Stay-at-Home-Parent-300x231When many couples have children, they fully expect to return to work after a few months off. However, when they see the costs of daycare, they re-evaluate leaving their child, or children, all day long to be raised by someone else. For some, the cost of not being with their kids all the time is more than just the money. So the decision is made to become a stay-at-home parent.

Before that goes into effect, however, there is a lot of planning that needs to be done. Your accountant in Billings, MT explains the financial impacts of being a stay-at-home parent.


Income of a Stay-at-Home Parent

It goes without saying that becoming a stay-at-home parent will cause one income to disappear. But there are other considerations as well. Let’s suppose that both you, and your spouse, were earning $3,000 per month take home pay. Your income won’t exactly be cut in half if one of you decides to stay home. After factoring in a reduction in expenses (like commuting, eating lunch at a restaurant, work clothes, etc.) you might only see a reduction in pay of about $2,500. But don’t expect expenses to drop.

Expenses as a Stay-at-Home Parent

When the kid, or kids, are still small (under about 10 months old) expenses are minimal. Most of the clothes are hand-me-downs, good is breast milk or formula, there are no special activities, play dates, or outside expenses.

But as the children get older, household expenses go up. Clothes and toys get more expensive as time goes on. Daytime activities that help both parent and child maintain their sanity accumulate bills. If you are going into being a stay-at-home parent, you can reasonably expect life to get more expensive instead of cheaper.

Investing as a Stay-at-Home Parent

Before you left your work to stay home and raise children, you were likely investing in a 401k (or something similar). Your retirement planning was based around the two of you working. Now that you’re home, those investments have ceased.

If you still want to retire on time, you still need to invest.

Fortunately there are ways for you to do so. As a stay-at-home parent, you could freelance, or earn money on the side. This will give you a taxable income, and allow you to contribute to your IRA (up to $5,500 in 2015). The alternative is that your spouse can contribute to a spousal IRA for you.

How to Overcome these Impacts

Having a baby brings about huge changes in your life; even if both parents continue to work. Making the commitment to being a stay-at-home parent brings even bigger changes. Fortunately, there are ways to make the transition easier.

Practice – Before the child comes, practice living off just one income. Take 100% of the money that the future stay-at-home spouse makes, and stash it away into a baby fund. This will help in two ways. First, you will see how much you need to cut back in order to make things work. And second, it will provide a nice buffer in case you have unexpected expenses pop up (by “in case you have” we mean “when they do come because they most certainly will come”).

Flex – Having a child is a time to practice flexibility. You have to be able to adjust to the baby’s schedule. Adjust to baby activities. Adjust to finding free activities that are fun, healthy, and enriching for the child. Sometimes a day at the park is worth far more than an expensive trip to a museum, aquarium, movie theater, or anywhere else.

Relax – Living on less is only temporary. When the child is older, and in school, you can go back to working (at least part time). This will help relieve the financial burden that you experience now. It’s only temporary, so take time to enjoy life as it happens.

Practical Taxes can Ease the Transition

Fortunately, the government does provide tax breaks when it comes to having children. In order to maximize those breaks, you need an accountant that understands them, and will work hard to make sure that you are getting the biggest refund possible.

Instead of trying to do your own taxes, let us do them for you! You can spend more time with your children, let a professional accountant handle your tax return, and get a larger refund than if you were to do everything yourself.

Call us at 406-894-2050 to schedule an appointment.

Christmas-Debt-298x300Christmas is only a few weeks away. If you haven’t done any planning yet, you better get a move on soon! Otherwise, you’re likely to fall into the trap of overspending. Keep in mind, we’re not just talking about money here. When you don’t plan and organize, you not only spend more money than you intend to, you also end up spending more time and effort.

It’s not that we don’t think that Christmas is supposed to be a time of giving. It’s simply that the Christmas season should be a haven of happy memories, and not a cause of stress, anxiety, an empty wallet, and a lean bank account.

To make sure that this Christmas will be the joyous occasion that it ought to be, your accountant in Billings, MT offers a few tips to help with your gift-giving plans.


