We’re almost done with August (!), and the school season is already starting in many areas where we serve our clients. This summer has absolutely FLOWN by — and those of us who pay attention to politics are all probably eagerly looking forward to being done with the Presidential election cycle (which is still more than a year out!).
But in the shorter term, we’ll start seeing Congressional action on a whole slew of financial and tax-related items come fall.
Because as usual, there will be a variety of tax credits going bye-bye on January 1, 2016. And provisions that affect regular families are always a big part of this conversation. On top of this, with the economy still sputtering, continued chaos at home, in Greece, China and the Middle East … well, it can be a little hairy out there.
Which is why it’s so important for you to maintain your peace in the midst of it all.
Look — it’s no mystery, probably, why I choose to write so often about maintaining the proper perspective. We see clients in here regularly, and you probably wouldn’t believe how often we have the same kinds of conversations. Finances touch a deep place of security (and fear) for so many, NO MATTER how much is in the bank accounts.
From the very well-off, to those deep in debt … everyone can pick and choose their poison these days, when it comes to fear.
I often play the role of counselor, in addition to helping folks navigate their way through tax and financial decisions. Because families and individuals can make rash decisions in times of perceived crisis — and they often have unforeseen wealth complications that stem from those decisions down the road.
Which is why it’s critical that we take a look at how things are set up (tax wise) for you and your family for the rest of 2015. With school coming back, it is the perfect time to take a clear-eyed look at things, and plan for the best way to save as much as absolutely possible.
Call my office this week: (718) 858-9864 (or email me by clicking the button at the top of this page) and request one of our limited 2015 Tax Planning Saver Sessions. During this session, we will analyze your current situation and identify clear action steps for the last quarter of 2015 — designed to save your bottom line hundreds (or even thousands).
You CAN control your tax strategy … and we can help.
James Pantzis, CPA, PC
There is a bit of a flood of recent tax-related news that I’d normally dispense with in the opening remarks of my Note here … but it’s weighty enough (and possibly could affect you), that I wanted to take a little more time for explanation of each.
But maybe the bigger news is this: NFL football is back on the air. (This past Sunday night, the first pre-season game was aired.)
Well, perhaps that is a mere shrug of the shoulders for many, but regardless of how we feel about it, what it DOES signify is that summer is headed towards a close. Soon, Saturdays and Sundays will be full of tailgates and (in most cities where I have clients) autumn colors. Many children are already back in school across the country, and Labor Day is hurtling towards us.
Around here, we’re investing ourselves in continuing education so that we can take advantage of every available (and ethical) tax move on behalf of our clients, and gearing up for what already promises to be a very full final quarter with our client family.
Thanks again for your trust, and for allowing us to stay connected as we have. It means a great deal.
Now … to the tax stuff: We’ve got scams, deadlines and audits. Yum.
James Pantzis’ Three Tax Updates To Know Right Now
“It is not a daily increase, but a daily decrease. Hack away at the inessentials.” – Bruce Lee
I’ll start with the one that could potentially impact all of my clients:
1) Tax Scammers Getting Smarter (And Scammier)
Because we’ve all gotten smarter about phishing emails and such, it is becoming much more common for the scammers to try two “new” (but very old) approaches: phone and mail.
Talk about the IRS phone impersonation scam started exactly two years ago, but now the Treasury Department is calling it “the largest, most pervasive impersonation scam in history” (at least as far as the Treasury Dept. is concerned).
Recent reports (see: http://bit.ly/1DHIVSs) are also saying that taxpayers are receiving MAIL that looks like it came from the IRS. This has been a topic of conversation among tax professionals at the IRS Tax Professional Forums all summer.
So: some rules of thumb about getting contacted by the IRS…
* Real correspondence (by phone or mail) will NEVER demand that you send payment by a specific format. Pre-paid debit cards seems to be the flavor of the month for scammers, so make sure you know that.
* ALWAYS check with a tax professional if you are contacted by the IRS about any kind of “overdue” tax. We will help you to navigate through whether or not it is of legitimate concern. And the better news: if it is, we can help you get it sorted right.
2) Deadline Changes
Switching gears now, from scams to legitimate tax law changes for you to be aware of: For some reason, Congress just loves to cram things into highway spending bills.
