Considering Moving to Another State?

May 31, 2019 / by Fortis Family Office Tax Team

Establishing State of Domicile for Tax Purposes

Wealthy taxpayers have long assumed that spending a minimum of 183 days, or six months plus one day, in a residence outside a high-tax state would be sufficient to avoid taxes in that state. But advisers note that this long-held belief is not a sophisticated approach. ¹

 Keeping track of where you were, will not be enough for most taxpayers. 

When scrutinized by state authorities, courts look at the totality of circumstance and not just technical check the box type requirements for establishing residency for tax purposes. ²

State authorities will most likely investigate the following circumstances:
  • Where you maintain a driver’s license and vehicle registration.
  • Where you are registered to vote.
  • Where you conduct business.
  • Where your employer resides.
  • The state where you maintain professional licenses.
  • The state where you keep your “near and dear” items (Teddy Bear Test; where you leave your teddy bear, is home). ³
  • The address for insurance, deeds, mortgages, leases, passport, banking statements, utility bills, federal and local tax returns.
  • Receipts for everyday expenses.
  • Active bank accounts/banking relationships.
  • Where your children are enrolled in school.
  • Where you house your pets.
  • Your doctors and lawyers.
  • The state of where you spend the greatest amount of time.
  • The property you own (second homes/vacation homes).
  • Where you declare residency for hunting or fishing licenses.
  • Your memberships to organizations.
  • Where you have social gatherings.

Keep records of your move and consider the factors state authorities look for to challenge state of domicile.  You should consult with a tax professional or adviser for help on how to obtain proof of residency.

¹ The Teddy Bear Test, and Other Ways to Pass a State Tax Audit

² “I want to establish Florida residency and avoid state income tax”. not so fast!

³ Teddy Bear Test and Other Challenges…

Additional Sources:
Moved to a New State? Be Prepared for a Residency Audit
So You Think You Are A Florida Resident?

Employee or Independent Contractor…Do You Know the Difference?

May 8, 2019 / by Fortis Family Office Tax Team

Before you can determine how to treat payments you make for services, you must first know the business relationship that exists between you and the person performing the services. The person performing the services may be ¹

How You Pay a Worker Determines How a Worker Pays Taxes

An employee can be paid hourly or salary with bonuses/paid commission.  Employees are taxed on their income and you are required to withhold federal and state income taxes (depending on their state income tax laws) and FICA taxes.

If you are paying an independent contractor, you are not required to withhold federal or state income taxes or FICA taxes. The independent contractor must pay his or her own income taxes (called self-employment taxes), along with income tax on earnings. ³

Also, most employees receive an annual Form W-2 and an independent contractor Form 1099-MISC, which are important when filing income taxes.

How the IRS Determines a Workers Status

If you are unsure how to determine a workers status, consider the three categories the IRS set up as a guideline for employers.  The three categories are –

Behavioral Control – a worker is an employee when the business has the right to direct and control the work performed by the worker. The behavioral control factors fall into the categories of ²

  • type of instructions given
  • degree of instruction
  • evaluation systems
  • training

Financial Control – refers to facts that show whether or not the business has the right to control the economic aspects of the worker’s job.  The financial control factors fall into the categories of ²

  • significant investment
  • unreimbursed expenses
  • opportunity for profit or loss
  • services available to the market
  • method of payment

Relationship – the type of relationship depends upon how the worker and business perceive their interaction with one another, such as, written contracts, benefits, services provided and the permanency of the relationship. ²


To avoid misclassifying a worker you can exercise due diligence.  It is important to know the difference of each workers status and to know how to properly withhold taxes.




How Do You Distinguish Between a Business and a Hobby?

