All posts by TL Wall

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

Is It Better To Take A Meal Per Diem?

When you’re working on the road, you’re entitled to a meal per diem. Every once in a while if you’re an independent contractor you might decide that you’d rather not accept that because you’d rather use your receipts to write off for expenses instead. Is that a good move or not?

To get to this question you have to start with the knowledge that you only get to write off half of your meals. So, if you spend $50 a day on meals, you only get to write off $25.

It turns out that, unless you’re working in an area where your meals are very expensive, you can actually benefit by accepting the meal allowance, no matter what the rate is.

For instance, in 2014, the expense rates were $259 as a high rate and $172 as a low rate based on where you’re working. This equates to roughly $35 or $25 a day for meals. Just so you know, this normally includes what’s known as “incidental expenses”, which means tips and things like that.

So, let’s take the lower rate. Basically, by average it’s expected that most people would spend around $4, $7 for lunch and $9 for dinner, which comes to $20. Anything you spend over that, including that extra $5, is on you.

The question to ask yourself if how often you might go over the $50 a day amount while you’re on the road.

Let’s say that you work Monday through Thursday. Most probably you leave on Sundays so you can work Monday morning, and you leave late on Thursday or early Friday morning. You only get paid for meal per diems when you stay overnight, which means you’d get paid for Sunday through Wednesday. That’s about $100.

If you’re flying at least 5 hours in a day your costs might be higher because airport food is expensive; even lunch could cost you $20. So, on a travel day, you might spend closer to $40. That’s still less than the $50.

If you decided to eat out one day a week during 4 days your dinner might cost you $40. If you balanced everything else out for the day your total meal for that day would be over $50.

Even with two travel days in the mix you’d end up slightly better with the meal per diem.

Say you stay two full weeks. With the lower meal per diem, you could possibly come out way ahead. A way of looking at things is that anything not covered by the meal per diem is considered an allowed expense. If you know how to budget your money, and you’re staying in a room where you have at least a refrigerator, you could end up on the positive end because you might spend less than what your per diem gives you, and all your other expenses can be written off your taxes in full.

So, the recommendation overall would be to accept the meal per diem, even if it’s on the low end. Many years ago, when you had to turn in receipts, it wasn’t such a luxury because companies would sometimes balk at paying for meals they felt were extravagant, and that would cause unneeded conflict. These days, where they don’t track anything like that for convenience, you can spend your money however you want to.

Has this been something you’ve wondered about? If so, hopefully we’ve alleviated some of that consternation.

Tax Preparation

Why I Needed An Accountant – A Client Story

My name is Mitch Mitchell, and I’m an independent consultant.

Many years ago, I was used to doing my own taxes. My income wasn’t anything special at the time, so it was pretty easy to do. However, even though it was easy, my wife and I were getting creamed on taxes. Still, we were able to pay them, so we continued going along like normal.

Then I had a really good year. Once again, I did my own taxes, and thought I’d taken care of everything. That is, until I got a letter from the IRS saying I owed them just over $25,000. I couldn’t believe it, based on how much I’d paid out, and I was in shock.

I knew that times had changed, and I really needed a professional. Terri and I were part of a training class and I’d gotten to know her very well. I was comfortable with her so I presented my issue to her and asked if she as an accountant could help. She said absolutely, and that began our association.

I ended up stringing two very good years together, but I hadn’t hired her soon enough to prevent my owing a lot more to the IRS after the second year. Per her recommendation, she said I need to be incorporated, which would allow me certain tax breaks. She also counseled me on how to maintain my receipts for expenses, and told me other things I could claim, since I was traveling a lot at the time.

She also recommended a financial analyst to help me put some money away. That worked very well also.

By being incorporated my tax liability issues went away. As a matter of fact, my expenses turned out to be so high that I for a few years I didn’t owe any taxes whatsoever; that was nice. What was even sweeter is that two years ago my wife also went independent, and last year we got our first tax refund ever! Without having an accountant, I doubt we’d be having the kind of success we’ve had.

