A Friendly Tip (Not About Taxes)

“It is well to give when asked, but it is better to give unasked.”

- Kahlil Gibran

Last Monday, there was a certain holiday to attend to,

and it’s pretty easy to let things sort of slide on by after

that point. But here’s my advice for you:

Don’t stop there.

Yes, yes — the old canard: EVERY day is Valentine’s Day!

And I’m very aware that you may have had a budget

for your expressions of love, so I’m taking a different approach.

These are some non-budget-busting ways to go “above and beyond” –

when it matters. Sure, wives may scoff at this list, and be gratified

when their husbands successfully surpass it. And husbands, well,

I know some are skilled at romance; and others …

well, here’s some help!

You see, how nice would it be to have “come through” last week

(or, well, not, as the case may be), but then follow up with

something more?

And again, I know that many families on my list have a certain

amount of means at their disposal, and others don’t. Which

makes this list even more helpful. Because *whatever* your budget,

the simple gesture of coming back around AFTER Valentine’s Day

is how real magic happens.

So, yes — today’s Note is not about taxes, per se … but as part of my

continuing quest to serve you “above and beyond”, I thought I’d offer

you a friendly reminder.

[But, on that note: Have you contacted us yet to get your taxes

in order? Because our schedule is rapidly filling up. Oh, and we

do generously reward for referrals, so send your friends our way! Just

have them let us know you sent them, and we'll give them a special

deal -- just from you.]

Roger Menden’s

“Real World” Personal Strategy

Making Your Love Gestures Stick

It’s no secret that our economy is in tough shape. And whatever your particular financial situation, wouldn’t it be great to create romance “magic” without spending an arm and two legs? So, perhaps you’ve done the old “flowers, candy and chocolate” routine already last week. Well,  here are a few modest and occasionally tongue-in-cheek suggestions for a sizzling follow-through … that won’t torch your wallet!

Be Green – Save Money and the Environment at the Same Time!

With the economy taking its toll on virtually every industry, even the high-rollers are looking for ways to spend their cash more effectively. One Hollywood studio saved $40,000 on cards and postage by doing e-Cards and videos for all of their clients and friends.

Seem cheap?  Spin it this way – you’re being green by not using snail mail – that’s so 20th century anyway. You’re keeping with the times, utilizing powerful technology and reducing your “footprint” at the same time! What environmentally-conscious woman could resist?!

Make a Video.

You can use the video setting on your digital camera, and create a heartfelt message of love for your sweetie. Then, you can post it to YouTube, or another online video-sharing site and send it on! Um, just be sure to adjust that YouTube setting to “private” unless you want to share with the world your dying love for your honey (hopefully with clothes on!).

Learn a Romantic Song and Sing it to Your Sweetheart.

Well, I’m no singer, so I can’t say I’ve tried this … but I hear it works well. Even better, if you can’t sing, your more-than-a-valentine will give you kudos for the effort! You could step it up by writing an original song and then sing it. Or, for the slightly-less courageous, you could pull a page out of John Cusack’s book in Say Anything and hold a boombox (or iPod) above your head and blare Peter Gabriel’s “In Your Eyes”. That seemed to work.

Not a singer? More of a writer? Or artist? For the artistically and/or musically inclined:

- You could pen a poem on nice paper

- or even paint it

- You can paint a picture of your honey. Just be sure it looks good.

The “Mix Tape” (or Playlist)

This is an old standby of high school kids everywhere. Except these days, the “tape” part is a bit less convenient. Instead, make a CD or mp3 playlist of Sweet Love Songs and make a cover list/ liner notes on the memories of you and your honey from the songs. And you can make a Personalized Photo Album using a service like Apple’s iBook service and iPhoto.

Romantic Picnic

Surprise your love with a ‘picnic’ in the park, at the beach, or any other outdoor nature spot. If the weather isn’t ideal for outdoors, you could bring the outdoors inside -find a fake palm tree, flowers, sand, beach umbrella, radio, towels. Nothing says “I love you” like fake palm trees!

