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Tax Tip of the Week | No. 261 | Do You Have A FROG File? July 30, 2014

Posted by bradstreetblogger in : Business consulting, General, Tax Planning Tips, Tax Tip, Taxes, Taxes , add a comment

Tax Tip of the Week | July 30, 2014 | No. 261 | Do You Have A FROG File?

Everyone needs one of these…

I recently attended a seminar on estate planning. The attorney presenting the class provided a nicely summarized list of important information that everyone should have prepared prior to their death.  She called this list a “FROG File” (For Your Own Good).

The list includes:

The Essentials

–    Executed Will Document
–    Trust Document(s)
–    Letter of Instructions:
o    Funeral Arrangements
o    Contact information for CPA, Attorney, Financial Advisor, Insurance Agents, Bankers, etc.

Proof of Ownership

–    Housing, land, and cemetery deeds
–    Proof of loans made and debts owed
–    Vehicle Titles
–    Stock Certificates, savings bonds and brokerage accounts
–    Partnership and/or Corporate Operating Agreements
–    Tax Returns (at least five years)

Bank/Brokerage Accounts

–    List of all Bank and Brokerage Accounts
–    List of all user names and passwords to access the accounts
–    List of safe-deposit boxes
o    For each, indicate who is the named beneficiary or has joint ownership

Health Care

–    Personal and family medical history
–    Durable health-care power of attorney
–    Authorization to release health-care information
–    Living Will
–    Do-Not-Resuscitate Order

Life Insurance and Retirement Accounts

–    Life Insurance policies
–    Individual Retirement Accounts
–    401(k) accounts
–    Pension documents
–    Annuity Contracts
o    Make sure beneficiary information is up-to-date!

Certificates and Licenses

–    Marriage License
–    Divorce Decrees
–    Military Records

Since we never know when we will be “hit by the bus” it would be a good idea to start your FROG file today!

You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.

Rick Prewitt – the guy behind TTW

…until next week.

Tax Tip of the Week | No. 260 | IRS Made Improper EITC Payments of $13.3 – $15.6 Billion July 23, 2014

Posted by bradstreetblogger in : General, tax changes, Tax Planning Tips, Tax Preparation, Tax Tip, Taxes, Taxes , 2comments

Tax Tip of the Week | July 23, 2014 | No. 260 | IRS Made Improper EITC Payments of $13.3 – $15.6 Billion

Here is an interesting article we came across….

The Internal Revenue Service allowed an estimated $13.3 billion to $15.6 billion to be paid in improper claims for the Earned Income Tax Credit last fiscal year, or about 22 to 26 percent of all EITC payments, according to a new government report which found the IRS continuing to be noncompliant with a 2010 law that sought to limit improper payments.

The IRS continues to make little progress in reducing improper EITC payments, according to the report, which was publicly released by the Treasury Inspector General for Tax Administration.

TIGTA’s finding came in a review of the IRS’s compliance with the Improper Payments Elimination and Recovery Act of 2010, which requires federal agencies to estimate improper payments for all programs in which such payments are significant. The IPERA requires TIGTA to assess the IRS’s compliance with improper payment requirements.

Editor’s Note:  The EITC was put into the tax code to incentivize work vs. people receiving welfare checks. The EITC is a lump-sum refundable credit (the government gives you money).  As with most refundable credits, there are plenty of crooks out there looking for ways to steal money.

The following are a couple of interesting comments that accompanied this article:

–    “I don’t think that EITC should be paid in a lump sum. If the payments were parceled out in possibly 4 to 6 payments, the IRS would at least have a chance to cut their losses after the first erroneous payment. Really why is this “welfare” given in one lump sum anyway?”

–    “The present EITC regulations are not only absurd, they discriminate against marriage. If two taxpayers are living together but not married, and each makes say $30,000, have 2 children, the EITC regulations allow each parent to claim one of the children and receive the EITC. If they were married, of course, they would not qualify for the EITC. So if I was married and in this situation, I could qualify for thousands of dollars a year in EITC simply by getting divorced. Why would any sane person making $25,000 or so get married? Is Congress even aware of this fact?”

Let us know if you have any comments.

You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.

Rick Prewitt – the guy behind TTW

…until next week.

Tax Tip of the Week | No. 259 | IRS Adopts Taxpayer Bill of Rights July 16, 2014

Posted by bradstreetblogger in : General, tax changes, Tax Planning Tips, Tax Preparation, Tax Tip, Taxes, Taxes , add a comment

Tax Tip of the Week | July 16, 2014 | No. 259 | IRS Adopts Taxpayer Bill of Rights

A new attitude?…..

