I’m not sure there is much that I can add to the commentary surrounding the events of the past week. I’m a tax professional, and I’ve found it wise to “stay in my lane” during these kinds of events, while still caring deeply about it all.
And so I’m grateful for the voices that are urging unity, and also grateful to those who remind us that there is so much more yet to be done before we get to the place of healing and truth. Indeed — some people are called to raise their voices right now, and I say this is all for the good. Let’s make it a priority to learn from one another during this kind of national moment … and let’s do it locally, here.
Well, moving on (and in the interest of “staying in my lane”), here a few things for you to consider, from a tax perspective right now…
We’re just past the midyear mark, and with months instead of just days left to act, you can make a substantial difference in your tax liability for 2016. There are simple steps you can take such as adjusting your payroll withholding and getting organized in advance (so next tax season is simpler).
A bit more trouble, but definitely worth it, are things such as contributing to a tax-deferred or tax-free retirement account and evaluating your investment portfolio NOW with an eye on how to take full tax advantage of capital gains and losses.
Or you can think really big and look into buying a home with its many tax breaks or making tax-saving alternative energy improvements to the house you already have. Sure, these tax moves might cut into your beach time a bit. But make the time, because they also could cut your tax bill.
We’re here to help! (718) 858-9864
Now, onto my primary Note … and feel free to forward this along to families who might come to mind, and let them know that we can certainly assist them with their unique situation.
Three Key Decisions For Brooklyn Families With Special Needs Children
“If you don’t design your own life plan, chances are you’ll fall into someone else’s plan. And guess what they have planned for you? Not much.” -Jim Rohn
Here is the standard thinking, in regards to setting up your affairs with children who have special needs:
Brooklyn families realize that they have to support these children for the rest of their lives. So, they typically write wills and take out significant term life insurance policies. They are careful to name a trust as the beneficiary, because if their child has more than $1,000 in assets upon reaching age 18, he/she will no longer be eligible for some government benefits.
However, while these families are indeed on the right track, parents with special needs children also need to:
1. Set up a second trust. The purpose of this additional trust would be so that friends and family members can contribute to the child’s care while the family is still alive–without causing the child to lose eligibility for federal disability benefits.
2. Increase savings. These families need a much larger emergency fund than most, and they also need to create a “reserve fund”. They should concentrate on savings–rather than paying off debt–especially if interest rates on loans are low.
3. Plan for three retirements. These Brooklyn families not only have to plan for their retirements, but also for the child’s long-term care. They should maximize their savings and take an aggressive approach with their portfolio to maximize returns over the long run.
These steps are so important that if you find yourself in this situation, you should raise them with whomever is helping you manage your affairs.
And, as I mentioned, we’re here to help.
James Pantzis, CPA, PC
The period in which our founders wrote the Declaration of Independence seems like such a different world than does today here in Brooklyn — and not simply because of the vastly different technological and lifestyle landscape (though that’s certainly significant).
As a tax professional, I have a certain fondness for Independence Day — what with taxes being at the root of it all. But in this world, and here in the Brooklyn area, with all of our local political issues, it’s a little sad to say that the whole “no taxation without representation” hubbub seems a bit, oh … quaint?
Yes, seen against the circumstances of the day, the Declaration was an act of incredible bravery by many people with a lot to lose by adding their names to it. It’s one of many inspiring acts by our Founders, and rightly worth tossing rockets into the air to celebrate and honor (if not more than that!).
But consider this thought experiment: Imagine if, before the Declaration was penned, the King of England had said: “Okay, I’ll allow a representative from each colony a seat in the Parliament.” Now consider — it’s not as if the Colonies stillwouldn’t have been taxed a lot, even with representation … the votes would have been something like 250-13 to tax the colonies a bunch. (And by today’s standards, “taxing the colonies a bunch” would probably feel like very little!)
But now there would have been “representation”. Historians point out that Washington, Adams, Franklin and others, at first, wanted only the same rights as other British subjects (to have representation in Parliament). It was only when the British remained stubborn on this point that the founders opted for full independence.
Instead, the British lack of imagination helped birth the greatest experiment in freedom the world has seen, over the last two+ centuries. It was the original “Brexit” (if you will). And it’s a big reason (in my opinion) why the world today is so different — and better — than the world of that period. The entire world can shift on small stubbornness.
Alright, James Pantzis thought experiment over — back to the real world in which we now live.
Let’s talk about how you can have some freedom TODAY, from the grasping hands of Uncle Sam, the local Brooklyn area tax authorities, and the IRS. Here’s where to start…
Financial Recordkeeping: A Simple Guide for Brooklyn Households
“Our character is what we do when we think no one is looking.” -H. Jackson Brown, Jr.
Well, the dream of freedom, birthed on the 4th, does still live. But let’s face it — our government (especially the IRS) would very much like to have a deeper, larger influence in our financial lives. And that very much includes the local Brooklyn municipalities.
As a US citizen, the IRS is one of the most powerful organizations in each of our little worlds. Solely responsible for collecting federal taxes and imposing related penalties, the IRS poses one of the biggest financial threats to Brooklyn individuals and business owners.