Write a Message To Be “Stumbled Upon”

Well, perhaps not *literally* stumbled upon, but try a nice outdoor surprise. If you do have snow outside, you could stomp out the message and fill in the letters with spray paint or flower pedals or rocks.  If there’s no snow, you can use sidewalk chalk to write a message to your sweetie.

You see, anybody can go out and “buy something” – but it takes effort and thoughtfulness to make it personal … and it doesn’t require a lot of money!

Just remember … follow-through is everything!

‘They’re All The Same’, And Other Untruths

“If you do not tell the truth about yourself you cannot tell it about other people.”

- Virginia Woolf

So the really important question: How’d you do on Valentine’s Day?

Many people say it’s a “Hallmark Holiday”, but well–some spouses and significant others think otherwise, right? Well, if you blew it, I’ve heard that it’s NEVER too late. Make this week count, my friend.

In fact, I briefly considered writing a treatise on love for you this week, but, well — I figure I should stick to my area of most expertise. And this week’s Note is about a marriage of a different sort.

There’s a news story floating around this week about politicians having to prepare their own taxes. (Here’s what I’m referring to, btw: http://www.nytimes.com/2011/02/13/business/yourtaxes/13essay.html) Apparently, the proposal gets a few laughs from those who hear about it, because, really — it’s becoming mind-numbingly complex, even for many professionals.

You think I’m kidding on that one? Well, you should see some of the returns we review for people who have had them prepared elsewhere … yikes.

So, just as the choice to file taxes via robotic software fails the test, selecting the wrong professional to file your returns can be a big, big mistake.

Here’s what I mean.

Roger Menden’s

“Real World” Personal Strategy

Is There Really Any Difference?

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 know that 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.

To your family’s financial and emotional peace!

Well-Publicized Mistakes, And Going Alone

The important work of moving the world forward does not wait to be done by perfect men.

- George Eliot

This week after the Super Bowl is leaving football fans at a bit of a loss. But an interesting fact about the winning Green Bay Packers: They’re the only professional sports team operating as a non-profit organization. There are exactly 112,015 owners of the club. That’s why it was the team “President” receiving the trophy the other night, rather than the usual team owner.

Now for the awkward segue into what I want to tell you about — and warn you about: The Green Bay Packers ownership isn’t a “lonely” enterprise, but you know what is? Trying to prepare your taxes correctly on your own.

[Sorry for that. Sometimes I have to stretch events to fit the narrative:). But stay with me, as this is important -- especially for you or your friends & family who may choose to go this route.]

You see, I don’t like to crow about other people’s mistakes.

In fact, in our line of work, much of what we get to do is to *fix* or alleviate those mistakes, at least when it comes to their tax implications.

And many of the mistakes we see, every year, are when taxpayers decide to tame the tax code on their own, or with the “help” of off-the-shelf software. Do you remember last year when even the Treasury Secretary, Tim Geithner, testified about tax irregularities in his personal returns? Do you remember where he placed the blame?

Turbo Tax.

And he’s not alone. But there’s a good way to fix that problem…

Roger Menden’s

“Real World” Personal Strategy

Don’t File Your Taxes By Yourself

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, last year, 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 their 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, or forms, in filing your taxes can place you directly in the crosshairs for an audit.

Even if I don’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 that 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, read a little online about the increased “enforcement” measures the IRS is taking this year.)

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 in 2010, delays in Congressional action, and issues with refund “loans” from the big chains are creating a 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 trust me — 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. To trust your work to poorly-trained preparers in a big box office.

But it can be a big trap.

Just ask Tim Geithner.

To your family’s financial and emotional peace!

Clearing The Fog Of Common Mistakes

Derive happiness in oneself from a good day’s work, from illuminating the fog that surrounds us.

- Henri Matisse

This is the time of year, during which we get to do exactly what Monsieur Matisse, up there, advises.

We clear the fog of the (unnecessarily, in my opinion) burdensome pile of forms and regulations which form our tax process. Yes, some people get paid to create tasty food, others to patrol our streets … and we, well we put out financial and regulatory fires.

And it can be a lot of fun — really! There are stories every year, which circulate around our office, about the grateful client who was utterly hopeless about their financial and tax situation … until they met with us, we crunched their forms and numbers, and not only gave them the nice news of a lower tax bill (or higher refund) than they expected — but that we were able to speak into the overall situation of their finances.