Save on money this Christmas

Make a list – Before doing any shopping, make a gift list, as well as a card list. This will ensure that you do not overlook anybody, risk hurting someone’s feelings, or go on a last-minute (usually over-budget) shopping rush.

Set a budget – One of the most logical ways to avoid overspending is to come up with a budget, and stick to it no matter what.

Come Up with a Theme – Especially for those you are unsure of what to get for Christmas this year. Having a theme might make gift-picking a little bit easier and likely more cost-effective too because of the possibility of buying in bulk or volume.

Bring out your Creativity – With so many DIY tutorials, finding a gift that you can do yourself is no longer a daunting task. More than just saving on cost, sometimes a personalized gift can turn out to be the most special because it speaks volumes about how important the recipient is to you that you were willing to spend extra time to make the gift, instead of simply buying it.

Make the most of Black Friday and Cyber Monday – Black Friday and Cyber Monday are undoubtedly the best sales events of the year (The time between Black Friday and Christmas makes up over 30% of some store’s annual revenue). Maximize your savings by buying at least half of your gifts during these events. While you’re at it, why not treat yourself to great deals as well?

Save on time and effort

Embrace e-Commerce – Gone are the days when shopping requires a trip to the mall. With the advent of online shopping, life has become made so much easier. No need to dress up, drive through traffic, fight over parking space, and face the overwhelming holiday shopping crowd. Instead of physically going from store to store, try browsing through different online stores instead, and shop from the comfort of your living room.

Go out on Weekdays; Stay Home on Weekends – Spare yourself from the usual weekend rush. Do your mall shopping during the weekdays, and use the weekend for what it is made for rest and relaxation.

Wrap Gifts Immediately – Instead of completing your gift list before wrapping, why not wrap immediately after buying? Try it and you’ll soon realize that it’s actually faster, easier, and less tiring compared to marathon gift wrapping.

Plan Now to Save on Christmas Shopping

Start with your Christmas planning now, while there’s still plenty of time. And remember, as cliché as it may sound, when it comes to giving, it’s still the thought that counts, and not the price. So let the Christmas season bring out the best in you, without having to overspend on anything.

If you do get in over your head, don’t worry, you’re not alone. Millions of Americans will overspend this year. Just make a plan to get out of that holiday debt. One way is to maximize your refund. Practical Taxes can help you get that refund.


Tax-Credit-300x215Most people want to reduce their tax bill as much as possible. So they look for all of the tax deductions that they can find. While this is a great way to lower your taxable income, to really look for a reduction in your tax bill, you want to look for all of the tax credits that you can find.

If you are working on preparing your taxes, and you are wondering the difference, don’t worry. Most people we talk to only have a little bit of an idea of what the difference is between a tax credit and a tax deduction. Keep reading as your accountant in Billings explains.


What is a Tax Deduction?

Every year, when you file your taxes, you have to report how much income you made. Most of the money you make is subject to taxes. But the government does allow you to reduce the amount that you report when you have spent that money elsewhere. These tax deductions lower the amount of money that you have to report, and subsequently lower your tax bill.

For instance, if you spend $2,500 on property taxes in any given year, the government doesn’t want to tax you again on that money. So you can deduct the amount spent on property taxes off of your taxable income.

Assuming that you are in the 25% tax bracket, deducting that $2,500 will lower your tax bill by $625.

What is a Tax Credit?

Tax credits are far more valuable than tax deductions. In order to encourage people to pursue more education, adopt children, and a variety of other pro-social activities, the government offers tax credits. These credits will lower a person’s tax bill dollar for dollar.

For instance, let’s suppose you spent $2,000 on tuition to earn your degree this year. That’s good for the economy, good for you, and good for everyone all around. The government wants to make sure that you’re not being taxed on that $2,000, and because they’re so generous they actually want to reward you. You can claim the American Opportunity Tax Credit and receive a credit toward your tax bill.

Regardless of which tax bracket you are in, a credit worth $2,000 will lower your tax bill by $2,000.

How to Maximize your Credits

If you’re wondering how to do your own taxes, and maximize your refund, then you need to pay attention here. Maximizing your credits will go the furthest to offsetting your tax bill.