That’s exactly what happened with these two updates. H.R. 3236, popularly known as “The Surface Transportation and Veterans Health Care Choice Improvement Act of 2015” (yes, that’s how these things are named) brought some tax-law-related changes.
Regular tax returns are still due on April 15th — and a six month extension period is still available. But …
* Partnership tax returns are due March 15, NOT April 15 as in the past. If your partnership isn’t on a calendar year, the return is due on the 15th day of the third month following the close of your tax year.
* C corporation tax returns are due April 15, NOT March 15. For non-calendar years, it is due on the 15th day of the fourth month following the close of the tax year.
* S corporation tax returns remain unchanged–they are still due March 15, or the third month following the close of the taxable year.
3) IRS Now May Have Six Years To Audit (Instead Of Three)
Taxes are complex enough as they are without having to worry about whether or not you did them correctly. (Which, of course, is just one reason why it pays to use a pro.)
The general rule of thumb is that the IRS usually has three years to audit you.
But crammed into that same highway bill referenced above was a move by Congress intended to clarify some language that the Supreme Court had used to justify a shorter limitation time. Now, essentially, if you withhold reporting of 25% or more of your income, the IRS has six years to figure it out.
They often do.
These three tax updates (and, of course, many more) are just more bricks in the wall for why it’s important to use a professional that you know, like, and trust.
Can you think of who that might be? 😉
Warmly (and until next week),
James Pantzis, CPA, PC
I hope you are doing well.
I have some thoughts for you today that may be a little bit of a mental (or emotional) stretch.
You see, when I write about financial principles in these Notes that I post, I do so recognizing that my clients come from a wide variety of different attitudes, circumstances and means.
It makes for a tricky proposition, because I want to both meet people where they are, but also call them to a higher place when it comes to how they think about finances. Many of my clients (probably you among them) are already in that place where they “get” much of what I write about as it relates to debt, avoiding taxes, and other basic financial strategies.
But sometimes there are “non-financial” decisions we’ve made or attitudes we’ve fostered that creep into how well we are able to do with our careers, our finances, or even our families.
I think we could all benefit from thinking a little larger and playing a bigger game. This might be a bit controversial, but I do hope that it challenges you where it should … I know it does so for me.
James Pantzis on Why the DIY Ethic Can Hold Us Back
“The answers you seek never come when the mind is busy, they come when the mind is still, when silence speaks loudest.” – Leon Brown
I’m not as handy as I’d like to be around the house.
In fact, I only recently learned how to plug in a hammer. (Ba-dum-bum, ching.)
But I’ve embraced my limited ways, and have learned to see why this “deficiency” enables me to think bigger, and grow wealth for my family.
Look, admit that most things out there, you simply cannot do (with apologies to the very “handy” among us): You probably aren’t going to redo the roof on your house. You likely don’t have a clue how to knock down a wall to open up the downstairs. If the toilet stops working and the plunger and Drano don’t work, you’re calling the plumber. Likewise, you pay someone to work on your car because you either don’t know how to or you’d rather have a professional do it.
But one of the common messages which even the wealthiest among us find themselves adhering to is the DIY ethic: “Do it yourself to save money.” Don’t hire a maid, don’t go out to eat, don’t pay someone to do your yard. Do it yourself and save money.
Phooey to that.
I say: “Outsource everything you can and focus on building your wealth!”
Oh, and it’s not only good for you, it’s good for the world economy. It’s called “comparative advantage” and it’s why you aren’t a landscaper. Or a plumber.
Some people have the time or the motivation to do things other people would outsource. I know plenty of men that just *like* to change their car’s oil. But I also know people too busy (and productive) to mow their own grass. So you have to decide what aspects of your life are worth outsourcing.
For fathers & mothers, there’s plenty that you perhaps *shouldn’t* outsource: raising your children, engaging with charities, loving your spouse (!). But there’s likely to be plenty of tasks which sap your energy, drain your productivity (in the home AND in your work pursuits), and can be successfully handled by an hourly earner.
Personally, I hope to make it possible that I’m so productive I have to outsource just about everything that I’d rather not do. Said differently, I want to move to the place where all I do is work on great projects, help my awesome clients, love my family well — and pay people to do just about everything else for me.
