By Michael A. Olguin / President of Havas Formula
If everything you read about millennials is only partially true, then we as employers should be afraid to hire anyone who was born in the ‘80s. Thus, if I was a millennial (which I am not), I would feel pretty bad about myself and the likelihood of reaching my fullest potential given all of the negative things that have been said and written about me—from my work ethic, need for positive affirmation and inability to take criticism to my lack of loyalty and quest for the fastest route to the corner office. So I thought I would provide the many millennials in the workforce with a can’t-miss plan for professional success that will, once and for all, quell all the haters out there.
1. Ask questions (but explain why you’re asking them) – Yes, many corporate managers expect subordinates to just do what has been asked of them. However, if you learn a bit about millennials you will understand that they need more information—they want to know why. What are we trying to accomplish? How are we going to get there? What’s the value? As a millennial, you will provide greater understanding to your manager if he or she understands the context of your question and how the answer will help you to do a better job.
2. Under promise and over deliver (not so obvious to millennials) – Many believe that millennials are more about doing the job quickly, rather than correctly. And that their goal is to get a pat on the back for getting the job done. The best way for millennials to change that perception is to deliver beyond their manager’s expectation. Ask specifics about the task, but then push beyond it. When your manager says they want “A, B and C,” deliver “A, B, C, D and E.” In addition to impressing them, you will find that the quality (and importance) of the work you are asked to do will also improve.
3. Don’t look for credit (I know it’s counter-intuitive, but I assure you it works) – When you are driven by doing what is right, what is best for the situation and what will drive the greatest results, you will find it incredibly satisfying. Bosses love when someone is selfless, cares only about the company (or client) and is driven by team success. When you focus on the group prize and not personal accolades, your entire team will notice—and this will ultimately drive your individual success.
4. Punch above your weight (do what nobody but you believed you could do) – Many managers erroneously believe that millennials don’t have the experience, know-how or desire to be successful. You have every opportunity to change that perception by asking to do more. Don’t settle for a standard list of to do’s. When you can do work above your pay grade, then you are bringing greater value to the company and to your manager. When they see that drive, they will likely look for greater opportunities to leverage your desire and motivation.
5. Lighten up (don’t let everything you believe in weigh you down) – The perception is that millennials are driven by a bigger purpose in life and business than what appears on the surface. This noble mentality is a good thing, but don’t let it get in the way of working hard, doing what’s right or upending your employer’s process because you feel differently. Though there are numerous mission-based brands out there, it’s important to remember that most companies are in business to turn a profit. Thus, everything you can do to enhance that proposition will cast a favorable light on you.
Remember that people who love what they do are typically the same people who have the greatest amount of success within their company—they have more friends at work, are promoted more frequently, and generally make more money. As a millennial, you can choose to be what you want to be, and not what the world thinks you are.
6 Must-Do Year-End Tax Planning Tips Featured
It's December. Time for year-end tax planning. Here are six must-do tips. Some can save you money by cutting this year's taxes. Other can boost the size of your nest egg over time.
Either — or both — can boost your finances and turbocharge your retirement planning.
• Speed up, slow down. You should accelerate any deductions that could fall to you in 2016 or 2015. Likewise, you should delay taxable income until next year.
The types of expenses you should speed up include any mortgage payment that is due in January. Also, state and local taxes as well as property taxes.
But be careful if you are subject to the alternative minimum tax (AMT). If so, you aren't allowed to take itemized deductions for state and local income taxes or real estate and personal property taxes.
"In a year that you have to pay the AMT, don't bother prepaying real estate or fourth-quarter state estimated tax payments in December," advises the website for TurboTax. "You get no benefit from paying these taxes in a year that you are subject to the AMT."
Self-employed people and business owners have the most control over the timing of their income.
Higher-income executives often can influence the timing of the exercise of stock options and of some deferred compensation.
• Set up a qualified retirement plan. Your deadline for setting up a Keogh plan, which can be used by some self-employed people and small-business owners, is Dec. 31. Keoghs require much more paperwork than a SEP-IRA and are more costly to run. Still, if your income is high enough, their higher contribution caps can make them worthwhile.