This is, in fact, why we, your trusted Brooklyn tax accountants, work so hard on your behalf.
The Treasury Department has unique information resources, legal standing, and even a role as a law enforcement agency. On top of all this, the IRS has the authority to issue legislation and the freedom to make mistakes without consequences (they’re protected from penalties for false tax accusations).
So what can we do to protect ourselves from the IRS’ power and potential for financial wrath? … Well, if there were a concrete answer for that, the IRS wouldn’t be the intimidating and widely-feared agency it is today. But there is one thing each of us can do to keep them off our back:
Keep good records.
Our best defense against audits and false accusations is keeping accurate, detailed records of the flow of all money into and out of our lives.
I’ve written on this subject before, but it’s worth re-visiting (and some of this has been updated since I last wrote). So here is my guide for Brooklyn businesses and families on how long to keep your records…
Completed tax returns: Keep for seven years
Pantzis’s Reasons Why:
1) The IRS has three years from your filing date to audit your return if it suspects good-faith errors.
2) The three-year deadline also applies if you’d like to make some sort of amendment because you discover a mistake in your return and can claim a refund.
3) The IRS has six years to challenge your return if it thinks you underreported your gross income, or if they deem there is a “substantial mistake” (this is new in the past year).
All this adds up to keeping that info for seven years. Beyond that, there’s no reason — except for posterity. (Maybe you want to just keep some vintage James Pantzis tax preparation work, you know, just for a future museum piece 😉 )
IRA contribution records: Keep Permanently
Pantzis’s Reasons Why:
You’ll need to be able to prove that you already paid tax on this money when the time comes to withdraw.
Bank records: Keep for just one year
Pantzis’s Reasons Why:
Those related to your taxes, Brooklyn business expenses, home improvements and mortgage payments will obviously need to be included for next year’s taxes. But unless there is some sort of emotional or posterity reason, get rid of everything after one year.
Brokerage statements: Keep until you sell
Pantzis’s Reasons Why:
To prove whether or not you have a capital gain or loss for tax purposes; after this point, shred it.
Household bills: Keep from one year to permanently
Pantzis’s Reasons Why:
When the canceled check from a paid bill has been returned, you can shred the bill with a clear conscience. However, bills for big purchases — such as jewelry, rugs, appliances, antiques, cars, collectibles, furniture, computers, etc. — should be kept in an insurance file for proof of their value in the event of loss or damage.
Credit card receipts and statements: Keep 45 days/Seven years
Pantzis’s Reasons Why:
Some Brooklyn families don’t even bother to match up their statements, but if you do so, shred the receipts once you’ve verified everything. There’s no reason to keep everyday receipts beyond this point. For tax-related purchases, you need only keep the statements for seven years — after that, shred it, baby.
Paycheck stubs: Keep for one year
Pantzis’s Reasons Why:
This is to verify that when you receive your annual W-2 form from your employer, the information from your stubs match. If so, shred all of the stubs … if not, request a corrected form, known as a W-2c. After that’s been handled — shred.
House/condominium records: Keep six years/permanently
Pantzis’s Reasons Why:
You’ll want to keep all records documenting the purchase price and the cost of permanent improvements — such as remodeling, additions and installations as well as records of expenses incurred in selling and buying the property, such as legal fees and your real estate agent’s commission, for six years after you sell your Brooklyn home.
Holding on to these records is important because any improvements you make on your house, as well as expenses in selling it, are added to the original purchase price or cost basis. Therefore, you are able to lower your capital gains tax when you sell your house.
All of this will help you develop a strong wall of defense around the “castle” of your finances. Generally, the better and more accurate your records, the better your chances are for surviving the peering eyes of IRS auditors.
If you need help with any of this, give us a call today.
James Pantzis, CPA, PC
The events of the past week or so have made some things clear, I think. There really are two different kinds of worlds … well, perhaps more accurately, in this Internet Age, there are many little worlds that we can inhabit. And your state of mind really does get impacted by the one in which you choose to dwell.
“Brexit” (Great Britain voting to exit the European Union) has left all the TV news people scratching their heads, searching for explanations and trying to draw big conclusions from it all. But if anything is OBVIOUS from it, it’s how disconnected so many people feel from the big stories that TV news people want to tell about us.
The horrible floods in West Virginia are an example of this. Folks there probably aren’t too terribly concerned with the state of the European Union right now.
And, unless you have pressing business that relates to foreign currency exchange, I highly recommend that you don’t concern yourself by it either. And, realistically, given the glacial pace, UK residents and those affected by the vote won’tactually feel the consequences of the vote for months and years down the line, while the details still get ironed out. Even the market gyrations last week were mostly just about the uncertainty of it all, and a “new normal” will settle in quite shortly (if it hasn’t already begun to do so, even).
Here in the United States, we all have our own fish to fry, so to speak. And this isn’t to mean that we shouldn’t care about world events, politics, etc. (because of my vocation, for instance, I do pay close attention). But we must limit ourselves to the matters that actually impact our world if we are to move forward in the things we are meant to do.
