We’ve been welcoming some happy (and former) TurboTax customers into our Brooklyn tax preparation headquarters this past week … a few of whom were frustrated by the delay in the software’s release of instructions for Form 8960 — which is the new 3.8% tax on net investment income. We have ways to work through that tax for our clients … but apparently, the software has been getting hammered by its users for the delay.
(Just a sampling of some of the frustration out there: https://ttlc.intuit.com/questions/2266554-why-is-form-8960-still-not-available )
But that’s just one of the problems with trusting in a software for your taxes, and I’d rather not belabor the point I already made last week.
And the IRS hasn’t been helping much either. From continuous news reports of employee fraud (like this recent one: http://articles.philly.com/2014-02-13/news/47273785_1_patricia-fountain-irs-worker-tax-filers ), to the familiar refrain of poor customer service (http://www.usatoday.com/story/money/personalfinance/2014/02/16/irs-customer-service/5435961/) … well, let’s just say that it’s never been more clear how important it is to have an experienced hand in your corner. (Ahem.)
But this week, I’m going to take a break on my software- and IRS-bashing, and inform my Brooklyn tax clients and friends about an important shift in the financial regulations for seniors. If this doesn’t apply to you or someone you love (as it will for many), then please pass it on to someone whom you know could benefit by being aware of it! Here’s what I’m referring to…
The Reverse Mortgage Regulations Landscape Has Changed for Senior Brooklyn Homeowners
“When you learn, teach; when you get, give.” -Maya Angelou
Many Brooklyn homeowners understandably want to remain in their homes as they age because they want to remain independent and because they have spent many years making their home everything they wanted it to be. Reverse mortgages have assisted many senior homeowners over the years to stay in their homes when their financial position changed.
A reverse mortgage is a loan for people age 62 or older. It provides money from the equity in your home through a line of credit, monthly payments or a lump sum. It does not require repayment of the loan until you move, sell the property, or pass away, and the homeowner is still responsible for property taxes and insurance.
Now, reverse mortgages were initially developed as a tool to assist individuals to remain in their homes and communities as they grow older, by allowing homeowners to tap their equity without selling their homes. All that said, however, the rules about reverse mortgages recently changed, making them harder to obtain.
And, of course, harder to sell. But that doesn’t stop the advertisements!
In August of 2013, the President signed HR 2167 — “The Reverse Mortgage Stabilization Act of 2013″ (https://www.govtrack.us/congress/bills/113/hr2167/text ) — giving the Federal Housing Administration (FHA) the authority to make necessary changes to the reverse mortgage program. According to the United States Department of Housing and Urban Development (HUD), the changes “reduce their risk and make the program easier for seniors to use responsibly.” For the homeowner, the changes will make it harder to qualify for a reverse mortgage, but will provide additional protections.
Until now, getting a reverse mortgage loan required no credit history and no minimum income requirement. Due to problems with homeowners failing to maintain their property tax and home insurance payments, starting on January 13, 2014, the FHA began requiring lenders to verify that homeowners have the ability to pay their taxes and insurance and that their credit history demonstrates a commitment to paying obligations.
To qualify for a reverse mortgage, lenders now must analyze all income sources — including pensions, Social Security, IRAs and 401(k) plans — as well as credit history. They also look closely at how much money is left over after paying typical living expenses.
In my opinion, these changes are welcome and needed. Too many seniors have been sucked into financial arrangements that were NOT in their best interest.
Now, if a lender determines that you would not be able to keep up with property taxes and hazard insurance payments, they are now authorized to set aside a certain amount of funds from your loan to pay future charges. The amount of the set-aside is based on the life expectancy of the youngest borrower. If set-aside funds run out, you must continue paying property charges using whatever funds are at your disposal.
If a lender determines that you have sufficient income left over, then you don’t have to worry about having any funds set aside to pay for future tax and insurance payments.
These changes, along with the reduced benefits adopted in September of 2013 (see a helpful NYT article here: http://www.nytimes.com/2013/09/07/your-money/tighter-rules-will-make-it-harder-to-get-a-reverse-mortgage.html?pagewanted=all ), mean that many seniors will not qualify for a reverse mortgage to make their homes affordable.
Why the new rules?
Some seniors who obtained reverse mortgages with rather harsh terms found that they were unable to either live off the loan for long, or to pay it back entirely. The FHA’s changes to its reverse mortgage program sets out to encourage homeowners to tap their home’s equity slowly and steadily. Again, this is a good thing, in my opinion.
“What regulators are trying to do is shift behavior so that people are more thoughtful and methodical about how they draw the money,” said Peter H. Bell, president of the National Reverse Mortgage Lenders Association. “The changes are intended to put the program back on track and encourage people to take what they need and no more.”
Reverse mortgages can sometimes interfere with other programs. Keeping money in a reverse mortgage line of credit, in most states, will not count as a resource for Medicaid eligibility purposes so long as the house itself is an exempt resource — which it would be as long as the recipient is living in the home and receiving home-based Medicaid services.
However, transferring money from the reverse mortgage line of credit to a bank account and leaving it there past the end of the month would convert the exempt home equity into a “countable resource” and that would make the person lose his or her Medicaid eligibility.
