With the recent bombings in New York and New Jersey, the nation seems (once again) to be on edge, and the news channels are (once again) analyzing non-stop the ramifications of it all, what should have been done, what could be done, etc. Fear can run rampant within us if we don’t guard our mind.
I’ll leave the analysis to others, when it comes to how best to secure against these kinds of attacks, and stay in my lane as the person who gets to help you secure against different kinds of dangers (of the financial and taxation kind).
And we pray that justice is done, and the perpetrators of this terroristic garbage are dealt with properly.
In the meantime, let’s do what *we* can do to shore up against those other kinds of thieves I mentioned, about which I have some thoughts today.
But before I get there, a couple reminders:
1) October 17th is the due date for extensions. Less than a month out, so let’s make sure everything on your end is handled. If we’re waiting on you, get your information to us ASAP.
2) That day (10/17) is also the deadline to fund a SEP-IRA or solo 401(k) for tax year 2015 if you requested an automatic extension of time to file. It’s also the deadline for “recharacterizing” a Roth IRA that you converted from a traditional IRA, back to the traditional format for tax purposes. If you converted one this year, we can take a look at whether it might make sense to undo that conversion.
Now, back to financial security. I’ve written in the past about personal online security, but keeping your affairs secure involves more than simply not falling for online scams. Here’s what I mean (and it’s short and sweet) …
Seven Free Tips For Identity Theft Protection For Brooklyn Individuals & Families
“Not until the pain of the same is greater than the pain of change will you embrace change.” -Dave Ramsey
Yes, commonly-advertised identity theft protection services for regular Brooklyn families can seem like an easy button. But the problem is that many of these products are unnecessary or ineffective, or they duplicate things you can do yourself — for free.
Here are some basic things you can set into place right now, which will cover you in the vast majority of circumstances:
1) Please don’t carry your SSN in your wallet. Ever.
2) Don’t post your full DOB on your social profiles. If you really like the messages on your wall for your birthday, just take out the year at least. (Besides, it makes you more mysterious.)
3) Don’t check your bank balances on public wi-fi.
Even if you do it on a secure connection, hacker programs to “snift” your info are as commonly-accessible as pirated video on the internet. This includes your mobile phone.
4) Um, don’t let your wallet get stolen.
5) In case it does, keep a photocopy of every important item in there.
(Except cash, of course. That’s, well, against the law.)
6) Check your credit annually.
www.AnnualCreditReport.com is the one where you don’t have to pay for it.
7) Shred important stuff you don’t need — including credit card solicitation offers. In fact, you can stop those solicitation offers for good by going here: www.optoutprescreen.com or calling 888-567-8688. Opting out should stop most offers, and it’s free.
There. I said it would be short, sweet, and full of common sense.
Don’t forget — we’re only a phone call or email away, and our consistent question for you is this: “What more could we do for you, to help?”
James Pantzis, CPA, PC
Lots of important things are happening in the world these days, but based on what I’m seeing in social media, perhaps the thing that people are MOST interested in is the return of NFL and college football.
Perhaps that causes a mere shrug of the shoulders for many, but regardless of how we feel about it, what it DOES signify is that summer is over. Saturdays and Sundays are now full of tailgates and, soon, (in most cities where I have clients) autumn colors.
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.
Our economy is now about *knowledge* … and that’s why I take the time each week to inform YOU about the “real world” steps you should be taking with your family’s finances, and how to be prepared for any circumstance.
Including the upcoming tax season — which, as I’m beginning to realize, will be here sooner than any of us think.
So I’ve put together a simple primer on what you should be pulling together over this quarter. But the BEST way to be prepared is to have a conversation now about a proactive strategy to minimize your tax burden. January through April may be “tax season”, but September-October is “tax planning season” — and to that end, I suggest you call us ((718) 858-9864) and set up a time for a tax planning session.
But regardless, here’s what you need to be making sure you have ready for 2017 …
James Pantzis’ Tax Planning Strategy For 2016
“It always seems impossible until it’s done.” -Nelson Mandela
Believe it or not, now is the time to start making sure that you’ll be ready for a few months from now, when 2016 tax time is upon us.
Generally speaking, you should keep any and all documents that may have an impact on your federal tax return. Individual Brooklyn taxpayers should usually keep the following records and supporting items on their tax returns for at least three years:
• Bills, Credit card and other receipts
• Invoices, Mileage logs
• Canceled, imaged or substitute checks or any other proof of payment
• Any other records to support deductions or credits you claim on your return.
You should normally keep records relating to property until at least three years after you sell or otherwise dispose of the property. Examples include…
• A home purchase or improvement
• Stocks and other investments
• IRA transactions
• Rental property records
Health insurance verification
The IRS will be sending out “information returns” (form 1095) before the end of January (presumably) that should cover your documentation … but as with everything in dealing with the IRS, it’s a good idea to be armed with your own documentation as well, which would include insurance cards, EOB forms, statements from your insurer, etc.
