The Complexity of Social Security Benefits For Brooklyn Retirees

The Complexity of Social Security Benefits For Brooklyn Retirees

There is more than one election in our future.

Yes, many are already tired of the presidential electioneering (though, I must say, if it weren’t for the fact that the next four years of our national direction were at stake, it would be much more entertaining than elections past!).

But for many of us, whether it’s very soon or in the somewhat-distant future, there is another election that will have a much more significant impact on your family’s situation than the presidential one.

So I thought I would take this week’s note to speak to those on the verge of retirement and have a frank conversation about Social Security benefits. (If you’re not yet close to filing for those, share this with somebody who is … they’ll thank you.)

Social Security benefits can represent a six-figure chunk of change. A typical monthly benefit of $2,200 has a present value of well over $500,000.00. So, despite the fact that it seems like an easy decision, you need to consider all your Social Security options carefully to avoid making a costly mistake.

And so the obvious question for people who are nearing eligibility: when should you take it?

It’s not so simple, but I happen to have some advice:

The Complexity of Social Security Benefits For Brooklyn Retirees
“It takes a great man to be a good listener.” -Calvin Coolidge

Like most government law, Social Security is not a simple piece of legislation. Since the Social Security Act became law in 1935, hundreds of amendments have been piled onto it, and have thereby added to the complexity. So to make the best decision about how to file for it, you’ll need to consider four things: 1) health, 2) income before retirement and 3) income during retirement, and 4) taxes.

Retirees from Brooklyn cannot rely on conventional wisdom! Simplistic “rules” such as “Always file for early benefits” or “You need to stop working to receive benefits” are NOT always true. There are specific cases that break every rule of thumb. And these one-size-fits-all answers leave many retirees failing to maximize the benefits they have earned.

At least four methods are used when electing how to take Social Security. And if you’re married, the two of you can mix and match these in more than 16 different ways (!). Each choice results in a different cash flow. By using the cash flows and the time value of money, you can determine which method will offer you the best maximum value.

So these methods differ significantly… they depend on your historical earnings, marital or divorce status, continued work in retirement, life-longevity and rates of return. The choice alone could be worth $250,000 of income or more.Filing options include “early filing,” “standard filing,” “delayed filing,” and many combinations of these options for married couples. It is DEFINITELY worth careful study and analysis of each option… yet a majority of Americans make their choice impulsively and emotionally.

The decision is even more crucial for many women. For 42% of single women older than 62, Social Security is their sole source of income. Women on average outlive men. Thus, planning for retirement is usually much easier for men (who statistically tend to have more assets and die younger). Widows are twice as likely to live under the poverty line as men who have lost their wives. And the poverty rate for elderly single women is 23% compared with just 5% for retired couples.

So couples must take their joint longevity into account before either one files for benefits. The person with the longer life expectancy will inherit either a wise or a foolish decision that will last a lifetime. Given that a husband’s benefits are often higher and the wife’s life expectancy longer, each case needs to be analyzed carefully.

Unfortunately, many people in Brooklyn file after considering only one or two options in isolation. Even worse–the Social Security Administration’s new online filing system enables quick decision-making. People can easily submit their request without any professional advice or planning.

Before filing, then, you obviously should be informed about all the options. To begin, you need to know your personal Social Security earnings and the projected benefits for both you and your spouse. You can request an estimate athttp://1.usa.gov/27s5kyX and then print the results. Or call the Social Security Administration at 800-772-1213. You can also get a copy of “Retirement Benefits” (Publication No. 05-10035) online.

Social Security planning is crucial for everyone. People with significant assets should carefully consider both the lifetime benefits and tax consequences of Social Security in light of their overall portfolio strategy. For the less well-off, Social Security benefits will dictate their retirement lifestyle. Proper planning could well determine what they can afford to eat.

So, there’s obviously a lot to consider here. I recommend you sit down with somebody you trust that can walk you through your different options. It could make a BIG difference in your lifestyle.

And regardless of whether that happens to be us, I do hope this helps.

To your family’s financial and emotional peace…

James Pantzis
(718) 858-9864

James Pantzis, CPA, PC

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James Pantzis On Keeping Your Mind Clear From Financial Junk

James Pantzis On Keeping Your Mind Clear From Financial Junk

As we move into the fullness of spring here in Brooklyn, the nation seems to be holding its collective breath (and getting the popcorn ready) for what will prove to be a fascinating election cycle. I don’t presume to have any foresight into the matter, butwhat I can confidently predict over the next year is a significant amount of uncertainty and upheaval.

