impacted.

Victims generally aren't aware of the attack until they try to access their data, or they receive a ransom request in the form of a pop-up window. These criminals don't want to be traced so they frequently use anonymous messaging platforms and demand payment in virtual currency such as Bitcoin.

Cybercriminals might use a phishing email to trick a potential victim into opening a link or attachment containing the ransomware. These may include email solicitations to support a fake COVID-19 charity. Cybercriminals also look for system vulnerabilities where human error is not needed to deliver their malware.

If you think you've been a victim of a tax scam, please contact the office immediately.

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Exiting a Business: Which Option Is Right for You?

Selecting your business successor is a fundamental objective when planning your exit strategy and requires a careful assessment of what you want from the sale of your business and who can best give it to you.

There are only four ways to leave your business and the more you understand about each one, the better the chance is that you will leave your business on your terms and under the conditions you want. With that in mind, here's what you need to know about each option:

1. Liquidate It

In a liquidation the owners sell off their assets, collect outstanding accounts receivable, pay off their bills, and keep what's left, if anything, for themselves. The primary reason liquidation is considered as an exit plan is that a business lacks sufficient income-producing capacity apart from the owner's direct efforts and apart from the value of the assets themselves. For example, if the business can produce only $75,000 per year and the assets themselves are worth $1 million, no one would pay more for the business than the value of the assets.

Service businesses in particular are thought to have little value when the owner leaves the business. Since most service businesses have little "hard value" other than accounts receivable, liquidation produces the smallest return for the owner's lifelong commitment to the business. Smart owners guard against this. They plan ahead to ensure that they do not have to rely on this last-ditch method to fund their retirement.

2. Sell It to A Third Party

While a sale to a third party too often becomes a bargain sale - and sometimes the only alternative to liquidation - this option just might be your best way to cash out if the business is well prepared for sale. In fact, you may find that this so-called "last resort" strategy just happens to land you at the resort of your choice.

Although many owners don't realize it, most or all of your money should come from the business at closing. Therefore, the fundamental advantage of a third-party sale is immediate cash or at least a substantial up-front portion of the selling price. This ensures that you obtain your fundamental objectives of financial security and, perhaps, avoid risk as well.

A second unanticipated advantage in selling to a third party is the ability to frequently receive substantially more cash than your CPA or other business appraiser anticipated because the market place is "hot." Finally, this may be the best option for a business that is too valuable to be purchased by anyone other than someone who has access to a considerable source of money.

If you do not receive the bulk of the purchase price in cash, at closing, however, your risk will suddenly become immense. You will place a substantial amount of the money you counted on receiving in the unpredictable hands of fate. The best way to avoid this risk is to get all of the money you are going to need at closing. This way any outstanding balance payable to you is "icing on the cake."

3. Transfer of Ownership to Your Children

While most business owners want to transfer their business to their children, few end up doing so for various reasons. There are however, advantages that are worth considering. For example, transferring your business to your children can provide financial well-being for younger family members unable to earn comparable income from outside employment, as well as allow you to stay actively involved in the business with your children until you choose your departure date. It also affords you the luxury of selling the business for whatever amount of money you need to live on, even if the value of the business does not justify that sum of money.

On the other hand, this option also holds the potential to increase family friction, discord, and feelings of unequal treatment among siblings. Parents often feel the need to treat all of their children equally. In reality, this is difficult to achieve. In most cases, one child will probably run or own the business at the perceived expense of the others.

At the same time, financial security also may be diminished, rather than enhanced, and the very existence of the business is at risk if it's transferred to a family member who can't or won't run it properly. In addition, family dynamics in general, may also significantly diminish your control over the business and its operations.

4. Employee Stock Option Plans (ESOP)

If your children have no interest or are unable to take over your business, there's another option to ensure the continued success of your business: The Employee Stock Ownership Plan (ESOP).

ESOPs are qualified retirement plans subject to the regulatory requirements of the Employee Retirement Income Security Act of 1974 (ERISA). There's one important difference however; the majority (more than half) of their investment must be derived from their own company stock.

Whether it's due to lack of interest on your children's part, an economic downturn or a high asking price that no one is willing to pay, what an ESOP does is create a third-party buyer (your employees) where none previously existed. After all, who more than your employees have a vested interest in your company?

ESOPs are set up as a trust (complete with trustees) into which either cash to buy company stock or newly issued stock is placed. Contributions the company makes to the trust are generally tax deductible, subject to certain limitations and because transactions are considered stock sales, the owner who is selling (you) can avoid paying capital gains. Shares are then distributed to employees (typically based on compensation levels) and grow tax free until distribution.

If your company is a stable, well-established one with steady, consistent earnings, then an ESOP might be just the ticket to creating a winning exit plan from your business.

If you need assistance figuring out which exit strategy is best for you and your business, please don't hesitate to contact the office. The sooner you start planning, the easier it will be.

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Protect Tax Records Before Disaster Strikes

As such, it's always a good idea to plan for what to do in case of a disaster. Here are some simple steps you can take right now to prepare:

1. Backup Records Electronically. Many people receive bank statements by email. This is a good way to secure your records. You can also scan tax records and insurance policies onto an electronic format. You can use an external hard drive, CD, or DVD to store important records. Be sure you back up your files and keep them in a safe place. If a disaster strikes your home, it may also affect a wide area. If that happens you may not be able to retrieve your records.

