5 Tips To Think More Clearly About Financial Decisions For Des Moines Taxpayers

5 Tips To Think More Clearly About Financial Decisions For Des Moines Taxpayers

Despite that title, it has, in fact, been a relatively smooth first week of tax filing here at Ann M. Hartz, CPA. Des Moines clients have been streaming through our doors, and we’ve been enjoying our little mini-reunion with so many longtime friends.

Now, there’s plenty to say about that Super Bowl, the advertisements (apparently, they’re all Tide ads), the halftime show, etc. But I’ll let others weigh in there. I’m a Des Moines tax professional after all.

But, given what happened with the stock market on Monday, I feel that I should make these quick financial points (which is closer to my area of expertise):

1) The Dow is not the economy. Good or bad.
2) Saving is almost always better than spending.
3) Fretting about the ups and downs of one market indicator will make you very tired. Don’t play that game.

Moving on, and somewhat relatedly, I posted a recent Note about retirement mistakes, and it stirred up some email responses, as well as conversation with clients in-person.

But it made me realize that in order to think clearly about retirement, taxes, or any kind of financial decision we need to be blunt with … ourselves.

That’s a difficult task, even for the best of us. But I have thoughts for you.

5 Tips To Think More Clearly About Financial Decisions For Des Moines Taxpayers
“Where you grew up has no bearing on where you decide you are going to be today.” – Dan Kennedy

Working with my Des Moines clients’ finances over the years has given me a bit of a crash course in human behavior. Often, I’m floored by the generosity I see displayed by many Des Moines clients — even those without significant means.

Other times … well, I think that we all could use the reminder that our human flaws show up very clearly in our family’s finances. The fact is that we ALL deceive ourselves, from time to time, about what’s really happening within our wallets.

This habit of self-deception threatens our financial stability. Instead of spending $10, we spend $30. Instead of recognizing that we *want* that new shirt, car, or fine dinner at a restaurant, we lie to ourselves until we are convinced that, for one reason or another, we *need* that new shirt, car, or fine dinner. The massive credit crunch a decade ago can partly be blamed on a nation full of people who convinced themselves that a $800,000 home was necessary — even though a $350,000 home was more than sufficient. We must learn to live within our income … and this sometimes means that we must stop lying.

So, I’ve compiled a short list of ideas on how to stop lying to ourselves, and to instead face the truth when making purchase decisions.

1. Have (and stick to) a budget. Is this purchase in my budget? For example, your family budgets a certain amount each month to spend on clothing. You’ve agreed that this amount is sufficient to meet your needs. So you set this amount before facing a purchase decision. If during the month you want to exceed the budget because Kohl’s is having a fantastic sale, then you are now lying to yourselves. You aren’t saving money by exceeding your budget during a sale. In fact, now you have to dip into savings to pay for your overspending.

2. Set a per-purchase spending limit. A wise man said, “The four most caring words for those we love are, ‘We can’t afford it.'” Take some time with your spouse to set what I call a “What I can spend without having to ask my spouse if it’s okay” spending limit. Some spouses have decided that neither one of them is allowed to spend more than $100 at any given time without calling and asking the other one if it’s okay (this does not apply to groceries). Let me tell you right now, these limits have stopped many from making a lot of unnecessary purchases.

3. Replace bad habits with enjoyable, inexpensive activities. Shopping or overspending is a habit that we have likely formed over years. Since our brains are programmed to react in a certain way in specific situations, any change is met by resistance. The existing habit is simply more comfortable and natural. To help change your behavior, replace the bad habit with another activity.

For example, instead of going to a Des Moines mall to pass time, go to a local park with a soccer ball and spend some time with family or friends. Start or re-start a hobby. Your new hobby might even be a low-cost home business in which you make money!

4. Make sure that the reason you tell yourself you are making the purchase and the *actual* reason you are making the purchase are the same. Ask yourself, “Why am I really making this purchase?” Am I buying this dress for my wife because I love her and want to show my appreciation, or am I trying to prove to her and the world that I am a good provider? We lie to ourselves to cover our true motives. If the real reason you are making a purchase isn’t in line with your principles and budget, then don’t buy it.

5. Take stock of, and enjoy, everything that you already have! Develop gratitude for what you already have in your life. Purchasing new things is often a sign of ingratitude for what life has already afforded us … or a sign that we feel deficient in some area.