If you are a Brooklyn small business owner, you must keep all your employment tax records for at least four years after the tax becomes due or is paid, whichever is later.
Examples of important documents Brooklyn business owners should keep include:
• Gross receipts: Cash register tapes, bank deposit slips, receipt books, invoices, credit card charge slips and Forms 1099-MISC
• Proof of purchases: Canceled checks, cash register tape receipts, credit card sales slips and invoices
• Expense documents: Canceled checks, cash register tapes, account statements, credit card sales slips, invoices and petty cash slips for small cash payments
• Documents to verify your assets: Purchase and sales invoices, real estate closing statements and canceled checks
Here’s the best part of all of this: By pulling together this information NOW, we can really work our “magic” and ensure that we aren’t simply playing catch-up for you after the fact. That’s what tax planning is all about.
So give us a call this week, and let’s plan out the rest of 2016 and beyond.
James Pantzis, CPA, PC
How was your long weekend? Look — whatever your opinion about labor unions, I think we all appreciate an extra “day off” now and then (though, as with many Brooklyn business owners, my “day off” wasn’t exactly just burgers and the pool … we’re working hard on getting ready for tax season around here).
Because, as you probably heard sometime last weekend, the reason we even HAVE a weekend is because of the labor movement.
“Labor Day” originated during the time of 7-day workweeks of 12-hour days, in the late 1800’s, as our country was in the throes of the Industrial Revolution. Times have certainly changed since then — and our economy is no longer driven by the manufacturing jobs of the past.
Some would say that the time of the labor movement has passed, but that’s a debate I’d rather not get into today, if that’s okay. 🙂
But although we’ve made so many strides in the last century when it comes to “quality of life” standards, it still doesn’t seem that many people are much happier.
My contention is that they’re probably not spending their money in a way that helps them. And it’s not just me saying so: it’s science.
Here’s what I mean…
James Pantzis’ Six Tips On Money Happiness & The Science Of Spending
“The art of living is more like wrestling than dancing.” -Marcus Aurelius
It’s an old cliche, and people still think it’s true that “money can’t buy happiness” … but that’s not what science has been recently telling us. From a recent study (my emphasis):
We report an analysis of more than 450,000 responses to the Gallup-Healthways Well-Being Index, a daily survey of 1,000 US residents conducted by the Gallup Organization. […] When plotted against log income, life evaluation rises steadily. Emotional well-being also rises with log income, but there is no further progress beyond an annual income of ~$75,000. For reference, the federal poverty level for a family of four is currently $23,050.Once you reach a little over 3 times the poverty level in income, you’ve achieved peak happiness, at least as far as money alone can reasonably get you.
More and more scientists are approaching this topic of finance and happiness, and many of their studies reflect this same reality. Essentially, once you have “enough” to secure food, shelter, security and a little bit more … having MORE money doesn’t actually seem to do much for your happiness quotient.
But there is an emerging trend that is telling us that the happiness/money ratio depends far more on how you spend than it does on how much you have.
The relevant research is summarized in a recent study in the Journal of Consumer Psychology by a quartet of Harvard researchers: “If money doesn’t make you happy, then you probably aren’t spending it right.” (July 2011, available online atwww.ScienceDirect.com )
Most people don’t know the basic scientific facts about happiness — about what brings it and what sustains it — and so they don’t know how to use their money to get it. It is not surprising when wealthy people who know nothing about wine end up with cellars that aren’t much better stocked than their neighbors’, and it shouldn’t be surprising when wealthy people who know nothing about happiness end up with lives that aren’t that much happier than anyone else’s. Money is a chance for happiness, but it is an opportunity that people routinely squander because the things they think will make them happy often don’t.
What is, then, the science of money happiness? I’ll summarize the basic seven points as best I can, but checking out the paper itself will add to it, with citations, etc.
1. Purchase experiences, not things.
Things get old. Things become ordinary. But experiences are totally unique; they shine like diamonds in your memory, often more brightly every year, and they can be shared forever. Whenever possible, spend money on experiences such as taking your family to Disney World, rather than things like a new television.
2. Stop spending so much on yourself
Anything we can do with money to create deeper connections with others tends to tighten our social connections and reinforce positive feelings about ourselves and others. Imagine ways you can spend some part of your money to help others — even in a very small way — and integrate that into your regular spending habits.
3. Go after lots of small pleasures instead of a couple bigger ones
Because we adapt so readily to change, the most effective use of your money is to bring frequent change. Break up large purchases, when possible, into smaller ones over time so that you can savor the entire experience. When it comes to happiness, frequency is more important than intensity. Embrace the idea that lots of small, pleasurable purchases are actually more effective than a single giant one.