But for some strange reason, many taxpayers STILL choose to “go it alone” when it comes to preparing their returns.

Well, far be it from me to have such hardy souls be left in the dark. While what I’m writing this week may seem “professionally risky”, we are sincere about wanting everyone in the area to pay the least amount in taxes possible.

So, even though it might encourage some people towards the risks of software-powered self-preparation, instead of our cost-effective, quick-but-meticulous services … here is a list of the most common errors I see when I review self-prepared returns.

(Warning: There’s no “app” for experience.)

Roger Menden’s

“Real World” Personal Strategy

Most Common Self-Preparation Tax Errors

As all of your information is coming into your mailbox this month to prepare for your taxes (Doctor’s bills, old W-2′s, interest statements for student loans, etc.), it can be tempting (to some folks, at least) to forego the  perceived “expense” of using a professional to help you save on your taxes for the year.

So, if you decide to go down that lonely road, please do at least watch out for these common errors which we routinely correct for those who have us review their previous-year returns:

* Filing the wrong status (dependent or independent, 0 instead of 1, etc.)

* Missing forms

* Forgetting to sign it (this is incredibly common! Make SURE you sign!)

* Not adhering to new laws (a biggie)

* Math errors or mixing up numbers

* Standardized deduction (one lump sum) when itemizing may return more

* Forgetting earned interest

* Not claiming your charitable donations (more common than you’d think!)

* Incorrect social security numbers

* Missing the deadlines

* Not checking last year’s taxes to see if anything carries over (again, very common — and a good reason to have a pro check it out)

* Not taking deductions where they’re pertinent (IRA’s, too much Social Security being taken out)

* Failing to include dependents who don’t live with you

* Claiming someone as a dependent who claimed themselves as independent

* Not filing domestic or self-employment taxes

* Not claiming credits where they’re due (Child Tax Credit, Earned Income Credit)

So what can you do to correct all of these errors?

1) Double check. And triple check. Then check again. The idea here is that when another pair of eyes look at it, they can see stuff you don’t. Your mind will tell you that things that you write or calculate are correct, even if they aren’t.

2) Go to a professional. Self-serving? Why, yes. But as I mentioned in my introduction, we get paid to know what we do, and following the tax code permutations is our J-O-B. We’ve seen so many tax returns, even already this year, that what would take you 12 hours — can be accomplished by me and my practiced team in one.

I’m not suggesting we never make mistakes … but can you really afford to skimp when thousands are on the line?

To your family’s financial and emotional peace!

Some Light Notes for Hot Times…

“Look, I’m not the one with the problem, okay? It’s the world that seems to have a problem with *me*! People take one look at me and go ‘Aargh! Help! Run! A big stupid ugly ogre!’ They judge me before they even know me.” – Shrek

The old email inbox has been “heating up” of late–we’ve been talking taxes, health care, current events–and how to put MORE into your family’s bottom line.

As you know, I love talking about this stuff…and there’s plenty to discuss these days.

But I thought that THIS week, I’d take a break from your regularly-scheduled money-saving advice, and offer up a few tidbits to keep things a little light around here. After all, it’s getting *hot* out there!

So…here we go:

*You thought the IRS was after YOU? Check out THESE famous tax cheats :
http://www.thedailybeast.com/blogs-and-stories/2009-08-03/a-list-tax-cheats/?cid=hp:beastoriginalsR3#

* You thought this only happened in fables? Think again…
http://www.timesonline.co.uk/tol/news/uk/science/article6753086.ece

* Everyone makes a difference: (this is NOT a misprint)
“Xvxryonx makxs a diffxrxncx”
Somxtimxs I gxt to thinking that what I do doxsn’t mattxr.
But whxn I start thinking that way, I rxmxm¬bxr my old
typxwritxr. Most of thx kxys workxd finx most of thx timx.
But onx day, onx of thx kxys stop¬pxd working altogxthxr.
And that rxally mxssxd xvxrything up. So whxn I’m txmptxd
to say, I’m only onx pxrson, it won’t makx much diffxrncx if
I don’t do this quitx right, I rxmxmbxr my old typxwritxr. And
I say to mysxlf: “I am a kxy pxrson and nxxdxd vxry much.”