Overcoming bad habits and addictions is a process that requires concerted effort. Face each day one at a time, and stop lying to yourself! Don’t believe the story you’ve created in your mind that justifies unnecessary and financially harmful purchases.

To your family’s financial and emotional peace …

Warmly,

Ann Hartz
(515) 707-0884

Ann M. Hartz, CPA

Five Common Retirement Strategy Mistakes We’ve Seen in Des Moines

Five Common Retirement Strategy Mistakes We’ve Seen in Des Moines

The IRS just began receiving tax returns this week, and we are cranking and grooving along, finding all kinds of savings on behalf of our Des Moines clients … as well as chomping at the bit to help them on THIS year’s taxes.

Truly, the more I take a look at this tax reform bill, the more I see opportunities for legal, ethical “loopholes” that might make an enormous difference on taxes. Especially for business owners.

Which, by the way, means that if you have ever had a hankering to start your own Des Moines business, this is a GREAT year to do so — even if it’s just a side hustle.

More about all of that in future Notes.

Right now, we are focused like a laser beam on 2017 taxes, and making sure that our internal and external communication protocols are working as we envisioned them. And we’re excited about all of the new clients that we’ve already heard from (thank you for your continued referrals)!

I do hope you understand, because of the busyness of this season, that we make every effort to respond to your emails and phone calls as soon as humanly possible. But if our response time is slightly longer this time of year, please remember that we are working hard to serve a variety of Des Moines clients — none of whom are “more important” than any other — but all of whom deserve our utmost attention to detail.

Already, we’re wading through piles of financial statements and account details for our clients, and I had the idea to write a short missive to you about retirement strategy. Perhaps it’s only because it pulls me out of the world of Schedule A’s and IRS forms, but more importantly it’s because I wanted to encourage you to have a clear strategy in place when it comes to saving for your sunset years.

Specifically, I’d like to see you avoid some mistakes I’ve seen a few clients make over the years. Most of which can be fixed with a good retirement strategy, but all of which are much easier to handle when you can see them coming in advance.

#TheMoreYouKnow …

Five Common Retirement Strategy Mistakes We’ve Seen in Des Moines
“Three Rules of Work: Out of clutter find simplicity; From discord find harmony; In the middle of difficulty lies opportunity.” -Albert Einstein

One or two mistakes in handling your retirement money could mean paying a stiff penalty as you grow older. I’d genuinely like to see you avoid these — some of them merely mental, and some of them with more significant consequences.

Are you making any of them?

1. Obsessing about market losses. 
Focus on your long-term needs, not the daily ups and downs of the Dow Jones Average (or the, ahem, Bitcoin prices). Catastrophic events and long-term health care needs can cause as much damage to your nest egg as a shaky market.

2. Forgetting about inflation and taxes. 
Your retirement savings may be a lot smaller than you think when you start factoring in the rate of inflation and the taxes you’ll have to pay when you start drawing out of it. We can help you with those calculations, and they should absolutely be understood.

3. Not saving in the last years before retirement. 
Just because you’ve got just a handful of years left before you retire doesn’t mean you should go ahead and buy that new Lexus. Some people in Des Moines are able to build up substantial savings in their last five years of work because they get serious about saving and investing.

4. Believing you can withdraw more than you really can. 
If you rely on “average” annual returns on your investments to determine just how much you can withdraw, you could be drawing down your retirement fund faster than you should. Average returns are seldom steady. A safe rule of thumb: Count on a 3 percent rate of withdrawal.

5. Not planning for a long life. 
Despite the dramatic rise in life expectancy in recent decades, many people still underestimate how long they’ll live. If you’re not thinking about longevity, you could tap out your savings much faster than you should. Look at the figures and add in at least a few extra years as you make your plans.

And lastly, remember this: We’re in your corner, no matter what mistakes you might make.

To your family’s financial and emotional peace…

Warmly,

Ann Hartz
(515) 707-0884

Ann M. Hartz, CPA

Are DIY Taxes Truly Free For Des Moines TaxPayers?

Are DIY Taxes Truly Free For Des Moines TaxPayers?

