Despite what they’re saying about the low TV ratings for these Olympics, almost everyone I know is talking about them. Michael Phelps, Simone Biles, Simone Manuel, Usain Bolt … the great stories are flying at us so fast that it’s almost hard to keep track. I’m so grateful for the streaming options this year so we don’t have to miss any of them! (Actually, that’s probably a big reason for the lower TV ratings, as I consider it.)
As viewers, we only get this tiny little window into the lives and motivations of these Olympians. It’s sometimes hard to remember how much hard work, determination and practice went into these athletic feats (well, except for when the Procter & Gamble commercials remind us about it).
And of course, we remember that however incredible these moments are, the most important story of our lives is what will be played out in the hidden, quiet moments that are only seen by those who love us most. However many gold medals Michael Phelps has in his trophy case, I imagine that none of them are as precious to him as his son, Boomer.
And we “get” that around here — life is much more than the big, loud moments, and all of it is worth protecting. It’s the story of a long road, and every twist is unique.
But that aside, there are some useful guidelines that you can use to evaluate how you’re proceeding, and whether the financial road you’re traveling on is taking you where you want to go.
Every one of my clients will find themselves in one of the following categories, and I have ideas for what you should be accomplishing in each. If you want to figure out how you can do a better job of any of this, this is also what we are here for. So don’t hesitate to email me or shoot us a phone call at: (718) 858-9864.
We’re here for you.
James Pantzis’ Financial Goals By Age Bracket
“The young man knows the rules, but the old man knows the exceptions.” -Oliver Wendell Holmes, Sr.
Making your money last long enough is a lifetime’s work. And there are some basic “rules” that we can all follow, depending on what stage of life in which we find ourselves.
However, it’s also useful to remember what Mr. Wendell Holmes, Sr. said up there beneath my article title: sometimes rules are best ignored.
Which is why we are here — to help you determine if you are breaking these rules WISELY … or if, perhaps, a refocusing of priorities should be in order.
Regardless, I offer you these financial goals everyone should consider:
Learn to invest, and start putting some money into a retirement account.
Keep planning for retirement. If possible, buy a house. Start saving for your kids’ college.
While still saving money, spend some of it to enjoy life. Talk to your parents about their finances to avoid unpleasant surprises as they grow older.
Analyze your retirement plans to make sure you’ll have enough money to retire. Adjust your saving strategy if necessary.
Start collecting Social Security. Take advantage of senior discounts. Put aside some of your savings for long-term medical needs.
Analyze your spending. Talk to your adult children about your financial situation.
80 and up:
Make sure your will is (continually) up to date. Start earmarking possessions for your children, or handing off family heirlooms outright. Spend your money on items that help you enjoy your life and keep you healthy and safe.
Again, every life has its exceptions … but I do hope that you’ve thought yours through. To your family’s financial health!
James Pantzis, CPA, PC
I’ve recently witnessed some child tantrums in the checkout line.
You know how it goes … many people looking away, some looking on with scowls of judgment and a few kind souls giving smiles and words of encouragement.
Parenting is no walk in the park.
Many parents face a unique tension when it comes to loving and providing for their children … and balancing it with the desire to keep them grounded. It is so hard. So, in the interest of throwing some ideas out there, I thought I’d weigh in with a few concepts that might spark ideas for instilling financial smarts into our children (and the ability to understand that they don’t get everything they want right away).
I know — this isn’t a normal topic for a tax professional to address.
But we see it as our role to come alongside families and individuals where the rubber meets the road: how taxes and money actually affect our daily lives. I happen to think it’s part of what makes us effective … because we care about ALL of the implications for your financial decisions.
I know that every family has its own rhythm and pattern, and I’m no “parenting expert”. It’s risky for me to even write about this stuff! But I hope you understand — these are ideas to spark your thinking. Do with them what you will.
