How many of you build, track and utilize credit card points for personal benefit? It’s a great tax strategy (credit card point redemption benefits are currently tax free), AND it’s an added bonus when you have to pay one of the most dreaded bills of the year.

No matter how you file your income tax return—by mailing a paper copy or electronically—you can pay your taxes using a major credit card or a debit card online. Individuals can make these payments 24 hours a day, seven days a week, using certain cards as long as they follow the proper procedure.

There are actually several advantages when turning to a credit card to pay your tax bill:

  • Delay paying the actual cash for your taxes
  • Hopefully get a lower interest rate than the IRS would give you if you were on a payment plan
  • Avoid any penalties if you don’t have the cash and chose not to pay anything
  • and of course airline mileage or certain reward programs include cash back cards

There are only a couple disadvantages, such as the convenience fee charged by service providers (both for credit and debit card transactions) is not deductible and of course paying the interest is no fun and not tax deductible either.

Two companies, Official Payments Corporation and Link2Gov Corporation, are authorized service providers for purposes of accepting credit cards, and debit cards from both electronic and paper filers. The companies have their own fee schedules and provide internet payment services. You can use these companies to charge taxes to an American Express, Discover Card, MasterCard, or VISA card or BillMeLater account or pay using a debit card. If you file early, you can still wait until April to make the online payment.

You can use the above credit card methods to pay any tax due on your Form 1040, 1040A, or 1040EZ; individual estimated taxes; installment payments; payments with extension of time to file (Form 4868); trust fund recovery penalty; and Form 5329 (IRA taxes).

Be aware that also some states accept credit card payments of state taxes. The federal and state payments are not combined.

Before you use any of these programs, make sure you do your research on the fees, as well as any other potential pros and cons. Maybe paying your taxes could actually give you a vacation when it’s all over.

Mark J. Kohler is a CPA, Attorney, Radio Show host and author of the new book “The Tax and Legal Playbook- Game Changing Solutions For Your Small Business Questions” and “What Your CPA Isn’t Telling You- Life Changing Tax Strategies”. He is also a partner at the law firm Kyler Kohler Ostermiller & Sorensen, LLP and the accounting firm K&E CPAs, LLP. For more information visit him at

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I think most people dream of doing more charitable work and giving to others. It’s an amazing feeling to lift and bless another. For some, just donating some time and giving what they can financially is all they can do, and there is certainly nothing wrong with that. Oh, how the world would benefit if more of us could just do a little something more to help others in charitable ways.

But for others, their dream is a little more grand. Some have the goal to start their own charity. Create their own 501(c)3 or charitable organization. A project that they can control with a board of directors, have fundraisers and events, and maybe even do a little more to impact our society and those in need.

I’m writing this article for those ambitious souls that want to start a legitimate non-profit charity.

At it’s most basic level a charity begins as a corporation. It has articles, bylaws, minutes and most importantly an independent board of directors. The unique aspect to a non-profit corporation, is that there are no owners; no shareholders. That’s because there isn’t any ‘profit’ to distribute. The goal of the non-profit is to help the world be a better place and re-invest it’s profits.

First, the Bad News- the Regulations and Rules to Operating

Now it might seem that it’s pretty straight forward: make money, get donations, do something good to help the public, the end. However, with the IRS, and especially an entity where you don’t get taxed, nothing is ever easy. There are some important rules and regulations. Here are just a few to understand as you contemplate setting up a charity structured as a 501(c)3 non-profit:

  • The entity must show through its policies and procedures that it is serving the general public good in a specific way.
  • There can’t be any transactions with officers, board members, employees or related organizations where they receive excessive compensation, free services or benefits from the charity in an inappropriate manner.
  • The non-profit entity cannot participate in any political or substantial lobbying activity. For example, the entity can’t make contributions to political campaign funds or promote a particular candidate for office.
  • The charity is of course allowed to receive donations, but it can also sell products, rent property or perform services for compensation. However, whenever it earns this type of income ‘unrelated to its exempt purpose’, the charity actually has to pay taxes on that net-income (known at UBIT).
  • Yes, a non-profit can make money and it will have to in order to survive and carry out it’s purposes, but the funds (after any potential taxes) are reinvested to serve the charity.
  • Finally, although the non-profit is exempt from certain taxes, it still must file a federal tax return (so the IRS knows what is going on), and must also pay employment tax, excise tax, and potentially property tax or local taxes if they don’t obtain a specific exemption.