2. Document Valuables. Take photos or videos of the contents of your home or business. These visual records can help you prove the value of your lost items. They may help with insurance claims or casualty loss deductions on your tax return. You should store them with a friend or relative who lives out of the area. The IRS has a disaster loss workbook, Publication 584, Casualty, Disaster, and Theft Loss Workbook (Personal-Use Property), which can help taxpayers compile a room-by-room list of belongings.

3. Update Emergency Plans. Review your emergency plans every year. Personal and business situations change over time as do preparedness needs, so update them when your situation changes. Make sure you have a way to get severe weather information and have a plan for what to do if threatening weather approaches. In addition, when employers hire new employees or when a company or organization changes functions, plans should be updated accordingly and employees should be informed of the changes.

4. Get Copies of Tax Returns or Transcripts. Use Form 4506, Request for Copy of Tax Return, to replace lost or destroyed tax returns or need information from your return. You can also file Form 4506T-EZ, Short Form Request for Individual Tax Return Transcript or Form 4506-T, Request for Transcript of Tax Return. If you need assistance filling this form out, please call.

5. Check on Fiduciary Bonds. Employers who use payroll service providers should ask the provider if it has a fiduciary bond in place. The bond could protect the employer in the event of default by the payroll service provider.

If you fall victim to a disaster, help is just a phone call away. Don't hesitate to call the office regarding any disaster-related tax questions or issues you might have.

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Filing an Amended Tax Return

If you discover a mistake on your tax return after you've already filed, don't panic. In most cases, all you have to do is file an amended tax return. Here's what you need to know:

Taxpayers should use Form 1040X, Amended U.S. Individual Income Tax Return, to file an amended (corrected) tax return. An amended tax return should only be filed to correct errors or make changes to your original tax return. For example, you should amend your return if you need to change your filing status or correct your income, deductions, or credits.

Currently, an amended return cannot be e-filed. Taxpayers should be able to file Form 1040-X electronically soon, according to a recent IRS news release, but only for tax year 2019 (Forms 1040 and 1040-SR). In the meantime, you must file the corrected tax return on paper. If you need to file another schedule or form, don't forget to attach it to the amended return. In general, taxpayers will still have the option to submit a paper version of the Form 1040-X and should follow the instructions for preparing and submitting the paper form.

Taxpayers filing Form 1040X in response to an IRS notice, should mail it to the address shown on the notice.

You normally do not need to file an amended return to correct math errors because the IRS automatically makes those changes for you. Also, do not file an amended return because you forgot to attach tax forms, such as W-2s or schedules. The IRS normally will mail you a request asking for those.

If you are amending more than one tax return, prepare a separate 1040X for each return and mail them to the IRS in separate envelopes. Note the tax year of the return you are amending at the top of Form 1040X. You will find the appropriate IRS address to mail your return to in the Form 1040X instructions.

If you are filing an amended tax return to claim an additional refund, wait until you have received your original tax refund before filing Form 1040X. Amended returns take up to 16 weeks to process. You may cash your original refund check while waiting for the additional refund.

If you owe additional taxes file Form 1040X and pay the tax as soon as possible to minimize interest and penalties on unpaid taxes. You can use IRS Direct Pay to pay your tax directly from your checking or savings account.

Generally, you must file Form 1040X within three years from the date you filed your original tax return or within two years of the date you paid the tax, whichever is later. For example, the last day for most people to file a 2017 claim for a refund is April 15, 2021. Special rules may apply to certain claims. Please call the office if you would like more information about this topic.

You can track the status of your amended tax return for the current year three weeks after you file. You can also check the status of amended returns for up to three prior years. To use the "Where's My Amended Return" tool on the IRS website, just enter your taxpayer identification number (usually your Social Security number), date of birth, and zip code. If you have filed amended returns for more than one year, you can select each year individually to check the status of each.

Don't hesitate to call if you need assistance filing an amended return or have any questions about Form 1040X.

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Tax Breaks for Teachers and Educators

While many schools are switching to hybrid or remote learning models, teachers and other educators should remember that they can still deduct certain unreimbursed expenses such as classroom supplies, training, and travel. Deducting these expenses helps reduce the amount of tax owed when filing a tax return.

To qualify for the deduction, the taxpayer must be a kindergarten through grade 12 teacher, instructor, counselor, principal, or aide. They must also work at least 900 hours a school year in a school that provides elementary or secondary education as determined under state law.

Teachers and other educators can also take advantage of various education tax benefits for ongoing educational pursuits such as the Lifetime Learning Credit or, in some instances depending on their circumstances, the American Opportunity Tax Credit.

How the Educator Expense Deduction Works

Educators can deduct up to $250 of unreimbursed business expenses. If both spouses are eligible educators and file a joint return, they may deduct up to $500, but not more than $250 each. The educator expense deduction is available even if an educator doesn't itemize their deductions. To take advantage of this deduction, the taxpayer must be a kindergarten through grade 12 teacher, instructor, counselor, principal or aide for at least 900 hours during a school year in a school that provides elementary or secondary education as determined under state law.