[And before I get to them, let me also emphasize that we are here for you year-round. With school right around the corner for many of our clients, there are a slew ofschool-related tax deductions we could explore for you. Let us know how we can help, by dropping me a note or calling: (718) 858-9864 ]
Children, Finances And Brooklyn’s Consumerism Culture
“Patience is the companion of wisdom.” -Saint Augustine
I should probably start this right off by saying that I’m not claiming to be a particular expert in these matters. However, I do watch what other people do well … and I’ve had many conversations with wise clients who have shared a thing or two over the years. I have clients with great material means, who have children that remain “unspoiled”, and who don’t carry an expectant spirit.
Likewise, I have clients who have shared their struggles with us about their children always wanting MORE MORE! (these are brave and wonderful clients to share such private details), and this can even be the case when some of these families don’t have large incomes.
And then there are the holidays — in about four months and coming faster than we all think. And I also have some clients whose children get “back to school” gifts (whether at home or from classmates), and of course the normal decisions about birthday gifts.
So how do we hold back a flood of consumerism, and teach our children the true meaning of gifts, giving and the upcoming holiday season? Well, some of my wiser clients might say …
Explicitly Limit The Number Of Gifts Given
Parents often tend to go overboard buying presents for their little ones around birthdays and holidays — after all, it often feels like an overflow of love AND children sure do love it.
But I know Brooklyn families who have always put a stated limit on Christmas and birthday presents — and yet their children don’t seem to act like they feel deprived. Christians can link Christmas gift-giving to the three gifts of the magi; Jewish believers can connect their celebration to the miracle of the oil and others can find different reasons (spiritual or otherwise) to not simply pour a truckload of gifts on their children. The key seems to be in creating a happy atmosphere around it, and remaining consistent.
And because I’m writing this months in advance, you have time to be thoughtful about it, and perhaps prepare your children differently, if you hope to make a shift.
Have Your Children Buy Their Friends Gifts
Why not let your kids experience what it feels like to sacrifice and give? After all, we’d all want to give ALL of our friends a gift, but the truth of the matter is that we simply cannot buy a gift for everyone on our list. We have finite resources and have to allocate them accordingly. There is a line that we all have to draw in the sand for who will get gifts and who will get a card.
Giving your children a certain dollar amount to spend on gifts, or simply making them pay for their friends’ gifts out of their own pocket, will teach them about making the hard choices of whom to give to, and how much, within their very limited resources.
And, of course, this assumes that they ARE giving gifts! If not, that’s a great place to start.
Share Financial Details With Your Children
Children should be protected from adult concerns. But that doesn’t mean that they should be blissfully ignorant about how money works. In fact, we owe it to our children to properly explain where the family’s money comes from, how it gets into the bank account, and how expenses and budgets work. With a little explanation about how your family’s budget is structured, you may be able to hold back the tide of consumerism culture.
Again, they don’t need to feel a pinch — but they SHOULD know that gifts and items have a monetary value, and don’t just get plucked from the shelves without cost.
These are just ideas to start with. It’s extremely hard to curb the allure of consumerism in our culture. But in my opinion, it’s a fight that every Brooklyn parent should consider waging in today’s society of overspending and consumer debt.
Again, every family has their own approach … but I do hope that you’ve thought yours through. To your family’s financial health!
James Pantzis, CPA, PC
I love technology, I truly do.
I’m not always perfect at using it as well as I could in my Brooklyn tax preparer business, but we do make it a point around here to stay as up-to-date as possible with the technology of what we do (in tax preparation, accounting, etc.), as well as the numerous other apps, tools and other software that we routinely access here at Team Pantzis.
But I’m also very aware of the risks that many Brooklyn people take (often unknowingly) in surrendering so much data to large corporations, and other entities.
So today, I’d like to remind you (and myself) of the value of privacy and security in our modern age.
Yes, we gain so much with the advent of so much convenience, but unless we are careful, we can lose so much more than what we’ve gained.