Yes, these next few months and years will be extremely “interesting” … and it’s all the more reason why it’s so good that Brooklyn small businesses and families have someone like me in your corner. Because those who don’t have someone who can pay CLOSE attention and plan accordingly on their behalf are going to deal with tax and financial consequences as a result, whether they like it or not.

Before the actual election, I will do an analysis of the different tax plans proposed by the presidential candidates (with a posture of aggressive neutrality!), which could give you some clarity on that aspect of things, but I’m going to keep my powder dry here, until we get closer.

In any election season, our candidates are (somewhat perversely) incentivized to “talk down” the economy, and our future. And some of their arguments might even have merit.

But what I want my Brooklyn tax and accounting clients to focus on — instead of the doom and gloom of “the world out there” — is what they can realistically control within their own sphere.

And so I have some thoughts for you on that matter.

James Pantzis On Keeping Your Mind Clear From Financial Junk
“The present time has one advantage over every other – it is our own.” -Charles Caleb Colton

In the midst of the media, presidential candidates and the headlines running our internal world … how can Brooklyn small businesses and families maintain a sense of personal peace in this … while NOT simply “ignoring” everything? I have four suggestions for my clients and friends:

1) Firstly, DO be very selective about (even, yes, choosing to ignore) certain media elements that have an agenda of spreading fear.
24-7 news channels and certain online outlets would make no money if they stopped preying on people’s fear. (You realize these ventures are not a public service, right? They are in the business of getting ratings to sell advertising. Period.)

Have you ever noticed your feelings after watching just 20 minutes of 24-7 news, or browsing certain media sites? Everything is going to pot. You’ll find negative stories on the environment, war, disease, crime, and of course … the economy. It’s sometimes almost laughable what they’ll come up with just to put out some bad news.

Everyone is selling crisis. This is true, from the media to the politicians. So stop browsing newsfeeds or watching CNN all day, refuse to participate in the circus, and instead start planning your first (or next) million. Seriously.

2) Look for the good news.
Now, I’m very careful here, because I’m aware that some of my clients and friends really are feeling the pinch, but let’s ALSO look at the bigger picture, especially in comparison to how things have been historically.

Despite fears of currency collapse in Europe, economies of certain countries reaching “breaking points” (e.g., China) and other challenges on the horizon, our nation and our global economy is nowhere near the kind of imminent collapse that people have been foreseeing for years (actually, for decades and for centuries). Do you remember what the environment was like in 2009 and all of the apocalyptic economic scenarios we faced?

The point is this: You can always find doom and gloom if you want to. So turn off your TV, shut down the social media on your phone for a while and focus on other activity. It will significantly help your inner peace.

3) Get out and do something profitable.
That may mean actually starting that exercise regime you’ve been putting off. Take up a new hobby. ANYTHING to get your mind in a more “profitable” mode. Go do it.

These steps will NOT solve the problems in your wallet, and in the economy. However, how you choose to respond to whatever comes in the subsequent months and years will affect your peace, and, actually … this WILL impact how you spend your money. Please, for your sake, tune OUT the fear, and tune IN to smart preparation.

4) Stave off fear by knowing actual numbers.
A bit self-serving? Sure, but also grounded in reality. The great problems many businesses and families face when money’s “tight” is SIGNIFICANTLY compounded by not knowing. Any number of pessimistic scenarios play out in your head.

So here’s how to fix that. Sit down with an advisor, get the real facts — and if they’re bad, you can still come up with a plan. You’ll find that laying out action steps with somebody competent changes everything. Call our office to schedule an appointment to lay out these steps with us. (718) 858-9864

James Pantzis
(718) 858-9864

James Pantzis, CPA, PC

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James Pantzis’ Four Tips On Building Wealth

James Pantzis’ Four Tips On Building Wealth

Ah, sweet May. I love it. The birds are chirping and the flowers are blooming. Once the weather begins to get warmer, you see people start thinking about summer and, of course, they want to lose weight to look good in their bathing suits.

Why do so many wait until it gets warmer until they start thinking ahead?

