For years the Commonwealth of Massachusetts has required businesses to pay their taxes electronically. The Department of Revenue has a web site designed to accomplish this. And the web site is actually fairly easy to use. Here is the website:
https://wfb.dor.state.ma.us/webfile/business/Public/Webforms/Login/Login.aspx
You take a few minutes to register and then it goes live a couple of days later. Then you can use its full capabilities.
You would use this to pay essentially any tax that you owe to the Commonwealth. The most common ones would be state tax withholdings, sales and meals taxes collected, and corporate excise taxes. You are required to pay even the more obscure taxes electronically.
The Massachusetts unemployment office has set up the QUEST system for employers to file and pay returns and process unemployment claims. It is located at
https://wfb.dor.state.ma.us/webfile/business/Public/Webforms/Login/Login.aspx
Again you need to register with them and this can be a difficult process. You need a user name and password and can call 617-626-5075 for assistance. Expect a wait.
The QUEST system is not as user friendly as other government sites.
The IRS is getting into the game of requiring direct payments rather than using paper checks. The system is relatively easy to use and it is required for all but the smallest business starting in 2011.
Here is the registration site
https://www.eftps.gov/eftps/
Good luck.
Showing posts with label Odds and Ends. Show all posts
Showing posts with label Odds and Ends. Show all posts
Tuesday, September 21, 2010
Why Have a Mortgage?
Most people have a mortgage because that is the only way they can afford to own a home. Although the real estate market is having a very tough time right now, over the long run your house is often your biggest asset and will help fund your retirement. Plus you get a tax benefit from paying the interest on the mortgage.
Some people are fortunate to have significant financial assets. One of the more important questions for these lucky people is “Why do you have a mortgage?” The answer often is “Its my only tax deduction.”
That’s nice but is it worth it? If you have a $200,000 mortgage at 4% you are paying the bank interest of $8,000. The IRS will give you back about $2,000 in reduced taxes so $6,000 is coming out of your pocket. That is not a very good result for your pocket.
Investment advisors argue that you can invest the money and earn more than 4% but they are hesitant to guarantee that you will earn more than the interest rate on your mortgage. My suggestion is to pay off your mortgage and then invest the monthly payment with your investment advisor. You will be amazed how quickly that money will pile up.
You can’t pay it off? Add a little extra to the principle you pay every month so that you will pay your mortgage off in a shorter time period. This will save you a lot of money.
Some people are fortunate to have significant financial assets. One of the more important questions for these lucky people is “Why do you have a mortgage?” The answer often is “Its my only tax deduction.”
That’s nice but is it worth it? If you have a $200,000 mortgage at 4% you are paying the bank interest of $8,000. The IRS will give you back about $2,000 in reduced taxes so $6,000 is coming out of your pocket. That is not a very good result for your pocket.
Investment advisors argue that you can invest the money and earn more than 4% but they are hesitant to guarantee that you will earn more than the interest rate on your mortgage. My suggestion is to pay off your mortgage and then invest the monthly payment with your investment advisor. You will be amazed how quickly that money will pile up.
You can’t pay it off? Add a little extra to the principle you pay every month so that you will pay your mortgage off in a shorter time period. This will save you a lot of money.
Friday, October 2, 2009
How to Protect Personal Data
You need to have a methodology for protecting both your electronic data and any physical records you have.
The best way to protect physical (hardcopy) files is to lock file cabinets and restrict access to files to only those who need to have access. You also need to protect against an outside effort to view the files either from a break in or by leaving files open on a desk where the public can see them.
Protecting your computer files is difficult. If you are connected to the Internet, you are vulnerable to any number of attacks. Hackers are constantly trying to break into computers. Robot programs exist that spend all their time trying to break passwords and access computers hooked to the internet. The popular thumb drives are dangerous. They are easy to lose and, if lost, work on any computer. You need to make sure no information is located on the drive that is not encrypted, and the encryption key cannot be on the thumb drive.
Laptops are also dangerous. If you lose a laptop, it is easy to take the hard drive out and put it into another computer, even if it is protected by a password. Remember, the hackers are smarter than you when it comes to computer security. Use the tools that are available to you.
You should have a firewall between your computer and the internet and highly secure passwords to access the computer and key programs. The password should be a combination of letters, numbers and symbols that have no meaning in any dictionary in the world (good luck on this one). Personal information should be encrypted. A lot of computer consultants are going to make a lot of money with this one.
The key is to put a plan into place that protects the information you gather from unauthorized use.
There are heavy penalties for failing to put a program into effect and for the failure to notify the proper authorities if a breach occurs. For most small businesses, the penalties would probably put them out of business. These can include having an injunction taken out against you, restitution, civil penalties, and the cost of the investigation. A civil fine of up to $100 per data subject affected and $50,000 for each instance of improper disposal will be imposed.
There is much more that can be said about the new law. Do you have any experience with identity theft and any tips on protecting data?
I wonder if the rush to protect this information will produce the same yawn and ho hum reaction as Y2K.