4. Pay now and consume later
Immediate gratification can lead you to make purchases you can’t afford, or may not even truly want. Impulse buying also deprives you of the distance necessary to make reasoned decisions. It eliminates any sense of anticipation, which is a strong source of happiness. For maximum happiness, savor (maybe even prolong!) the uncertainty of deciding whether to buy, what to buy, and the time waiting for the object of your desire to arrive.
5. Consider the details more
We tend to gloss over details when considering future purchases, but research shows that our happiness (or unhappiness) largely lies in exactly those tiny details we aren’t thinking about. Before making a major purchase, consider the mechanics and logistics of owning this thing, and where your actual time will be spent once you own it. Try to imagine a typical day in your life, in some detail, hour by hour: how will it be affected by this purchase?
6. Beware of comparison shopping
Comparison shopping focuses us on attributes of products that arbitrarily distinguish one product from another, but have nothing to do with how much we’ll enjoy the purchase. They emphasize things we care about while shopping, but not necessarily what we’ll care about when actually using what we just bought. In other words, getting a great deal on cheap chocolate for $2 may not matter if it’s not fun to eat.
Happiness is a lot harder to come by than money. So when you do spend money, keep these lessons in mind to maximize what happiness it can buy for you. And remember: it’s science.
James Pantzis, CPA, PC
There are people on social media who are already posting hopeful pictures about “Harvest Time” and “Fall 2016”, and I think it might be because this summer has been a really hard one for the nation, and our world. We’ve had terrorist attacks, Zika, terrible flooding in multiple states, political turmoil, a very surreal Olympics (though seasoned with wonderful stories).
And the backdrop of it all is an election season that nobody seems very happy about on either side.
No wonder so many people want to turn the page to a new season as soon as possible.
One of the harbingers of fall is the beginning of school. Parents everywhere are rejoicing (with a healthy seasoning of the bittersweet in realizing again that the kids keep getting older!), and the school buses are starting to get busy around here.
And perhaps naturally, the federal and state governments are interested in our citizenry becoming more educated, and there are a variety of resources and regulations out there that I wanted to let you know about.
By no means is this an exhaustive rundown!
There are goodies in here both for current students, past students and even as well for prospective students (of the child and adult variety). Let me know if we can help in any specific way possible — we’re here for you!
An Overview Of Student Tax Credits, Benefits & Deductions By James Pantzis
“The difficulty in life is the choice.” -George A. Moore
As I mentioned above, this isn’t intended to be a fully-exhaustive list, but there are a bunch of resources for students that many of my clients and friends may not realize are available to them — and I’d like to make sure you know about them!
For Current Students
I’ll address student loans in a minute, but first let’s examine the three big tax-related benefits for current students. There are two major credits, and one major deduction. Again, this is a basic rundown, and for the sake of brevity I’m not including EVERY particular rule for each of these, just the major ones.
The Lifetime Learning Credit (LLC)
Originally passed back in 1997, this is a $2,000 credit towards qualifying college expenses that can be claimed once per tax return. Like most tax credits, with student tax credits there are income phaseouts and limits (which is why we’ll want to be smart about how and when it’s used), but the greatest benefit of it is that there is no time limit on claiming it and you only need to have taken one college course to take the credit.
The American Opportunity Credit (AOC)
This came to us as recently as 2009, as part of the original stimulus package (remember that?), and it offers up to $2,500 for each student. The income phaseouts are higher than the LLC, and it can be used for expenses beyond just tuition (like books). Also, 40% of it is refundable which means you can receive money back from Uncle Sam, even if you didn’t pay any tax! There are other restrictions, but these are the main ones.
Tuition and Fees Deduction
No fancy acronym for this one, as it’s a pretty standard one. Generally, credits are more powerful than deductions, as this one simply reduces the “income” number with which your actual tax is computed (as opposed to a credit which reduces the actual tax). But it gives up to a $4,000 deduction against tuition and qualifying fees.
There are advantages and disadvantages for each of these provisions, and you CAN take all three on one tax return — but they would have to be for a different student (no double-dipping). As usual, we’re here to help with these. In many cases, we’re already doing the thinking for you on them!
For Past Students
This can also apply for current students, but let’s briefly address student loans. As the cost of a college education continues to climb, more and more students are taking on student debt. Collectively, as a country, we currently owe nearly $1.4 trillion in student loans. That balance is growing at a rate of $2,726.27 every second.
“Good” news is that the interest is deductible. Even if you don’t itemize, you can claim up to $2,500 deducted from your income when paying interest on student loans. Generally, your lender keeps track of this for you and you’ll get a form if you paid more than $600 over the course of the year. And, of course, there are other rules (related to if you are claimed as a dependent, income phaseouts, etc.). But again, this is what we are here for!