I’d like to help you make some shifts in your thinking today. I’ve been reading up, recently, about Warren Buffett (the richest man in the world, at occasional times, depending on market fluctuations) — and what it took for him to create the kind of financial empire he now enjoys.

His company, Berkshire Hathaway, just had their annual meeting for investors — some of whom pony up the $200K+ for ONE SHARE, just to be in that room. The WSJ did a writeup of the news from that meeting here: http://on.wsj.com/26L3qZM

But I’ve gathered some broader lessons about his success, which I’d like to pass on to you today, as inspiration for what can truly be possible.

Financial well-being is earned by paying close attention to how you are thinking about that well-being, and what it takes to get there. So, if you’ll indulge me, allow me to give you a few short lessons from what I’ve learned about Mr. Buffett on how to create financial success — in any economic season.

I’d love your thoughts.

(And don’t miss the opportunity for your friends to enjoy the peace-of-mind found from having a competent expert review their 2016 returns, at the end of my Note. They’ll thank you…)

James Pantzis’ Four Tips On Building Wealth
“We all have ability. The difference is how we use it.” -Charlotte Whitton

Billionaires aren’t hatched overnight.

But there will be another generation of such men and women in the next few decades — and chances are, they will tread the same path as those who have come before.

So how did Warren Buffett do it? Here’s some of the basic path:

1) Start with a meat and potatoes small business — and be your own boss.
Buffett made his fortune by doing things his way, not by following the crowd. In high school, Buffett and a pal bought a pinball machine to put inside a barbershop. With the money they earned, they bought more machines until they had eight different shops running their machines. When they sold the venture, Buffett used the proceeds to buy stock and start another small business. By age 26, he’d become his own boss and amassed $174,000 — or $1.4 million in today’s money.

LESSON: Don’t fall for the temptations of a huge, immediate windfall business. Cut your teeth on the side, with something basic, reliable and small.

2) Mind the foxes who steal from the vineyard: small expenses.
In the famous book, The Millionaire Next Door, authors Stanley and Danko report that millionaires live well below their means. They budget, plan investments, and allocate their time, energy, and money into building wealth instead of displaying high social status.

Warren Buffett’s companies are known for watching out for small expenses. Exercising vigilance over every expense can make your profits and your paycheck go much further.

LESSON: The next time you spot a sale or online deal, check in with yourself to see if that $50 is better saved or invested than spent. It might seem like you’re spending a relatively small amount of money, but it all adds up.

3) Debt kills.
Warren Buffett advises his people to limit what they borrow. Living on credit cards and loans won’t make you rich. Buffett never borrowed a significant amount of money, not even for investments or mortgages.

The Millionaire Next Door reports that millionaires’ parents did not provide “economic outpatient care”, and their own adult children are economically self-sufficient as well.

LESSON: If you do give your teenager a credit card, make sure to set firm limits and specify use ahead of time. If they abuse the privilege, they lose the card. Do the same for yourself.

4) Leap forward.
Very often those who supply the affluent become wealthy themselves. In fact, one of the best ways to make money is to sell products or services to those who already have money. Many people don’t see these opportunities because they’re far too busy seeking money and security in the short term only.

Well, when Buffett began managing money in 1956 with $100,000 cobbled together from a handful of investors, he was dubbed an oddball. But he didn’t allow others’ opinions to keep him from leaping into a profitable venture. Over and above, I might add, others with greater private means.

Lastly, I will suggest this: Get professional advice on new ventures and ideas.We are here for far more than “just” tax preparation and planning. I and my team would love the opportunity to sit with you, and help you evaluate the direction of your financial life … and point you in a new direction, should it be necessary.

To more of your money staying in your wallet,

James Pantzis
(718) 858-9864

James Pantzis, CPA, PC

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James Pantzis’ Three Tax Questions After Filing

James Pantzis’ Three Tax Questions After Filing

By that subject line you might think that I’m referring to myself! After all, with the tax deadline behind us, I know that some friends of mine have asked if I just “kick back” and put my feet up by the pool the rest of the year.

Actually, no. Not only do I LOVE what we get to do (though yes, I’m definitely still a bit tired right about now), but doing our job well requires that my team and I keep up with continuous changes in the tax code and how we can work to save our clients’ money THROUGHOUT the year, and not just during “tax season”.

