Wednesday, April 16, 2014


The Search Monitor writes: Welcome to the Tax Day edition of the Search Monitor blog! We hope this is a day of celebration (refund)!
We decided to look at the two big players in tax filing and see how they have been preparing for the big day. We dove into our Lighthouse monitoring product–which focuses on competitive intelligence for 22 different verticals–and performed this analysis:
  • Looked at 8 popular keyword phrases about tax filing services
  • Looked at the run-up period before Tax Day, specifically March 8 to April 7, 2014
  • Looked at ads run on Google in the United States
  • Looked at two of the big players: H&R Block and TurboTax
  • Pulled the Rank Knockout chart, which shows the competitors that are knocking your site out of the ranking of your choice for a given set of keywords and time period
Our Hypothesis: H&R Block and TurboTax would be bidding appropriately to ensure very high visibility on these essential keywords. We thought one of the two would be ranked #1 for every one of our keywords. Also, when we polled our team of analysts,  a few respondents thought that TurboTax would out-rank H&R Block for terms around e-filing (i.e. digital terms), while H&R Block would rank higher on more general, offline terms.
OK, drum roll please!  Here’s what we found:
H&R Block vs. TurboTax for PPC Rank
Our color commentary:
  • H&R Block dominated the #1 rank for 3 important keywords. This included ‘efile’, which was contrary to our hypothesis that TurboTax would be owning this one. The other two keywords where H&R Block performed well (tax services and tax preparation) were more general terms, like we suspected. Kudos to H&R Block for owning those key phrases – they either had higher bids or had an amazing Ad Quality score. Ot a little of both.
  • For the keyword ‘file taxes’, the two industry leaders were about neck-and-neck. Notice how those two numbers sum to 100%, meaning that no other company made it to the top rank during this 30-day period.
  • TurboTax did not perform well for ‘tax software’, showing up as #1 only 20% of the time. This surprised us. Most of us thought that H&R Block was more well known for their in-office tax filing services and not their software.
  • We noticed how slight differences in keywords produced different results for ranking. Changing ‘file taxes’ to ‘filing taxes’ resulted in better ranking for TurboTax. The same scenario occurred when the word ‘online’ was added to ‘file taxes’. We’d love to hear your comments on this
  • Lastly, we love the Rank Knockout Chart. It’s a Search Monitor exclusive that shows anyone how they stack up against their competitors . If you’d like us to pull the report for a keyword set, just reach out or request a demo.
So, we actually won this battle? It’s tricky to say with just this data. We’d want to see metrics such as: which keywords had the most volume, which companies received more clicks, what the total spend was for each, and then ask each company what their total revenue and ROI was for this time period.
Our competitive ad monitoring tools can help with every data point on that list (except the last two).  :)
Posted on 11:54 AM | Categories:

'TurboTax for Cryptocurrencies' (BitCoin) -- Startup CoinCPA tracks all your coins everywhere, great for IRS compliance

Bitjuice Editor's writes: Ed & Ethan on Let's Talk Bitcoin called CoinCPA "the TurboTax for Cryptocurrencies." This startup answers the question "What's in my cryptocurrency Wallet?" Not only that, it will tell you what different crytocurrencies you have in multiple wallets, various exchanges, mining pools, giving you a breakdown in USD$ in a tidy spreadsheet. 
I spoke with co-founder Alan Walker of CoinCPA today. The genesis of this service grew out of frustration he and business partner Tron Black had in maintaining "monster spreadsheets" to track their multiple crytptocurrencies in all the different locations it was stored. As background, both founders are crypto­currency miners who own various currencies on different exchanges, have multiple wallets and belong to multiple mining pools.
As software developers and entrepreneurs, Alan Walker and Tron Black saw a need and had the skillset to develop a solution. In the process, they created a simple tool that makes it easy to track the location and value of all their funds in USD$. Using custom blockchain explorers (Bitcoin, Litecoin and Dogecoin) that refresh frequently, which keeps the balances up to date. While CoinCPA currently provides balances, in the near future it will also offer transaction data tracking. 
CoinCPA was launched April 7th at the Inside Bitcoin Conference in NY, and already has over 500 subscribers. There's a free account for those just getting started (5 wallets, 1 exchange, 1 mining Pool, support for Bitcoin, Litecoin, and Dogecoin). They also offer a premium account for as little as $2.99/month with Unlimited wallets, exchanges, and mining pools as well as support for over 80 altcoins. The payments can be made in bitcoin, calculated at the CoinBase spot price at the time of enrollment.
They don't take a position on IRS Tax compliance, but Tron said that for "those who choose to comply, CoinPay will be very helpful"
He explained the process: 
"You put in public key/address, your exchanges, it will figure out the value for you. We can go to the block chain and exchanges and mining pools and collect the data for you. We don't store any value, we just track it for you automatically." 
For those who want to track their funds in their own customized spreadsheet or google document, CoinCPA provides an API as well. With this powerful API, CoinCPA also welcomes developers to integrate into the tool to help bring even more value to their customers by providing real­time balance data into their applications.
While already supporting more than 80 cryptocurrencies, if one you want to track isnt' in the list, let them know. Alan said they don't make any judgements on the validity of an altcoin, they'll add it to the list if there is an API to integrate with their system. 
Their enhancement roadmap includes adding individual transaction tracking, cost basis reporting and profit/loss reporting. If you want to hear the CoinCPA segment on Ed & Ethan, it begins at the 28:40 mark.
Posted on 8:44 AM | Categories:

ETFs For Those Seeking Greater Tax Freedom

Gary Gordon for Seeking Alpha writes: A leading non-partisan tax policy researcher, The Tax Foundation, estimates that your first 111 days belong to the U.S. government. When the estimate includes the effect of federal borrowing, the date moves to May 6. In other words, you work for Uncle Sam in your first 125 days of a given year, while the remaining 240 belong to you.