To reduce how much you owe in taxes the most, you need to be aware of which credits are available to you. Here are a few that you may be able to claim:

Naturally if you are working with an accountant, such as one of the professional’s at Practical Taxes, then they will automatically check to see if you qualify for one, or more, of these credits.

Let Practical Taxes help find Tax Credits for you

There is no need to slog through your taxes every year. Instead, an accountant at Practical Taxes can take care of all of the tax preparation work for you. You bring in your documents, we find you the biggest refund possible, and you only have to worry about collecting your check from the government. It really is that simple.

Want to learn more about how we can help save you a lot of time and money? Give us a call at 406-894-2050 and learn about our tax preparation services in Billings, MT.


If you are a business owner then you are always on the lookout for how to run a better business. You want to have a clean and fluid business that can operate without you. You want to be able to take a vacation and know that when you return, there won’t be a pile of work for you to get done. But you wonder how can that can even happen? You’re scraping by now and can only dream of those days.

It all starts with taking small steps. Let your accountant in Billings, MT explain the three steps it takes to run a better business.

Invest in Your Presence

There are two different types of marketing out there: branding and marketing. Branding is letting people know who you are; marketing is letting people know what you sell. Many businesses skip the first step, and jump right into the second step.

Before you can sell a product to your customer, your customer needs to be familiar with your face. Let’s look at it this way. You need life insurance and the only two companies that you can find are MET Life and XYZ Financial. You have seen the Snoopy commercials, you know “Get MET, it Pays”, and you’re familiar with the brand. XYZ Financial says they offer a premium product for 20% less than MET Life offers. Who do you choose? Most people will go with MET because they trust the brand (although they know nothing about the brand other than they have heard the name often).

As a business owner, you want your name to become a household name (Coca-Cola, Kleenex, Apple, Toyota, etc.). When people already know your name, then they will be more likely to buy your product.

Sell to Your Customer; Not to You

A good sales person knows this rule of sales: make it all about the customer. Don’t tell them what you have to offer, tell them how you can solve their problem.

accounting services billings mt

Often we hear sales pitches that go like this: “We have the best product on the market. Through years of research and development, we have developed a product that blows away the competition. Our product is ranked better than 98% of all others out there, and our sales show that we are the best!”

Nobody cares. The customer wants to hear a pitch like this: “Are you tired of [xyz]? 98% of our customers report that [product name] has helped them. Don’t suffer any more, try us today. If it doesn’t work out, we have a money back guarantee.”

See the difference? The first pitch is all about how great the product is. The second is all about how the product helps the customer.

Meet the customer’s needs, and the sale will make itself.

Get Organized

One of the biggest business killers is lack of organization. If you want to run a better business, you have to invest time (every single day) into staying organized. Doing so will help ensure that you will remember to reply to all of those emails, return phone calls, and get everything done.

Look at it like this. Suppose you remain unorganized. Every morning, before you get any work done, you have to spend an hour remembering where you left off the day before, figuring out what project you are working on, and de-cluttering your desk. Now let’s suppose you spend 15 minutes at the end of every day organizing for the following day. Now you have that entire hour at the beginning of the day (when you are fresh and thinking clearly), to get as much accomplished as possible. You can run a better business with ease because you gave yourself a boost.

Let Practical Taxes help you Run a Better Business

As a business owner, you have a lot on your plate. You have work to do, prospects to follow up with, and phone calls to return. The last thing that you want to do is worry about your taxes and payroll. Don’t muddle through doing your own taxes, leave them to us!

We offer affordable tax preparation services here in Billings, MT. We spend our time on your taxes, so you can spend your time learning how to run a better business.

castle-780982_1920-300x225Estate taxes are often referred to as death taxes. It seems that no matter what is going on, the government wants to get a piece of the pie. So when you pass away, if you have a large enough estate, there may be taxes that are owed. On top of that, there are inheritance taxes to be worried about. So how do you know the difference, how much you will owe, and what to plan for? Keep reading as Practical Taxes, your accountant in Billings, explains the difference between estate taxes, inheritance taxes, and who needs to worry about them.