The best way to protect physical (hardcopy) files is to lock file cabinets and restrict access to files to only those who need to have access. You also need to protect against an outside effort to view the files either from a break in or by leaving files open on a desk where the public can see them.
Protecting your computer files is difficult. If you are connected to the Internet, you are vulnerable to any number of attacks. Hackers are constantly trying to break into computers. Robot programs exist that spend all their time trying to break passwords and access computers hooked to the internet. The popular thumb drives are dangerous. They are easy to lose and, if lost, work on any computer. You need to make sure no information is located on the drive that is not encrypted, and the encryption key cannot be on the thumb drive.
Laptops are also dangerous. If you lose a laptop, it is easy to take the hard drive out and put it into another computer, even if it is protected by a password. Remember, the hackers are smarter than you when it comes to computer security. Use the tools that are available to you.
You should have a firewall between your computer and the internet and highly secure passwords to access the computer and key programs. The password should be a combination of letters, numbers and symbols that have no meaning in any dictionary in the world (good luck on this one). Personal information should be encrypted. A lot of computer consultants are going to make a lot of money with this one.
The key is to put a plan into place that protects the information you gather from unauthorized use.
There are heavy penalties for failing to put a program into effect and for the failure to notify the proper authorities if a breach occurs. For most small businesses, the penalties would probably put them out of business. These can include having an injunction taken out against you, restitution, civil penalties, and the cost of the investigation. A civil fine of up to $100 per data subject affected and $50,000 for each instance of improper disposal will be imposed.
There is much more that can be said about the new law. Do you have any experience with identity theft and any tips on protecting data?
I wonder if the rush to protect this information will produce the same yawn and ho hum reaction as Y2K.
Monday, September 28, 2009
How Safe Is Your Idenity
I was at a doctor’s office last week. The X-ray technician came out and asked for me by first name. I followed her through the door and she checked my last name. She told me that they are not allowed to say a person’s first and last name in front of other patients. Why did this happen? It is all part of the current effort to prevent identity theft.
A couple of years ago Massachusetts passed a very tough data security law. The law imposes strict security procedures on any business that collects personal information? The law has had several implementation dates that have been postponed. Currently the drop-dead date is March 1, 2010. The general consensus is that the date will not be postponed again.
What is interesting is that your first and last names as well as your address are not considered personal information. Thus, the law does not cover the basic demographic information kept in your contact manager. However, if you combine your client’s first name or initial and last name with a list of other information then you become subject to the law. The other information covered by the data security law are: Social Security Number, Drivers License Number, State Issued ID Card Number, Credit Card Number, Debit Card Number, or Financial Account Number. The last one is interesting because checks have first and last name and the financial account number. So every time you send a check to someone you are risking identity theft.
Whom does this law cover? Any business that collects personal information from its customers must comply. If you sell a product to a customer and they pay you any way other than cash, you have to follow the law. That pretty much covers all companies. How many businesses accept only cash? Practically none. So the only folks who are not covered by the law are drug dealers and other illegitimate businesses. (Wouldn’t it be interesting if such businesses could not be caught for their more dangerous activities but did get caught by the Data Security Breach Law)?
What does this law cover? Any physical or electronic files that contain the covered information are subject to the law. So if you have names in one file and credit card numbers in another file and no method for connecting the two files you would not come under the jurisdiction of the law. Not many businesses would do this—it would make your business difficult to manage.
The law requires four things:
1. Assess your files and systems to indentify Personal Information.
2. Adopt policies and procedures to protect the information.
3. Destroy the information on a regular basis as required by law.
4. Report any unauthorized use or acquisition of the information.
Your policies and procedures must be in writing.
My next blog will cover HOW you protect your data and any physical records you have.
A couple of years ago Massachusetts passed a very tough data security law. The law imposes strict security procedures on any business that collects personal information? The law has had several implementation dates that have been postponed. Currently the drop-dead date is March 1, 2010. The general consensus is that the date will not be postponed again.
What is interesting is that your first and last names as well as your address are not considered personal information. Thus, the law does not cover the basic demographic information kept in your contact manager. However, if you combine your client’s first name or initial and last name with a list of other information then you become subject to the law. The other information covered by the data security law are: Social Security Number, Drivers License Number, State Issued ID Card Number, Credit Card Number, Debit Card Number, or Financial Account Number. The last one is interesting because checks have first and last name and the financial account number. So every time you send a check to someone you are risking identity theft.
Whom does this law cover? Any business that collects personal information from its customers must comply. If you sell a product to a customer and they pay you any way other than cash, you have to follow the law. That pretty much covers all companies. How many businesses accept only cash? Practically none. So the only folks who are not covered by the law are drug dealers and other illegitimate businesses. (Wouldn’t it be interesting if such businesses could not be caught for their more dangerous activities but did get caught by the Data Security Breach Law)?
What does this law cover? Any physical or electronic files that contain the covered information are subject to the law. So if you have names in one file and credit card numbers in another file and no method for connecting the two files you would not come under the jurisdiction of the law. Not many businesses would do this—it would make your business difficult to manage.