You can contribute to SEP-IRAs and Keoghs as late as your filing due date plus extensions.
The deadline for setting up a SEP-IRA is your filing due date plus extensions.
The deadline for setting up a solo 401(k) plan is Dec. 31.
• Donate appreciated securities to charity. Dec. 31 is the deadline to make a charitable donation that you can deduct on your 2015 return.
It's usually better to donate appreciated assets instead of cash. With appreciated assets, neither you nor the charity has to pay tax on a capital gain when the security is eventually sold.
If you sold the asset first, you'd have to pay cap-gain tax on any profit.
If you're thinking about donations to several charities, consider a donor-advised fund, says Matthew Sommer, director of retirement strategy at Janus Capital. You must make the donation by Dec. 31 to get the deduction. But the fund does not have to dish out the money this year.
Americans gave $358.38 billion in 2014, a 7.1% increase from 2013, and equivalent to a whopping 2% of the U.S. gross domestic product (GDP). The majority of that giving, $258.51 billion, came from individuals, representing 72% of all charitable donors.
Making a charitable donation is not only a chance to make a difference: it’s also an excellent way to reduce your tax burden for the year. The tax benefit is considered a compelling reason for making charitable deductions: more than two-thirds of high-net-worth donors said they would decrease their giving if they did not receive a corresponding tax deduction.
A tax deduction for charitable giving isn’t guaranteed just because you’re feeling generous. As with everything in tax law, it’s important to follow the rules. With that in mind, here are 11 tips for making your charitable donation count:
- Itemize. In order to claim a charitable deduction on your tax return, you must itemize your deductions. You report itemized deductions on Schedule A on your federal form 1040 using lines 16-19:
- Choose carefully. Only donations to qualified charitable organizations are deductible. If you’re not sure whether an organization is qualified, ask to see their letter from the Internal Revenue Service (IRS): many organizations will actually post their letters on their website. If that isn’t possible, you can search online using IRS Exempt Organizations Select Check. Please note that this year, due to a programming problem at IRS, organizations that received determination letters in November 2015 and later may not be reflected on EO Select Check. You can always confirm an organization’s exempt status by asking to see the organization’s IRS determination letter (many organizations will post the letter on their website) or by calling the IRS at 1.877.829.5500. You can also find out more about a charitable organization’s tax-exempt status – as well as review financials, mission statements and more – by checking out a third party evaluator site like Charity Navigator. Finally, keep in mind that churches, synagogues, temples, and mosques are considered de factocharitable organizations and are eligible to receive deductible donations even if they’re not on the list (some exceptions apply so be sure and ask if you’re not sure).
- Remember that donations to individuals will not qualify. You cannot deduct contributions to specific individuals – no matter how deserving. This includes handouts to the homeless and collections at the office or in your neighborhood for those experiencing tough times (including pooled funds for folks who are ill or have experienced a tragedy such as an accident or fire). If the deduction is important to you, consider working through an established organization like the Red Cross which provides disaster or other relief. See again #2.
- Get a receipt – even for cash. Cash deductions, regardless of the amount, must be substantiated by a bank record (such as a canceled check or credit card receipt, clearly annotated with the name of the charity) or in writing from the organization. The writing must include the date, the amount and the organization that received the donation. You can claim a deduction for a contribution of $250 or more only if you have an acknowledgment of your contribution from the qualified organization. As a best practice, I suggest always asking for a receipt – almost any charitable organization worth its salt will happily offer you one. You don’t have to submit documentation along with your tax return but you need to be prepared to provide it at audit.
- Don’t overlook payroll deductions. Increasingly, employees rely on charitable giving opportunities available through their employer. If you make a contribution by payroll deduction, record keeping requirements under the Pension Protection Act of 2006 require you to retain a pay stub, form W-2 or other document furnished by your employer that shows the total amount withheld as a charitable donation along with the pledge card that shows the name of the charity. For federal workers, a pledge card with the name of a Combined Federal Campaign will meet these requirements.
- Pay attention to the value of any incentives. A charitable donation is deductible only to the extent that the donation exceeds the value of any goods or services received in exchange. If you make a donation and receive something in exchange – anything from a coffee mug to a dinner – you can deduct the cost of your donation less the value of the item received. If you’re not sure of the value of an item or service received after a donation, just ask. Most charitable organizations will do the math for you and document the value of your donation on their thank you letter or receipt.