For Prospective Students
You can take into account the above tax benefits when making your decision, as well as avail yourself of the many (many) scholarships and grants available to you.
One option that may be available to you if you work for a large company is that some of them offer Educational Assistance programs, and you can receive up to $5,250 worth of benefits from an employer to pay for schooling (as long as it is “career related” or towards a specific degree). Anything above that amount would need to be recorded as income.
I hope all of this wasn’t mind-numbingly dull. It’s fun for us here at Team Pantzis to think about the strategic ways to use all this stuff to save our clients on their taxes.
But we also realize that many of our clients simply want us to handle it all for them. We love that … but we also wanted to make sure you knew what was out there.
I hope this helps — and bring on the Fall!
James Pantzis, CPA, PC
A couple things need to be said before I get into the meat of what I’m writing today.
Firstly, our thoughts and prayers are with the residents of Louisiana and the Gulf Coast who withstood 7 trillion gallons of rain in just one week, and this disaster is shaping up to be extremely significant.
As usual, the best way we can help is to make cash donations to trusted organizations — as in many tragedies, scum-sucking scammers quickly poke their heads out of the mud and try to use our heartbreak to line their own pockets. There are many great organizations, obviously, but here is a page for the Salvation Army’s special relief fund.
Secondly (and speaking of scammers), back-to-school season is upon us all, and the IRS has issued new warnings about how many people are being hassled for what is being called a “federal student tax”. There is no such thing. Don’t fall for it.
As a reminder, the IRS has already told us that they will NOT:
- Call to demand immediate payment over the phone, nor will the agency call about taxes owed without first having mailed you several bills.
- Call or email you to verify your identity by asking for personal and financial information.
- Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.
- Require you to use a specific payment method for your taxes, such as a prepaid debit card.
- Ask for credit or debit card numbers over the phone or email.
- Threaten to immediately bring in local police or other law-enforcement groups to have you arrested for not paying.
So if you ever receive such a call or communication (and especially if you do not owe tax), don’t engage with the scammer and do NOT give out any information. Just hang up.
Lastly, with the Olympics in our rearview mirror, there’s been lots of angry talk about Olympians getting taxed for their medals. And, as is always a good policy, it’s a good idea to check Snopes about that.
Now, while earning a cash bonus from the United States Olympic Committee might not work as a “side income” for all of my clients, I do get asked from time to time if I have ideas for what might help earn some additional spending money, so I’ve put together some ideas here for a possible “side hustle”…
James Pantzis’ Five Ideas For Establishing A Side Hustle
“Defeat is not the worst of failures. Not to have tried is the true failure.” -George Edward Woodberry
Continued economic uncertainty (especially with so much political turmoil) has brought clients to me who are looking for ways to “trim the fat” … and so, to continue the metaphor, how about *adding* some “lean”?
You see, when trying to save money, eventually you’ll come to a point where you have cut as many expenses as you can and there are no additional steps you can take to free up money from your current income. The next step to saving more could be to look for other sources of income. These are a few common ways to make extra income with which I’ve seen many clients succeed:
* One of the most obvious has to be getting a second job. While this can eat into your free time, it’s an immediate way to bring in a dependable, set amount of income. You could try to make it more enjoyable by choosing something you’re interested in. For example, if you are an avid golfer, then work in a golf store. Not only will you enjoy the job more, you may have a discount that will benefit you as much as the pay check.
* When you invest in dividend paying stocks, you can receive 3-6% annually in dividends from some of the top financial and utility stocks.
* Rental property can be a great form of income, as long as it’s “cash flow positive” — meaning that the rent you bring in more than covers all the expenses. You don’t want your only hope of making money to rest upon the future value of the property. With the exception of the occasional real estate bubble, the actual appreciation on a house makes a terrible investment, believe it or not.
* Sell things around the house that you don’t use anymore. This could be done with a garage sale (often more hassle than it’s worth) or more efficiently online on eBay or Craigslist. If you get comfortable with selling on these sites, you could even buy things at other garage sales or wholesaling sites that are undervalued and sell them online yourself. If you enjoy a certain hobby, like crafts or woodwork, you might be able to make something that you can then sell online on Etsy or other similar sites.
* If you have “freelance” skills, a great site to find work is www.upwork.com.
While not all of these ideas will make a lot of money, even bringing in an extra $100 a month to invest and earn 7% will give you extra savings of around $117,000 in 30 years. And I like the sound of that for you.
I hope this helps.
James Pantzis, CPA, PC
Despite what they’re saying about the low TV ratings for these Olympics, almost everyone I know is talking about them. Michael Phelps, Simone Biles, Simone Manuel, Usain Bolt … the great stories are flying at us so fast that it’s almost hard to keep track. I’m so grateful for the streaming options this year so we don’t have to miss any of them! (Actually, that’s probably a big reason for the lower TV ratings, as I consider it.)
