All posts by TL Wall

I'm the owner of TL Wall Accounting, located in North Syracuse, NY
Finances

It’s Always Better To Know Your Financial Status

As we come to the close of another year, we first want to wish everyone a very successful 2016. We also want to wish that everyone’s finances are in order, that money is plentiful, and that all goes well for now and forever.

Roll, break me off some...
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Unfortunately, we also know it won’t be this way for everyone. As accountants, one of the things we deal with are those clients who come in at the last minute with their papers and receipts for us to do their taxes, or those who want to request an extension without knowing whether they actually need it or not.

Anxiety is a hard thing to overcome in life. It’s very strong when it comes to looking at one’s finances. There’s an inherent response to fear and anxiety; we try to run away from it, avoid it, and hope it goes away. It might for a short period of time… but eventually if it’s bad or perceived to be bad it catches up with all of us.

We always stand on the side that it’s better to know what one’s financial position is than not know. If it’s good, it alleviates a lot of stress. If it’s bad, knowing as far in advance as possible gives you the opportunity to do something about it.

For instance, something we talked about earlier this year involved a friend’s corporate taxes and how, if they’d been addressed way earlier than they were, he would have actually come out way ahead of the game instead of owing money to the government. Sometimes running away from trouble causes more trouble.

We talk about budgeting a lot here because if you budget, you know how much money you have, where it’s going, and whether you have enough or need to find ways to generate more. Budgets help a lot of people get out of trouble and also alleviates a lot of stress when people realize just how much money they have.

A couple of years ago we had a post that talked about the IRS’ willingness to work with people who owe money on their federal taxes and how accommodating they can be. In actuality, the same applies to most large creditors. All you need to do is pick up the phone and talk to someone and almost always, the person on the other end is willing to help you out somehow. There’s a great fear of calling customer service over things like this but the reality is that not only are they regular people like us, but they know that things happen and they’re going to do what they can to keep a customer who’s possibly going through a rough patch.

Of course, nothing is ever guaranteed. You could call someone who’s not as accommodating. In that case, you do what you can, learn who you shouldn’t be a consumer with, and move on with life. Things are always better when you feel you have a bit of control over your life and finances rather than being afraid to pick up the phone because it might be a bill collector.

For 2016, we urge everyone to decide to be a more confident person as it relates to their financial status. We’d love to work with anyone who needs or wants our help in figuring things out, and of course when it comes to your taxes. Be strong, be courageous, and be knowledgeable; those are great things to aim for. Happy New Year!
 

Tax Preparation

Tax Credits & Other Information For 2016

This is a summary of some of the things regarding taxes for 2015 I sent out to my clients by mail as we head into the new year. Some of it only applies to New York state residents while others are federal tax related. This post will be in bullet form:

* New York state’s corporate minimum fixed dollar amount is based on gross receipts. If you need to file an extension it should be filed by the beginning of March to allow time for processing by the state.

* Hopefully you had insurance coverage in 2015. If not, there’s a penalty of $325 if you’re single and as much as $2,000 or more if you’re married with dependent children. Hopefully you’ll receive Form 1095-B which proves you were covered for the year. You’ll only get this form if your company isn’t covering your insurance and you have to report it on your own. We want to clarify that you won’t be paying these amounts; they count as income, and will be taxed along with whatever you earned for the year.

* The Capital Gains tax rate is 20% for taxpayers in the 39.6% tax bracket, 15% for everyone else.

* The 179 Depreciation Deduction (a business deduction for capital equipment and software) has been reduced to $25,000 as of now; this could change before the end of the year.

* The business mileage rate for 2015 is 57.5 cents per mile. Medical and moving is 23 cents and charity is 14 cents.

* If you have kids in college, the American Opportunity Credit is still available up to $2,500. Of that amount, 40% might be refundable up to $1,000. This credit is set to expire in 2017. The Student Loan interest deduction is still limited to $2,500 per year.

* The maximum Earned Income Credit for 3 children is $6,242 and $5,548 for 2 children.

* The following credits or deductions have expired:
– Educator Credit $250
– Sales tax deduction on Schedule A Itemized instead of state & local income tax
– Above the line tuition deduction and related expenses
– Mortgage Insurance Premium Interest (MIP)

As we always reiterate, we hope you’ve kept all of your receipts for the year so we can determine just how much you get to deduct to reduce your tax liability.
 

Managing Money

Financial Goals To Shoot For In 2016

As we’ve done the previous 2 years, this is our year end, or close to year end, attempt to get you looking at setting some financial goals for the upcoming year. Two years ago we talked about setting goals like budgeting, saving money and increasing income. Last year we looked at 2015 financial goals of generating more income, paying off a significant bill, and finding something to give up to help you grow your money.

Personal finance
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Thus, it’s time for 3 more goals to look at, while still incorporating those old goals. After all, those are important, and if you worked on any of them you’re way ahead of the game by now. Yet you’re not done; not sure if we’re ever done. So, let’s look at 3 more things to shoot for in 2016.

1. It’s time to look at protecting your future. This could be seen as saving money but, though that’s a part of it, it’s not close to being enough. This time we’re talking about things like buying life insurance, possibly purchasing long term catastrophic life insurance, checking on your health and automobile insurance, and of course having someone talk to you about your pension or social security.

If you haven’t done any of these things you probably should. If you’re young you definitely need to do these things because they’ll cost you less to invest in now. If you’re older you need to know where you stand when you’re ready to retire.

