Abundant Financial Life

Preparing for clients with digital estate planning - Financial Planning. - Financial Planning

2011-12-24T11:46:00.000-08:00

Preparing for clients with digital estate planning - Financial Planning. - Financial Planning

CPAs Offer Financial Literacy Calendar

2008-12-23T17:18:00.000-08:00

Richmond, Va. (Dec. 8, 2008) By WebCPA staff

The Virginia Society of CPAs is offering a free financial wall calendar for consumers, developed in partnership with the American Institute of CPAs.

The 12-month Financial Fitness Calendar is part of a national effort by the profession to educate the public on topics related to money management and fiscal responsibility.

"In light of the current economic crisis, it's important for consumers to be reminded of basic money management principles," said VSCPA chairman Gregory F. Lawson in a statement.

In addition to serving as a wall calendar, the VSCPA Financial Fitness Calendar also contains year-round money management advice on topics such as budget planning, saving for the future, understanding credit and making wise investments. It also includes important tax and financial dates to remember, definitions of common financial terms and contact information for additional financial assistance.

Consumers can access the 2009 Financial Fitness Calendar free of charge online at www.FinancialFitness.org or request a printed copy by contacting the VSCPA at financialfitness@vscpa.com or (800) 733-8272

IRS Goes Easy on Homeowner Tax Liens

2008-12-17T11:00:00.000-08:00

Washington, D.C. (Dec. 17, 2008) By WebCPA Staff

The Internal Revenue Service plans to make it easier for financially troubled homeowners to avoid federal tax liens that block them from selling their homes or refinancing their mortgages.

The IRS noted that taxpayers facing a lien from the IRS already have some options. Taxpayers or their representatives or lenders can request that the IRS make a tax lien secondary to the lien by the lending institution that is refinancing or restructuring the loan. This is known as a lien subordination. Taxpayers or their representatives can also request that the IRS discharge its claim if the home is being sold for less than the amount of the mortgage lien under certain circumstances.

The process to request a discharge or a subordination of a tax lien takes approximately 30 days after the submission of the completed application, but the IRS said it will now work to speed those requests in the wake of the economic downturn.

"We don't want the IRS to be a barrier to people saving or selling their homes," said IRS Commissioner Doug Shulman (pictured) in a statement.

"We want to raise awareness of these lien options and to speed our decision-making process so people can refinance their mortgages or sell their homes."

To apply for a certificate of lien subordination, taxpayers or their representatives must follow the directions in Publication 784, "How to Prepare an Application for a Certificate of Subordination of a Federal Tax Lien." To apply for a tax lien discharge, applicants must follow the directions in Publication 783, "Instructions on How to Apply for a Certificate of Discharge of a Federal Tax Lien."

The IRS also urges people to contact the agency's Collection Advisory Group early in the home sale or refinancing process so it can begin work on their requests. Currently, there are more than 1 million federal tax liens outstanding tied to both real and personal property. The IRS issues more than 600,000 federal tax lien notices annually.

Seven PFP Strategies That Can't Wait

2008-12-14T23:39:00.000-08:00

What are you doing to help worried clients? Tell us how CPAs should help. E-mail Rick Telberg.
December 1, 2008 by Rick Telberg/At Large

With an economy skittering out of control and investors facing once-in-a-generation losses, CPAs are talking increasingly about their special duty and capacity to help investors find calm in the storm.

I’ve been talking to dozens of CPAs and financial experts lately. But it doesn’t take long to gather at least seven essential take-aways:

1. CPAs are the voice of reason.

“We’re independent, objective and contrarian thinkers,” says Susan Bruno, CPA, PFS at Beacon Wealth Consulting LLC in Rowayton, Conn. “And isn’t that what’s needed today? I think that investors need that CPA perspective more than ever before.”