May 6, 2019 / by Fortis Family Office Tax Team

As you might expect, the IRS distinguishes between legitimate businesses and hobby activities, for the purpose of taxes. If you are legitimately in business, you can deduct the expenses of that business and possibly take a loss if your business isn’t profitable. If you are engaging in a hobby, you cannot deduct expenses to get a loss to offset other income. The IRS calls this the “hobby loss” rule. ¹

Per the IRS, you should consider these factors ²

  • Whether you carry on the activity in a businesslike manner and maintain complete and accurate books and records.
  • Whether the time and effort you put into the activity indicate you intend to make it profitable.
  • Whether you depend on income from the activity for your livelihood.
  • Whether your losses are due to circumstances beyond your control (or are normal in the startup phase of your type of business).
  • Whether you change your methods of operation in an attempt to improve profitability.
  • Whether you or your advisors have the knowledge needed to carry on the activity as a successful business.
  • Whether you were successful in making a profit in similar activities in the past.
  • Whether the activity makes a profit in some years and how much profit it makes.
  • Whether you can expect to make a future profit from the appreciation of the assets used in the activity.

It is best practice to follow the IRS guidelines so you can better understand what is considered to be a legitimate business vs a hobby. Keeping track of your business income and expenses throughout the year will help you determine the factors listed above.



What Should You Be Communicating to Your Tax Preparer?

April 16, 2019 / by Fortis Family Office Tax Team

Communication is key to a successful relationship between you and your tax preparer. The tax preparer may ask certain questions and request information he or she believes is necessary to prepare a complete and accurate tax return.  However, you must understand that the responsibility to provide all necessary information lies with you.¹

Information you should be sharing with your tax preparer:
• New job
• Change in number of dependents
• Change in residency
• Large purchases, such as motor vehicle, boat, aircraft
• Change in marital status
• Salary increase or decrease
• Buy/sell a home
• Contribute to an IRA
• Establish a new trust
• Start a business

In conclusion, it is best to communicate with your tax preparer any life changing events as it can affect your taxes.



Are You Aware of the Financial Scams Targeting Elders?

April 4, 2019 / by Fortis Family Office Tax Team

Elderly fraud is becoming a major problem. Ever have a grandparent or parent ask how to access, fix, use, or view something on their iPhone or computer?  They could be asking due to their lack of understanding of advancing technology, which can make them an easy target of financial scams.

The National Council on Aging has identified the top 10 financial scams targeting elders:¹

  • Medicare/health insurance scams
  • Counterfeit prescription drugs
  • Funeral and cemetery scams
  • Fraudulent anti-aging products
  • Telemarketing scams
  • Internet fraud
  • Investment schemes
  • Homeowner/reverse mortgage scams
  • Sweepstakes and lottery scams
  • Grandparent scams

Those with financial and accounting backgrounds, such as CPA’s, can educate clients and family members to avoid financial frauds and scams. The elderly fraud article the PICPA published by Howard M Silverstone and Irina Balashova, is one of the many resources that provide useful information. ²

Additional Resources:

Pennsylvania Institute of Certified Public Accountants (

¹ The National Council on Aging (




What Can You Do Today to Qualify for a 2018 Tax Deduction?

March 28, 2019 / by Fortis Family Office Tax Team

The IRS is reminding taxpayers it’s not too late to make a traditional IRA contribution and claim it on your 2018 income tax return.  Contributions must be made by April 15, 2019 and cannot exceed $5,500, unless the taxpayer was 50 years of age at the end of 2018, the contribution limit is $6,500.

What is a Traditional IRA? Contributions you make to a traditional individual retirement account may be fully or partially deductible, depending on your circumstances.

Making yearly contributions to your traditional IRA can not only build up your savings for retirement, but can typically lower your AGI (annual gross income).  You have until each year’s tax filing deadline to make your traditional IRA contributions.  For 2018 that means you can make your contributions from January 1, 2018 until April 15, 2019.

Keep in mind that not all taxpayers can qualify for this deduction.  It is best practice to always consult with your tax preparer and/or an advisor who can help you determine the type of IRA that can be tax beneficial to you.


Traditional IRAs

Tax Time Guide



Paycheck Checkup for 2019 Withholding

When to check your withholding?