Those who qualify can deduct costs of books, supplies, computer equipment, and software, classroom equipment, and supplementary materials used in the classroom. Expenses for participation in professional development courses are also deductible. Athletic supplies qualify if used for courses in health or physical education.

Keep Good Records

Educators should keep detailed records of qualifying expenses noting the date, amount, and purpose of each purchase. This will help prevent a missed deduction at tax time. Taxpayers should also keep a copy of their tax returns for at least three years. Copies of tax returns may be needed for many reasons. A tax transcript summarizes return information and includes adjusted gross income and available free of charge from the IRS.

Questions?

Don't hesitate to call if you have any questions about tax deduction available to educators including teachers, administrators, and aides.

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What is Form 1099-NEC?

Starting in tax year 2020, payers must complete Form 1099-NEC, Nonemployee Compensation to report any payment of $600 or more to a payee. There is a new form that only applies to business taxpayers who pay or receive nonemployee compensation.

Generally, payers must file Form 1099-NEC by January 31. For 2020 tax returns, however, the due date is February 1, 2021. Be advised that there is no automatic 30-day extension to file Form 1099-NEC although an extension to file may be available under certain hardship conditions.

Nonemployee compensation may be subject to backup withholding if a payee has not provided a taxpayer identification number to the payer or the IRS notifies the payer that the taxpayer identification number provided was incorrect.

Backup withholding refers to situations when the person or business paying the taxpayer doesn't generally withhold taxes from certain payments. It applies to most kinds of payments reported on Forms 1099 and W-2G. There are, however, situations when the payer is required to withhold a certain percentage of tax to make sure the IRS receives the tax due on this income. This is known as backup withholding.

A taxpayer identification number (TIN) can be one of the following numbers:

  • Social Security
  • Employer identification
  • Individual taxpayer identification
  • Adoption taxpayer identification

If you have questions on nonemployee compensation, contact the office for more information.

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RIC Shareholder Dividends Qualify as Section 199A

Section 199A, enacted as part of the Tax Cuts and Jobs Act (TCJA), allows individual taxpayers and certain trusts and estates to deduct up to 20 percent of certain income (section 199A deduction). It is available to eligible taxpayers with qualified business income (QBI) from qualified trades or businesses operated as sole proprietorships or through partnerships, S corporations, trusts, or estates, as well as for qualified REIT dividends and income from publicly traded partnerships. The deduction is not available for C corporations.

Recently, regulations were issued clarifying that a RIC that receives qualified real estate investment trust (REIT) dividends is now able to report these dividends, which are paid to its shareholders, as section 199A dividends to take the deduction.

The regulations also provide additional guidance on the treatment of previously disallowed losses that are included in QBI in subsequent years and guide taxpayers who hold interests in split-interest trusts or charitable remainder trusts.

For more information about this and other provisions of the TCJA, please call.

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Temporary Relief for Retirement Plan Participants

Temporary administrative relief has been issued that helps certain retirement plan participants or beneficiaries who need to make participant elections by allowing flexibility for remote signatures. Generally, signatures of the individual making the election must be witnessed by a notary public or in the presence of a plan representative. This includes a spousal consent as well.

Plan participants, beneficiaries, and administrators of qualified retirement plans and other tax-favored retirement arrangements have now been granted temporary relief from the physical presence requirement for any participant election that is:

  • Witnessed by a notary public in a state that permits remote notarization; or
  • Witnessed by a plan representative using certain safeguards.

The guidance was issued as a result of local shutdowns and social distancing practices due to COVID-19 and is intended to facilitate the payment of coronavirus-related distributions and plan loans to qualified individuals, as permitted by the CARES Act. The relief is in effects for the period from January 1, 2020, through December 31, 2020. During this period, a plan participant or beneficiary may use an electronic system facilitating remote notarization if executed via live audio-video technology to satisfy the requirements of participant elections.

In the case of a participant election witnessed by a plan representative, the individual may use an electronic system using live audio-video technology if the following requirements are satisfied:

  1. The individual must be effectively able to access the electronic medium used to make the participant election;
  2. The electronic system must be reasonably designed to preclude any person other than the appropriate individual from making the participant election;
  3. The electronic system must provide the individual making the election with a reasonable opportunity to review, confirm, modify, or rescind the terms of the election before it becomes effective; and
  4. The individual making the election, within a reasonable time, must receive confirmation of the election through either a written paper document or an electronic medium under a system that satisfies the applicable notice requirements.

Don’t hesitate to contact the office if you have questions about this or need additional information regarding tax relief for those affected by the COVID-19 pandemic.

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Tax Facts to Know If You're Selling Your Home This Year

In most cases, gains from sales are taxable. But did you know that if you sell your home, you may not have to pay taxes? Here are ten facts to keep in mind if you sell your home this year.

1. Exclusion of Gain. You may be able to exclude part or all of the gain from the sale of your home. This rule may apply if you meet the eligibility test. Parts of the test involve your ownership and use of the home. You must have owned and used it as your main home for at least two out of the five years before the date of sale.