It all reminds me of some of things many (but not all) of us learned from our Dads. And with Father’s Day only recently in the rearview mirror, I thought I’d revisit some things I learned, hopefully for your benefit. And, as usual, I’d love your thoughts…
Financial Wisdom from James Pantzis’ Dad
“Success: keeping your mind awake and your desire asleep.” -Sir Walter Scott
My Dad said a lot over the years, giving me some valuable lessons.
I’m attempting here to summarize his thoughts…so call this a paraphrase of Dad’s Financial Wisdom:
* The bank is not your financial security.
The best credit line available is the one attached to your emergency savings fund. Remember, the borrower is sli’ave to the lender, and you don’t want to be a slave to big banks. Take my word for it!
* Don’t depend on government for making your life easy.
In an emergency, don’t be too proud to accept help, but do not make it a way of life.
* You can’t depend on schools to provide your full education.
You must self-educate beyond the lessons taught in school. Challenge your educators, and challenge your own thoughts. Read books. Read books contrary to your own opinion, so that you may learn another point of view. Read books on subjects you don’t think you care about and you just may discover your passion.
* Getting rich rarely comes quickly.
Building wealth takes time, and a lot of hard work. If you want to be successful in anything, you must work at it for hours every day — sometimes late into the night, and early in the morning. If you are happy with mediocrity, punch the clock after 8 hours, plop down in front of a television and waste valuable time until you fall asleep. Repeat this process until the weekends when you can do even more of the same.
* Be skeptical.
Don’t believe everything you read, most things you hear, and even a few things you see with your own eyes. Question everything. Nothing in life is black and white.
And, while we’re on the subject of Dads, let me leave you with one final gift:
Finish the race.
James Pantzis, CPA, PC
The basketball season is (finally?) over, and summer is officially here. For a “winter” sport, the NBA sure does hold on for a while … but that Finals series sure was one for the ages, and what an emotional end for Lebron James and the city of Cleveland. Many congratulations to them … and now we’ll see if the next professional championship drought to end will be the Cubs?
With the (official) advent of summer, many of our families have children underfoot in new ways.
This can add energy to everything else that’s happening in a home. And of course parents are aware of this.
Yet there is an area within family life to which (I believe) we don’t give enough thought.
Yes, many of our clients and friends are very careful to instill money “habits” into their children. But as your children (perhaps) walk a little more closely within the family ways this summer, let’s all do what we can to raise their vision about the bigger picture around finances. Sometimes we unwittingly can create a culture around money that sets our children up for future financial failure.
This may not be something you struggle with — but it also may not be something in which you’ve been as intentional as you’d like to be.
Certainly this stuff is sensitive — so I’d love your thoughts (as always).
We’re in your corner.
Teaching Brooklyn Kids About Money
“The price of greatness is responsibility.” -Winston Churchill
While it is impossible to completely shield kids from all the hard things that go on around them, I happen to believe money worries are one of those things we shouldn’t share with kids.
Whether you have many digits in your bank accounts, or you are still scraping by, money can (obviously) form a subject of dysfunction and tension, if we allow it.
So there are a number of ways to help our children move past this — some very specific, and some more subtle.
Don’t Argue About Money in Front of Kids
This one seems the most obvious. When it comes to transferring anxiety over money to your children, there is no faster way than to fight over it with your partner. Asking couples not to argue over money at all is a little unrealistic, so when differences arise, at least try to do it in private and out of earshot of your kids.
Spenders and savers are bound to clash, but when they fight in front of kids they give kids something to worry about beyond Mom and Dad fighting. Will we run out of money? Is Dad losing his job? Will we have to move? Will we have money for food? Even if parents are unsure about the answers themselves, they owe it to their kids to exude confidence when it comes to money. If things really do get bad, emphasize that no matter what, you’ll all be together and that home is where you make it — wherever that may be.
Avoid These Phrases: “We Can’t Afford That” or “We’re Poor”
When kids ask to buy things, and money is tight, try to rationalize with them instead of simply saying, “we can’t afford it.” Tell kids that instead of spending money on toys this week, you need to focus on buying some basic things like food and gasoline for the car. Ask them to come along to the grocery store to help pick out a few favorites. If you simply say you can’t afford something, kids will begin to wonder what else you can’t afford, and that’s a psychological slippery slope for young minds.
In fact, I’d go so far as to say this: Don’t allow anyone in your house to use the word “poor” when describing your economic situation — even when times are pretty lean in the household. Some Brooklyn families might be broke– but that doesn’t mean they’re poor! It’s more than semantics. The word “poor” seems to connote inferiority, or having some unfortunate circumstance. We don’t have to accept that paradigm. Sometimes, families simply spend more money than they earned and have to live on far less to turn things around. They may have been foolish, but they don’t have to be poor!
Now, let’s shift away from things not to do around kids, and focus on some positive things to teach kids to help them with their own financial futures.
