Category: Blog

Des Moines Accountant On: “Taking The Mountain Off Your Back”

Monday, 13 February 2012 08:41 Written by admin 0 Comments


So, the White House released its budget projections for the 2013 fiscal year (which starts in October) (a rundown from Bloomberg here: http://bloom.bg/waLvtc) — and what strikes me first about it is that government economics are pretty different from household economics!

For instance, in this budget, the money "saved" from fighting the wars in Iraq and Afghanistan — which was being borrowed, mind you — is now being allocated to other spending. But it’s being counted as savings! That’s like borrowing money to make your car payments, selling the car, CONTINUING to borrow the money and spending it on a 2nd mortgage.

And counting it as savings.

Borrowing money to pay off more borrowed money (and calling it savings) only works for Uncle Sam, apparently.

So, this is the perfect time for me to finally bring to you what I had worked up for you about unique debt-reduction strategies for Des Moines-area households and businesses.

By the way, I’m a big fan of automation — but not in all instances. Do NOT "automate" your tax preparation process with off-the-shelf software. Especially of the "free" variety. We have to clean up so many mistakes made by these products (and their users!), that I cannot, in good conscience, recommend them.

Yes, I’m obviously biased. But the facts are the facts. Take a gander at this, for just one small example: http://www.customerservicescoreboard.com/TurboTax

In the meantime, let me know if you have any pressing tax issues or questions! We exist to serve you! (515) 986-5843.

The Six Best Ways To Beat Credit Card Debt for Des Moines Families
The national average credit card balance for 2011 was $6,576, down from $7,404 the previous year — and while it’s certainly nice to see improvement, I also know that any kind of debt can feel like you have Justin Tuck climbing on your back. (That’s a New York Giants reference, by the way. Google him if you must. Not a small man.)

So, you may be in a better situation … it may also be worse. So, to answer the questions we often get around here from clients facing tough times, I’ve put together a step-by-step process which we often help people work through. But as I’ve said before, feel free to call us at: (515) 986-5843 for more customized advice.

1. If you ever hope to pay off your credit card debt, pay more than the minimum payment each month.
If you only pay the minimum payment each month, your bill could continue to INCREASE, even if you completely stop using your card. This is called "negative amortization"–where you think you are paying on your debt but the additional fees and finance charges are more than the minimum payment. The bottom line is: Pay more than your minimum or you will eventually be in debt over your head.  

2. Implement a regular *system* for credit card debt reduction.
With online banking and automatic payment options, there are GREAT tools for ensuring you don’t mess up because of administrative chaos. If you feel you can’t manage all your bills by pen and paper, there are several good software programs available for keeping track of your financial records.

In fact, I recommend that you automate a payment ABOVE the minimum monthly payment, just to be certain that you start getting ahead of the game. Those minimum payments are rigged against you, and the only way to get ahead is to … get ahead. I have some more thoughts on automation in a moment.

3. You can negotiate with your credit card company.
No, you do not need to be an attorney or other professional to negotiate with your credit card company (you will need patience and persistence though). The rising amount of consumer debt in this country has made creditors realize that they need to be more understanding of their customers — if they hope to get any money back. If you file bankruptcy they are only going to get pennies on the dollar, so they are willing to make deals.

4. Write letters to each of your creditors acknowledging your debt and the situation, and tell each one when you can begin repayment.
Open communication always helps. Usually credit card companies get ignored and end up sending delinquent files to a collections agency. So they’ll actually appreciate your openness in contacting them and may be more understanding of your situation. Proactively dealing with your debt problem rather than hiding will not only help your financial problem but make you feel better about yourself.

5. Keep track of what you are able to pay each creditor every month.
If you are not able to pay the full amount of your credit each month, you still should still pay something to stay on top of it. You should work off a written budget so you know exactly where you stand. Some experts suggest that you divide your monthly debt budget by the percentage each bill makes of the total and pay that amount.

Here’s an example: If you owe a total of $1,000, and one credit card is $800 and the other is $200, and you only have $100 available to pay for that month… You should pay $80 on the $800 balance, and $20 on the $200 balance. This way you are reducing each debt by the same percentage.  

