“Real World” Personal Strategy Blog
This Is The Last Week …
December 26, 2011 by Roger Menden, Shakopee Tax Professional
"Life consists not in holding good cards but in playing those you hold well."
- Josh Billings
I woke up Monday morning, after the wonderful holiday weekend … and I had a realization: after today, there are only FIVE days left in 2011.
Perhaps not a genius realization — fine. BUT, if you’re smart about how you handle these days, you can pay yourself quite well, when tax time rolls around.
The VERY good news is that we’ve been able to clear out three "FAST ACTION" appointment slots this week only for clients and friends who are committed to following our advice quickly, and who want ensure that their tax bill for the 2011 tax year is the lowest it can possibly be.
There are a veritable slew of beneficial tax provisions which are expiring on Saturday night, and some of them can still be leveraged. And with the payroll tax cut deal being struck, there aren’t any last-minute shenanigans from Congress for all of us to worry about!
For a list of them (some of which is technical, but it’s all pretty clear), see here:
http://www.journalofaccountancy.com/Web/20114945.htm
Email me to snag a Fast-Action Appointment, or call: (952) 445-8753 — and may I suggest you do it quickly? These slots are sure to go fast. After that point, you’ll be put on a short waiting list.
But for those of my clients and friends who prefer to "do it yourself" (though with THIS tax code, I’m not sure that’s always wise), I’ve put together a brief, and actionable "checklist" to ensure that you’re squeezing every last drop out of the deductions available to you for 2011.
And, on the early note — let me wish you a premature Happy New Year, 2012!
Now, let’s get deducting…shall we?
Roger Menden’s
"Real World" Personal Strategy
Ultra Last-Minute Tax Moves for 2011
Because time is short, and some moves do require more than this week to pull off, I’m restricting myself to those items which you can realistically affect before the end of the year.
This will be short, and (hopefully) sweet to your wallet…
1) Use Your FSA Funds
Money set aside in a flexible spending account must be spent by the end of the year, else the funds are lost. Some employers allow a 2-and-a-half month grace period. So check with your employer to see what your personal deadline is for utilizing your FSA savings.
2) Make an Extra Payment on Your Mortgage
If you own a house with a mortgage, and you can swing the cashflow hit, add an additional payment before year-end, and the interest on that payment will be deductible for 2011. Of course, that means that it WON’T be so for 2012, but perhaps you can use this as an "extra" payment … and get ahead of the escrow game.
3) Make the Switch to a Roth IRA
Roth conversions are taxed in the year the conversion happens. However taxpayers have the option to undo part or all of that conversion by their filing deadline. But in order to retroactively undo part of their conversion next year, they first have to convert this year. So if you are on the fence about converting, consider taking the plunge before the end of the year knowing that you (and/or WE) can re-characterize some or all of the amounts early next year.
4) The old standby
You know how I feel about charitable giving by now (I hope). This week, of course, is a big one for non-profits who are the happy beneficiaries of last-minute donations. You can pay early on a monthly gift, or give a lump-sum gift. The purpose (aside from the many, many benefits to the organization, and to you), of course, being to knock you into a different tax bracket, perhaps, or to simply cut your tax bill, regardless of the bracket status. Note: This is the LAST year where charitable donations from an IRA are handled generously.
Now, there are plenty others. But these are the quickest, and the easiest (aside, perhaps, from the Roth conversion — but that can be done quickly).
Do you have others you want to explore? Give us a call (952) 445-8753 or shoot me back an email, and we’ll help you out.
Best to you! We’d love to see your family THRIVE in 2012!
“My Holiday Prayer” Shakopee Accountant Explains
December 19, 2011 by Roger Menden, Shakopee Tax Professional
"People travel to wonder at the height of the mountains, at the huge waves of the seas, at the long course of the rivers, at the vast compass of the ocean, at the circular motion of the stars, and yet they pass by themselves without wondering." -St. Augustine
It seems that every year around this time that we tax professionals cast our gimlet eyes on Congress, and wait for them to resolve their year-end business — which ALWAYS affects our work.
Well, ho ho ho … this year is no different! As of this writing (Monday morning, December 19th), we’re seeing the payroll tax cut (worth up to $1K for many working families) be batted around. (A news article on it: http://on.wsj.com/sEufja )
We’ll keep you posted with the relevant details, as well as other, hopefully-pertinent information (you never know, with Congress!).
Anyway, I came in to the office this morning, and I noticed that traffic is already a little "lighter" around town. Many of us are still working, but I know of plenty of folks who have already taken time away from work, starting today.