Teaching Kids About Money
When I was growing up, money was taboo. Many Brooklyn parents would no more talk about money with their children than they would their love life. While this is still true to an extent, I think most of us have recognized that kids need to eventually become more aware about the potential financial pitfalls out there than we were in my generation.
Start giving kids an allowance to budget their savings, spending and giving. Help them open a savings account and begin to teach the mechanics of a bank account — completing deposit slips, balancing their accounts and explaining how compound interest works. As kids get older, introduce them to increasingly more complicated topics like investing, borrowing money, insurance, etc. By the time they are teenagers they should have a good grasp on Personal Finance 101 topics to better prepare them for life.
Encourage Saving Over Spending
As adults, we know it is prudent to put back a sizable emergency fund of several months (I actually recommend a full year) of basic, household expenses. Because kids are not responsible for everyday expenses, it can be hard to get this message across to them. Instead of focusing on saving money for emergencies, teach kids to save money for opportunities.
Foster Entrepreneurialism in Your Kids
My parents and grandparents were probably a lot like yours — they worked 40-50 hours a week, punched a clock and recharged over the weekends. After doing this for several decades they were given a cheap retirement gift, maybe a small pension, and a retirement send-off.
Well, times have changed.
The global economy, and the hyper-connected marketplace have underscored the importance of developing an entrepreneurial streak at a young age. Chances are very slim that your child will graduate college, pick one job and stay there for 40 years. More likely, there will be many jobs with many employers, and many periods of being “between jobs” in their lifetime. Wouldn’t it be great if they developed a “side hustle” to get them through those periods of unemployment, or to supplement their full-time income all along?
Perhaps you enjoy building things and have turned your one-time hobby into a side hustle building decks and fences on the weekends. Get your kids involved in the process as they grow older, and perhaps you can pass along a valuable trade. Even if they become accountants or fire fighters, having the knowledge and experience of a trade to fall back on could be incredibly valuable to them over a lifetime.
The point is not to stifle your kids’ ideas by forcing them into some ideal career path you have selected for them. Allow them to cultivate their own ideas. Over the next few decades, personal branding, and the branding of individual ideas will likely be hotter than any particular industry. Think about it — an iPhone app may be the next lemonade stand.
In a way, social media, and other new media, have greatly expanded the opportunities for kids to create new products, explore new ideas and push new content into the mainstream. There’s never been a better time to have an entrepreneurial mindset, and fostering that in your children at an early age is invaluable.
James Pantzis, CPA, PC
I appreciate the need for all of us to debate about where our local and national policies should be focused. As a tax professional, political decisions affect my work, and I do pay close attention.
But in the wake of the shootings in Orlando, and the seemingly-immediate political outcry on all sides, I couldn’t help but think that it might be more appropriate if we held off on the shouting for a little while, and allowed the 49 families of those killed to mourn the murder of their loved ones. Nor does that account for those who were injured by this evil act.
Yes, there will be time for talking about what may need to change. But despite the fact that we’re in an intense election cycle, let’s not forget that there are real people who are behind these numbers, and let’s first make sure to mourn with them for the many lives which ended too early. I know I have been. What a terrible act that was.
And there is really no good way to gracefully transition away from that topic, and into what I have been thinking about for your finances, so I’m just going to go for “abrupt”.
Because sometimes I get to be the one who provides a (hopefully bracing) reminder that some financial habits need to be broken. So today I thought I’d reach for something, put on my “coach” hat, and do what I can to inspire you into even greater financial prosperity.
I want my clients to think properly about these things … because when times of crisis do come (however intense or unexpected), it’s much easier to give from a place of continued strength than from weakness.
James Pantzis Identifies 5 Money Habits That Are Financially Crippling You
“Success is getting what you want. Happiness is wanting what you get.” -Dale Carnegie
As I mentioned, I’m going to risk being a bit blunt here.
That said, I’ll apologize ahead of time for those of you in truly tragic financial circumstances. I’m referring to events, completely out of control, which wreck your balance sheets. Like a medical emergency, not covered by insurance — and which no reasonable person could have expected.
But for the rest of you, call this your early intervention.
I know life is hard. I know being single is expensive. I know being married is expensive. Having children is expensive. And there’s no doubt that getting divorced can be a drain too. Yes, working two (maybe even three) jobs is exhausting. I haven’t been all of these things. Maybe you have. But on the surface all these “reasons for losing money” are just the result of a much bigger problem.
So if you’re ready to stop complaining about life’s circumstances, then here’s the remedy — the real reason why you’re losing financial ground — even (and perhaps, ESPECIALLY) if you had plenty already in the banks.
1. You spend good money on junk.
I’m sure the marketers love you since you’re spending your hard-earned money on modern debris. It’s the stuff that’s cluttering your home and bursting out of your front door. It’s the disposable, upgradeable, and superfluous stuff you buy in a heartbeat because “you’re worth it!” But it costs. It consumes your space, it can initially make you feel good but can lead to feelings of guilt, and can make you (eventually) broke. Please, learn to identify junk and end the spending spree — because yes, you’re worth it.