This important distinction between countable resources and exempt assets is not a simple black and white issue — if you or your loved one is facing the possible need for long-term care, you should have a conversation with a professional who can help you to handle such matters properly.
And once again, allow me to remind you that though we are VERY busy right now, we always have time for you. Give us a call at (718) 858-9864 , and let’s get your tax return started right now…
Watching the Olympics the past couple weeks from Brooklyn tax preparation headquarters (well, not while we’re preparing your taxes, of course!), and on the heels of the Super Bowl, we’ve been treated to some pretty great commercials lately, haven’t we? Some of the spots for the Olympics were downright inspiring.
But, of course, we all know that they are made with the express purpose to cause us to purchase. Either through creating dissatisfaction with our current lot, provoking envy/greed/jealousy/desire or by associating a brand with some really nice feelings.
Now, I’m certainly not one to rail against marketing per se. In a sense, this blogpost on my Team James Pantzis site is marketing (of a sort).
But sometimes that marketing can lead Brooklyn-area consumers down a path which isn’t in their best interests. And though my writing this could easily be seen as self-serving, that doesn’t keep it from being true. Here’s what I’m referring to:
Trying to prepare your taxes correctly (and completely) on your own.
I should say that I don’t like to crow about other people’s mistakes — especially other, local Brooklyn tax professionals.
In fact, in our line of work, much of what we get to do is to *fix* or alleviate those mistakes, at least when it comes to their tax implications. This year (of all years) carries so many changes that tax software users who fall prey to screaming offers and seductive easy-buttons from the “cheap” options are more exposed to wallet-sucking mistakes, or even an audit.
Do you remember when even the former Treasury Secretary, Tim Geithner, testified about tax irregularities in his own personal returns? Do you remember what DIDN’T help him find those irregularities?
Turbo Tax. (Link to a brief clip of his testimony before the Senate: http://www.youtube.com/watch?v=eKVxGlkPRlo#t=130 )
And he’s not alone here in Brooklyn. But there’s a good way to fix that problem…
… and a BIG incentive to do so, by the way, at the end of my Note.
Turbo-Charged Audits and Mistakes – Eliminated By James Pantzis
“Talent is a gift that brings with it an obligation to serve the world, and not ourselves, for it is not of our making.” -Jose Marti
You may have heard me say it before, but it’s true: Did you know that we Brooklyn-area tax accountants sometimes joke to one another about how good these online software programs (TaxSlayer, TurboTax, TaxACT, FreeFile, etc.) are for our business? Firstly, they are not as “easy to use” as claimed, and secondly … they cost you an arm and a leg.
You might think they’re cheap. And on the surface, you might be right (though, in the last few years, a $1 Billion class action lawsuit was filed in the federal court in Philadelphia alleging gross misstatement of fees and deceptive standards of the federal “FreeFile” program … so even on the surface, it wasn’t always cheap). But I’m not even talking about the money for the service itself.
Using those programs can end up leaving hundreds, or even thousands of your dollars in the coffers of Uncle Sam … even if you follow all of their instructions to a tee. I see it all the time — frustrated Brooklyn-area tax preparation clients bringing in their prior year’s tax return, astonished at all the “hidden money” my staff and I are able to find for them.
Choosing the wrong method, or forms, in filing your taxes can place you directly in the crosshairs for an audit.
Even if you don’t owe a ton of back taxes, you still don’t want your record to show some IRS agent that there has been a discrepancy of some kind in the past, so that red flags begin to fly, and then more bureaucratic people start looking through all of your past tax filings and current income holdings … basically taking your social security number, and poking around in your private life.
(And if you think they won’t do this, read a little online about the increased “enforcement” measures the IRS has been taking the last few years.)
They can do a lot of things you won’t want them to do. However, if you keep a clean slate (no IRS correspondence with you, related to filing your taxes incorrectly), the opportunities for them to mess with your personal stuff will be limited.
Here’s another reason why this is so important … now more than ever. New government regulations in 2013-4 (including the much-delayed ACA regulations), delays in Congressional action, and issues with refund “loans” from the big chains are creating a mess in the tax industry… and the “Big Brand Names” (you know who I’m talking about) do NOT want you to think much about it. In fact, they’re doing all they can this year to hold on to their business, and trust me — it is not always good for you.
Yes, it can be seductive to “go it alone” … to trust a piece of software to point out possible deductions. To trust your work to poorly-trained preparers in a big box office. To protect against your chances of audits through online chatroom support or hourly employees.
But it can be a big trap.
Just ask Tim Geithner.
And once again, allow me to remind you that though we are VERY busy right now, we always have time for you. Give us a call at (718) 858-9864 , and let’s get your tax return started right now…
Scattershooting around the Brooklyn tax preparation world (taking note of the IRS’s recent “suggestion” to NOT call their phone support — which is fine for you, because you have *this* number: (718) 858-9864), I still come back to the big question of the week: how did Valentine’s go?
Some say it’s a “Hallmark Holiday”, but well — some spouses think otherwise, right? Well, if you blew it , I’ve heard that it’s NEVER too late. So make this week count, my friend.
Now this past weekend’s festivities aren’t the only experience I have with the language of love. You see, we here at Team James Pantzis meet with married couples from the Brooklyn region (and beyond) almost every week in the course of preparing taxes and handling other such matters. It’s part of what we do — and, as we do so, we get sort of a crash course in marital communication.