As viewers, we only get this tiny little window into the lives and motivations of these Olympians. It’s sometimes hard to remember how much hard work, determination and practice went into these athletic feats (well, except for when the Procter & Gamble commercials remind us about it).
And of course, we remember that however incredible these moments are, the most important story of our lives is what will be played out in the hidden, quiet moments that are only seen by those who love us most. However many gold medals Michael Phelps has in his trophy case, I imagine that none of them are as precious to him as his son, Boomer.
And we “get” that around here — life is much more than the big, loud moments, and all of it is worth protecting. It’s the story of a long road, and every twist is unique.
But that aside, there are some useful guidelines that you can use to evaluate how you’re proceeding, and whether the financial road you’re traveling on is taking you where you want to go.
Every one of my clients will find themselves in one of the following categories, and I have ideas for what you should be accomplishing in each. If you want to figure out how you can do a better job of any of this, this is also what we are here for. So don’t hesitate to email me or shoot us a phone call at: (718) 858-9864.
We’re here for you.
James Pantzis’ Financial Goals By Age Bracket
“The young man knows the rules, but the old man knows the exceptions.” -Oliver Wendell Holmes, Sr.
Making your money last long enough is a lifetime’s work. And there are some basic “rules” that we can all follow, depending on what stage of life in which we find ourselves.
However, it’s also useful to remember what Mr. Wendell Holmes, Sr. said up there beneath my article title: sometimes rules are best ignored.
Which is why we are here — to help you determine if you are breaking these rules WISELY … or if, perhaps, a refocusing of priorities should be in order.
Regardless, I offer you these financial goals everyone should consider:
Learn to invest, and start putting some money into a retirement account.
Keep planning for retirement. If possible, buy a house. Start saving for your kids’ college.
While still saving money, spend some of it to enjoy life. Talk to your parents about their finances to avoid unpleasant surprises as they grow older.
Analyze your retirement plans to make sure you’ll have enough money to retire. Adjust your saving strategy if necessary.
Start collecting Social Security. Take advantage of senior discounts. Put aside some of your savings for long-term medical needs.
Analyze your spending. Talk to your adult children about your financial situation.
80 and up:
Make sure your will is (continually) up to date. Start earmarking possessions for your children, or handing off family heirlooms outright. Spend your money on items that help you enjoy your life and keep you healthy and safe.
Again, every life has its exceptions … but I do hope that you’ve thought yours through. To your family’s financial health!
James Pantzis, CPA, PC
I’ve recently witnessed some child tantrums in the checkout line.
You know how it goes … many people looking away, some looking on with scowls of judgment and a few kind souls giving smiles and words of encouragement.
Parenting is no walk in the park.
Many parents face a unique tension when it comes to loving and providing for their children … and balancing it with the desire to keep them grounded. It is so hard. So, in the interest of throwing some ideas out there, I thought I’d weigh in with a few concepts that might spark ideas for instilling financial smarts into our children (and the ability to understand that they don’t get everything they want right away).
I know — this isn’t a normal topic for a tax professional to address.
But we see it as our role to come alongside families and individuals where the rubber meets the road: how taxes and money actually affect our daily lives. I happen to think it’s part of what makes us effective … because we care about ALL of the implications for your financial decisions.
I know that every family has its own rhythm and pattern, and I’m no “parenting expert”. It’s risky for me to even write about this stuff! But I hope you understand — these are ideas to spark your thinking. Do with them what you will.
[And before I get to them, let me also emphasize that we are here for you year-round. With school right around the corner for many of our clients, there are a slew ofschool-related tax deductions we could explore for you. Let us know how we can help, by dropping me a note or calling: (718) 858-9864 ]
Children, Finances And Brooklyn’s Consumerism Culture
“Patience is the companion of wisdom.” -Saint Augustine
I should probably start this right off by saying that I’m not claiming to be a particular expert in these matters. However, I do watch what other people do well … and I’ve had many conversations with wise clients who have shared a thing or two over the years. I have clients with great material means, who have children that remain “unspoiled”, and who don’t carry an expectant spirit.
Likewise, I have clients who have shared their struggles with us about their children always wanting MORE MORE! (these are brave and wonderful clients to share such private details), and this can even be the case when some of these families don’t have large incomes.
And then there are the holidays — in about four months and coming faster than we all think. And I also have some clients whose children get “back to school” gifts (whether at home or from classmates), and of course the normal decisions about birthday gifts.
So how do we hold back a flood of consumerism, and teach our children the true meaning of gifts, giving and the upcoming holiday season? Well, some of my wiser clients might say …
Explicitly Limit The Number Of Gifts Given
Parents often tend to go overboard buying presents for their little ones around birthdays and holidays — after all, it often feels like an overflow of love AND children sure do love it.