So that means we’re diving into our practices from this past tax season these days, all to ensure that we continue to keep our irons sharp and make improvements on how we serve you, year after year. And I do hope our efforts showed this year.

What I’m *actually* referring to by that subject line is the annual observance of “Tax Freedom Day”. This is the date pegged as the date when you’ve finally worked enough days to pay off your taxes. The rest of the year is your “take home” pay. 🙁

This year, it was on Sunday, April the 24th. The date varies year to year (this year it is actually one day earlier than 2015), and more information is here:http://bit.ly/1NtHRGD

The calculating organization is the Tax Foundation, a nonpartisan educational organization dedicated to informing US — the taxpayers — about the burdens of our tax liabilities. And according to the Foundation, here’s a fun little fact: Americans pay more in taxes than they did on food, clothing and shelter — combined.

Which, of course, is why I and my staff are working as we do, throughout the entire year: We are about keeping your tax bill as low as legally and ethically possible.

But we also deal with lots of questions this time of year related to a variety of “post-preparation” issues, so here is a brief rundown on the common ones.

James Pantzis’ Three Tax Questions After Filing
“It takes a great man to give sound advice tactfully, but a greater to accept it graciously.” – Logan Pearsall Smith

The big rush to get everything filed is finished. At least, of course, if you didn’t file for an extension.

It does feel nice, even if more money was owed than you would like … because it *is* completed, after all.

But that doesn’t mean you may not still have tax questions. Here are some common ones we get this week…

1. “When will I get my refund?”

Well, the IRS does seem to have entered the 21st century.

If you had us “e-file” your return, you can check your status right now, or if you had us mail a paper return, after about 3 to 4 weeks.

When you’re checking with the following options, make sure you have a copy of your tax return on hand or know your “filing status”, SSN and the exact dollar amount of the anticipated refund.

Online: Go to IRS.gov and click on Where’s My Refund.
[or go right to: http://1.usa.gov/1NtJm7C ]
Automated Phone: Call 1-800-829-4477 24 hours a day, 7 days a week for automated refund information.
In-Person Phone: Call 1-800-829-1954 during the hours shown in your IRS form instructions. [Of course, the hold time for the IRS is … somewhat of an issue]

2. “Do I need to keep a copy of my return?”

Yes, for a *minimum* of three years, but we recommend forever. There’s all kinds of contexts where it’s useful. We do keep one on file, on your behalf, but it’s just smart and safe for you to keep one in a secure place at home. (I’ve already written about Amended Returns, and you’ll need a copy for that process, of course.)

As for the supporting documents from your return, anything that relates to a home purchase or sale, stock transactions, retirement, business or rental property, should be kept much longer than the three years.

I’ll give even more guidance on this issue in subsequent weeks.

3. “I think there’s a mistake in my return. What should I do?”

Sometimes, you’ll find a receipt or a documentation after April 15th which really would have changed your prior year tax return. That’s, again, when you would have us file an “Amended Return”. Here are some other, common reasons to Amend…

• You neglected to report some income earned.
• You claimed deductions or credits you should not have claimed.
• You did not claim deductions or credits you could have claimed.
• You filed under one filing status, but you should have filed under another.
For some strange reason, you did NOT have us prepare your return!

You might have other tax questions, which I haven’t addressed here. Let me know!

To more of your money staying in your wallet,

James Pantzis
(718) 858-9864

James Pantzis, CPA, PC

 

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Pantzis’ Hope In A Complex Tax System

Pantzis’ Hope In A Complex Tax System

Part of me can’t believe that I’m taking the time to put together this note, now, the week of the big tax deadlines. But I also know if I don’t do it now, this tax season having been so full … well, I may be spending a few days in bed this week just to recover from all of the caffeine (still) in my bloodstream.

And, of course, the other part of me (the wiser part) says: “James,helping people with their taxes is only the means to a greater end: enabling your clients to live richer lives, without having to fret about the details.”

My relationship with you is worth the time investment (and more).

And speaking of investments, I know that a fair number of our clients were graciously invited to send their final “investment” to the IRS (and their state) this week.

And some of our clients also received (or will be receiving) a payment from the Treasury, as a sort of “thanks for letting us have your money for a year!” gesture. No interest paid out, of course.

Both of these circumstances are problematic in their own way.