Before you get worried — know that we don’t pass judgment on anybody’s marriage! Everyone has their own, unique relational dynamic. And every marriage works a little bit differently — it’s part of what makes it a wonderful institution.
And, after all, nobody has ever accused this Brooklyn tax professional of being a “love doctor”.
That said, however, I’ve noticed that *finances* can be a major sticking point in a good marriage.
But there are some simple steps you can take (five, by my count), which will ensure that you don’t ever fall into the trap of letting a good marriage be spoiled by money miscommunication.
Read on, and send your feedback. And, of course, if you need help with any of this, or if you have any pressing tax issues or questions, email me, or call us at (718) 858-9864 . We *love* serving YOU!
Brooklyn Tax Preparer Shows How To Protect Your Marriage Through Wise Stewardship
“Pretend that every single person you meet has a sign around his or her neck that says, Make Me Feel Important. Not only will you succeed in sales, you will succeed in life.” – Mary Kay Ash
Far too many marriages fall apart. And, sadly, one of the most often-cited reasons for that being the case is financial angst.
We’ve seen enough beautiful marriages around here in our Brooklyn tax preparation offices, that I believe that I can put together a few commonalities of how finances are handled in some of the best of relationships — be they marriage, or otherwise…
Start saving when young. Every seven years you delay starting a savings plan cuts in half your ultimate net worth in retirement. Chances are that you know someone who’s getting married this year so send them a copy of this article. It may be more valuable than any check you write.
Budgeting together. Couples that share church activities or philanthropic causes do better financially because their common vision allows them to work together instead of pulling in different directions. They do well while doing good.
So, the more chances you have to do something which helps you to clarify your shared vision, the better the marriage team. Even the simple process of creating and adjusting a family budget provides a forum for discussion of what is really important to the family.
Realize that a budget brings freedom — not constraint. Couples without a budget can, and often do, fight over every dollar spent. But Brooklyn couples who have worked together on a budget are already in agreement on the big picture. Once the difficult decisions are made, the specific purchases in each category are much less critical.
Here’s one way this works (among many): Having decided how much money the family can afford to spend on clothes for him and for her, it doesn’t matter as much if he prefers lots of inexpensive clothes and she prefers a few nice pieces, or vice versa. A budget allows discretion and freedom to prevail within the context of cooperation and teamwork.
Pay your family first! Even if it hurts, at first, saving equals paying yourself. And don’t worry in the beginning overly much about where you’re placing your savings — only after you’ve saved several times your annual salary does the rate of appreciation become more important than the actual rate of savings. The main thing, early on, is to do it!
Because money makes money. And the money that money makes, makes even more money.
Limit the amount you spend unless you both agree. One big mistake can undo months of frugality and sacrifice. So it’s a good idea, that for big purchases, you require both members of the team to agree. Honoring each other in this way helps avoid resentment and disgust.
Have a small slush fund. Both members of a marriage should have a slice of the budget which is completely at their discretion. So long as their spending stays within this thin slice of the budget pie, they can be completely frivolous. Maybe it’s only 0.5% of your total budget, but it’ll provide a place to put purchases which otherwise might cause marital strife.
If one member collects ceramic pink pigs and the other signed collectible hockey cards they can both enjoy their frivolous expenditures without jeopardizing budget items that are more important to the family.
Couples that learn to live proportionately maintain their balance, whether they are rich or poor. No matter the circumstances, they include some fun, some gifting, and some investing as a reflection of their shared family values.
And it starts with having the conversation. So do it!
And once again, allow me to remind you that though we are VERY busy right now preparing taxes for Brooklyn couples and taxpayers, we always have time for you. Give us a call at (718) 858-9864 , and let’s get your tax return started right now…
Many of our Brooklyn tax preparation clients have never received that dreadful notice from the IRS, initiating an audit — or, much worse, the KNOCK on the door! If you never have, you probably don’t keep much financial documentation.
If you have, you are probably terrified to part with a single receipt.
Unfortunately, the IRS is one of the few courts where failure to produce proof of your tax claims results in the assumption that you are guilty of tax fraud.
(This is part of the reason why you ALWAYS want a competent Brooklyn area tax professional on your side in these matters. Would you go to court without an advocate? Would you go before a court with a software-generated defense? “Your honor, here is my lawyer, Siri.”)
So, during these days of tight government budgets, it’s imperative that you are able to protect yourself. And, as great as we are here at Team Pantzis — some of this falls in your court. That’s why you must save all the financial documents used to create your tax returns in order to defend yourself in the case of an audit.
So, with self-protection in mind, here’s my guide for Brooklyn taxpayers on how long to be keeping your records…
Self-Protection Through Knowing How Long To Keep Tax Records, by James Pantzis
“Problems are only opportunities in work clothes.” – Henry J Kaiser
First, retain a paper copy or receipt of any tax-relevant transaction. Scan these documents and archive them electronically, or acquire them in an electronic format. If the purchase has a manual or warranty, store all the documents in the same electronic and physical location.
Sadly, the IRS has ruled bank or credit card records to be insufficient documentation. As a result, just keep your statements long enough to reconcile your account.
If the purchase was a business or tax-deductible expense, record the expense and why it justifies the deduction. Store this information with or on the receipts.
