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IRS Issues Warning About New Identity Theft ScamsThe IRS is reminding taxpayers to beware of identity theft scams that may use the IRS name, logo or web site address to trick taxpayers into believing that the IRS is genuinely requesting personal information or official communication. The IRS does not contact taxpayers or request personal information by email, and any communications purportedly from the IRS asking for detailed personal information should be suspect. The IRS asks that suspicious email be forwarded to the agency at phishing@irs.gov, and then deleted from the recipient's inbox. The IRS is advising individuals and other consumers to avoid the following scams that have recently surfaced: Making Work Pay credit. This phishing scam says that the Making Work Pay credit can be paid into the recipient's bank account if the recipent registers their account information with the IRS. However, most taxpayers receive the credit in their paychecks as a result of decreased withholding. Inherited fund/lottery winnings/cash consignment. This phishing scam is a multi-step scheme in which an email claiming to come from the IRS notifies taxpayers that they will receive millions of dollars in recovered funds, lottery winnings or cash consignments if they provide personal information. Tax changes: a non-stop processCongress and the new administration are handing out benefits to taxpayers and, at the same time, making business owners work diligently to cover every possible situation. College credits: The HOPE credit, which applies to the first two years of college, has a new name, The American Opportunity Tax Credit, and a higher limit. For other educational benefits, the definition of qualifying expenses has been expanded to include more items. Energy credits: Credits which were not allowed in 2008 are back with higher limits for 2009 and 2010. Look at the IRS website for more specific info regarding the credit limits on high-efficiency heat pumps, air conditioners, water heaters, wind and solar installations. Health insurance premium assistance: Employers beware of the new rules that allow former employees to pay only 35% of their COBRA continuation coverage. The other 65% will be paid by the employer, but later refunded through payroll tax credits. The new rules include many unexpected requirements and definitions of terms, so it will be easy for employers to make wrong assumptions about which individuals need to be notified and possibly included in the new deal. Employers of any size who have any employees that separate from service between 9/1/08 and 12/31/09 need to contact their health insurance providers for assistance. New sales tax deduction for cars: For vehicles purchased after 2/16/09, taxpayers can deduct the sales tax on page 1 of their income tax return, which is potentially much more valuable than the itemized deduction. Purchase price and adjusted gross income limits apply to the new deduction. Help for employers: The Texas Business Conference by Texas Workforce Commission in various cities July through October (in Austin July 31) covers hiring and employment law, employee handbooks, unemployment claims, independent contractors, and worker's compensation. Learn more about very important issues. Sign up at www.twc.state.tx.us/twcinfo/tbcforms/tbcfaq.html. Selling a vehicle: Selling a personal vehicle rarely causes an impact on your income tax return, but it can cause as much grief as a letter from the IRS if you fail to complete all steps in the transaction. If you sell a vehicle to an individual, be sure to notify TXDOT, so you will no longer be responsible for law enforcement violations related to that vehicle. Remove the windshield registration sticker, the toll tag, and the license plate. For $5, you can transfer the license plate to another vehicle. www.txdot.gov 2009 Things to Think About2008 was a huge year for tax law changes, and Congress may be just as prolific in 2009. Several recent changes and proposals provide food for thought.
The lifetime exemption from estate tax changed on January 1, 2009 to $3.5 million per person. This significant increase, compared to the $2 million exemption last year, creates a real need for everyone to review their wills and trusts. The beginning of a new year is a great time to open up your documents and review them with your attorney. Since your last review, you may have gained beneficiaries, received an inheritance, won the lottery, or experienced another significant economic event. Expect to review your documents again next year, after the 2009 Congress has had time to tinker with the estate tax rules. Estate planning is a constantly moving target! First-time home buyers The new stimulus plan changed the home buyer credit. First-time buyers (those who have not owned a home in the three years prior to the purchase date) may qualify for up to $8,000 credit on their tax return. The credit won't have to be repaid unless the home is sold within three years. Income limits apply. Home purchases must close before December 1, 2009, and the home must be a primary residence. As always, these comments should open the door to more in-depth analysis of your situation. Please call us any time we can help you. Charitable ContributionsSubstantiation requirements are stricter than ever before. Be sure to keep good records to verify your deductions.
Common MisconceptionsMedia soundbites, conversations with friends and co-workers, and frequent tax law changes contribute to the confusion about the tax impact of various transactions. Tax law is complicated, and individual circumstances bring about varied consequences in similar situations. Following are a few samples of comments and misunderstandings we encounter in our practice:
What's the bottom line?We can help you much more if you include us in your transaction planning than if you engage us only to prepare tax returns. We are here to help. Please call us soon.