In the following weeks, I’ll be sharing with you how you can fix that .

But the primary thing I’d like to communicate in this note is: Thank you.

This is one of those situations when those words don’t really suffice — and I may have communicated something along those lines already, but I wanted to make sure you heard it from me again.

I suppose I should also thank the federal government for creating a tax system so frustratingly complex and counterintuitive for so many families that it has provided myself and those who work for me with gainful employment.

When we are able to step away from all of the haze of forms and regulations, we actually find ourselves saying: We get to do this! *We* get to be hope-bringers in the midst of financial storms.

Yes, I’d be thrilled if our tax system was much simpler — no matter what it would mean for my “job”.

But it isn’t simple — and as I’ve often said, it is far better to live in the reality of what *is* (and work to make positive change), than to simply moan about a problem that is larger than what any one person can fix.

Preparing tax returns is like that — it is dealing with what *is* — not with what “could be”.Which is why tax PLANNING will be the subject of a few of my Notes in the future.

Lastly, I hope you’ll forgive me for taking a break from writing you a Personal Strategy Note for this week … I’m not sure that if I did so, anything besides numbers and spreadsheets would come out. It’s amazing what four months of staring at government forms does to a brain!

But hey — this is what we signed up for.

We will be in touch again soon. That’s assuming this caffeine hangover should ever release me from its grip, of course!

With affection,

James Pantzis
(718) 858-9864

James Pantzis, CPA, PC

 

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James Pantzis’ Tax Extension Tips

James Pantzis’ Tax Extension Tips

Well, here we are. The personal filing deadline (April 18th) is *so* close.

Yes, it’s officially the final week of tax season — and we are working our tails off for our clients!

There’s a lot of “business” in this note, so please make sure you read it all — it could make a huge difference. (Honestly, I much prefer writing the notes that are a little more “interesting”, but this is really crucial information.)

This is often our busiest week of the year (so please be understanding), and it’s also the week when we receive, with clockwork regularity, many questions about extensions and payment options.

But before I get to that: other deadlines that fall on April 18th this year:

1) Estimated taxes for the first quarter are due.
2) Want to open or contribute to an IRA or Roth IRA for 2015? Gotta get that done by Monday the 18th.
3) Final day to max out contributions for your 2015 HSA (Health Savings Account).
4) Claim any refund money from an unfiled 2012 return (there is almost $1BN of unclaimed refund money out there for that year — but only available if you didn’t file then).
5) Most states tax deadlines also fall on the 18th. (Exceptions – DE 4/30; HI 4/20; IA 4/30; LA 5/15; ME 4/19; MA 4/19; VA 5/2; any state with no income tax.)

Alright — let’s dive into my thoughts on extensions and payment options (if you aren’t able to pay your tax bill right away)…

James Pantzis’ Tax Extension Tips
“Worry never robs tomorrow of its sorrow, it only saps today of its joy.” -Leo Buscaglia

As you know, this upcoming Monday, April 18, is the filing deadline for a federal tax return. If you need more time to get your paperwork complete, you need to file (or have us file on your behalf) this form: http://1.usa.gov/23p6ICM with the IRS by the end of the day on the 18th. This gives you an automatic six-month (until October 17, 2016) extension of time to file.

Here’s the deal: An “Extension of Time to File” is not an “Extension of Time to Pay”, unfortunately. The Extension simply gives you an automatic six months of additional time to get your paperwork together and file that return. But, if you owe more than what you paid with your estimate, you’ll be accumulating penalties and interest on the difference — so PLEASE don’t take the entire six months to do this!

So, when filing your “Extension of Time to File”, you’ll need to estimate what you think you owe to the IRS. This should not be pulling numbers out of thin air (or other various body parts)! You’ll still need to go through your receipts and tax documents and get them “somewhat” organized.

From here, you can estimate both your income and your expenses, and then approximate what you owe Uncle Sam. Keep in mind that this is an ESTIMATE. And, you’ll have to pay what you estimate you owe at the time we file for the extension.

You can do this all electronically through our office, you can mail in the form WITH estimated payment (must be postmarked by the 18th), or you can call a specialized provider and pay by credit card. We can provide you with the appropriate number to call.

