You did not get your W-2!

If you haven’t gotten your W-2 by now, here are some basic steps for you (you might want to print out or save this link, by the way):

1) Contact your payroll department/boss. Be nice about it — after all, they’re just as burdened by the paperwork junk as you are!

2) If, however, the days roll by and the form is indeed lost or your employer is inordinately slow in issuing a replacement, or you worked for a company that went out of business and there’s no one to bug about getting a W-2 … what then?

“Make” your own! Well, actually, you contact the IRS at this number: (800) 829-1040 with the following info from your last paystub handy:

• Year’s wages.
• Payroll taxes withheld.
• Federal and state income taxes withheld.
• Contributions to your company retirement/401(k) plan.
• Employer’s tax identification number.

Wait on hold, and ask for Form 4852. Basically, this will inform your employer “officially” that they’re delinquent, and you can even use this form in a pinch, if your employer never gets their act together.

If you need further help, please feel free to email us at Howard@savemoretaxes.com or call us at 847-243-3600.

Related articles

• Happy Tax Season Series: Where’s my W-2? (ataxingaffair.com)

Financial Resolutions for 2012

Kaufman’s Financial Resolutions for 2012

Here’s the thing about most financial resolutions: They don’t usually last even until the end of January. That’s because making a permanent change in our behavior requires both time and a steely resolve. But I’ve found that we can develop financial character one action at a time. That is why I am giving these out now so you can really get going.

So in that vein, here are some financial practices to take you from pauper to prince or princess if you add one each year. If you’ve already got one down, move to the next on the list.

#1 MOST CRITICAL: Resolve to become (and stay) debt free. Now, I’m not Dave Ramsey, but there’s a reason why he’s become so popular: his approach works. I’d say that  you can have a fixed-rate fixed-year traditional mortgage on your house — but nothing else, please. No equity line of credit on your house. No car payments. Certainly no credit card debt. Because you simply have to learn to live within your income — which, unfortunately, sometimes means going without. The millionaires among us really are frugal. So learn to enjoy that process, and it’s a fantastic start.

#2 Automate your savings (AKA Pay Yourself First). You can start by getting the entire match if your company offers a 401(k) plan. Usually this translates to saving 5% of your salary while the company contributes a 4% match, which is the fastest way to get an 80% return on your money. Most Americans forgo this match, believing they need to spend 100% of their salary. But you can learn to think like a millionaire and live well on 95% of what you make.  If you don’t have a 401(k) plan, act like you do, and sock away 5% automatically by following step 4 below .

#3 Fully fund your 2012 Roth IRA. This is $5,000 in 2012 and $6,000 if you are older than age 50. If you can’t manage the entire amount in January, put in $416 monthly. Automating deposits in an employer-defined contribution plan is easy. Fortunately, automating saving in a Roth IRA or a taxable savings plan is equally painless. Most brokers offer an automatic money link between your checking account and an investment account. Set your savings on autopilot, baby!

Remember — these steps build off one another, so if you already have done the first 3, here’s your next step:

#4 Save another 5% in a Private Reserve Strategy. This is a strategy designed to help develop or improve one’s financial position by avoiding or minimizing unnecessary wealth transfers where possible, and accumulate an increasing pool of capital providing accessibility and control.  Want to know how to set one up,  give us a call at 847-243-3600.  Do it now!

Let us know how you are doing.  Leave a comment below.

The Rental Decision Part 1

The Rental Decision
Long-time renters often cite all the negatives of home ownership, and there are some to be sure.  But many of these oft-cited reasons have a valid counterargument OR these old paradigms are no longer accurate:

Lets take a close look at this.

Current Conception #1: It’s More Expensive to Own Than to Rent — This is probably the biggest myth out there that many proponents of renting continue to propagate. Primarily, at this point in time, with home prices having crashed and interest rates at record lows, the rent-to-buy ratio is favoring “buy” in many parts of the country, more so than at any point in recent history.

Now this isn’t just a rah-rah “buy a home” Note, and I would concede that it is entirely plausible that home prices continue to decline for several more years. But if you’re not buying to sell, but rather buying to live, it can be MUCH more economically efficient to own over rent, especially at this time.

Here is the data (rent vs buy favors buy in 75% of US cities), aside from the other intangibles listed below: http://money.cnn.com/2011/08/16/real_estate/buy_rent/index.htm

Let me repeat:  It is becoming cheaper to own and it is becoming more expensive to rent.