Second, keep brokerage statements indefinitely for taxable accounts. You are responsible for reporting the cost basis of any security you sell to calculate the capital gains tax. For a mutual fund with 30 years of reinvested dividends, each dividend payment is part of the cost basis. As a result, the cost basis can sometimes be computed only if you have the complete transaction history.
Without knowing the cost basis, the IRS could argue that the entire value of the investment be treated as gain.
If you have lost the record of how much you originally paid for an investment, instead of selling and paying 15% or more of the value in taxes, you can use that investment as part of your charitable giving. Gifting appreciated stock avoids the tax owed and still qualifies for a full deduction. Oddly enough, the IRS still asks for the original purchase date and price for gifted securities, but leaving these blank has no effect on your tax owed.
Many custodians keep several years of electronic copies of brokerage statements available. And they are now required to send any known cost basis electronically when you transfer securities to a new custodian. If your current custodian has the correct cost basis of your securities, you probably no longer need to keep brokerage statements. However, an approach of “better safe than sorry” is always advisable with the IRS.
Third, keep IRA nondeductible contribution records forever. You may need those records every year that you withdraw money in retirement to show that a portion of the withdrawal is not tax deductible.
Or to avoid the hassle, clear out nondeductible IRA contributions by converting all of your IRA accounts to Roth accounts.
Fourth, keep partnership documents, contracts, commission or royalty structures forever. This includes property records, deeds and titles, especially those relating to intellectual property. It also includes any transfers of value for estate planning purposes.
Finally, save all of your tax returns. After you file, save the paper and/or electronic copies with the rest of that year’s financial documents.
Tax returns and all the supporting documentation must be kept at least seven years. The IRS can audit your return for up to three years from your filing date. However, the three-year limit only applies to good-faith errors.
If the IRS suspects you underreported your gross income by 25% or more, they have up to six years to challenge your return. And because you may file for an extension at the October 15 deadline, you must keep your records for at least seven years.
Regardless of those rules, though, if the IRS suspects you filed a fraudulent return, no statute of limitations applies. Because the IRS is run and organized by fallible people (with all of their attendant biases, emotions, etc.), we suggest keeping your tax returns and documents forever.
Unfortunately, whenever the IRS challenges you, the burden of producing evidence that your claims are true rests entirely with you, so you had better have your documentation in order.
Taxpayers collectively spend six billion hours, or 8,758 lifetimes, annually trying to comply with the tax code. Fortunately, as I previously mentioned, YOU don’t have to be the one to do all the heavy lifting. We here at Team James Pantzis are on your side…
I hope this all helps! To your family’s financial and emotional peace…
Now that the Super Bowl is over, and the football season is finished, we here in Brooklyn tax preparer land can now finally get back to looking forward to football season.
And, of course, the commercials! (Which this year seemed a little … “ok” — though I think I will have dreams of that Doberhuaha for a while.)
Anyway, you may have heard that tax season has officially “begun”. Well, when we here at Team James Pantzis sit down with a Brooklyn tax preparation client during tax season, we are picking through history — we are helping you sort through your 2013, and make sure that the numbers match … AND, of course, that YOU are able to take advantage of every possible legal and ethical method to hold on to your hard-earned dollars (or sometimes receive a nice bump in your supply from a refundable tax credit).
But we also like to spend time future-casting.
That means that we get to be ones who dream with you — ones (beside you and your spouse) who focus not just on accurately recording “history” for our Brooklyn tax preparation clients but also about the real-world implications for what life will look like down the line.
When we do this, it makes me wonder if Brooklyn financial counselors do the same thing with retirement?
In fact, I know that some of them do.
But, on the chance that your particular financial planner only pays attention to the numbers, and doesn’t help you evaluate some of the other components of your retirement situation, here’s a few ideas for some practical things you can do.
Would you add anything to this list? I’d be interested in your comments…
James Pantzis Suggests: Take A Test Drive Of Your Retirement Plans
“It doesn’t matter where you are, you are nowhere compared to where you can go.” -Bob Proctor
Brooklyn people over 40 shouldn’t just plan for retirement, they should rehearse for it. Because retirement can last 20 to 30 years, it’s more important than ever that “pre-retirees” (those who plan to retire in five to seven years) practice how they want to live without work as the organizational focus of their lives:
Try out different retirement lifestyles
For example, many people dream of selling the family home in the Brooklyn area and traveling in an RV or going abroad. Practice this by renting a camper and going on the road for a long vacation. You may discover that travel is exhausting or boring to you.
The same holds true for relocation dreams. Rent a home where you think you may want to retire to see if it really is where you’d like to move. The weather may not suit you, or the community may not be your cup of tea. Work out these details before you commit to an expensive change.
Live with your spouse 24 hours a day
Most couples spend much of their early years working and, thus, spending much of their time apart. It may take some time to get used to the other person’s schedule, habits, and routines.
Practice living on that retirement budget.
Most retirees’ income is significantly less than their preretirement income. Add up all the Social Security benefits, pension income, and 401(k) and IRA savings to calculate what you can realistically expect to live on each month. Then live on that amount for a month to determine what changes, if any, you need to make to your plans.
I hope this all helps! To your family’s financial and emotional peace…
Well, this week I want to tell you a story, and one that, though it is not about our Brooklyn tax preparation service per se, will help take some stress off ye olde plate for you and your family.