The effect of federal borrowing cannot be understated. Right now, you work an extra 14 days to pay the interest on the country's debt. On the other hand, the Federal Reserve's zero-interest-rate policy coupled with quantitative easing ("QE") has kept the borrowing costs for the U.S. exceptionally low. If rates returned to "normal," the current 6.4% of tax dollars going toward interest on sovereign debt would likely jump to 12.5%. Instead of working until May 6 to reach "Tax Freedom Day," you may need to wait until June approaches.
Keep in mind, I haven't mentioned the probability that tax rates for families are likely to climb. Consider Congressional Budget Office (CBO) data that shows the trend of an increasing burden on the top 20% earners, not just the much-maligned 1%. The Wall Street Journal, citing the CBO data, explained that increased taxation of a couple with two children making more than $150,000 has jumped from 65% in 1980 to more than 90% by 2010.
Think increases in taxes will only hit the top 20% of income earning families? Then you must not be paying attention. Due to a lack of savings by "Boomers" and "Gen Xers," as well as an increasingly aging population and new entitlements, the U.S. will need to collect as much as 25% more tax revenue above the average percentage (17.4%) of gross domestic product (GDP). Yet half of Americans effectively contribute zero dollars to the present tax system. Indeed, one does not need to be psychic to foresee the onerous tax hikes ahead.
Granted, there are scores of legitimate ways to reduce a tax albatross. One family might look to shift some W-2 earnings to 1099 income such that the side business activity offers deductible expenses. Another family might move from a high-tax state to a lower-tax state. Still, are there ways that a market-based investor can reduce the number of days that Uncle Sam has commandeered?
The short answer is "yes."
Unfortunately, most people's imagination rarely moves beyond tax deferral in an employer-sponsored plan. Tax deferral is remarkably beneficial in compounding the growth of a portfolio. On the other hand, pushing one's tax obligation out into the future is not the same as shrinking it or eliminating it.
Enter the exchange-traded index fund. An ETF that tracks an established index does not distribute significant capital gains the way a traditional mutual fund might. For one thing, an index does not change very much, if at all. Without the need to change what the ETF holds, the lack of trading activity means there are less distributions to shareholders for tax consequences. Similarly, outflows force the sale of securities in mutual funds. The redemption process for an ETF is different than the process for a mutual fund whereby the ETF structure enhances tax efficiency.
According to a 2012 study at Morningstar, the five-year average distribution for a large-cap stock blend mutual fund was nearly 2%. ETFs? 0%. For one who might have $200,000 in large stock mutual fund exposure, that would be four thousand dollars in capital gains distributions annually. Five years of holding the large cap fund would cost $600 per year at a 15% capital gains rate for a total of $3,000. Simply selecting iShares S&P 500 (IVV) in one's brokerage account would eliminate the levy.
Outside of the stock arena, distaste for capital gains distributions morphs into disdain for the taxation of interest income. Those who find themselves in a very high marginal tax bracket might do well to skip straight to the no-tax world of municipal bonds. It is true that the rapid rise in interest rates that followed the Fed's tapering announcement in May of 2013 served to punish munis mercilessly. SPDR Nuveen Muni Bond (TFI) logged -3.9% last year.
However, last year's muni bashing created opportunity for those who wish to pursue income free from federal taxation. TFI quickly recovered a technical uptrend, already garnering 4.5% year-to-date. For an investor in the 35% tax bracket, the taxable bond equivalent yield is 4.0% - a return that simply cannot be matched by intermediate-term investment grade bond funds. Longer-term munis in Market Vectors Long (MLN) have also been winners.
Obviously, investing in anything for tax benefits alone is likely to bite in unexpected and undesirable ways. Nevertheless, one can consider the favorable spreads that munis offer the high marginal tax bracket investor. A fund that I like for taxable as well as non-taxable accounts is PIMCO Short-Term High Yield (HYS). It may offer a 4.3% yield with relatively low risk. Now consider Market Vectors Short-Term High Yield Muni (SHYD) with a projected 3.9% yield net of fees. In a 35% marginal bracket, a 6.0% taxable equivalent yield makes SHYD an attractive prospect.
Disclosure: Gary Gordon, MS, CFP is the president of Pacific Park Financial, Inc., a Registered Investment Adviser with the SEC. Gary Gordon, Pacific Park Financial, Inc, and/or its clients may hold positions in the ETFs, mutual funds, and/or any investment asset mentioned above. The commentary does not constitute individualized investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities. At times, issuers of exchange-traded products compensate Pacific Park Financial, Inc. or its subsidiaries for advertising at the ETF Expert web site. ETF Expert content is created independently of any advertising relationships.

Comments (2)
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  • Hi Gary
    I think you are confusing total return with yield in some of your examples.
    TFI yields roughly 2.45% in potentially tax free distributions.
    The fact it is about 4.5% up in TOTAL Return year to date does not mean that this is a tax free total return as most of it would be subject to tax (about 3.5% of the 4.5%) and only about 1% so far is considered as tax free distributions.
    Therefore, your taxable equivalent of 6.9% YTD is mistaken.
    15 Apr, 07:13 AMReplyReport AbuseLike0
  • Gary Gordon 
    Comments (142)
    Author’s reply » NYer1

    Thank you... you are correct about my mistake for the taxable equivalent yield for the 35% tax bracket. I had been hastily looking at numbers... and yes, for TFI with a 2.4% yield, the taxable equivalent is 4.0% annual, irrespective of cap app. It is not 6.9%, and I will remedy that in the article.


