Monthly Archives: December 2013

5 Quick Year End Tax Tips

So 2013 is ending in about 3 days and here you are wondering what you can do to cut your tax bill.  Well, while most of your options are just about gone, here are 5 quick things to consider:

Do A Test Run of Your Tax Return
If possible, why not do a quick test run of your return?  The year is almost done so you should have most of the information you need to come up with a projection.  Sure, some of the numbers will need to be estimated, but the end result should yield a pretty good picture.  With that picture in hand, you will know what moves you can or need to make before year’s end.

Pull Expenses Into 2013
Both individual and business returns tend to be prepared on a cash basis.  Thus, if you can spend the money in 2013, you will get it to count on your return.  Have some medical purchases (e.g. glasses, contacts, etc) that you were planning to make in January?  Move them into December and they’ll be deductible on this years tax return.  The same is true for that mortgage payment of yours.  If the bank cashes the check in December, the mortgage interest will increase your deduction for this year.

Shift Income into 2014
Are you a self employed business person?  Do you operate on a cash basis?  Well, if you want to reduce your taxable income for 2013, why not consider billing your customers late or giving them a little grace period to pay so that the revenue hits your desk in 2014.

Make Those Last Minute Retirement Contributions
Do you have a company 401(K) account but haven’t contributed the Federal maximum of $17,500?  Well, each dollar you contribute reduces your taxable income.  Already received your last paycheck?  Not to worry, you can still make a contribution to your IRA AND if you meet certain income limitations, you can shave a little off your tax bill.  If you are self employed, you can make contributions to SEP and SIMPLE plans to receive a tax benefit on your return.

Give To Charity
Were you considering making a donation next year to a certain charitable organization?  If so, consider making them in 2013 and you can reduce your taxable income.  Have some items in your house that are taking up space?  Why not give them to the Salvation Army, Goodwill or your other local charitable organization?  You’ll be able to deduct the fair market value of the goods on your tax return and help out someone in need.  Just make sure you follow these tips to get the most out of your donation.

Can You Stop The IRS From Garnishing Your Wages?

wage-garnishment-267x300-1311595100

Sometimes, no matter how careful you are about filing your taxes and paying what you owe, the time may come when you have a bill that you can’t pay.   Like all creditors, the Internal Revenue Service will try to collect what you owe using several different means.  One of those methods is via a wage garnishment.

Employers are prohibited from letting you go because of a wage garnishment issue, a protection extended under the Consumer Credit Protection Act.  However, you get only one “get out of garnishment jail free card.” A second garnishment isn’t protected by Uncle Sam, and an employer who views an employee with a second garnishment as a mark on his or her character has every right to fire them.

What is Wage Garnishment?

Simply put, a wage garnishment is when the IRS locates a debtor’s employer and takes their wages during each pay period until the debt is paid in full.  A wage garnishment can be used to collect a debt that you owe due to a late filing.  It can also be used when you file your return correctly but do not pay the full balance of your debt.

A wage garnishment is most commonly levied by the IRS or via a court ruling.  To implement the garnishment, the IRS obtains a judgment and sends it to the debtor’s employer.  The employer is then required to withhold a certain amount of the individual’s paycheck each pay period and send it to the IRS until the debt has been fully paid.  Depending on state laws, a garnishment may take anywhere from 30 percent to 70 percent of your paycheck to cover your unpaid debts.

Furthermore, the IRS is particularly tough; it can garnish both your income and, if you’re retired and collecting government benefits, can take your Social Security checks, too.  The levy usually isn’t lifted until the debt is paid off in full.  However, you do have some options, though, as outlined by the IRS.

Stopping A Wage Garnishment

Pay off the debt in full.  Once that’s done, the garnishment is automatically lifted.  This is the quickest and least painful way to get the IRS off your back.

Offer a lower bulk payment as compromise.  If you can negotiate a “payoff” sum with the IRS, you can also avoid a wage garnishment.  This one’s tricky though, and you’re better off checking in with a tax professional before you climb into the ring with the IRS.

Ask the IRS for a payment plan.  Uncle Sam may be willing to negotiate regular monthly payments to erase your debts and avoid the need to garnish your wages at all.  However, just note that this is typically only granted if you demonstrate that the levy is causing you financial hardship.  Thus, if you are receiving notices of tax debt owed, but have yet to have your wages garnished, it’s best to try and set up a payment plan BEFORE this IRS begins garnishments.  Once the garnishment is in place, the IRS has little impetus (other than the hardship situation) to revert to a payment plan if it’s collecting money from you.