And sometimes, it’s important to make some shifts in this direction before we’re as “ready” as we’d like.
Because we then free up the space to do MORE (not less), and we can play a little bit of a bigger game.
What do you think you can move off of your plate today?
Again, I welcome your thoughts…
Warmly (and until next week),
James Pantzis, CPA, PC
Meeting with clients for mid-year planning sessions the past few weeks has been wonderful.
No — really! And yes, I know, I should get out more.
The reason we enjoy doing this (especially this time of year), is seeing that look on our clients’ faces when we identify tweaks and quick moves which can bring a significant ROI on their tax return for their effort and time… well, it’s worth all of the time we’ve put into learning this craft.
Sometimes during these meetings, I find myself sharing some of the private details of how I think about taxes, finances and investing for my OWN family. Yes, I do try to practice what I preach in these Notes to my clients and friends. (And yes, believe it or not, I do have a private life outside of tax forms.)
Enough people have told me that these back-of-the-napkin principles which I share have been helpful, that this morning I’ve been motivated to put some of them down for you in easy-to-digest form.
So, without further ado, here are some of James Pantzis’s ‘secret’ financial tips…
James Pantzis’ 4 Secret Financial Tips To Start Using Today
“The only person who is educated is the one who has learned how to learn and change.” – Carl Rogers
Whether you’re running a Fortune 50 corporation, or just trying to keep your household expenses from exceeding your salary, the same basic financial concepts which I use in my personal life can apply to yours. In my practiced opinion, these are fundamental building blocks for wise financial decisions.
You almost don’t need much else besides these four ideas (almost)…
1. Quick Interest Calculations: The Rule of 72.
Want to double your holdings? The Rule of 72 can tell you how long it will take, based on the specific interest rate you’re looking at. Just divide 72 by the interest rate.
For example, if you’re looking at an investment with an interest rate of 6 percent, then 72 divided by 6 gets you an answer of 12 years.
This is a rough estimate, of course, but it’s pretty effective.
In fact, you can also turn the equation around to determine the interest rate you’re looking at if someone promises to double your returns in a set amount of time. Twice as much money in 12 years? Divide 72 by 12 and you get an interest rate of 6 percent. This rule lets you evaluate investment opportunities quickly and decide where to put your money.
2. Opportunity costs.
What do you need to give up in order to get something you want? It’s almost always a question of money, but also one that involves time and value.
Pursuing an advanced degree may take years — are you willing to put in that amount of time? Will a sports car give you enough enjoyment to offset going into debt for it?
Whatever decision you end up making about how you are investing your money, should also be applied to how you think about your time. Sometimes it really does pay to invest in a lawncare service so that you can free yourself up to do more “valuable” work on behalf of your family.
3. Sunk costs.
This is money you can’t get back — a non-refundable airline ticket, for example. The idea here is that you need to keep sunk costs in the proper perspective. It’s easy to start thinking “Well, I’ve already spent $100, what’s another $25?” You’ve got to be willing to walk away sometimes.
Once something is paid for, and cannot be refunded, it shouldn’t impact your future financial decisions. It is a “sunk” cost, i.e., water under the bridge, and whatever you do in the future won’t ever get it back.
4. Time value of money.
According to this principle, a dollar you receive today is worth more than a dollar you’ll get tomorrow. You’ll have opportunity to invest that dollar immediately and begin earning more revenue from it (and also avoid losing value because of inflation).
Again, this helps you make certain calls about your purchases — and your income. It’s the old “a bird in the hand” theory in action for your wallet.
These four financial tips have served me well over the years.
Are there any that you think I have missed? Do you have questions? I’d love to hear from you, so shoot me an email with your thoughts (simply click the button at the top of this page to email me).
Warmly (and until next week),
James Pantzis, CPA, PC
A couple weeks back (after Independence Day), I wrote about the shared covenant we are blessed with in our nation. Our Constitution and our laws form a different kind of bond than what was ever seen, at least at the time of our nation’s founding.
(Speaking of blessings — did you see that video over the weekend of the surfer in South Africa who beat off a Great White shark attack? http://cbsn.ws/1gK9uMF Scary stuff … so glad he is alright. That’s probably one reason why I’m not a surfer. There may be others.)