6. Don’t fall prey to intimidation tactics
No matter how forthcoming and honest you are, some creditors have been taught to be mean and downright nasty. Hang in there and don’t let this tactic intimidate you.

Lastly–don’t let the IRS be one of those creditors. Let us help you this tax season, and THAT will be one less creditor to worry about, I assure you!

Des Moines Accountant On: “A Penny-Pinching Tax Professional’s Guide To Romance”

Monday, 06 February 2012 08:59 Written by admin 0 Comments

"You just can’t beat the person who never gives up." -Babe Ruth

What is it with the Giants and acrobatic catches? Five years ago, it was David Tyree … and this year, Mario Manningham comes through with the game-changing catch on the Giants final drive. Enough has been said about the game — but even though I’m not a Giants fan, what I loved about their victory is how even though they had a sub-par regular season, they simply didn’t give up.

There’s plenty inspiration in there for all of us, methinks. It’s not over until, well, it’s really over.

Well, as I mentioned last week, I’ve put together a primer on automating and leveraging tools in order to get out of debt, but once again — events are getting ahead of me. Because Valentine’s Day is hurtling towards us, and I thought I’d give you a little "nudge".

But, since I am a tax professional, after all — I’m going to give you some romance tips "on a budget"! Wives can scoff at this list, and be gratified when their husbands successfully surpass it. And husbands, well I know some are skilled at romance; and others … well, here’s some help!

Even better, for some of our clients who are doing just fine, thank you, this is actually a great list for you too … after all, the best gestures are from the heart, not necessarily the wallet.

"Real World" Personal Strategy

Love Without Spending
A Penny-Pinching Tax Professional’s Guide To Creating Romance
Look– whatever your particular financial situation, wouldn’t it be great to create romance "magic" without spending an arm and two legs? So, instead of the tired old "flowers, candy and chocolate" [boring!], here’s a few modest and occasionally tongue-in-cheek suggestions for a sizzling Valentines … that won’t torch your wallet!

Make a Video.
You can use the video setting on your phone or digital camera, and create a heartfelt message of love for your sweetie. Then, post it to YouTube, Vimeo or another online video-sharing site and send it on! Um, just be sure to make that video setting to "private" unless you want to share with the world your dying love for your honey (hopefully with clothes on!).

Learn a Romantic Song and Sing it to Your Sweetheart.
Well, I’m no singer, so I can’t say I’ve tried this … but I hear it works well. Even better, if you can’t sing, your valentine will give you kudos for the effort! You could step it up by writing an original song and then sing it. Or, for the slightly-less courageous, you could pull a page out of John Cusack’s book in Say Anything and hold a boombox (or iPod) above your head and blare Peter Gabriel’s "In Your Eyes". That seemed to work.

Not a singer? More of a writer? Or artist? For the otherwise artistically inclined:

- You could pen a poem on nice paper
- or even paint it
- You can paint a picture of your honey. Just be sure it looks good.

The "Mix Tape" (or Playlist)
This is an old standby of high school kids everywhere. Except these days, the "tape" part is a bit less convenient. Instead, make a CD or mp3 playlist of Sweet Love Songs and make a cover list/ liner notes on the memories of you and your honey from the songs. And you can make a Personalized Photo Album using Shutterfly or a service like it.

Romantic Picnic
Surprise your love with a ‘picnic’ in the park, at the beach, or any other outdoor nature spot. If the weather isn’t ideal for outdoors, you could bring the outdoors inside — find a fake palm tree, flowers, sand, beach umbrella, radio, towels (borrow them). Nothing says "I love you" like fake palm trees!

Write a Message To Be "Stumbled Upon"
Well, perhaps not *literally* stumbled upon, but try a nice outdoor surprise. If you do have snow outside, you could stomp out the message and fill in the letters with spray paint or flower pedals or rocks.  If there’s no snow, you can use sidewalk chalk to write a message to your sweetie.

You see, anybody can go out and "buy something" – but it takes effort and thoughtfulness to make it personal … and it doesn’t require a lot of money! And as someone whose JOB it is to save money, that’s what I like.