- Consider donating appreciated assets. Donating property that has appreciated in value, like stock, can result in a double benefit. Not only can you deduct the fair market value of the property (so long as you’ve owned it for at least one year), you avoid paying capital gains tax. Normally, appreciated property is subject to capital gains tax at disposition but there’s an exception for donations to charitable organizations (for more on donating appreciated assets, see this post).
- You can’t deduct the value of your time. The IRS does not allow a charitable deduction for volunteering your services. The good news is that most out of pocket expenses relating to volunteering are deductible so long as they’re not reimbursed or considered personal in nature. Out of pocket charitable expenses which might be deductible include the cost of transportation (including parking fees and tolls); travel expenses; uniforms or other related clothing worn as part of your charitable service; and supplies used in the performance of your services. As with other donations, keep good records since documentation is key.
- Document the value of your gift. Good records are always important when it comes to charitable giving but even more so for donations of non-cash items. You must be able to substantiate the value of your donation. You can generally take a deduction for the fair market value of the items, or what the item would sell for in its current condition, but you’ll want to be able to establish an appropriate value. If self-documenting the donation because it’s less than $500, be specific, noting the description and condition of the items. If you contribute property worth more than $5,000, you must obtain a written appraisal of the property’s fair market value. If you make non-cash contributions (generally those over $500), you may also be required to fill out one or more parts of form 8283 (downloads as a pdf).
- Limits may apply. Many taxpayers aren’t even aware that there are limits on charitable deductions but they do exist. If you contribute more than 20% of your adjusted gross income (AGI, found on line 37 of your form 1040), pay attention to limits. The specific limitations can be fairly complicated – with numerous exceptions – but here are some quick rules of thumb: you can deduct appreciated capital gains assets up to 20% of AGI; you can deduct non-cash assets worth up to 30% of AGI; and you can deduct cash contributions up to 50% of AGI. Pease limitations may limit your gifts even more (for more on Pease limitations in 2015, check out this prior post). Carryovers may apply if you exceed the limits on contributions.
- Pay attention to the calendar. Contributions are deductible in the year made. To make it count during the tax year, gifts must be made by December 31. That doesn’t necessarily mean cash out of your account. Contributions made by text message are deductible in the year you send the text message if the contribution is charged to your telephone or wireless account. Credit card charges – even if they’re not paid off before the end of the year – are deductible so long as the charge is captured by year end. Similarly, checks which are written and mailed by the end of the year will be deductible for this year even if they aren’t cashed until 2016. Good intentions don’t count: making announcements that you intend to donate assets (a la Zuckerberg’s letter to his daughter pledging to donate most of his Facebook stock) will not qualify for a deduction in the current tax year unless you make good on the pledge during the year.
2016 Tax Season Opens Jan. 19 for Nation’s Taxpayers
IR-2015-139, Dec. 21, 2015
WASHINGTON ― Following a review of the tax extenders legislation signed into law last week, the Internal Revenue Service announced today that the nation’s tax season will begin as scheduled on Tuesday, Jan. 19, 2016.
The IRS will begin accepting individual electronic returns that day. The IRS expects to receive more than 150 million individual returns in 2016, with more than four out of five being prepared using tax return preparation software and e-filed. The IRS will begin processing paper tax returns at the same time. There is no advantage to people filing tax returns on paper in early January instead of waiting for e-file to begin.
“We look forward to opening the 2016 tax season on time,” IRS Commissioner John Koskinen said. “Our employees have been working hard throughout this year to make this happen. We also appreciate the help from the nation’s tax professionals and the software community, who are critical to helping taxpayers during the filing season.”
As part of the Security Summit initiative, the IRS has been working closely with the tax industry and state revenue departments to provide stronger protections against identity theft for taxpayers during the coming filing season.
The filing deadline to submit 2015 tax returns is Monday, April 18, 2016, rather than the traditional April 15 date. Washington, D.C., will celebrate Emancipation Day on that Friday, which pushes the deadline to the following Monday for most of the nation. (Due to Patriots Day, the deadline will be Tuesday, April 19, in Maine and Massachusetts.)