But before I get there, a few tax items to note…
1) Officially, tax filing is set to begin this Friday, January 31st – nationally, not just here in the Brooklyn area. As I have said before, however, this does NOT mean that we cannot start work on your file here at Team James Pantzis (and, in fact, we have already begun files for many Brooklyn tax preparation clients).
2) You should be receiving all your W-2′s by the end of the week. If you have not received them all by Monday, contact your payroll department (they may just be behind, after all).
If that is fruitless, we can work with you to create a valid replacement, as well as to alert the IRS to the problem. Don’t try to go that one alone.
In fact, that leads to this week’s Note. As I mentioned above, it’s a good story (an old one, which I’ve re-adapted), and it gives a powerful lesson about the value of your work.
Here we go…
Brooklyn Tax Preparation: The Power of Specialized Knowledge
“You must have long range goals to keep you from being frustrated by short range failures.” -Charles C. Noble
Some years ago, one of the major manufacturing companies in this country (rumored to be a local Brooklyn-area business, but unsubstantiated) was facing a crisis. The central conveyor belt of its automated assembly line quit running and brought the entire plant to a stop.
Although they tried everything they could think of, and even brought in several consultants, no one was able to get the conveyor belt running again, or even to identify what caused the breakdown in the first place. The company was really in a bind. With on-going overhead, and the loss of production, the company was losing money at the rate of $1,000,000.00 a day.
Finally, after a week of down time, the big brass told the plant manager to call Tom — the mechanical engineer who had retired the year before, after 25 years with the company. The conveyor belt had been Tom’s specialty and primary responsibility.
When Tom got the call, he caught the next flight from the city where he now lived and arrived at the plant the next day. He met with both the local vice president and the plant manager to get as much information as he could as to what had happened and what they had tried. He then walked slowly along the belt until he came to a particular point.
He put his ear against the machine and listened. He asked for a hammer and then gave the machine a swift and forceful blow.
“Give it a try now!” he called to the foreman. The conveyor belt started right up and ran like a dream.
Tom then left and went back home, but before he did, the company vice president told him to send them a bill for what he had accomplished. Two days later, the company received Tom’s invoice for one million dollars!
Thinking that was way too high for the little time Tom had spent to solve the problem, and how he did so with just a single blow from a hammer, the company wrote back and asked Tom to provide them with an itemization. This was Tom’s response:
One hammer blow: $2.00
Knowing where to hit it: $999,998.00
With the receipt of that simple invoice, the company came to understand the reason for Tom’s fee and immediately issued a check to him for one million dollars!
Special knowledge is the key. Although the company’s leaders had to be reminded of that fact by receiving Tom’s invoice, as soon as it did, they knew he was right. They could have given hammers to every employee in the plant and even had the big brass banging on the machine from sunrise to sunset, but it would have done no good… because they didn’t have the knowledge; they didn’t know where to hit it.
This is an old story, told in different ways, with different names and amounts. But it’s powerful for a simple reason: labor is NOT about how much “time” is put into executing a particular solution to a problem — it’s knowing when and how to do it.
In the realm of preparing your tax return, I urge you… do NOT fall prey to the thinking that a software program or forms downloaded from the internet can suffice to enable you to preserve your resources, or properly leverage the multiplicity of credits, loopholes and deductions available.
Give yourself and your family the gift of financial peace of mind during tax season, and do it with a Brooklyn tax service who knows how to do it right.
To your family’s happiness…
In a moment, I’ll show you why this is so important for Brooklyn tax preparation clients. Because the hits keep on coming for Target Corp, and it’s unfortunate for them because they seem to be a company that works hard at doing things well. In fact, they were on the forefront of “Point of Sale” (POS) security with some new software, but other retailers didn’t join them, so it became cost prohibitive to go it alone.
They recently announced that they will be offering a year of free credit monitoring to those who were affected, and this seems to me an effective way of “making things right”. But this crisis has highlighted a bunch of risks that you, as a local Brooklyn taxpayer, should understand … and it provides another reason to get your taxes submitted (properly) ASAP.
But before I explain what I mean by that, a couple pertinent things you should be aware of…
Tax documents are trickling out (organizations have until Jan. 31 to send everything your way), the long form 1040 was officially posted recently on the IRS site … and our phone has begun to ring with regularity [(718) 858-9864 in case you need it!].
So make sure you call us soon to set up a time where we can go through your situation with you. After all, would you rather spend 18 hours going it alone, or have your trusted advisor do it for you?
And here’s the list of forms you should be looking for in the mail, and online (from any employer, vendor, client or anyone else with whom you had a taxable transaction last year):
* Wage earners, watch for your W-2 forms, one from each employer.
* “Other income” (like a state tax refund, or government benefits) is shown to you on Form 1099-G
* Prize winnings — Form W-2G
* Most canceled debt (but not all) is reported as taxable. In which case, you’ll get Form 1099-C
… as I’m writing this, I realize the list is extremely long. Here’s a good place for the whole list: http://en.wikipedia.org/wiki/IRS_tax_forms [look under the section "Information Returns"]
So, as if there wasn’t enough incentive to get your taxes prepared by someone in the Brooklyn area who knows what they are doing (ahem), here’s another log on that fire…
Attention Brooklyn Tax Payers: Identity Thieves Want YOUR Tax Return
“Show me someone who has done something worthwhile, and I’ll show you someone who has overcome adversity.” – Lou Holtz
It may not surprise you to learn that identity theft is annually the number one complaint made to the Federal Trade Commission (FTC). Well, the tax return component of this crime has been heating up.