I’m actually not even referring today to the profound social and cultural shifts that we’ve all been living through as communication has become so instantaneous and in our pocket. (Do you sometimes get nostalgic, as I do, for the 90’s, when we didn’t have much of an internet and cellphones were a luxury item, instead of a necessity?)
As much as I’d love to make an attempt at getting eloquent about our modern culture, today, I have a smaller target in mind. But it’s a subject which many of us don’t think enough about, and one that can truly wreck your life, if you’re unwise about it.
And hey — I’m a Brooklyn tax professional, so yes, you would probably expect me to be a little “careful”. But don’t ignore this stuff, and let me be the uptight one in the room, who very well might save your bacon.
Your thoughts, as usual, are welcomed.
Your Brooklyn Tax Accountant On: Common Sense Online Security (For Normal People)
“The price of greatness is responsibility.” -Winston Churchill
I’ll spare you the horror stories about the terrible things that can happen if you’re not careful online (but there are plenty if you want to google them).
We tax professionals recently received a notice from the IRS about how we are an increasingly ripe target for identity thieves and scammers. In New York state alone, the tax department has stopped more than 330,000 suspicious personal income tax refunds, catching nearly $500 million in attempted tax refund fraud.
And, of course, it seems a new data breach or famous hacking case is reported every week.
So, as your trusted Brooklyn tax preparation practice, we make it a point to go well beyond what I’m about to share with you here, in our office, simply because we handle so much sensitive information.
But for normal families, you don’t need to erect the kind of cyber fortress that we have here at Team Pantzis … you just need to mind yourself with some simple steps.
I have thoughts on each area that you need to guard, and I won’t go into massive detail, but will hopefully give you some common sense guidelines for staying safe.
Data Protection for Brooklyn Families
This means, essentially, don’t let your most private data get shared in an insecure way! SSN#, account numbers, DOB’s, etc. are big targets for thieves, so share that information only when you know WHY it is necessary, and when you are sure you’re in a secure environment. In other words, don’t email this data, certainly don’t post it on a website, and definitely don’t hand it over to someone you don’t know.
This also means that you should be extremely careful when you get rid of electronic devices that you have used (laptops, computers, and phones, etc.) — wipe them clean with a commercial-grade utility that will delete the data as permanently as possible.
Password and ID Theft Protection
There are plenty of great resources out there for effective password discipline. Basically, don’t use simple passwords, don’t use the same one everywhere, and for the love of Pete, invest in the security of a good password manager. These seem to be the most popular and effective: LastPass, Dashlane and 1Password.
Stop using “qwerty” or “12345” — PLEASE.
This can almost be summarized as: “Don’t fall for the fake emails that promise you free gift cards.” Be very, very careful about clicking links from email senders that you don’t know, and if anything automatically downloads on your computer that is an “.exe” file or some kind of program, don’t run it unless you are ABSOLUTELY sure you know it’s legit. Nobody legitimate is going to email you about how they “found a virus on your computer that can only be solved by clicking on this link.”
Keep your stuff updated and watch your statements.
The primary reason that many of your apps and operating systems on your phone and computer alert you to software updates is that they are protecting their system from security flaws. Run the updates! I know it can be a pain, but running outdated versions of commonly-used applications can expose you to risk.
And, of course, it probably should go without saying (I am a tax and financial person after all), but don’t allow the convenience of cloud banking to prevent you from carefully monitoring your financial statements each month. Even when you primarily use a debit card, many banks have great security teams who will handle fraudulent transactions and protect you from thieves. But they only work if you notice!
I do hope this helps, my friend. I’m truly dedicated to the success of your family — and to protecting your hard-earned assets. Can other Brooklyn area tax professionals say that?
James Pantzis, CPA, PC
We’re in the middle of the always-somewhat-odd political convention season, in which true believers fire each other up, and most everyone else issues a collective yawn (and more strongly filters their Facebook feed).