2. Do the math.

“The market is going to come back. But when? That’s the question,” Jim Shambo, CPA, PFS at Lifetime Planning Concepts Inc. in Colorado Springs, Colo. “Two years? Three years? Or five years? We don’t know and we can’t guess. We just need to do the math. And what that means today is looking at the loss in equities and sometimes seeing that it’s out of balance with your client’s other assets, like bonds, cash or even real estate. So it’s time to be rebalancing. With equities off so much it’s really important that we add some cash back into stocks. As a CPA, you have to follow the math and the math says rebalance.”

3. Let clients know you’ve prepared them well.

“We need to make sure that clients understand that bear markets have happened before and they’ll happen again,” says Lyle Benson, CPA, PFS at L.K. Benson & Co. in Baltimore. “These are the times we’ve been preparing for. That’s why, if you’ve been really following the financial process, you’re ready. You have a diversified portfolio that’s liquid in the right places to take advantage of some of the opportunities that are opening up here.”

4. Focus on the personal and specific.

The stock market averages may be down, but those are only averages, your clients’ needs are very personal and completely specific. CPAs need to be talking to clients about the details of their situations. For starters, Benson adds, tell clients to turn off CNBC TV and stop hitting the “refresh” button at Yahoo! Finance. “That’ll drive you crazy.”

5. Seize the opportunities.

“As bad as this is,” Benson continues, “and I really hate to put it this way, but it’s a marketing opportunity. This is a time when CPAs, who tend to be fiduciary type of advisors, can gather in clients and assets. We use a proven, well-thought-out process.” Ask Jimmy J. Williams, CPA, PFS at Jimmy J. Williams & Co. in McAlester, Okla. The market has been off about 40 percent, but his financial planning business is also up 40 percent. With a modest $52 million under management, Williams’ team of five is earning fees at a run-rate of $840,000 annually.

6. Keep it real.

Williams has something more to add: In reviewing goals and objectives with clients, CPAs have a knack for the No B.S. approach. “We know the facts. We stick to the facts. Clients want that and expect it from us,” he says. Unlike any other class of financial advisor, we can give our clients the information that they need to hear. And that gives it a credibility that others can’t give it. We keep it real.”

7. Start today.

With only days to go before year-end, CPAs need to move fast to help clients grab some last-minute opportunities. Robert Keebler, CPA/MST at Virchow Krause in Green Bay, Wisc., offers at least two quick ideas to put to work today:

Harvest losses. It’s painful, but a lot of mutual funds, believe it or not, will be distributing capital gains from investments purchased years ago and this isn’t a year when anyone needs to be paying gains taxes.

Think Roth. Depreciated assets make it a good time to look at converting regular IRAs into Roth IRAs.

Tax season starts in only a few weeks. But Dec. 31 is coming in a matter of days. Clients need their CPAs now more than ever.

JOIN THE CONVERSATION: What’s your view on the personal financial planning situation today? How worried are you? How worried are your clients? What should CPAs be doing? Tell me and I’ll post and share the best comments. E-mail Rick Telberg.

RELATED RESOURCES: Plan to attend the AICPA Advanced Personal Financial Planning Conference, Jan. 18 to Jan. 21 in San Diego, Calif. Learn more and register here.

Copyright © 2008 CPA Trendlines/BSG LLC. All Rights Reserved. Used by Permission. First published by the AICPA.

3 big mistakes I see people making in 2008 when it comes to their taxes...

2008-12-14T22:45:00.000-08:00

You can subscribe to this newsletter from Diane Kennedy CPA at www.TaxLoopholes.com

Avoid Mistake #1: Don’t focus so much on bringing in cash flow and paying the bills that you forget that you have less than 6 weeks to plan for year-end.

That’s one of the dangers I see happening with ideas like David and other business people have. Sometimes they take off, and they take off fast. It’s months after the fact when someone wakes up and thinks, “What about the tax?” I don’t want this to happen to you!

