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, CPA, PC
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!
James Pantzis, CPA, PC
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.
James Pantzis, CPA, PC
“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:
(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.
James Pantzis, CPA, PC
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:
- Water & Food
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!
James Pantzis, CPA, PC
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.
James Pantzis, CPA, PC
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.
James Pantzis, CPA, PC
We’re officially into the season that we get really and truly busy. Even with the extended tax deadline of April 18th this year, I know that some of our clients are still gathering their paperwork for their taxes — and I wanted to say: many happy returns to you in the effort.
(See what I did there? “Many happy returns”? Tax pro humor — it’s a little corny.)
Anyway, some of our clients are experiencing some nice refunds, others are better able to plan for their tax obligations and we are cranking, cranking away. If you have NOT contacted us yet to set up a time to meet, please do so ASAP ((718) 858-9864 or email us by clicking the button above).
And if you have? We’d love it if you would let us know about your experience!
Now — I have spent some time considering what really makes for happiness when it comes to money.
Reason being, we have worked with so many intensely joyful families who have NOT been blessed with significant means (and many, of course, who are quite wealthy) — as well as families who never can quite seem to get enough.
And I believe that this is about something more than money.
Now, if you’ll allow me to think a little more deeply than normal, I have some larger thoughts about money and consumption for you today… and all of it matters, when we consider how we want to craft great tax and financial plans for you in the future.
Pantzis’ Top 5 Tips for Smart Spending
“Plenty of people miss their share of happiness, not because they never found it, but because they didn’t stop to enjoy it.” – William Feather
Creating a budget really shouldn’t be the place where financial decisions begin. Instead, a comprehensive look at what you most care about and how you want to live your life is the best place to start, even before budget categories are determined.
This becomes especially clear when we consider how we seek to raise our children with a proper financial mindset. We want them to learn how to earn, how to save (and invest), and how to spend. Unfortunately, this doesn’t spring up for them from the womb!
When speaking with our clients about their financial decisions, these are the sort of conversations that ultimately prove to be the most meaningful — often life-changing.
We get the opportunity to help them discover not only how they want to use their money, but perhaps even more rewardingly — how to align that spending with the things they care most about.
Here’s one of the places where we start:
Rich people don’t clutter their lives with liabilities — they make investments. As a way of contrast, those in the middle class accumulate such items, and are often forced to make payments on them (too-expensive cars, boats, etc.). And, of course, those who are stuck in a cycle of poverty usually see themselves as buying “things”.
The problem here isn’t that those who are poor, or “middle class” aren’t wealthy — it’s that they haven’t taken the time to figure out a healthy approach to their spending.
There is a book by Elizabeth Dunn and Michael Norton (called The Science of Happier Spending) which chronicles the “research distinguishing spending that satisfies from that which disappoints.” The authors give us five principles of the kind of smart spending that actually produces fruit.
1) Experiences satisfy more than material things.
2) Too much indulgence wears down. Making it rarer makes it more satisfying.
3) The best investment is usually in your time
4) Flipping the credit game — “pay now, use later” versus “pay later, use now” — gives a sense of anticipation which is far better than immediate pleasure combined with the later pain of paying for something already consumed.
5) It is happier to spend on others rather than on ourselves.
I’d say that’s a great place to start in having these conversations.
For example, recognizing that time is much more of a limited quantity than is money (as the adage says: “We are each only given 24 hours in a day”) means that it makes sense to evaluate how you are approaching the “spending” and stewardship of your time — and that it often makes sense to pay money for more of it.
The wealthy see the value of their time, and they regularly invest in it by paying others to free it up. This could range from paying for lawncare, cooking — or even sometimes paying for someone else to drive them to and from work. And this often forces them to think about using their time in the most valuable way possible.
You are the only one who can be a mother or father to your children. You are the only one who can be a spouse to your partner. You are the only one who can do the things that only you can uniquely do.
Bringing your money together with the things you most deeply care about isn’t always easy … but it IS worth it.
But this is what my team and I are here for. When you come to us for your planning this year, if you’re willing, let’s set a time to have a longer conversation about what you would like to do with your life. Because that’s really where everything comes together.
James Pantzis, CPA, PC
A little while back, the IRS released a study which showed that the average time it takes ALL taxpayers to do their taxes is a total of 18 hours.
The number is even higher if you don’t just use the 1040EZ form.