In 2010, only about 15 percent of all identity theft complaints to the FTC dealt with tax returns. Well, in 2013, that jumped to 43 percent.
All the thief requires is your SSN, a few easily-forged counterfeit documents … and WHAMMO, they’ve got your expected refund.
In essence, to prevent this kind of theft of your refund, or your return filing status, you need to file your return before the thief does. Which is just another reason to start the process with us here in Brooklyn, ASAP (Here’s our number: (718) 858-9864 — call us today).
The good news is that the IRS is aware of this problem, and they do have systems in place. If this DOES happen to you, we can help you work with the IRS to get it resolved. Alternatively, of course, you can call the IRS ID Theft Protection Unit yourself at (800) 908-4490, extension 245. The hold times … well, they’re not always fun. There will be paperwork to file and other things you will have to do as quickly as possible.
Which means that it’s nice to have someone in your corner who can handle this kind of thing on your behalf, right?
Other ways to protect yourself
Nobody can *guarantee* that they won’t get victimized, but here are a couple steps you can take to reduce the risk…
- If you file by mail, go to the post office. Don’t place your documents in an unlocked mailbox in front of your house.
- If you file electronically, use a secure computer on a secure network (which we happen to have). Never do anything financially sensitive from a public WiFi spot.
- Get your return done as soon as you can. It really is in your best interest to file as early as possible.
Again, while we can never fully prevent bad things from happening, we certainly can help you cover your bases!
Give us a call today.
To your family’s financial and emotional peace…
Just a little over two weeks from now, we will begin filing client tax returns to the IRS (electronically), and our Brooklyn tax preparer offices will be jumping.
–> And by the way, though we aren’t *filing* until the 31st, we at Team Pantzis ARE working (right now, in fact) on client files. This filing delay does NOT mean that we can’t work with you (or, in some cases, perhaps help you obtain an advance on a refund), if you pull together your paperwork before that point. Call us: (718) 858-9864 if you’d like to hear about those options. <–
So, while our Brooklyn tax preparer offices are starting to jump, don’t pity us, of course! This is, after all, exactly what we have been preparing for over the past seven months or so — and we’re pretty excited to see the fruition of our labors, AND to “seal the deal” on a variety of tax-saving maneuvers to which we’ve directed clients over the past year. In short, this is really fun for us here at Team Pantzis.
But filing your taxes on your own is becoming much less fun for regular Brooklyn taxpayers, even with nice-looking softwares on the market which purport to make it “easy” for you.
I truly do pity those inexperienced ones who try to muddle through all of the different codes and forms on their own,without devoting even a week’s labor to the transaction. It really doesn’t pay to “go it alone” for certain tasks.
So, for those of you who want our help, I’ve put together a handy little list of what you’ll need to bring in. There may be certain situations where we’ll need other documentation to get you even more deductions. But, of course, we’ll let you know about that, should the situation arise!
Let me know your thoughts … and of course, if you’d like to talk this over with us, we’re here for you ((718) 858-9864)!
James Pantzis’s 2014 Tax Time Document Chase List
“Don’t worry about failures, worry about the chances you miss when you don’t even try.” -Jack Canfield
Yes, this is a long list — but it’s the unfortunate reality of our tax code that it’s not even comprehensive! But these items will cover 95% of our Brooklyn tax preparation clients. Really, this is for ensuring that we’re able to help you keep every dollar you can keep under our tax code.
Even if for some strange reason you won’t be using our cost-effective services this year, feel free to use this list as a handy guide…
Social Security Numbers (including spouse and children)
Child care provider tax I.D. or Social Security Number
Employment & Income Data
W-2 forms for this year
Tax refunds and unemployment compensation: Form 1099-G
Miscellaneous income including rent: Form 1099-MISC
Partnership and trust income
Pensions and annuities
Jury duty pay
Gambling and lottery winnings
Prizes and awards
Scholarships and fellowships
State and local income tax refunds
Residential address(es) for this year
Mortgage interest: Form 1098
Sale of your home or other real estate: Form 1099-S
Second mortgage interest paid
Real estate taxes paid
Rent paid during tax year
Interest income statements: Form 1099-INT & 1099-OID
Dividend income statements: Form 1099-DIV
Proceeds from broker transactions: Form 1099-B
Retirement plan distribution: Form 1099-R
Capital gains or losses
Auto loans and leases (account numbers and car value) if vehicle used for business
Student loan interest paid
Early withdrawal penalties on CDs and other fixed time deposits
Personal property tax information
Department of Motor Vehicles fees
Gifts to charity (receipts for any single donations of $250 or more)
Unreimbursed expenses related to volunteer work
Unreimbursed expenses related to your job (travel expenses, entertainment, uniforms, union dues, subscriptions)
Education expenses (tuition and fees)
Child care expenses
Medical Savings Accounts
Tax return preparation expenses and fees
Estimated tax vouchers for the current year
Self-employment SEP plans
Self-employed health insurance
K-1s on all partnerships
Receipts or documentation for business-related expenses
State and local income taxes
IRA, Keogh and other retirement plan contributions
Casualty or theft losses
Other miscellaneous deductions
We hope this helps, and we really look forward to seeing you in here in 2014!