Despite all of the seeming chaos we are subjected to by the likes of our national media, we should remember how unique and effective our system of government has been over the years.
Yes, we have some stupid laws … but we also have some very good ones.
And some of these, by the way, are concerned with the ordered and proper passing along of our assets to our family, friends and future generations. We shouldn’t take for granted how important this is — in many nations, it’s a much more chaotic process, and is sometimes even handled without law whatsoever.
So, in accordance with our flawed-but-excellent estate laws, it really makes sense to recognize the necessity of a plan.
We’d love to help you in any way that we can in this process, and we’ll even recommend some excellent outside help if it comes to that rare something that we aren’t best able to handle.
But sometimes we have to remind ourselves exactly why we should be going to the trouble in the first place …
James Pantzis’ Eight Reasons For Having an Estate Plan
“It is not enough to stare up the steps, we must step up the stairs.” – Vaclav Havel
Many well-meaning families think an estate plan is for someone else, not them. They may rationalize that they are too young or don’t have enough money to reap the tax benefits of a plan. But as I would like to make clear, estate planning is for everyone, regardless of age or net worth.
Here are my EIGHT reasons why you should consider putting this into place right now…
1) Loss of capacity. What if you become incompetent and unable to manage your own affairs? Without a plan, the courts will select the person to manage your affairs. With a plan, you pick that person (through a power of attorney).
2) Minor children. Who will raise your children if you die? Without a plan, a court will make that decision. With a plan, you are able to nominate the guardian of your choice.
3) Blended families. What if your family is the result of multiple marriages? Without a plan, children from different marriages may not be treated as you would wish. With a plan, you determine what goes to your current spouse, and to the children from a prior marriage or marriages.
4) Children with special needs. Without a plan, a child with special needs risks being disqualified from receiving Medicaid or SSI benefits, and may have to use his or her inheritance to pay for care. With a plan, you can set up a Supplemental Needs Trust that will allow the child to remain eligible for government benefits while using the trust assets to pay for non-covered expenses.
5) Keeping assets in the family. Would you prefer that your assets stay in your own family? Without a plan, your child’s spouse may wind up with your money if your child passes away prematurely. If your child divorces his or her current spouse, half of your assets could go to the spouse. With a plan, you can set up a trust that ensures that your assets will stay in your family and, for example, pass to your grandchildren.
6) Financial security. Will your spouse and children be able to survive financially? Without a plan and the income replacement provided by life insurance, your family may be unable to maintain its current living standard. With a plan, life insurance can mean that your family will enjoy financial security.
7) Retirement accounts. Do you have an IRA or similar retirement account? Without a plan, your designated beneficiary for the retirement account funds may not reflect your current wishes, and may result in burdensome tax consequences for your heirs (although the rules regarding the designation of a beneficiary have been eased considerably). With a plan, you can choose the optimal beneficiary.
8) Avoiding probate. Without a plan, your estate may be subject to delays and excess fees (depending on the state), and your assets will be a matter of public record. With a plan, you can structure things so that probate can be avoided entirely.
I hope you do carefully consider these elements, and let us know how we can help. We would love to be a part of your generational assets being preserved rightly.
Warmly (and until next week),
James Pantzis, CPA, PC
I have an action item for you in a moment, but before I get there, allow me to explain…
You see, one of the projects toward which I devote my time during the summer, is expanding my financial intelligence. I’m not just referring to learning more technical moves, or adding more letters after my name.
Instead, I want to learn how money works.
So, I’ve been going through this book: How Rich People Think by Steve Siebold (http://amzn.to/1eWMFUF), and it’s right on the money (bada-bing). For example, here are some traits his book identifies among the rich, as opposed to the middle class:
* Rich people focus on earning, not saving
* They understand that leverage creates wealth, not hard work
* See that they are in control of their wealth, not luck or fate
* Know that money is earned from focused thought, not hard labor
* Don’t see money with emotion, but with logic
* Are Action-Takers (as opposed to having a lottery mindset)
So why do I emphasize that last one? Simple — I’m suggesting you take an action now, which could have a big difference on your 2015 bottom line…
Halftime Tax Adjustments for Brooklyn Taxpayers
“My favorite things in life don’t cost any money. It’s really clear that the most precious resource we all have is time.” – Steve Jobs
You know how good coaches are usually famous for making adjustments during the halftime of big games? Well, here I am — acting as your financial coach in matters tax-related, and we’ve just about hit the halftime mark for 2015.
