July, 2020 | Live a Life By Design

The Millennial Perspective: Office Space Evolution

Posted on July 28, 2020May 13, 2021 by Ashley Stieb

The traditional office space can be described as a cubicle or office with a desk, chair, and computer. However, the traditional office space has started to evolve for some. If you look at tech companies like Google, their office spaces are far from “traditional.” More and more businesses, especially those that have a large number of millennials on staff, are leaning more towards this open office concept where there are no defined spaces. Instead workers are free to sit where they please and wherever sparks the most motivation and focus. Now in recent times, the office space has once again evolved into something a little more secluded. However, instead of going back to the traditional setting, millennials and many others have found their offices in their own home.

When COVID-19 made its way to the United States, businesses began shutting down or transitioning to a remote work setting, if possible. Some of us have now found ourselves in a whole new working environment away from our office mates and in the comfort of our own homes. For some this was a welcomed change. For others this change may be less than productive. For myself, I found that I enjoyed working from home. I was more focused on the task at hand and what I needed to get done throughout the day. However, I can’t speak for every millennial in this situation, so I once again reached out to my friends, I asked them if they worked from home due to or before the pandemic. I also asked them if they preferred working from home over a traditional office setting and what they did for a living. I had quite a few friends respond. Some opted to leave their traditional settings to work from home before the pandemic, others decided to start their own business out of their home, but the majority found that this was their new normal as a result of the pandemic.

Many of those commenting found it difficult to deal with balancing and finding the divide between work life and home life. Several of them also mentioned that they got burnt out because of the continued work mode they found themselves in. They missed the face to face interaction with members of their teams and have even found struggles in keeping their team members motivated. Those with children struggle because their kids may not understand the situation completely and required their parent’s attention, although they are attempting to set boundaries to help with this. Some have welcomed the extra time to spend with their significant others and children, but still find that they are getting burnt out. However, despite these challenges they may not want to return to the traditional setting full time even after the pandemic is over. Providing a mixture of remote work and in-office work gives them a chance to avoid burn out on either end and may empower them to stay more focused and motivated. As for their office set up in their homes, they all provided very different answers. Some preferred a private space to make it feel less like home. Others created an office space where they could still interact with their families while others had a space designated for their home office but wouldn’t consider it a “formal” office space. No matter what setting you prefer or what generation you belong to, I feel that we are all facing challenges with our office settings these days while trying to figure out what the new normal will be going forward.

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Three T’s of Successful Retirement Planning

Posted on July 24, 2020July 24, 2020 by Jimmy J. Williams, CPA/PFS, CFP®

Making a major life decision is not to be approached in a haphazard manner. Many people underestimate the impact of retirement on their lives and have “buyer’s remorse” once the process is complete. How can you experience a more positive and proactive outcome to retiring? Simply follow the “3 T’s” outlined below and you will gain tremendous confidence and control over your new phase of life.

Establish a Team

The first “T” is to establish a team. Many aspects of life allow you only one opportunity to get things right and this is one of them. Financial, estate, cash flow and tax considerations must be addressed in the process of planning to retire. Often clients come to our office for a meeting about their retirement and certain elections chosen by the individual are irrevocable. Elections in the format in which you will receive your retirement benefits, Medicare and Social Security Benefits and other critical lifestyle choices may have lifelong ramifications. You should consider assembling a team consisting of, at a minimum, a CPA, a Certified Financial Planner™ practitioner, an estate planning attorney and your spouse or significant other. Why do you wish to include your spouse/significant other? Do you know how your relationship may be changed by each of you spending the majority of your day together? It is critical that you listen and coordinate your plans for retirement with your team.

Timing

The second “T” is timing. When is the best time to retire? How can you maximize retirement income by electing benefits offered by your employer, SSA Benefits and other support income during your retirement years? The key to properly timing your approach to launch into this next phase of life is to understand the qualitative issues and work to resolve them to your benefit with similar gusto as you do your quantitative needs. Emphasis is generally given the monetary issues of retirement only to realize your plan failed to consider the importance of emotional issues about the changing lifestyle you may find yourself. Work with your wealth advisor to determine if you have addressed all facets of retirement and the timing is in your best interest.

Transition

The third and final “T” is for transition. Successful individuals that transition smoothly to and enjoy retirement are those that understand their time is more valuable than their wealth. Purpose is required of each of us to live a fulfilling life. Why would you wish to devote most of your early life to work and career only to be miserable after your leave employment? That, to me, is not success. However, the person who understands that she has talents, time and treasure to devote to others may find a more rewarding experience in the retirement phase. Consider your plans to travel, join civic groups, devote your time to education in other fields of interest, etc. You must understand that with today’s medical advancements, you may spend as many years in retirement as you did in your career. With that in your mind, wouldn’t you feel more confident knowing that you addressed the Three T’s of Retirement Planning?

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Selling the Farm? Think About This Tax-Saving Election!

Posted on July 20, 2020July 20, 2020 by Jimmy J. Williams, CPA/PFS, CFP®

You worked your entire life and a significant amount of your family’s wealth is tied to the family farm. This scenario is experienced by many families in the U.S. How do you obtain your value from the land and pay the least amount of income tax? There is a way.