Now the Good News!!

Once you are up an operating, a non-profit can be an amazing entity to operate and be a part of. I have served on several 501(c)3 boards over the years and they are truly some my most fondest memories from being in business. Here are some of the ‘perks’ for lack of a better word:

  • Donors get a tax deduction for giving your organization money and you don’t pay taxes on the donations or grants you receive.
  • You and your board control how the funds are spent and distributed to the public purpose of the charity. For example, you may not have been pleased how your money was spent when you donated to the college, the hospital, United Way or even the Salvation Army. However, with your own non-profit you make the calls and decisions (with your board) regarding how the money is spent and invested for the charitable purpose.
  • Your non-profit entity may get special discounts from other for-profit businesses in the local area, and oftentimes benefits you would never get with your own business or as an individual.
  • You get to associate with people that may not normally give you their time or energy. When you direct or simply participate in a non-profit you will typically associate with more affluent or successful people (because they generally have the time and money to be involved). These relationships can bless your life personally, but may even improve your business or financial contacts.
  • Limited liability for directors, officers, employees, volunteers and members. This provides incentives to those asked to serve the organization on the board or as volunteers.
  • You get to be a part of amazing fund raising events, black tie affairs, publicity events, golf tournaments, and get to work with the media, public officials and often times celebrities.
  • Bottom line, you help people. You make the world a better place and it changes you. It makes life more tolerable and down right special at times. It certainly can give you meaning in life.

How Can I get Started Now?

We are constantly helping many of our clients set up their own 501(c)3 non-profit charity. It’s affordable, taking into account the enormous amount of paperwork and time to get it approved (approximately $3,000+ filing fees)…and better yet, the organization can reimburse you for the fees to set it up with donations it receives now or in the future.

Here is some of the information we typically ask for at the outset of setting up a charitable organization and will certainly get the set-up process well under way:

  • A name for the organization, and the company address and contact information typically needed to set up a standard corporation.
  • At least 5-7 members to serve on the Board of Directors. We’ll need their addresses, social security numbers, titles and the role they will play in the organization.
  • Your mission statement, charitable purpose and goals for the company.
  • How you plan to raise money and a tentative budget for the first 3 years.
  • Your URL and Website should be set-up to reflect the information above and be a direct reflection of your goals and your application to the IRS.

As you can imagine, there is a lot more to it than that, but the law firm you work with for the set-up of the organization should provide multiple phone calls and consultations to help you through the process and answer all of your questions. We even start out with a 2-3 page Memo of all the information we will need and direction on how to start operation your charitable organization.

In sum, I just want to say that if you have this dream to start a non-profit, please don’t give up on it. If it was easy everyone would do it. Sometimes your greatest legacy can be what you do for your fellow man or woman and helping lift another in need.

Mark J. Kohler is a CPA, Attorney, Radio Show host and author of the new book “The Tax and Legal Playbook- Game Changing Solutions For Your Small Business Questions” and “What Your CPA Isn’t Telling You- Life Changing Tax Strategies”. He is also a partner at the law firm Kyler Kohler Ostermiller & Sorensen, LLP and the accounting firm K&E CPAs, LLP. For more information visit him at

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As I am now a parent with three kids in college, this topic has never become more important to me than it is now. Yes!! I have written on this topic for many years, but I certainly want to take it to a whole new level. I apologize for the self-serving article, but I hope it will many of you now and those planning for your children’s college education in the future.

Let’s break this down into three distinct groups. 1) Those already stressed out and having to deal with paying for a student in college now; 2) Those of you who are already paying back student loans and are hoping for a write-off; and 3) Those of you that have the luxury of a few years before a child goes to college and don’t realize how fast it is coming.

Each one of these groups has options, but needs to plan carefully and strategically with their CPA and Financial Advisor.

1. Those with Kids in College NOW! You have 4 Options and yes, I feel your urgency and you obviously are the group that needs to the most attention. Let’s hit your options first.

  • American Opportunity Credit. This credit, originally created under the American Recovery and Reinvestment Act, is still available for 2015. The credit can be up to $2,500 per eligible student and is available for the first four years of post secondary education at an eligible institution. Forty percent of this credit is refundable, which means that you may be able to receive up to $1,000, even if you don’t owe any taxes. Qualified expenses include tuition and fees, course related books, supplies and equipment.
  • Lifetime Learning Credit. In 2015, you may be able to claim a Lifetime Learning Credit of up to $2,000 for qualified education expenses paid for a student enrolled in eligible educational institutions. There is no limit on the number of years you can claim the Lifetime Learning Credit for an eligible student.