2. Exceptions May Apply. There are exceptions to the ownership, use, and other rules. One exception applies to persons with a disability. Another applies to certain members of the military. That rule includes certain government and Peace Corps workers. For more information about these exceptions, please call the office.

3. Exclusion Limit. The most gain you can exclude from tax is $250,000. This limit is $500,000 for joint returns. The Net Investment Income Tax will not apply to the excluded gain.

4. May Not Need to Report Sale. If the gain is not taxable, you may not need to report the sale to the IRS on your tax return.

5. When You Must Report the Sale. You must report the sale on your tax return if you can't exclude all or part of the gain. You must report the sale if you choose not to claim the exclusion. That's also true if you get Form 1099-S, Proceeds from Real Estate Transactions. If you report the sale, you may need to pay the Net Investment Income Tax. Please call the office for assistance on this topic.

6. Exclusion Frequency Limit. Generally, you may exclude the gain from the sale of your main home only once every two years. Some exceptions may apply to this rule.

7. Only a Main Home Qualifies. If you own more than one home, you may only exclude the gain on the sale of your main home. Your main home usually is the home that you live in most of the time.

8. First-time Homebuyer Credit. If you claimed the first-time homebuyer credit when you bought the home, special rules apply to the sale. For more on those rules, please call.

9. Home Sold at a Loss. If you sell your main home at a loss, you can't deduct the loss on your tax return.

10. Report Your Address Change. After you sell your home and move, update your address with the IRS. To do this, file Form 8822, Change of Address. You can find the address to send it to in the form's instructions on page two. If you purchase health insurance through the Health Insurance Marketplace, you should also notify the Marketplace when you move out of the area covered by your current Marketplace plan.

Questions? Help is just a phone call away.

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Small Business Tax Tips: Payroll Expenses

Federal law requires most employers to withhold federal taxes from their employees' wages. Whether you're a small business owner who's just starting or one who has been in business a while and is ready to hire an employee or two, here are five things you should know about withholding, reporting, and paying employment taxes.

1. Federal Income Tax. Small businesses first need to figure out how much tax to withhold. Small business employers can better understand the process by starting with an employee's Form W-4 and the withholding tables described in Publication 15, Employer's Tax Guide. Please call if you need help understanding withholding tables.

2. Social Security and Medicare Taxes. Most employers also withhold social security and Medicare taxes from employees' wages and deposit them along with the employers' matching share. In 2013, employers became responsible for withholding the Additional Medicare Tax on wages that exceed a threshold amount as well. There is no employer match for the Additional Medicare Tax, and certain types of wages and compensation are not subject to withholding.

3. Federal Unemployment (FUTA) Tax. Employers report and pay FUTA tax separately from other taxes. Employees do not pay this tax or have it withheld from their pay. Businesses pay FUTA taxes from their own funds.

4. Depositing Employment Taxes. Generally, employers pay employment taxes by making federal tax deposits through the Electronic Federal Tax Payment System (EFTPS). The amount of taxes withheld during a prior one-year period determines when to make the deposits. Publication 3151-A, The ABCs of FTDs: Resource Guide for Understanding Federal Tax Deposits and the IRS Tax Calendar for Businesses and Self-Employed are helpful tools.

Failure to make a timely deposit can mean being subject to a failure-to-deposit penalty of up to 15 percent. But the penalty can be waived if an employer has a history of filing required returns and making tax payments on time. Penalty relief is available, however. Please call the office for more information.

5. Reporting Employment Taxes. Generally, employers report wages and compensation paid to an employee by filing the required forms with the IRS. E-filing Forms 940, 941, 943, 944, and 945 is an easy, secure, and accurate way to file employment tax forms. Employers filing quarterly tax returns with an estimated total of $1,000 or less for the calendar year may now request to file Form 944,Employer's Annual Federal Tax Return once a year instead. At the end of the year, the employer must provide employees with Form W-2, Wage and Tax Statement, to report wages, tips, and other compensation. Small businesses file Forms W-2 and Form W-3, Transmittal of Wage and Tax Statements, with the Social Security Administration and if required, state or local tax departments.

Questions about payroll taxes?

If you have any questions about payroll taxes, please call.

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Connect with Customers Using Built-in Tools

Businesses are starting to cautiously re-open in the U.S. (at least partially), but we're still a long way from "normal." Because of COVID-19, some companies have done very well. Most, though, have had to make changes to comply with health guidelines and keep their customers and employees as safe as possible. And many consumers and businesses are less willing to spend money until they know more about the country's path to recovery.

If your business has had to shut down temporarily, or at least scale back operations, we hope you've found ways to stay in touch with your customers. Even if you're struggling, it's important to communicate with the people who have helped you build your company.

QuickBooks can support you in this effort. Its integration with Microsoft Word makes it possible to create and dispatch letters or emails to customers that can fit a variety of common situations. There are dozens of pre-written templates that you can personalize and send to one or 10 or hundreds of the consumers and companies with whom you've built a relationship.

Here's how it works:

Finding Your Message

To get started, open the Customers menu and select Customer Center. To explore what's available, click the down arrow next to Word in the toolbar, then select Customize Letter Templates. This window will open:


Figure 1: Before you start preparing customer letters, you should see what's available.

