“Real World” Personal Strategy Blog
And you think WE’VE got it bad!
October 26, 2009 by Roger Menden
“The wisdom acquired with the passage of time is a useless gift unless you share it.”
- Esther Williams
It sometimes seems to me like this country is torn up with envy.
(By the way, I hope you had a great weekend. Mine was nice and slow at home and outside with the family–enjoying the fall weather. Only a few more weeks until things start to really change…and then indoors we go!)
With this economy still not yet recovering, there are still plenty of families that are doing just fine–even thriving. But it’s not considered very kind to demonstrate one’s prosperity in this environment, which is perfectly understandable.
But, whatever your specific situation, I suggest that you make a clear and sustained effort to keep your eyes off the situation of those around you–and continue to focus on what YOU can do to grow your family’s wealth and joy. Really, it’s the only thing which you can actually control.
Envy truly sucks the joy out of your life…but it could be much worse than it is in this country. We could live in Norway.
Last week marked the annual release of EVERYBODY’S tax records to the general public in Norway–giving any interested party a precise picture of their neighbor’s annual income and wealth.
(Story here: http://news.yahoo.com/s/ap/20091022/ap_on_bi_ge/eu_norway_money_roll )
How do you think that would be for feeding envy, huh?
*********
Now, before I move on to this week’s Strategy Note I couldn’t help but show you this:
http://taxprof.typepad.com/taxprof_blog/2009/10/accuracy-rate.html
The IRS’ program to assist people in their taxes at no charge wasn’t very effective. Certainly, we can all get behind the *concept * of helping low-income families, but is it really “helping” when errors abound? Further, many upper income families availed themselves of this service–often to their detriment.
Sometimes it’s best to stick with a professional…
And, on to my Personal Strategy Note. I’ve put together a list of often-overlooked deductions. This is one to forward to your friends.
And, as usual–we’re here to help. Call us for any questions or concerns.
(And, again–please do feel free to leave comments. I read every one that comes my way!)
“Real World” Personal Strategy
Little-Known Tax Deductions & Credits!
Here is a handy list of items to make sure you’re covered on this upcoming tax season…
1) Military Reservists’ Travel Expenses: Military reserve forces and National Guard troops are allowed a deduction for travel expenses attending drills or meetings provided you travel more than 100 miles and stay overnight for the training exercise. This deduction includes mileage reimbursement at 55 cents per each mile traveled. Parking toll fees also qualify. You receive this deduction whether or not you itemize your deductions.
2) Charitable Volunteering: If you volunteer for a charitable organization you may have deductible expenses. Did you purchase supplies or required equipment? Perhaps you volunteer in a hospital and need to purchase a uniform. The costs for the apparel AND the costs to clean the uniform can qualify as charitable deductions. And don’t forget mileage, it too can often be deducted.
3) Child and Dependent Care Credit: Did you know the popular Child and Dependent Care tax credit also applies to summer day camp costs? As long as the camp is a day-camp and camp officials supervise the child while the parents work you can claim the credit for the camp costs.
4) Moving Expenses: While job related moving expenses are a well known deduction, many clients don’t realize moving expenses for a first job may also be deducted if the job passes a 50 mile distance test from the place the newly employed person has been living.
5) Mortgage Refinancing Points: If you refinance your house or buy a second residence, any “points” you pay for the loan can be deducted proportionately each year over the life of the loan. If you sell your home or refinance before you have deducted the full cost of your “points”, you can then deduct the remaining amount in the year of the refinancing or sale. Warning: The lender in the subsequent refinancing must be different to deduct points this way.
6) Job Hunting Costs: Workers can often deduct job hunting costs provided the expenses are associated with looking for a new job in your present occupation. Qualifying costs include resume preparation, printing, postage, phone calls and outplacement/employment agency fees. Remember these costs, along with other miscellaneous itemized expenses, must exceed 2 percent of your adjusted gross income before they produce any tax savings.
I hope this helps!
Protect yourself
October 23, 2009 by Roger Menden
“Small deeds done are better than great deeds planned.”
-Peter Marshall
This is that time of year when all sorts of tax-related proposals are bouncing around Capitol Hill. It’s not really worth the regular family’s time to be paying attention to the ramifications of these proposals–of course, that is, outside of making your opinions known to your own representatives.
But watching this stuff IS part of how we’re able to deliver the most up-to-date and comprehensive tax services in the area. We pay attention so YOU don’t have to!