You might have heard me talk about Diane Kennedy’s Tax Services, a 6 mo old full service tax practice. We’ve got a very interesting new model for working with clients. There are different programs that we offer: For example, if you’re just Getting Started, you don’t need an initial strategy as much as you need the ability to get UNLIMITED consulting and you need a budget for the beginning of your business. Or, you might be at the Stage in your business where you are making good money and are wanting to move to auto-pilot. You need to know what it takes to immediately pay less tax by getting a comprehensive look at everything that you have going on. Plus, you need to have someone who can look at deals and strategies on a year-round, ongoing basis. And, of course, you want to make sure the people doing the strategy are the ones preparing the tax returns.

Well, we knew it was something people needed, but we had no idea that it would grow as fast as it did. Plus, with some innovative ways of recruiting and compensating the people who work for us, we’ve got very happy people who want to save you money.

Today, I found out that we’ve all been so busy bringing in business and giving them an amazing experience, that we haven’t really been paying attention to our own bottom line. We’ve made money. Some really good money. And this morning Bill and I had to have a very serious discussion about the fact that we only have 6 weeks left for tax planning!

Yikes! I’m glad we didn’t wait much longer.

If you’ve had a good year, call Richard now at 888.592.4769 or drop him an email at Richard@DKTaxServices.com to find out about our tax plans. If you’ve had a tougher year, then it’s even more important for you to get hold of Richard right now. You can turn that loss into a big asset for the future, if you do it right! Plus, we can even take those paper losses and get you refunds for past year’s taxes. Sometimes a business loss can mean cash flow! Tax savings is real money you can put in your pocket right now.

Avoid Mistake #2: Don’t worry so much about 2009 tax changes that you forget about 2008 ! There are great loopholes that you need to take advantage of now.

We had some nice changes in 2008. Take depreciation for example: You can take up to $250,000 in a Section 179 deduction. And you can get a 50% bonus depreciation for new assets. You can combine those two loopholes or use just one. There a lot of different variations on how you can take advantage of this change. Section 179 can’t push you into a loss, whereas bonus depreciation can. But look at the definition of “loss”, it’s loss from your trade or business, which can include income from your job.

That’s just one of the hundreds of changes in tax laws for 2008. For now, let’s not worry about what might happen next year. For now, make sure you’ve got an updated tax plan that takes advantage of all you have available in 2008!

Just one tax strategy change, properly implemented, could save you thousands, maybe tens of thousands of dollars.

Can DKTaxServices save you money? Find out for FREE! with a FREE! CPA Tax Review. For a limited time, I’ll personally review your past tax returns. There are three ways you can send the return to us today:

(1) Fax your past year’s tax returns using our secure fax line to 602.258.0721. Please include your name, phone number and email address so we can get back to you quickly with your tax-saving results, OR

(2) Mail your tax returns or send a CD-Rom of your tax returns CONFIDENTIALLY to:
DK Tax Services
PMB 603
5350 W Bell Rd, C-122
Glendale, AZ 85308
OR
(3) Mark out your Social Security numbers and EINs and send via email to Richard@DKTaxServices.com.

Avoid Mistake #3: Do NOT try to do-it-yourself if you’re on the path to being rich!

Go back and read that last sentence in the previous section about depreciation again. Hint: It’s the one that starts “But look at the definition…”

That’s the sentence that saved one of our new clients over $100,000 in taxes for 2008. He can’t wait to file his tax return! I only wish we’d talked sooner. Now he has to wait for the big refund. But, what if he’d never made that first call? What if he (or another tax preparer) didn’t fully understand the definition of “trade or business”? Most of the popular, off the shelf, tax preparation software won’t walk you through critical tax issues like this. Imagine how bad you’d feel knowing that you had left hundreds of thousands of dollars of YOUR money in the hands of the IRS.

When it comes to taxes, the do-it-yourself approach can be the most COSTLY decision you ever make!