Click the button in front of View or Edit Existing Letter Templates, and then click Next. You’ll see the available letter templates, divided into types. Spend some time clicking on each type to see what your options are.

Let's say you want to send a letter to customers who haven't been active for a while. Click the button in front of Customer and scroll down to Inactive customer. Select it and click Next. You'll notice that Microsoft Word has opened and is displaying your letter template, which is now saved to your QuickBooks folder. If it's in your taskbar tray, click to open it. Read through it and make any changes you want, then save to the current folder and close it. Click Use Template.

In the window that opens, you'll select the recipients of your letter. Under Include names that are, you'll click the button in front of Inactive. You want to direct your correspondence to customers, not jobs, so click the button in front of Customer. Look at the list that QuickBooks has displayed and make sure all of the entries have a checkmark in front of them. If you want to remove any of them, click the checkmark to turn it off. Click Next.


Figure 2: You can select the customers who are to receive your correspondence on this screen.

Editing Your Letter

In the window that just opened, Inactive customer should be highlighted. Click Next. Enter the Name and Title that should appear in your letter's signature. When you click Next again, a single Microsoft Word document will open containing all of your letters in one continuous document (each letter will start on a new page). You'll be able to edit these letters without affecting the original template.

If you want to print envelopes, you'll click Next. If you want to continue to edit and send your letters, click Cancel. Your personalized letters should be in your Windows taskbar tray. Open the document and scan through it to see if you want to change anything.


Figure 3: You can edit your customer letters individually.

In the example above, you might want to, for example, delete the customer's first name so it just reads Dear Mr. Burch. Or, you might want to change the words "Have we disturbed" to something like "worried" in the second paragraph.

If you want to save these letters as edited, you can go ahead and do so. Otherwise, just print them as you would any Word document. Of course, you could copy and paste them into your email system and send them that way. But sending a signed, printed letter during these times provides a more personal touch.

You may have already developed the habit of communicating with your customers outside of exchanging sales forms and payments. If not, consider finding ways to interact occasionally with those individuals and companies that keep your business going. This is especially important right now, as we all wait to see how the recovery will continue to progress. If you need any assistance during this uncertain period, please don't hesitate to call.

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Tax Due Dates for August 2020

August 10

Employees Who Work for Tips - If you received $20 or more in tips during July, report them to your employer. You can use Form 4070.

Employers - Social Security, Medicare, and withheld income tax. File Form 941 for the second quarter of 2020. This due date applies only if you deposited the tax for the quarter in full and on time.

August 17

Employers - Nonpayroll withholding. If the monthly deposit rule applies, deposit the tax for payments in July.

Employers - Social Security, Medicare, and withheld income tax. If the monthly deposit rule applies, deposit the tax for payments in July.


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7 Key Tips for Managing Credit and Eliminating Debt

In today’s world, debt is so integrated into our society that it is considered the normal way to pay for many things. These things include homes, college educations, cars, medical expenses (in some cases), vacations, and even clothing. If you are unable to buy a house or a vehicle with saved cash, you will likely end up using debt to pay for it. Debt can, in some cases, be a useful tool, but it can also get you into trouble if managed incorrectly.

If you know the facts and risks and follow sound financial practices, you can better handle debt-financed purchases. Here are seven key points that can help you manage debt well and eliminate it if possible.

1. Learn How to Establish Credit

If you don’t have any credit history, you probably won’t be able to borrow any money in the first place. Before you can purchase a car or house, you will need to build up your credit score. If you don’t, creditors will likely see you as too much of a risk because of your lack of adequate borrowing and repayment history.

Establishing credit typically begins with a secured credit card or store card, which you use to purchase something small and then pay it off in a short timeframe. After several months, you will have a better credit score and can apply for a standard (unsecured) credit card and repeat the process.

2. Know the Importance of Your FICO Score

Your credit score is the most significant number that creditors look at when evaluating your credit card applications, loans, and even mortgages. Pay attention to the things that can negatively impact your credit score, such as late payments, excessive balances, and having too few open accounts. This information will keep you in touch with your financial health status and help you make appropriate purchasing decisions. 

3. Improve and Maintain a Good Credit Score

If you look up your credit score and find that it is too low, learn the next steps to improve it. Your credit score is not some magical random number that does whatever it wants to. You can control your credit score with sound decisions and strategy. If you manage your credit well and follow best practices, you can predictably build your credit score month after month until you have the credit score you desire. That credit score, in turn, will help you to get approved for the loans or cards that you want.

4. Regularly Check Your Credit Score for Free!

While you are building your credit score, you will need a way to check it for free regularly. If you are flying blind and don’t know your exact credit score, that will handicap you when it comes to applying for credit. You should review your credit report before you walk into the bank or fill out an online loan or credit card application.

This information can prevent your request from being denied, which could reduce your credit score. It can also give you an accurate picture of what cards and loans you should apply for because you can look at the average approved or required approval credit scores for many loans and cards. Sites like CreditKarma.com and others allow you access to this information, and you can get a free copy of your credit report each year from the three main credit bureaus.

