Paying for a child’s education is certainly one of the greatest gifts you can give. But the costs of higher education have been rising at a shocking rate. With in-state expenses at a public school averaging just below $20,000 per year, you may be wondering what you can do.

One excellent solution to ease the financial challenge of paying for college is the 529 College Savings Plan. These are state-sponsored savings plans that allow for tax-free earnings. Contributions are not deductible for federal income tax purposes, but are deductible in many instances for state tax purposes.

To open a plan, here are some basics you’ll need to know:

1. Tax write-offs can be huge. Every five years, account holders can write off up to $55,000 from their estate per beneficiary without having to pay federal gift tax. For married couples, the limit is $110,000.

• As an example, a wealthy couple with 5 grandchildren could deposit $550,000 ($110,000 x 5) towards their grandchildren’s education and eliminate that amount from their estate. They could do that every 5 years until the maximum is reached ($300,000+ per beneficiary in many instances).
  
  
• You maintain control of the assets. If you decided to close the account, you would have to pay a 10% penalty and income tax on any earnings. The balance is yours to do with as you wish.
  
  
• The beneficiary can be changed. If your son decides that he’s not going to college, the account can be reassigned to someone else. The account must be transferred to an eligible individual within the same family.
  
  
• Different states, different plans. Each state has its own plan(s), and some are much better than others. But you can invest in nearly every other state’s plans.
  
  
• In theory, you could be an Arizona resident, invest in a Connecticut 529 plan, and send your child to school in Florida. A lot of flexibility is available, so be sure to shop around before you open an account.

The fees associated with the various plans are also important to consider. Some will be much higher than others. In fact, many experts consider the extra charges to be the most important criteria when choosing a plan. Some fees are incurred when opening the account; there are also annual maintenance charges.

If you know for certain where you want to send your child to school, many universities offer prepaid 529 plans. This would allow you to lock in the cost of future credit hours at the current rate. Unfortunately, there are penalties should you decide to later send your child somewhere else. So if you choose this option, be very sure where you’ll be sending your kid to college.

On the downside, investment options are rather narrow, and the ability to switch between available investment options is also limited. The tax code currently curtails changes to once per calendar year.

Like any investment, 529 plans may or not be right for you. There are numerous other options to finance a college education, each with their own benefits and limitations.

However, if you’ve evaluated your investment options thoroughly, you may find that a 529 plan is an excellent option to ease the burden of paying for a college education. The tax benefits are considerable, and you always maintain control of your account. With the rising cost of college, your kids will thank you for investing in their futures.

Personal taxes can be complicated. Business taxes can be even more difficult. If you own a small business, tax time can be challenging. The livelihood of any company is at least partially dependent on its ability to minimize its tax liability, while meeting the requirements of the IRS.

While taxes are rarely enjoyable or interesting topic, they’re a part of any business owner’s life. Getting a handle your business taxes can increase your income and help you avoid legal issues.

Check out these tax tips that are helpful for any small business:

1. Keep your tax and financial documents for at least 7 years. If you’re ever audited, you’ll need those records. Any claims made at tax time require supporting documentation. Keeping good records is an excellent idea for any small business because it encourages organization. It is very difficult to reconstruct records at a later date.
   
   
2. Know your deadlines. It isn’t all about April 15^th. While most business entities can wait until “tax day,” C-corporations are required to file within 10 weeks after the fiscal year ends, which is normally December 31^st.
   
   
3. Understand your loans. The IRS doesn’t classify most business loans as income. But the interest paid on loans is generally a deductible expense. It’s important to have records regarding the use of any loans. It might be for equipment or to finance some other activity.
   
   
4. Know the different types of audits. There are several types of audits and some are more intimidating than others.
   
   
   1. Office audit: Generally this is a simple audit. You’ll be requested to report to your local IRS office to resolve some discrepancy.
      
      
   1. Correspondence audit: You’ll just be asked to send in a document via mail or fax.

• Field audit: These tend to be very thorough audits and they are conducted at your place of business.

• Criminal investigation audit: Consult your lawyer. You’re suspected of tax evasion.