Lights...Camera...(no) Action!Has a little security breach (like theft) turned into a wake up call to upgrade your security? Do you have a cyclical business that might have a slow season coming up soon? Whether it's prompted by extra time (unlikely) or an unpleasant incident, this fall is probably a good time to give your business a security checkup. Lights, Camera...If your business involves frequent public access, you should review the entire location for ways to improve security. As our metropolis grows, crime does not seem to decline. Many security measures are very inexpensive or less expensive than they used to be. Think about installing outside lights with either photo sensors or motion detectors. Lights and security camera systems discourage criminal activity. Security company signs and window stickers greatly discourage crime to your premises. Think about the way you handle cash, checks, and credit card information. Do you make bank deposits often, or do cash and checks remain in your office overnight? If you hold money, do you keep it locked in a place that would be difficult to enter? Do you protect your clients' and customers' credit card and other private information? Do you offer a location that's as safe as possible for your employees to work? Do you have overlapping schedules to minimize the amount of time that only one person works? Not Just the Building...As I visited with a client on the phone about these measures, our conversation segued into other important security concerns. Think about data and computer security. If you set up your current backup system a few years ago, it may be time to upgrade. Our office now has much more redundancy in the backup system than we had in prior years. The technology to operate it was easy to install, and the daily and weekly process does not take much time to complete. If you need help in this department, call us for a referral to our computer technician. Next, think about accounting security. Although we all hire excellent employees and would never suspect any misbehavior, it's always good company policy to have procedures in place to consistently encourage honesty and discourage fraud of any kind. Even in a very small business, separation of duties helps to accomplish this process. Usually the duties of handling cash and bookkeeping can be divided among the office person, the owner and the outside bookkeeper. Call us if you want to come over for a brainstorming session on various aspects of security. What's next?When you finish your review of business security, take the process home and put into place your good ideas for physical security, computer security, and identity theft prevention. You know the old saying: An ounce of prevention is worth many days of cleaning up after a disaster! Puzzle Pieces
What are some of the questions to ask and talk about with yourself, your spouse, and other family members? In putting together any puzzle, you first need to turn right side up all the pieces and find the ones with the straight edges. In other words, who are you? What is your lifestyle, your income, your values, your relationship with money, financial needs of your family and or extended family? The answers to these questions are the parameters of your financial plan or the edges and defining shape of your puzzle. Each family is different: the financial needs are different, risk tolerances are different, spending habits are different. The dynamics of life are unique for each family. Financial plans should not all look the same but represent the unique desires of your family. Financial planners should listen to these desires and help you to explore the nuances of the various choices. The next step in putting together a puzzle is to find the pieces that have common colors or lines that begin to link together to form a part of the picture. The common pieces of a financial plan generally include identifying your income sources, your expenses, college funding, your future needs for your retirement years, insurance, savings, and any tax effect of these decisions or combination of these decisions. As the picture of the puzzle begins to take some shape, what are some other things for you to consider as the sections start to be pieced together? Consider the following: What is the nature of your income? Is it earned income, wages or self-employment income, where payroll tax (social security and medicare tax) and income tax are paid on your earnings? Is it passive income, investment or rental income, where only income tax is paid on it? What are your expenses? What is tax deductible in whole or in part? How much debt do you have? Should you rearrange some of your savings (i.e. 401(k) retirement plans, home equity, other investments) to reduce higher interest bearing debt or interest that is not tax deductible - be it consumer credit, vehicle loans, or otherwise? Do you have the right amount of insurance - life, health, disability, liability, and property insurance? Are the amounts of the deductibles on these insurance policies at the right levels? In summary, your financial plan is just that - Yours! Once you and your family consider all the pieces of the financial puzzle, then the strategies for designing the puzzle to fit your desires will become apparent. And, remember, your puzzle may change its shape or picture as circumstances and the dynamics of life happen. So, what shape and design is your puzzle? | ||||||||||||||||||||||||||||||
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Your financial plan is like a big puzzle. When the puzzle is all put together, you have the complete picture. Each decision in your financial plan can be thought of as representing a puzzle piece. What will your puzzle look like? What then are the puzzle pieces? There are a lot of questions to ask and to be answered. Don�t overlook the help of professionals in configuring your puzzle. Qualified professionals will bring value to you. They will help you to explore the possibilities of different sizes and shapes of the pieces and will help you to decide which ones best fit your puzzle. Professional financial planners will facilitate the questions and offer solutions you may not be aware of.