5. Budget and Find Money to Eliminate Debt

Creating a budget may seem like something that would reduce your financial freedom and eliminate fun. However, you might be surprised by how far you can stretch your dollars when you spend your money intentionally rather than on impulse. If you create a budget plan, you might be able to find money to eliminate debt by paying much more than the minimum payments on each of your credit cards.

6. Always Pay More Than the Minimum Payment

If you only make the minimum payments, you will take over a decade to pay off most credit card balances! However, paying more than the minimum each month reduces the amount of time it will take to pay off each card. It can also dramatically decrease the amount of interest you’ll pay.

Credit card companies like it when you pay only the minimum because they make a lot more money on the balance owed. Credit card interest rates work on a compounding model, which means the total interest you’ll be required to pay to eliminate your balance goes up for every month you carry that balance. The longer you take to pay, the more you pay. The only way out of this vicious cycle of compounding interest is to pay more than the monthly minimums – as much as you can afford.

Keep in mind the recommended way to eliminate your credit card debt is to pay only the minimums on all but one card. Select that card based on the highest interest rate or the lowest balance. If you can pay off one card with the lowest balance, it will keep you motivated to pay off the others. Paying off the card with the highest interest rate first will save you the most money but could potentially take much longer if you have a high balance, which could lead to your getting discouraged and giving up. Only you know what motivates you, so choose a strategy that works for you and stick to it. You can get out of debt!

7. Ask for Help When Needed

If you have developed poor financial habits and tend to overspend regularly, it may be time to seek help in the form of credit counseling. You might also consider taking personal finance classes or joining a support group on credit debt elimination. There is nothing shameful about asking for help! It means you have a realistic view of your current circumstances and habits, have acknowledged that there is a problem, and are taking steps to solve it.

Hopefully, these tips prove helpful to you in your efforts to understand and manage your credit and debt. Controlling and eliminating debt are vital financial skills that will help you to prosper. They can help you achieve your goals and prepare for the future. If you have any suggestions, please share them in the comments below!

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5 Simple Options to Raise Capital for New Small Businesses

If you have decided to take the leap and start a small business, the first obstacle you are likely to face is that of financing. Without any capital, it is nearly impossible to get your new business up and running. Yet without any income, your business is unable to generate money for itself. What is a new business owner to do?

Unless you have a lot of personal savings or are independently wealthy, you will probably need to raise some capital from outside sources. Here are a few options for raising money to start a new small business.

1. Friends and Family Loans  

Often, friends and family will be willing to loan or donate money to your business to help you succeed. They can also be the fastest and most accessible source of financing for a new fledgling business.

However, be extremely careful and respectful when asking friends and family for money. It is incredibly easy to damage life-long relationships by making mistakes here. Four out of five businesses fail within the first five years, and money from friends and family may need to be repaid in full or with interest to preserve those relationships.

If your business struggles during its founding years, you may be forced to choose between repaying your family or keeping the business afloat. This circumstance can leave you in an uncomfortable position. It is essential to communicate with anyone you borrow money from directly and thoroughly to ensure that all expectations are realistic, and that they know what they are getting themselves into. One suggestion is to consider any money borrowed from friends or family to be a short-term high-interest loan that must be repaid as quickly as possible once the business is generating revenue. It can also be beneficial to have these terms in writing before accepting the loan, just as they would be when borrowing from anyone else.

2. Product Pre-Sales Can Raise Capital 

If your business is based on selling a single product, you may be able to pre-sell it to customers as a way to raise the capital needed to produce and deliver the products. This method eliminates the risk of having produced unsold inventory and then having to warehouse those products. It ensures that every product has a customer waiting. It also encourages you to be fast and efficient with your production, because customers are eagerly awaiting delivery, often by a specific shipment deadline.

This method can result in a lot of pressure to deliver your products promptly. The expectation can be a good thing, but it also could result in compromises that shortchange customers by providing an inferior product. If anything goes wrong during production, you will be accountable to your customers for those delays and owe them an explanation. Impatient customers could get frustrated and demand refunds or leave negative reviews online, which could damage your company’s reputation.

Pre-sales can work very well if you are well organized and have any production issues sorted out ahead of time. It is vital to understand the pros and cons before choosing to go this route.

3. Crowdfunding Websites  

Crowdfunding sites are similar to product pre-sales but provide a lot more infrastructure and tools to help you succeed. They also allow you to pre-sell more than one product, or combinations of products easily to large numbers of people. Recently, crowdfunding has become a popular way to raise money for new businesses that produce one or a few products. If you are an inventor, this could be a good option.

Popular crowdfunding sites include Kickstarter, Indiegogo, Fundly, and Fundable. These services all come with their own benefits and features, so it is essential to do your research and see which site is the best fit for your needs.

4. Take Out A Personal Loan 

Financing any new business is a risky endeavor, and many lenders may be unwilling to lend you money because of the inherent risk. However, if you have considerable savings or own your home, you may be able to use either of those as collateral to take out a credit line to fund your business. Keep in mind that there are serious risks to be considered when going this route. If your company struggles to generate adequate revenue to repay the debt, you could end up losing a lot more than just your business.