To your family’s financial and emotional peace, ~Contact.FirstName~…
Dave Ramsey might hate ol’ James Pantzis for this, but I’m going to make a case for something today with which he might disagree. Proceed at your own risk, if you are a Brooklyn-area Ramsey-head (which is definitely NOT a bad thing to be!).
But before I get there, just a couple of tax things:
1) [Mentioned last week, but worth repeating] Because of the government shutdown earlier in the fall, the IRS systems missed some crucial preparation days, and resultingly, the start of actual tax filing will not begin until January 31, 2014 – and this is true for Brooklyn tax preparation clients and all over the country. This does NOT mean that we can’t begin the preparation process earlier here at Team Pantzis(we can, if you really have your paperwork in order), but it does mean that the IRS won’t be issuing refunds or otherwise officially accepting returns until that point.
2) Dying to know what tax breaks have gone away and which ones are new for 2014? Yes, I know there are some tax code geeks out there in Brooklyn … here’s the best, most concise list I’ve found, and it also lists the cost to the government of extending some of these once more (which is still possible, as Congress often “extends” credits retroactively) … http://taxfoundation.org/blog/out-extenders-new-obamacare-taxes
Now, the reason I’m risking Dave Ramsey’s ire is that one of the hidden benefits of using a credit card versus a debit card is SECURITY. And, as the Target mess from last month showed us, the more we rely on electronic payments, the more we put our information in harm’s way.
[Here's an interesting look at the Target thing, btw, which shows that Target Corp. was actually ahead of the curve on this ... but other retailers weren't, and so they were forced to hold back their security measures: http://www.startribune.com/business/238738351.html ]
But if you ARE going to use that debit card, there’s really only one way to do so. It’s difficult to make this case without slides or illustrations, but I’m going to do my best…
Brooklyn Tax Accountant Explains How To Answer: “Run It Debit or Credit?”
“Have the clarity and courage to not enter every door and to not accept every invitation. Protect your peace.” -Thema Davis
You are just trying to buy $20 worth of groceries in one of our local Brooklyn-area grocery stores. You swipe your debit card at the card reader and the clerk quickly asks, “Debit or Credit?” Which should you choose? The answer could actually determine how safe both your money and identity are.
There are three basic steps regardless of which method you choose. First, you are asked to provide identification. Second, your identity is verified. Third (and only if step two is approved), your money is deducted. However, Debit and Credit go about those three steps very differently.
When you say Debit, the cashier or the card reader will ask you to enter your PIN. This is your means of identification. A success results in your identity being verified. A failure gives you a few more attempts to retry.
When you run it as Debit, the cashier may ask you if you’d like to get “cash back,” meaning do you want to use this store as though it were an ATM and withdraw additional funds from your account. In this case, we’ll have you say no. If you did say yes, the store would be paid however much cash you withdrew and the store would pay you the same amount in cash.
In any case, your verified identity authorizes the system to send a request of funds to your bank. The bank, upon this receipt and authorization, immediately transfers the $20 from your bank account to the store’s account. You now are $20 poorer.
When you say Credit, the cashier prints out a receipt and asks you to sign at the bottom. Your signature is considered your identification. Your information — location of sale, credit card number, etc. — are sent to your debit card’s sponsoring credit card company, like Visa.
Visa then takes 1-7 days to look for fraud. If any factors look suspicious, such as the location of sale seeming unlikely, the sale is reported to you as potential fraud and the $20 remains in your bank account.
If everything checks out though, and your identity is authorized, then $20 is moved from your bank account, and divided up among three locations:
1. $0.20 (1%) is given to Visa, for their service of fraud detection;
2. $0.20 (1%) is given to your bank, for their service of providing a card; and
3. $19.60 (98%) is given to the grocery store to pay for the goods
Even though your money has gone more places, you are still just $20 poorer. These hidden fees of credit cards are only a cost for the store, not you. If the store chooses to accept credit cards, they also overcharge all of their goods by 2% in order to cover the possibility of people paying with credit. When you run your card debit, they just pocket the additional 2% for themselves.
At this point it sounds like you might want to run it Debit, in order to give all the money to the store, but if you stopped the analysis there, you would be compromising your identity.
But let’s say: prior to your $20 purchase, a thief had attached a device to the store’s card reader which records all of the information.
If you ran it Debit, the thief’s recorder has access to your credit card number, name, expiration date, and PIN. He can access to all of your funds and can make a copy of your card. With this copy, he can run it Debit and verify his identity by entering your PIN.
Because PIN is the only verification of your identify when running a card Debit, your bank transfers the money out he asks for, sometimes regardless of how much it may look like fraud, with no questions asked. No one is watching over your Debit purchases but you. It’s only if you log on to your bank account and see that your funds are gone that you could find out that a copy has been made.
If you do catch him and cancel your debit card, the damage done in this case may be permanent. Because the PIN number is the only identification used, it is hard to prove that such purchases were actually fraud. Even if they do determine it is fraud, often times no one will refund you the money. The bank, who is the only reasonable candidate who might, does not (usually) offer you such fraud coverage. That’s why Visa sponsors your card, to catch fraud. But since you didn’t run your card Credit, Visa was never given a chance to perform that role for you.