If you cannot pay your taxes due for some reason:

1) Pay as much as you possibly can right now.
2) You can ask for (and often receive) a tax extension of up to 120 days to PAY:https://www.irs.gov/taxtopics/tc202.html. It requires a phone call to the IRS. 🙁
3) “Financial hardship” delay: this is if paying your tax bill would demonstrably affect your ability to pay your other bills. Interest and penalties still accrue, but it’s better to register this with the IRS than to simply ignore the bill.
4) Installment payment plan: If you owe less than $50K in taxes, you should usually be able to get an installment payment plan of up to 72 months, simply by asking for it. If this is something you are considering, please let’s talk it over to make sure we come up with the best plan. But you can apply online for this here: https://www.irs.gov/Individuals/Online-Payment-Agreement-Application
5) Negotiate: this is NOT something to try on your own. We can help, but the number of “Offers in Compromise” that get accepted each year are quite small and a knowledge of how the system works is important.
6) Using existing credit sources (credit card, HELOC, private loans): some tax advisors would quickly recommend this, but I would NOT recommend you go this route. If you’ve exhausted the options above, do this instead:
7) Sell something you don’t need anymore. Always a pretty good plan anyway.

PHEW! That was a lot of information. I truly hope it is helpful.

With affection,

James Pantzis
(718) 858-9864

James Pantzis, CPA, PC

 

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James Pantzis’ Quick Guide to How to Work Smart

James Pantzis’ Quick Guide to How to Work Smart

“I’ll get to it later…”No, I’m not talking about us doing your tax return!

But come on — haven’t we all uttered that magical phrase, capable of assuaging all our fears, and brilliantly putting off tomorrow what could have been put off today?

I’m talking to you, Mr. [or Mrs.] Procrastinator.

Yet, do not fear! I’m not here to browbeat, I’m not here to scold … instead, I’m here to offer hope.

James Pantzis’ Quick Guide to How to Work Smart
“The future depends on what we do in the present.” – Mahatma Gandhi

Right now, there are an infinite number of things you could be doing. No matter what you work on, you’re not working on everything else. So the question is not how to avoid procrastination, but how to procrastinate well.

In my view, there are three kinds of procrastination. Depending on what you do instead of working on something, you could work on:
(a) nothing,
(b) something less important, or
(c) something more important.

That last type, I’d say, is good procrastination.

This is the kind of procrastination practiced by the “absent-minded professor” type, who forgets to shave, or eat, or even perhaps look where he’s going while he’s thinking about some interesting question. His mind is absent from the everyday world because it’s hard at work in another.

That’s the sense in which the most impressive people I know are all procrastinators. They’re type-C procrastinators: they put off working on small stuff to work smart on big stuff.

What’s “small stuff?” Roughly, work that has zero chance of being mentioned in your obituary. It’s hard to say at the time what will turn out to be your best work (will it be your thesis for your PhD, or that detective thriller you worked on at night?), but there’s a whole class of tasks you can safely rule out: shaving, doing your laundry, cleaning the house, writing thank-you notes–anything that might be called an errand.

Good procrastination is avoiding errands to do real work.

Good in a sense, at least. The people who want you to do the errands won’t think it’s good. But you probably have to annoy them if you want to get any real work done. The mildest-seeming people, if they want to do real work, all have a certain degree of ruthlessness when it comes to avoiding errands.

Some errands, like replying to emails, go away if you ignore them (perhaps taking friends with them). Others, like mowing the lawn, or filing your tax returns, only get worse if you put them off. In principle, it shouldn’t work to put off the second kind of errand. You’re going to have to do whatever it is eventually. Why not (as past-due notices are always saying) do it now?

The reason it pays to put off even those errands is that real work needs two things errands don’t: big chunks of time, and the right mood. If you get inspired by some project, it can be a net win to blow off everything you were supposed to do for the next few days to work on it. Yes, those errands may cost you more time when you finally get around to them. But if you get a lot done during those few days, you will be net more productive.

So here’s where we come in.

Consider us “The Ultimate Procrastination Solution”.

Allow us to take the pain away from these second-level tasks (like getting your return filed) — and you go back to writing that killer novel.

With affection,

James Pantzis
(718) 858-9864

James Pantzis, CPA, PC

 

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James Pantzis’ 3 Essential Areas For Disaster Planning

James Pantzis’ 3 Essential Areas For Disaster Planning

I’m not just talking about tax disasters here.