Evaluate your options carefully and assess the risks before putting anything too vital on the line to get a personal loan. Also, it is essential to discuss these options and risks with any other stakeholders, including family, who may be adversely affected should you fail to repay the loan on time.

5. Alternative Lending Sources 

Alternative lenders may require you to do a little more research before taking out a loan, as you want to be sure that any company you borrow from is a legitimate organization you can trust. These lenders fall across a spectrum of different categories outside of the usual banks and financial institutions. Some of these include Prosper, PayPal, Can Capital, OnDeck, and Kabbage.

Whichever funding source you choose to go with, always do your due diligence and verify that any terms and risks suit your needs and preferences before agreeing to anything. Make sure that your business is structured correctly, incorporated, and has adequate documentation and stable finances before attempting to secure financing from many of these sources. Lenders are taking a risk on you when they invest in a small business, so the more you can do to lessen their doubts and assure them of your ability to repay them, the better.

There are many different methods of securing funding for small businesses, but this shortlist of five simple options can help if you are beginning the journey of funding a new small business.

If you have any tips for fellow small business owners, feel free to share them in the comments below!

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10 Simple Budgeting Tips That Can Transform Your Life

Living paycheck to paycheck can be frustrating and leave you spinning your financial wheels and not making any progress. Following these simple budgeting tips can renovate your spending habits and help you complete goals that are important to you.

1. Create a Zero-Based Budget

A zero-based budget accounts for every dollar of each paycheck. Often we have a budget that accounts for some mandatory expenses but then leaves the remaining money on the table for anyone to grab for whatever they want. The problem with this approach is that you end up spending money flippantly, and often it goes to things you wouldn’t have preferred to spend it on.

For example, it is easy to go out and spend a little here and a little there at the mall, and before you know it, you’ve just spent $200. When you have every dollar designated, this type of spending is less likely to happen. Also, that money could go a long way toward achieving something on your goal list.

2. Create Your Budget Together as a Family

If you have a spouse or family member who shares your finances, you both must be on the same page with regards to money. If one of you establishes the budget and the other is out of the loop, then they will be pulling against you and spending money outside the budget. Worse yet, this will almost inevitably lead to arguments about money you could prevent by open communication.

3. Remember, No Two Months are Exactly the Same

During the school year months, you might need to budget for school expenses, while during the summer, you might need to plan for vacations or family trips. It’s ok to have different budgets for each month that meet your changing financial needs. The point of a budget is to create structure and accountability for each dollar, not to have your expenses be precisely the same each month. Don’t be afraid to modify your budget to suit the demands of the month.

4. Begin with Your Most Important Categories

These categories might not be what you’d expect. Saving and giving are recommended as the first two categories because they matter the most to your family and your community in the long run. Next come major living expenses like your rent or mortgage, car payment or repairs, services, and utilities. You want to create a budget that represents the things you value first and foremost and also covers core needs like shelter, food, and transportation.

5. Eliminate Your Debts

Regardless of your financial goals, debts will get in the way until you pay them off. Credit card and loan balances require monthly payments and interest charges, which will eat into your budget and make it harder to stick to the plan. By eliminating your debts one at a time, you can free up money that was going to repay lenders and reach your own goals more quickly.

6. Be Flexible

When you set up your budget each month, don’t think that you need to have the same amount in each category as you did in the past months. It is essential to be realistic, but you also need to make deliberate cuts to areas where you have been historically overspending. If you have a daily coffee shop stop that has been racking up hundreds of dollars a month, perhaps it’s time to reduce that coffee budget by making it at home instead. Similar principles apply in other categories.

7. Eliminate Credit Card Use

For anyone who is living on a budget or trying to reduce debt and reach financial goals, credit cards are a trap. They entice you to spend money you don’t have on things you don’t need, or even on things you do need but can’t afford. They accumulate debt that you don’t see, which can quickly get out of control.

Credit cards are not your friend. The rewards they sometimes promise result from companies knowing they will make far more in interest and fees. If you are serious about creating good financial habits, one of the best things you can do is to stop spending on your credit cards, even if it means cutting them up or freezing them inside a block of ice!

8. Try a Budgeting App or Website

Free smartphone apps like EveryDollar can help you create a budget and stick to it. They make it easy to track financial transactions and see what your budget looks like in real time. Some (including the premium version of EveryDollar) allows you to integrate your bank account to update the app automatically when you spend money.

Watching your expenses tracked in real time and the effect they have on your budget can be a real motivator and help you stay on track. Another benefit of these apps is that your family members can access them, which means you can all stay on the same page regarding your budget.

9. Set Realistic, Targeted Goals

Whether your goal is to pay off a credit card balance, save for college, or pay off your mortgage, try to set small incremental goals and focus all your financial energy on reaching one at a time. If you attempt to achieve everything at once, you may get overwhelmed and give up. Furthermore, spreading all your available money across several goals at once means you will only make a tiny amount of progress on each one each month. However, if you focus all your available resources on a singular goal at a time, you will make progress much faster.

