Monthly Archives: November 2016

Some Things I Wish I Told My Dad About Finances

In 2014 my father was diagnosed with Lewy Body Dementia, which is the second most common type of dementia after Alzheimer’s disease. Little did my family know the difficult road that would lie ahead to provide my father with appropriate care as the disease continues to progress. As a financial advisor, I find comfort in being able to alleviate the stress my mother has had managing their finances through this difficult situation.

My father never liked to seek outside help with his personal finances. But five years ago, while he was still well enough to make his own decisions, he brought me down to his office in the basement to go over his accounts in case his health were to diminish. At the time, I was a trader on Wall Street and knew very little about how a retiree should manage their finances. But if I knew what I now know, this is what I would have told him on that day.

For Your Family’s Sake, Consolidate
The binder my father used to keep track of his accounts was always up to date and accurate. But as I thumbed through the graph paper with numbers carefully penciled in, I noticed that as time went on the pages weren’t as detailed and the time between entries was further apart. I didn’t know it at the time, but this was one of the earliest signs of his cognitive issues. When his condition worsened and I took over managing the accounts, there were checking and savings accounts at several banks, CDs reinvesting at almost no interest, paper savings bonds stashed away with no copies stored online or in another physical location, and a portfolio which had very little direction comprised of investments that were collected over the years that were never revisited to determine if they were still suitable.

We have since consolidated these accounts and come up with a portfolio that reflects their current needs. At any time, my mother has online access to a snapshot of her accounts where she can see everything in one place. This has given her great peace of mind.

Dust Off Those Estate Plans
It isn’t uncommon for a young family to establish their estate plans when they get married or have their first child and never revisit them again. This is a mistake. I cannot emphasize enough how important it is to have a durable power of attorney with clear direction. The power of attorney has been an important tool in managing my father’s finances. His will and health care proxy will take a lot of the difficult decisions away from our family. We are able to spend our time with him and focus on providing him with the best quality of life that we can, knowing what his wishes are.

Long-Term Care Isn’t Cheap, So What’s the Plan?
The cost of long-term care can easily dwarf the cost of attending a four-year university. We spend years planning how we are going to pay for our children’s education, but very little time is spent on how we will manage the cost to maintain our own quality of life in our later years. Long-term care insurance isn’t always feasible but if added to the picture, it can be an extremely valuable tool. In most cases, some form of it should be considered sooner rather than later as policies become more cost prohibitive as one gets older. My father does not have a long-term care policy and it would have made the planning process easier.

Can Anyone Help Pay the Bills?
In addition to long-term care insurance, other options to subsidize the cost of long-term care include Medicaid, VA benefits, and certain supplemental insurance policies. These were all areas that we explored after my father was already sick and in the early days it took time away from getting him the proper help. Understand these programs and policies before you actually need them to see if they will be available to you. Even if you are eligible, the paperwork can be overwhelming and it is better to be prepared.

Work With the Pros
Talking to your children about your finances and wishes in case your health were to decline is a great first step, but have a team of professionals and their contact information available for your family members so they can step in and do the heavy lifting when needed. A financial planner can act as the quarterback for your family and work between you and the other professionals that you entrusted. I was fortunate to work with my family’s estate attorney and accountant to guide me through the planning process. A geriatric social worker or elder care consultant could also be a valuable resource.

Nobody wants to think about the possibility of losing their cognitive abilities, but establishing a plan will assist your loved ones in the event that they need to oversee your care. Reacting to unfortunate events leads to worse outcomes than ahead planning for their possibility. Take the initiative, and speak with a qualified professional to assist you with your plan.

Some Tax Checkups You Can Do Any Time of Year

The first quarter of the year may be the height of tax prep activities for many business owners, but you shouldn’t only be thinking about your taxes right before the April 15 deadline. Day-to-day decisions can have a significant impact on your overall tax obligations, so you should be planning throughout the year to make sure you’re ready.

“When a small business owner plans for tax season strategically and consistently throughout the year, they can create a much better financial outcome for their company,” Jamal Ayyad, vice president of service delivery for SurePayroll, said in a statement.

Whether you’re preparing to file your 2016 tax return or you just want to plan smart for the current year, here are six “checkups” you can do to make sure you’re always on top of your taxes.

1. Ensure that ownership records and hiring/employment practices are up-to-date
In order to guarantee that your business is complying with guidelines that are constantly changing, plan regular reviews of documents and applicable rules, said Scott Augustine, a shareholder with Chamberlain Hrdlicka law firm.

2. Calculate your projected payroll taxes
Small businesses that are having trouble paying their payroll taxes may be able to take advantage of an IRS installment plan, Ayyad said. If you owe less than $25,000 in combined tax, penalties and interest, and filed all required returns, you may be eligible. Visit the IRS website for more details.

3. Do a compliance checkup
The Affordable Care Act, the IRS and the U.S. Department of Labor have rules regarding independent contractors or 1099 employees. Make sure your firm or organization operations are in compliance to avoid costly penalties and fees, Augustine said.

