Francetic Tax Resolution LLC - May 2021

MAY 2021

262-752-6992

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THERE’S A CAT IN THE SINK! An Update on the Antics of Simba and Nala

If you’ve been reading my newsletters for a while, then you might remember that way back in the summer of 2019 I adopted two cute kittens from Safe Harbor Humane Society. I’d never owned cats before, and I was afraid we might not all get along, but my worries turned out to be groundless. Almost two years later, Simba and Nala are the sweetest, funniest, quirkiest cats I’ve ever met. They love to wrestle, run around the house like maniacs, and jump out from behind things to scare each other. Of course, being cats, they aren’t always on their best behavior. Simba in particular is a little rascal. He likes to perch on top of the loveseat in my family room and scratch the heck out of the blinds covering my front window. This has been a pattern of bad behavior since he was a kitten. I’ve gotten him scratching posts and tried discipline, but nothing helps! Eventually I started keeping some of the accordion blinds pulled up all the time to keep his fuzzy paws off them, but the set in the family room is a pain to put up and down every day because of the large window. There are several large scratch marks on it. The thing that irks me the most, though, isn’t the damage — it’s the fact he does it to spite me! Simba loves to sit in my lap and adores it when I pet him. So when I go into my home office to work, he gets annoyed that I’m ignoring him. Several times a week when I sit down to start typing, a few minutes in I hear a “scritch scritch scritch” from the family room. So, I poke my head around the corner to tell him off. He always freezes when he sees me coming — usually with both front paws still stuck in the blinds.

You should have seen what happened next. She shot out of the sink dripping wet, just like a cat in an old-time cartoon. I wish I’d gotten a picture before she rocketed out of the room! Nala was so shaken by the whole experience that she didn’t even come out when I put her food bowl down, and she avoided the sink for two weeks. Afterward, she went back to courting disaster — although she hasn't fallen in again since. I love both of my cats to pieces, even though they won’t let me sleep past 6:30 a.m. because they can’t resist jumping up on the bed and walking on my face. May is National Pet Month, so if you have any stories about your pets’ crazy behavior, I’d love to hear them! Shoot me an email at Francetictax@gmail.com, or just fill me in next time you call with a tax problem or send a loved one my way for help.

“What are you doing man?” I ask.

He looks at me with big, innocent eyes. Then, the second I go back into my office he starts up again.

Nala is the nicer, more reserved cat of the two, but even she makes mistakes. Fortunately, her mistakes usually backfire on her instead of me! I’ll never forget the day when I was doing the dishes and Nala jumped up on the kitchen counter. She wanted to walk across the narrow ledge between the sink and the window, and she started out pretty gracefully. But then her paw hit a wet spot and she dumped herself right into the sink full of water!

Paul Francetic

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WHAT TO DO ABOUT YOUR HOME’S ‘ENERGY VAMPIRES’ DON’T LET HIDDEN ENERGY COSTS DRAIN YOUR BANK ACCOUNT

We’ve all been there: You’re hit with an unusually high energy bill and you aren’t sure why. While we expect our energy bills to increase during certain times of the year, we still expect some consistency. When there are unusual bumps, we want to know why. In some cases, these unusual bumps can be traced to hidden energy drains, or “energy vampires.” Most of these energy vampires are far more insidious than a noticeable bump to your energy bill. Why? Because we’re often paying for electricity we didn’t even realize we were using. What are these energy drains and what can you do about them? ELECTRONICS TVs, PCs, surround sound equipment, and video game consoles typically drain energy. It

comes down to the simple fact that practically every electronic device made today stays “on” even when we turn it off. The U.S. Department of Energy estimates that these electronics — while off — still contribute to more than 10% of household energy bills. Some electronics offer settings that allow people to truly turn them off, but even that’s not a guarantee. Another option, however, is to use energy-saving power strips or plug-ins. These power strips allow you to control power to select devices — and ensure these devices are only powered when you want them to be. APPLIANCES Appliances like refrigerators, dishwashers, washing machines, and dryers can be used very inefficiently. Refrigerators, for example, work best when they’re full. If you have a fridge with