Adapted from the book Inside the Magic Kingdom, used with the permission of the publisher.

Finally, for my “Real World” Personal Strategy Note, I’d like to pass along something an old friend sent to me…feel free to send this along yourself, and remember to be thankful!

“Real World” Personal Strategy
Thanks For Your Time

It had been some time since Jack had seen the old man. College, girls, career, and life itself got in the way. In fact, Jack moved clear across the country in pursuit of his dreams. There, in the rush of his busy life, Jack had little time to think about the past and often no time to spend with his wife and son. He was working on his future, and nothing could stop him.

Over the phone, his mother told him, “Mr. Belser died last night. The funeral is Wednesday.” Memories flashed through his mind like an old newsreel as he sat quietly remembering his childhood days.

“Jack, did you hear me?”

“Oh, sorry, Mom. Yes, I heard you. It’s been so long since I thought of him. I’m sorry, but I honestly thought he died years ago,” Jack said

“Well, he didn’t forget you. Every time I saw him he’d ask how you were doing. He’d reminisce about the many days you spent over ‘his side of the fence’ as he put it,” Mom told him.

“I loved that old house he lived in,” Jack said.

“You know, Jack, after your father died, Mr. Belser stepped in to make sure you had a man’s influence in your life,” she said

“He’s the one who taught me carpentry,” he said. “I wouldn’t be in this business if it weren’t for him. He spent a lot of time teaching me things he thought were important…Mom, I’ll be there for the funeral,” Jack said.

As busy as he was, he kept his word. Jack caught the next flight to his hometown. Mr. Belser’s funeral was small and uneventful. He had no children of his own, and most of his relatives had passed away.

The night before he had to return home, Jack and his Mom stopped by to see the old house next door one more time.

Standing in the doorway, Jack paused for a moment. It was like crossing over into another dimension, a leap through space and time The house was exactly as he remembered. Every step held memories. Every picture, every piece of furniture….Jack stopped suddenly.

“What’s wrong, Jack?” his Mom asked.

“The box is gone,” he said

“What box?” Mom asked.

“There was a small gold box that he kept locked on top of his desk. I must have asked him a thousand times what was inside. All he’d ever tell me was ‘the thing I value most,’” Jack said.

It was gone. Everything about the house was exactly how Jack remembered it, except for the box. He figured someone from the Belser family had taken it.

“Now I’ll never know what was so valuable to him,” Jack said. “I better get some sleep. I have an early flight home, Mom..”

It had been about two weeks since Mr. Belser died. Returning home from work one day Jack discovered a note in his mailbox. “Signature required on a package. No one at home. Please stop by the main post office within the next three days,” the note read.

Early the next day Jack retrieved the package. The small box was old and looked like it had been mailed a hundred years ago. The handwriting was difficult to read, but the return address caught his attention. “Mr. Harold Belser” it read. Jack took the box out to his car and ripped open the package. There inside was the gold box and an envelope. Jack’s hands shook as he read the note inside.

“Upon my death, please forward this box and its contents to Jack Bennett. It’s the thing I valued most in my life.” A small key was taped to the letter. His heart racing, as tears filling his eyes, Jack carefully unlocked the box. There inside he found a beautiful gold pocket watch.

Running his fingers slowly over the finely etched casing, he unlatched the cover. Inside he found these words engraved:

“Jack, Thanks for your time! -Harold Belser.”

“The thing he valued most was…my time”

Jack held the watch for a few minutes, then called his office and cleared his appointments for the next two days. “Why?” Janet, his assistant asked.

“I need some time to spend with my son,” he said.

“Oh, by the way, Janet, thanks for your time!”

“Life is not measured by the number of breaths we take but by the moments that take our breath away,”

If you have a great friend, take the time to let them know that they are great.

Send this letter to all the people you care about, if you do so, you will certainly brighten someone’s day and might change their perspective on life…for the better.

To everyone I write this: “Thanks for your time.”