10. Stop Comparing Yourself to Others

Comparing yourself to others has never been more pervasive than it is today. The always-connected world of social media not only means we compare ourselves with others but that those comparisons come in non-stop by the thousands. Furthermore, those people we tend to compare ourselves to on social media are often posting sponsored or artificially curated versions of their lives, showing only the very best highlights and making it appear as though these are the everyday norm.

We can also compare ourselves to people in different countries, with wildly different incomes and very different living costs. This judgment leads to dangerously inaccurate expectations that can cause depression, anxiety, and a feeling of reduced self-worth. Remember how bad it was when people were just keeping up with the Jones’s? Now we try to keep up with everyone on the planet!

The key is to stop all those comparisons and to start a daily gratitude practice. Give thanks each day and make a list of things you appreciate. You will be surprised just how much good you have in your life if you take a minute to think about it. You might also consider unfollowing or unsubscribing from social media accounts that make you feel jealous, discontent, or inadequate. Instead, try to find things that help you to feel more gratitude and appreciation for what you already have.

Do you have any strategies that have helped you budget more effectively? If so, please share them below!

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Five Helpful Tips for Leaving a Will

While most of us don’t like thinking about our mortality or planning for it, creating a will is one of the most important things we can do to help our loved ones. It can help to prevent unnecessary stress, legal headaches, and court delays, allowing your family to mourn in peace without dealing with things that could be prevented by having a will in place.

Here are five helpful tips that could help you better understand the will creation and execution processes. Following these points can help you feel better prepared and more informed when it comes to this critical topic.

1. Your Will May Need to be Updated Periodically

While it may be tempting to think of a will as something set in stone, it may not be wise to let a will sit for years without taking the time to re-examine and reconsider its details from time to time. Nothing in life tends to be constant, and things change all the time. For example, you could have a new grandchild born into the family, or experience a divorce. You might also sell your home and move somewhere new, or choose to give some of the items listed in your will away to loved ones or charity.

If you had younger children when you wrote your will, they will eventually grow up and live on their own, negating the need to designate a legal guardian. However, if you have any other dependents such as a disabled relative, they may still need someone to care for them.

In cases like these, you will want to update your will to ensure it reflects the current realities of your life and relationships. In general, estate planners tend to recommend that you update your testament once every two to three years to be on the safe side.

2. Your Will Could be Contested When Executed

When a will is contested, someone challenges the legal validity of something in the will, or the will itself. For example, if one of your beneficiaries feels wronged by something in the will, they may decide to raise a legal challenge and contest it. Another example is a spouse or child who believes that the will violates an estate law. They may choose to challenge it on those legal grounds rather than on emotional ones.

Several other things could potentially cause a will to be contested. For instance, if not witnessed legally or if you were not aware of what you were doing when you signed it, the will could be challenged.

In these cases, a probate judge will either rule in favor of the will or support the contestation. As with most legal claims, the key to a successful contestation of a will is finding a legitimate legal flaw in it or fault in the way it was written or executed. One way you can help to prevent this is by working with an estate lawyer when you create your will, as they may be able to help you foresee any potential legal challenges that may arise and work to prevent them by writing a proper will.

3. Store Your Will in a Safe, Yet Accessible Location

For a will to be executed, the court will generally require the original document. If your will is lost or stored in a safety deposit box at your bank that only you can access, then it will not be available for execution when it is needed. In the case of the safety deposit box, your family would need to get a court order to open the box, which will add complexity and delays to an already emotionally stressful situation.

A better alternative would be to store the will in a fireproof and waterproof safe in your home and to make sure that your executor knows the location of the key or the key code to access the safe. That way, when your will is needed in court, it will be readily available.

4. A “Letter of Instruction” Can Help Clarify Your Wishes

While you will leave specific items to individual beneficiaries in your will, some details can be challenging to understand. Perhaps the will only designates the main large items, or maybe there wasn’t room in the will for an adequate description of what you intended.

A Letter of Instruction is a more informally written document which you can include alongside your will to help those who execute it understand what you meant. The document won’t have to use legalese language that feels less relatable and harder to understand. This preparation can help alleviate some of the stress associated with executing an estate and help your loved ones feel comforted, all the while answering potential questions that might arise at the execution of your estate.

A Letter of Instruction can contain useful and essential details such as account numbers, usernames, and passwords, which would be necessary to execute the estate but not included in the document itself.

In some states, a Letter of Instruction is legally binding, while in others, it is considered more of a helpful suggestion. Your estate lawyer can help you understand how the Letter of Instruction works in your particular area.

5. Empower Your Executor to Deal with Debts and Bills

One aspect of leaving a will that might be easy to neglect is the need to deal with outstanding debts and bills after the time of your passing. This is a less glamorous and rather unsentimental aspect of estate execution but is just as necessary. It is important to detail how your debts and bills should be handled and provide the proper authority to do so. This planning can potentially prevent debtors from claiming assets from your beneficiaries and using them to settle debts.

These tips cover a handful of examples of things that are important when executing an estate or leaving a will. Hopefully, you will find these tips helpful in your estate planning process. If you have any suggestions of your own to share with others, feel free to share them in the comments below!

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Copyright © 2020   All materials contained in this document are protected by U.S. and international copyright laws. All other trade names, trademarks, registered trademarks and service marks are the property of their respective owners.


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