4. Keep up with your home state’s tax issues
Some states take loans from the federal government to meet unemployment benefits liabilities. Ayyad noted that if your state has taken, but not repaid those loans, there will be a reduction in the credit against the Federal Unemployment Tax Act tax rate. This means employers in those states will have to pay more. A number of states may be affected, including Arizona, Arkansas, California, Connecticut, Delaware, Indiana, Kentucky, New York, North Carolina, Ohio, Rhode Island and South Carolina, as well as the U.S. Virgin Islands.

5. Review non-competes and confidentiality agreements
This is especially important for those that have been written by attorneys outside your state of operation to avoid possible theft of important assets, Augustine said. As part of this, he also advised reassessing document-retention policies to make sure they balance exposure with business needs. This will help you avoid issues in tax matter and litigation, he said.

6. Think about succession planning
What would happen to your business if you had an unexpected health crisis or accident? Augustine said business owners should be discussing and determining what actions may need to be taken to ensure the firm continues on. There are also tax benefits to succession planning, so discuss with both your attorney and your accountant, he added.

Organizing tax records now can make filing taxes much easier and faster later on, Ayyad said.

“When small business owners get their information together well ahead of time, they greatly improve the odds of filing a complete and accurate return,” he said. “Being compliant is the law, but instead of merely checking taxes off of a list of things to do at the end of the year, a savvy small business owner knows that preparation and planning ahead are key components of success.”

Best Tax Apps for Small Businesses

Although you know when tax season is coming, you may not always be prepared for it. If you’re a brand new business or have a limited budget, you may not be able to afford accountant, which means you may be stuck doing your taxes on your own.

Thankfully, with your smart phone or tablet — and the right apps — tax season doesn’t have to be a headache. Here are seven free mobile apps to help you stop stressing and start filing.

1. IRS2Go (iOS, Android)
This is the official mobile app of the IRS and is great for new business owners who want verified and expert tax advice right from the source. With IRS2Go, you can check the status of your federal income tax refund, make a payment on any taxes that you end up owing, and get free tax preparation assistance from an IRS Volunteer Income Tax Assistant in your area. You can also request tax return information and account transcripts through the app.

2. H&R Block Mobile (iOS, Android)
The H&R Block mobile app connects you directly to tax professionals to make the filing process easier. You can take a picture of your W-2 and the app will instantly import your information. You can upload any other documents and send them to a tax pro. The app can also created a personalized checklist of required documents, and lets you view tax returns from previous years. In addition, the app lets you check the status of your federal tax return, and estimate the amount of your return with a built-in calculator. If you are constantly switching between devices throughout your day, this app lets you go from your phone or tablet to your computer and back again with ease.

3. TurboTax (iOS, Android)
Intuit’s TurboTax walks you through the process of filing your taxes. You snap a photo of your tax documents and the app coaches you through every step of the filing process, double-checking to ensure that you have entered all information correctly. You can be connected with an expert live and on-screen to get answers as soon as you need them and when you input all of your information, it is saved with secure encryption and always password protected. TurboTax also checks for deductions and credits, and once your return arrives, it gets stored in the TurboTax Cloud. TurboTax is free to download, but there are costs for federal and state filing.

4. TaxCaster (iOS, Android, Windows Phone)
This income tax calculator by Intuit allows you to accurately forecast your federal income taxes before you file to see how much you may get back, or how much you may owe. Just enter the basic information about your lifestyle and business, and TaxCaster will make the estimations based on that information. Since this is an Intuit product, the app uses the same tax calculator you’ll find in the desktop version of TurboTax to provide the estimates. Based on the information you provide, it can also recommend a product to help you complete the filing process.

5. Shoeboxed (iOS, Android)
With Shoeboxed, keeping your receipts, bills, and other financial documents organized is as easy as taking a picture. Once you upload your document in the app, it automatically spots the important information, such as vendor, date, total and payment type. This then creates a fully searchable digital database of your transactions. For small business owners, Shoeboxed will pay off at tax time. The app can save you time and money by managing your paper documents for you, as opposed to needing to hire someone else to do it.

6. Evernote (iOS, Android, Windows Phone)
Evernote is more than just your run-of-the-mill note-taking tool. It also offers a way to manage the documents you’ll need to file your taxes. Because Evernote lets you easily store and organize images, you can scan in your receipts and then trash them, and since the app can read printed text, it’s easy to search for a specific receipt. To get your receipts into Evernote, there are two options: The ScanSnap scanner is the pricier option, but it is made by the Evernote developer, so it will directly scan high-quality images and automatically uploads them to your Evernote account. For a cheaper option, there is the DocScanner app for iOS and Android, which you can use to “scan” in receipts by snapping a photo with your smartphone or tablet.

7. iDonatedIt (iOS)
Charitable donations are tax-deductible expenses and can reduce your taxable income to ultimately lower your tax bill. Tracking your donations throughout the year can be a hassle, but apps like iDonatedIt are there to help. The app streamlines the process by helping you document your donations quickly and easily. Whenever you donate a non-cash item to charity, use the app to track the donation date, the charity you donated to and the fair-market value of the item. By tax day, you will have a complete and permanent record of donated items that meets IRS compliance requirements. You can also attach photos of donated items and email the detailed donation report to yourself, or an accountant.