Posted on 8:36 AM | Categories:

Tax simplification: Intuit’s Position on How to Do It

M Runzlar for Intuit writes: Everyone agrees the U.S. tax code, weighing in at some 44,000 pages, and 4 million words, needs simplification. The question is how to do it.

Intuit has long supported a system of voluntary compliance, where taxpayers have a simple and easy way to file their returns, ensuring they receive all the money to which they are entitled. Others, including some media outlets, propose a so-called Ready Return model, where the Internal Revenue Service would both prepare and collect people’s taxes.

Intuit believes such a system minimizes the taxpayers’ voice and instead maximizes revenue collection for government. That kind of anti-consumer policy does not advance taxpayer rights, citizen empowerment or real simplification of the tax code.

Intuit CEO Brad Smith outlined the company’s position on tax simplification in a letter to U.S. Sens. Ron Wyden and Orrin  Hatch earlier this month. You can read the entire letter here.


Brad Smith 
President & CEO 

2700 Coast Avenue 
Mountain View, CA 94043 

April 4, 2014 

The Honorable Ron Wyden The Honorable Orrin Hatch 
Chairman, Ranking Member, 
Committee on Finance Committee on Finance 
United States Senate United States Senate 
Washington, DC 20510 Washington, DC 20510 

Dear Chairman Wyden and Ranking Member Hatch, 
I am writing on behalf of Intuit, the maker of TurboTax, to express our strong support for your 
objective of simplifying the tax code for the average American, a key component not only of basic tax reform, but also for strengthening the safety, integrity, effectiveness and fairness of the U.S.  income tax system. 

We have advocated for tax simplification reform for a decade, because while technology innovation has, and will continue to, deliver simplicity and burden reduction for taxpayer, the extreme complexity of the tax system today has become a risk to more than just the burden of compliance. 

Complexity works at cross-purposes to assurance of the integrity, safety and fairness of the tax 
system itself.  I testified before the House Ways and Means Committee in 2005 and called for tax simplification for  the average taxpayer. We offered the suggestion then, based on our taxpayer experience, that  streamlining and simplifying today’s myriad of tax incentives for education and retirement, as one  example of reform, could make a meaningful difference for the average taxpayer. There are other  such practical examples, including sorting out the multiple conflicting definitions of common tax  terms in different provisions of the Code, such as the definition of dependent child. Such complexity  creates confusion and makes tax compliance unnecessarily difficult for the average family. But we  believe tax simplification reform is important as well to strengthen the integrity and effectiveness  of the tax system in ways that would reduce both inadvertent error and the opportunities for  intentional fraud. Tax simplification reform would benefit both the tax system and the taxpayer. 

Simplification reform can also bring closer the day that data-driven innovation can deliver a 10 
minute tax return for the average American taxpayer, slashing compliance burden. The private 
sector technology industry, including Intuit, has already delivered critical inventions and 
innovations that bring that goal within reach today. But American ingenuity can do more. And tax  simplification reform can help. 

But simplification alone is not enough to fully strengthen and improve our tax system. We also 
believe that oversight and regulation of the tax industry is important to the public interest. We 
testified before the IRS in 2009 in support of a sound and thoughtful strategy for providing return preparer oversight, but at that time we also called for a parallel oversight initiative that would 
provide standards-based regulation of the software sector of the tax industry. A dozen years ago IRS Commissioner Charles Rossotti – with the partnership and support of many 
in Congress and on this Committee -- created an unprecedented public-private partnership 
initiative called the IRS Free File Program, which provides private sector donation of online tax 
preparation products and services to lower and middle income taxpayers at no cost to either the Government or the individual taxpayer. 

In more recent years the Free File Program was expanded,  due to Senator Schumer’s leadership, to include an electronic fillable forms utility that can be used  by all taxpayers, again at no cost to the public purse or to the individual user. And importantly,  these free online tax software services must all meet the standards-based rules and requirements  that were established with the IRS to govern their Free File Program. 
We have urged that the standards-based rules that IRS uses to govern Free File could point the way to a similar strategy model that could be applied to the tax products and services of the technology industry more broadly. We continue to believe this is a proposal that merits adoption by the IRS in furtherance of the public interest. 

We would welcome the opportunity to work with the Committee to explore these concepts more  fully, for both tax simplification reform and industry oversight, and to consider the most effective  ways to advance their adoption. The tax system will be sounder and work better as a result. But  we think there is still more that can be done to strengthen tax system integrity. 

The tax association, the American Coalition for Taxpayer Rights, ACTR, has proposed a series of technology measures which, taken together, could significantly tighten safeguards against identity theft and refund fraud in our tax system. Intuit testified on behalf of the Association before this Committee two years ago on this subject. The fact is that IRS and the Justice Department are already hard at work to stop criminals and safeguard honest taxpayers, and the industry is cooperative and supportive of these critically important law enforcement efforts. But there is even more that could be done to further strengthen the effort, as the ACTR association has urged, with the Government drawing on the best advice of the technology experts in the industry, and ACTR has shared these recommendations with IRS and the DOJ over time. We recognize that IRS is resource constrained, but would strongly urge that they prioritize those recommendations as quickly as possible and advance them to the implementation stage. 

Thank you for the opportunity to offer these thoughts and suggestions for the Committee’s 
consideration in your ongoing work, and in your Hearing this week. There is much work to be 
done in all of these areas of reform and improvement, and we want to support and assist the 
Committee in its vitally important work. 


Brad Smith 
President and CEO, 

cc: Members of the U.S. Senate Committee on Finance 

Posted on 8:23 AM | Categories:

It’s the busy season for tax preparation stocks like small cap JTH Holding Inc (TAX), mid cap H & R Block Inc (HRB) and large cap Intuit Inc (INTU), but which one has performed best for investors?

