“Real World” Personal Strategy Blog
“Regret for the things we did can be tempered by time; it is regret for the things we did not do that is inconsolable.”
- Sydney J Harris
Thanks for all of your notes, feedback and phone calls about last week’s post re: Haiti. That crisis seems to have affected the world in an unusual way–and it’s difficult to wade through our daily lives in the midst of such devastation “down there”. Our world here is so different, so untouched by that kind of devastation, that our “problems” really should be re-assessed in the light of the very real blessings we all enjoy.
Yes, even with its flaws, our nation has created a much better life (at least circumstantially) for so many people…and we should be thankful.
We did hear about a few good places to lend a hand (or a donation) for the Haitian crisis. Here’s a few of the suggested links:
These are notable for the fact that your donations will be most efficiently used (and not to solicit even more donations, as is so often the case with so many huge organizations).
But, as with last week, onward we must go.
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It’s “high noon” for tax season, right now…and we’re receiving a TON of phone calls.
That being the case, I thought I’d return to my series addressing the different mistakes families make when choosing a tax professional.
Let me know your thoughts…and, of course, if you’d like to talk this over with us we DO have some open appointments for now. That will quickly change, however. Call or email soon!
“Real World” Personal Strategy
Mistakes Made During Tax Season (Part 2)
Choosing The Wrong Professional
Unfortunately, with the way that most tax professionals and CPA’s present themselves to the world, it seems like we’re all the same. We all seem to offer the same services, for pretty similar fees. If I weren’t working every day in this industry, I’m pretty sure I would think that all accountants and CPA’s were the same. Nothing could be further from the truth.
You see, each tax professional does have certain qualifications. Some might be experts at this sort of tax law, or in working with farmers or with getting money back through IRS representation, or a whole variety of different things…but are they really providing what you, the consumer, wants?
What do you want from a tax preparer?
When I sit down and talk with regular consumers, here’s what I discover:
You want to be able to work with a caring professional…NOT one of those “cattle call” shops, where you’re squeezed in with a bunch of other people, and seen by harried, poorly-trained employees that just took a basic tax course.
You want an accurately filed tax return. You want the whole thing broken down in terms that you understand, and in a way that you don’t need a translator to communicate. You want there to be processes in place to ensure that the most money is kept out of the grasping hands of Uncle Sam, and in your wallet (legally).
You want a “heads up” about future ways you can legally add deductions and make sure that you can get even more money back in the future. You want assurances everything your tax preparer is doing for you is valid and correct, so a guarantee(s) is essential to the process.
And of course, you want do it fast. Look, I know this is a big deal for consumers…you don’t want your accountant pushing back at you all the time, saying “give me more time”, when you know it’s not because they’re working hard on your behalf, but that they’re so poorly organized that they’re not getting ANYBODY’S work done on time!
Oh, and if you ARE getting a refund, you want a tax firm who can get you the most money back the fastest … with the most electronic filing options available.
Here’s the bottom line: You want professionalism…accuracy … you want clarity … you want to be aware of beneficial tax options … you want peace of mind … you want an efficient use of your time …. you want your refund money back in your hands fast …. And at the end of the day, you want to KNOW you got the most money back from Uncle Sam AND you know the IRS will stay off your back so you can sleep like a baby at night!
If the accountant or tax professional you are talking to can’t do these things, you need to call one that can.
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I hope all this helps. To your family’s financial and emotional peace…
He who loses wealth loses much; he who loses a friend loses more; but he that loses his courage loses all.
- Miguel De Cervantes
I’ve been deeply affected by what happened in Haiti last week. It’s shocking, painful and the worst part of it all is how uncertain that nation’s future will remain to be for some time.
How have you been processing that event? Part of what often makes us all numb to these disasters is that “daily life” must go on. So there’s a natural disconnect.
Here I am watching images of severe devastation–there I am grabbing a caramel latte with a double shot of espresso.
But what are regular families to do, besides pray, donate … and care? Again, I’d be interested in your thoughts.
(And, as an aside, I’d also be interested to find out if you have located an effective place to send donations–the big organizations spend so much money on “overhead”, that I find it difficult to believe I’d get the most “bang for my buck” in donating. Any thoughts?)
And, while the scope of the tragedy is very different, “mopping up” after a family tragedy can be just as devastating.
Which is why, simply put, it pays to be prepared.
Yes, there have been significant estate tax changes this year–but did you know that estate planning is *much* more than just avoiding the “estate tax”?
In fact, the great majority of our clients aren’t in the wealth category affected by the estate tax legislation. But that doesn’t mean that estate planning shouldn’t be sought. You’ll see what I mean below.
(Oh, and by the way–next week, I’ll return to my surprisingly popular theme re: mistakes made during tax season. Thanks for your nice feedback!)
Let me know your thoughts…and, of course, if you’d like to talk this over with us we DO have some open appointments for now. That will quickly change, however. Call or email soon!
“Real World” Personal Strategy
Part 2: Common Myths About Estate Planning
A few weeks ago, I wrote about these common myths–still held by the majority of Americans.