only a few things in it, you’re wasting a lot of energy. When it comes to dishwashers, washing machines, and dryers, make sure you run larger, less frequent loads. Running the appliances for smaller loads is very costly — even with ENERGY STAR-rated appliances. One of the biggest energy drains in the home is the electric water heater. For the most part, that’s to be expected. But what people don’t realize is that sometimes, the water temperature is set too high. In this case, your water heater has to work extra hard to keep the temperature up, resulting in an energy drain. The best way to combat this is to simply lower the temperature on the unit.

GOOD NEWS: MONEY IS COMING!

Your 2021 Child Tax Credit Questions, Answered

HOW MUCH MONEY WILL I GET? In the past, the CTC only paid out up to $2,000 per qualifying child under the age of 17. Now, for families that receive the increase (see above), it’s $3,000 for each qualifying child who is between 6 and 17 at the end of the year, and $3,600 for each qualifying child under 6. CAN I OPT OUT OF EARLY PAYMENTS? Yes! An opt-out option will be live soon on IRS.gov if it isn’t there already. If you opt out, you will still receive the full CTC credit your family qualifies for, but instead of receiving up to 50% of it in the form of early payments from July–December and the rest after filing, you’ll receive it all after filing your 2021 return. WHAT IF MY PAYMENTS NEVER COME? If you don’t get any advance payments, a couple things could have happened. Either you opted out, you weren’t eligible for the CTC in 2020, or the

Yes, you read that headline right! Earlier this year, the Biden administration passed an update to the Child Tax Credit (CTC) as part of the American Rescue Plan Act (ARPA). If you claimed the CTC on your 2020 tax return, that might mean more money for you and your family starting as soon as this summer. WHAT CHANGED? To put it briefly, ARPA increased the amount of the 2021 Child Tax Credit for families that make under $150,000 (married filing jointly, or qualified widows or widowers), $112,500 (heads of household), or $75,000 (all other taxpayers) in annual income. This year, payments totalling up to 50% of the CTC amount will also go out in advance starting in July and continuing through December. WHY WERE THE CHANGES MADE? It appears the changes were a reaction to COVID-19, and the payments are meant to help families get through the last few tough months of the pandemic.

IRS messed up. The best way to find out which of those things happened and get it straightened out is to call me at 262-752-6992.

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FTR TAX TIP OF THE MONTH

THE GIFT TAX ISN’T ALWAYS WHAT IT SEEMS!

SHAVED ASPARAGUS SALAD

Over the last couple months, I’ve talked to several clients who were worried about the gift tax and how it could affect the way they give to family members and friends. One particular client was worried that both he and his mother would be on the hook for the gift tax if his mother gave him more than $15,000 (the 2020 exclusion amount) in a given year. He’d talked to a financial planner and the planner had been quick to point out that any gifts over $15,000 per year, per person are taxable. That was a poor choice of words! The truth is that any gift over $15,000 MAY BE a taxable event for the donor, depending on individual facts and circumstances . Let’s say my client’s mother gave him a check for $50,000. In this example, there COULD BE a $35,000 taxable event (the sum exceeding the $15,000 exclusion amount), but that’s highly unlikely for most people, including my client. He wouldn’t have to pay a dime and neither would his mother. However, his mother would have to fill out a gift tax return (Form 709) to report the excess $35,000 gift. Why wouldn’t his mother have to pay? Well, she has a built-in buffer called the lifetime gift tax exemption. Let’s assume this was the first gift made by the mother during her lifetime over the current $15,000 exclusion. In my example, she will claim the $35,000 excess gift against her lifetime exemption ($11.58 million for 2020). After subtracting the gift ($11.58 million - $35,000), she will still have $11.545 million to use for future excess gift amounts or to use against her estate assets when she dies, before an estate tax is assessed. In my June FTR Tax Tip of the Month, I’ll explain what constitutes a gift and which categories of gifts are not actually treated as gifts if given correctly. If you have any questions about gifting in your particular circumstances, please reach out to me so I can help you make an informed choice. If you’re considering gifting over the yearly exclusion amount and are worried that you’ll have to pay tax, I’ll put your fears to rest!