If you’re in business on your own and you’ve been doing your own taxes, stop! At the very least meet with an accountant and let them see if they can do more to help you protect your income and your assets while lowering your tax liability. It’s much better than taking a once a year trip to the mall and allowing a tax company to do your taxes. Trust me, I did that once and my wife and I weren’t close to getting a refund.

Managing Money

4 Ways To Save Money On Heating Bills In The Winter

For those of us who live in central New York cold weather is nothing new. However, for many people trying to figure out ways to save money on heating bills is usually a major chore. If the temperature stayed around 32° most of the winter it might not be so bad. But how are we supposed to save money when temperatures drop below zero, which they did last night?

We’re here to help. These ideas might not all be inexpensive to implement, but if you can get them done you’ll save a lot of money for the rest of winter and for years to come. Here we go:

1. Buy a kerosene heater. It turns out kerosene heaters aren’t close to being as dangerous as people think they are. A good one might cost around $150 but you could find yourself saving as much as 35% on your monthly winter bills, depending on how cold it gets and the area you have to heat.

If you don’t have to keep every room in your house heated throughout the day a kerosene heater could keep a large area of your home comfortable, and on a full tank it can usually run for up to 10 hours. However, what you’ll find is that you’ll probably only need to run it at max about 90 minutes, which might even be too hot, so you’ll be able to stretch your dollars even further.

Kerosene can run anywhere from $2- $4 depending on where you live, but if you’re not running it for 10 hours straight all the time you might be able to get through almost 2 days before you have to add more.

2. Buy a humidifier. Most people buy humidifiers to help breathe better inside because winter weather seems to dry the air in your house. Turns out that it’s a great conductor for heat, thus it can make you feel warmer.

However, here’s an interesting tip. Turns out if you get a kerosene heater with a flat top you can put a pot on top of it and it’ll act like a humidifier and help heat your rooms faster. However, if you live in an area with hard water you could have a film of calcium getting on your walls, so you might want to also buy some distilled water to help take care of that issue.

3. Insulate! It turns out that most homes don’t come close to having enough insulation to stay energy efficient. Adding insulation to areas such as walls and attics could help you save a lot of money both for winter and summer because it keeps outside temperatures outside better and helps both your heater and air conditioning work better, if you need to run them at all. This option isn’t inexpensive though, as it can cost anywhere from $1,000 to $10,000 depending on the size of your house. However, in some states you can finance it through your power company or potentially qualify for special programs that help even middle class families with tax breaks, and it’ll protect your home for years.

However, there are some small things you might be able to do that can help. Try to cover up spaces under and over doors. Make sure your windows are sealed well. Putting up plastic on some windows can help with drafts but if you have windows that you’re not worried about having to look outside of you can add towels or blankets to help insulate them better. Finally, don’t forget to change from screens to storm windows if you have them, both on your regular windows and your screen doors. These are inexpensive little things that could end up saving you a lot of money while keeping you warm.

4. Check your vents and registers. Are you sure you’re getting all the air you should coming into your rooms without some of it scattering in other areas of your house that don’t need the heat? If you’re not feeling strong pushes of air coming from your vents it wouldn’t hurt to pay to have someone come over to check your vent system and also clean it out so you don’t have to deal with dust and other nasty stuff getting into your air.

Luckily, this doesn’t cost as much as insulation. There are many companies that charge less than $100 for this service, but you should shop around because you might find someone who might charge a little bit more to check your furnace, filters and even your hot water heater to make sure everything working efficiently.
 

Finances

Will You Have Financial Goals In 2015?

Back in 2013 we had an article on the blog titled Setting Financial Goals. In that article we laid out what we considered the 3 most important things for any financial goals one might wish to set: saving money; reducing debt; and increasing income.

Money Shirt
Creative Commons License Rob Lee via Compfight

Every once in a while we get the opportunity to work with clients to help them set financial goals for the year. The year doesn’t always start at the beginning, but it’s a good time to do it because it fits with the tax time period.