So, here are a couple things we’re paying attention to around here:
1) First, this has been sort of a joke among we tax professionals, but it’s actually now under real consideration, apparently! (Ok, perhaps this doesn’t say much about “accountant humor”, so let’s just move along now.) They’re considering allowing deductions for pets…
http://abcnews.go.com/Politics/pets-save-taxes-congress-debate-happy-act/story?id=8811927
Seriously–$3500 of pet expenses? Those are some expensive pooches. But hey, we all love our pets!
What’s YOUR opinion? Too much? Too little? Or maybe not a very good idea in the first place?
Here’s a couple other ideas coming out of Washington…
2) The House committee charged with overseeing tax policy (Ways & Means) is considering a few sweeping proposals.
a. Extending the $8,000.00 First-Time Homebuyers credit
b. Extending the current estate tax limits
c. Some sort of jobs-measure
The original article is here:
http://www.bnasoftware.com/News_Articles/News/Rangel_Plans_Separate_Estate_Tax,_Jobs_Creation,_Tax_Extenders_Measures.asp
We’ll keep you informed, especially as it affects you!
3) We’ve got clients all across the US, so this isn’t just about our humble state. See how YOUR state gets its revenue here:
http://www.stateline.org/live/details/story?contentId=430433
It’s an eye-opener, especially as it relates to how different states are responding to the current economy!
So, on to my Personal Strategy Note. Since I send these via email, I thought this was particularly prescient. Some recent news revealed that thousands of Hotmail passwords were hacked, so here’s some tips I ran across for making sure it doesn’t happen to you!
(And, again–please do feel free to leave comments. I read every one that comes my way!)
“Real World” Personal Strategy
How To Protect Your Online Passwords
It’s been in the news that 30,000 passwords for Hotmail and Gmail accounts were stolen earlier this month. Small wonder, right?
Well, a security group analyzed those passwords and found that the most commonly used password was “123456″! If that wasn’t bad enough, the second most common password that was used…yep, you guessed it…123456789.
In today’s electronic environment, that’s unbelievable. We no longer live in a world where we can use a simple string of numbers or a child’s name as a password. They’re just too easy to hack…and the results can be much more devastating than merely finding your emails made public.
The problem is that we all have so many passwords. So how do we make strong passwords that we can actually remember for every account?
The tips below can help you avoid the most common password pitfalls and even implement a few new ideas that will make your passwords easy to remember…and hard to break!
Avoid The “Easy to Guess”
There’s no way around it…a well-protected password is hard for other people to guess. How do you do that? It’s pretty simple really. Just follow this advice:
• Use a random string of characters. That means no sequential letters or numbers, like those Hotmail accounts that used 123456!
• Make it looooong. The longer the better–even up to as many as 10 to 14 characters if space allows.
• Switch things up. Use a combination of upper and lower case letters, along with a few numbers mixed in the middle or end.
• Don’t use substitute symbols in common words. Using “@” for “a” or “1″ for “I” may look good to you, but most hackers are smart enough to break those substitutes rather quickly when the password consists of a common word.
• For that matter, avoid easy targets like words straight out of the dictionary or things like family names and birthdays.
Mix Things Up
Most of us cheat when it comes to passwords. We have trouble remembering our passwords, so we come up with two or three that we can remember and use them everywhere.
But…you should avoid the temptation! That’s because all of your accounts will be vulnerable if even one account is compromised. The reality is, you need to create and remember multiple passwords–a different one for each account! Fortunately, it’s easier than you think. Just follow the steps below.
A Simple Roadmap for Memorable, Yet Hard To Hack Passwords
Good passwords come down to two things: (1) they’re easy for you to remember and (2) they’re hard for others to break. Here’s a sure-fire tip that can help you achieve both!
1. Think up a phrase. Instead of a common word or family member’s name, think up a unique phrase that only you know. For example, you may think up something off the wall such as “I Like Short Hair Too.”
2. Make it an acronym. In our example, “I Like Short Hair Too” would become ILSHT.
3. Add Complexity. Remember those substitutes you’re not supposed to use with common dictionary words? Well, you CAN use them with your acronym. For example, “I Like Short Hair Too” can become “1 Like $hort Hair 2″ which makes: 1L$H2. You can also use upper and lower letters to make it 1L$h2. The point is to be creative, but in a way that you can easily remember it.
4. Make it unique. A password is only really unique if you use it for one account and one account only. So you can’t just use 1L$h2 for every account. And, in reality it’s still too short.