John Udovich for writes: April 15th is tax day and tax preparer stocks like small cap JTH Holding Inc (NASDAQ: TAX), mid cap H & R Block Inc (NYSE: HRBand large cap Intuit Inc (NASDAQ: INTU) help millions of Americans to figure out just how much they owe to “big brother.” But which of these tax preparation stocks is the best investment for investors looking for a way to offset that tax bite? First, here is a quick overview of each tax preparer:
  • JTH Holding Inc. Founded in 1997 by CEO John T. Hewitt, JTH Holding is the parent company of Liberty Tax Service - the fastest-growing tax preparation franchise with more than 4,400 offices and online. In fact, John T. Hewitt rang the NASDAQ closing bell on tax day this year. In mid March, JTH Holding reported that revenues for the three months ended January 31 had increased 8.3% to $40.7 million while US customers served during the calendar year through February 28, 2014 increased 7.7% (or 1,250,000 total returns processed in offices and online) with returns processed in offices increasing 6.1% to 1,148,000 and the number of returns processed online increasing 29.1% to 102,000thanks in part due to the acquisition of certain assets of an online tax preparation provider. Systemwide revenue increased 13.3% from the same period in the prior year while net income for the third fiscal quarter was $4.1 million verses $1.7 million. Finally, it should be noted that JTH Holding has a trailing P/E of 22.28 and a forward P/E of 14.75. On Tuesday, small cap JTH Holding rose 1.98% to $27.29 (TAX has a 52 week trading range of $15.22 to $28.00 a share) for a market cap of $356.29 million plus the stock is up 10.3% since the start of the year, up 60.1% over the past year and up 97% over the past five years.
  • H & R Block Inc. Founded in 1955 by brothers Henry W. Bloch and Richard A. Bloch, H & R Block prepares 1 in every 7 US tax returns plus over 11,000 company-owned and franchise retail tax offices worldwide which means the company has a retail office within 5 miles of most Americans. On April 10, H & R Block announced that H&R Block Bank had entered into a definitive purchase and assumption agreement (subject to regulatory approvals) with BofI Federal Bank to sell certain assets and transfer certain liabilities to BofI – a decision prompted by new rules that will impose higher capital requirements on savings and loan holding companies. The CEO noted:
"This is an important step in ceasing to be regulated as a savings and loan holding company, which we believe is in the best strategic interests of our company and our shareholders."
In early March, H & R Block reported earnings and noted that the delayed opening of IRS’s e-file system to January 31 resulted in revenue related to tax returns prepared but not yet filed totaling $277 million being shifted to the company's fiscal fourth quarter ending April 30. For that reason, revenues sank 58%, or $272 million, to $200 million while the adjusted net loss from continuing operations increased to $209 million due almost entirely to the timing shift in revenues. Otherwise, H & R Block has a trailing P/E of 33.97 and a forward P/E of 14.01 along with a forward dividend of $0.80 for a 2.90% dividend yield to help offset the cost of using a tax preparer. On Tuesday, mid cap H & R Block rose 0.43% to $28.16 (HRB has a 52 week trading range of $25.98 to $32.42 a share) for a market cap of $7.72 billion plus the stock is down 3.2% since the start of the year, down 1.5% over the past year and up 58.2% over the past five years.
  • Intuit Inc. Founded in 1983 and with flagship products like QuickBooksTurboTax and Quicken, Intuit helps customers manage their personal finances, run small businesses and pay employees. The company has approximately 8,000 employees with major offices in the United States, Canada, the United Kingdom, India and other locations. Back in mid February, Intuitreported that second-quarter revenue declined 12% to $782 million, reflecting processing delays and changes in the company’s tax offerings that will shift revenue into the third quarter, plus a net loss of $37 million verses net income of $71 million. Intuit also completed an accelerated share repurchase agreement to buy back $1.4 billion in shares in December 2013 (with approximately $2 billion remains on the current share repurchase authorization) plus the company raised its third-quarter earnings forecast thanks to strong demand for TurboTax in the US tax-filing season and said it aims to double the number of customers for its small business group unit - its biggest unit. It should be noted that the company gets most of its profit in its second and third quarters as Americans buy its software in the lead-up to the tax season while the first and fourth quarters are seasonally weak as its the tax filing off-season. Finally, it should be mentioned that Intuit has a trailing P/E of 28.71 and a forward P/E of 18.43 along with a forward dividend of $0.76 for a 1% dividend yield to help investors offset the cost of their software. On Tuesday, large cap Intuit rose 0.49% to $73.74 (INTU has a 52 week trading range of $55.54 to $82.40 a share) for a market cap of $20.89 billion plus the stock is down 3.7% since the start of the year, up 14% over the past year and up 165.9% over the past five years.
Finally, here is a look at the long term performance of JTH Holding, H & R Block and Intuit:
As you can see from the above performance chart, accounting and tax software maker Intuit has been the steady long term performance winner albeit JTH Holding has put in a rather decent show for the last two years and H & R Block has given a mixed long term performance.
Posted on 8:16 AM | Categories:

"Scribe Software Releases QuickBooks Desktop and SalesForce Customer, Order, and Invoice Synchronization v2.1 SolutionPak"

he QuickBooks Desktop and SalesForce Customer, Order, and Invoice Synchronization v2.1 SolutionPak is now available on the OpenMind Downloads page.

This SolutionPak enables you to easily integrate QuickBooks Customer, Address, Product, Sales Order, and Invoice data with SalesForce. The 2.1 version of the SolutionPak takes advantage of the new Lookup Block and Comment Block functionality that is now available in Scribe Online

You can download this SolutionPak and associated User Guide from the Scribe Products Downloads page.