To a LOW tax bill for you!

Turns Out You Might Get Taxed, After All…

“Morale is when your hands and feet keep on working when your head says it can’t be done.”
- Benjamin Morrell

As you know, from previous notes we’ve exchanged, I really do try to steer clear of political disputes. My clients hail from all sides of the political spectrum, and it does me no good to tick off a bunch of friends to somehow “prove” my bona fides to another.

But I think we can all agree that our political system isn’t what it should be. That said, I still believe we live in the best country on the planet–despite how disappointed we can be with individual politicians. And with these individuals, I think it’s fair and appropriate to point out that “promises” made on the campaign trail sometimes must bow to facts on the ground.

Why do I write about this?

Well, it’s now in the news that President Obama may indeed be contemplating a tax increase on middle-class families, despite his promises to the contrary: http://finance.yahoo.com/news/2-Obama-officials-No-apf-2491158742.html?x=0&.v=7 . Again, people may (vigorously) disagree about the particular economic strategy of raising taxes in the midst of a downturn, but after working with the IRS for years, I’ve discovered this unassailable truth…

The government really likes to have your money.

And sure–putting yourself in their shoes, it’s hard to blame them! Of COURSE individual bureaucrats and politicians believe that THEIR particular initiatives deserve funding–it’s normal human nature, right? It’s just that the funding comes in the form of being taken from your and my paycheck.

Which is why we do what we do here.

I’m all for paying my fair share–I just hate when I see families hit with a “stupid tax” because they didn’t know all the relevant tax code…or because they worked with somebody who didn’t take the kind of time we take.

On to this week’s Personal Strategy Note: now’s a great time to get the education you’ve been putting off to advance your career. Once you’re done (hopefully) the job market will be MUCH better than it is now! I’ve got some money-saving tips for you this week…

“Real World” Personal Strategy
Go Back To School…At No Charge!

Recessions often see a “boom” in adult education, and this one’s no different. But if you’re seriously considering how to get ahead, do NOT leave behind these strategies to get the thing paid for!

Scholarships
Many scholarships don’t have age limits, which makes anyone eligible to apply. Check out www.Fastweb.com and www.SuperCollege.com to search for available scholarships.

Professional and Trade Organizations
Local and national professional and trade organizations often offer grants and scholarships. For instance, The San Diego Foundation (http://www.sdfoundation.org/grant/ ) has several scholarships for adults. Begin by doing an Internet search for your particular locale and specialty. You can also contact your local Chamber of Commerce to see if they have any information on local grants and scholarships.

Colleges and Universities
Many schools offer scholarships created especially for adults who are returning to school. Check a school’s individual Web site or contact the admissions office for details.

The Government
Individual states may also provide grants to help people attend re-training programs that they sponsor. Information and links can be found at www.careeronestop.org . In addition, the Obama administration has launched www.opportunity.gov to help unemployed adults return to college. The site includes information on a variety of federal student aid programs.

Employers
A large number of employers still offer tuition assistance, especially if you can show how the educational program will help your job performance. For adults who want to return to school while they are still working, this is another avenue to consider.

The Bottom Line
With a little research and a little effort, returning to school may be a whole lot easier…and a whole lot cheaper…than you think!

Hope this helps!

There ARE Some Shady Tax Pros Out There

“A lot of people like to do certain things, but they’re not that good at it. Keep going through the things that you like to do, until you find something that you actually seem to be extremely good at. It can be anything.”
- George Lucas

This subject came up in a note I wrote in mid-June, and the topic is back in the news.

You see, unlike my clients, there is a growing number of individuals and families who feel like they get a bit taken advantage by unethical and poorly-trained tax preparers and professionals. Families get sold on promises of fat refunds and excellent service…and then reality sets in. Errors, unfulfilled promises and worse–audits (!) come down the pike, and these families are left hanging in the lurch.

Well, the federal government is considering requiring a license for *anyone* who prepares taxes on another’s behalf. And yes…you might think I’d be opposed to these additional standards and licenses, but, in fact, legitimate businesses generally welcome higher standards as a way of announcing to our clients that we meet those standards! The American Bar Association and H&R Block are just two of the organizations that have announced they support the IRS effort.