Here’s the key to the whole process: Mix in additional letters and numbers that are unique to each account. For example, if you’re logging into a “gmail account” you can use the “gm” and “@cct” (for acct) to make: 1L$h2gM@cct. Then, for a Netflix account, you may use: 1L$h2Nf@cct. That way, you’re passwords will be hard for others to guess and unique to each account, but also easy for you to remember!
Of course, these are just examples. You’ll want to be creative and think up your own acronym and ways to add unique characters for each account. And then keep that little secret to yourself so no one will be able to guess your account passwords.
Follow these simple steps and you’ll have passwords that are tough to break, unique to every account, and easy to remember. And if you have children in your house who are starting to use passwords for email and IM accounts, teach them these steps to help educate them on the importance of strong passwords – they’ll thank you later in life!
I hope this helps!
It’s a new world
October 12, 2009 by Roger Menden
“If you don’t know where you are going, how can you expect to get there?”
- Basil S. Walsh
I’m writing this on Columbus Day…which is really an interesting holiday, right? Chances are, if it weren’t for the fact that government offices shut down for it (most notably, the USPS), I’m not sure that many folks would celebrate it much anymore. It seems so distant from our current world–the notion that a man (and his crew) would set sail with no real map to guide them…and find a vast continent.
And, of course, there’s plenty of criticism (some deserved, much not deserved) about how “Euro-centric” this celebration really is. After all, it’s not like this continent was uninhabited! (And, I will say that much of the criticism doesn’t take into account the very nature of how nations were built throughout history–fairly or not, it was through war and conquest.) So, these factors have led to a slow decline in appreciation for Christopher Columbus.
But leaving aside the controversy, let’s celebrate the extraordinary accomplishment of a brave entrepreneur … who put aside fear and accomplished something great.
What’s your next ocean? We’d love to help you cross it…let us know how we can help!
Before I get to this week’s Strategy Note, a few tax items of note:
1) I’ve written often about the $8,000.00 First-Time Homebuyer’s Credit, and urging folks to move on it before it expired. Well, if you’re serving our country in the armed services, you’ve got some breathing room–it’s been extended for you.
2) This one is more of a chuckler…and an admittedly self-serving item.
Still thinking about “going it alone” on your taxes this year? Well, beware of turning to the IRS for help on the phone. Turns out the IRS didn’t answer 22.4 million phone calls last tax season.
Ouch: http://taxprof.typepad.com/taxprof_blog/2009/10/irs-didnt-answer.html
It’s a pretty low bar to hurdle, but I think I can confidently declare that we WILL answer the phone around here! (Or, at least return the call promptly if we happen to be very busy–which does seem to occur more and more.)
I’m keeping this week’s Strategy Note relatively short and sweet…I think it’s worth your time, and–especially–your action.
(And, again–please do feel free to leave comments. I read every one that comes my way!)
“Real World” Personal Strategy
Plan Now For Tax Season
Too many clients (almost all of them) wait until the late winter or early spring before they look at their tax obligations. Even worse, they wait until that season before they speak with their professional in any kind of pro-active way.
That’s a problem, and it could be costing you some serious savings.
Here’s an example:
Let’s say that you were considering taking money out of a pension (401k) to finance the down payment on a house. It’s quite a common maneuver. But let’s say next that you do this withOUT discussing it ahead of time with a professional. That could be a four (or five) figure mistake.
If you were to come into our offices before such a move, I would ask you a few easy, but very important questions, and then (depending on the answer) likely advise you to first roll the money ($10,000) into a Traditional IRA. You could then withdraw the money at a savings of $1,000.00. This is because money used for a first home, up to $10,000, is penalty-free when taken from an IRA, but NOT a 401K.
Would you be pleased by that move? I’d guess “yes”, especially if you knew about another couple I know of who failed to plan. This couple learned of the $41,000.00 penalty –when they had to pay it for doing the same thing, but from their 401(k).
Ouch.
There is no guarantee that you will save by speaking to us in advance. But this I CAN guarantee: If you don’t speak with us, we won’t be able to save you a dime.
Call, or email right away!
I hope this helps!
Make the ’space’ work for you
October 8, 2009 by Roger Menden
You will never find time for anything. If you want the time, you must make it.
- Charles Buxton
We’re rolling into fall, and getting ready for tax season around here. So here’s my question:
Are YOU ready for tax season?
The reason I ask is that you may not be aware that there are steps which you can *still* take that would significantly impact your tax bill for this year.