Get Started today with a FREE! CPA Tax Review for limited time only by me personally. I’ll review your returns, plus the notes you send me on your current situation and we’ll get back to you with the results. The cost is FREE! You have no further obligation with us. But my guess is that you’ll be like the vast majority of people who know a good deal when you see one. UNLIMITED consultation for no extra charge besides the affordable monthly expense that you can easily budget. Plus you’ll get the preparation of two returns – one business and one individual included in your program. Don’t wait. Get started today by sending in your tax return for a FREE! CPA Tax Review.

There are only 6 weeks left. You might find it hard to focus on taxes right now when there is so much economic uncertainty. You can’t know what the future will hold for most things. But there is one thing you do know. If you don’t take advantage of the small little window left for tax planning this year, the window will close. You can do something about your 2008 taxes, but you’ve got to act soon.

Warmly,

Diane

P.S. There will be a lot of changes coming in 2009. You’ll hear about most of it first by being part of our email program. Plus, make sure you check www.TaxLoopholes.com frequently for tax strategy updates.
P.P.S. Remember: In order to get your FREE! CPA Tax Review you need to send in your past year tax returns in one of three ways:

(1) Fax your past year’s tax return using our secure fax line to 602.258.0721. Please include your name, phone number and email address so we can get back to you quickly with your tax-saving results, OR

(2) Mail your tax returns or send a CD-Rom of your tax returns CONFIDENTIALLY to:
DK Tax Services
PMB 603
5350 W Bell Rd, C-122
Glendale, AZ 85308
OR

(3) Mark out your Social Security numbers and EINs and send via email to Richard@DKTaxServices.com.

Emergency Economic Stabilization Act of 2008

2008-10-09T13:46:00.000-07:00

INCOME TAX CONSEQUENCES
SIGNED INTO LAW OCTOBER 3 2008

The historical financial markets rescue bill includes over 100 tax provisions and over $150 billion in separate tax breaks. In addition to the major tax provisions that directly address current financial bailout measures, the new law includes a much-anticipated alternative minimum tax (AMT) patch, an extensive package of tax extenders, energy incentives, disaster relief, and more. The Emergency Economic Stabilization Act’s $150 billion in tax incentives impacts both individuals and businesses. Approximately $44 billion in offsets, however, mean tax increases for certain groups.

Comment. A version that contained only rescue plan provisions failed in the House on September 29. The Senate then took the lead, gambling on linking the AMT patch, extenders, and disaster relief to the rescue plan, and won.

Impact. Although the new law’s primary purpose is to solve the credit crunch in the financial markets, it also serves as one of the largest tax bills in recent years. The new law makes almost 300 changes to the Internal Revenue Code. While roughly $150 billion in tax breaks had to be computed over a requisite 10-year period for budget scoring purposes, the lion’s share of that outlay provides taxpayer relief immediately in 2008 and 2009. Consequently, year-end tax planning takes on a special urgency this year to maximize taxpayer use of these new tax breaks both before 2008 ends and immediately at the start of 2009.

Alternative Minimum Tax Patch

For certain individuals who have to many deductions the tax code has provisions for an “alternative” minimum tax. In recent years far too many taxpayers have been qualifying for the AMT even though they are not the super wealthy.

Congress included an alternative minimum tax (AMT) patch in the new law. Under the new law’s patch for the 2008 tax year, the AMT exemption amounts are $69,950 for married couples filing jointly and surviving spouses, $46,200 for single taxpayers and heads of household, and $34,975 for married couples filing separately for 2008.

Impact. The patch is designed to insulate middle-income taxpayers from the reach of the AMT. The AMT patch will cost $61.8 billion when measured against what would have been collected without it.

Reminder. The patch is only for 2008. Hopes are high that in 2009 Congress finally will face up to the need to find a permanent solution to the AMT and pass AMT reform rather than yet another patch.

Nonrefundable Personal Credits The patch allows taxpayers to take nonrefundable personal credits to reduce their AMT liability. The law also removes limits in the AMT on taking personal credits against regular tax liability.