You have six months of financial info to use for some quick math about your year as a whole, and to prepare for a pleasant upcoming tax season.
To begin, all you have to do is take your cash flow for the first half of the year, and multiply by two. Add up your wages, dividends, interest, and any other income, and then–if this represents approximately what you’re expecting for the second half of the year — double the sum.
Once you have your estimated 2015 income, you can give us a call: (718) 858-9864 (or send me an email by clicking the button at the top of this page), and we’ll help you determine the appropriate tax rate and deductions to apply. Because once you’re armed with this info, we can help you determine the amount of taxes you might expect to owe for 2015.
By then comparing this against your projected withholding, you can adjust the withholding on your paycheck in advance as needed, and ensure a happy visit to our office in the winter.
This can also be a good time to organize your financial records (about which I recently wrote) and/or get started with some financial software. Getting organized now can make gathering a report of all those deductions a breeze, come tax time.
Because of recent tax changes, wealthy Americans in particular are facing higher tax rates on ordinary and investment income.
That makes it all the more important to review Uncle Sam’s highest-impact tax breaks, such as donations of appreciated assets, tax-free exchanges and capital-loss harvesting.
Unlike obvious moves, such as contributing to an individual retirement account or a 401(k) plan, these strategies require a higher degree of awareness and active planning.
Not all high-impact breaks are for the wealthy. Any homeowner can benefit from a provision allowing taxpayers to pocket tax-free income from renting a residence for as long as two weeks, and low-bracket taxpayers can pay zero tax on long-term capital gains.
Other important moves can help minimize estate, gift and inheritance taxes. Really, there are a variety of tax adjustments we can make to help you with your planning for the year … but you have to let us help you. It is, after all, why we are here.
Warmly (and until next week),
James Pantzis, CPA, PC
As we just celebrated our Independence Day, I think it’s worth considering *financial* independence.
But we should pause first in gratitude to Will Smith and Jeff Goldblum who, along with our armed forces, back in 1996 successfully repelled an alien invasion that was bent on wiping our very existence off of this earth.
Or perhaps, in the real world, we should honor the 56 signatories to the incredible document that is the Declaration of Independence, and remember that we live in a system of government driven by principles, laws and a shared covenant — rather than one driven merely by ethnicity or pure government power. We are, truly, blessed — no matter what you may think about the state of our current politics.
Now … I’ve written before about the value of automating your financial world. Making savings and investment an automatic, “don’t even have to think about it” decision can help kickstart some great habits for all of us.
However, there are some dangers.
High frequency trading in the financial markets (and the occasional crashes resulting from it the last few years) is just one example of the dangers of this approach.
And there are some instances when “automation”, as such, can actually HINDER our financial growth. And they may rob you of the kind of independence you’re looking for.
Call it the hidden cost of convenience. And, in my opinion, it’s quite real.
So, whatever the numbers in your bank accounts are showing, I believe that there is application to you for what I write about this week. Whether there are four figures or ten in your accounts, the principle can hold true.
Check out my humble suggestion, and let me know what you think…
James Pantzis on NOT Automating Your Personal Finances
“You always pass failure on the way to success.” – Mickey Rooney
Small business owners and those with more complicated incomes know what it is to write checks for quarterly taxes, and, I believe, they have a deeper sense for what they are paying, as a result.
In fact, I think our country would be a different place if everyone had to write a personal check and send in their taxes like this. When people really see what they pay (or don’t pay) I think they would feel differently about their tax burden!
This is a common refrain among certain political observers — but it has me thinking about what it might mean for YOUR family’s personal finances …
In fact, this is part of the genius of financial guru Dave Ramsey’s “envelope system” for family budgeting (whereby you place cash into specified envelopes, and pay only as much cash as remains in the envelope for different budget categories). “Automating away” our obligations can lull us into financial slumber.