Warning-You can claim only one type of education credit per student in the same tax year. However, if you pay college expenses for more than one student in the same year, you can choose to take credits on a per-student, per-year basis. For example, you can claim the American Opportunity Credit for one student and the Lifetime Learning Credit for the other student.

  • Make Your Child a Sub-Contractor. If you own a small business, this is one of the best strategies you have at your disposal. Expand your business to the town where your child is going to college, put them on the board of directors, give them specific marketing duties in the business…bottom line…get them legitimately involved in your business. THEN, you can pay them a 1099 (since they are probably over 18, unless you have a child genius) and your child now has their own small business and you get a killer write-off in your business. They can use the funds for college expenses and if they have taxable income they are surely in a lower tax bracket than you. Some interesting side benefits- Your child may learn entrepreneurship, build credit, file a tax return, learn money management and maybe, just maybe realize they aren’t getting a free ride for educational expenses. However, there are still a couple drawbacks. First, the child may now have to pay or deal with SE tax themselves, and again, once their taxable income exceeds $6,300 (in 2015), they are paying income taxes themselves (albeit at probably a lower rate). Is it worth the work and does it pay off? Run the numbers…until you do, you will never know
  • Put Your Child on Payroll and consider a 127 Plan. In a 127 Plan (as it’s called), an employee’s gross income and wages do not include amounts paid or incurred under an employer’s qualified educational assistance program. The first $5,250 of qualified educational assistance provided during the calendar year under a Section 127 plan is exempt compensation for federal income tax, social security and Medicare tax (FICA), and federal unemployment tax (FUTA) purposes. This also includes graduate courses.Sounds great, but there’s one major problem, you can’t hire your kids in a sole-proprietorship, S-Corp or LLC and set up a 127 Plan for them. Moreover, the plan must meet an eligibility test, and no more than 5% of the benefits during the year may be provided to more-than-5% owners (or their spouses or dependents).

    Thus, you end up having to use a C-Corporation, and surprisingly you are good to go with children 21 and older! But, of course the inherit problem with a C-Corp is that we need to make sure we zero out the income so we don’t have the double tax problem. Thus, it requires an “additional entity” for my clients. We still want to run their primary business through an S-Corporation and take care of SE Tax planning strategies, and avoid the dreaded double tax (corporate tax) at the same time. BUT, in some situations, in some states, having a C-Corporation could be a great fit to shelter some additional income for education expenses, and maybe even through in health care for good measure.

2. Those Out of College and Paying down Debt

  • Student loan interest deduction. Not many options here. Generally, personal interest you pay, other than certain mortgage interest, is not deductible. However, you may be able to deduct interest paid on a qualified student loan during the year. Regrettably, you can only deduct up to $2,500, but still allowed even if you itemize deductions. Other than this minor deduction, if you are paying back your own debt, it will sadly be with after tax dollars.
  • Make Your Child a Sub-Contractor. If you’re helping your child pay down some student debt, and they are in a lower tax bracket than you…run the numbers. See the details above and take a tax deduction if they are legitimately working in your business and you can shift the income into their tax bracket. The moral of the story- keep your school debt down and settle for a lesser quality university if necessary, maybe even a community college first and then transfer to a major university.

3. Those ‘Thinking about’ Saving for College for their Minor Children

Lots of options here. I suggest you consider implementing 2 or 3 so you are tackling the project from several angles.