2. You don’t have a budget.
Yes, sticking to a budget (or starting one) can be scary and learning about your true financial situation can be a downer. Get over it. Please. At least get some help with it, find your net worth, add up all your debt, track your spending, and build a budget that reflects your true reality — not the world you prefer to live in. Only when you face the facts — by spending the time to manage your money — will you stop losing ground.
3. You don’t earn enough.
This is a toughie. If you’ve cut the junk, you’ve made a budget, and you’re still inching down your savings, you need to fix the income side of the equation. I’ve known people with 3 jobs — THREE JOBS — to make ends meet. They work their tails off to earn enough cash to cover the rent, buy better quality food, and pay off student debt. If need be, they didn’t own a car, didn’t wear fancy clothing, and didn’t wine and dine on the weekends.
The answer here isn’t easy — you’ll have to find a way to make more money. Even in a choppy economy, *if* you can swallow your pride, there’s always a way.
Plus, there are now more ways to get off your behind and build something on the side than ever before. Leverage that social network of yours, and take the entrepreneurial leap.
4. You don’t pay off your debt.
If you don’t have a plan to conquer your debt, then you’re going to do more than “lose ground” — you’ll go broke.
It’s time to look at ways to increase your debt payments. Paying just the minimum balance is a sure-fire way to keep the debt around your neck like a noose forever, so dig into that debt by paying it off sooner.
5. You don’t save.
Perhaps you used to save well — and now you’re resting on previous good habits. It may be time to INCREASE on that front, or at least return to what brought you upward in the first place. Saving even just a smidgen more of your income is a wise way to get started again. Take a good hard look at your spending patterns, your subscriptions and services, and find ways to cut back. For example, downgrading your television package — or canceling it completely — adds up to money that could be put into a high interest savings or investment account. The idea is to be consistent and set up automatic deposits into a specific account set aside for emergencies and long-term plans. (Again.)
If this stuff resonates with you, then good … if not, then I do hope that you keep on maintaining the excellent money habits that got you here in the first place.
And lastly, I hope this little dosage of “tough medicine” goes down smooth, and that you’ll forgive me my possible insensitivity. I’m in your corner. Many of my clients are doing quite well. But sometimes it’s important to admit it when you’re not.
James Pantzis, CPA, PC
First off, a quick reminder that estimated taxes for the second quarter are due June 15th. This one always feels as if it came a little quick (2 months instead of the normal 3), so if this applies to you, you’ll want to make sure you have that all set up in time.
Secondly (and relatedly), I think I’m still in denial that we’re already into June. Our busiest season is behind us, and I always seem to expect that everything will slow down in a massive way afterwards … but this year has seen so much energy and growth around our practice that I find myself in the midst of some very full days!
This, of course, is a very good thing. We are so grateful to be able to play such a meaningful role in the lives of our clients. We continue to work with some clients who are on extension and we’re helping clients who are (wisely) already making changes to their financial lives in order to pro-actively save themselves on taxes. It’s all fun, because we really do love what we do around here.
But that doesn’t mean I don’t pine away for vacation some days.
The BEST kind of vacation comes following work that is well and fully done.
And, I’ve found, it also helps to plan ahead — even when what we’re planning for involves beaches, lakes and mountains (and food … lots of food).
How Comprehensive Travel Insurance Can Help Brooklyn Families Avoid Vacation Nightmares
“It doesn’t matter where you are, you are nowhere compared to where you can go.” -Bob Proctor
So begins “vacation season”. June is here and school is pretty much out, and many Brooklyn families have already planned for their time away.
But when following your vacation itinerary, the last thing you want to do is worry about any financial loss that might occur as a result of a missed flight, an injury or illness, lost baggage, or any other unforeseen incident. To “insure” [;)] your peace of mind while away from home, many companies provide several different types of traveler’s protection plans to help ease the burden.
I do recommend that you strongly consider this, ESPECIALLY for vacations that are significant. The extra expense might seem excessive … until it isn’t. Certain trips have less “emotional loss potential” than do the big family vacay, and so it may very well be worth it to you to select these options for special trips.
Without insurance, a traveler can lose nonrefundable deposits and prepayments that can add up to hundreds, or even thousands, of dollars. A good, comprehensive travel insurance plan will often reimburse a traveler for all pre-paid, nonrefundable expenses for a covered loss.
Here are some general types of coverage you may want to consider before heading out for this summer’s vacation:
Travel Arrangement Protection – This covers you in case of trip cancellation, interruption, or travel delays (these can include inclement weather, lost or stolen passports, quarantine, hijacking or natural disaster).
Medical Protection – Despite having health insurance at home, the moment you set foot on foreign soil or even set sail on a cruise, many health plans are considered null and void. So be sure you carefully check your international coverage with your existing carrier, and as needed, get travel medical protection to cover emergency medical expenses, such as illness and accident expenses, and emergency medical transportation to the nearest medical facility.
