“Real World” Personal Strategy Blog

Kindergartners With A Credit Card?

"Good, better, best. Never rest until good be better and better best."
- Mother Goose

Google tells me that Mother Goose didn’t *actually* exist — but she sure was smart, eh?

We’re heading into spring … and just a couple weeks remain here in "tax season" (what we tax professionals call it). I do hope that, by now, you’ve taken the steps to be in touch with my office, and that we’re already working on your file.

Next week, I’ll have some advice for "procrastinators" (you know who you are!), but needless to say — let’s not have you be in their ranks, ok?

In my Strategy Note this week, I’d like to address moms and dads. We’ve seen many parents in our offices these last few months, and I’ve asked a few of them how they handle finances with their young children. Well, many parents have no plan for training their children how to understand, and handle finances.

I’d like to help you fix that. We’ve put together some strategic advice to help you raise financially-literate children, in hopes that by the time they reach adulthood, they’ll be contributing to your family economy — rather than draining it!

Let me know what you think …

[And again--drop us a line to get in our queue ... and send your friends our way! We reward generously for referrals because they always end up being our best clients.]

Roger Menden’s
"Real World" Personal Strategy
Money Lessons For Young Children

Perhaps I’m biased, but I believe that it really is never too early to start teaching your children about good money habits. Obviously, by doing so, you are preparing them for the uncertain future. You’re also establishing a family culture, wherein money is handled with maturity and openness.

But the best news is that helping them to develop these habits can be fairly simple! I’ve put together some basic steps — many of these may not seem like rocket science, but my job is to be a coach and a goad for you to do the things which you already may "know" to do!

1) Give them an allowance–with strings. Don’t just give them an allowance for doing nothing — this actually defeats the purpose! You can buy your young children whatever they ask for, so they don’t need "spending money". Instead, see an allowance as a training tool: your children should learn that money is earned by working. Believe it or not, this isn’t an obvious connection for a young child! Because a kindergartner truly is able to help with small chores around the house, you can put them to work and let them earn their allowance this way. Rather than seeing it as a "bribe", or some sort of indentured servitude, this is a critical knowledge base for a young child.

2) The old lemonade stand. Encourage this! And do it with adult supervision. Your child will learn how to make a product, market it and sell it. While the idea is to teach good money habits, they are also learning valuable life lessons — nothing sells itself, after all. (Though with cute kids, that’s sometimes the case!)

3) Saving and investing. Rather than showering your young child with gift after gift, encourage them to go through the process of working towards a savings goal. You can always "supplement" this process, but having your child save up for an item will teach them that nothing comes for free. In return, children also learn that the items you buy them have real value and should be treated as such.

This might, even, cut down on those "negotiations" so familiar to parents who bring their children into stores!

4) Cold, hard cash. A lot of children nowadays are so used to seeing parents pay with debit and credit cards that they may not know what actual money looks like! This is a new-generational issue, and it’s important that your children learn that money is more than a mouse click, or a card swipe. Show your kids the different types of money – coins, bills, etc. and tell them the monetary amount for each.

When you go shopping, let your child have a try at paying for certain items. This will help them feel quite grown up, and again — they see that transactions don’t just "happen", they cost.

What about you? How have you gone about introducing your children to money? I’d be interested to hear some other tactics, and may share them with the list next week.

But until then, I remain your kindly tax professional — out to save the world from unnecessary taxes … and from young adults still living on Mommy/Daddy credit!

To You and Your Family!

Posting This Again

“I’d rather regret the things I’ve done than regret the things I haven’t done.”

- Lucille Ball

Well, last week I departed from my normal area of expertise, and wrote a real-world guide on preparing your family and home for a true disaster. Got lots of feedback — thank you!

But, I thought I should re-enter the fray of my primary task: ensuring you and your family don’t face an IRS disaster! And, since we’re nearing the home stretch in tax season, with the deadline for individuals (April 18th) just under a month out, we’ve been “packing them in” around here!

But this is something we still get asked about every day!

However, before I get there, I did want to say that one of the main reasons we love tax season around here is that we get to sit down with such incredible people. I’ve truly been reminded of how grateful I am for our clients–and for your trust in us during these “unusual” times.

We’re getting notes around here more and more often as people pass around my Strategy Notes to their friends. People seem to hunger for real world hope. I’m glad to be able to say that there *is* reason for anticipating a recovery in our future, but that whatever comes, my staff and I will be here to walk you through the storms.

So, onward with the answer to our most commonly-asked question around now!

Roger Menden’s

“Real World” Personal Strategy

Your Tax-Time Checklist!

In early January, I wrote a “checklist”, and it was one of our most popular messages. I guess it was handy!