  • Scholarships and Grants. This method of saving for college is of course the most preferential and beneficial for the family. However, this is the most unpredictable and unreliable option. This is an important area for a family to research and understand, but should not be solely relied upon as the primary source of paying for future college expenses.
  • Family Investment Account. This is simply a financial account or combination of accounts, such as CDs, Savings account, Stock Brokerage accounts, or Mutual funds maintained for the purpose of paying for the future education of your children. These would be an account(s) owned and maintained by Mom and/or Dad. This is certainly a good first step in saving for the future education expenses, however is the least tax preferred. The income from the accounts would be taxed to Mom and/or Dad on their personal return, with no deferral of taxes. The benefit is that Mom and/or Dad has complete control of the account, it’s liquid and Mom and/or Dad could use the money at anytime without penalty for anything they see fit.
  • Real Estate Project. This strategy is fairly straight forward and similar to the Family Investment Account set forth above. It is essentially making the effort to undertake and/or designate a specific real estate project from which the profits will be used for future education expenses. The good thing here is that it forces Mom and/or Dad to commit to a project that is more difficult to exit until the specified time in the future. The con is just that, it is a less liquid investment. Although, the gain/appreciation may grow tax free, it is ultimately not tax preferred for education expenses when its time to exit the project.
  • UGMTA Account. (Otherwise referred to as Uniform Transfers to Minors Act (UTMA) or the Uniform Gifts to Minors Act (UGMA)). In my opinion, this has to be one of the worst methods to save for college education. This is an account that is generally taxed as income to the child, however, because it will create unearned income and would be subject to the onerous “kiddie tax.” Essentially, the Acts allow a person to fund an account for a child, but limit that child’s access to the account until the child reaches the age of majority. The age of majority is set by state law and typically ranges from 18 to 21. In general terms, an account established pursuant to UTMA or UGMA is a type of custodial account. The child is the account owner, but the parent (or other adult) is named as custodian. The custodian controls the account until the child is no longer a minor. At that point, the custodial relationship ends and the child controls the account.
  • Coverdell Education Savings Account (formerly referred to as an Education IRA). These accounts have several significant benefits and only one major drawback. The beauty of these plans is that they grow tax free and come out tax free for qualified education expenses. The can even be “self-directed” similar to that of a retirement plan and invest in real estate or make loans to 3rd parties. The major drawback is that the maximum annual contribution is limited to $2,000 and the income of the parents creates a phase out rule that may even limit the $2,000 even further. Your contribution goes into an account that will eventually be distributed to your child if not used for college. You cannot simply refund the account back to yourself like you can with most 529 plans. This means you lose some degree of control. The ESA is on equal footing with the 529 plan when applying for federal financial aid. The account is considered an asset of the account custodian, typically the parent. Withdrawals are not reported as student or parent income as long as it is tax-free for federal income taxes. Coordinating withdrawals with other tax benefits, especially the Hope or Lifetime Learning credits, can be tricky. The account must be fully withdrawn by the time the beneficiary reaches age 30, or else it will be subject to tax and penalties. Before embarking on an ESA, make sure to consult with your tax professional and understand all of the pros and cons of establishing and maintaining such an account.
  • Prepaid Tuition Plans. These are a fairly recent phenomenon and come in two forms. The first are those plans provided directly by a college institution and generally allow a parent to pay for their child to attend the college at the future, but pay for it at today’s tuition costs. The second is more common and is generally referred to as an Independent or Pre-Paid 529 Tuition Plan. It is more of a ‘funding mechanism’ that allows families in any state to pay today’s tuition prices for future tuition bills at more than 250 participating private colleges. Both types of prepaid plans come with some major drawbacks. First, these plans obviously substantially restrict school selection. Although refunds may be available, if your child is attending a school not covered by the plan, there are no guarantees that the amount you have set aside in your prepaid plan will cover the school’s costs. In many cases, it won’t even come close. Another problem with these plans is how they could affect your child’s financial aid. Right now the financial aid treatment is in flux. Currently, distributions from these plans are often treated as an “outside resource” of the child which means the distribution is treated much in the same way a scholarship would be. In effect, your financial-aid need could be reduced dollar-for-dollar.
  • 529 College Saving Plans. Of all the plans, this is probably the most powerful. Principally, because families can contributed significant amounts (far more than the Education IRA) and there are no limits imposed based on the income tax bracket of Mom and/or Dad. College savings plans generally permit a college saver (also called the “account holder”) to establish an account for a student (the “beneficiary”) for the purpose of paying the beneficiary’s eligible college expenses. An account holder may typically choose among several investment options for his or her contributions, which the college savings plan invests on behalf of the account holder. Investment options often include stock mutual funds, bond mutual funds, and money market funds, as well as, age-based portfolios that automatically shift toward more conservative investments as the beneficiary gets closer to college age. Withdrawals from college savings plans can generally be used at any college or university. Investments in college savings plans that invest in mutual funds are not guaranteed by state governments and are not federally insured. Many plans have contribution limits in excess of $200,000. No age limits. Open to adults and children. The 529 Plan is generally sold through a financial advisor who can explain more of the details before you embark on this type of plan.
  • Educational Trust. This is not a structure that saves taxes, but is trust that is designed to hold the tax preferred investments for the future education expenses of your posterity in perpetuity. This means you can set up an irrevocable trust that generally doesn’t pay taxes (because it holds accounts that grow tax free for education expenses), you can designate back up trustees to manage the trust after your passing, and if your children don’t use the money for education expenses, the monies are held in trust for the next generation’s education expenses. This is a wonderful tool to educate the “family” for many generations to come.

