All posts by TL Wall

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

5 Things To Know About The Affordable Care Act

Last October we did a quick piece on the new federal health insurance plan, known as the Affordable Care Act, and how it might affect taxes. This isn’t necessarily a follow up piece but it offers 5 things that could affect finances that maybe some folks haven’t considered before.

1. For many people there’s a negligible difference between what they were paying out of pocket for their health insurance and what they might have to pay now. Because of the wide range of discounts offered in many states some people might even end up paying less for their insurance. However, it also depends on where you live because if your area doesn’t have at least 4 competing offers you’ll see your costs go up.

2. It turns out that even with a deductible certain things are being paid, even if not at 100%. Diabetic supplies, lab tests, and even some doctor visits for specialists are receiving some kind of payment. While most insurances cover the same thing, the rate of payment is different so it’s worth checking with your insurance company to see what they might pony up for you (this has always been true by the way).

3. If you’ve never saved receipts for medical services this is the year you should do it. It looks like you can write off any payments you make for the year as long as it comes to at least 10% of your adjusted gross income.

If you have a high deductible plan because it’s what you could afford you’re probably going to fall into this category if you’ve had a few doctor visits or even prescriptions you’ve had to buy that you got minimal discounts for. If you got an adjusted fee owed based on income that will be taken into account, but you’ll need to see your accountant to figure out how it will all work out.

4. Even if you qualify for discounts on your insurance premiums, you should be cautious in accepting them if you feel your financial situation might improve. Those tax breaks you get will become payments you need to make back to the government if you end up not qualifying for those same discounts the next year; in essence it’s considered more of a loan. If you’re not getting at least 50% adjusted off, and you know you’re going to be going for a much better paying job, it might be smarter to not accept any assistance.

5. We haven’t talked about it here so it’s time to mention what happens if you decide not to get insurance. For 2014, the penalty starts at around $900 if you’re single, $3,800 if you’re a family. That’s considered “taxable income“, not how much you’ll actually pay.

Depending on your income it’ll start around $95 and go up from there for individuals and couples, and start around $383 for families. There’s a max limit the first year, which is helpful, but it goes up drastically for 2015 and eve higher for 2016.

The thing is, if you’re unemployed or under employed, and you don’t qualify for Medicaid, this is a great option because you could end up with little to no premiums coming out of your pocket and still have health care coverage until you get back on your feet. At the very least, it’s worth looking into, no matter what your finances look like. But hurry up, otherwise you’ll have to wait until November to start over.
 

Budgeting

Reasons To Have At Least One Credit Card

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Credit cards can be dangerous in the wrong hands. They can also not only be beneficial at times, but they’re necessary at other times.

There’s an interesting debate between financial experts on whether people should pay off all their credit cards as soon as possible or keep a balance on some of them and pay them down via a schedule to show that you know how to pay off debt. It’s a crazy conversation where, strangely enough, both sides make sense. There’s no doubt that if you have a lot credit cards you need to wean yourself off them but what are some of the thoughts on having credit cards in the first place? Check these out.

First, having at least one credit card turns out to be necessary if you ever plan on going anywhere or staying in a hotel. You can’t rent a car without one, can’t stay in a hotel, and if you’re flying in these days of terrorism worry you might have to find ways of proving who you are before you’re allowed to buy a ticket.

Second, you can probably alleviate some of these issues by using a bank debit card that’s either a Visa or Mastercard but there’s something you need to know. If you’re renting a car they’ll hit your account up for a much higher amount than what they believe your balance will be and that could leave you without access to your account if you don’t have way more money in it than you expected to need. The same goes for some hotels. They’ll only keep it that long for up to 24 hours but that could be quite stressful.

Third, though we’d probably side with those who believe if you can pay off your credit card immediately do so, within the context of a budget if you need a big ticket item and can pay it off within 3 – 6 months without hurting yourself overall it’s not a bad idea to do that.

Fourth, there’s a fine line on just how many credit cards you can have, even if they’re all pulled off, and how credit agencies will judge your worthiness. If you have more than what makes them comfortable they see you as a potential credit risk who could run up unconscionable debt within a short period of time, even if that’s never been your pattern. Having too few credit cards, or at least a history of having them, makes them feel they can’t get a gauge on the type of financial risk you might be. We can’t make that recommendation for you but it’s something you should know.

Fifth, if possible it never hurts to have at least one store credit card of some type, and the best type is a department store. In an emergency you might need clothes, and even if the interest rates can be higher on store cards having the ability to get clothes where the monthly payments will be lower than normal credit cards can be crucial.

There you go, some thoughts on why having a credit card might be worthwhile. Let us know your thoughts on this.
 

Tax Preparation

Don’t Wait Until The Last Minute To Do Your Taxes

We’re in the final countdown to another tax season and, if you’re like half the population, you probably haven’t even started putting anything together to give to your accountant, or if you don’t have an accountant are worried that you might owe money so you’re putting off the bad news until the last minute.

We’re a “wait until the last minute” society and that means we’re either not disciplined or are usually expecting the worst. People who expect good things always get to them as soon as possible so they can get on with having fun, or at least being comfortable.

When it comes to taxes, you might as well face the fact that you still have to report them by April 15th (although in some states it gets delayed a day and of course one can always file for an extension, even though by rights you’re still supposed to pay something if you think you might owe). It’s in this regard that we list some things you should think about that may or may not encourage you to get to your taxes earlier.