Whatever your faith background, it’s hard to ignore the holiday clamor. In my opinion, it’s a crying shame that a season of reflection and prayer (Christmas, Hanukkah, etc) would become transformed into something so… busy. It’s almost as if we now have to rush around to "purchase" or artificially create nostalgic moments, when they would happen on their own before.
Now look — as a proud business owner, I’ve got no problem with people earning money during this season…I just wonder when it’s time to say "enough"?
But enough holiday ranting. This week, while everyone else is attempting to slow down, we tax professionals are gearing up. I thought I would take a break from my usual "financial" strategy tips, for the holidays, and pause a moment for reflection with you.
Because as I’ve been meeting with tax clients in getting ready for the season, I’ve discovered that many of you are worried and stressed–about finances, family, personal circumstances, etc. It’s not my job to save the world on your behalf of course, but I do get to be somebody in your world that can encourage you to slow down, take a breather and keep your perspective on what’s really important.
Thanks for your friendship, and for your business in 2011, and (hopefully) in 2012!
This week’s Note is to help us all keep perspective, this week…and into next year.
Roger Menden’s
"Real World" Personal Strategy
A Holiday Prayer For All Of Us
"God, help us remember that the jerk who cut us off in traffic last night is a single mother who worked nine hours that day and is rushing home to cook dinner, help with homework, do the laundry and spend a few precious moments with her children.
"Help us to remember that the pierced, tattooed, disinterested young man who can’t make change correctly is a worried 19-year-old college student, balancing his apprehension over final exams with his fear of not getting his student loans for next semester.
"Remind us, Lord, that the scary-looking bum, begging for money in the same spot every day (who really ought to get a job!) is a slave to addictions that we can only imagine in our worst nightmares…
"Help us to remember that the old couple walking annoyingly slow through the store aisles and blocking our shopping progress are savoring this moment, knowing that, based on the biopsy report she got back last week, this will be the last year that they go shopping together.
"Father, remind us each day that, of all the gifts you give us, the greatest gift is love. It is not enough to share that love with those we hold dear. Open our hearts not to just those who are close to us, but to all humanity. Let us be slow to judge and quick to forgive, show patience, empathy and love. "
Best to you! May your season be truly bright.
Shakopee Accountant: “I’m A Myth-Buster”
December 12, 2011 by Roger Menden, Shakopee Tax Professional
"If you love life, don’t waste time, for time is what life is made up of." – Bruce Lee
Scattershooting around the tax world while simultaneously preparing for a sure-to-be-busier tax season (thanks for all the recent referrals — keep ‘em coming!) AND navigating the perils of another holiday season … well, it means one busy Roger!
Seriously, we’re getting excited about what is our most intense season of the year — TAX time. In between cookies and egg nog, we’re boning up on all of the official tax law changes, and meeting with clients for last-minute tax-planning.
A few quick tax items for you, in fact, before I get to the good stuff:
IRS might have some refund $$ for you: There’s $153 million unclaimed right now. So, if you were expecting a refund check and fear it might have been returned to the IRS as undeliverable, go to the IRS website (www.irs.gov) and use the "Where’s My Refund?" tool. This will give you the status of your refund. In some cases, it will also provide "instructions on how to resolve delivery problems." You can also can get a phone version of "Where’s My Refund" at (800) 829-1954.
A friendly reminder: Use those FSA funds in the next few weeks … or lose ‘em! No explanation necessary, methinks.
Now… on to something which might just serve as a friendly nudge: "Tax time" is the perfect time for you to get other, long-delayed financial tasks accomplished. One of these is the dreaded estate plan. This is something which every family should have in place — not just the 1% (if you will). In fact, there are some myths about preparing estate plans which I thought we should deconstruct together, today.
(And as I mentioned — preparing to set up one of these plans is much easier in the context of what you normally do in preparing for tax season … so, let us know how we can help you with it!)
Roger Menden’s
"Real World" Personal Strategy
Two Common Estate Plan Myths — BUSTED
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.
One of the big reasons that most families don’t yet have this kind of plan in place is because of some incorrect thinking about whether it’s right for them, or if it’s even necessary. And sure –some people just haven’t gotten around to creating a will or trust. Others think they don’t need an estate plan because they’re not "rich".
But here’s the problem–if you continue without an estate plan, you could leave a legacy of bad feelings and attorneys’ fees.
So I wanted to speak to some of the more common misconceptions out there. I’ll start with a couple big ones this week, and when the time is right, address a few more in 2012…
MYTH #1: Only rich people prepare estate plans.