But I know Brooklyn families who have always put a stated limit on Christmas and birthday presents — and yet their children don’t seem to act like they feel deprived. Christians can link Christmas gift-giving to the three gifts of the magi; Jewish believers can connect their celebration to the miracle of the oil and others can find different reasons (spiritual or otherwise) to not simply pour a truckload of gifts on their children. The key seems to be in creating a happy atmosphere around it, and remaining consistent.
And because I’m writing this months in advance, you have time to be thoughtful about it, and perhaps prepare your children differently, if you hope to make a shift.
Have Your Children Buy Their Friends Gifts
Why not let your kids experience what it feels like to sacrifice and give? After all, we’d all want to give ALL of our friends a gift, but the truth of the matter is that we simply cannot buy a gift for everyone on our list. We have finite resources and have to allocate them accordingly. There is a line that we all have to draw in the sand for who will get gifts and who will get a card.
Giving your children a certain dollar amount to spend on gifts, or simply making them pay for their friends’ gifts out of their own pocket, will teach them about making the hard choices of whom to give to, and how much, within their very limited resources.
And, of course, this assumes that they ARE giving gifts! If not, that’s a great place to start.
Share Financial Details With Your Children
Children should be protected from adult concerns. But that doesn’t mean that they should be blissfully ignorant about how money works. In fact, we owe it to our children to properly explain where the family’s money comes from, how it gets into the bank account, and how expenses and budgets work. With a little explanation about how your family’s budget is structured, you may be able to hold back the tide of consumerism culture.
Again, they don’t need to feel a pinch — but they SHOULD know that gifts and items have a monetary value, and don’t just get plucked from the shelves without cost.
These are just ideas to start with. It’s extremely hard to curb the allure of consumerism in our culture. But in my opinion, it’s a fight that every Brooklyn parent should consider waging in today’s society of overspending and consumer debt.
Again, every family has their own approach … but I do hope that you’ve thought yours through. To your family’s financial health!
James Pantzis, CPA, PC
I love technology, I truly do.
I’m not always perfect at using it as well as I could in my Brooklyn tax preparer business, but we do make it a point around here to stay as up-to-date as possible with the technology of what we do (in tax preparation, accounting, etc.), as well as the numerous other apps, tools and other software that we routinely access here at Team Pantzis.
But I’m also very aware of the risks that many Brooklyn people take (often unknowingly) in surrendering so much data to large corporations, and other entities.
So today, I’d like to remind you (and myself) of the value of privacy and security in our modern age.
Yes, we gain so much with the advent of so much convenience, but unless we are careful, we can lose so much more than what we’ve gained.
I’m actually not even referring today to the profound social and cultural shifts that we’ve all been living through as communication has become so instantaneous and in our pocket. (Do you sometimes get nostalgic, as I do, for the 90’s, when we didn’t have much of an internet and cellphones were a luxury item, instead of a necessity?)
As much as I’d love to make an attempt at getting eloquent about our modern culture, today, I have a smaller target in mind. But it’s a subject which many of us don’t think enough about, and one that can truly wreck your life, if you’re unwise about it.
And hey — I’m a Brooklyn tax professional, so yes, you would probably expect me to be a little “careful”. But don’t ignore this stuff, and let me be the uptight one in the room, who very well might save your bacon.
Your thoughts, as usual, are welcomed.
Your Brooklyn Tax Accountant On: Common Sense Online Security (For Normal People)
“The price of greatness is responsibility.” -Winston Churchill
I’ll spare you the horror stories about the terrible things that can happen if you’re not careful online (but there are plenty if you want to google them).
We tax professionals recently received a notice from the IRS about how we are an increasingly ripe target for identity thieves and scammers. In New York state alone, the tax department has stopped more than 330,000 suspicious personal income tax refunds, catching nearly $500 million in attempted tax refund fraud.
And, of course, it seems a new data breach or famous hacking case is reported every week.
So, as your trusted Brooklyn tax preparation practice, we make it a point to go well beyond what I’m about to share with you here, in our office, simply because we handle so much sensitive information.
But for normal families, you don’t need to erect the kind of cyber fortress that we have here at Team Pantzis … you just need to mind yourself with some simple steps.
I have thoughts on each area that you need to guard, and I won’t go into massive detail, but will hopefully give you some common sense guidelines for staying safe.
Data Protection for Brooklyn Families
This means, essentially, don’t let your most private data get shared in an insecure way! SSN#, account numbers, DOB’s, etc. are big targets for thieves, so share that information only when you know WHY it is necessary, and when you are sure you’re in a secure environment. In other words, don’t email this data, certainly don’t post it on a website, and definitely don’t hand it over to someone you don’t know.
This also means that you should be extremely careful when you get rid of electronic devices that you have used (laptops, computers, and phones, etc.) — wipe them clean with a commercial-grade utility that will delete the data as permanently as possible.