Which is why I now propose that you REMOVE automation from certain checks that you write each month from your personal finances. (Again, this is aside from automated savings, as I’ve previously discussed.)
[But a word of caution: The only danger to this approach is that you run the risk of focusing too much on scrimping pennies. I certainly advocate wise budgeting, but it’s important to remember that thinking overmuch about saving money can constrict your mind away from important “risks”, which can often be worth taking — like starting that business, making a new investment, etc. Don’t let this technique keep you from expanding your financial mindset!]
So, a few suggestions for what you might DE-automate:
1) Just once, receive your paycheck in cash (instead of ACH’d), or cash the full amount when you receive it. Because, have you ever HELD one paycheck’s worth of money before? It’s really hard to fully comprehend how much you’re bringing in until you physically feel those stacks of $20s in your hand. I can guarantee you it’s a lot harder to spend it when you’re seeing it in person rather than online. And it hurts frittering it away more, too.
2) Paying your mortgage manually. Feel the burn of this large check, every time you write it. It will trickle into how you think about the other bills which you pay such that even if this is the only bill you take off of “auto-pay”, you’ll be wiser with your remaining funds each month.
3) Only purchase vehicles for cash. If you had to pay outright, wouldn’t you end up with a cheaper car? Probably. Just because many are used to setting up loans and payments for vehicles, does NOT mean it’s wise — in fact, this is one of the primary markers for the “quiet millionaires” (those who are getting ahead financially, even on relatively smaller salaries). Yes, your pride might suffer when you’re not rolling around in a 2015 Lexus … but considering the real cost of that pride-booster does wonders for ameliorating your egotistic tendencies.
In short, paying in cash (or with a manual check) helps you to consider the following questions:
* Is this ____ still WORTH it?
* Is there a way I can cut it down a bit?
* What’s the best way to pay for it right now? (c/c, check, cash?)
Again, some of this could literally take seconds, but the point of it all is that you STOP to do it. With automation, you don’t get the “ping” every month because it’s already doing the thinking for you. You’ll learn a LOT more about the financial “you” this way than you would otherwise, I’m certain. It’s really about paying closer attention.
With warmth (and until next week),
James Pantzis, CPA, PC
We’ve seen many parents in our offices these last few months, and we obviously go over tax returns, customized plans for saving more on taxes, as well as a variety of other strategies for handling their assets so that their children will, one day, be financially prepared.
(We certainly wouldn’t want our children and their eventual families to end in a financial crisis like we’re seeing unfold in an entire nation, such as Greece!)
But as we prepare our own house, and make sure everything is order, I’ve sometimes noticed that we don’t give enough thought to helping our children build the kind of financial “house” that they will eventually need so they can withstand the future gyrations of economic life.
You see, I’ve asked a few parents how they handle finances with their young children. Well, I’ve found that some parents have no plan for training their younger children how to understand, and handle finances. (Notice that word: “training”.)
I’d like to help you fix that. We’ve put together some strategic advice to help you raise financially-literate children, in hopes that by the time they reach adulthood, they’ll be contributing to your family economy — rather than draining it!
Let me know what you think …
James Pantzis’ 5 Quick Tips for Teaching Kids About Money
“Today well lived makes every yesterday a dream of happiness and every tomorrow a vision of hope. Look well therefore to this day.” – Francis Gray
Perhaps I’m biased, but I believe that it really is never too early to start teaching your kids about money. Obviously, by doing so, you are preparing them for the uncertain future. You’re also establishing a family culture, wherein money is handled with maturity and openness.
But the best news is that helping them to develop these habits can be fairly simple! I’ve put together some basic steps — many of these may not seem like rocket science, but my job is to be a coach and a goad for you to do the things which you already may “know” to do.
1) Give them an allowance — with strings.
Don’t just give them an allowance for doing nothing — this actually defeats the purpose. You can buy your young children whatever they ask for, so they don’t need “spending money”. Instead, see an allowance as a training tool: your children should learn that money is earned by working. Believe it or not, this isn’t an obvious connection for a young child! Because a kindergartner truly is able to help with small chores around the house, you can put them to work and let them earn their allowance this way. Rather than seeing it as a “bribe”, or some sort of indentured servitude, this is a critical knowledge base for a young child.