Federal Estate Taxes

A few years ago, understanding estate taxes was a pain. There was a set amount that would be excluded, and that number stayed the same for a decade. After 10 years it needed to be adjusted for inflation, but congress was trying to decide what to do. There was a fear that it would reset, and anyone that died during the reset period would be subject to massive taxes.

Fortunately that has been figured out, and the estate tax exclusion now adjusts annually. For tax year 2015, your assets can total $5.43 million before you owe taxes. That means if your assets total $5.45 million, you only owe federal estate taxes on $20,000. Current estate tax rates are between 35% and 45% depending on your situation.

If you are fortunate to have an estate larger than the exclusion, and thus you will have to worry about the taxes, pay attention to the name of the tax. Estate taxes are paid by the estate before money is distributed to the heirs. The government doesn’t care if those assets are tied up in real estate either. The estate will have to raise the money any way possible to pay the tax.

State Inheritance Taxes

Fortunately there are only 15 states (and D.C.) that have an inheritance tax. Montana is not one of them. But in case you have two residences, pay attention.

State inheritance tax varies by state. There are different exclusions, different tax rates, and different provisions. Since Montana isn’t included, we won’t go into any details; but we can discuss it with you if your situation calls for it.

Just as estate taxes are paid by the estate, inheritance taxes are paid by the heir.

How to Avoid Estate Taxes

There are a couple of ways to avoid estate taxes. One involves reducing the size of your estate, the other actually involves increasing the size.

Reducing the size of your estate – The only true way to completely avoid estate taxes is to have an estate smaller than the exclusion of $5.43 million. However, rapidly reducing your estate is tough since you can only give away a certain amount every year. You can give $14,000 each year to anyone and avoid gift taxes.   So if you have 10 grandkids, you can move $140,000 out to UGMA or UTMA accounts. You can move money out by donating to charity, or setting up an ILIT.

Increasing the size of your estate – Moving money into an ILIT will actually increase the size of your estate. Let’s suppose your estate is worth $6 million. You start an ILIT (the trust owns the insurance, the estate is the beneficiary) and give the trust $14,000 per year to pay the premiums. Suppose the death benefit is $4 million, your estate (at the time of your death) will be worth $10 million. The benefit here is that even though you owe taxes on the additional value; it is all paid with liquid money that comes from the life insurance.

Let Practical Taxes Help with Your Estate Planning

If you have estate planning needs, Practical Taxes can help. We can work closely with your attorney, your financial advisor, and you to draw up these plans. We will help you plan for your estate taxes, or help you avoid them if we can legally make it happen.

If you don’t have estate tax issues, we offer affordable tax preparation services in Billings. Give us a call at 406-894-2050 to learn more and to schedule your appointment.


Tax-Documents-300x200Freelancing has taken off in popularity in recent years. It’s easier to find the jobs with the help of the internet, wages have been stagnant for quite a while, and the idea of earning a few hundred to a few thousand extra dollars each month is appealing.

What happens, however, is that many people begin freelancing without taking into consideration the effect that it will have on their taxes. There is nothing wrong with bringing in money on the side, and you don’t have to be set up as a business to do it. But you do need to make sure that you are keeping track of your income, and know just how much you will pay in taxes come tax season.

Taxes as a W2 Employee

When you are an employee, you get the benefit of having taxes automatically taken from your paycheck. While many people hate this, claiming it’s a free loan to the government, it’s actually in your best interest.

Your employer pays a portion of your taxes for you. Legally they have to pay half of your FICA taxes, as well as provide worker’s compensation insurance, and submit your taxes without charging you. In the end, you get the better end of the deal.

That’s not the case as a freelancer.

Taxes as a Freelancer

Your taxes as a freelancer are going to look vastly different than your taxes as an employee. And there are several reasons for that.

No Withholdings – As an employee, a portion of your earnings are held back. As a freelancer, you don’t get that option.

100% FICA – As an employee, your employer pays 7.65% of your FICA taxes. As a freelancer, you are responsible for the full 15.3%.

Self Employment Tax – If you’re confused about the FICA portion above, don’t worry. As a freelancer you pay self employment tax; it’s just paying the employer share of FICA taxes.