Do you own ANYTHING? Because if so, you need a will. You see, a will allows you to designate who will receive your property should anything happen. Continuing without one ensures that your assets will be distributed under the terms of your state’s "intestate succession" laws. That means your money and property could end up with family members you haven’t spoken to in years, instead of who you’d really like to see control your assets.
I won’t go into all of the different components of a will, trust, health care directive etc., as my purpose here is to emphasize that failing to plan is simply a decision to trust your assets to government bureaucrats who don’t know you from Adam.
Even if you think your situation is pretty straightforward, you may feel more comfortable hiring a lawyer to guide you through the process.
MYTH #2: Everything goes to your spouse, if something happens.
Unfortunately, that’s not always the case. We deal with clients from different states around the country, and state laws vary. In fact, in most states, if you continue without a will (intestate), your inheritance will be divided among your spouse and your children. In New York, for example, when someone dies, the spouse gets the first $50,000 of the estate and what’s left is divided 50-50 among the spouse and the children.
You can imagine how this could create all kinds of problems, particularly if your spouse was financially dependent on you or you have children from a previous marriage.
I’ll send a few more in the future, but I hope you can already see that things are not always as we "think". And let’s take advantage of tax season and move towards getting this done (or updated) in 2012!
I hope this helps! To your family’s financial and emotional peace…
Shakopee Accountant On: “How To Handle All These End-Of-Year Giving Requests”
December 5, 2011 by Roger Menden, Shakopee Tax Professional
"The only way to get positive feelings about yourself is to take positive actions. Man does not live as he thinks, he thinks as he lives."
- Vaughan Quinn
The other day, I received probably the 20th "Consider including _____ in your holiday giving plans" request of the season. I’m not tired of it (in fact, I welcome it), but it’s also pretty clear that these 501(c)3 organizations all sort of "get" simple tax planning!
So as a tax professional, it warms my heart to see all of that deductibility flying around through mailboxes and the interwebs, and I’m especially happy when I see clients step to the plate and actually give.
Last week, I wrote about those inevitable "last-minute tax moves" we tax professionals always spout off about around this time of the year, and (surprise, surprise!) one of the options was increasing your donations.
But I wanted to address this a little more specifically — because donating for tax purposes is good (VERY good) … but there are better reasons. In fact, the current White House administration continues to scrutinize reducing the deduction rate for charitable donations, as it seems to do every year around this time.
So we might as well consider what it would look like to give with a smaller tax deduction incentive for doing so (though I should hasten to add that these proposals are not yet set into law).
Roger Menden’s
"Real World" Personal Strategy
3 Reasons To Give Money Away, With or Without a Tax Deduction
There’s something that happens to your soul when you cut a big check to someone in need.
You signal to those very fears and desires which so often control your unconscious thoughts: "Money doesn’t rule me. I have more than enough, so much more than enough that I’m giving it away." Then, of course, something special often happens: more money seems to find itself in your hands.
I’m not advocating a mystical pay-it-forward scheme; I’m simply making the observation over years of being a student of how money "works". And, "coincidentally" it just seems to find itself in the hands of those who give it away.
Why is it that those who are benevolent seem to be well-taken care of, even rich? I know many families of significant means who were NOT wealthy when they started to give in large percentages of their income (15%+). Coincidence?
So I’d say that this first dynamic is one significant reason to give: Your soul is set free from the shackles of fear and greed.
Here are two more big reasons:
2) You build a network of grateful friends and organizations. You’ll never know when someone to whom you’ve donated or given (be it time, money, connections, or other resources) comes back to you with something you need, at just the right time.
Personally, I’ve seen this dynamic in play enough times to not dismiss it. When you act or give generously, it’s the most powerful form of networking on the planet. Obviously, there are better, less self-interested reasons to give … but there sure are worse ones.
3) Your perspective can shift in an instant. When you don’t just give money, but also time and heart, you often learn heretofore unrealized reasons for being grateful about your own present circumstances.
Sometimes giving to institutions that work with the poor can bring home appreciation of your own enormous wealth. And it can also bring home awareness of a poverty which isn’t solved through adding zeroes to a bank balance. But either way, if you do it right, you are changed for the better.
With these reasons, AND the monetary benefits to your tax return, I urge you: stretch yourself this month. Give more than you think you should. See what happens.
I promise it’ll be good.
All this said, above, I firmly advocate for being careful with your planning of said giving. I don’t suggest impulsivity, just some small risk-taking.
But don’t risk losing out on the tax advantages to gifting appreciated stock, or other, less common, forms of gifting. Shoot me an email, or give us a call (952) 445-8753 if you want to discuss the tax implications of your year-end giving. It is, after all, what we do.