Putting together this list may run slightly counter to my business goals–after all, we do get paid to do this on behalf of clients! That said, our mission is to ensure that EVERYONE in the area saves the most possible when the IRS comes calling! Some of these may seem small, but trust me when I say that they add up.

So…even if for some strange reason you won’t be using our cost-effective services this year, and because we’re getting so close to April 18th, here it is again for you: what you’ll need to prepare your taxes…

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

While some of these statements, and their ensuing deductions may seem like “pocket change”…just a few minutes of effort can pay a nice hourly rate! And, better in YOUR pockets than in Uncle Sam’s, right?

So, I hope this helps!

The Japan Disaster And You

He who loses wealth loses much; he who loses a friend loses more; but he that loses his courage loses all.
- Miguel De Cervantes

It’s deja vu all over again, with another massive earthquake coming during tax time this year. Last year, it was Haiti … this year, of course, it’s Japan.

The fallout (if you’ll forgive that term, not intended as an insensitive pun) has been radically different for each event — but, as was the case with the Haitian earthquake, the real problems and ramifications for everyone are yet to be seen … but what *is* clear is that many lives have been lost, and many more have been radically altered.

So, how have you been processing this one?

Last year, I was struck by how different my daily existence was, from the devastation wrought in Haiti. The same is true here … but I must confess to feeling (at least at first) some "disaster fatigue" setting in.

It seems that the world has spawned disaster after disaster over the last year.

But that doesn’t mean we turn away. No, this is the time where we actually need to "press in" a little, and care.

(So, 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 (as I mentioned about this time last year, for Haiti) I find it difficult to believe I’d get the most "bang for my buck" in donating to them (as we unfortunately saw with Hurricane Katrina). Any thoughts?)

So, rather than my normal tax or financial fare this week, I have something different. I’ve stopped apologizing for being such an obsessive planner … it sort of pays to be that way, in my profession, after all! This week, I wanted to remind you of what we almost never think about during "good" times: How to prepare your family for "grid-failure" emergencies.

This isn’t an area of extensive expertise for me, but it’s so important, I did some research, and have a good framework for you to consider… (after the jump)

Roger Menden’s
"Real World" Personal Strategy
How To Prepare Now For a "Japan-Type" Disaster
With the images of devastation we’ve been seeing, in addition to being moved for those who are currently experiencing all this, I’ve been reminded how important having a plan really is.

This is true for finances (a tax plan, an estate plan, etc. – let us know if you need to set one of those up! 952-445-8753), and it’s equally true for a big disaster.

We can be so complacent about the security of our daily existence, that an event like this seems unrealistic. But, we’re getting continued reminders, every year, at how fragile our modern world truly can be.

But that doesn’t mean you have to panic.

No, with a few basic points of preparation, you and your family could be vastly more prepared than your neighbors, even giving you the opportunity to be ones who can support and assist your neighbors, rather than have to *ask* for support.

There are three primary areas where you need to be prepared:
1)    Energy/Power/Heat
2)    Water & Food
3)    Family

1) Energy: However unlikely a massive grid failure might seem now, it’s important that you at least think through what you and your family would do about heating your home during the winter (wood stove? indoor propane heater? burning your furniture?), and/or cooling your home during the summer (which may not be quite as critical).

Additionally, consider what parts of your existence are dependent on power, and what it would be like to live without it. Write down your plan.

2) Food & Water: For water and food, it’s a very good idea to have food and water for at least 3 days on hand, and in permanent storage. Typically, you need about a gallon of water, per person, per day … and non-perishable food is now so readily-available, that you have your pick for how to stock up. You can save water in a leech-proof plastic jug and just switch it out every 5 years.

3) Family Plan:
* Identify meeting places where you and your family would come together, in the event of some sort of catastrophic grid failure or event, in which you aren’t able to stay at home.
* Put together a "Go Bag" for your family, which carries critical supplies and information for whatever circumstance you may run across. Here is what your bag should include …
•    A disaster plan including location of emergency centers, rallying points, possible evacuation routes, etc.
•    Positive Identification, such as drivers license, state I.D. card, or social security card
•    Enough medicine to last an extended evacuation period
•    Cash and change, as electronic banking transactions may not be available during the initial period following an emergency or evacuation
•    A first aid kit
•    Fire starting tool (e.g., matches, ferrocerium rod, lighter, etc.)
•    Professional emergency literature explaining what to do in various types of disaster, studied and understood before the actual disaster but kept for reference
•    Maps and travel information
•    Standard camping equipment, including sanitation supplies
•    Weather-appropriate clothing (e.g., poncho, headwear, gloves, etc.)
•    Bedding items such as sleeping bags and blankets
•    Medical records
•    Pet, child, and elderly care needs
•    Battery- or crank-operated Radio
•    Lighting (battery- or crank-operated flashlight, glow sticks)
•    Firearms and appropriate ammunition
•    Fixed-blade and folding knife
•    Duct Tape and rope/para-cord
•    Plastic tarps for shelter and water collection
•    Slingshot, pellet gun, blowgun or other small game hunting equipment
•    Wire for binding and animal traps

This all might seem a bit excessive now … but so does every disaster plan — until disaster actually strikes.