Without regular withholdings, and having that extra 7.65% included in your taxes, your tax bill can add up quickly. Especially if your freelancing brings in a lot of money.

But there is a silver lining. The self employment tax is deductible from your income. And being self employed you can write off a significant number of things: such as a portion of your cell phone bill, some of your utilities, mileage getting to and from meetings with clients, supplies, and more. Keep accurate records, save receipts, and don’t try to cheat the system or an audit might not work out well for you.

So what will your taxes as a freelancer look like?

First you need to estimate your total household income. Let’s suppose it is $50,000 plus $12,000 you make from freelancing. Using Bankrate’s income tax calculator, we see that you owe $11,290 (after standard deduction and writing off the employer half of FICA taxes). Without the freelancing income, your tax bill is $6,806 (not including any deductions you may have made for business expenses).

Earning $12,000 increased your tax bill $4,284. When it comes time to do your taxes in the spring, make sure you have figured your taxes as a freelancer.

Practical Taxes can Help

Fortunately, all you have to worry about is having enough in your savings account to cover anything that is owed when tax season rolls around. Leave the rest of it up to Practical Taxes, your accounting expert in Billings, MT. We know the laws, we know the rules, and we can help you get the largest tax refund possible. You work hard to earn extra income as a freelancer, don’t give all that money back to the government if you don’t have to!

Practical Taxes is located at 1503 13th St. West in Billings, MT. We can prepare your taxes, help with your bookkeeping, understand your taxes as a freelancer, and do payroll if you need it. Call us today at 406-894-2050.


Interest-Rates-300x212A few times every year the Fed gathers together. There are rumors that run rampant throughout the finance world that they are raising interest rates this time. So far every meeting has adjourned and the decision has been to leave interest rates alone. But they can’t stay down forever.

When interest rates start to rise, they can have some drastic effects on your taxes. Just how drastic? Read on to learn more about how rising interest rates can affect you.

Interest Rates and You

Every financial transaction that you make is affected by interest rates. From the cost of goods, to how much you earn on your investments, to how much you pay when you carry a balance on your credit card. For the consumer in debt, low interest rates are good. It means you get cheaper credit. For those who have a lot of investments, a higher is better. But if interest rates rise too fast, it can have some severe problems.

Most people think of interest rates and how they affect their loans. If interest rates drop, they can refinance and get a better deal on their loans. That means if you’re stuck paying 6% interest on your mortgage, and the Fed lowers interest rates another time, then you might be able to refinance at 4%. Over the life of the loan, that extra 2% can mean many thousands of dollars.

Interest rates also affect how much you earn when you put your money into savings. If interest rates are high, then you get a better return (many accounts were yielding 5 or 6% before the recession in 2008). That meant your money would grow a lot faster.

Investments in bonds are tied very closely to interest rates. Bonds are in essence giving a loan to a company. Suppose you buy a $1,000 bond with a coupon of 5% (basically it pays 5% interest). Every year the company gives you $50, and at the end of the term (usually 10, 20 or 30 years), you get your $1,000 back. If interest rates drop, and the company can now sell bonds for 3% interest, they will cancel your bond, pay you $1,000, and then sell a new bond to someone for cheaper. The bond market is much more complex than that, but you get the idea.

Investments in the stock market are also tied to interest rates, albeit a little more indirectly. If interest rates go up, stocks that pay dividends know that their dividends are going to have to go up in order to stay competitive. This means that the value of the stock itself will drop a little bit.

Rising Interest Rates and Your Taxes

There’s a quick rundown on how rates affect your investments, savings, and loans. But how do they affect your taxes?

Let’s look at each of those components and see.

Mortgage interest is tax deductible (to a certain amount). That means if you have an adjustable rate mortgage, you are probably paying really low interest right now. If interest rates go up, you will end up paying more in interest on your loan, and you will be able to deduct more off your taxes. Likewise if you take out a new loan, a rising interest rates will mean a larger tax deduction.