Password and ID Theft Protection
There are plenty of great resources out there for effective password discipline. Basically, don’t use simple passwords, don’t use the same one everywhere, and for the love of Pete, invest in the security of a good password manager. These seem to be the most popular and effective: LastPass, Dashlane and 1Password.
Stop using “qwerty” or “12345” — PLEASE.
This can almost be summarized as: “Don’t fall for the fake emails that promise you free gift cards.” Be very, very careful about clicking links from email senders that you don’t know, and if anything automatically downloads on your computer that is an “.exe” file or some kind of program, don’t run it unless you are ABSOLUTELY sure you know it’s legit. Nobody legitimate is going to email you about how they “found a virus on your computer that can only be solved by clicking on this link.”
Keep your stuff updated and watch your statements.
The primary reason that many of your apps and operating systems on your phone and computer alert you to software updates is that they are protecting their system from security flaws. Run the updates! I know it can be a pain, but running outdated versions of commonly-used applications can expose you to risk.
And, of course, it probably should go without saying (I am a tax and financial person after all), but don’t allow the convenience of cloud banking to prevent you from carefully monitoring your financial statements each month. Even when you primarily use a debit card, many banks have great security teams who will handle fraudulent transactions and protect you from thieves. But they only work if you notice!
I do hope this helps, my friend. I’m truly dedicated to the success of your family — and to protecting your hard-earned assets. Can other Brooklyn area tax professionals say that?
James Pantzis, CPA, PC
We’re in the middle of the always-somewhat-odd political convention season, in which true believers fire each other up, and most everyone else issues a collective yawn (and more strongly filters their Facebook feed).
I don’t mean to say that I don’t care about politics, or the direction of our country (to the contrary — it is a VERY big part of even my professional life). But only that political conventions are remarkable mostly because of the *lack* of meaningful news they actually generate.
We, on the other hand, hope to be an actually meaningful part of your life.
You see, in posting these strategy notes that I do, one of my goals is that I hope you can tell that we care about what we do around here — and that we care for you. Enough to take the time to be in close contact with you throughout the year, and to open myself up to plenty of email questions, and otherwise.
(Unfortunately, most tax professionals don’t usually offer this kind of access … which, I suppose is good for me and my clients — but not so good for the many other families out there.)
In any case, moving on to the subject of my note for this week, something I frequently see is that many families pay little mind to estate planning because the estate tax threshold is so high ($5.45M for an individual, $10.9M for a couple). But leaving aside the fact that for some farmers and business owners whose inventory and supplies can surprisingly affect this number, this is actually a short-sighted mistake. Here’s what I mean…
Estate & Tax Planning For Brooklyn Families
“The purpose of life is a life of purpose.”- Robert Byrne
It’s an all-too-common misconception that smart estate planning is all about avoiding the estate tax.
And, if that were the case, only the very wealthy would be affected by it — since only those with estates carrying over $5.45M in value aren’t exempt.
You may fall into that category, but even if you DON’T (and also if you do), you should be considering the following questions as a family. You see, regardless of whatever funds will or will not be affected by this exemption, you should focus your attention on what you are really trying to accomplish with how you pass along your assets.
And this is the best question to ask:
What are your values and goals? I.e., “How do you want your success to affect your children and grandchildren?”
Every family has a different answer to that question, and it’s an extremely important — foundational — component of how we work with our client families, even in tax planning and preparation.
You see, some planning only takes “money” into consideration. And while that’s certainly an important item to consider, the money is really only there to create a specific destiny, and a style-of-life that you’d want to see carried into successive generations.
And it doesn’t require a lot of “it” [money] for you to be able to pass along your most precious values.
I often urge my clients and friends to actually take the time to consider this question, because it may seem obvious on its face … but your answers (upon a longer consideration) will often surprise you.
And we’re here to provide any kind of support along the way which you might require. We’re pretty practiced in helping families cut through the clutter of financial statements — and finding the hidden gems of core values and relationships.
And THOSE are the only things which really do last forever.
Let’s talk more, if you want to explore these issues. Because regardless of estate tax thresholds and legislations, walking without the right kind of plan can create an even worse mess when the time comes — and I’m not referring to anything about money.
If we can’t help you directly, we’ll put you in touch with the right people who can.
I’m personally dedicated to the success of your family–and to your dreams. Can other tax professionals say that?
James Pantzis, CPA, PC
Estate & Tax Planning For Brooklyn Families
When it comes to estate and tax planning, it’s not all about the money. Money is important, but there are other, more foundational issues to focus on.
Look, I don’t know what a Pokemon is, but with the kind of summer that our nation and world has been having, I suppose I can understand the appeal of plugging into an alternate reality and hunting weird, imaginary creatures.