I don’t mean to say that I don’t care about politics, or the direction of our country (to the contrary — it is a VERY big part of even my professional life). But only that political conventions are remarkable mostly because of the *lack* of meaningful news they actually generate.
We, on the other hand, hope to be an actually meaningful part of your life.
You see, in posting these strategy notes that I do, one of my goals is that I hope you can tell that we care about what we do around here — and that we care for you. Enough to take the time to be in close contact with you throughout the year, and to open myself up to plenty of email questions, and otherwise.
(Unfortunately, most tax professionals don’t usually offer this kind of access … which, I suppose is good for me and my clients — but not so good for the many other families out there.)
In any case, moving on to the subject of my note for this week, something I frequently see is that many families pay little mind to estate planning because the estate tax threshold is so high ($5.45M for an individual, $10.9M for a couple). But leaving aside the fact that for some farmers and business owners whose inventory and supplies can surprisingly affect this number, this is actually a short-sighted mistake. Here’s what I mean…
Estate & Tax Planning For Brooklyn Families
“The purpose of life is a life of purpose.”- Robert Byrne
It’s an all-too-common misconception that smart estate planning is all about avoiding the estate tax.
And, if that were the case, only the very wealthy would be affected by it — since only those with estates carrying over $5.45M in value aren’t exempt.
You may fall into that category, but even if you DON’T (and also if you do), you should be considering the following questions as a family. You see, regardless of whatever funds will or will not be affected by this exemption, you should focus your attention on what you are really trying to accomplish with how you pass along your assets.
And this is the best question to ask:
What are your values and goals? I.e., “How do you want your success to affect your children and grandchildren?”
Every family has a different answer to that question, and it’s an extremely important — foundational — component of how we work with our client families, even in tax planning and preparation.
You see, some planning only takes “money” into consideration. And while that’s certainly an important item to consider, the money is really only there to create a specific destiny, and a style-of-life that you’d want to see carried into successive generations.
And it doesn’t require a lot of “it” [money] for you to be able to pass along your most precious values.
I often urge my clients and friends to actually take the time to consider this question, because it may seem obvious on its face … but your answers (upon a longer consideration) will often surprise you.
And we’re here to provide any kind of support along the way which you might require. We’re pretty practiced in helping families cut through the clutter of financial statements — and finding the hidden gems of core values and relationships.
And THOSE are the only things which really do last forever.
Let’s talk more, if you want to explore these issues. Because regardless of estate tax thresholds and legislations, walking without the right kind of plan can create an even worse mess when the time comes — and I’m not referring to anything about money.
If we can’t help you directly, we’ll put you in touch with the right people who can.
I’m personally dedicated to the success of your family–and to your dreams. Can other tax professionals say that?
James Pantzis, CPA, PC
Estate & Tax Planning For Brooklyn Families
When it comes to estate and tax planning, it’s not all about the money. Money is important, but there are other, more foundational issues to focus on.
Look, I don’t know what a Pokemon is, but with the kind of summer that our nation and world has been having, I suppose I can understand the appeal of plugging into an alternate reality and hunting weird, imaginary creatures.
With Baton Rouge (once again) in the headlines, and Nice, France revealing a new form of terror (on top of the events in Turkey, Dallas, Minnesota, Orlando, Iraq, etc.), we’ve had a pretty rough go of it. Especially if we allow ourselves, and our mindset, to be driven by the winds of media and 24-7 crisis.
But even for the most discerning of us, all of these events are sobering.
And they lead me towards thinking about being ready for whatever might come, whether it be circumstantial, financial, or otherwise.
One of the best places to start is to look at your existing debt loads, and what you can do about them. And then, once you’ve done that, you should examine your credit situation and what is and could be available to you in a pinch.
World crisis has a way of making our personal situations seem more urgent. And that’s a GOOD thing.
But aside from mobilizing for possible crisis, there are happier things to consider, for which your credit is a big deal. Purchasing a home, a car, etc. But I should hasten to add that using credit for discretionary purchases (even — perhaps, especially — for cars) is NOT something I would recommend.