In my analysis, this trend will continue for years.

Why?  First off, the Fed‘s policy has been to reward debt holders and punish savers with the unprecedented a) zero interest rate policy and b) projecting out through 2013 that rates will stay low.  This in turn, is pushing up gold prices and equities prices, and investors are pricing in future inflation. This bodes well for landlords, and poorly for renters. See, this interest rate/inflation phenomena mixed with the new ratio of renters over owners is flooding the market with renters and starving the market for buyers. This makes homes more affordable, while landlords are embarking on higher annual rent increases.

We will look at another Conception on our next blog.  Stay tuned.

Lastly, I’m here to HELP you, only and always. Let us help you through the important financial decisions in your life, while taking a holistic view of ALL of the costs.

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IRS changes the Standard Mileage Rate

The Internal Revenue Service announced an increase in the optional standard mileage rates for the final six months of 2011. Taxpayers may use the optional standard rates to calculate the deductible costs of operating an automobile for business and other purposes.

The rate will increase to 55.5 cents a mile for all business miles driven from July 1, 2011, through Dec. 31, 2011. This is an increase of 4.5 cents from the 51 cent rate in effect for the first six months of 2011.

The real question is whether this rate is realistic for the increasing costs we face while using our vehicles for business.  The only way to know for sure is to keep track of your expenses and see which method works best.

If you need help in setting up a daily system to keep track of your expenses, let us know, we can help.

How Planning Can Save you $1000+

Looks like summer is finally right around the corner. That means the year is almost half over and before you know it’s over.

Too many clients (almost all of them) wait until the winter before they look at their tax obligations. Even worse, they wait until that season before they speak with their professional in any kind of proactive way.

That’s a problem, and it could be costing you some serious savings.

Here’s an example:

Let’s say that you were considering taking money out of a pension (401k) to finance the down payment on a house. It’s quite a common maneuver. But let’s say next that you do this withOUT discussing it ahead of time with a professional. That could be a four (or five) figure mistake.

If you were to come into our offices or contact us before such a move, I would ask you a few easy, but very important questions, and then (depending on the answer) likely advise you to first roll the money ($10,000) into a Traditional IRA. You could then withdraw the money at a savings of $1,000.00. This is because money used for a first home, up to $10,000, is penalty-free when taken from an IRA, but NOT a 401K.

Would you be pleased by that move? I’d guess “yes”, especially if you knew about other clients I know of who failed to plan. This couple just learned of the $41,000.00 penalty they had to pay for doing the same thing, but from their 401k.

Ouch.

There is no guarantee that you will save by speaking to us in advance. But this I CAN guarantee: If you don’t speak with us, we won’t be able to save you a dime.

Let us know if this was helpful.  Do you have a situation that might create a tax issue. Be proactive and contact a tax professional.  Hopefully us.

When The Tax Return is Wrong

Do you have a tax accountant who guarantees their work…in writing?

Sure, some guys might say: “We’ll make it

right if we screw up”, but then the stuff hits the fan and they fight you every step of the way.

I’ve heard too many horror stories about taxpayers getting a letter from the IRS, then they take it to their accountant, and then the letter sits on a desk gathering dust.

Or stories about the CPA who makes some calls on your behalf, but then you get charged an arm and a leg in the process.  Or sadly, a taxpayer doesn’t get any help from the person who prepared their taxes for them so they “go it alone”, call the IRS themselves and have to try to figure out what to do and not to do during this normally ugly IRS correspondence … THIS can be a nightmare!

Don’t let that happen to you. You need to have a written understanding with your tax professional that you won’t be left in the lurch. Oh, and also-does this guarantee actually do something you want it to?

I’ve seen some accountants guarantee they will file your taxes for you by April 15th or they will file an extension for you.  Well…great!  That sure makes you feel good in the morning, doesn’t it?   Other weak guarantees I’ve seen in the tax industry are, “We guarantee we will begin preparing your tax return the same day we meet with you.”

That means nothing to me.  I don’t care when you start preparing my taxes.  I want to know how long it is going to take you to finish it and do so without leaving out silly errors you know you should have caught.

So remember:  the guarantees should be in areas you care about, like:

Tax Return Accuracy … Speed of Service … Most Money Legally Yours … Ongoing IRS Protection For Years After Filing …

These are the things YOU care about!  Make sure the tax professional you choose stands behind these critical areas of tax filing so you get the most out of your tax filing experience.