Baggage Protection – Not only do you want coverage for lost, stolen or damaged baggage, but many plans offer reimbursement for the purchase of essential items if baggage is delayed.
Worldwide Emergency Assistance – If traveling outside of the country, make sure you purchase a policy that covers international emergencies. This can include emergency cash transfer assistance, legal assistance, and lost travel documents assistance.
The cost of travel insurance is based, in most cases, on the value of the trip and the age of the traveler. Typically, the cost is 5-7 percent of the trip cost. Like most every other type of insurance, be it automobile, medical, or homeowner’s, you hope you never need to use it. But it sure can be a relief to have it when you do need it.
The bottom line is: Before embarking on your next trip, do your homework! Talk to your insurance agent – or call me for a recommendation – and learn more about all the different insurance options available to you, so you can make the best choice for your peace of mind.
With that, I’ll leave you until next week.
James Pantzis, CPA, PC
As I was scanning the news this past week, and seeing the *continued* doom and gloom in our 24-7 world, the glut of “experts” who clamor for your inbox and your attention, and the unfortunate reality of our scattered, modern age … well, I just thought you should have a better idea about who would be guiding your finances and your tax strategy through all the noise.
Yes, this is a small departure from the pocket-protecting strategies I normally post, but I felt that it was a necessary interregnum.
Oh, and my people helped me put some of these together, as did a certain California gentleman who spent some time in Texas, enforcing the law …
13 Reasons The Taxman Fears James Pantzis
“The greatest pleasure in life is doing what people say you cannot do.” – Walter Bagehot
1) James Pantzis does not sleep after tax season, but only waits.
2) When the IRS TaxMan goes to sleep each night, he checks his closet for signs of James Pantzis. Carefully.
3) James Pantzis can lead a horse to water AND make it drink — and analyze a prior-year tax return at the same time.
4) James Pantzis counted to infinity — twice. The IRS is still counting.
5) When James Pantzis falls into the water, James Pantzis doesn’t get wet. Water gets James Pantzis. And all documentation is still preserved.
6) James Pantzis CAN believe it’s not butter. Treasury agents think that it is probably butter.
7) James Pantzis doesn’t read the tax code … but simply stares it down until the information submits.
8) James Pantzis can divide by zero. Legally.
9) If you look closely, you can see James Pantzis in every scene of Gladiator. Marcus Aurelius was grateful for the tax advice.
10) James Pantzis has never blinked over the course of life. Never. Unlike the IRS when they pick up the phone and James Pantzis is on the line.
11) James Pantzis once fixed an incorrect tax return by simply looking at it. With eyes of fire.
12) James Pantzis has never been “away” on vacation. Resort locations come to James Pantzis. Even during tax season.
13) James Pantzis never hides, but only seeks. And always on your behalf.
Don’t you feel better with James Pantzis on your side?
Like I said…a bit self-aggrandizing, but fun :). I hope you enjoyed it. Only certain parts of it are actually true. I’ll leave it to you to figure out which parts.
And all kidding aside — I want you to know how deeply we appreciate the opportunity to serve you and your family THROUGHOUT the year. Yes, the “tax season” is behind us, but we are here for you even still … and grateful for the chance to put our very specific set of skills to work on your behalf.
To your family’s financial and emotional peace…
James Pantzis, CPA, PC
There is more than one election in our future.
Yes, many are already tired of the presidential electioneering (though, I must say, if it weren’t for the fact that the next four years of our national direction were at stake, it would be much more entertaining than elections past!).
But for many of us, whether it’s very soon or in the somewhat-distant future, there is another election that will have a much more significant impact on your family’s situation than the presidential one.
So I thought I would take this week’s note to speak to those on the verge of retirement and have a frank conversation about Social Security benefits. (If you’re not yet close to filing for those, share this with somebody who is … they’ll thank you.)
Social Security benefits can represent a six-figure chunk of change. A typical monthly benefit of $2,200 has a present value of well over $500,000.00. So, despite the fact that it seems like an easy decision, you need to consider all your Social Security options carefully to avoid making a costly mistake.
And so the obvious question for people who are nearing eligibility: when should you take it?
It’s not so simple, but I happen to have some advice:
The Complexity of Social Security Benefits For Brooklyn Retirees
“It takes a great man to be a good listener.” -Calvin Coolidge
Like most government law, Social Security is not a simple piece of legislation. Since the Social Security Act became law in 1935, hundreds of amendments have been piled onto it, and have thereby added to the complexity. So to make the best decision about how to file for it, you’ll need to consider four things: 1) health, 2) income before retirement and 3) income during retirement, and 4) taxes.
Retirees from Brooklyn cannot rely on conventional wisdom! Simplistic “rules” such as “Always file for early benefits” or “You need to stop working to receive benefits” are NOT always true. There are specific cases that break every rule of thumb. And these one-size-fits-all answers leave many retirees failing to maximize the benefits they have earned.
At least four methods are used when electing how to take Social Security. And if you’re married, the two of you can mix and match these in more than 16 different ways (!). Each choice results in a different cash flow. By using the cash flows and the time value of money, you can determine which method will offer you the best maximum value.