But here’s the problem: you (and I) may not comprehend those steps unless we sit down and have a chat about your situation. I suggest you do this quickly. It could mean significant savings for you.
Moving on to this week’s Personal Strategy Note, I often advise my clients and their friends on the *tax* elements of setting up a home office, but I came across some great advice regarding the actual setup of the space…and I believe that it’s worth your time to check it out…and to take some time to make that space work FOR you, not against you!
Oh, but before I get to that, I almost forgot to point out some more economic good news–one of my favorite activities in my Notes. Turns out that “Personal Spending” was reported last week, indicating that spending rose in August at its fastest monthly pace in almost 8 years! While the news appears to be good for the economy, we do have to take it with a grain of salt, since a large part of that spending was the result of the “Cash for Clunkers” vehicle purchasing incentive program, which is no longer in effect.
Finally, the housing industry received some good news last week, as Pending Home Sales were up significantly at 6.4%, which was far above expectations.
http://www.usatoday.com/money/economy/housing/2009-10-01-pending-home-sales-august_N.htm
Some of the increase is likely due to folks working fast to take advantage of the $8,000 First-Time Homebuyer Tax Credit, which is currently set to expire on November 30th. Be sure to ask me about this, if you or any of your friends, family members, neighbors or coworkers could benefit from this great incentive.
(And, again–please do feel free to leave comments. I read every one that comes my way!)
“Real World” Personal Strategy
The Perfect Home Office
These days, more and more people are working all or part of the time from home, making a home office a necessity. And while I have never proclaimed myself a “design guru”, here are some “Real World” tips for creating the perfect home office…
Layout – There is no bigger mistake you can make than purchasing office furniture or equipment without knowing exactly where you’ll be placing it in the room. Before you buy any new furniture, make sure you measure and plot where each piece will go, and don’t forget to account for electrical and cable outlets.
Furniture – A desk that’s roughly 60-inches wide, 30-inches deep, and 29-inches high is not only conducive to work, but it’s highly functional in terms of storing the items you use regularly. Your chair should be comfortable, but its primary function should be to promote healthy posture. Good posture will facilitate strong mental focus and will help to alleviate back and neck pain.
Lighting – Don’t underestimate the importance of quality lighting. If you’re lucky enough to have a window in your office, this should serve as your primary light source during the day. Natural light is easy on the eyes and promotes physical energy as well as a good mood. It’s also free. Large lights like floor lamps and ceiling lights should have the ability to be dimmed. Also, make sure your desk lamp is equipped with a light bulb that’s easy on the eyes. These “soft” light bulbs can be found anywhere, from office supply stores to grocery stores.
Storage - Identifying the type of items you need to store, as well as the quantity, will help you to determine an appropriate course of action. Here are a few helpful hints.
• Closets are great for storage. Not only can they house filing cabinets, but they are also perfect for storing the items you don’t need to access on a regular basis. This helps to maximize the actual workspace of your office.
• Shelving is one of the most versatile options for storage. Shelves can be purchased cheaply and come in a variety of sizes. They are easily installed and take up zero floor space.
• Don’t forget about your garage. When it comes to older files or anything that is rarely accessed, a garage can provide ample storage space. Word to the wise, however, the garage can be a dirty place. Plan accordingly by storing paper items in boxes and wrapping equipment in protective plastic.
• Visit a store that’s dedicated to home organization. Nowadays it seems like nearly every mall has a store of this kind. You’d be surprised at some of the inexpensive, space-saving storage options available.
Wall Organizers – Dry erase boards, chalkboards, corkboards, and magnetic boards are fantastic tools for keeping clutter off your desk. They are inexpensive and available everywhere in a variety of sizes. There are even combination boards that provide countless options.
Cords – Never underestimate the importance of power strips as they provide the ability to plug multiple devices into one outlet. The better power strips also provide surge protection to the equipment that’s plugged into them. In addition, cord covers are a great way to not only hide cords but to keep them from becoming a tangled mess. They can be purchased quite cheaply at any electronics store.
Decor – Last but not least, once you’ve got all the necessities in, don’t overlook decor. Certificates, diplomas, awards, trophies, and pictures not only complement an office, but they also help to personalize it. It’s also a great idea to put “triggers” on your wall which motivate, inspire and help you to maintain the proper mindset for creating wealth.
Follow these simple steps, and more organization, function, and focus could be right around the corner.