Further, you can add your own comments for the IRS here: http://www.irs.gov/newsroom/article/0,,id=211141,00.html . Feel free to add your thoughts–it will NOT increase your likelihood of an audit .

Moving on to the subject of this week’s Strategy Note, we’ll be talking CARS. Specifically, of the “clunker” variety, as the new federal program started on Friday. Plus, there’s some other ways you can save on your taxes through qualifying vehicle purchases, which I lay out in this week’s note.

Oh, but before I go there, let me remind you of our “Independence Month Special”, esp. for your friends who may want the peace-of-mind from having some REAL professionals review their previous years’ returns–up to three years previous can still trigger an amendment which can save on taxes!

“Real World” Personal Strategy
Cars, Cars and CARS…

Two items today, re: vehicle purchases…

There’s been a bit of controversy surrounding the new program for trading in low-mileage vehicles (see here: http://abcnews.go.com/Business/story?id=8154897&page=1) , but regardless of your opinion on the program, it started on Friday.

To recap…

*Trade-ins must be 1984 models or newer, get no better than 18 miles per gallon, and have been registered and insured for the past year. (An interesting note is that buyers’ trades will actually be completely scrapped and have no value to the dealership above the amount of the voucher. A 10-year-old Lexus might qualify for the biggest ($4,500) voucher, but it’s almost certainly worth more than that on the open market, so you should keep that in mind.)

* The mileage you get in your daily driving does not matter one bit. What matters is what’s on record with the government; its source of data is www.fueleconomy.gov. A muffler-dragging 23-year-old Honda may meet the popular definition of “clunker”, but if the government’s estimates show it should get more than 18 mpg combined new, it’s not a clunker. You’ll see two sets of fuel-economy numbers for most cars: one calculated under an older EPA system, the other recalculated to reflect a new formula. Use the new one.

*The numbers:
- New passenger vehicles must have a combined mpg of 22mpg; “Light duty” trucks must be 18 mpg; and trucks over 6,000 lbs. must get 15mpg

- To qualify for the program, the “old” vehicle must get…

>Passenger vehicles– 4 mpg LESS than the new for $3500 credit; 10 mpg LESS than the new for $4500 credit

>”Light duty” trucks– 2 mpg LESS than the new for $3500; 5 mpg LESS for $4500

>Trucks over 6K lbs– 1 mpg LESS than the new for $3500; 2 mpg LESS for $4500

Let us know if we can help…

SEPARATELY from “Cash for Clunkers”…

A special deduction will be available on your 2009 individual tax return, next year, whether you itemize deductions or not.

If you purchase a new passenger vehicle between February 16, 2009 and before January 1, 2010, you may qualify for the deduction. There are income limitations after which a phase-out will occur. For example, if your modified adjusted gross income is between $125,000 and $135,000 for individual filers, or between $250,000 and $260,000 for joint filers, the deduction may be discounted or disallowed.

No matter whether you purchase a new car, light truck, motor home or motorcycle, this deduction will be limited to the state and local sales and excise taxes paid on up to $49,500 of the original purchase price of the vehicle. According to the IRS, this deduction will enable you to buy now and get cash back later on your 2009 tax return.

Hope this helps!

Summer Time is Tax Cutting Time!

No life ever grows great until it is focused, dedicated, disciplined. - Harry Emerson Fosdick

It’s pretty crazy that we’re already nearing the end of July! Is it just me, or is time really flying by? More than halfway through 2009…

Well, I often try to avoid discussing taxes with you in these personal notes. I find that too many tax professionals and accountants are so full of tax jargon, that the regular family just ends up buried in a blizzard of gobbledy-gook.

I hope you can already tell that I take a different approach . And, of course, it’s our JOB (and our true pleasure at my firm) to take care of most of that stuff on your behalf in the first place!

But I did want to make some suggestions this week for how you can plan ahead NOW to avoid getting nailed next tax season.

That’s my subject for this week’s Personal Strategy Note…read on, and leave your feedback or questions!