So these methods differ significantly… they depend on your historical earnings, marital or divorce status, continued work in retirement, life-longevity and rates of return. The choice alone could be worth $250,000 of income or more.Filing options include “early filing,” “standard filing,” “delayed filing,” and many combinations of these options for married couples. It is DEFINITELY worth careful study and analysis of each option… yet a majority of Americans make their choice impulsively and emotionally.
The decision is even more crucial for many women. For 42% of single women older than 62, Social Security is their sole source of income. Women on average outlive men. Thus, planning for retirement is usually much easier for men (who statistically tend to have more assets and die younger). Widows are twice as likely to live under the poverty line as men who have lost their wives. And the poverty rate for elderly single women is 23% compared with just 5% for retired couples.
So couples must take their joint longevity into account before either one files for benefits. The person with the longer life expectancy will inherit either a wise or a foolish decision that will last a lifetime. Given that a husband’s benefits are often higher and the wife’s life expectancy longer, each case needs to be analyzed carefully.
Unfortunately, many people in Brooklyn file after considering only one or two options in isolation. Even worse–the Social Security Administration’s new online filing system enables quick decision-making. People can easily submit their request without any professional advice or planning.
Before filing, then, you obviously should be informed about all the options. To begin, you need to know your personal Social Security earnings and the projected benefits for both you and your spouse. You can request an estimate athttp://1.usa.gov/27s5kyX and then print the results. Or call the Social Security Administration at 800-772-1213. You can also get a copy of “Retirement Benefits” (Publication No. 05-10035) online.
Social Security planning is crucial for everyone. People with significant assets should carefully consider both the lifetime benefits and tax consequences of Social Security in light of their overall portfolio strategy. For the less well-off, Social Security benefits will dictate their retirement lifestyle. Proper planning could well determine what they can afford to eat.
So, there’s obviously a lot to consider here. I recommend you sit down with somebody you trust that can walk you through your different options. It could make a BIG difference in your lifestyle.
And regardless of whether that happens to be us, I do hope this helps.
To your family’s financial and emotional peace…
James Pantzis, CPA, PC
As we move into the fullness of spring here in Brooklyn, the nation seems to be holding its collective breath (and getting the popcorn ready) for what will prove to be a fascinating election cycle. I don’t presume to have any foresight into the matter, butwhat I can confidently predict over the next year is a significant amount of uncertainty and upheaval.
Yes, these next few months and years will be extremely “interesting” … and it’s all the more reason why it’s so good that Brooklyn small businesses and families have someone like me in your corner. Because those who don’t have someone who can pay CLOSE attention and plan accordingly on their behalf are going to deal with tax and financial consequences as a result, whether they like it or not.
Before the actual election, I will do an analysis of the different tax plans proposed by the presidential candidates (with a posture of aggressive neutrality!), which could give you some clarity on that aspect of things, but I’m going to keep my powder dry here, until we get closer.
In any election season, our candidates are (somewhat perversely) incentivized to “talk down” the economy, and our future. And some of their arguments might even have merit.
But what I want my Brooklyn tax and accounting clients to focus on — instead of the doom and gloom of “the world out there” — is what they can realistically control within their own sphere.
And so I have some thoughts for you on that matter.
James Pantzis On Keeping Your Mind Clear From Financial Junk
“The present time has one advantage over every other – it is our own.” -Charles Caleb Colton
In the midst of the media, presidential candidates and the headlines running our internal world … how can Brooklyn small businesses and families maintain a sense of personal peace in this … while NOT simply “ignoring” everything? I have four suggestions for my clients and friends:
1) Firstly, DO be very selective about (even, yes, choosing to ignore) certain media elements that have an agenda of spreading fear.
24-7 news channels and certain online outlets would make no money if they stopped preying on people’s fear. (You realize these ventures are not a public service, right? They are in the business of getting ratings to sell advertising. Period.)
Have you ever noticed your feelings after watching just 20 minutes of 24-7 news, or browsing certain media sites? Everything is going to pot. You’ll find negative stories on the environment, war, disease, crime, and of course … the economy. It’s sometimes almost laughable what they’ll come up with just to put out some bad news.
Everyone is selling crisis. This is true, from the media to the politicians. So stop browsing newsfeeds or watching CNN all day, refuse to participate in the circus, and instead start planning your first (or next) million. Seriously.
2) Look for the good news.
Now, I’m very careful here, because I’m aware that some of my clients and friends really are feeling the pinch, but let’s ALSO look at the bigger picture, especially in comparison to how things have been historically.
Despite fears of currency collapse in Europe, economies of certain countries reaching “breaking points” (e.g., China) and other challenges on the horizon, our nation and our global economy is nowhere near the kind of imminent collapse that people have been foreseeing for years (actually, for decades and for centuries). Do you remember what the environment was like in 2009 and all of the apocalyptic economic scenarios we faced?