We stand behind our work and have done so for the last thirty years.  See what others have to say about our work.  Check out our web page.

PS–If you would like to receive weekly emails on various topics, you may go HERE to subscribe: http://howardkaufman.mylocaltaxpro.com

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Is There Really Any Difference?

There’s a news story floating around the other week about politicians having to prepare their own taxes. (Here’s what I’m referring to, btw: http://www.nytimes.com/2011/02/13/business/yourtaxes/13essay.html) Apparently, the proposal gets a few laughs from those who hear about it, because, really — it’s becoming mind-numbingly complex, even for many professionals.

You think I’m kidding on that one? Well, you should see some of the

returns we review for people who have had them prepared elsewhere … yikes.

So, just as the choice to file taxes via robotic software fails the test, selecting the wrong professional to file your returns can be a big, big mistake.

Here’s what I mean.

Is There Really Any Difference?

Unfortunately, with the way that most tax professionals and CPA‘s present themselves to the world, it seems like we’re all the same. We all seem to offer the same services, for pretty similar fees. If I weren’t working every day in this industry, I’m pretty sure I would think that all accountants and CPA’s were the same. Nothing could be further from the truth.

You see, each tax professional does have certain qualifications. Some might be experts at this sort of tax law, or in working with farmers or with getting money back through IRS representation, or a whole variety of different things…but are they really providing what you, the consumer, wants?

What do you want from a tax preparer?

When I sit down and talk with regular consumers, here’s what I discover:

You want to be able to work with a caring professional…NOT one of those “cattle call” shops, where you’re squeezed in with a bunch of other people, and seen by harried, poorly-trained employees that just took a basic tax course.

You want an accurately filed tax return.  You want the whole thing broken down in terms that you understand, and in a way that you don’t need a translator to communicate. You want there to be processes in place to ensure that the most money is kept out of the grasping hands of Uncle Sam, and in your wallet (legally).

You want a “heads up” about future ways you can legally add deductions and make sure that you can get even more money back in the future. You want assurances everything your tax preparer is doing for you is valid and correct, so a guarantee(s) is essential to the process.

And of course, you want do it fast.  Look, I know this is a big deal for consumers…you don’t want your accountant pushing back at you all the time, saying “give me more time”, when you know it’s not because they’re working hard on your behalf, but that they’re so poorly organized that they’re not getting ANYBODY’S work done on time!

Oh, and if you ARE getting a refund, you want a tax firm who can get you the most money back the fastest … with the most electronic filing options available.

Here’s the bottom line:  You want professionalism … accuracy … you want clarity … you want to be aware of beneficial tax options … you want peace of mind … you want an efficient use of your time …. you want your refund money back in your hands fast …. And at the end of the day, you want to KNOW you got the most money back from Uncle Sam AND know that the IRS will stay off your back so you can sleep like a baby at night!

If the accountant or tax professional you are talking to can’t do these things, you need to call one that can.
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The Tax Paper Chase List-Check out our discount

This has ALREADY been one of our most intense years, in preparing the groundwork for “tax season”, simply because the tax code is getting even MORE complex. And, truly–it seems as if I write that *every* year, which isn’t a great sign for families who are wanting to do their own taxes!

And, of course, Congress’ last-minute tax agreement didn’t make things any easier.

Don’t cry for us — this is our full-time occupation, after all! But I truly do pity those who attempt to wade through all of the different codes and forms on their own, and not devote 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 got a special incentive for you at the end of this blog post l … AND, I’ve got a handy little list of what you’ll need to bring in or will need to complete your tax organizer we send to you. It’s mostly complete, but 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 DO have a couple slots left! Call or email soon, though.

The Tax Paper Chase List
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 clients.  Really, this is for ensuring that we’re able to help you keep everything you deserve to 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…

Personal Data
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
Alimony received
Jury duty pay
Gambling and lottery winnings
Prizes and awards
Scholarships and fellowships
State and local income tax refunds
Unemployment compensation

Homeowner/Renter Data
Residential address(es) for this year
Mortgage interest: Form 1098
Sale of your home or other real estate: Form 1099-S
Second mortgage interest paid
Real estate taxes paid
Rent paid during tax year
Moving expenses

Financial Assets
Interest income statements: Form 1099-INT & 1099-OID
Dividend income statements: Form 1099-DIV
Proceeds from broker transactions: Form 1099-B
Retirement plan distribution: Form 1099-R
Capital gains or losses