Please note that Scribe's QuickBooks SolutionPaks were designed for and tested with the US version. The QuickBooks Desktop connector also supports the UK version of QuickBooks, and you may want to use the SolutionPaks as a starting point for integrations with the UK version. In most cases, you will need to make some adjustments to the maps when using the SolutionPak with the UK version. For example, the SolutionPak uses the US address format, so you will need to adjust the maps with addresses to match the UK address format.
Posted on 8:11 AM | Categories:

Eight Facts about Penalties for Filing and Paying Late

April 15 is the tax day deadline for most people. If you’re due a refund there’s no penalty if you file a late tax return. But if you owe taxes and you fail to file and pay on time, you’ll usually owe interest and penalties on the taxes you pay late. Here are eight facts that you should know about these penalties. 

1. If you file late and owe federal taxes, two penalties may apply. The first is a failure-to-file penalty for late filing. The second is a failure-to-pay penalty for paying late.

2. The failure-to-file penalty is usually much more than the failure-to-pay penalty. In most cases, it’s 10 times more, so if you can’t pay what you owe by the due date, you should still file your tax return on time and pay as much as you can. You should try other options to pay, such as getting a loan or paying by credit card. The IRS will work with you to help you resolve your tax debt. Most people can set up a payment plan with the IRS using the Online Payment Agreement tool on

3. The failure-to-file penalty is normally 5 percent of the unpaid taxes for each month or part of a month that a tax return is late. It will not exceed 25 percent of your unpaid taxes.

4. If you file your return more than 60 days after the due date or extended due date, the minimum penalty for late filing is the smaller of $135 or 100 percent of the unpaid tax.

5. The failure-to-pay penalty is generally 0.5 percent per month of your unpaid taxes. It applies for each month or part of a month your taxes remain unpaid and starts accruing the day after taxes are due. It can build up to as much as 25 percent of your unpaid taxes.

6. If the 5 percent failure-to-file penalty and the 0.5 percent failure-to-pay penalty both apply in any month, the maximum penalty amount charged for that month is 5 percent.

7. If you requested an extension of time to file your income tax return by the tax due date and paid at least 90 percent of the taxes you owe, you may not face a failure-to-pay penalty. However, you must pay the remaining balance by the extended due date. You will owe interest on any taxes you pay after the April 15 due date.

8. You will not have to pay a failure-to-file or failure-to-pay penalty if you can show reasonable cause for not filing or paying on time.

Additional IRS Resources:
Posted on 8:07 AM | Categories:

Tuesday, April 15, 2014

4 Tax Tips Your Accountant Will Never Tell You / Consider the tax consequences of your investments.

Daniel Solin for The Smarter Investor/US News World Report writes: I have a high regard for accountants. They have an extremely difficult job. In order to maximize tax savings for their clients, they need to understand and interpret an incredibly complicated Internal Revenue Code. Former U.S. congressman John Hostettler once said, “The Internal Revenue Code and regulations add up to 1 million words and is nearly seven times the length of the Bible.”

It's not surprising that few accountants look outside the code for tax-saving opportunities. That’s unfortunate. There’s a world of tax-saving possibilities related to investing. If your accountant is not familiar with them, your registered investment advisor should be alerting you to them.
The failure to focus on the tax efficiency of your investments can significantly affect your returns. According to a 2008 Vanguard publication, "Tax-Efficient Equity Investing: Solutions for Maximizing After-Tax Returns," taxes have the potential to take the “biggest bite” out of total returns. How much of a bite? According to research by Joe Dickson and John Shoven, “Taxes and Mutual Funds: An Investor Perspective," taxes can reduce the returns of a mutual fund by as much as a whopping 25 percent. 

These tax tips will help make you a more tax-savvy investor:

1. Harvest your tax losses. No one is happy when their investment goes down in value. However, tax-loss harvesting permits you to sell investments at a loss and use those losses to offset gains on other investments. Here’s an example of how it works. 

Assume you purchased a fund for $10,000 on January 1 and it declined to $5,000 on March 1 of the same year. If you decide to "harvest" the loss, it will be characterized as a short-term loss since the fund was held for less than one year. Assuming a 35 percent ordinary federal income tax, your tax savings would be $1,750. You will have reduced your economic loss to $3,250.

Tax-loss harvesting is not simple. Initially, it involves determining whether the loss is substantial enough to harvest. You also need to assess the problem of exiting the market and missing out on potentially large gains. You can avoid this problem by complying with the "wash-sale" rule, which permits you to sell a stock or mutual fund and buy a replacement stock or fund, as long as the replacement is not considered "substantially identical" in nature.

2. Invest in retirement accounts. Take advantage of a 401(k) or 403(b) plan offered by your employer. The funds you invest in these plans are pretax. You will defer taxes until you start receiving distributions. Don't forget to contribute on your own to a traditional individual retirement account or (if you qualify) to a Roth IRA. With a Roth, you will be contributing with after-tax funds, but your withdrawals will be tax-free.

3. Allocate your investments. The way you allocate funds between your taxable and nontaxable accounts can have a meaningful impact on your after-tax returns. Funds that pay out meaningful taxable distributions of dividends and capital gains should typically be placed in a tax-deferred account. Taxable bond funds should also be placed in a tax-deferred account. This will permit you to reinvest distributions and avoid recognizing those distributions as ordinary income. 

Real estate investment trusts and most alternative investments should generally be held in tax-deferred accounts to defer taxes on distributions.

Active trading of your investments is generally a bad idea because it runs up transaction costs, which reduces returns. However, if you must actively trade, put those investments in a tax-deferred account so you can buy and sell without tax consequences.