1. You might be getting a refund. We’ve never been able to figure out why people who know they’re getting money back won’t get their taxes in sooner. If you’re a millionaire we might understand but for the rest of us, which is close to 95%…

2. You might owe something. This is what people fear but the truth is that the IRS is probably one of the few agencies in the country where they’ll work with you on paying down outstanding debt, and the interest rates aren’t really all that high. Still, it’s possible that if you do your taxes earlier and you see there’s an amount you owe that you can save up and either pay the entire thing off on the 15th or pay something toward your balance; the IRS likes that.

3. If you’re not planning on doing your own taxes the availability of someone to do them gets severely tested. In January many accountants or tax preparation companies have people just sitting around waiting for you. As it gets close to the magic date you’ll often see lines and, in some cases, you’ll have to make an appointment to see some of these folks. Talk about anxiety levels!

4. If you’re doing your own and you’ve just bought the software you could find yourself getting confused. If you have any questions at all and need to reach out to someone you’re probably going to get put on hold and have to wait while they deal with all those other people who waited until the last minute to use the software to do their taxes.

As we like to say around here, it’s always better to know than not know. If you haven’t addressed it yet… well, what are you waiting for! 🙂
 

Collections

Why You Need To Always Make Collection Agencies Prove Your Debt

Last year we wrote a post titled 5 Rights You Have With Collection Agencies. The beginning of our second right was this sentence: “You have the right to ask them to prove you owe what they say you owe”. Turns out this is important advice and we’re going to tell you why.

Over the last year there have been some collection agencies that were fined for trying to collect on debts that didn’t exist. One of those companies, Expert Global Solutions, was hit with a $3.2 million fine for that and other illegal practices. In September, National Attorney Collection Services Inc was fined $1 million for the same, as well as representing themselves as a law firm and violating the confidentiality of those it was trying to get money from.

There’s two things most people don’t know about credit.

First, since most large companies get their money from insurance claims if they’re not paid, they’re getting paid a second time when they give these accounts to collection agencies, and they’ll do almost anything, including lie and harassment, when they’re able to earn anywhere from 80-92% or sometimes even more of their initial investment.

Second, it’s true that if you have something hit your credit report that if you don’t pay it in 7 years it falls off your credit report (well, not medical bills or anything owed to the government, but everything else). However, if a collection agency gets its hands on this stuff they can legally keep chasing you for the money.

One other thing collection agencies are counting on is your not having any record of an outstanding claim, thus feeling pressured and anxious when you get that sudden phone call. These days they’ll even call you on your cellphone, although if you tell them they’re violating the Telephone Consumer Protection Act and that you’re going to report them to the federal government they’ll probably hang up and leave you alone for a while because the fine they’ll get is sometimes higher than any money they get from you.

In any case, what happens sometimes is they’ve laid their hands on some paperwork and falsified a number, but you’ll never be able to investigate it for yourself if you don’t request anything from them. And sometimes when you request information, they’ll never call you again because they don’t really have anything to send you, since they have to send you not only proof of the outstanding debt but proof that the original company billed you for it.

It’s always wise to ask for proof whenever someone wants your money, but when it comes to collection agencies, who can hurt your credit, it’s critical to do.
 

Finances

5 Things To Know Before You Start Investing Your Money

It’s not a bad idea to think about finding ways to grow your finances through investing. With that said, one has to know that investing can be dicey, and rushing into it without knowing the good and the bad is basically gambling with your finances. I know many people who were cruising along with their investments until the recession of 2008-2009 hit, and many people lost money needlessly, although those who were able to weather the storm made it back and more over the last couple of years.

It’s not that investing isn’t easy; it really is. All you have to do is give the right person some money and off you go. But how do you determine who the right people are? Here are 5 tips to help you:

1. Ask people who they invest with specifically, but initially only stick with people you can talk to or research online. Everyone knows at least a couple of people who are investing their money in some fashion, whether directly with a broker or through some plan at work. If you can, get names of some of these brokers and the names of their company as well. If you can find out who’s backing them even better, as many brokers are associated with a specific trade organization.

2. Research everyone, always. Ever heard of Google? There’s no excuse for not going online to check out every person whose name you might get, as well as learning something about the companies they work with. Just because someone might not be online may not mean they’re not capable, but the way I see it if they’re not visible online and you can’t get information on them be wary.

3. If they claim high rates of returns, beware and research strongly. Remember the name Bernard Madoff. There were a lot of people vouching for this guy, many famous people who thought they were making money hand over fist, and when it all came crashing down it was ugly, not only for Madoff’s family and people who were cheated but people who had cashed in, thinking they’d earned their profits legitimately and suddenly found themselves being sued by the government to return those funds. When something sounds too good, it’s smart to look at the negative reviews and see why some people might not trust them; there was a lot out on Madoff that those investing with him decided to ignore.

4. Only invest what you can stand to lose. Starting off relatively small, maybe $100 a month if you can handle it, is a lot smarter than giving someone $5,000 without knowing if you might have something major coming up such as having to replace a furnace and not having the funds to take care of it. No matter how much you invest, the returns are relatively small percentage wise, even with the most aggressive investing position. Always take care of your present as much as your future.

5. Even if you don’t understand it, make sure you talk to your broker at least once every 3 months and open your mail regularly. A big mistake many people make is not opening up their mail and seeing if their money is moving in a positive direction or not. A secondary mistake is not keeping up with their brokers, who are sometimes known to leave and suddenly you have no idea who’s managing your money, if there is anyone managing it.