(And those are very real — believe me when I tell you that there have been a few clients who didn’t allow us to help them do some basic tax planning for this past year, and who are now reaping the whirlwind of unfortunate — and avoidable — tax bills. More about tax planning in a future note.)

No, I’m actually talking about REAL disasters. With the Easter explosion in Pakistan and the terror in Brussels from last week, as well as the myriad natural disasters we have witnessed over the past year, we can’t help but be reminded that everything can change on a dime.

If you and I think we’re immune to disaster, we’re in denial.

So I’ve learned to stop apologizing for being an obsessive planner. It sort of pays to be that way, in my profession, after all. And 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.

Before I get there, here are a couple tax items to remind you of:

1) We’re rolling into April. Yes, the deadline is the 18th (and not the 15th) this year, but I think you know that we’re getting close, yes?

2) Tax scammers continue to plague the nation. The flavor of the minute is that the scammers are posing as members of the IRS Taxpayer Advocacy Panel. As with the other flavors, be suspicious always. Don’t click on any emailed links, don’t respond to the phone calls. If the IRS needs your attention, they will MAIL you. And we’re in your corner if that ever happens. So, in sum — ignore the phone calls and emails from people who say they’re with the IRS, however seemingly legit. And if you’re worried about something real (an unpaid IRS bill, or some such), contact the IRS yourself (800-829-1040) or let us help you (even better).

Now, let’s talk about if stuff really hits the fan.

James Pantzis’ 3 Essential Areas For Disaster Planning
“You have succeeded in life when all you really want is only what you really need.” -Vernon Howard

No, I am NOT a “prepper.”

But I’m continually reminded (in my line of work) of how important having a plan really is.

This is true for finances, and it’s equally true for other kinds of disasters.

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 disaster planning 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 having 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: It’s a very good idea to have food and water for at least 3 dayson 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 BPA-free 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 driver’s 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!

Warmly,

James Pantzis
(718) 858-9864

James Pantzis, CPA, PC

 

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James Pantzis’ Four Reasons For Monthly Financial Reports With Your Partner

James Pantzis’ Four Reasons For Monthly Financial Reports With Your Partner

The other day was the first day of spring — which seems to always rush past me in a caffeine-soaked blur. As you may understand, we’re a little “busy” this time of year!

(This year, by the way, has been very encouraging on a variety of fronts — mostly because I have been excited to see some wonderful developments in the lives of many of our clients.)

Well, despite that fact that it seems to have hit us hard and fast this year, I do hope you and your family will pause a little and enjoy some “spring” this year — in the more figurative sense; whether or not it’s in the next couple of months. The winter always seems hard to get through, but now that we’re officially through it, I’m reminded of why I appreciate it.

You see, like the lifecycle of an economy, I still believe that it’s a *good* thing to experience a time of dormancy. Speaking biologically, plants and flowers often need that time of “being withdrawn” to survive the “facts on the ground” (really cold temps!).

They’re a classic picture of a healthy cycle — pull back a little when it’s harsh, but look for the warmer temps and be ready to bloom.

I don’t know all the details of your personal situation. But I do know that you and I have a choice about how we’re gonna weather our different financial seasons. Keep acting like it’s summer (when it’s really winter out there), and you’ll wither, and suffer for it.

But the opposite is also true — keep staying “shut down” and dormant when the weather is turning up … and, well, you’ll miss your chance to really grow up and blossom.

Fine — I’m a tax accountant, not a poet, but you get the point. Don’t be afraid to step out again, even if it’s been cold for awhile out there.

Lastly — one of the ways that you can grow in confidence to take new financial steps is to have clarity about where you are. Especially if you’re in a marriage partnership (or really, any kind of partnership venture).

James Pantzis’ Four Reasons For Monthly Financial Reports With Your Partner
“It is better to know some of the questions than all of the answers.” -James Thurber

Do you get a knot in your gut when your spouse asks you how the finances are looking? Do you practice a policy of “Don’t ask, Don’t tell”?

One of the best tools I’ve seen to keep your spouse or partner in the loop about your finances is the simple concept of the monthly financial report. If you find it useful, and once you’ve established the format, you can also do it twice a month to take a look at how you’re meeting your goals.