If you watched any football over the weekend, you probably saw this year’s version of the popular tax software maker* touting “free taxes” or some such. Not only was the commercial fairly disturbing (it involves impalement of a person played as a joke), but the underlying message also leaves a little to be desired.

*Name of said software maker withheld for reasons of mercy and not piling on.

The tagline is: at least your taxes are free.

Yes, my writing this week’s Note could easily be seen as self-serving, but that doesn’t keep it from being true. Free doesn’t always mean “free”.

Falling prey to the siren song of “free DIY taxes” is not a good reason to use a particular tax solution. Firstly, we should note that the commercial refers to the filing fees — not the price of the software. How do you think they can afford fancy (albeit disturbing) commercials?

But there are other issues with using these kinds of softwares.

Do you remember when even the former Treasury Secretary, Tim Geithner, testified about tax irregularities in his own personal returns? Do you remember what DIDN’T help him find those irregularities?

Tax Software. (Link to a brief clip of his testimony before the Senate: http://www.youtube.com/watch?v=eKVxGlkPRlo#t=130)

And he’s not alone. But there’s a good way to fix that problem…

… and a BIG incentive to do so, by the way, at the end of my Note.

Are DIY Taxes Truly Free For Des Moines TaxPayers?
“Even if you are on the right track, you’ll get run over if you just sit there.” -Will Rogers

Did you know that we accountants like to joke to one another about how good these online software programs are for our business? Firstly, they are not as “easy to use” as claimed, and secondly … they cost you an arm and a leg.

You might think they’re cheap. And on the surface, you might be right (though, in the last few years, a $1 Billion class action lawsuit was filed in the federal court in Philadelphia alleging gross misstatement of fees and deceptive standards of the federal “FreeFile” program … so even on the surface, it wasn’t always cheap).

But I’m not referring to the money for the service itself.

Using those programs can end up leaving hundreds, or even thousands of your dollars in the coffers of Uncle Sam … even if you follow all of their instructions to a tee. I see it all the time — frustrated Des Moines clients bringing in their prior year’s tax return, astonished at all the “hidden money” my staff and I are able to find for them.

Even worse…

Choosing the wrong method, or forms, in filing your taxes can place you directly in the crosshairs for an audit.

Even if you don’t owe a ton of back taxes, you still don’t want your record to show some IRS agent that there has been a discrepancy of some kind in the past, so that red flags begin to fly, and then more bureaucratic people start looking through all of your past tax filings and current income holdings … basically taking your social security number, and poking around in your private life.

They can do a lot of things you won’t want them to do. However, if you keep a clean slate (no IRS correspondence with you, related to filing your taxes incorrectly), the opportunities for them to mess with your personal stuff will be limited.

Here’s another reason why this is so important … now more than ever. New government regulations in 2018, delays in Congressional action (SHUTDOWNS), and issues with adjusting to the tax reform bill are creating a mess in the tax industry… you don’t want to be left at the mercy of a piece of software, or a poorly-trained temp in a corporate tax prep “store”.

Yes, it can be seductive to “go it alone” … to trust a piece of software to point out possible deductions. To trust your work to poorly-trained preparers in a big box office. To protect against your chances of audits through online chat room support or hourly employees.

But it can be a big trap.

Just ask the former Treasury Secretary.

So, let’s get your financial paperwork in the hands of someone who cares.

To your family’s financial and emotional peace…

Warmly,

Ann Hartz
(515) 707-0884

Ann M. Hartz, CPA

Common Sense Taxpayer Information Security for Ann M. Hartz, CPA Clients

Common Sense Taxpayer Information Security for Ann M. Hartz, CPA Clients

We’re gearing up for tax season around here, already beginning to help certain Des Moines clients get their returns ready for filing (yes, this early) when the IRS begins allowing receipt of electronically-filed returns on the 29th of this month.

And while we have been doing so, we have heard some things I wanted to tell you about …

You see, there is a lot of buzz flying around the tax professional community in recent days about a series of criminals who are posing as potential clients for unsuspecting tax firms around the country, trying to gain access to the data within a tax firm’s files. The fraudsters reach out, “looking for tax help”, and eventually sucker in the overly-hungry (and under-cautious) tax pro into clicking on a link or opening a document purporting to be their tax data.