The law requires four things:
1. Assess your files and systems to indentify Personal Information.
2. Adopt policies and procedures to protect the information.
3. Destroy the information on a regular basis as required by law.
4. Report any unauthorized use or acquisition of the information.
Your policies and procedures must be in writing.
My next blog will cover HOW you protect your data and any physical records you have.
Monday, August 31, 2009
Electric Cars
I am on an automobile kick this week. There was a big story on the news about electric cars hitting the market with some history of the vehicles and some interesting information on the cars.
The Chevrolet Volt was prominently mentioned. It is supposed to get 230 miles per gallon of gas and cost about $43,000. What a deal that must be. Let’s take a look at that.
Assume that you buy a Volt and drive exactly 230 miles per week. That’s a gallon of gas a week. Suppose in 2 or 3 years gas is at $5 per gallon. It’s going to cost you $5 per week or $260 per year. Not bad.
Instead you buy a Toyota Prius for about $23,000. It gets 50 miles per gallon. You drive the same 230 miles per week it’s going to cost you $23 a week — essentially five times the cost of gas for the Volt. So you will be spending $1,200 per year on gas, an increase of $940 over the Volt. That means that it will take 21 years to get back your added investment of $20,000 in the Volt. Of course this calculation changes if you drive more or less than these numbers or if the price of gas is different than $5 per gallon. You also can get a tax credit of $2,500 for the Volt but no credit for the Prius.
Taking it one step further, you buy an economy car for $15,000 that gets 25 miles per gallon (is that an economy care anymore) and drive that same 230 miles per week. Total gas cost for the year is $2,400 or an increase of $2,140 over the Volt. This time it will take you 13 years to get your money back BUT you will have to swap out the batteries in the Volt at some time in that period.
It takes about 7 years to get your money back if you compare the economy car with the Prius.
These electric vehicles certainly save gasoline but are not necessarily economical. However, being economical is not necessarily the reason you but a Volt.
The Chevrolet Volt was prominently mentioned. It is supposed to get 230 miles per gallon of gas and cost about $43,000. What a deal that must be. Let’s take a look at that.
Assume that you buy a Volt and drive exactly 230 miles per week. That’s a gallon of gas a week. Suppose in 2 or 3 years gas is at $5 per gallon. It’s going to cost you $5 per week or $260 per year. Not bad.
Instead you buy a Toyota Prius for about $23,000. It gets 50 miles per gallon. You drive the same 230 miles per week it’s going to cost you $23 a week — essentially five times the cost of gas for the Volt. So you will be spending $1,200 per year on gas, an increase of $940 over the Volt. That means that it will take 21 years to get back your added investment of $20,000 in the Volt. Of course this calculation changes if you drive more or less than these numbers or if the price of gas is different than $5 per gallon. You also can get a tax credit of $2,500 for the Volt but no credit for the Prius.
Taking it one step further, you buy an economy car for $15,000 that gets 25 miles per gallon (is that an economy care anymore) and drive that same 230 miles per week. Total gas cost for the year is $2,400 or an increase of $2,140 over the Volt. This time it will take you 13 years to get your money back BUT you will have to swap out the batteries in the Volt at some time in that period.
It takes about 7 years to get your money back if you compare the economy car with the Prius.
These electric vehicles certainly save gasoline but are not necessarily economical. However, being economical is not necessarily the reason you but a Volt.
Saturday, August 22, 2009
Gas Prices Revisited
Back in January, I predicted that gas prices would be at $3 per gallon now. I missed by about 40 cents. Some areas of the country did see gas prices at this level and eastern Massachusetts saw some stations selling premium gas above that price. Generally I should stick to accounting and not predicting the future.
However, the idea of trading up to a car that gets better mileage is still a good idea. Gas prices have bounced around lately but they will be headed up (there I go predicting the future again). The “Cash for Clunkers” program (see my previous blog) is in full swing and may be over by the time you read this. Getting more bang for your buck is always a good idea.
However, the idea of trading up to a car that gets better mileage is still a good idea. Gas prices have bounced around lately but they will be headed up (there I go predicting the future again). The “Cash for Clunkers” program (see my previous blog) is in full swing and may be over by the time you read this. Getting more bang for your buck is always a good idea.
Monday, June 29, 2009
Say What?
I’m a numbers guy. They talk to me. Sometimes words just fail me. Luckily I have a good editor for this blog. But sometimes words speak to me. I administer a group on Yahoo and got the following message:
“Sir am interested in joining ur group found in search seems intrestingfor me so plz accept my membership thanking u.”
Wow. In this case words screamed at me. I know that texting is popular and requires a lot of abbreviations. But this is not texting. This is an email requesting participation in a business networking group. My immediate impression was that this was an ignorant lazy person who was not willing to take the time to form a literate sentence.
Here is my suggestion. Think before you hit the send button.
Now let’s hope my editor reviews this carefully. It would be bad form to have a grammar or spelling mistake.
(Editor’s note: I found two spelling errors.)