Almost everyone that comes in wants to talk about one thing, which doesn’t quite fit any of the three, though comes closest to saving money; reducing how much they might owe in taxes. It must be an occupational hazard for being a consultant because, though it’s a big part of what we do, it’s not the only thing we do.

Truth be told, taxes aren’t a major concern when other needs are met. Although you sometimes hear a few rich people complaining about having to pay too many taxes, the overwhelming majority don’t have a problem with it because they have enough money and, if they’ve got good accountants, all that is taken care of and they still have lots to play with.

If you’re worried about having to pay taxes, learning how to save money and cut corners on spending will provide you with enough to pay your taxes. Also, if you’re really good you can make sure you’re having enough taxes taken out of your paycheck if you’re still employed.

If you reduce your debt you invariably end up with more money. That’s because as you pay your bills down you owe less, and even if you keep paying them at the same high rate you’ll pay off the debt sooner, which means you’ll have a nice chunk of cash you can move elsewhere.

If you increase your income… well, we already touched upon that part. 🙂

With that said, do you have any ideas on what types of financial goals you really should have? If not, we’ll give you 3 to think about:

1. Find ways to generate more income in 2015. There are so many ways for people to do this that all it takes is an hour of uninterrupted thought every day for a week to plan it out and you could be making more money in another week. The idea is to think about what you can do, how much more money you’d like to make, and then go for it. Many people are doing it; you can also.

2. Set a goal to pay off one of your bills where the payment starts at least at $100 a month. If you don’t have anything like that good for you. If you do, realize that if you could pay one of those bills off you have the opportunity to have an extra $1,200 a year and it’s tax free! Pay off more debt and you’ll have more money the same way.

3. Think of one thing you’re willing to give up or alter that will help you save even a little bit of money. For Christmas one of my friends got a coffee maker and many bags of special coffee that can be made at home. The reason was her daughter hated knowing that her mother was stopping at a national coffee location buying expensive coffee every day, both going to and coming home from work.

Suddenly, her mother can now save $10 a day, which equates to around $300 a month, which can be applied to other things. And the coffee will be just as good, maybe even better because that same brand can be bought in many stores if she wishes to stick to that brand and will still cost her less than paying someone else to make it.

Financial goals don’t have to be really big to make a big impact. All it takes is a little bit of ingenuity adn the willingness to make a change here and there. After all, isn’t a new year a good time for resolutions and goals?

We wish everyone a safe and happy new year, and of course a financially successful year as well.
 

Tax Preparation

Business Tax Information You Need For 2014

As we come to the close of another year, we’d like to highlight a few things you might need to know as we head into 2015. A quick disclaimer up front is that some of this information is geared towards New York state residents.

* New York state’s Corporate Minimum Fixed Dollar amount is based on gross receipts. Extensions should be filed by the beginning of March. A few things to know regarding this are:

  • Fixed dollar minimum tax for general business taxpayers under $100,000 is $25;
  • More than $100,000 but not over $250,000 is $75;
  • More than $250,000 but not over $500,000 is $175

* The penalty for those who don’t have health care coverage will be paid out in 2015. The minimum penalty amount is $95 for singles, upwards of $1,000 for married couples with dependent children. It’s all based on your tax return. You need to know that this counts as income, not what you’ll actually have to pay so don’t panic. Still, it’s something to look at for 2015 because the rates will be much higher come 2016. Also, if you paid for health care insurance through the program this year, didn’t get any upfront adjustments and didn’t have any of it paid by an employer, you’re probably going to get a nice deduction, as well as be qualified to write off other health care expenses.

* Business mileage for 2014 is 56 cents a mile. The minimum allowable payment for meal expenses is $46.

* If you have kids in college, you can still get the American Opportunity Credit up to $2,500, which can be used for the normal 4 years it takes to get a bachelor’s degree. Out of that, 40% of it may be refundable. The student loan interest deductible is still $2,500 a year.

* The maximum Earned Income Credit for 3 children is $6,143 and $5,460 for 2 children.

There are many other changes this year, which includes many deductions taken away. As always, we recommend seeing an accountant to try to get the maximum benefit possible.