Last week to lower your tax bill?

Are you ready for 2010?

“If you keep thinking about what you want to do or what you hope will happen, you don’t do it, and it won’t happen.”
- Desiderius Erasmus

2009 is drawing to a close….

Have you done everything you can to protect yourself in 2009 from the IRS tax hounds?

I’m not sure if you know this, but the federal government is gunning after small business owners and families to ensure they collect as much revenue as possible this year. It’s a simple function of the fact that revenues for the government are way down. That includes good families, like yours, unfortunately.

If families don’t develop a plan now, many will be faced with a big surprise when they have their taxes prepared.

And to make things worse, there are significant changes on the horizon which promise to increase that tax burden even more.

It’s not too late to make some last-minute changes to your situation. Call us by the 30th…you won’t be disappointed.

Now, before we get to this week’s Strategy Note, a few interesting news items

Filed under: Another celebrity tax scandal: The Black-Eyed Peas
http://www.thewrap.com/ind-column/black-eyed-peas-lawyer-business-manager-failed-pay-their-taxes-11780
I can’t admit to actually knowing much about this band, but apparently they’re pretty famous. Enough so, that they were all over the “tax news” wires last week for failing to pay taxes. This one seems to be the fault of poor management, but the lesson is true even for families who don’t pay a business manager–have someone competent manage your taxes!

Filed under: Health Care Reform is coming
http://www.reuters.com/article/idUSTRE5B83ZG20091221
Well, this was just a procedural vote, but over the weekend in DC, our Congressional leaders inched closer (in a seemingly decisive move) to passing the much-discussed health care legislation. I’m going to reserve comment until the final bill is passed…but needless to say, the tax implications will be significant for families and business owners. We’ll keep you in the loop.

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Now…to this week’s Strategy Note…one of the significant tax items under discussion has been a repeal of the “estate tax”. It’s still unclear what will occur, but it reminded me of something I’ve been meaning to write about for a while–estate planning for families. It’s a significant “missed base” for many people, often because of misconceptions about it. So, I’ve got a two-part series on “Estate Planning Myths” which might clear up some of the confusion. And I also know that the holiday season can be painful for families who are processing the loss of loved ones in years past, so this isn’t at all intended to chafe those wounds. Instead, I hope you can see it as an opportunity to make proactive steps to lessen any future impact of losses.

Let me know your thoughts…and if you’d like to be put in touch with someone who can help you get this important process completed on your behalf!

“Real World” Personal Strategy
Part 1: Common Myths About Estate Planning

As of this writing, it’s a fact that almost 60% of Americans don’t have a basic will, and that’s a big problem.

One of the big reasons that most families don’t yet have this in place is because of some incorrect thinking about whether it’s right for them, or if it’s even necessary. And sure, some people just haven’t gotten around to creating a will or trust. Others think they don’t need an estate plan because they’re not rich. I’ve even heard from people that they don’t want to put it in place because when they do, it’s sending some sort of death wish into the universe (or some such).

Well, I’ll start by busting THAT myth: Preparing a plan for your succession will not speed your demise. Easy enough.

But here’s the problem–if you continue without an estate plan, you could leave a legacy of bad feelings and attorneys’ fees.

But, I’ll move off of that easy one, and speak to some of the more common misconceptions out there. I’ll start with two this week, and address three more in a future Note.

1. Only rich people prepare estate plans.

Do you own ANYTHING? Because if so, you need a will. You see, a will allows you to designate who will receive your property should anything happen. Continuing without one ensures that your assets will be distributed under the terms of your state’s “intestate succession” laws. That means your money and property could end up with family members you haven’t spoken to in years, instead of who you’d really like to see control your assets.

I won’t go into all of the different components of a will, trust, health care directive etc., as my purpose here is to emphasize that failing to plan is simply a decision to trust your assets to government bureaucrats.

Even if you think your situation is pretty straightforward, you may feel more comfortable hiring a lawyer to guide you through the process.

2. Everything goes to your spouse, if something happens.

Unfortunately, that’s not always the case. We deal with clients from different states around the country, and state laws vary. In fact, in most states, if you continue without a will (intestate), your inheritance will be divided among your spouse and your children. In New York, for example, when someone dies intestate, the spouse gets the first $50,000 of the estate and what’s left is divided 50-50 among the spouse and the children.

You can imagine how this could create all kinds of problems, particularly if your spouse was financially dependent on you or you have children from a previous marriage.

I’ll send a few more in the weeks ahead, but I hope you can already see that things are not always as we “think”.

I hope this helps. To your family’s financial and emotional peace…

The best presents for the season (not what you think)

“If you haven’t any charity in your heart, you have the worst kind of heart trouble.”
- Bob Hope

Well, my family is deep into the holiday season. No matter your religious persuasion, it’s pretty difficult to avoid the non-stop merchant clamor to “buy stuff” in order to properly celebrate what started as a spiritual season.

And yes, I’m a business owner–I have nothing against people spending money as a way to communicate their love. It’s just…a tad ironic, isn’t it?

