Case Studies

Case Study #1: Problem – Husband Had Retirement Savings But Wife Did Not

Synopsis

In tax year 2018, a chiropractor-employee launched a sole-proprietor chiropractor business. This resulted in two (2) sources of income: one from employer; the other from sole-proprietor business. Chiropractor-employee had 401(k) from employment. Chiropractor was married. His spouse was unemployed and she did not have any retirement savings.

The Value One-Fifth Financial Brings

One-Fifth Financial’s tax planning strategy provided for an increase in retirement savings in the amount of $37,500 annually for the chiropractor and his spouse. Out of this amount, the chiropractor’s spouse began having her own individual retirement savings in the amount of $14,082 per year and an annual salary of $12,000.

Case Study #2: Problem – CPA Caused Taxpayer $1,445 in Taxes Instead of $410 in Refund

Synopsis

With the enactment of the Tax Cuts & Jobs Act last December 2017, there are federal tax deductions that are postponed for tax years beginning 2018 and ending in 2025. However, California does not conform to this federal tax law. In tax year 2018, a CPA missed claiming deductions that California does not conform to federal tax law. This error caused the taxpayer $1,445 in California taxes instead of receiving a refund of $410. The taxpayer’s gut informed him that there was something wrong with his tax return. He asked for advice from a friend of his, and his friend referred the taxpayer to us (One-Fifth Financial) for a complimentary review. This friend is a customer of One-Fifth Financial.

The Value One-Fifth Financial Brings

One-Fifth Financial performed a careful 2018 tax return review at no cost. We found that the CPA failed to claim $22,902 in California deductions, and this caused the taxpayer $1,445 in taxes instead of receiving a refund of $410. The taxpayer hired us, One-Fifth Financial, to amend his 2018 tax return and hired us to prepare his 2019 and future income tax returns.

Case Study #3: Problem – A $200,860 Combined Federal and California Tax Bill

Synopsis

In tax year 2019, a sole proprietor received an additional $400,000 in gross revenue. The combined federal and California tax bill for this revenue was $200,860 , a whopping 50.22% tax rate. This sole proprietor was referred to us (One-Fifth Financial) for a complimentary review.

The Value One-Fifth Financial Brings

After a thoughtful analysis and application of income tax code, One-Fifth Financial designed a two (2) step plan for the taxpayer to reduce the combined federal and California tax bills. The first step transformed the combined $200,860 combined tax bill into a $57,500 tax savings. The second step produced an additional tax savings of $14,601 for a total tax savings of $72,101.