But a very important aspect of your credit for a home purchase, or other such investment is, of course, your actual credit score (if you won’t be paying with cash). So if you have a large purchase in your near future that absolutely requires some kind of financing, what I’ve put together here will really help.
And regardless, it would be a valuable piece for you to look through, and have clarity about for the future.
Pantzis’ 5 Steps To Affect Your Credit Score
“A man should always consider how much he has more than he wants.” -Joseph Addison
If you want to fix your credit score, you need to know what your current score is. Most creditors rely on the three-digit FICO credit score, which ranges between 300 and 850, when determining your level of risk as a borrower. The higher your score, the lower the risk is for the lender, and thus the better your interest rate will be.
On the other hand, low credit scores result in getting denied for credit, or getting credit at extremely high interest rates. Contact a credit reporting agency to obtain your FICO score, to see where you stand. You can get a free credit report, but to get the actual credit score from FICO (Fair Isaac Corporation) you will have to pay, usually around $20.
Mint.com and other services like Credit Karma and Credit Sesame all offer some variation of a “free credit score”, but they are NOT, in fact, the FICO score that most creditors rely upon. There are, in fact, dozens of “scores” that bureaus assign to your data, but the FICO is the most authoritative and commonly relied upon.
Once you have your credit report and score in hand, you can take the following steps to fix your credit score fast:
1. Pay Off Non-Installment Debt First
If you have credit cards, you’ll want to focus your debt repayments here first. Paying credit card bills on time, and paying down the balances or paying them off completely will improve your score faster and more than paying off installment loans (car, student, mortgage, etc).
2. Get Under This Threshold:
Focus on getting your overall debt below 30% of your available credit limit on each credit card and revolving account you have.
This increases the amount of your “available credit” and will improve your credit score as you will be seen as less of a risk. Look at your credit card balances and send higher payments to the cards with balances closest to the credit limit first — to work toward the goal of decreasing your overall debt to less than 30% of available credit limits. Once you’ve obtained that goal, you can focus on paying back high interest debts first.
Or, of course, Dave Ramsey’s “Debt Snowball” approach (wherein you tackle small debts first, building confidence as you go, to pay off larger debts faster) can be even more effective–especially if your goal is (wisely) to pay off all debts completely.
3. Only Use When Necessary
Try not to use your credit cards, even if you’re paying your bills in full each month. Each month, the balance from your last statement is reported to the credit bureaus, and whether you made your payment on time. Using a card that already has a balance isn’t going to improve your score, so save yourself the extra interest and stop using the cards while you’re working to improve your credit score.
Definitely do not use credit cards from issuers who don’t report your credit limit. For example, American Express tends not to submit a credit limit, which means the credit bureau assumes your highest balance is your credit limit. This will make it look like you’ve maxed out your credit card, which affects your score negatively.
4. Check Your Limits
Verify that the credit limits shown on your credit report match your actual credit limit for each credit card account. If the report is showing a lower limit than you really have, it can cause artificially lower credit scores — because it will appear you’re using more of your available credit than you really are. If you find an error, simply ask the credit-card issuer to update the information with the credit bureaus.
5. Fix Your Reports
Have your credit report corrected if there are errors with any of the following situations, as they negatively affect your credit score:
* Late payments, collections, charge-offs that you don’t think are yours
* Credit limits reported lower than they really are (as discussed above)
* Accounts which are listed as anything other than “paid as agreed” or “current”, including “settled”, “paid charge-off”, “paid derogatory”
* Accounts listed as unpaid that were included in a previous bankruptcy
* Any negative item older than 7 years that is still appearing on your report (it should automatically come off the report after 7 years — or 10, if you filed for bankruptcy)
I hope this helps — feel free to forward along to your friends, especially those who are considering a major purchase, such as a car or new home.
And, as I mentioned, we’re here to help.
James Pantzis, CPA, PC
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