“Sir am interested in joining ur group found in search seems intrestingfor me so plz accept my membership thanking u.”
Wow. In this case words screamed at me. I know that texting is popular and requires a lot of abbreviations. But this is not texting. This is an email requesting participation in a business networking group. My immediate impression was that this was an ignorant lazy person who was not willing to take the time to form a literate sentence.
Here is my suggestion. Think before you hit the send button.
Now let’s hope my editor reviews this carefully. It would be bad form to have a grammar or spelling mistake.
(Editor’s note: I found two spelling errors.)
Sunday, June 21, 2009
How To Improve Your Business
Employees can provide a plethora of ideas to improve their company. Sometimes, bosses are too self-important to realize this and they squelch any sort of effort on the part of the employee’s to make constructive suggestions. The boss then complains of having unmotivated, uncooperative employees.
Every year, after tax season, we take our team from Arrison & Olden out to a restaurant for a morning of conversation. Because it minimizes any extraneous interruptions, we do it offsite where we are in a better environment to be able to relax and give better feedback.
We discuss three basic topics; what went right, what went wrong, what can we do better. The team has the right to send the two partners (Andy and Thom) out of the room if they wish. This has never happened. So we spend the morning drinking coffee, eating pastry and breaking down the business. It is one of the most valuable times we spend together all year.
What are the benefits? First, we get great ideas for making next year better. Sometimes it means small changes, but changes that can have a big impact. We have had suggestions like getting electric staplers, or getting our tax return extension process ready earlier. Most importantly, team members get to feel that they are listened to and valued (which they are all year round). An added advantage is the chance to socialize, which we don’t get to do during the tax season. It has proved to be, year after year, a very positive experience.
We hire an outside executive coaching firm to run the meeting and keep it focused. For several years we have used Jan Stewart from Emerge in Littleton, Mass. She has done a great job of guiding the meeting, keeping good notes and providing valuable feedback. If you are thinking of doing something like this, I highly recommend Jan and her team to help you. For more information, Emerge’s website is: http://www.emergewithcoaching.com
Every year, after tax season, we take our team from Arrison & Olden out to a restaurant for a morning of conversation. Because it minimizes any extraneous interruptions, we do it offsite where we are in a better environment to be able to relax and give better feedback.
We discuss three basic topics; what went right, what went wrong, what can we do better. The team has the right to send the two partners (Andy and Thom) out of the room if they wish. This has never happened. So we spend the morning drinking coffee, eating pastry and breaking down the business. It is one of the most valuable times we spend together all year.
What are the benefits? First, we get great ideas for making next year better. Sometimes it means small changes, but changes that can have a big impact. We have had suggestions like getting electric staplers, or getting our tax return extension process ready earlier. Most importantly, team members get to feel that they are listened to and valued (which they are all year round). An added advantage is the chance to socialize, which we don’t get to do during the tax season. It has proved to be, year after year, a very positive experience.
We hire an outside executive coaching firm to run the meeting and keep it focused. For several years we have used Jan Stewart from Emerge in Littleton, Mass. She has done a great job of guiding the meeting, keeping good notes and providing valuable feedback. If you are thinking of doing something like this, I highly recommend Jan and her team to help you. For more information, Emerge’s website is: http://www.emergewithcoaching.com
How To Improve Your Business
Employees can provide a plethora of ideas to improve their company. Sometimes, bosses are too self-important to realize this and they squelch any sort of effort on the part of the employee’s to make constructive suggestions. The boss then complains of having unmotivated, uncooperative employees.
Every year, after tax season, we take our team from Arrison & Olden out to a restaurant for a morning of conversation. Because it minimizes any extraneous interruptions, we do it offsite where we are in a better environment to be able to relax and give better feedback.
We discuss three basic topics; what went right, what went wrong, what can we do better. The team has the right to send the two partners (Andy and Thom) out of the room if they wish. This has never happened. So we spend the morning drinking coffee, eating pastry and breaking down the business. It is one of the most valuable times we spend together all year.
What are the benefits? First, we get great ideas for making next year better. Sometimes it means small changes, but changes that can have a big impact. We have had suggestions like getting electric staplers, or getting our tax return extension process ready earlier. Most importantly, team members get to feel that they are listened to and valued (which they are all year round). An added advantage is the chance to socialize, which we don’t get to do during the tax season. It has proved to be, year after year, a very positive experience.
We hire an outside executive coaching firm to run the meeting and keep it focused. For several years we have used Jan Stewart from Emerge in Littleton, Mass. She has done a great job of guiding the meeting, keeping good notes and providing valuable feedback. If you are thinking of doing something like this, I highly recommend Jan and her team to help you. For more information, Emerge’s website is: http://www.emergewithcoaching.com
Every year, after tax season, we take our team from Arrison & Olden out to a restaurant for a morning of conversation. Because it minimizes any extraneous interruptions, we do it offsite where we are in a better environment to be able to relax and give better feedback.