Comment. Personal credits include the dependent care credit and education tax credits. The adoption, child and saver’s credit were already allowed in full against the AMT and regular tax.

INDIVIDUAL INCOME TAX INCENTIVES

Tax relief for individual taxpayers in the new law primarily comes in the form of a handful of popular “extenders.” These encompass tax breaks that, for many taxpayers, have been considered as permanent provisions because of the expectation of automatic renewal every year or two.

State and Local Sales Tax Deduction

The American Jobs Creation Act of 2004 and subsequent legislation allowed individuals to deduct state and local general sales taxes in lieu of state and local income taxes. This deduction expired at the end of 2007. The new law makes the deduction retroactive for 2008 and extends it for two years through December 31, 2009.

Reminder. Taxpayers can calculate their deduction by either saving receipts or using the Optional State Sales Tax Tables provided by the IRS.

Higher Education Tuition Deduction

The new law extends through December 31, 2009, the above-the-line (arriving at adjusted gross income bottom of page one of form 1040) higher education tuition deduction. The deduction allows eligible taxpayers to deduct the costs of qualified higher education expenses paid during the year for themselves, a spouse, or a dependent.

Comment. The deduction continues to be barred to taxpayers whose filing status is married filing separately, or if another person can claim an exemption for the taxpayer as a dependent on his or her tax return.

Impact. The maximum deductible amount is $4,000 for taxpayers with adjusted gross income not exceeding $65,000 ($130,000 for joint filers). Taxpayers whose income exceeds that limit but does not exceed $80,000 ($160,000 for joint filers) may deduct up to $2,000 in qualified expenses. For many taxpayers, the HOPE or Lifetime Learning credit is also an option.

Additional Standard Deduction for Real Property Taxes

The new law extends the additional standard deduction for real property taxes for non-itemizers through 2009. Congress authorized a maximum $500 additional standard deduction ($1,000 for joint filers) in the Housing Assistance Tax Act of 2008 but made it available only for the 2008 tax year.

Reminder. The deduction is in addition to the standard deduction. It is not an above-the-line deduction that lowers a taxpayer’s adjusted gross income (AGI). For 2008, the $10,900 standard deduction for joint filers will increase to a maximum of $11,900 with the additional standard deduction for non-itemizers, while the $5,450 standard deduction for single individuals will increase to a maximum $5,950, and the head-of-household amount from $8,000 to $8,500.

Teachers’ Classroom Expense Deduction

For 2008 and 2009, teachers and other education professionals can deduct, above the line, up to $250 of certain out-of-pocket classroom expenses, including the cost of books, supplies, equipment, and software used in the classroom. First introduced in 2002, this deduction is available to qualified educators regardless of whether or not they itemize their deductions.

Comment. Expenses that exceed $250 and non-classroom supplies may be deducted as an employment-related miscellaneous itemized deduction subject to the two-percent floor for taxpayers who itemize.

Tax-Free Distributions from IRAs for Charitable Purposes

The new law permits taxpayers to make tax-free distributions from IRAs for charitable purposes through December 31, 2009. This popular charitable contribution option had expired January 1, 2008. The maximum contribution limit for 2008 and again for 2009 is $100,000.

Impact. This treatment applies to traditional and Roth IRAs. However, no charitable deduction is allowed for any portion of these withdrawals that would have been otherwise taxable.

More Individual Incentives The new law also extends:

Treatment of certain dividends of Regulated Investment Companies (RICs)
Estate tax look-through for RIC stock held by nonresidents
Qualified investment entities treatment

CHILD TAX CREDIT

The new law enhances the child tax credit. The credit is currently refundable to the extent of 15 percent of the taxpayer’s earned income in excess of approximately $12,050 (reflecting inflation adjustments from the original floor of $10,000). Under the new law, the earned income floor falls to $8,500. Additionally, the rescue plan changes the definition of a “qualifying child” with respect to age and joint returns, clarifies the tiebreaker rules and ties the child tax credit to the child dependency exemption.