“Those Little Mistakes Will Be Your Undoing” Des Moines Accountant Warns

Monday, 23 January 2012 08:18 Written by admin 0 Comments

"Failure doesn’t kill you … it increases your desire to make something happen." – Kevin Costner

As I write this on Monday morning, there are a bunch of tears in Baltimore and San Francisco.

If you’re not a football fan — let me briefly tell you why: yesterday, in Baltimore, a game-tying "gimme" field goal went wide left, and in San Francisco a fumble and another small error (the ball grazing the leg of a player) were largely responsible for an overtime loss. So New England and New York (Giants) are headed to Indy for the Super Bowl.

Little hinges swing big doors, as they say.

We are FINALLY moved into our new office space.  Still some finish work going on around us and boxes to unpack but at least we’re moved in and able to get back to work.  Remember, we are still in the SAME strip mall, just at the far West end.

Our offices are starting to get pretty busy. Last week, the IRS began accepting e-filed returns (for which they save $3.10 each, which adds up) and we’re getting a bunch of emails and phone calls ((515) 986-5843, by the way) with little questions.

It’s smart to ask the little questions. Because this year, the IRS will be scrutinizing returns in unprecedented ways — and they pay careful attention to those "little" things.

As you know, I don’t always write about taxes in my weekly Notes — in fact, I make a point to put these together differently than all those other accountants who spit out pre-heated leftovers to their clients in the form of canned "tax tips" and useless content. But this time of year is when many of my clients and contacts are figuring out exactly how they’ll be pulling together their tax file … and, well, it’s a pretty important decision. I want to speak to it while there’s time to help.

So, here’s what I mean…


"Real World" Personal Strategy
The IRS is Paying Close Attention
Think tax evasion is a small problem? The Tax Justice Network released a report at the end of 2011 which showed that tax evasion amounts to $337.3 billion per year in the US. Yes, that’s billion with a "B".

This was based on numbers from 1999 to 2006, and is probably even higher in recent years, as the weak economy may have led more people to hide money from the government. As an example, the average tax refund decreased by $100 in 2011 — perhaps people are reporting less income in order to keep more of their money.

Now, it’s hard for us wrap our heads around how much money that really is. Here’s a way to do so: Recently, Congress was unable to agree on a plan which would reduce the national deficit by $1 trillion over 10 years. Over that same time period, tax evasion will cost us well over $3.3 trillion.

Given my profession, perhaps it’s obvious that I’m a big proponent of everyone following the tax rules. When we don’t, it means that everyone else has to pick up the slack. And the consequences of all of this reporting about tax fraud is greater scrutiny on honest taxpayers, and higher tax rates.

The IRS is Catching More Tax Evaders
The "good" news is that the IRS is doing a better job of catching people who aren’t paying their fair share of taxes. Fraud investigations increased by 14% in 2010, while prosecution recommendations (cases that the IRS thinks should be brought to court) increased 18% and convictions increased by 4%.

Again, it’s possible that some of these increases are due to the economic situation of the past few years, but the fact that the IRS decreased its investigation time by nearly 40 days is a sign that the IRS is doing a better job.

Don’t Give In To The Pressure; Avoid Taxes — LEGALLY
Here’s what you should understand — the rise in tax evasion means that the IRS is continuing to increase its scrutiny on every return. But that doesn’t mean you have to give up the fight! There are innumerable LEGAL ways to avoid paying too much in taxes. And, unfortunately, software programs and fly-by-night tax shops don’t do a very good job of proactively seeking them out for you.

But perhaps you know someone who does?

“This Is Self-Serving, But It Needs To Be Said” Des Moines Accountant Reports

Monday, 16 January 2012 08:41 Written by admin 0 Comments

"The most important thing in communication is hearing what isn’t said." – Peter F. Drucker

As I wrote a couple weeks ago, the start of the year is pretty important, in my opinion. And the LAST thing you need is to be stressed over finances.

Yet that’s, unfortunately, how many families start their year, this year.