We discuss three basic topics; what went right, what went wrong, what can we do better. The team has the right to send the two partners (Andy and Thom) out of the room if they wish. This has never happened. So we spend the morning drinking coffee, eating pastry and breaking down the business. It is one of the most valuable times we spend together all year.
What are the benefits? First, we get great ideas for making next year better. Sometimes it means small changes, but changes that can have a big impact. We have had suggestions like getting electric staplers, or getting our tax return extension process ready earlier. Most importantly, team members get to feel that they are listened to and valued (which they are all year round). An added advantage is the chance to socialize, which we don’t get to do during the tax season. It has proved to be, year after year, a very positive experience.
We hire an outside executive coaching firm to run the meeting and keep it focused. For several years we have used Jan Stewart from Emerge in Littleton, Mass. She has done a great job of guiding the meeting, keeping good notes and providing valuable feedback. If you are thinking of doing something like this, I highly recommend Jan and her team to help you. For more information, Emerge’s website is: http://www.emergewithcoaching.com
Worker's Compensation
Recently, one of our clients got a nasty surprise from the Commonwealth of Massachusetts. A representative from the Worker’s Compensation Board walked into our client’s one-person company and demanded to see his Worker’s Compensation policy. He did not have one. He was shut down until he paid a fine and took care of the Workers Compensation situation.
Usually, this would not be unusual. Companies are supposed to have Worker’s Compensation Insurance and the punishment for not having it is harsh. There is an important exception. The owner of a business can elect out of the insurance.
Our client was the only employee of his incorporated business and he was aware that he did not need to have Workers Comp for himself. He didn’t realize that, legally, he had to make a positive election to not have the insurance. This is where he got in trouble.
My advice is to call your insurance agent to make sure you avoid this situation, and to verify that you have done everything right.
Usually, this would not be unusual. Companies are supposed to have Worker’s Compensation Insurance and the punishment for not having it is harsh. There is an important exception. The owner of a business can elect out of the insurance.
Our client was the only employee of his incorporated business and he was aware that he did not need to have Workers Comp for himself. He didn’t realize that, legally, he had to make a positive election to not have the insurance. This is where he got in trouble.
My advice is to call your insurance agent to make sure you avoid this situation, and to verify that you have done everything right.
Monday, April 27, 2009
What Incredable Re=-Appearing Blog
Hi. I have been floored by a flu that might be lime disease With a little luck I will be functional again in a couple of days. This has just been a roller coaster of a sickness and is now headed toward 2 weeks. Seeing the doctor tomorrow. More later.
Tuesday, April 21, 2009
The Incredible Re-Appearing Blog
You may have noticed that the blog has been a bit erratic over the last few weeks. I was concentrating on my clients rather than you and then got hit by my annual post tax season cold the made my head even fuzzier than normal. Who knows what the blog might have said if I wrote it this last week. But I’m baaaaaaaaaack!
How about a few comments on the tax season.
It turned out to be a delayed rush this year. Many more of my clients showed up at the end of our deadline (March 15th) this year than last year. In case you are wondering, we need our clients tax information by March 15th to get the return completed by April 15th. What seemed to be happening was that no one wanted to open up their investment or retirement statements (I haven’t opened my since September) and then extended the practice to their " Important Tax Documents". Suddenly, with our deadline looming, people started opening envelopes and getting their information to us.
This was coupled with a new software program that had a learning curve that went straight up. It wasn’t until about March 15th that we felt comfortable with the program and this created a double whammy as March changed into April. Hectic would be a mild way to phrase it. Ah but I’m a loyal Red Sox fan. Wait until next year.
My conversations with my clients changed slightly during the course of the 3-½ months. In January and February it was hard to avoid doom and gloom. No one was spending any money, planning vacations or buying cars. Thus we have to bail out GM. March saw a slight positive movement. Some of my small business clients saw an increase in sales, admittedly from dismal numbers. My unemployed clients started to say that they could at least get their resumes out to people and maybe even connect up with a real person rather than the stone wall they were running into before. Are we out of the wood, no but it seems like the uphill climb is starting to get a bit easier.
The only good news that I can glean is that most of my clients are getting refunds rather than making payments this year. Of course this is because they lost money in the stock market in 2008 when then made big gains in 2007.
So I’m back at the keyboard and looking forward to an easier pace of work and blogging until January 1, 2010.
How about a few comments on the tax season.
It turned out to be a delayed rush this year. Many more of my clients showed up at the end of our deadline (March 15th) this year than last year. In case you are wondering, we need our clients tax information by March 15th to get the return completed by April 15th. What seemed to be happening was that no one wanted to open up their investment or retirement statements (I haven’t opened my since September) and then extended the practice to their " Important Tax Documents". Suddenly, with our deadline looming, people started opening envelopes and getting their information to us.
This was coupled with a new software program that had a learning curve that went straight up. It wasn’t until about March 15th that we felt comfortable with the program and this created a double whammy as March changed into April. Hectic would be a mild way to phrase it. Ah but I’m a loyal Red Sox fan. Wait until next year.