2. This isn’t necessarily a financial goal for you but your family; it’s time to set up a will. This isn’t the easiest thing to have to deal with mentally but it’s potentially one of the most crucial. Many people think that their spouse will automatically get everything once they pass away and that the spouse will do “the right thing” in distributing assets to other family members.

Unfortunately, it’s not quite that simple. Even if there’s only one person who could possibly get all the assets the government is going to get involved. If there’s no will the process gets uglier and the potential recipient might not have the resources to hold out for as long as it could take.

Wills don’t have to be expensive or overly complicated, but they’re definitely necessary.

3. Time to think more about investing. Once you look at everything else, you need to think about ways to help grow the money you already have. You could put it in a bank and earn .5% a year on it but that’s not very significant. You need to think about better ways of growing your money and assessing your comfort level as it pertains to risk.

This is an area where accountants are great to work with. They can help you assess what you already have and where you want to go, then guide you to the proper people who can help you take it further, while helping you determine how much you can afford to risk. If you start early enough you’ll be amazed at how much money you could possibly have to live on in your old age.
 

Budgeting

Buying Capital Equipment On Black Friday

This might seem like a strange type of article to be on the blog of an accountant. However, since we’re talking about Black Friday as it applies to business expenses and capital equipment, it seems like fair game from our perspective.

Reading about the crunchpad on my own pad.
Steve Paine via Compfight

Of course everybody knows what Black Friday is. For those that don’t, it’s the day after Thanksgiving when many companies across the country decide to have major sales of some of their products. Some companies even so go so far as to start on Thanksgiving itself, but not all that many.

What you see happening for some items is people actually leaving their house early afternoon on Thanksgiving and then waiting outside of whatever establishment has the item they want so that they can be one of the first people in there. The reason they do that is because, at a lot of these stores, the deal is only good as long as they have the product. Once they run out of the product, that particular sale is over and it leaves a lot of people disappointed.

You’re in business though. Unless your business is a restaurant that has a lot of games or an internet cafe, it’s probably not likely that you’ll be standing in line waiting to get the new Xbox or whatever product is out there. Still, looking for a deal as it applies to equipment your business might need for the next year is never a bad thing.

What you need to be doing is a little bit of research. Right now, it’s hoped that a lot of people know how much things they’re hoping to buy actually cost. It is not uncommon for some retailers to do some tricky math and offer something at a 35% discount that just three weeks earlier was that exact same price.

Of course, not all items that are needed by businesses will be on sale during shopping days like this. But there will be some things that will be on sale that businesses might need. For instance, if you need technology like computers, laptops or tablets, those will definitely be on sale. If you need items for communication like phone systems or smartphones, those types of items will be on sale. Maybe you’ll need something small like a new shredder; trust me, those will also be on sale.

It behooves the savvy owner to try to get whatever works for their business at the best price possible. It’s true that you can write all that stuff off your taxes, but it’s better to save money up front than try to beat the system by writing things off later on. Still, the smartest thing is to be diligent in your research to make sure you’re not being taken advantage of by any retailer.
 

Tax Preparation

Three Things To Know About State And Federal Tax Arrangements

A couple of years ago we wrote a post recommending that, if you owe money to either the IRS or the state, that you call them and make payment arrangements with them. They’re pretty easy to work with in setting up the arrangements, and you can also do this online. However, there are some caveats you should know before you start the process.

The first is that you don’t want to wait until the last minute to try to reach them on the phone. That’s because you’re not going to be the only person trying to reach them, which means you will either have a very long wait or, believe it or not, you won’t even get through.

If the IRS determines your wait time might be longer than an hour, they’ll actually tell you to call them later and hang up on you; how rude! If you keep trying to call them within that time period you can bet you’re going to keep being rejected. You could end up calling for many days before you get through.

Truthfully, the best time to call them is the middle of the afternoon, after 3PM; at least you’ll probably get on the waiting list, which will still be long. Most people are trying to get the IRS on the phone first thing in the morning, thinking they’ll be able to beat everyone else to the punch; you can imagine the numbers of people clogging up the lines.

So far, we haven’t heard of anyone calling the state and having them hang up on you, but you could easily be waiting a long time to talk to someone.

The second thing to know is that you have to set an amount to pay off your claim in a certain amount of time. It’s based on how much you owe and who you owe.

The IRS will work with you if you owe a very high amount. They’ll often let you set a rate where you’ll have your balance paid off within 20 years if it’s high. Otherwise, they’d like you to have it paid off within 5 years.

The states are a different animal. Depending on which state you’re in, they’ll want the balance paid off any time between two and four years, which means you’ll have to find a way to fit your requested monthly payment into that slot. Luckily, state taxes are rarely all that high for most people and businesses, so it’s a lot easier on you to address them.

The third thing to know is that if you have a payment arrangement in one year and you end up owing the second year and can’t pay, you can have your agreement altered to include both years. However, you only get to to this once; if you have a third year they’ll consider you in default and you’ll have bigger problems to deal with.

If you’re the state, the rules differ. Since we’re based in New York we’ll talk about our rule. If you need a second year, the first thing the state does is reports to the credit bureaus that you’re in default for the first year. Then they’ll allow you to add the new amount to your previous balance. However, the deed is done because that’s a bad thing to have on your credit record until it’s paid off.

You’ll have a hard time getting any credit during the period you have an open balance with them. Once it’s paid off, when you get the letter saying it’s been taken care of you can send that to each credit reporting agency and ask them to remove it; however, there’s no guarantee that they will, though most people report that they usually do.

As we recommended two years ago, it’s always better to be proactive in these instances. These agencies are willing to work with you; it’s their job.