Individual stocks that you intend to keep for a long time should be placed in an after-tax account. Index funds and stock index exchange-traded funds are also good candidates for your after-tax account.
When deciding how to allocate investments between your taxable and nontaxable accounts, taxes should not be your sole consideration. Investments in tax-deferred accounts have restrictions on withdrawals. You may incur a penalty if you withdraw these funds earlier than permitted. You want to be sure you have enough funds in your taxable account so you can meet your needs, without accessing your retirement accounts.

4. Buy index funds. As a general rule, index funds (where the fund manager seeks to replicate the returns of the designated index and there are less transaction costs) that track a broad index (like the Standard & Poor's 500 index) and comparable ETFs are very tax-efficient. Most actively managed funds (where the fund manager attempts to beat the returns of the designated benchmark) trade more than index funds, incurring higher taxes. They are less tax-efficient.

The same Vanguard study calculated the tax costs of actively managed funds and index funds. The study measured the tax cost for 15 years ended Dec. 31, 2007. It found the median tax cost of domestic actively managed funds was higher, by 0.83 percent annually, than the tax cost for index funds. 

This significant difference in tax costs is a major reason why the same study found that "indexing has historically provided higher after-tax returns than have actively managed mutual funds.” 

Here’s the bottom line: If tax efficiency is important to you, consider investing in index funds, ETFs or passively managed fund.

Dan Solin is the director of investor advocacy for the BAM Alliance and a wealth advisor with Buckingham Asset Management. He is a New York Times best-selling author of the Smartest series of books. His latest book, "The Smartest Sales Book You'll Ever Read," has just been published.

Posted on 3:45 PM | Categories:

Tax Day Freebies, Promotions, Deals and Specials

Kelly Phillips Erb for Forbes writes:  Tax Day is just around the corner. Nobody likes writing a big check to Uncle Sam but there is some good news: Tax Day also means free stuff, promotions, deals and specials. After you pop your return (or your extension) in the mail, kick back and take advantage of some of the promos and specials. More and more will be popping up so check back today and tomorrow (especially closer to lunch and again at happy hour). I’ll highlight the updated entries for you to make it quick. Here’s what’s on tap so far:

Hotels, Entertainment & Restaurants
Arby’s. Arby’s is planning to offer a free Snack-Sized Curly Fry on April 15 at all Arby’s locations nationwide. Guests can visit or Arby’s social channels to print a coupon.

Boston Market. Boston Market, the fast casual restaurant chain is offering a “Tax Day Deal Chicken Meal” on April 15, when all guests can receive two half chicken individual meals for just $10.40. The “Tax Day Deal Chicken Meal” offers guests two individual meals, each including a half rotisserie chicken with a choice of two home style sides and freshly baked cornbread. George Michel (a.k.a. “The Big Chicken”), CEO of Boston Market said about the deal (downloads as a pdf), “While no one enjoys 1040 forms, our 2 for $10.40 deal provides delicious meals at an affordable price, and that’s something our guests can feel good about this Tax Day.” No coupon is needed to enjoy the offer, which is available at all Boston Market locations on April 15, 2014.

Burritt Room at the Mystic Hotel by Charlie Palmer (San Francisco). From April 1 – 15, the Burritt Room at the Mystic Hotel by Charlie Palmer is offering a special cocktail called the Tax Man (Gin, Thyme Liqueur, Aperol, Strawberry, Lemon, Seltzer) for $12.

California Tortilla. Declaring that “Queso Makes Life Less Taxing,” California Tortilla is offering free chips and queso with any purchase on April 15, 2014, while supplies last. No coupon is needed: just say “Taxes, Schmaxes” to the cashier to claim your deal.

Esquared Hospitality. For Tax Day (Tuesday, April 15th), global restaurant group ESquared Hospitality will be offering 50% off all alcoholic beverages. Enjoy specialty cocktails, beer, wines by the glass or bottle, and spiked shakes (available at GO Burger Bar & Grill only) at half the price. This promotion includes the following: New York City (BLT Steak New York, BLT Prime, BLT Fish, BLT Fish Shack, BLT Bar & Grill, Casa Nonna, GO Burger Bar & Grill and Juni); White Plains, NY (BLT Steak White Plains); Hawaii (BLT Steak Waikiki); Atlanta (BLT Steak Atlanta); Charlotte (BLT Steak Charlotte); Chicago (The Florentine); Miami (BLT Steak Miami) and Washington, D.C. (BLT Steak DC).

Gerber Group venues. Gerber Group venues Whiskey Park, Whiskey Blue, Living Room, Stone Rose Lounge and The LCL: Bar & Kitchen will offer a specialty Jalapeño Margarita for $8.88, an ode to New York’s sales tax percentage ($8.8875%).

Great American Cookies. Great American Cookies says that, “Refund or not, you deserve a cookie on #TaxDay.” Stop by participating locations at Great American Cookies on April 15 for a free chocolate chip cookie!

Hard Rock Cafe. This year, on Tax Day, Hard Rock Cafe is cutting Americans a break across the country by asking them to lay down their wallets and pick up the mic! Warm up those vocal cords as Hard Rock Cafe opens up its stages to give fans a chance to “Sing for Their Supper” on Tuesday, April 15, 2014. On Tax Day, guests will have the opportunity to select their favorite song and take the stage to perform at their local Hard Rock Cafe. Guests who perform a complete song on their Hard Rock Cafe’s live music stage in front of the entire restaurant will receive a free dinner entrée from Hard Rock’s new menu. Singers can choose from a selection of new menu items and classic Hard Rock favorites, including the Grilled Vegetable Sandwich, Arugula Salad with Shaved Marinated Chicken, Legendary Big Cheese Burger or Veggie Burger as their free meal.