“Real World” Personal Strategy

Tax Cutting Tips For The Summer

Here are just a few summertime tax-saving ideas to consider:

* If spring cleaning left you with outgrown clothing and household items you no longer use, donate them to charity. Items in good used condition qualify for a tax deduction.

* If you and your spouse work, consider sending your children to a summer day camp. The cost may qualify for the dependent care tax credit.

* If you operate an unincorporated business, consider hiring your children to work for you this summer. You can deduct reasonable wages paid to them for the work they perform, and there’s no social security tax on their wages if they are under age 18.

* Summer is great for entertaining customers or clients. Keep records of the cost, the date, who was entertained, and what the business purpose was. However, your tax deduction is limited to 50% of your cost.

* Combine business with your summer travel, and you may be able to take a tax deduction for the business portion of your costs.

Need To Make Some Home Improvements?

Make energy efficiency changes and you might be able to cut your 2009 tax bill at the same time.

The 2009 tax law signed in February expanded energy tax credits in order to encourage homeowners to make improvements that will make their homes more energy-efficient and save money over the long run.

Qualifying improvements – such as adding insulation, energy-efficient exterior windows, and energy-efficient heating and air conditioning systems – could cut your taxes. Previously the credit for energy improvements was 10% of the cost, with a $500 lifetime limit. The new law increases the credit to 30%, with a $1,500 limit.

The new law also eliminates the cap on the 30% tax credit for alternative energy equipment, such as solar water heaters and geothermal heat pumps installed in homes.

For details and guidance in maximizing the enhanced energy credits for your home improvement projects, give us a call. We’re here to help you benefit from every available tax break!

Hope this helps!

To a LOW tax bill for you!

More on Achieving Financial Independence

“A true conservationist is a man who knows that the world is not given by his fathers, but borrowed from his children.” – John James Audubon

Thanks for your responses from last week’s Strategy Note on achieving financial independence. It was so well-received, that I thought I would spend a bit more time on that subject in this weeks’ note for you.

But, before I get there, I’d like to speak some encouragement to you. A few people wrote to me saying that they were feeling pretty dispirited about their personal situation…and that anything discussing “financial independence” really seemed like a pipe dream, and unrealistic for them.

As usual, I know that when a few people write about it, there’s many more that think it, and I’d like to speak a word to you, if you’re in that category.

Don’t give up.

Yes, simplistic perhaps–but with all of the folks in this economy who are going through hard times, it’s easy for them to believe that there isn’t a light at the end of the tunnel. Did you know that most millionaires have previously been bankrupt at some point? In fact, it’s often the “fire” of these times of trouble which serve to clarify things–and get you making smart decisions, perhaps for the first time.

So, if you’re feeling the financial heat right now, look out for the blessings in the midst of pain. I know it’s hard–but chances are, you’re being reminded of what’s REALLY important…and often, seeing this again can be a launch pad for living the kind of life that you really want to live.

So go for it!

Well, I’ve got some additional thoughts for you about what I wrote in last week’s Personal Strategy Note…

“Real World” Personal Strategy

How To Achieve Financial Independence (Part 2)

Money has no value unless you’ve got the time and good health to enjoy it. In fact, if you have to be poor, would you rather be poor now or at retirement? By planning carefully and investing wisely, you shouldn’t have to make this choice.

Planning for Financial Independence

I believe that you ought to save early and often, making regular scheduled investments in the stock market through the use of mutual funds.

Over the long term, the U.S. stock market yields an annualized return of about 10% (assuming dividends are reinvested). Yes, things are volatile right now…but “market risk” is not the greatest danger to your savings – inflation is the greatest danger. The value of your retirement erodes at a rate of roughly three or four percent every year.

But the stock market has always recovered from even the steepest declines.

Here’s an historical note for you (pertinent now): the worst one-year period for the Dow ran from 01 July 1931 to 30 June 1932. It lost 68.92% of its value. Would you have bought stock then? If your goals were long term, that’s exactly what you should have done. The best 30-year period for the Dow ran from 01 July 1932 to 30 June 1962, during which time it offered an average annual return of 14.34%.