My conversations with my clients changed slightly during the course of the 3-½ months. In January and February it was hard to avoid doom and gloom. No one was spending any money, planning vacations or buying cars. Thus we have to bail out GM. March saw a slight positive movement. Some of my small business clients saw an increase in sales, admittedly from dismal numbers. My unemployed clients started to say that they could at least get their resumes out to people and maybe even connect up with a real person rather than the stone wall they were running into before. Are we out of the wood, no but it seems like the uphill climb is starting to get a bit easier.
The only good news that I can glean is that most of my clients are getting refunds rather than making payments this year. Of course this is because they lost money in the stock market in 2008 when then made big gains in 2007.
So I’m back at the keyboard and looking forward to an easier pace of work and blogging until January 1, 2010.
Saturday, March 28, 2009
Do You Have any questions?
One of the good parts about a blog is the interaction with the readers. I enjoy reading the comments and then responding if appropriate. The comments are moderated but that is only to weed out the obscene or the obvious advertisements and spam. So far there has been no edited or deleted comments.
Now its your turn. Please send me questions or comments. If there is some part of the tax law that you want some information on, please let me know. I have a good source of subjects from my practice but could always use a fresh perspective. You can comment on this blog or you can send questions to thomstaxtalk@gmail.com
Now its your turn. Please send me questions or comments. If there is some part of the tax law that you want some information on, please let me know. I have a good source of subjects from my practice but could always use a fresh perspective. You can comment on this blog or you can send questions to thomstaxtalk@gmail.com
Friday, March 20, 2009
Ode To A New Economy
My apologies to Bare Naked Ladies. Connect to their web site here http://www.bnlmusic.com/
Once I had a million dollars. (Once I had a million dollars)
But I just lost my house (But I just lost my house)
Once I had a million dollars. (Once I had a million dollars)
Sold the furniture in my house.(Wanna buy a nice chesterfield or ottoman?)
Once I had a million dollars. (Once I had a million dollars)
Bought you a kiddie-car (a nice pedal automobile)
Once I had a million dollars
Once I had a million dollars. Now I live in a tree fort in your yard.
Once I had a million dollars. You could join me, it wouldn't be that hard.
Once I a million dollars. (We would put a little tiny fridge in there somewhere.)We could just go up and hang out. (Open the fridge there would becheap food laid out for us, little half subs and moldy bread and things.)
Once I had a million dollars (Once I had a million dollars)
I sold your fur coat (But not for much cause its not real)
Once I had a million dollars. (Once I had a million dollars)
We ate our exotic pets (both the llama and the emu)
Once I had a million dollars. (Once I had a million dollars)I sold everything that remains (ooh all them crazy elephant tusks and such)
Once I had a million dollars.
Once I had a million dollars (we couldn’t drive to the store.)
Once I had a million dollars (we'd take a bicycle to save some more.)
Once I had a million dollars (we’d have to eat Kraft dinner.)We’d get sick of eating Kraft dinner. Well of course we would and we'd still eat more. ANDSteal all the fanciest ketchup for it...Dijon ketchup! mmmm…
Once I had a million dollars. (Once I had a million dollars)
I'd buy you a Goodwill dress. (but not a real Goodwill dress that's cruel)
Once I had a million dollars. (Once I had a million dollars)
We’d sell all our art. (Poker playing dogs on velvet)
Once I had a million dollars. (Once I had a million dollars)
We ate our monkey. (He joined the llama and the emu)
Once I had a million dollars
Once I had a million dollars (Once I had a million dollars)
Once I had a million dollars (Once I had a million dollars)
Once I had a million dollars…
I was rich.
Once I had a million dollars. (Once I had a million dollars)
But I just lost my house (But I just lost my house)
Once I had a million dollars. (Once I had a million dollars)
Sold the furniture in my house.(Wanna buy a nice chesterfield or ottoman?)
Once I had a million dollars. (Once I had a million dollars)
Bought you a kiddie-car (a nice pedal automobile)
Once I had a million dollars
Once I had a million dollars. Now I live in a tree fort in your yard.
Once I had a million dollars. You could join me, it wouldn't be that hard.
Once I a million dollars. (We would put a little tiny fridge in there somewhere.)We could just go up and hang out. (Open the fridge there would becheap food laid out for us, little half subs and moldy bread and things.)
Once I had a million dollars (Once I had a million dollars)
I sold your fur coat (But not for much cause its not real)
Once I had a million dollars. (Once I had a million dollars)
We ate our exotic pets (both the llama and the emu)
Once I had a million dollars. (Once I had a million dollars)I sold everything that remains (ooh all them crazy elephant tusks and such)
Once I had a million dollars.
Once I had a million dollars (we couldn’t drive to the store.)
Once I had a million dollars (we'd take a bicycle to save some more.)