2) The old lemonade stand.
Encourage this! And do it with adult supervision. Your child will learn how to make a product, market it and sell it. While the idea is to teach good money habits, they are also learning valuable life lessons — nothing sells itself, after all. (Though with cute kids, that’s sometimes the case!)
3) Saving and investing.
Rather than showering your young child with gift after gift, encourage them to go through the process of working towards a savings goal. You can always “supplement” this process, but having your child save up for an item will teach them that nothing comes for free. In return, children also learn that the items you buy them have real value and should be treated as such.
This might, even, cut down on those “negotiations” so familiar to parents who bring their children into stores.
4) Cold, hard cash.
A lot of children nowadays are so used to seeing parents pay with debit and credit cards that they may not know what actual money looks like! This is a new-generational issue, and it’s important that your children learn that money is more than a mouse click, or a card swipe. Show your kids the different types of money – coins, bills, etc. and tell them the monetary amount for each.
When you go shopping, let your child have a try at paying for certain items. This will help them feel quite grown up, and again — they see that transactions don’t just “happen”, they cost.
5) There’s an app for that.
I just found a great article in US News & World Report that shared 7 great iPod or smartphone apps that also provide a bunch of great lessons. Some families don’t allow their younger children access to these devices, but if you have older children in the house, you could even try some of these apps as a condition for handling the responsibility of using one of these devices. Here’s the article, and they have seven great options that they’ve vetted, ranging from free to paid (but inexpensive): http://bit.ly/1LEjrru
What about you? How have you gone about teaching your kids about money? I’d be interested to hear some other tactics, and may share them with the list next week.
But until then, I remain your kindly tax pro — out to save the world from improper planning, unnecessary taxes … and from young adults still living on Mommy/Daddy credit!
James Pantzis, CPA, PC
The events in Charleston last week have left all of us — once again — searching for answers to what feels like a festering wound simmering under the surface of our culture.
But the grace notes we have seen coming from the hearts and mouths of survivors and family members of the victims might, perhaps, show all of us a way towards healing. Forgiveness, rather than offense (even when offense is completely justified), is truly a much stronger force.
In the meantime, let’s take notes on what those brave family members are doing.
Now … well, we’re almost to the end of June, which feels a little crazy to me. But here we are.
These months provide a different rhythm (especially for those who have young children in the home!), and in my opinion, it’s a great time to get organized in a way that you perhaps haven’t been in the past.
It’s amazing to me how many families and households don’t have a workable plan when it comes to handling the flow of paperwork that comes through their mailbox, and for tracking their online world.
In fact, the cloud-based nature of so many financial statements can lead us all into a bit of a lull: “Everything is online, so I can just throw away the paper statements”, or “If I really need something, I can always request a copy.”
And so people have begun letting their household filing system go to the dogs.
The problem with that is …
1) It’s actually not the case that everything can be available online — many statements are only kept a short amount of time “in the cloud”, and unless you are scanning them yourself, you often have to pay fees to retrieve older items.
2) Throwing away documents and trusting everything to “the cloud” can leave you vulnerable to ID theft (especially when you don’t employ a shredder!).
So, I’ve put together something that will (hopefully) provide you a simple plan, and perhaps a tiny little kick in the behind to get this into place.
Pantzis’ Simple, 4-Step Plan For Organizing Your Financial Records
“You will never win if you never begin.” – Robert Schuller
When we’re privileged enough to have conversations with clients unrelated to estate planning, and more about their general financial world, we’re often asked about setting up a good system for keeping it all organized. Often, one of the major problems for many families is simply keeping track of everything! So here’s what we suggest…
1. Find a good home for your documents.
The best spot to set up a home financial center is where you find the bills and receipts generally piling up–even if it’s in the corner of your kitchen. If you don’t want your financial records on your kitchen countertop, store them away in a corner filing cabinet nearby. Better to use a space you usually go to than to try to form a habit of going to the upstairs study you visit only once a week.
2. Determine what you need to keep and what you can throw away.
Generally, you can get rid of grocery receipts, credit card slips for non-tax-deductible items, and ATM receipts you’ve already reconciled. Toss all your junk mail. You should hold on to receipts for anything that’s tax deductible, as well as medical expenses, past tax returns, and records of charitable contributions. Also keep insurance policies, investment purchase records, mortgage and property bills, and warranties and instructions.