Koskinen noted the new legislation makes permanent many provisions and extends many others for several years. "This provides certainty for planning purposes, which will help taxpayers and the tax community as well as the IRS," he said.
The IRS urges all taxpayers to make sure they have all their year-end statements in hand before filing, including Forms W-2 from employers, Forms 1099 from banks and other payers, and Form 1095-A from the Marketplace for those claiming the premium tax credit.
“We encourage taxpayers to take full advantage of the expanding array of tools and information on IRS.gov to make their tax preparation easier,” Koskinen said.
Although the IRS begins accepting returns on Jan. 19, many tax software companies will begin accepting tax returns earlier in January and submitting them to the IRS when processing systems open.
Choosing e-file and direct deposit for refunds remains the fastest and safest way to file an accurate income tax return and receive a refund. The IRS anticipates issuing more than nine out of 10 refunds in less than 21 days. Find free options to get tax help, and to prepare and file your return on IRS.gov or in your community if you qualify. Go to IRS.gov and click on the Filing tab to see your options.
· Seventy percent of the nation’s taxpayers are eligible for IRS Free File. Commercial partners of the IRS offer free brand-name software to about 100 million individuals and families with incomes of $62,000 or less;
· Online fillable forms provides electronic versions of IRS paper forms to all taxpayers regardless of income that can be prepared and filed by people comfortable with completing their own returns.
· The Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) offer free tax help to people who qualify. Go to irs.gov and enter “free tax prep” in the search box to learn more and find a VITA or TCE site near you, or download the IRS2Go app on your smart phone and find a free tax prep provider.
The IRS also reminds taxpayers that a trusted tax professional can provide helpful information and advice about the ever-changing tax code. Tips for choosing a return preparer and details about national tax professional groups are available on IRS.gov.
The President has signed the Protecting Americans from Tax Hikes Act of 2015 (the PATH Act). Here is a list of key provisions.
Extended through 2016:
Extended through 2019:
Getting audited is many taxpayers' worst nightmare, but that shouldn't stop you from taking advantage of the tax deductions you're legally entitled to take. You should just take care to make sure you have the documentation you need to back up your deduction if the IRS decides to take a closer look at your return.
Below, you'll learn about three tax deductions that often raise red flags from would-be auditors.
1. Home office deduction
Abuse of this provision has led to increased IRS scrutiny. The most important thing to remember is that you need to be able to document the separate area and its exclusive business use, so if your business takes up a large fraction of your overall property, you'll need to prepare to prove it. In addition, ensuring that all claimed expenses are business-related is important in maintaining your credibility during an audit.
2. Charitable deductions
In judging your charitable donations, the IRS will compare your deductions with those of taxpayers in a similar financial situation based on your tax return. If you're on the high side of average, the risk of an audit will increase, and it'll be more important for you to keep good records on what you gave, when you gave it, and how you determined the appropriate value of the property. Fail at any of those tasks, and you could be left unable to support your deduction to an IRS auditor.
3. Unreimbursed business expenses
Most of the time, employees get reimbursed by their employers for any business expenses they pay for themselves. As a result, the IRS looks carefully at unreimbursed business expenses, even though they're an itemized deduction and are only deductible to the extent that they exceed 2% of adjusted gross income.
Many items are potentially deductible, including dues and license fees, subscriptions to trade journals and publications related to your work, tools and supplies, and specialty uniforms. Yet the temptation among many taxpayers is to try to deduct additional items that are only somewhat connected to their jobs. Before taking this deduction, make sure the expenses you're seeking to claim are legitimately business-related, and be prepared to explain in an audit why your employer didn't reimburse you for them.
Finally, bear in mind that any deduction could lead to an audit if it's unusually large compared to what most people report on their tax returns. If you're entitled to a big deduction for any reason, make sure you have the records to prove it in case the IRS comes knocking.
Getting audited is no fun, but as long as you have the required documentation, you should be able to stand up to IRS scrutiny with your deductions intact. Keeping good tax records with these three deductions in particular is a smart move that will keep you from paying extra tax after an audit.