Financial Liabilities
Auto loans and leases  (account numbers and car value) if vehicle used for business
Student loan interest paid
Early withdrawal penalties on CDs and other fixed time deposits

Automobiles
Personal property tax information
Department of Motor Vehicles fees

Expenses
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)
Investment expenses
Job-hunting expenses
Education expenses (tuition and fees)
Child care expenses
Medical Savings Accounts
Adoption expenses
Alimony paid
Tax return preparation expenses and fees

Self-Employment Data
Estimated tax vouchers for the current year
Self-employment tax
Self-employment SEP plans
Self-employed health insurance
K-1s on all partnerships
Receipts or documentation for business-related expenses
Farm income

Deduction Documents
State and local income taxes
IRA, Keogh and other retirement plan contributions
Medical expenses
Casualty or theft losses
Other miscellaneous deductions

We hope this helps, and we look forward to seeing you this year!

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Warmly,

Howard

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Special Early 2011 Blog Offer
$29.00 Off Any Tax Service
Special Gift Certificate
Print This blog post and bring it to our office–and receive an instant $29 credit towards any tax or financial service for 2011

Expires February 11th, 2011
Not valid with any other offer
+++++++++++++++++++++++++++++++++

So what will the new tax changes do for me!

First of all, the new tax changes will give some stability in tax planning.  The 2010 Tax Relief Act extends the Bush-era individual and capital gains/dividend tax cuts for all taxpayers for 2011 and 2012. But be careful,  the provisions are temporary and the new law places the ultimate fate of the Bush-era tax cuts to 2012, a presidential year.

Here are some details:

Individual income tax rates that are presently in place will be extended for 2011 and 2012 with the maximum tax rate at 35% versus 39.6%. In addition, the amount withheld  from paychecks for social security will drop to 4.2% from the present 6.2%. This is only for the 2011 year. What that means is that an individual earning $50,000 in 2011 will see an approximate tax savings of $1,890 in combined income tax and payroll tax rate reductions. This information courtesy of   Commerce Clearing House, publisher of tax resources.

Other individual income tax areas will stay the same. For example,  capital gains/dividends will still be taxes at 15%.  There will be relief in the itemized deduction limitation, marriage penalty , child tax credit, earned income tax credit, adoption credit, dependent care credit, mortgage insurance premiums, educational assistance exclusion, student loan interest deduction,  and the alternative minimum tax.

Estate Tax

The estate tax is reinstated in 2011 but at a much higher rate. Basically with some estate planning, up to $10 million can be excluded by a husband and wife. $5 million for an individual.  There are some options for those who died in 2010.

Business

Business has been given some tax incentives over the next two years.  100 Percent Bonus depreciation is available for certain periods over the next two years along Section 179 expensing.  Research Tax Credits, Small Business Stock incentives and other credits.

Bottom Line

We have only scratched the surface of this new tax changes. You need to sit down with a tax professional to see how this impacts you. There is only a two year period to take advantage of these opportunities. I am sure that in two years,  the tone of the political  and economic environment will be different and the opportunities we have before us will be gone.

We offer free first time consultations to review your situation. Check us out. You have nothing to lose.

Related articles

• What does the tax deal mean to you? (usatoday.com)
• So, what does this tax bill stuff really mean for you? (capitolhillblue.com)

Last minute year end tax ideas

Now that we near the end of the year, here are some last minute tax tips.

Gifting

1. If you are giving securities away, endorse them over to the donee.  On year-end gifts, companies may not be able to retitle the certificates in the donee’s name by December 31st.

2. If you’re making a gift by check, be sure the donee deposits it in 2010 if you want the money to be included as a 2010 gift for gift tax purposes.

Otherwise, give a certified check to the recipient this year.  That will count as a 2010 gift, even if the donee does not deposit the check into his or her account until next year.

General

1.  Mail checks for deductible items before year-end to make sure of a 2010 write-off. You get to claim the deduction this year even if the checks don’t clear until January.

2.  If you are charging deductible items, make sure you know these rules:

Charges that you make with a retail store credit-card are only allowed as a deduction in the year you pay the bill.

Charges that you make with a bank credit card are allowed as a deduction in the year you charge the items, even if you pay the bill next year.

Here are some links to some more articles

Related articles

• Year-end giving moves, December 2010 (dontmesswithtaxes.typepad.com)
• Sometimes it’s better to give right now (iowabiz.com)