In fact, as of this writing, it’s a fact that almost 60% of Americans don’t have a basic will, and that’s a big problem.
Much of the reason for this is because of misconceptions about estate planning, and I dealt with two already:
Myth 1. Only rich people prepare estate plans.
Myth 2. Everything goes to your spouse, if something happens.
Well, I’ve got three more for you to chew on, and dispense with.
Myth 3. After I create my will or living trust, there’s nothing else to think about.
Well, if you follow this line of thinking, it could lead to a lot of problems. For instance, once you set up a trust, you need to re-title the assets you want to transfer to the trust. Otherwise, the trust doesn’t help a thing.
On top of that, families need to periodically update their will or trust to reflect major life events, such as a divorce or the birth of a child. You’ll also want to revisit your estate plan if you move to another state.
In fact, it’s a good idea to meet with us every 3 or 4 years to make sure your plan is fully up-to-date. (Which, incidentally, we provide free to certain clients. Ask us about that.)
Myth 4. If I have a will, my estate automatically won’t go through probate.
Well, again–that’s not the case. In fact, ALL wills are subject to “probate”. This is a process in which a court determines whether the document is actually valid and ensures that relatives and creditors are notified. This process can take several months and drain thousands of dollars from your estate.
So here’s one way to avoid that entirely–create that living trust. Essentially, a living trust is a legal document you create which holds property (such as brokerage accounts and real estate). When you die or are incapacitated, the property is smoothly transferred to your beneficiaries. This transfer occurs outside of the probate process, which saves a TON of hassle.
Not everyone needs one of these documents, but it’s something which you can’t paint over with a broad brush. Which is why it’s important to walk with a competent guide on these matters.
By the way, if you own property in more than one state, a living trust is a no-brainer. Going through probate in multiple states is a nightmare.
Another advantage to a living trust is privacy. A will is a public document, and anyone can come to the probate hearing to see if any fights break out. Living trusts aren’t published in any courthouse, so people can’t gain easy access to them. That’s quite nice.
Myth 5. I could be held responsible for a deceased parent’s debts.
No, you’re not responsible for credit card debts from your parents.
In general, children aren’t responsible for a deceased parent’s debts, and in some cases spouses are often exempt as well. Again…you can’t paint it with a broad brush. But as a general rule, the estate is responsible for paying debts. If there isn’t enough in the estate to cover the amount owed, the debts usually go unpaid.
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I hope all this helps. To your family’s financial and emotional peace…
“There are generations yet unborn, whose very lives will be shifted and shaped by the moves you make and the actions you take.”
- Andy Andrews
How did the first week of the decade go for you? How are you feeling … financially?
As I wrote last week, the start of the year is pretty important, in my opinion. And the LAST thing you need is to be stressed over finances.
Yet that’s, unfortunately, how many families start their year, this year.
Is there anything we can do to help? Yes, we live to help you with your taxes, but what truly animates me and my staff is the fact that assisting real families (like yours) can make a difference–not just in your “bottom line”, but in the peace with which you operate. That’s, really, why we do what we do.
So, do let us know if there’s anything at all we can help you with.
We’re getting very close to the point where we begin to see many folks walk through our doors with their tax information in hand.
(Oh, and last week my blog included a mostly-complete list of what you will need to get your taxes done. That’s a great list to forward to your friends!)
As folks start streaming through our doors, we end up reviewing the “work” of other tax preparers, as we take a look at previous year returns and numbers.
It’s not always pretty.
So–I thought I’d take some time to give you some pointers for how to avoid some big mistakes during tax time. Yes, it may seem self-serving. And, well…it is. I wouldn’t write this if I didn’t firmly believe in the work we do here.
But if, for some reason, you are in the market for another tax professional (you moved, or you haven’t yet come in to see us before), I hope you’ll find this useful.
Let me know your thoughts…and, of course, if you’d like to talk this over with us we DO have some open appointments for now. That will quickly change, however. Call or email soon!
“Real World” Personal Strategy
Mistakes Made During Tax Season (Part 1)
The “Free” Online Options
Did you know that we accountants like to joke to one another about how good these online software programs (TaxCut, TurboTax, etc.) are for our business? Firstly, they are NOT as “easy to use” as claimed, and secondly…they cost you an arm and a leg.
You might think they’re cheap. And on the surface, you might be right (though, recently, a $1 Billion class action lawsuit was filed in the federal court in Philadelphia alleging gross misstatement of fees and deceptive standards of the federal “FreeFile” program … so even on the surface, it wasn’t always cheap!). But I’m not even talking about the money for the service itself.
Using those programs can end up leaving hundreds, or even thousands of YOUR dollars in the coffers of Uncle Sam … even if you follow all of their instructions to a tee. I see it ALL THE TIME–frustrated clients bringing in prior year’s tax return, astonished at all the “hidden money” my staff and I are able to find for them!
Even worse…
Choosing The WRONG Method To File Your Taxes Could Put You In Some Serious Hot Water With The IRS!