NEW -> Historic Mission Inn Hotel & Spa (Riverside, CA). Tax Return & Relax. Albert Einstein once said, “The hardest thing in the world to understand is income tax.” The Mission Inn Hotel & Spa understands your need to spend a day or two relaxing after filing taxes.  They invite you to spend some ‘relaxation time’ with them this April: you may not be able to deduct it, but you’ve certainly earned it! The Tax Free Package includes: overnight Deluxe accommodations; Casey’s Cupcakes for two; $25 resort gift card to spend at any of the Inn’s award-winning restaurants, lounges or Kelly’s Spa and Boutique; and complimentary valet parking. Starting at $169*, available 4/1/14 – 4/30/14.

Hotel Monaco Chicago (Chicago, IL). Relax with No Tax. Imbibe, Relax and Save (IRS)! Put your tax return to good use with a tax break package at the hotel including: IMBIBE: $25 beverage credit at South Water Kitchen; RELAX: $50 in-room spa credit during your stay; SAVE: No occupancy or lodging taxes on your room rate. Book online or call 866-610-0081 and mention rate code NOTAX. Valid for stays April 1-30, 2014. Rates are subject to availability, blackout dates may apply.

Hotel Monaco Portland (Portland, OR). On April 15, the hotel will offer complimentary chair massage during wine hour to soothe those ‘taxed’ nerves. There will also be champagne on hand for anyone who wants to toast their refund or chocolate for those who need to forget their financial sorrows/losses. Guests must show the front desk that they owe money to Uncle Sam (a tax return or other official document) to receive a free cocktail at the adjacent Red Star Tavern. The restaurant will also offer up a selection of specialty cocktails for just $4.15.

Hotel Palomar Dallas (Dallas, TX). Gimme a Break – Tax Season Special: 10% off best available rate at the hotel; $40 food and beverage credit. Available now through May 3, 2014. Use rate code GMAB.

Hotel Palomar Philadelphia (Philadelphia, PA). With so many accounting professionals diligently dedicating their waking hours to preparing and filing taxes up until the 11th hour, Kimpton’s Hotel Palomar Philadelphia celebrates these hard-working professionals with a new special tax relief happy hour package. For $35 per tax payer, there will be butler passed hors d’oeuvres, imported and domestic cheeses, oven-roasted vegetables and a two-hour open bar catered by Square 1682 (available from April 15-30, 2014).

Kona Ice. To ease the pain of tax filing, Kona Ice is serving up a frozen cup of tax day relief for tense taxpayers in all areas of the country. On April 16th, the day after Tax Day, the brand will have trucks parked at community parks in all corners of the country to hand out FREE cups of fluffy snow and complimentary Hawaiian lei’s to all who stop by. The refreshing treat will ensure that there is no taxation without relaxation this tax season and represent the “Chill” Kona Ice is spreading.

Martinis Above Fourth Table + Stage (San Diego, CA). Martinis Above Fourth Table + Stage will present a show on April 15 called Three Divas – A Lover, A Lot and A Librarian featuring three of San Diego’s favorite performers. You can get a 15% discount on tickets by using the code TAXDAY15. They say: taxes shmaxes! Come out and have some fun! Purchase tickets online @

NEW -> Maya Del Sol. Maya Del Sol is once again offering customers a chance to ‘Pay What Is Fair’ for dinner on tax filing day for the 6th year in a row. From 4pm to 9pm on Tuesday, April 15th, customers at the popular Latin Fusion restaurant will have the opportunity to decide what to pay for their meal. When seated for dinner, customers are given a menu without any prices. Once their meal is complete, guests write in the price they think is fair for their meal, which is what they will be charged. The ‘Pay What Is Fair’ offer will apply to the food menu only; beverages, tax and gratuity will be excluded. The ‘Pay What Is Fair’ promotion is available only on Tuesday, April 15th, 2014. Reservations are strongly recommended and should be made by calling 708.358.9800. For more details about the promotion, call Paul Abu-Taleb at 708-228-2657 (cell) or 708-358-9800 (restaurant).
Newport Beachside Hotel & Resort (Sunny Isles Beach, FL).
No Taxation without Relaxation. The hotel is offering a series of hotel and spa promotions to take the edge off of Tax Day. Enjoy a 7% deduction on hotel stays booked between April 1st and April 30th or cash in on a selection of 1040EZ specials at the Aveda Seven Seas Spa & Salon including a polish change, eyebrow wax or hair consultation and trim available for $10.40 each. For reservations, call 305.949.1300 or toll-free at 800.327.5476.

The Oceanfront Litchfield Inn (Pawleys Island, SC). The Oceanfront Litchfield Inn is offering a 1040 EZ Package. Enjoy $10.40 off per night. Offer cannot be combined with other offers or promotions. Limited number available.

Orange Leaf Yogurt. To help ease the pain of Tax Day (4/15), all of the more than 300 Orange Leaf locations across the country will be offering customers a great deal: fill your cup for $4.15. On average, this amounts to approximately 50% off, depending on how much froyo and toppings the customer chooses. Claim the offer by visiting the Orange Leaf Facebook page and downloading a coupon.

NEW -> Park Hyatt Beaver Creek Resort and Spa. In honor of Tax Day (April 15), tax-filing travelers have reason to celebrate as Park Hyatt Beaver Creek Resort and Spa is offering special incentives throughout the recently renovated resort.  Travelers looking to unwind after filing their returns can receive a complimentary Red Rumrunner cocktail at 8100 Mountainside Bar & Grill when they show their W2. As an added perk since April is also National Stress Awareness Month, Allegria Spa is offering a 20% discount on any massage, body treatment or facial treatments for those who show their W2 at the award-winning spa. The Allegria Spa offer is valid through April 20th.