3. Sort your papers.
Use four categories: bills, insurance policies and records, bank and brokerage statements, and other important documents. Then sort those papers into separate folders for each account, type of receipt (like transportation expenses or medical bills), insurance policies, etc. Toss the papers that don’t fit into any category.
4. Spend five to 10 minutes a day maintaining your files (or 30 minutes per week).
Open your mail near the trash bin. Circle the due date for your bills and file them in the proper order. Then save whatever you decide to keep in its proper folder.
I hope this helps.
Until next week then, I am warmly yours,
James Pantzis, CPA, PC
We work hard for our clients.
Crafting elegant, tax-saving and easy-to-understand strategies to help you save on your taxes is a joy. And, of course, removing from our clients the annoying hassle of dealing closely with government paperwork, deadlines and personnel — while not exactly a “joy”, does also provide us with great satisfaction because we know that we get to serve our clients and help them not have to deal with stuff that isn’t exactly “fun”.
But sometimes (usually a rare instance), there are circumstances in which, despite great planning and implementation of strategy, things go sideways.
Last week, I wrote about estate planning, and I do want to touch on it one more time here today — despite the fact that it isn’t our primary area of service. It’s such a critical part of a family’s financial picture, but it doesn’t really get focused on sometimes until it’s too late.
You see, even the most well-crafted estate plan can be ruined by a poor choice of executor.
Of course, that said, we can always do our best to help our Brooklyn clients and their families deal with it and navigate through this poor choice, once it becomes apparent — but it’s always better if the choice is made well.
So, this week, I have some words about this, as you consider your current executor of estate, and whether they fit the profile…
James Pantzis On What to Look For in an Executor of Estate
“You only have to do a very few things right in your life so long as you don’t do too many things wrong.” – Warren Buffett
Your executor of estate is what is called a “fiduciary” which means he or she must be someone who will act in good faith when handling your affairs. He or she cannot take advantage of his or her position or unfairly profit from financial transactions from your estate. The executor will meet the standard of a fiduciary duty if he or she does a competent, honest job.
You want your fiduciary to be both trustworthy and capable of handling the tasks. You have to have complete faith in him or her. Make sure he or she understands the responsibility of the job and is willing to accept it. This requires a discussion before you make your Will.
It sounds a bit strange, but name someone who is healthy and likely to be around after your death. To be secure, you should definitely select at least one successor executor to serve if your first choice is unable or unwilling to do so when the time comes.
For many people, the choice is obvious — their spouse. Others select a close friend, a grown child or other close relative. If no obvious person comes to mind, make a list of your possible selections and use common sense (and this article as your guide) to make the wisest choice.
Remember, as I wrote last week …
An executor must:
* Obtain certified copies of your death certificate
* Locate Will beneficiaries
* Examine and inventory your safe deposit boxes
* Collect your mail
* Cancel credit cards and subscriptions
* Notify the SSA and other benefit plan administrators of your death
* Learn about your property, which may involve examining bank statements, deeds, insurance policies, tax returns and other records
* Get bank accounts covered by the Will released
* Place notices in newspapers so creditors can make claims
* Hire a probate attorney
Either the executor or the probate attorney must:
* File court papers to start the probate process and obtain legal authority to act as your executor
* Manage your assets during the probate process, which usually takes six months to a year
* Handle court-supervised probate matters, including transfer of property to your beneficiaries and making sure your final debts and taxes are paid
* Have final income tax forms prepared, and, if necessary, have estate tax returns for your estate prepared and filed
So the choice is important.
But lastly, as you make these decisions, consider telling your family exactly what you plan.
This gives you the chance to head off any possible disagreements among your family about how things “should” be handled. If you happen to die or lose capacity, it’s usually too late.
Eliminate surprises and keep those family fights at bay.
Perhaps the LAST thing to say is: make sure you have competent help by your side, in ALL things financial (especially when it comes to your existing finances and tax strategy).
And that, of course, is what we’re here for.
Until next week then, I am warmly yours,
James Pantzis, CPA, PC