Anyway, I’ve put together a little note which may actually be somewhat controversial about holiday shopping, but before I get to that–some tax news (which I know you’re just dying to learn about. Ok…feel free to skip to the article about holiday shopping!)…

Filed under: Hidden Taxes in Proposed Health Care Reform:
http://wellness.blogs.time.com/2009/11/30/bo-tax-a-levy-on-nips-and-tucks/?xid=rss-topstories
Looks like one of the ways with which Congress is looking to fund the Health Care Reform package is that there are specific items which will be taxed. One of them is elective cosmetic surgery. That might not be a bad thing (unless you’re a cosmetic surgeon)? We’ll see what happens…and will, of course, keep you in the loop.

Filed under: How To Pay For War
http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=111_cong_bills&docid=f:h4130ih.txt.pdf
This one is getting a lot of commentary–a proposed bill which would have high-earners pay MORE percentage for the Afghanistan conflict than would lower-earners. Too much politics to wade through on this one–but that link will show you what a Congressional bill really looks like. (Note: That link is to an online PDF and may give you a warning, but it’s a safe file; may just take a couple of clicks to view.)

Filed under: “I Guess It Pays to Be a Snitch?”
http://www.forbes.com/forbes/2009/1214/investment-guide-10-ubs-irs-spondello-tax-informants-on-loose.html
Among other well-publicized similar initiatives, this one is aiming to reward people for informing on their friends and neighbors who hid money in offshore accounts. Quite a moral conundrum, eh?

Now…to this week’s Strategy Note. It’s on shopping…but it may not *quite* give you what you think it will. You’ll see what I mean.

And, as always, I would love your feedback, as I read every comment that comes my way!

“Real World” Personal Strategy
Are You Wasting “Value” With Gifts?

Many people spend more during the holiday season than they can afford. Among other things, sometimes guilt or shame can drive a lot of big-ticket gifts–though not always, of course. But the satisfaction can be both short-lived and shortsighted.

Well, in a new book, Wharton School professor Joel Waldfogel’s book, “Scroogenomics: Why You Shouldn’t Buy Presents for the Holidays.” says that people are the most efficient when spending their own money, producing at least a dollar in satisfaction for every dollar they spend. But spending money on those we don’t know well results in what Waldfogel calls a “deadweight loss” of value–about 20%.

You are guarding against deadweight loss when the recipient can exchange the gift or return it for cash. With Christmas & holiday spending in the United States at $100 billion, this loss results in “an orgy of wealth destruction” to the tune of about $20 billion. Ouch.

Waldfogel’s study found that givers with infrequent contact were those most likely to give less appreciated gifts. This group includes aunts, uncles and grandparents who live in another town. According to economists, people are better off when they make their own choices. For this obvious reason, Waldfogel suggests giving money or gift cards instead.

To the criticism that he had taken the joy out of Christmas, he responds that after watching desperate last-minute shoppers, he thinks the joy was taken out of Christmas long before his critique.

Of course railing against the commercialism and waste of the holidays is pretty common these days. So, let’s further breakdown what happens during this gift-giving season…

Some gift giving is driven by social expectation and becomes a test of the relationship. For example, for couples who are dating seriously, the message is much more important than the medium. Give a book the other person despises, and you have revealed how little you pay attention to your loved one’s opinions. But a pair of gloves, with a heartfelt note saying, “These will keep your hands warm when I’m not there to hold them” would show your affectionate side. Or perhaps the receiver doesn’t like romantic mush, and you are expected to know better.

Parents can help extended family members select gifts for their children by providing specific wish lists to ensure that what they buy will truly be appreciated. If you aren’t confident, include a gift receipt. You are guarding against deadweight loss when the recipient can exchange the gift or return it for cash.

And in families where children don’t have any spending money, cash may be the best possible gift. Handling cash with all the complexity of choice is an experience that offers irreplaceable life lessons.

Try asking people, “What present changed the course of your life the most?” to see how much influence you can have. A pair of binoculars sparks a love of ornithology. A telescope fuels a fascination with astrophysics. A microscope leads to a biology career. An electronic toy prompts your daughter to join a robotics competition.

Not all presents need to be academic. A graphics tablet can lead to a design career. A guitar can inspire your son to form a new band. Or a video camera can lead to a later career choice in filmmaking.

Finally, some parents who are still unemployed will disappoint their children if they are hoping for expensive gifts this year. I’ve known a few families who had to tell their children that celebrating a traditional American credit card holiday would jeopardize the family’s financial security. Many parents are experiencing the first economic setback in their adult lives. Being financially cautious doesn’t mean you love your children any less. And if you can be positive and reassuring, you needn’t try to shelter you children from household economics.

The greatest joy of the holiday season is not bought in a store and does not increase your credit card debt. There is a better way to celebrate that builds long-lasting family ties.

Make a list of all the things you have gotten right in past holidays and make them annual family traditions. Add a few new ideas every year. The best holiday traditions don’t cost a lot of money, and they aren’t wrapped and put under a tree.