Fortunately for us (and for you), we’ve already set procedures in to place that would make it very difficult for something like that to get through. We gladly will take on new Des Moines clients and referrals, but we have security protocols for handling our Des Moines clients’ data for a reason!

But that’s not the problem that concerns you…

You see, there are some other stories going around tax industry circles that would definitely interest you, if you heard them.

What am I referring to?

The horror stories for regular Des Moines taxpayers whose identity DOES get taken by a fraudster, whether or not the source is from an unsuspecting (other) tax professional. I’ll spare you the harrowing details, but suffice to say that the IRS has not (yet) proven itself very “nimble” in dealing with taxpayers whose data gets compromised by fraud.

And I’d say that’s putting it very generously.

In short, you do not want to get caught on the bad end of taxpayer fraud (i.e., when someone steals your data to file a false return and fraudulently obtain refund dollars from the IRS).

One of the best ways you can prevent this from happening is to file your returns with us as soon as humanly possible in the season.

But there are other smart ways you can protect yourself, and that’s the subject for today’s Note…

Common Sense Taxpayer Information Security for Ann M. Hartz, CPA Clients
“We all yearn for what we have lost. But sometimes, we forget what we have.” -Mitch Albom

We’re all seeing the cultural consequences for when people seem to lose their sense of decorum and decency when handling themselves online.

But the other side of the problem is that people also seem to lose their common sense about their own extremely sensitive financial data.

My first point today is this: use your common sense. If your gut is telling you something seems fishy, then it likely is phishy. Don’t take the bait!

With that as a base point, here are some other simple security precautions I’d like to see each of our Des Moines clients take (even those who aren’t “tech savvy”) …

1) As I already mentioned, the best place to start is to file early to lessen the window of opportunity for a criminal to file first. Even if you’re not good with a computer, you can do that.

2) If, for some odd reason, you do NOT choose to use our services this year, I urge you: thoroughly research any paid preparer or tax-preparation software. Scammers love to set up fake websites and software downloads solely designed to trick consumers into providing their personal information. If you haven’t already heard of it, don’t use it. And also: ask potential Des Moines tax preparers to explain how they file and what steps they take to protect customer information. Information security must be at the top of your checklist over the next few months.

3) Do not use public Wi-Fi to send us your sensitive data. There are many good reasons for this, but the takeaway for our purposes here: wait until you are on a secure network to send us your data.

4) Do NOT respond to any emails or text messages from anyone who says they’re with the IRS, as the organization typically makes first contact with individuals via phone or traditional mailed correspondence. No IRS representative ever will ask for immediate payment via phone. Let us handle your correspondence with the fine folks at the IRS on your behalf!

5) Residents of Florida, Georgia or the District of Columbia can choose to get an Identity Protection PIN (IP PIN), which is a six-digit number assigned to eligible taxpayers that helps prevent the misuse of their Social Security number on fraudulent federal income tax returns. Eventually, they should be expanding this program for other states, but if you happen to have tax interests there, it’s a good idea to take advantage.

If the worst happens, and crooks do manage to steal your tax identity, we are here to help. But it’s also a good idea to check your credit report for any additional fraudulent activity. You can get copies of your credit reports directly from each of the three major credit bureaus: ExperianTransUnion and Equifax.

The IRS also wants to know about any and all tax scam attempts, so it can get the word out early and prevent or limit any potential damage. Send a copy of any phishing email to the tax agency at phishing@irs.gov.

We’re here to help. Let me know if you have any questions.

Warmly,

Ann Hartz
(515) 707-0884

Ann M. Hartz, CPA

Ann Hartz’s 2018 Tax Preparation Checklist

Ann Hartz’s 2018 Tax Preparation Checklist

Yes, you *thought* 2017 was in the rearview mirror, didn’t you?

Well, not for the IRS it isn’t.

That’s because, as you probably know, we are now beginning the process of doing what we do best: effectively, legally, and ethically reporting our clients’ financial lives to the government for maximum savings — i.e., tax return preparation.

And while the government last week set the date for when they will actually begin accepting electronically-filed returns (Monday, January 29, 2018), that doesn’t mean that we can’t get started on pulling together what we need to have your return ready to file ASAP.

(In fact, it’s almost always a great idea to file your return as early as possible in the season … not just for peace of mind, but also because it prevents fraudsters from using your information to steal any refund that might be headed your way.)