The point is this: You can always find doom and gloom if you want to. So turn off your TV, shut down the social media on your phone for a while and focus on other activity. It will significantly help your inner peace.
3) Get out and do something profitable.
That may mean actually starting that exercise regime you’ve been putting off. Take up a new hobby. ANYTHING to get your mind in a more “profitable” mode. Go do it.
These steps will NOT solve the problems in your wallet, and in the economy. However, how you choose to respond to whatever comes in the subsequent months and years will affect your peace, and, actually … this WILL impact how you spend your money. Please, for your sake, tune OUT the fear, and tune IN to smart preparation.
4) Stave off fear by knowing actual numbers.
A bit self-serving? Sure, but also grounded in reality. The great problems many businesses and families face when money’s “tight” is SIGNIFICANTLY compounded by not knowing. Any number of pessimistic scenarios play out in your head.
So here’s how to fix that. Sit down with an advisor, get the real facts — and if they’re bad, you can still come up with a plan. You’ll find that laying out action steps with somebody competent changes everything. Call our office to schedule an appointment to lay out these steps with us. (718) 858-9864
James Pantzis, CPA, PC
Ah, sweet May. I love it. The birds are chirping and the flowers are blooming. Once the weather begins to get warmer, you see people start thinking about summer and, of course, they want to lose weight to look good in their bathing suits.
Why do so many wait until it gets warmer until they start thinking ahead?
I’d like to help you make some shifts in your thinking today. I’ve been reading up, recently, about Warren Buffett (the richest man in the world, at occasional times, depending on market fluctuations) — and what it took for him to create the kind of financial empire he now enjoys.
His company, Berkshire Hathaway, just had their annual meeting for investors — some of whom pony up the $200K+ for ONE SHARE, just to be in that room. The WSJ did a writeup of the news from that meeting here: http://on.wsj.com/26L3qZM
But I’ve gathered some broader lessons about his success, which I’d like to pass on to you today, as inspiration for what can truly be possible.
Financial well-being is earned by paying close attention to how you are thinking about that well-being, and what it takes to get there. So, if you’ll indulge me, allow me to give you a few short lessons from what I’ve learned about Mr. Buffett on how to create financial success — in any economic season.
I’d love your thoughts.
(And don’t miss the opportunity for your friends to enjoy the peace-of-mind found from having a competent expert review their 2016 returns, at the end of my Note. They’ll thank you…)
James Pantzis’ Four Tips On Building Wealth
“We all have ability. The difference is how we use it.” -Charlotte Whitton
Billionaires aren’t hatched overnight.
But there will be another generation of such men and women in the next few decades — and chances are, they will tread the same path as those who have come before.
So how did Warren Buffett do it? Here’s some of the basic path:
1) Start with a meat and potatoes small business — and be your own boss.
Buffett made his fortune by doing things his way, not by following the crowd. In high school, Buffett and a pal bought a pinball machine to put inside a barbershop. With the money they earned, they bought more machines until they had eight different shops running their machines. When they sold the venture, Buffett used the proceeds to buy stock and start another small business. By age 26, he’d become his own boss and amassed $174,000 — or $1.4 million in today’s money.
LESSON: Don’t fall for the temptations of a huge, immediate windfall business. Cut your teeth on the side, with something basic, reliable and small.
2) Mind the foxes who steal from the vineyard: small expenses.
In the famous book, The Millionaire Next Door, authors Stanley and Danko report that millionaires live well below their means. They budget, plan investments, and allocate their time, energy, and money into building wealth instead of displaying high social status.
Warren Buffett’s companies are known for watching out for small expenses. Exercising vigilance over every expense can make your profits and your paycheck go much further.
LESSON: The next time you spot a sale or online deal, check in with yourself to see if that $50 is better saved or invested than spent. It might seem like you’re spending a relatively small amount of money, but it all adds up.
3) Debt kills.
Warren Buffett advises his people to limit what they borrow. Living on credit cards and loans won’t make you rich. Buffett never borrowed a significant amount of money, not even for investments or mortgages.
The Millionaire Next Door reports that millionaires’ parents did not provide “economic outpatient care”, and their own adult children are economically self-sufficient as well.
LESSON: If you do give your teenager a credit card, make sure to set firm limits and specify use ahead of time. If they abuse the privilege, they lose the card. Do the same for yourself.
4) Leap forward.
Very often those who supply the affluent become wealthy themselves. In fact, one of the best ways to make money is to sell products or services to those who already have money. Many people don’t see these opportunities because they’re far too busy seeking money and security in the short term only.
Well, when Buffett began managing money in 1956 with $100,000 cobbled together from a handful of investors, he was dubbed an oddball. But he didn’t allow others’ opinions to keep him from leaping into a profitable venture. Over and above, I might add, others with greater private means.
Lastly, I will suggest this: Get professional advice on new ventures and ideas.We are here for far more than “just” tax preparation and planning. I and my team would love the opportunity to sit with you, and help you evaluate the direction of your financial life … and point you in a new direction, should it be necessary.
To more of your money staying in your wallet,
James Pantzis, CPA, PC