The income tax laws, referred to as the Internal Revenue Code in the United States, provides for families to retire from the farm without paying current income taxes on the transaction. As you can imagine, there are a few caveats and requirements to performing such a transaction. This type of land transfer is known as a “like-kind exchange”. In recent years the regulations governing this type of transaction have been refined to allow property held for productive use or investment (i.e., the farmland) to be exchanged with other investment property to defer the tax on the potential gain in the land.

Think about this approach. Mr. Jones has a farm which consists of 640 acres of pastureland. He purchased the land 40 years ago. His basis in the land is $100 per acre or $64,000 for the total parcel. However, Mr. Jones is ready to retire and decides he wants to sell the property. Today, the land is worth $1,000 per acre or $640,000 for the total parcel. Mr. Jones visits his CPA to discuss his decision to retire and sell his land. The good news is that Mr. Jones is retiring. The bad news is that his federal tax bill on the sale of the could be as much $128,000!

To defer the tax bill to its latest due date, Mr. Jones’ CPA informs him of a structure that allows Mr. Jones to exchange his farm land for other land that is held for investment. Perhaps Mr. Jones would desire to own rental properties that would generate cash flow to supplement his retirement?

This area of law is very specific but can provide significant benefit to taxpayers. Two important timelines are required to be met to treat the property received in the exchange as “like-kind” property: 1) The property to be received must be identified within 45 days after the taxpayer’s property is relinquished in the exchange; 2) The property transaction shall be closed within 180 days after the relinquished property is transferred to the other party.

Additional parties are involved in this type of transaction. A qualified intermediary is utilized to transfer the deeds, hold the deposits and to execute the transaction on behalf of the two exchange parties.

Before you simply decide to sell your farm, think about other opportunities to mitigate the tax bill. You will be glad you did.

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Tax Law Changes Due to COVID-19

Posted on July 3, 2020July 2, 2020 by Jimmy J. Williams, CPA/PFS, CFP®

Many U.S. citizens have been subjected to financial and other difficulties due to the pandemic. In March, 2020, the U.S. Treasury Department issued an extension of time for filing, and paying, income taxes for individuals. The good news is that you have until July 15, 2020, to file your 2019 individual income tax returns and pay your taxes. Even better news is that you will not be penalized for filing the returns and paying your taxes after April 15, 2020, which is the original legal due date. This exception for the filing date is only applicable to this year due to the disruption in the economy and the “safer at home” implementation protocol for reducing the spread of COVID-19.

Confusion arises when you are one of the taxpayers required to make estimated tax payments to resolve your tax liability. For example, the typical estimated tax payment schedule would be April 15, 2020, June 15, 2020, September 15, 2020 and January 15, 2021. The confusion arises when the original due date for your 2019 return has been extended beyond the payment date for your second quarterly estimated tax payment. To reconcile this quandary, the IRS changed the order of the required estimated tax payments to be as follows: 1^st quarter – July 15, 2020; 2^nd quarter – July 15, 2020; 3^rd quarter – September 15, 2020; and 4^th quarter – January 15, 2021.

Additional time to file returns and pay taxes is an anomaly for U.S. tax filers. Typically, an extension of time would be requested by filing a Form 4868 with the IRS on or before April 15. Consequently, if additional time is needed to complete and file your 2019 returns beyond the extended due date of July 15, you must file a Form 4868 to request additional time to file until October 15, 2020. Remember, the tax you owe for 2019 must be paid by July 15, 2020, or additional penalties and interest may be incurred. To alleviate these onerous penalties and interest, remit your estimated amount owed with your filing of Form 4868.

For those of us that are charitably minded but lack the required level of expenses that qualify for itemizing deductions on our individual return, the IRS is allowing an “above-the-line” deduction of $300 for qualified charitable contributions. My philosophy is to support my favorite qualified exempt organizations despite the ability to deduct the contribution. The pandemic has dealt a cruel blow to the finances of many exempt organizations during a time the need is much greater than anticipated. Take advantage of this opportunity to provide support for our citizens in need of these services and deduct up to $300 without itemizing your deductions for your 2020 income tax returns.

Individuals who wish to be generous in their contributions to exempt organizations can donate even more than the previously law allowed in 2020. Under prior law, the limit for cash donations was increased from 50% to 60% of the taxpayer’s adjusted gross income. The CARES Act suspends the limit of 60% and allows you to contribute 100% of your adjusted gross income to qualified exempt organizations. This provision of law was intended to help the funding shortfalls of the exempt organizations during the pandemic. The suspension applies to cash contributions only (of course, a check or other forms of cash will suffice) and not to contributions of property. Let’s support these organizations that provide a substantial service to our communities!

Lastly, join me in taking the necessary actions to eliminate or thwart the spread of the virus. Each of us has a responsibility in our community to do our part. Adhere to the three “W’s”: Wear a mask, Wait for six feet in distance between you and others in small gatherings to avoid close contact and Wash your hands. All people, including our friends in other countries, should care for one another and work together to rid our world of this deadly virus.