Once I had a million dollars (we’d have to eat Kraft dinner.)We’d get sick of eating Kraft dinner. Well of course we would and we'd still eat more. ANDSteal all the fanciest ketchup for it...Dijon ketchup! mmmm…
Once I had a million dollars. (Once I had a million dollars)
I'd buy you a Goodwill dress. (but not a real Goodwill dress that's cruel)
Once I had a million dollars. (Once I had a million dollars)
We’d sell all our art. (Poker playing dogs on velvet)
Once I had a million dollars. (Once I had a million dollars)
We ate our monkey. (He joined the llama and the emu)
Once I had a million dollars
Once I had a million dollars (Once I had a million dollars)
Once I had a million dollars (Once I had a million dollars)
Once I had a million dollars…
I was rich.
Tuesday, March 17, 2009
A Worthless Letter
Have you received a letter from Compliance Services that started out "Annual Minutes Requirement Statement"? It then quoted various laws and told you to complete the form and send it to them with a check for $125. It is an official looking form but does indicate that it is not a government form.
What is the purpose of this form? That is a good question. Based on the instructions, the company will prepare some document and send it back to you for filing with your other corporate records. They threaten you with dire results if you do not comply. Their main goal is to scare you into sending them $125. Don’t do it! Dealing with this company does not provide you with any additional protection.
My suggestion: THROW THE LETTER AWAY. The company is not providing any benefits for the fee.
If you are incorporated you must file an annual report with the Secretary of the State of Massachusetts. You can do this online or on paper. The cost is $125. (Guess how the company calculated their fee!) Here is a link to the Secretary of State’s web site where you can get much better information on your filing requirements. There also is a posting about the Compliance Services letter.
http://www.sec.state.ma.us/cor/coridx.htm
Please pass this blog on to your incorporated friends.
What is the purpose of this form? That is a good question. Based on the instructions, the company will prepare some document and send it back to you for filing with your other corporate records. They threaten you with dire results if you do not comply. Their main goal is to scare you into sending them $125. Don’t do it! Dealing with this company does not provide you with any additional protection.
My suggestion: THROW THE LETTER AWAY. The company is not providing any benefits for the fee.
If you are incorporated you must file an annual report with the Secretary of the State of Massachusetts. You can do this online or on paper. The cost is $125. (Guess how the company calculated their fee!) Here is a link to the Secretary of State’s web site where you can get much better information on your filing requirements. There also is a posting about the Compliance Services letter.
http://www.sec.state.ma.us/cor/coridx.htm
Please pass this blog on to your incorporated friends.
Wednesday, March 11, 2009
Is Getting Married A Good Tax Move
I went to a friend’s wedding last week and was thinking about the tax consequences of marriage. Only a CPA would think about taxes on a sunny Sunday while going to a wedding. But getting married changes your tax situation, sometimes drastically.
Many years ago two friends of mine decided to get married. They decided on a New Year’s Eve wedding and planned on getting married at 11:45 PM. They were both clients so I pulled out their tax returns and did a little math. I suggested that they postpone their wedding for a half-hour and save $4000 in taxes, enough to pay for their wedding. They decided to get married the next year, at 12:01.
Why did this happen? They both had about the same substantial income. They had both gotten a package to leave their jobs and would be earning a lot less the next year. They would have jumped into a higher tax bracket that year filing as a married couple rather than as two singles.
This is called the marriage penalty. Congress keeps vacillating between a marriage penalty and a singles penalty. Currently there is a marriage penalty and every year congress talks about changing it. Who knows what they will do next?
The rule of thumb is that if two people’s incomes are about equal, they will probably pay a higher tax as a married couple. If their incomes are significantly different, they pay more in taxes as singles. Other things, like kids, medical expenses and home ownership can effect this calculation.
I’m wondering if a few people will plan their wedding based on this blog.
Many years ago two friends of mine decided to get married. They decided on a New Year’s Eve wedding and planned on getting married at 11:45 PM. They were both clients so I pulled out their tax returns and did a little math. I suggested that they postpone their wedding for a half-hour and save $4000 in taxes, enough to pay for their wedding. They decided to get married the next year, at 12:01.
Why did this happen? They both had about the same substantial income. They had both gotten a package to leave their jobs and would be earning a lot less the next year. They would have jumped into a higher tax bracket that year filing as a married couple rather than as two singles.
This is called the marriage penalty. Congress keeps vacillating between a marriage penalty and a singles penalty. Currently there is a marriage penalty and every year congress talks about changing it. Who knows what they will do next?
The rule of thumb is that if two people’s incomes are about equal, they will probably pay a higher tax as a married couple. If their incomes are significantly different, they pay more in taxes as singles. Other things, like kids, medical expenses and home ownership can effect this calculation.
I’m wondering if a few people will plan their wedding based on this blog.
Sunday, February 22, 2009
Throwing Away the Old Financial Records
"How long do I need to keep my financial records?" is a common question. Here are some pointers:
Financial records (such as bills) that do not effect your tax return can be destroyed as they are paid. Unless you are using your phone, electric, and gas bills as tax deductions, there is no compelling reason to keep them. The major exception to this would be records of home improvements, like the new kitchen or garage.