Even if I didn’t owe a ton of back taxes, I still don’t want my record to show some IRS agent that there has been some discrepancy in the past so red flags start to fly and more bureaucratic people begin looking through all my past tax filings and current income holdings … basically taking my social security number and poking around in my private life!
(If you think they won’t do this, the wool might have already been pulled over your eyes.)
They can do a lot of things you won’t want them to do. However, if you keep a clean slate (no IRS correspondence with you related to filing your taxes correctly), the opportunities for them to mess with your personal stuff will be limited.
Here’s another reason why this is so important … now more than ever! New government regulations and changes to the IRS refund system are creating a BIG MESS in the tax industry… and the “Big Brand Names” (you know who I’m talking about) do NOT want you to know about it! In fact, they’re doing all they can this year to hold on to their business, and it is NOT good for you!
Yes, it can be seductive to “go it alone”…to trust a piece of software to point out possible deductions.
But it can be a big trap.
Just ask Tim Geithner.
Be true to your work, your word, and your friend.
- Henry David Thoreau
Well, now the holidays are truly behind us, and this is the week where reality sets in for everybody.
No more family (which might be a relief?), no more parties, no more presents. Just…daily life. And, in my opinion, this week is actually crucial to how the rest of your year goes. Why?
Because intentions and actions matter. No, I don’t subscribe to a mystical ‘universal law of attraction’–but I DO believe that how we act out what we intend sets a sub-conscious belief system in place which can have an impact for months at a time.
In other words–do what you *intend* to do this week, and it’ll be much easier to carry that forward into more of 2010.
At least, that’s been my experience.
What about you? Do you find the beginning of the year to be full of opportunity? Or is it full of discouragement? I’d be interested to hear your thoughts.
Well, for my staff and me…it’s certainly full of preparation! This is one of our most intense years of groundwork for tax season, simply because the tax code is getting even MORE complex. And, truly–it seems as if I write that *every* year…which isn’t a great sign for families who are wanting to do their own taxes!
Well, for those of you who want our help (and it’s the vast majority of our email contacts), I’ve got a special incentive for you at the end of this email…AND, I’ve got a handy little list of what you’ll need to bring in. It’s mostly complete, but there may be certain situations where we’ll need other documentation to get you even more deductions…but, of course, we’ll let you know about that should the situation arise!
Let me know your thoughts…and, of course, if you’d like to talk this over with us we DO have a couple slots left! Call or email soon, though!
“Real World” Personal Strategy
A Mostly-Complete List Of What You’ll Need At Tax Time
After putting together this list and looking at it, I’m aware that it can seem quite overwhelming. However–have no fear! This is not intended to drown you in paperwork, but instead to give you a handy guide to ensuring that we’re able to help you keep everything you deserve to keep under our tax code.
As you’re getting your information together, this will help you guide your process. And, even if for some strange reason you won’t be using our cost-effective services this year, feel free to use this list as a handy guide…
Personal Data
Social Security Numbers (including spouse and children)
Child care provider tax I.D. or Social Security Number
Employment & Income Data
W-2 forms for this year
Tax refunds and unemployment compensation: Form 1099-G
Miscellaneous income including rent: Form 1099-MISC
Partnership and trust income
Pensions and annuities
Alimony received
Jury duty pay
Gambling and lottery winnings
Prizes and awards
Scholarships and fellowships
State and local income tax refunds
Unemployment compensation
Homeowner/Renter Data
Residential address(es) for this year
Mortgage interest: Form 1098
Sale of your home or other real estate: Form 1099-S
Second mortgage interest paid
Real estate taxes paid
Rent paid during tax year
Moving expenses
Financial Assets
Interest income statements: Form 1099-INT & 1099-OID
Dividend income statements: Form 1099-DIV
Proceeds from broker transactions: Form 1099-B
Retirement plan distribution: Form 1099-R
Capital gains or losses
Financial Liabilities
Auto loans and leases (account numbers and car value) if vehicle used for business
Student loan interest paid
Early withdrawal penalties on CDs and other fixed time deposits
Automobiles
Personal property tax information
Department of Motor Vehicles fees
Expenses
Gifts to charity (receipts for any single donations of $250 or more)
Unreimbursed expenses related to volunteer work
Unreimbursed expenses related to your job (travel expenses, entertainment, uniforms, union dues, subscriptions)
Investment expenses
Job-hunting expenses
Education expenses (tuition and fees)
Child care expenses
Medical Savings Accounts
Adoption expenses
Alimony paid
Tax return preparation expenses and fees
Self-Employment Data
Estimated tax vouchers for the current year
Self-employment tax
Self-employment SEP plans
Self-employed health insurance
K-1s on all partnerships
Receipts or documentation for business-related expenses
Farm income
Deduction Documents
State and local income taxes
IRA, Keogh and other retirement plan contributions
Medical expenses
Casualty or theft losses
Other miscellaneous deductions
We hope this helps, and we look forward to seeing you this year!