With Baton Rouge (once again) in the headlines, and Nice, France revealing a new form of terror (on top of the events in Turkey, Dallas, Minnesota, Orlando, Iraq, etc.), we’ve had a pretty rough go of it. Especially if we allow ourselves, and our mindset, to be driven by the winds of media and 24-7 crisis.
But even for the most discerning of us, all of these events are sobering.
And they lead me towards thinking about being ready for whatever might come, whether it be circumstantial, financial, or otherwise.
One of the best places to start is to look at your existing debt loads, and what you can do about them. And then, once you’ve done that, you should examine your credit situation and what is and could be available to you in a pinch.
World crisis has a way of making our personal situations seem more urgent. And that’s a GOOD thing.
But aside from mobilizing for possible crisis, there are happier things to consider, for which your credit is a big deal. Purchasing a home, a car, etc. But I should hasten to add that using credit for discretionary purchases (even — perhaps, especially — for cars) is NOT something I would recommend.
But a very important aspect of your credit for a home purchase, or other such investment is, of course, your actual credit score (if you won’t be paying with cash). So if you have a large purchase in your near future that absolutely requires some kind of financing, what I’ve put together here will really help.
And regardless, it would be a valuable piece for you to look through, and have clarity about for the future.
Pantzis’ 5 Steps To Affect Your Credit Score
“A man should always consider how much he has more than he wants.” -Joseph Addison
If you want to fix your credit score, you need to know what your current score is. Most creditors rely on the three-digit FICO credit score, which ranges between 300 and 850, when determining your level of risk as a borrower. The higher your score, the lower the risk is for the lender, and thus the better your interest rate will be.
On the other hand, low credit scores result in getting denied for credit, or getting credit at extremely high interest rates. Contact a credit reporting agency to obtain your FICO score, to see where you stand. You can get a free credit report, but to get the actual credit score from FICO (Fair Isaac Corporation) you will have to pay, usually around $20.
Mint.com and other services like Credit Karma and Credit Sesame all offer some variation of a “free credit score”, but they are NOT, in fact, the FICO score that most creditors rely upon. There are, in fact, dozens of “scores” that bureaus assign to your data, but the FICO is the most authoritative and commonly relied upon.
Once you have your credit report and score in hand, you can take the following steps to fix your credit score fast:
1. Pay Off Non-Installment Debt First
If you have credit cards, you’ll want to focus your debt repayments here first. Paying credit card bills on time, and paying down the balances or paying them off completely will improve your score faster and more than paying off installment loans (car, student, mortgage, etc).
2. Get Under This Threshold:
Focus on getting your overall debt below 30% of your available credit limit on each credit card and revolving account you have.
This increases the amount of your “available credit” and will improve your credit score as you will be seen as less of a risk. Look at your credit card balances and send higher payments to the cards with balances closest to the credit limit first — to work toward the goal of decreasing your overall debt to less than 30% of available credit limits. Once you’ve obtained that goal, you can focus on paying back high interest debts first.
Or, of course, Dave Ramsey’s “Debt Snowball” approach (wherein you tackle small debts first, building confidence as you go, to pay off larger debts faster) can be even more effective–especially if your goal is (wisely) to pay off all debts completely.
3. Only Use When Necessary
Try not to use your credit cards, even if you’re paying your bills in full each month. Each month, the balance from your last statement is reported to the credit bureaus, and whether you made your payment on time. Using a card that already has a balance isn’t going to improve your score, so save yourself the extra interest and stop using the cards while you’re working to improve your credit score.
Definitely do not use credit cards from issuers who don’t report your credit limit. For example, American Express tends not to submit a credit limit, which means the credit bureau assumes your highest balance is your credit limit. This will make it look like you’ve maxed out your credit card, which affects your score negatively.
4. Check Your Limits
Verify that the credit limits shown on your credit report match your actual credit limit for each credit card account. If the report is showing a lower limit than you really have, it can cause artificially lower credit scores — because it will appear you’re using more of your available credit than you really are. If you find an error, simply ask the credit-card issuer to update the information with the credit bureaus.
5. Fix Your Reports
Have your credit report corrected if there are errors with any of the following situations, as they negatively affect your credit score:
* Late payments, collections, charge-offs that you don’t think are yours
* Credit limits reported lower than they really are (as discussed above)
* Accounts which are listed as anything other than “paid as agreed” or “current”, including “settled”, “paid charge-off”, “paid derogatory”
* Accounts listed as unpaid that were included in a previous bankruptcy
* Any negative item older than 7 years that is still appearing on your report (it should automatically come off the report after 7 years — or 10, if you filed for bankruptcy)
I hope this helps — feel free to forward along to your friends, especially those who are considering a major purchase, such as a car or new home.
And, as I mentioned, we’re here to help.
James Pantzis, CPA, PC