So, is there anything we can do to help? Yes, we live to help you with your taxes, but what truly animates me and my staff is the fact that assisting real families (like yours) can make a difference — not just in your "bottom line", but in the peace by which you operate. That’s, really, why we do what we do.

So, do let us know if there’s anything at all we can help you with: (515) 986-5843

Indeed — we’re getting very close to the point where we begin to see many folks walk through our doors with their tax information in hand. Last week, I posted a mostly-complete list of what you will need to get your taxes done.

Well, today my message runs a significant risk of being extremely self-serving. I get that, but I want you to know that isn’t why I’m writing it.  Sure — I want my business to do well, and that happens when our clients keep using our services and refer their family and friends our way.

But I’m writing this today to give you a warning about some new options available to taxpayers, which haven’t always been there. I hope you hear what I have to say, and that you take it to heart.

Jim McClaflin’s
"Real World" Personal Strategy
Hidden Problems In Popular Tax Filing Options
For various liability issues, I’m loathe to actually mention this company by name, but let’s say (for the purposes of this conversation) that there’s a big, popular company who made its fortune on the backs of lower-income taxpayers called H&P Black (a name picked completely at random). This company is flooding the airwaves with a brand new program offering "free" tax preparation.

Maybe you’ve heard about it? Well, like many such things, there are, shall we say … strings.

First of all, here are the restrictions:  it only covers those filing the 1040EZ federal form, which covers only the very simplest tax issues. It can’t be used by anyone who has dependents, makes more than $100,000 per year, is age 65 or older, claims adjustment to income like alimony or tuition deductions, or itemizes deductions. Thus, homeowners who deduct mortgage interest or people with large charitable contributions can’t use the 1040EZ.

Plus, filers have to pay fees for state tax preparation and any other fees incurred — which have a tendency to pile up.

Asked by stock investors why [said company] was doing this, an executive replied: "Our ability to monetize this program means a minimal impact on our net average charge," [said company] Retail Tax President Phil Mazzini told analysts on Dec. 7. (source)

It’s always enlightening to look at executive interactions with stock analysts to see why public companies do what they do, I’ve found.

So — in summary: don’t be seduced by the siren call of getting something for nothing. You usually end up paying for it, in a whole host of ways.

In fact, one of OUR revenue centers over the years has always been in fixing the mistakes made by these "big box" retail tax outfits and off-the-shelf software programs, and discovering loads of missed opportunities and overpayments.

(Because, speaking of software: do you remember when our current Treasury Secretary used the leading tax software to do HIS taxes, unintentionally created a bunch of errors with it, and then blamed it for all of his tax problems in front of the Senate? Not an uncommon issue, I’m afraid.)

The old adage *is* an adage because it’s so often true: you get what you pay for. It’s the foundation for a stable economic system because it’s almost always true.

This List Will Help You

Monday, 09 January 2012 08:29 Written by admin 0 Comments

"A daily routine built on good habits and disciplines separates the most successful among us from everyone else." – Darren Hardy

Last week I wrote about financial resolutions — and, well, John Tierney of the New York Times must be a reader!

The columnist devoted a fantastic column to the keeping of resolutions and though he didn’t name me directly, he made a bunch of great points. I read this in the paper version, but I wanted you to see it online. In my opinion, here’s the key bit (my emphasis):

The study, led by Wilhelm Hofmann of the University of Chicago, showed that the people with the best self-control, paradoxically, are the ones who use their willpower less often. Instead of fending off one urge after another, these people set up their lives to minimize temptations. They play offense, not defense, using their willpower in advance so that they avoid crises, conserve their energy and outsource as much self-control as they can.

Alright — so perhaps he’s not talking about the automation and financial resolutions which I discussed! But I do hope you noticed what I emphasized there: sometimes our best method to stick to our resolutions is to not rely on our simple willpower — but to outsource it.

I’m running down some tools for you on this for next week, which I hope will help.

In the meantime (and speaking of outsourcing)… I truly do pity those who attempt to wade through all of the different tax 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 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!

Jim McClaflin’s
"Real World" Personal Strategy
McClaflin’s Tax Time Document 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 really look forward to seeing you this year!

++++++++

To your family’s financial and emotional peace…

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