Becoming Financially Independent

Reaching financial independence isn’t always easy. It takes time and work. You cannot accomplish your goal of achieving it by wishing. It takes doing. It takes being committed to and being absolutely determined to act.

One way you can act now, is to take a look at your personal expenses. Here’s some tips to cut them…

* If you and your partner both work, try to live on only one income. Invest the other.

* Save an emergency fund, but don’t make it too large. I like a small (one-month of expenses) emergency reserve, with everything else invested in mutual funds.

* Never borrow money, except to buy a home. If you use credit cards, use them only as a convenience, not to borrow.

* Pay yourself first. Every month, invest some portion of your income for your future.

Finding more money to actually invest is the best way for you to reach financial independence. And one great way to find extra money is to cut back on your existing expenses.

Yes, you can achieve financial independence, but you can’t get there overnight, and you can’t get there without setting goals and making sacrifices.

So start now.

Hope this helps…

To your greater independence!

How to Achieve Financial Independence

No bird soars too high, if he soars with his own wings. - William Blake

I truly hope you enjoyed your Independence Day festivities.

Interestingly, did you know that the Declaration of Independence was actually approved on July 2nd, and most of the delegates didn’t sign it until August 2nd? While John Adams expected Americans would celebrate July 2, the date on the publicized copies of the document was July 4th…so that’s why we celebrate it then!

Some other facts you may not know about our just-passed holiday…

* Three presidents died on July 4th: Thomas Jefferson and John Adams in 1826, and James Monroe, in 1831. Calvin Coolidge was the only president born on July 4th, in 1872.

* The Massachusetts General Court was the first state legislature to recognize July 4th as a state celebration, in 1781.

* The first recorded use of the name “Independence Day” occurred in 1791.

* The U.S. Congress established Independence Day as an unpaid holiday for federal employees in 1870. They changed it to a federal paid holiday in 1931.

For those of you who enjoyed a paid holiday on Friday–thank the Great Depression-era Congress!

So…all of this about “independence” got me thinking about YOUR *financial* independence. Are you on track for it?

I’ve got some thoughts for you about how to get there in this week’s Personal Strategy Note…

“Real World” Personal Strategy

How To Achieve Financial Independence

Often, as we strive to keep our heads above water in these financially crazy times, it’s easy to lose sight of why we’re doing this. What is the goal? What is it we’re trying to accomplish by earning wealth? For me – and for many others – the answer is Financial Independence.

I would define this as “having an income sufficient for your basic needs and comforts from sources other than paid employment”. Financial independence implies freedom. It’s the condition of having saved enough money that you can do whatever you choose. Whether you elect to keep working doesn’t matter – you have enough saved and invested to follow your dreams.

But is financial independence just a pipe dream? Is it something only for the lucky and the strong? No, it’s a goal that anyone can fulfill as long as they’re armed with some basic knowledge, as long as you make smart choices.

As I see it, there are four keys to accumulating wealth:

1. Start investing as early as possible. It takes significantly less money to accomplish what you want, and you have more time working for you.

2. Be determined to save on a regular basis. It is an easy way to accumulate wealth.

3. Begin investing with the largest possible sum you can. You will have more money working for you over a longer period of time.

4. Reach for the highest rate of return you believe you can safely receive on your money over time. Each additional percent is important. The higher the rate, the less money it takes to accomplish what you want.

Financial independence is built upon these four guidelines.

Confronting your financial challenges

In order to save money, you must fight to keep from spending it. I encourage you to set goals, to prioritize wants. Since money can be spent only once, you need to decide which wants are most important. To do this, it may be helpful to place a value on each of your wants.

So…here’s an exercise for the week: Pull out a piece of paper and list your wants.

These can range from a new house to a hot tub to a trip to London to a new blender for the kitchen. Next to each item, write why you want it. (You might want a hot tub, for example, because it would allow you to relax with family and friends.)

When you’ve finished, take another piece of paper and re-order the list based on how important each want is to you. If a trip to London tops the list, are you still willing to delay it by spending $40/month for that gym membership you rarely use?

Confront this issue first (keeping in mind those four keys mentioned above), and I’ll be back with more thoughts for you next week.

Hope this helps!

To your greater independence…

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