The Internal Revenue Service has adopted a “Taxpayer Bill of Rights” that it said would become a cornerstone document to provide the nation’s taxpayers with a better understanding of their rights.
The Taxpayer Bill of Rights takes multiple existing rights that have already been included in the Tax Code and groups them into 10 broad categories, making them more visible and easier for taxpayers to find on IRS.gov.

Publication 1, “Your Rights as a Taxpayer,” has been updated with the 10 rights and will be sent to millions of taxpayers this year when they receive IRS notices on issues ranging from audits to collection. The rights will also be publicly visible in all IRS facilities for taxpayers and employees to see.
“The Taxpayer Bill of Rights contains fundamental information to help taxpayers,” said IRS Commissioner John A. Koskinen in a statement. “These are core concepts about which taxpayers should be aware. Respecting taxpayer rights continues to be a top priority for IRS employees, and the new Taxpayer Bill of Rights summarizes these important protections in a clearer, more understandable format than ever before.”

“Congress has passed multiple pieces of legislation with the title of ‘Taxpayer Bill of Rights,’” Taxpayer Advocate Olson said. “However, taxpayer surveys conducted by my office have found that most taxpayers do not believe they have rights before the IRS and even fewer can name their rights. I believe the list of core taxpayer rights the IRS is announcing today will help taxpayers better understand their rights in dealing with the tax system.”

The Tax Code includes numerous taxpayer rights, but they are scattered throughout the code, making it difficult for people to track and understand. Similar to the U.S. Constitution’s Bill of Rights, the Taxpayer Bill of Rights contains 10 provisions. They are:

1. The Right to Be Informed
2. The Right to Quality Service
3. The Right to Pay No More than the Correct Amount of Tax
4. The Right to Challenge the IRS’s Position and Be Heard
5. The Right to Appeal an IRS Decision in an Independent Forum
6. The Right to Finality
7. The Right to Privacy
8. The Right to Confidentiality
9. The Right to Retain Representation
10. The Right to a Fair and Just Tax System

Does this mean I no longer need to wait on hold for an hour when calling the IRS?   We’ll keep you informed.

You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.

Rick Prewitt – the guy behind TTW

…until next week.

Tax Tip of the Week | No. 257 | Don’t Outlive Your Money: 7 Tips July 9, 2014

Posted by bradstreetblogger in : tax changes, Tax Planning Tips, Tax Preparation, Tax Tip, Taxes, Taxes, Uncategorized , add a comment

Tax Tip of the Week | July 9, 2014 | No. 257 | Don’t Outlive Your Money: 7 Tips

I ran across this interesting article and thought you might like it also….

The scariest financial risk people face in life is running out of money at an old age. I’m 83 and I’m speaking from personal experience. After a long career as a newspaper editor, I retired in 1991 at the age of 60, with my wife, who is 14 years younger and retired in 2004. I’ve learned about financial matters the hard way, and I ghost-write articles like this one to earn some extra income. I’m not scared about running out of money in my lifetime, but I am fearful of not leaving enough money to my wife, who is much younger than I. Let me share with you some financial lessons I’ve learned.

1. DO NOT elect to take Social Security benefits early. If you do take early benefits, you probably will be shortchanged on what you would have received in total payments over the rest of your lifetime. People are living longer these days. You will add 8% a year in payment totals after full retirement age if you can wait until age 70 to take benefits.

2. Downsize your home at the earliest opportunity. Once you become an empty nester, the odds are that you do not need a house as large as the one in which you now live. Sell it and buy a smaller one. Pay cash if at all possible.

3. Consider moving to a retirement community, which can be a highly desirable and cost-efficient place for the elderly to live. Your neighbors in such communities most likely are like-minded and in your age group. Also, such communities are especially designed for elderly living, and most are located near good health-care facilities. Plus, they offer social, educational and recreational facilities designed specifically for the elderly.

4. If you are not already out of debt, get out as soon as possible. When you are not in debt you can live on much less month to month, thereby lessening your chances of outliving your money.

5. If you have two cars, sell one. If you only have one, drive it twice as long as you did in the past. You probably will be driving less at this time in your life, and you can most likely drive your current car much longer without encountering excessive repair bills. If you are in the practice of making monthly car payments, once you’ve paid off your vehicle you can put all of the payments you would have made before into your savings.

6. If you are part of a close-knit family, do not move very far from your children and grandchildren. Life-changing occurrences such as death, divorce and disabilities are easier experiences when you have the support of family members around you all the time.

7. Finally, and most important of all: Continue to save all that you possibly can. The amount that you can save if you follow the previous six recommendations may be considerable. Where and how should you invest it? Seek out a financial adviser that you are sure you can trust and that you are sure is competent, and turn investment decisions over to him or her.

Bob McGinty is a retired newspaper editor who occasionally ghost-writes articles for financial advisers.

You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.

Rick Prewitt – the guy behind TTW

…until next week.