• Pay your quarterly tax bill. This is a common mistake. If you have an employer, your taxes are regularly taken out of your paycheck. If you’re self-employed, you’re required to estimate your tax each quarter and pay it. Failure to pay this can result in a significant tax penalty.

• You might also end up with a bigger tax bill than you can handle in a single payment. Make a habit of setting aside a portion of your profit each month in anticipation of paying your quarterly taxes.

• Prepare early. The vast number of tax filers wait until the last minute. If you’re expecting a refund, this can be the worst time to file. The IRS is overwhelmed with all the tax returns that pour in. However, this can also be the best time to avoid an audit. Preparing your tax return early leaves you time to find any missing documents and answer any questions.
  
  
  • Get help. Depending on the complexity of your business’s finances, hiring an expert to prepare your tax return might be a good idea. In theory, the money you spend ought to result in a smaller tax burden. It’s also helpful if any legal issues arise.
    
    
  • Avoid using taxes collected from employee payroll to pay business expenses. This common practice upsets the IRS greatly. When you withhold taxes, send them to the IRS!

Taxes are a large expense for any business that shows a profit. It only makes sense to minimize that expense. Consult a tax professional if you have any questions or concerns regarding your business’s tax situation.

One of the most common trouble spots that business owner incur is how to treat vehicles for business purpose. Most business owners ask about deducting mileage and then also the payments on the vehicle, and are shocked to learn you can only do one or the other. Also, once you choose one method on that vehicle, you are locked in to that method with some exceptions. Knowing the proper way to deduct your vehicle expenses will not only save you money, but also from a potential audit.

Standard Mileage Deduction

For 2020, the standard mileage rate was reduced to 57.5 cents. In 2019, it was 58 cents.

It is called the standard mileage deduction because it takes the least amount of work to take this expense. Think of it as a catch all without having to prove all the expenses. Essentially, you need to keep track of your business miles for the year in a written log or app, and you are good to go. This can be used for purchased or leased cars as well. You can also deduct parking fees/tolls, interest you pay on a loan and any registration and taxes that are owed on the car. You cannot take depreciation on the car, gas, vehicle repairs, lease payments or anything else related to the car.

Actual Expenses Deduction

This deduction is just as it sounds, you can claim all the actual expenses you incur. You will still need to log your miles so that you can determine the business and personal use of the vehicle and you will also need to keep all your receipts. You can now deduct gas, repairs and all other expenses to your car. If you are financing it, you may take the depreciation of the vehicle and if leasing, you may now take the lease payments.

You can still deduct parking, interest and taxes on the car, but with this deduction, you can deduct everything else that is vehicle related. Even things like garage rent, insurance, etc can be taken now.

Which One is Better?

This is an impossible question to answer without knowing a person’s situation. In general, if a car is being used for light duty, such as just for visiting clients, then the standard mileage is generally the better way to go. If you are operating a large vehicle with poor gas mileage and high maintenance costs, then you will likely choose the actual expenses. Again, it all depends on your situation.

To figure out what is best for your business and to learn other ways to help maximize your tax write-offs, please schedule a consultation with us.

1. What Did You do before Blockchain?

Actually, the same thing as I am doing now, but with a different clientele. Before I got involved in blockchain, I was still an accountant helping business and individuals with their goals and planning. While I still serve the same clientele I did before, I now have a whole new set of clients that are very passionate about what they do, whether it is mining, investing or trading.

• What Brought you into the Space?

My love for exploring new technology and looking for new areas to invest. I knew about Bitcoin since 2013 but foolishly brushed it off as a fad. As I watched it go up and ultimately crash a bit, it only confirmed (in my mind) that I was right. I kept my eye on it until the beginning of 2017, when I saw it started to show some life again and decided to finally jump in the mix. While making money from Bitcoin and other alts, I naturally, as an accountant, figured I needed to learn how the IRS treats the income made from crypto. I am more than excited I was brought into this industry and I am super excited at the speed this industry moves at.

•  What’s Keeping You in the Space?