Quit your job and dodge the IRS for a while.  If you quit your job, it will probably take the IRS a few months to track you down at your new job.  They won’t like it, but at least your wages won’t be garnished in your new job (for the short term, anyway).  That might buy you some time to come up with the money to settle your debt.

File for bankruptcy.  This option should not be used lightly, but if it’s “last resort” time, bankruptcy can at least help you avoid wage garnishment, or have it released if the garnishment is already in place.

Don’t create a garnishment to begin with.   The best way to avoid a wage garnishment may be old-fashioned, but it works all the time.  Pay your bills on time, save some money for emergencies and spend less than you earn.  Do that and neither your employer nor the IRS will be dogging you about wage garnishments ever again.

 

Milestones – Our 100th Post

To know where you are going, you must know where you've been.

To know where you are going, you must know where you've been.

Funny how time flies.  Two years ago we were just a few weeks away from opening up the doors to our Beverly retail office.  In this, our 100th post, we thought it would be appropriate to reflect a little.

When we created our blog, we set one simple goal for it; create one post per week with content we believed would be relevant to our customers as well as general taxpayers.  During that time we’ve gone through two tax seasons, refreshed our website, increased our client base as well as a host of other things.  The point you may ask?  Well, none of this would be possible without milestones.

Milestones serve to inform us of how far we are in our journey and how much further we have to go.  In the short two years of opening our office, we’ve come quite a way from our beginnings.  Yet, we still have a long way to go to our self prescribed destination.

With that said, as we prepare to enter into a new year (which many will mark with New Year’s Resolutions), we urge all of you to set goals for yourself along with milestones.  That way, when you’re questioning whether you should continue on your journey (or if you have the strength to) you’ll have a pretty clear answer to help you in your decision.

Now back to getting ready for our 3rd tax season…

My View: The Two Biggest Keys To Success

When you advise aspiring and fledgling business owners, one question that routinely comes up is what it takes to be successful.  While it takes many ingredients to achieve success, there are two that are key in my opinion.

Persistency

Back in High School I tried out and made the football team.  In reality it wasn’t that hard as they pretty much took anyone who tried out.  But the real challenge was getting to play.  Most of the playing time (a.k.a. “tick”) was given to starters and second string players.  Me?  Oh, I was just a guy who was on the team; by most standards I was just your typical benchwarmer.  But just like everyone else, I earned my “letter” for each year I was on the team.  And just like everyone else, I sported my letters on my letterman’s jacket.  To the girl at the bus stop, I looked just like all the other “jocks” when we got off the bus at her stop!

Win the battle, show your medal, we're loyal to you old pal!

Win the battle, show your medal, we're loyal to you old pal!

The point of this story is what?  Quite simply, persistency pays off.  I could/should have quit numerous times during the years I played football.  The total amount of tick I got was probably the equivalent of a first half, but was spread across three years.  Yet I didn’t give up.  I never succumbed to the pressure to stop going to two-a-days.  I never let the ridicule of “star” players deter me from marching on.  But more importantly, I never let myself disappoint the one person who really mattered; me.

If you want to be successful, you have to sometimes have the fight of a dog in you.  When everything is pointing to stopping, you have to tell yourself that success may be just around the corner.  And if you can be persistent?  You might just wind up with a successful business like all those other entrepreneurs who started their business just like you did; one day at a time.

Consistency         

Some of the greatest people have achieved their success not because of special talents or intellect, but because they consistently plod along.  Whatever goals you’re trying to reach; they aren’t just going to happen.  You have to actually/consistently be working on them.

Here is a case in point.  When you are wooing someone, you go through the effort of being consistent.  You will routinely call them, see them, take them on dates, tell them they are special, compliment them, etc.  But what happens once you’ve won their heart?  Those consistent things start to fade by the wayside.  Why?  Primarily because you achieved you goal; getting them to become your boyfriend, girlfriend or spouse!

The moral of the story is that you achieve your goals by consistently doing the necessary work.  If you walk a few steps each and every day of the year, after a year you will have walked several miles.