Why You Should Do This

While there are many benefits to the monthly report that are outside the scope of this discussion, some of the major ones that apply to most families are:

1. You keep each other accountable. Neither one of you can step too far outside the artificial boundaries you set up for yourselves (budgets, investments, etc.), because you know that you have to answer to the other every (15 or) 30 days. This helps you avoid making major financial mistakes.

2. Awareness of your financial situation. Each one of you is fully aware of your current financial situation at all times, including your account balances and other major metrics.

3. An opportunity to discuss goals and progress. Your meetings to review and discuss the report give you the opportunity to talk about your major financial goals, how you’re progressing toward meeting those goals, challenges that lie ahead, and potential changes you might have to make in your financial management to meet those goals.

4. You can celebrate successes. Seeing your progress on paper allows you to look back and celebrate how far you’ve come, and encourages you to know you’re moving in the right direction.

What Should You Include?
The great thing about setting up a template like this, is that you’ll likely not change it very much at all after the first month or two. I would include the following:
* The Date (and whether the report is a mid-month check-in or an end-of-month summary).
* Money In: All income and transfers into your accounts.
* Money Out: All expenses and transfers out, categorized by bills, other expenses, investments/savings, and loans. I also recommend breaking down the biggest expenses within each of these major categories.
* In Minus Out: Cash flow for the month, and the plan for the resulting shortfall or surplus.
* Net Worth: A quick overview of all assets and liabilities to determine your month-to-month net worth.
* Credit Score: Update of your credit score from a monitoring service, and a comparison to last month’s score.
* Goal Monitoring: If you set up any special savings or financial goals at the beginning of the year, this is the place where you track them and keep each other accountable.
* Notes: This is where you can explain any unusual activity, or make notes on upcoming expenses or issues. This is also where you can make notes as to important milestones and successes you’ve made, particularly when year-to-year comparisons are important to make.

In particular when one partner is primarily in charge of handling the finances, this kind of reporting can make a huge difference in your peace of mind — and your relationship!

YNAB.com (one of my favorite budgeting tools) can make this extremely efficient, as can other free online softwares out there.

But the most important thing I want to communicate? Have that open conversation. And if you need a referee, let me know — I’m always glad to be a neutral sounding board.

Oh, and one more thing — taxes are due Monday, April 18th. Just so you know.

Warmly,

James Pantzis
(718) 858-9864

James Pantzis, CPA, PC

 

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James Pantzis’ Thoughts On Taxpayer Guarantees

James Pantzis’ Thoughts On Taxpayer Guarantees

The brackets are all set — well, by that I mean, the NCAA basketball brackets … the TAX brackets have been set for quite some time, and we’ve been spending our days with them far more than any basketball bracket!

I know the struggle is real for normal humans around these next few weeks to stay focused, but it’s not so difficult around THIS office simply because we are in such intensive work mode. But this, for us, is fun — it’s what we’ve been preparing all year for!

Sadly, not every tax professional makes the kinds of year-round preparations that we do here at Team Pantzis. And by saying that, I don’t mean to bash anyone in particular, but simply as an observation based upon the work we occasionally do on prior year returns (more about that in a moment) when they are prepared outside our firm.

Throughout the year, we go to conferences (put on by the IRS, and by others), we share strategy with other tax professionals around the country (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 even more than specific mistakes or sloppy work, one of the problems with some tax professionals out there are the “terms” by which they operate, and a lack of communication about what happens when … well, read on.

James Pantzis’ Thoughts On Taxpayer Guarantees
“Most ball games are lost, not won.” -Casey Stenge

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 quick 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 do?

I’ve seen some accountants “guarantee” that they will file your taxes for you by April 15th (the 18th this year) 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.”

To most taxpayers, this means nothing. You don’t particularly care when I start preparing your taxes. You want to know how long it is going to take someone to finish it, and to do so without silly errors you know should have been 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 … etc.

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

And speaking of errors and omissions …

There are (literally) almost one BILLION dollars in unclaimed refund money available from the IRS from 2012 returns. Here’s the catch: You must claim it by April 18th, 2016. (Source: http://ti.me/21rmve4).

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 it to say, “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 so many unclaimed refunds due to unfiled returns.

Either way, we can help (and routinely do). Call us.

Warmly,

James Pantzis
(718) 858-9864

James Pantzis, CPA, PC

 

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