You should always check your withholding early in the year and now is the time to do it. Especially when your income changes or when a life changing event occurs.


What are some life changing events?

⋅ New job

⋅ Marital status

⋅ Number of dependents

⋅ Salary increase/decrease

Buy/Sell a house 


Why check your withholding?

Every taxpayer should do a paycheck checkup each year. Two reasons…

1.Having too little tax withheld could result in owing interest & penalties when you file your return.

2.Having too much tax withheld means having to wait to get back your money until your return is approved and processed by the IRS.

The IRS  2019 Withholding Calculator is an easy way to help you determine whether you need to make changes to withholding.  

If you make the decision to change your withholding you will need to complete a new Form W-4 and give the form to your employer. 


 – Your Fortis Tax Team

March 14, 2019




Tax Withholding – How to Get it Right

IRS Withholding Calculator



Tips on Choosing a Tax Preparer

1. You should always ask if the tax preparer has an IRS preparer tax identification number (PTIN).

2. Important credentials are certified public accountant (CPA) or/and an enrolled agent (EA).

3. It is best practice to obtain a written agreement for service fees.

4. A tax preparer should…

  • Be reachable during tax season.
  • Be up-to-date. The Tax Cuts and Jobs Act made big changes to the U.S. tax code.  A tax preparer should be aware of these changes and how they might affect you.
  • Know the requirements of the states and localities where you are required to file.  Ask upfront to make sure that your tax preparer knows – and can handle – the filing requirements of all states and localities required.
  • Be upfront about the time to prepare and deliver your tax return. You should receive an idea of how long it will take for your tax return to be completed and upon completion, receive a complete copy of your tax return.
  • Be organized. A reputable tax preparer should be able to explain what documents are needed to complete an accurate tax return.

– Your Fortis Tax Team

March 7, 2019



Are Hedge Funds Really Worth the Fees They Charge?

From the Desk of Our Managing Partner, Randy Hubschmidt

As Bloomberg’s Nir Kaisser so adroitly pointed out in his recent Opinion piece, money continues to flow in to hedge funds even as hedge funds continue to underperform.

Back when there were fewer hedge fund managers, there was less competition for good deals and hence, more opportunity for tremendous returns.  Just as more entrants chase the same (or similar) strategies, reversion to the mean inevitably occurred. High fees, low tax efficiency and illiquidity all add up to significant underperformance.

Sound familiar?

As many of you know, my colleagues and I at Fortis Wealth have been ardent advocates for building TOTAL wealth, not chasing fads.

As shown in the chart below hedge fund assets have exceeded pre-2008 levels.  The 10 year bull market has emboldened investors to once again roll the dice…

Notice the spread between the HFRI Equity Hedge Total Index and the Bond Index shown in the chart below.



If you’d like to learn more about our unique philosophy for managing wealth, visit our website

October is Cyber-Security Awareness Month – Week 4

October 2018

Here at Fortis, we believe cyber-security is of the utmost importance, and we have made cyber-awareness a top priority for our Clients, Colleagues and Friends.  October is National Cyber Security Awareness Month.  Fortis is promoting cyber security by sharing weekly tips and information during the month of October.


Cyber Security and Social Media

The ubiquity of social media can’t be understated. It effects the vast majority of our population – ranging from children to people well into their retirement years. As such, safeguarding these connections must be a top priority.

Earlier this month, some 30 million Facebook accounts were compromised due to a security breach. In addition, a few dozen accounts were removed from Facebook due to Russian companies who create biometric software for the Russian government extracting data from the social network. The companies were suspended by Facebook for policy violation. While these widespread acts can be punished, there are other heinous acts such as cyberbullying, stalking or harassment that are more specifically targeted social media violations – particularly among teens – that can be more difficult to track. Predators may use social media as a way to build a relationship with children, or could use account information to stalk or even harm them. Teens can use it to spread rumors, or share unflattering images. Unfortunately, in extreme cases, victims have taken their own lives. (more…)