Seeing that figure once again reminded me of the service we get to provide. Truth be told, it doesn’t require those kind of man-hours for us to complete most returns, even those which are more complicated. But that’s mainly because — not to get too technical — we’re sort of experts at this stuff.
Already, we have many, many clients who have filed, have received refunds and have written us notes telling us that they’ve never been more pleased. This makes me happy, as you might imagine.
Well, we’d like to ask you a favor, and we have a simple way to help you help us, as it were. Yes, we’re extremely busy, but we’ve set aside some capacity for friends and family of our clients. The reason we’re willing to do this is that we already know that you are a good person to work with (else we would have released you as a client!)so it stands to reason that you associate with similar people.
Pantzis’ Top 10 Tax Document Checklist (Again)
“Wisdom is knowing when you can’t be wise.” – Paul Engle
With the increased penalties associated with the ACA in 2016, and all of the other changes every year, filing your taxes on your own is becoming much less ‘fun’ for regular taxpayers — even with nice-looking softwares on the market which purport to make it easy for you.
I truly do pity those inexperienced ones who try to muddle through all of the different codes and forms on their own,without devoting even a week’s labor to the transaction.It really doesn’t pay to “go it alone” for certain tasks.
Yes, this is a long checklist — but it’s the unfortunate reality of our tax code that it’s not even comprehensive! But these items will cover 95% of our clients. Really, this is for ensuring that we’re able to help you keep every dollar you can keep under our tax code.
Even if for some strange reason you won’t be using our cost-effective services this year, feel free to use this checklist as a handy guide…
1) Personal Data
Social Security Numbers (including spouse and children)
Child care provider tax I.D. or Social Security Number
2) Employment & Income Data
W-2 forms for this year
Tax refunds and unemployment compensation: Form 1099-G
Miscellaneous income including rent: Form 1099-MISC
Partnership and trust income
Pensions and annuities
Jury duty pay
Gambling and lottery winnings
Prizes and awards
Scholarships and fellowships
State and local income tax refunds
3) Health Insurance Information
* All 1095-A Forms from marketplace providers (if you purchased insurance through a Marketplace)
* Existing plan information (policy numbers, etc.)
* If claiming an exemption, your unique Exemption Certificate Number
* Records of credits and/or advance payments received from the Premium Tax Credit (if claiming)
4) Homeowner/Renter Data
Residential address(es) for this year
Mortgage interest: Form 1098
Sale of your home or other real estate: Form 1099-S
Second mortgage interest paid
Real estate taxes paid
Rent paid during tax year
5) Financial Assets
Interest income statements: Form 1099-INT & 1099-OID
Dividend income statements: Form 1099-DIV
Proceeds from broker transactions: Form 1099-B
Retirement plan distribution: Form 1099-R
Capital gains or losses
6) Financial Liabilities
Auto loans and leases (account numbers and car value) if vehicle used for business
Student loan interest paid
Early withdrawal penalties on CDs and other fixed time deposits
Personal property tax information
Department of Motor Vehicles fees
Gifts to charity (receipts for any single donations of $250 or more)
Unreimbursed expenses related to volunteer work
Unreimbursed expenses related to your job (travel expenses, entertainment, uniforms, union dues, subscriptions)
Education expenses (tuition and fees)
Child care expenses
Medical Savings Accounts
Tax return preparation expenses and fees
9) Self-Employment Data
Estimated tax vouchers for the current year
Self-employment SEP plans
Self-employed health insurance
K-1s on all partnerships
Receipts or documentation for business-related expenses
10) Deduction Documents
State and local income taxes
IRA, Keogh and other retirement plan contributions
Casualty or theft losses
Other miscellaneous deductions
We hope to see you in here soon!
James Pantzis, CPA, PC
I’m going to start off this blog post with asking for a small favor — would you take a few moments and leave an honest review on Yelp or Google Maps about your experience with us? And obviously, if you have NOT yet used our services for preparing your taxes or helping with your books, it wouldn’t quite make sense yet to do this (!) … but you can probably agree that getting others’ words about a place can make a great difference. So, thank you in advance!
Yelp Review: http://bit.ly/1oJuwPd
Google Review: http://bit.ly/1LqBUJw
Now, February is the “love month” (at least according to Hallmark), and for us this year (as almost every year), it’s the time when we don’t have as much time for our personal lives as we do in other months. (I like to think of May as my “Love Month”!).