You should keep your tax records for a minimum of 4 years and a maximum of 8 years. This would be copies of your W-2s and 1099s, real estate tax bills, business expenses etc. Anything that effects your tax return should be maintained. Why the difference in holding period? If the IRS can prove that you have substantially understated your income or taxes, they can go back 7 years from the date of the filing of your return. So a return for 2001 can be audited up to sometime in 2009. The vast majority of taxpayers have a W-2, some investment income and a house. The odds of these taxpayers understating their income are remote. So, to be on the safe side, keep your records for 8 years.
You should keep your investment records permanently. However, this does not mean that you need to keep every scrap of paper that comes from your broker, mutual fund or bank. Most mutual funds send out a statement each quarter and then an annual one summarizing all the activity for the year. Once the annual statement arrives, get rid of the quarterly ones. The same goes for brokerage accounts. Nowadays, the mutual fund companies and brokerage firms maintain a record of your investment purchases. BUT these can get lost if you switch brokerage firms and some mutual fund companies don’t have the records if you opened the account a long time ago.
Some other notes:
With all the identity theft that is going on today, it is best to shred rather than throw out any records you decide to get rid of. Definitely do not put financial records that are not shredded in the recycle bin.
Keep electronic copies of your records. This is easy if you have brokerage accounts or mutual funds. You can download PDFs of your statements and store them on your computer. You can do the same thing with your charge card statements. You can also get PDFs of your tax returns, and can scan and store the basic records. Think of all the trees you can save by not getting paper copies of everything.
To guard against a computer crash, be sure to backup your data if you keep electronic copies of your records
Financial records (such as bills) that do not effect your tax return can be destroyed as they are paid. Unless you are using your phone, electric, and gas bills as tax deductions, there is no compelling reason to keep them. The major exception to this would be records of home improvements, like the new kitchen or garage.
You should keep your tax records for a minimum of 4 years and a maximum of 8 years. This would be copies of your W-2s and 1099s, real estate tax bills, business expenses etc. Anything that effects your tax return should be maintained. Why the difference in holding period? If the IRS can prove that you have substantially understated your income or taxes, they can go back 7 years from the date of the filing of your return. So a return for 2001 can be audited up to sometime in 2009. The vast majority of taxpayers have a W-2, some investment income and a house. The odds of these taxpayers understating their income are remote. So, to be on the safe side, keep your records for 8 years.
You should keep your investment records permanently. However, this does not mean that you need to keep every scrap of paper that comes from your broker, mutual fund or bank. Most mutual funds send out a statement each quarter and then an annual one summarizing all the activity for the year. Once the annual statement arrives, get rid of the quarterly ones. The same goes for brokerage accounts. Nowadays, the mutual fund companies and brokerage firms maintain a record of your investment purchases. BUT these can get lost if you switch brokerage firms and some mutual fund companies don’t have the records if you opened the account a long time ago.
Some other notes:
With all the identity theft that is going on today, it is best to shred rather than throw out any records you decide to get rid of. Definitely do not put financial records that are not shredded in the recycle bin.
Keep electronic copies of your records. This is easy if you have brokerage accounts or mutual funds. You can download PDFs of your statements and store them on your computer. You can do the same thing with your charge card statements. You can also get PDFs of your tax returns, and can scan and store the basic records. Think of all the trees you can save by not getting paper copies of everything.
To guard against a computer crash, be sure to backup your data if you keep electronic copies of your records
Saturday, January 24, 2009
Gassing Up
I have a prediction: gasoline will hit $3.00 per gallon by July 4th. Why do I say this? Adjusted for inflation, gas prices are lower now than they were when I was in college…and that was a long time ago. The major oil producing countries are finally lowering production. The federal and state government are proposing raising gas taxes to pay for road repairs and construction. Massachusetts has a proposal to up the gas tax by 29 cents per gallon. Drivers are becoming less interested in conserving gas. In my opinion, this means that gas prices will rise.
Couple that with the current inability of the automobile industry to sell cars. The spike in gas prices killed off the market for monster cars. Then the drop in gas prices lessened interest in small cars. Toyota is even having trouble selling the Prius. This presents a glorious opportunity. Prepare for the increase in gas prices by buying a fuel-efficient car now at what are probably bargain basement prices. Once the price of gas goes up, the price of these small cars will rise too. Think of the savings when the price of gas goes over $4 or $5 per gallon permanently.
What does this have to do with taxes? Nothing. But preparing for it now will improve your own personal finances in the future.
Couple that with the current inability of the automobile industry to sell cars. The spike in gas prices killed off the market for monster cars. Then the drop in gas prices lessened interest in small cars. Toyota is even having trouble selling the Prius. This presents a glorious opportunity. Prepare for the increase in gas prices by buying a fuel-efficient car now at what are probably bargain basement prices. Once the price of gas goes up, the price of these small cars will rise too. Think of the savings when the price of gas goes over $4 or $5 per gallon permanently.
What does this have to do with taxes? Nothing. But preparing for it now will improve your own personal finances in the future.
Subscribe to:
Posts (Atom)
Posts