As a fellow parent with college age children, I certainly understand the pressure and stress college expenses can put on a family. I strongly encourage you to study the options above and see if they could possibly work in your situation. Discuss these options with your tax adviser and stay tuned for additional upcoming articles and radio shows on the topic.

Mark J. Kohler is a CPA, Attorney, co-host of the Radio Show “Refresh Your Wealth”and author of the new book “The Tax and Legal Playbook- Game Changing Solutions For Your Small Business Questions” and “What Your CPA Isn’t Telling You- Life Changing Tax Strategies”. He is also a partner at the law firm Kyler Kohler Ostermiller & Sorensen, LLP and the accounting firm K&E CPAs, LLP. For more information visit him at

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By Cicely Wedgeworth of


The choice between solid hardwood floors and engineered wood planks can surprise homeowners when they first sit down with a contractor. What's the difference? Aren't all hardwood floors made from wood? Is there a better pick to ensure you get "real" hardwood floors?

Technically, both of these options qualify as "real" hardwood flooring, but they’re surprisingly different from each other.

Solid hardwood flooring

Solid wood planks are milled from a single piece of hardwood and covered with a thin, clear protective layer that often consists of aluminum oxide, ceramic or an acrylic substance.

Typically three quarters of an inch, the thickness of solid wood planking enables it to be sanded and refinished many times throughout the life of the floor.

Because the plank is a solid piece of wood, it will expand and contract in accordance with the home’s relative humidity. To prevent warping, the home’s interior relative humidity needs to remain between 45% and 65% all year round.

Solid hardwood flooring is available in a wide array of wood species—including oak, maple, and black walnut as well as regional-specific choices like pecan, mesquite and others. The market also sometimes offers exotic species of hardwood from Brazil, Africa and elsewhere.

A solid hardwood floor is permanently nailed to the subfloor. Because of the expansion and contraction issues, installers will normally leave a gap between the wall and the floor to accommodate swelling.This type of hardwood flooring should only be installed in parts of the home above grade and only over plywood, wood or oriented strand board (OSB) subfloors.

Engineered hardwood planks

Hardwood planks classified as “engineered” feature multiple layers (typically three to five) bonded together under extreme heat and pressure. You're still getting real hardwood floors; they're just made differently.

The layers typically include a top veneer of hardwood backed by less expensive layers of plywood—although some manufacturers use substrates made from recycled wood fibers mixed with stone dust for improved durability and stability.

Because of the way engineered hardwood is processed, it is not as affected by humidity as solid wood planks are. Therefore, the product is often the preferred choice for kitchens and bathrooms or in areas where the humidity level can vary—like in a basement or a part of the house below grade, as long as a moisture barrier is placed between the subfloor and the hardwood planks.

They are also better suited for installing over in-floor heating systems.

Engineered wood planks now are being created with a tongue and groove installation method, much like laminate flooring. This enables them to be installed in a floating floor format without nails or glue.

Engineered hardwood floors are suitable for installation on all levels of the home and over plywood, wood, OSB and concrete subfloors.

Which wood flooring should I choose?

Ultimately, your wood flooring choice is going to be determined by where you are planning to install the product and what you’re looking for in terms of design aesthetic.

If you’re installing hardwood flooring in a lower level of your home or in an area where moisture or high (or low) humidity might be an issue, then you’re going to want to stick with engineered hardwood.

On the other hand, if you are installing the new floor on an above-grade level and you want a traditional hardwood floor, then you can go ahead with solid hardwood.

Both types offer a beautiful finish and will increase the value of your home—as long as they are installed correctly and maintained properly over the duration of your ownership.

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By: Ingrid Case, October 25th 2017

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Single-family rentals — either detached homes or townhomes — are developing faster than any other portion of the housing market. These rentals outpace both single-family home purchases and apartment-style living, according to the Urban Institute.

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