I hope this helps!
Surrounded by beauty
October 1, 2009 by Roger Menden
“You are the same today as you’ll be in five years except for two things: the books you read and the people you meet.”
- Charlie “Tremendous” Jones
Well, I generated some nice reaction last week with my plea that we all calm down!
Many thoughtfully wrote me about their opinions–and it all made me think. That’s one of the great benefits of community–we can challenge each other in a friendly, constructive way.
I’m sure we all wish our political community operated like that. But “it is what it is”, as they say…and, it’s my job (and my staff’s job) to make sure that YOU and your family don’t get smacked by the consequences of a tax code run amok. It’s why I write these blogs each week, and then move into making sure that I and my staff around here are fully-briefed on ensuring our clients (and their lucky friends) keep as much in their bottom line as legally and ethically possible.
Over the weekend, I was listening to NPR, and I briefly caught a story about something which is well worth 8 minutes of your time. It’s a thing of beauty. Perhaps you’ve already seen it? (2+ million already have on youtube.)
It’s the winner of “Ukraine’s Got Talent” (did you know such a show existed?), and she’s a “sand painter.”
See it here: http://www.youtube.com/watch?v=518XP8prwZo . It’s incredible, and will bring a touch of beauty to your day.
With her “painting” (done live) the artist recounts Germany conquering Ukraine in the Second World War. She brings calm, then conflict: A couple on a bench become a woman’s face; a peaceful walkway becomes a firefight; a weeping widow morphs into a memorial for an unknown soldier. She moves the judges to tears as she subtitles the final scene “you are always near”.
Before I moved on to some more specific thoughts for you, I thought you’d appreciate seeing that.
So, switching gears to this week’s Personal Strategy Note, I wanted to remind you of a few deadlines which are coming near…
(And, again–please do feel free to post comments. I read every one that comes my way!)
“Real World” Personal Strategy
Time Could Be Running Out…For the Pricing AND the Credit
The deadline is fast approaching to take advantage of the valuable federal tax credit for first-time homebuyers–worth up to $8,000 for 2009 purchases.
The “American Recovery and Reinvestment Act of 2009″ made the first-time homebuyer credit more generous than a previous credit available for purchases made last year. For a qualified home purchase between January 1 and November 30, 2009, the maximum credit equals the lesser of:
* 10 percent of the purchase price of a principal residence or
* $8,000 (or $4,000 for those who are married but file separately).
To qualify for the credit, the home sale must close by Monday, November 30. Merely having a contract by that date is not enough.
To make matters worse, Thanksgiving falls on November 26 this year, which means a day off for most people involved in the home buying process (banks, title companies, home inspectors, attorneys and real estate agents). So there will likely be large numbers of homebuyers trying to find a property, secure a mortgage, and fit the closing in by November 30.
The National Association of Realtors estimates that the entire process can take up to two months. So…now could be the time to act.
“Am I Eligible?”
Eligibility for the credit is limited to those who haven’t owned a principal residence in the U.S. during the three-year period that ends on the purchase date. In the case of a married couple, both spouses must pass this test (even if they don’t file jointly). So you don’t really have to be a first-time homebuyer.
For a newly constructed home, the purchase date is considered the move-in date. To qualify, the residence cannot be bought from a spouse, parent, grandparent, child, or certain other related parties.
The credit is reduced or eliminated if “Modified Adjusted Gross Income” (MAGI) is too high. The phase-out range for single filers and married individuals who file separately is between MAGI of $75,000 and $95,000. For joint filers, it is between MAGI of $150,000 and $170,000.
Under the old rules, which expired on December 31, 2008, the credit was worth up to $7,500 and all homebuyers were generally required to repay it over 15 years. The Recovery Act eliminates the 15-year repayment rule for purchases between January 1 and November 30, 2009.
However, even under the new liberalized rules that apply for 2009, buyers may have to repay the credit if they sell or stop using the home as their principal residence within three years of the purchase date. In such cases, the credit must generally be repaid by remitting it with the tax return for the year the triggering event occurs. However, the amount due cannot exceed the gain from selling the home.
“Come on–this is the kind of thing that will get extended…right?”
Well, realtors and other organizations are lobbying Congress to extend the first-time homebuyer credit and even make it larger in order to continue the real estate market recovery. But with the government short of cash right now, I wouldn’t count on it. We’ll keep you posted of any developments.
And, of course–if you go for it, give us a call to make sure it’s done right!
I hope this helps!