Interest earned on a savings account is taxable income. Let’s suppose you are currently earning .5% on $25,000 of savings. That brings in a whopping $125 per year. In a 25% tax bracket you’re looking at roughly $25 in taxes. Rising interest rates make that go up, and if your account starts earning 3.5% interest, you are now getting $875 each year in interest. That same tax bracket means you owe $175 in taxes.

If you have a bond that is paying a lower interest rate than what the market says it should, the value of the bond is going to go down. So if you try to sell your $1,000 bond on the open market, you may only get $850 for it because people know they can get a higher interest rate by paying full price. If you paid $1,000 for a bond, and you sold it for $850, you can deduct $150 from your taxes. Likewise, if you invest in a new bond, all interest is taxable (for corporate bonds at least).

Dividends collected from stocks are taxable. The more the stock pays out the more you pay in taxes. That one is pretty simple.

Practical Taxes is your Affordable Tax Preparer in Billings

Here at Practical Taxes we want to make sure that you know about your taxes. We will prepare your tax return, but we will also give you pointers on how you can lower your tax bill next year. Tax preparation is our specialty, but get in touch with us for all your accounting and bookkeeping needs. Just call 406-894-2050.

checklist-911840_1920-232x300You have probably heard the saying, “No one cares more about your money than you do.” No matter how much your financial advisor says they care, you care more. No matter how much your tax advisor says that they care, you care more. That is why you should make sure that your tax documents are in order, before you bring them in to Practical Taxes. After all, we can’t get you the deductions if we don’t know about them!

With a couple of months left in 2015, you have some time to get everything in order. After the calendar flips to January 1st, it’s too late to make donations to lower your tax bill. So now is the time to get it in order.

We have put together a yearend tax checklist for you so that you can make sure your ducks are in order, or your receipts, unless you have a duck business that is.


Year End Tax Checklist

The process is simple. Just go down the list, and determine if you need to change anything in these last two months.

Calculate Your Estimated Income – If you are on salary, this isn’t hard to do. You just have to take a look at your paystubs and see where you will land at the end of the year. In all likeliness you already know what it will be.

Estimate Taxes Paid – At the end of the year you will probably have paid some taxes already. Determine how much you have paid.

Calculate Your Tax Bracket – This isn’t too hard to do, there are many online calculators that you can use to figure out how much you owe in taxes.

Determine your Refund Amount – Or if you haven’t paid enough, determine how much you will owe.

Increase Deductions – You have 2 months to get your income down enough so that you won’t owe any taxes. This can be done through charitable giving, increasing retirement account savings, or otherwise reducing your income for the rest of the year. Keep in mind that your standard deduction for 2015 will be $6,300 ($12,600 for married filing jointly).

That’s all there is to your tax checklist. But it is easier said than done.

How Much to Donate?

Let’s suppose that you and your spouse make $100,000 per year for your combined income. This puts you square in the 25% tax bracket. You like the fact that you get more in each paycheck by minimizing your withholdings, so over the course of the year you only had $4,000 (each) withheld. You have no itemized deductions.

Using the TaxAct calculator, at the end of the year you will end up owing $3,444. You would rather not pay that, so you need to give to some charities or contribute to your IRA (or other qualified retirement plan). But how much do you have to give?

Until you give over the standard deduction ($12,600) it is better not to itemize. So your starting point is giving $12,600. If you maximize your deductions to $13,000, your tax bill lowers by just $100. You still owe $3,344.

Let’s suppose you make some sacrifices and you are able to get your deductions up to $20,000. You still will owe $1,881. Not nearly as bad much as $3,444, but still a big chunk of money.

In order to get your tax bill to $0, you have to reduce your taxable income by $32,501! For most that won’t be feasible in just two months.

This is why tax planning all year long is necessary, but a year end tax checklist is a start.

Practical Taxes can Help with Your Taxes

Practical Taxes provides affordable tax preparation services in Billings, Montana. If you are looking for an accountant to do your taxes, we are your resource. If you are wondering, “how do I do my own taxes?” we can help you out by taking away that burden. If you want to reduce your tax liability next year, come to us this year and we can give you pointers.

Schedule your appointment with Practical Taxes in Billings, MT by calling 406-894-2050.