Anyway, this month’s “festivities” aren’t the only experience I have with the language of love. You see, we meet with married couples almost every week throughout the entire year in the course of preparing tax returns and handling other such matters. It’s part of what we do. And, as we do so, we get sort of a crash course in marital communication.
Before you get worried — know that we don’t pass judgment on anybody’s marriage! Everyone has their own, unique relational dynamic. And every marriage works a little bit differently — it’s part of what makes it a wonderful institution.
All that said, however, I’ve noticed that *finances* can be a major sticking point in a good marriage.
But the great news is that there are simple steps you can take to help ensure you don’t ever fall into the trap of letting a good marriage be spoiled by money miscommunication.
And, of course, let me know if you have any pressing financial issues or questions, even during this busy time! We *love* serving YOU! Email me (simply click the button above), or call us at(718) 858-9864.
Pantzis’ Five Commitments For MarriageAnd Money
“Without labor nothing prospers.” – Sophocles
One of the most pressing, painful and significant issues within a marriage can be the problem of finances. For some, this presents no significant hurdle whatsoever — often because the money is flowing, and there are no pressing concerns. However, this can be a bandaid over problems that eventually show themselves when the (inevitable) crisis strikes.
Most of these are in denial. The rest of them are looking for a quick fix. Even a financial planner can’t help unless the couple is willing to make a few simple commitments. You can always choose to find something to fight about. But if you are serious about removing the financial obstacles in your love life, you should commit to the following marriage and money management rules.
Whether you are in crisis or not, there should be at least five major commitments within a marriage on the proper handling of money. Abiding by these principles will only bring you and your spouse closer together, and will help you to signal to one another that you are committed to partnership in every area:
1) Do the hard work of ensuring that you are fully open about your finances. It’s a fact that I’ve seen that most arguments within a marriage aren’t about how to spend money in the future, but rather, about how the money was spent in the past. The surest way to avoid these sorts of issues is to provide one another with an open and honest accounting of how money has been spent … which will only breed confidence for how it will be spent in the future.
2) Pay yourselves first. This is a common staple of investment and savings advice, and it’s all the more essential to make a commitment towards this within a marriage partnership.
Take the time to come together on an appropriate savings + investment rate, and do it in a way that will be easy — i.e., automate it.
When you automate your savings (and your investments), you protect yourself against the concerns of the month that might sap your resolve. It’s far too easy to not write that check to an investment or savings account when Johnny needs a new bicycle, or Jane needs braces.
Automate your savings, and consider those amounts sacrosanct.
In certain cases, making the commitment towards savings may even need to be a priority over reducing debt. Dave Ramsey and others speak about the “debt snowball”, and it is wise advice. First, adjust your lifestyle so that you are spending less than what you make. In this way, you can avoid making the debt spiral worse.
This leads to my next piece of advice…
3) Agree upon how you will use credit. Credit cards can be very advantageous for many couples … but these advantages become serious disadvantages when they are not handled in a previously agreed-upon manner.
Silo your credit card spending into specific budget categories (like gas, groceries, etc.), and avoid using them for “impulse” categories such as eating out, or other such optional spending.
One of the problems couples face with the use of credit cards is that it enables the ability to not face their financial problems. It makes spending easy, and can lead couples who are facing financial difficulties into worse ruin.
Give each other the ability to “veto” the use of credit cards altogether, or for particular categories, and you will have done well in your financial communication and care for one another.
4) Agree upon a “slush spending” amount. Anything that represents a significant budget item is best agreed upon in advance — but that doesn’t mean that you must check in with each other over every purchase within a marriage.
Young couples can set this amount to a low number, and as they get more experience (and cashflow), move that number to a higher level. But it should be clear that any purchase above that level would require and trigger a mutually agreed-upon decision.
5) Finally, agree not to stick your heads in the sand! It’s probably wisest that finances shouldn’t be handled only by one spouse in the marriage. Sometimes problems arise within a marriage because one of the partners decided “not to care”. If that’s you — well, you’re probably not reading this — or if that’s your partner, do the hard work to come together in this area. If you aren’t taking the time or interest to be involved in the finances, you might be creating bigger, unnecessary problems down the road. Get some help, and start the process of discovery.
Look, I’m not a marriage counselor. But I DO know good communication when I see it. And that’s what I’m here to help you with.
But I gotta say that we’re probably better at the “taxes” thing than almost anything else ;).
See you soon.
James Pantzis, CPA, PC