So, to that end, I’ve put together my annual tax preparation checklist of what you’ll need to have for an effectively-prepared tax return. This is meant to be informational for you, and as something you can hold on to over the following weeks as you begin the process of excavating your financial files.

There may be certain situations where we’ll need other documentation to get you even more deductions. But, of course, we’ll let you know about that, should the situation arise.

And also, just to remind you, this is also the last tax return we’ll be filing for you under the “old” tax code. It will be interesting to have us compare what your taxes would look like under 2018 rules (at least on a very basic level), which we’d be glad to do for you, when you come in.

You see, I truly do pity those who attempt to wade through all of the different tax codes and forms on their own, and not devote a week’s labor to the transaction. It really doesn’t pay to “go it alone” for certain tasks.Ann Hartz’s 2018 Tax Preparation Checklist
“In every single thing you do, you are choosing a direction. Your life is a product of choices.” – Dr. Kathleen Hall

With all of the changes every year (and, of course, that’s especially true THIS year), filing your taxes on your own is not for the faint of heart. That’s even with nice-looking softwares on the market which purport to make it easy for you.

But that’s what we’re here for. Let us be your easy button.

Below is a list of what you will need during the tax preparation process. Not all of them will apply to you — probably MOST will not. Nonetheless, it’s a useful checklist for all Des Moines taxpayers.

Before you get overwhelmed: yes, this is a long list — but it’s the unfortunate reality of our tax code that it’s not even comprehensive! But these items will cover 95% of our Des Moines clients.  Really, this is for ensuring that we’re able to help you keep every dollar you can keep under our tax code.

Even if for some strange reason you won’t be using our cost-effective services this year, feel free to use this list as a handy guide…

Personal Data
Social Security Numbers (including spouse and children)
Child care provider tax I.D. or Social Security Number

Employment & Income Data
W-2 forms for this year
Tax refunds and unemployment compensation: Form 1099-G
Miscellaneous income including rent: Form 1099-MISC
Partnership and trust income
Pensions and annuities
Alimony received
Jury duty pay
Gambling and lottery winnings
Prizes and awards
Scholarships and fellowships
State and local income tax refunds
Unemployment compensation

Health Insurance Information: NOTE — despite the passage of tax reform that changes this information for 2018 taxes, we still need it for 2017 taxes.
* All 1095-A Forms from marketplace providers (if you purchased insurance through a Marketplace)
* Existing plan information (policy numbers, etc.)
* If claiming an exemption, your unique Exemption Certificate Number
* Records of credits and/or advance payments received from the Premium Tax Credit (if claiming)

Homeowner/Renter Data
Residential address(es) for this year
Mortgage interest: Form 1098
Sale of your home or other real estate: Form 1099-S
Second mortgage interest paid
Real estate taxes paid
Rent paid during tax year
Moving expenses

Financial Assets
Interest income statements: Form 1099-INT & 1099-OID
Dividend income statements: Form 1099-DIV
Proceeds from broker transactions: Form 1099-B
Retirement plan distribution: Form 1099-R
Capital gains or losses

Financial Liabilities
Auto loans and leases (account numbers and car value) if vehicle used for business
Student loan interest paid
Early withdrawal penalties on CDs and other fixed time deposits

Automobiles
Personal property tax information
Department of Motor Vehicles fees

Expenses
Gifts to charity (receipts for any single donations of $250 or more)
Unreimbursed expenses related to volunteer work
Unreimbursed expenses related to your job (travel expenses, entertainment, uniforms, union dues, subscriptions)
Investment expenses
Job-hunting expenses
Education expenses (tuition and fees)
Child care expenses
Medical Savings Accounts
Adoption expenses
Alimony paid
Tax return preparation expenses and fees

Self-Employment Data
Estimated tax vouchers for the current year
Self-employment tax
Self-employment SEP plans
Self-employed health insurance
K-1s on all partnerships
Receipts or documentation for business-related expenses
Farm income

Deduction Documents
State and local income taxes
IRA, Keogh and other retirement plan contributions
Medical expenses
Casualty or theft losses
Other miscellaneous deductions

We’re here to help. Let me know if you have any questions.

Warmly,

Ann Hartz
(515) 707-0884

Ann M. Hartz, CPA

 

« Previous Entries