If you ran it Credit, the thief’s recorder has access to your credit card number, name, and expiration date. He notably does not have access to your PIN. With this information, he can still make a copy of your card and, with this copy, he can still try to make purchases running the card as Credit.
Running it Credit in stores will require that he forges your signature. The information of the sale is then sent to Visa for fraud checking. If Visa’s systems detect a change from your typical behavior, they will flag the transaction as fraud, and alert you.
Even if Visa doesn’t catch that it is fraud, just the process of going to Visa keeps the funds in your account for 1-7 days. That may be long enough to give you some time to see the stolen activity as pending charges, cancel your card, and report the identity theft to your bank. Doing this protects your bank account from ever having to pay for these charges.
If Visa doesn’t catch the fraud and neither do you, then the money transfers out of the account to pay the thief’s bills. However, because all the information passed under Visa’s watch, if you catch the fraud after the fact, you are protected by Visa’s fraud protection policies, which are much more likely to pay you back in the event that the fraud can be proven.
If the thief uses the stolen information to make purchases online, he will have to know your billing address, which is information he likely has not acquired.
Conclusion: Always run your cards as Credit. Protect your funds by allowing your sponsoring credit company to implement their fraud protection. Never be afraid to dispute or question charges you see pending or fulfilled. Time is important in cases of fraud, and waiting may make the process of proving fraud more difficult.
Oh, and I hope this goes without saying — but always pay your Visa bills on time, and fully every month. That way, you get all this protection … for free!
Note: Actual percentage reimbursements and fraud policies vary across credit companies and banks. Read the fine print for your specific card, for a more detailed and specific description.
I do hope all this helps. To your family’s financial and emotional peace…
It’s still the “holiday” season right now with all of the New Year festivities happening here around Brooklyn, but I’ve just about had enough of cookies and sweets to last me through April. (Well, maybe one more will be alright.)
But as the holidays wind down, it means no more extended family (which might be a relief?), no more parties, no more presents. Just … daily life. And, in my opinion, this coming week is actually crucial to how the rest of your year goes.
Why? Because intentions and actions matter. No, I certainly don’t subscribe to a mystical law of attraction — but I DO believe that how we act out what we intend to do sets a subconscious belief system in place which can have an impact for months at a time.
In other words–do what you *intend* to do this week, and it’ll be much easier to carry that forward into more of 2014. At least, that’s been my experience.
What about you? Do you find the beginning of the year to be full of opportunity? Or is it full of discouragement? I’d be interested to hear your thoughts.
Well, for my staff and me here in our Brooklyn tax office … it’s certainly full of preparation. This is one of our most intense years of groundwork for tax season, simply because the tax code is getting even MORE complex. While we do NOT need to report anything to the IRS in regards to healthcare and the ACA this year … we are certainly planning for what that will look like in the years ahead.
Also, an important note: Because of the government shutdown earlier in the fall, the IRS systems missed some crucial preparation days, and resultingly, the start of actual tax filing will not begin until January 31, 2014. This does NOT mean that we can’t begin the preparation process earlier (we can, if you really have your paperwork in order), but it does mean that the IRS won’t be issuing refunds or otherwise officially accepting returns until that point.
Now, onto what you should be thinking about for 2014…
James Pantzis Weighs In: New 2014, New Financial Goals
“No matter how dirty your past is, your future is still spotless.” – Drake
Not to make you feel guilty, but for every seven years you delay saving and investing for the future, you cut in half the income you would enjoy at the end of your life. So, let’s make 2014 the year we get on the right financial course, shall we?
Here are some suggestions to get started…
1) Set realistic goals. First, ask the right questions, and stay the course until you’ve found the answers. Goals that are shared are ten times more likely to be acted on. Don’t wait until you have everything set up, to seek out accountability.
2) Make those goals concrete, and then document them. Set your savings goals as a specific annual percentage of your adjusted gross income (AGI). It’s a great idea to save at least 10% of your AGI in tax-free retirement accounts and another 5% toward retirement in taxable investments. If you are behind on your savings, you may want to save even more in order to catch up.
3) Craft the best strategy to implement your goals, including prioritizing the appropriate retirement vehicles. Start by investing just enough to get the entire match from a company’s 401(k) plan (if you have one), and then fund your Roth IRA accounts next. After these two, make certain you have enough non-retirement savings.
4) And this is a BIG deal — automate your plan. Automating putting money in an employer-defined contribution plan is easy. Automating a taxable savings plan is just as painless. Most banks or brokers here in Brooklyn (or anywhere, really) offer an automatic money link between an investment account and a checking account. They should also offer a monthly automatic transfer between the two accounts.
Going into further detail would actually entail sitting down and creating a true, full financial plan–which is impossible in this space, of course (but very do-able, in person).
But I will say one last thing: the most critical component of wealth management in the new year will be AGI minimization. With the new linkage between income and healthcare — and all of the related subsidies and reporting requirements, it’s never been more important to monitor what number upon which the IRS is basing their picture of you. Let us help you do it right.
I do hope all this helps. To your family’s financial and emotional peace…