The potential for being on the cusp of an amazing new technology for our world is what drives me. My end goal for crypto is to be accepted the same as the dollar, euro, renminbi, etc., and part of that mainstream adoption is proper taxation. Governments simply will not allow people to make money without getting their part, but money people are being taxed on profits that have not actually realized in fiat. My dream is to help with the adoption of crypto in mainstream society, and believe it or not, I feel that taxation is a large part of that. Getting better tax laws and guidance from the IRS drives me to work harder for my clients.

• What Lies Ahead for You?

This will be my fourth year working with clients who had cryptocurrency, and I hope to build my practice with more clients who are as passionate as they all were. I love working with my crypto clients, as they have a certain excitement and passion that really drives me. I am looking to continue to help as many investors, traders and miners minimize their tax liability while staying compliant with the IRS. The IRS is getting better technology to track those who own crypto and reporting the proper amount of taxes is more important than ever.

• What Blockchain Developments are you Following?

I tend to focus more on the finance side of the blockchain developments, so ETF of course is near the top for me. Also, there is a lot of movement from the large financial institutions to incorporate crypto into people’s retirement accounts, which is huge. This tells me more people are requesting the product, and the companies are complying. Canada just passed a law about tax-free IRAs incorporating Bitcoin, which again, is great news that is moving the industry as a whole forward.

• Who’s Your Top Influencer Inside the Blockchain Space?

I know I may be different than others in the blockchain space, but I tend to stay away from YouTube and Twitter and just do lots of reading on different sites to get my news. I read lots of different sources so that I can get different perspectives on things, such as mainstream and industry-specific sites. Specific people that I find interesting, though I may not always agree with, are guys like John McAfee and Roger Ver. Oh, and I did meet the guys from Crypto Street Podcast and listened to their panel at a crypto convention and they were very interesting and knowledgeable.

• Who’s Your Top Influencer Outside of It?

This may sound cliché or corny, but my wife. She pushes and drives me like no one else in the world can, and without her, I don’t think I would be where I am at today. She celebrates the highs with me and kicks me in the butt to get me out of my lows and come out as a better person, so without a doubt, she is my influencer in life.

• Where Do You See Yourself in 5 Years?

In the blockchain space, 5 years can feel like a lifetime. I hope to see myself, though, as an authority and influencer in the blockchain industry on accounting and tax. The accounting and tax laws that deal with crypto is extremely vague and new, and guidance from the IRS was last issued in 2014. As you all know, much has changed in 4 years, so I hope to help carve out what taxation will look like. Also, I feel as though taxation is one of the last big hurdles crypto will have to face in 1^st world countries to obtain true mainstream acceptance. Tax laws currently are too cumbersome for any person to be able to use it daily to replace cash if they want to be reporting their taxable income in compliance.

• What do you want people to know about your business?

As I have said before, I am an accounting and tax professional with over a decade of experience in public and private accounting. One of my specialties in the accounting world is cost accounting, which I feel flows well with blockchain accounting. Cost accounting breaks things down on such a small level and allows me to properly understand the true cost of business, which directly correlates to the crypto mining and investment industry. I have worked with over 60 clients alone in the 2017 tax year, my first year that I really dealt with crypto clients. I continue to be involved in the industry and learning how to properly account for it and have a great passion for the crypto community. I have spoken at a crypto convention about taxation and would love to continue doing this at other events. Finally, I also work with a mining company, Windfall Mining, as their CFO. They are doing some great things in the industry as well and I am more than happy to be a part of their project.

1. How can someone get in contact with you?

You can find me at www.BryanShearer.accountant or contact me on my office phone at 717-639-2550. You can also find me on social media on Facebook under Shearer’s Accounting & Tax Service, Twitter at @shearersaccount or on LinkedIn under my name Bryan Shearer. I am more than happy to answer questions you may have, so feel free to email me at tax@bryanshearer.accountant or use the form on my website. Thanks so much for this great interview and it was lots of fun talking about the blockchain industry!

Attached here is the guide that I created and sent out to my clients so that they could understand the tax law a bit better. Please read over and feel free to ask any questions.

This is created for all my clients, whether they are my income tax clients in Hanover or my virtual tax clients from across the United States. Some of these principles also apply to my business tax clients here in Hanover and virtually, but it mostly covers personal income taxes.

If you have more specific questions, please contact Bryan Shearer, Accountant if in the Hanover area or virtually.