Salvatore’s Restaurants (Greater Boston). On Tax Day, Tuesday, April 15th, 2014, Salvatore’s Restaurant, the upscale casual Italian eatery with five locations in the Greater Boston area, celebrates the unveiling of its new spring menu with tax-free dining. Offering a special break on Tax Day, Salvatore’s invites diners to sample the menu while enjoying a tax-free dining experience. The special tax break is only available on Tax Day and applies to food purchases only.

Schlotzsky’s. All Schlotzsky’s locations are offering one free small “The Original” sandwich with the purchase of chips and a 32 oz. drink on Tax Day, April 15 (no coupon required).

NEW -> Sonny’s BBQ Ribs. Sonny’s BBQ is offering an Irresistible Ribs Special (IRS). All day, April 15th every Sonny’s BBQ location will be offering half off on Sweet & Smokey or House Dry-Rubbed Ribs lunch or dinner plate. “Doing your taxes is a lot like making ribs,” says Dominic Losacco, Vice President of Marketing for Sonny’s BBQ, “It’s a long slow process, but the outcome can be fantastic, if you know what you’re doing.” Sonny’s BBQ is located in: AL, GA, FL, KY, LA, MS, NC, SC & TN. Dine in only and no coupon needed.

Springmaid Beach Resort (Myrtle Beach, SC). Springmaid Beach Resort is offering a 1040 Taxation Vacation Package. The package includes deluxe accommodations with a $10.40 deduction per night off the room rate and breakfast for two for only $10.40 per night. Offer cannot be combined with other offers or promotions. Limited number available.

Surfside Beach Resort (Myrtle Beach, SC). Surfside Beach Resort is offering a Tax Day $99 Package. Studies show the top 1 percent of Americans took a record share of U.S income last year. In honor of the other 99% hard-working Americans, Surfside Beach Resort is offering two night stays for $99. Stay Sunday-Thursday from 3/30/14-5/1/14 in one of our Deluxe Two Queen Ocean View Balcony Rooms. This offer includes 2 night accommodations; deluxe room with a private balcony; complimentary Wi-Fi and Parking; access to our outdoor pool and hot tub; and complimentary coffee service in the lobby. This offer cannot be combined with other offers or promotions, not valid for groups, limited number of rooms available. For more information please call 800-533-7599.

NEW -> Westin New York Grand Central hotel. The Tax Is On Us Deal: The Westin New York Grand Central hotel is throwing in the tax for free, by offering a 15% reduction in rates through December 31, 2014, when booked now through May 15, 2014. (Lodging taxes in NYC are approximately 15%.) Use the rate plan TAXBRK when booking online at

Shopping & Electronics is giving out 1,000 “Abolish the IRS” apple scented urinal screens FREE to the first 1,000 people that request (+ $3.00 shipping/handling). is the only urinal screen company in the world to provide fresh urinal screens for bars, restaurants, convenience and nightclubs on a monthly basis.

White Aspen Boutique (CA). White Aspen Boutique is offering customers 15% off for tax day. Use the coupon here (the coupon code is W-2).

Tax Software & Professionals is an online tax company and an IRS-authorized Electronic Return Originator (ERO). Currently they’re offering an “expecial promo”: efile an extension for $9.95 and and get 50% off your tax return (expires October 15, 2014). You can find more info about the offer here:

TaxConnections. With thousands of tax advisors offering a world of tax expertise, TaxConnections invites consumers and tax professionals to TaxConnections Worldwide Directory of Tax Professionals. Consumers can take advantage of a Free Membership to access while tax professionals can get a 45 Day Free Trial Tax Professional Membership which includes a full page native ad on their tax services (to join as an Annual Gold Member and send a message using the “Contact Us Today” button at the bottom of every page on TaxConnections and simply say, “Kelly sent me to TaxConnections!”).

Home & Business Services

MasterLock. Master Lock Vault, a free safe and secure online storage and organization system is offering tax tips and the chance to win one of five $1,000 prizes when customers register for a Vault account as part of the Master Lock “Tax Relief Rewards” Sweepstakes.

MyCorporation. MyCorporation is running an “Incorporate or Form an LLC for FREE on Tax Day” promotion. On a day when business owners and entrepreneurs are having to send in tax payments, this is a great way to offer business owners some ‘relief’ from our document processing fees. The promo is good for all 50 states – any state a business owner wants to incorporate in, the fees will be waived.

Philadelphia Business Journal. It’s As Good As A Refund! This is PBJ’s version of tax relief: subscribe now and save 25% off the regular subscription price. You’ll receive the Weekly Edition in print and digital formats, and the Apple Newsstand app – at no charge! Offer expires April 15th at midnight.

South Coast Air Quality Management District (SoCal). The annual program to improve air quality by exchanging polluting gas-powered mowers for high-performance electric mowers, registration opens the day after Tax Day on April 16. SoCal residents who exchange a gas mower can get up to 75% off the price of an electric brand-name mower. It’s perfect timing for people who are getting back their tax refunds.
Please note that these specials are based on information passed along from companies and their representatives, as well as social media. While I’ve made every effort to make sure that they’re accurate, I haven’t been by each location so I can’t vouch for all of them. Remember, too, that many of these companies are franchises and may have different promotions or may not participate at all. If you’re concerned, give a quick call – or tweet – before you show up.

Some companies require a coupon or a “like” on Facebook and I’ve tried to link to those which do. If you are not sure, then err on the side of checking out websites (I’ve included links, where possible) first.

You can follow the author Kelly Phillips Erb on Twitter Here.
Posted on 7:30 AM | Categories:

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