So, perhaps make it a fun family activity to work through setting up these plans, and you’ll sleep much better knowing you’re prepared!

To you and your family’s safety!

Are You Working Without A Net?

“Then give to the world the best you have, and the best will come back to you.”

- Madeline Bridges

Before I get to what I wrote this week, I wanted you to know that there are a few important “announcements”, following my Note, which affect your tax situation for 2010 (i.e. the taxes we’re helping you prepare NOW), or for this year.

I’m always fascinated by the “behind the scenes” of what happens in different businesses. For instance, I wonder what the board meetings are really like for professional sports teams, for tv stations. Some people think about the teams, the shows … I find myself thinking a lot about the business behind them. That’s just how I’m wired.

Well, one of the “behind the scenes” aspects of OUR work is our interaction with other tax professionals. We go to conferences (put on by the IRS, etc.), we share strategy with one another (unless we’re in fierce local competition — but even then, I make it a point to be giving), and we often get to see each other’s work (reviewing returns).

But one of the problems with many tax professionals are the “terms” by which they operate, and a  lack of communication about what happens when … well, read on.

Roger Menden’s

“Real World” Personal Strategy

When The Tax Return is Wrong

Do you have a tax accountant who guarantees their work…in writing?

Sure, some guys might say: “We’ll make it right if we screw up”, but then the stuff hits the fan and they fight you every step of the way.

I’ve heard too many horror stories about taxpayers getting a letter from the IRS, then they take it to their accountant, and then the letter sits on a desk gathering dust.

Or stories about the CPA who makes some calls on your behalf, but then you get charged an arm and a leg in the process.  Or sadly, a taxpayer doesn’t get any help from the person who prepared their taxes for them so they “go it alone”, call the IRS themselves and have to try to figure out what to do and not to do during this normally ugly IRS correspondence … THIS can be a nightmare!

Don’t let that happen to you. You need to have a written understanding with your tax professional that you won’t be left in the lurch. Oh, and also-does this guarantee actually do something you want it to?

I’ve seen some accountants guarantee they will file your taxes for you by April 15th or they will file an extension for you.  Well…great!  That sure makes you feel good in the morning, doesn’t it?   Other weak guarantees I’ve seen in the tax industry are, “We guarantee we will begin preparing your tax return the same day we meet with you.”

That means nothing to me.  I don’t care when you start preparing my taxes.  I want to know how long it is going to take you to finish it and do so without leaving out silly errors you know you should have caught.

So remember:  the guarantees should be in areas you care about, like:

Tax Return Accuracy … Speed of Service … Most Money Legally Yours … Ongoing IRS Protection For Years After Filing …

These are the things YOU care about!  Make sure the tax professional you choose stands behind these critical areas of tax filing so you get the most out of your tax filing experience.

Now for those announcements:

1) There are (literally) BILLIONS of dollars in unclaimed refund money available from the IRS from 2007 returns. Here’s the catch: You must claim it by April 18th, 2011. How do you do that? Have us take a look at your return, and file an amendment if we find something which needs changing, updating, etc. There are all kinds of reasons why this might be — suffice to say that nothing ventured, nothing gained.

Or, alternatively, there are people who simply didn’t FILE a return, but just trusted that the taxes withheld from paychecks was correct. Oops — that’s where the IRS gets the billions figure, because there are unclaimed refunds due to unfiled returns.

Either way, we can help (and routinely do). Call us: 952-445-8753

2) About that deadline: We have three extra days to work on your information this year, but this does NOT mean that you should procrastinate!

The three extra days have been added because of Emancipation Day, which is a little-known Washington, DC holiday that celebrates the freeing of slaves in the district. The holiday actually falls on Saturday, April 16 this year, but will officially be observed on Friday, April 15. As a result, the IRS pushed the filing deadline to Monday, April 18 – since the tax code states that filing deadlines can’t fall on Saturdays, Sundays or holidays.

Despite this short extension, the federal filing deadline is approaching quickly. Don’t wait until the last minute to get your paper work in order.

With gratitude for your trust!