Inspired by ACoupleCooks.com

INGREDIENTS

• • • • •

1 lb asparagus spears 1 tbsp lemon juice 1 tsp Dijon mustard

• • •

1/2 tsp kosher salt

1/8 tsp red pepper flakes

Freshly ground black pepper, to taste

3 tbsp extra-virgin olive oil 3/4 cup Parmesan cheese, grated

DIRECTIONS

1. With a vegetable peeler, shave each asparagus spear from tip to base. This is easiest to do if the asparagus is on a flat surface.

2. Place shaved asparagus in a bowl and blot off excess moisture with a paper towel.

3. In a separate bowl, make a vinaigrette by whisking together lemon juice, Dijon mustard, and olive oil.

4. Pour vinaigrette over shaved asparagus and add Parmesan cheese, salt, red pepper flakes, and black pepper. Toss to combine. Taste and adjust seasonings.

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5429 DEERFIELD ROAD MOUNT PLEASANT, WI 53406-1919

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INSIDE

RETURNSERVICE REQUESTED

Listen to Paul Saturday mornings at 7 a.m. on channel 1050 WLIP-AM or stream online at WLIP.com!

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There’s a Cat in the Sink!

Eliminate Your Home’s ‘Energy Vampires’

Your Guide to the 2021 Child Tax Credit Changes

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When Is a Gift Actually Taxable?

Shaved Asparagus Salad

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The Bet That Spawned the Filet-O-Fish Sandwich

THE BET THAT SPAWNED THE FILET-O-FISH SANDWICH

Every day, 68 million people dine under the iconic golden arches of McDonald’s. If you’re one of them, then you’re probably intimately familiar with one of the most famous offerings on the menu after the McRib and the Big Mac: the Filet-O-Fish Sandwich. This bestselling entree looks simple enough. It features a fried square of wild-caught fish nestled under a slice of American cheese and a smear of tartar sauce. But it has a contentious history. In fact, Ray Kroc, the owner of McDonald’s who was immortalized in the 2016 movie “The Founder,” didn’t want the fishy offering on the menu. It ended up there anyway for one of the oldest reasons in the world: Kroc lost a bet. The story starts back in 1962 in Cincinnati, Ohio. That year, an enterprising McDonald's franchisee named Lou Groen had a problem. His customer base was largely Catholic and abstained from eating meat on Fridays (not to mention during Lent!), and they weren’t buying enough burgers to keep his restaurant afloat. According to the Smithsonian Magazine, on Fridays, Groen pulled in just $75 per day. To combat that lack of sales, he

masterminded a beef-free option, and the Filet-O- Fish Sandwich was born.

The problem came when Groen pitched the entree to Ray Kroc. The founder didn't approve. In a 2006 interview with Business Courier, Groen recalled Kroc’s reaction: “You’re always coming up here with a bunch of crap!” he said. “I don’t want my stores stunk up with the smell of fish.” But at the end of the day, Kroc’s motivation was profit. So the two men made a bet. On Good Friday in 1962, select McDonald's would put both the Filet-O-Fish and a different meatless option, the pineapple-centric Hula Burger, on their menus. The entree that sold the best would stick around. Since you’ve probably dined on a Filet-O-Fish and never heard of Hula Burger, you can guess what happened. Groen sold 350 Filet-O-Fish sandwiches. And Kroc? Well, he moved just six Hula Burgers. Fishy smell or not, the filet was there to stay. Want to read up on more fast-food capers? Pick up the book “Drive-Thru Dreams: A Journey Through the Heart of America's Fast-Food Kingdom” by Adam Chandler. His KFC stories will blow your mind.

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