BUSINESS TAX INCENTIVES

The new law includes a host of incentives targeted to businesses, several of which revise as well as extend tax benefits. Among the most significant are revised research tax credit, enhanced depreciation for leasehold and restaurant improvements, and brown fields remediation.

Research Tax Credit

The new law extends the research tax credit to amounts paid or incurred in 2008 and 2009. It also modifies the credit, increasing the alternative simplified credit while repealing the alternative incremental research credit.

Comment. Congress first created the alternative simplified credit in 2006. The credit was 12 percent of qualified research expenses that exceed 50 percent of the average qualified research expenses for the three preceding tax years. The new law raises the percentage to 14 percent and makes some technical corrections.

Leasehold and Restaurant Improvements

Under the new law, qualifying restaurant improvements and leasehold improvements will be eligible for 15-year cost recovery rather than a 39-year period for two more years, through December 31, 2009. Similarly, Congress authorized a 15-year recovery period for depreciation of certain improvements to retail space. This treatment is extended through December 31, 2009.

Impact. The treatment applies to retailers that own their buildings as well as retailers that lease.

Charitable Contributions

The Tax Code gives businesses enhanced deductions for contributions of food to charitable organizations, as well as contributions of books and computer equipment to qualifying schools. The new law extends these tax breaks through December 31, 2009. Additionally, Congress extended the temporary suspension of limitations on charitable contributions in the case of a qualified farmer or rancher contributing food before January 1, 2009.

Comment. S corp shareholders are also eligible for special tax treatment when making charitable contributions of qualifying property. The new law extends the special rule allowing S corp shareholders to take into account their pro-rata share of charitable deductions even if such deductions would exceed such shareholder’s adjusted basis in the S corp through December 31, 2009.

New Markets Tax Credit

The new law extends the New Markets Tax Credit through December 31, 2009.

Impact. The New Markets Tax Credit encourages taxpayers to invest in or make loans to small businesses in economically distressed areas. In today’s credit crunch, extension of the New Markets Tax Credit may prove especially valuable to those businesses.

Hurricane Katrina Relief

After Hurricane Katrina devastated the Gulf Coast, Congress passed a package of tax incentives to help individuals and businesses recover. One provision enhanced the Work Opportunity Tax Credit for Hurricane Katrina-affected employers. The new law extends this provision through 2009. Another Katrina-related incentive, the increased rehabilitation credit for structures in the Gulf Opportunity Zone, is also extended through 2009.

More Business Extenders The new law also extends:

Seven-year straight-line cost recovery for motorsports complexes; The special domestic production activities deduction in Puerto Rico; Qualified Zone Academy Bonds; District of Columbia first-time homebuyer tax credit; Indian employment credit; and over a dozen more targeted provisions.

OFFSETS

The new law includes more than $43 billion in revenue raisers, which only partially offset the cost of the extenders and other tax provisions. One of the most expansive offsets is broker basis reporting. Another offset plugs a foreign deferred compensation loophole and still another extends an employment surtax.

Broker Basis Reporting

Reporting by brokers has been expanded. Brokers must report the adjusted basis of publicly traded securities when reporting sales transactions and indicate whether gain is long-term or short-term. Securities subject to the new reporting requirement include stocks, bonds, debentures, commodities, derivatives, and other financial instruments designated by Treasury. Reporting will take effect for stock acquired in 2011, mutual funds acquired in 2012, and other securities acquired in 2013. The provision is estimated to raise $6.7 billion over 10 years.

Comment. Brokers will use the first-in, first-out (FIFO) method or the average cost method to determine basis, unless the taxpayer provides specific identification of the securities being sold.

Foreign Deferred Compensation

Nonqualified deferred compensation plans maintained by foreign corporations will generally become taxable, unless the compensation is deferred 12 months or less after the end of the year that the compensation vests. The tax can also apply to partnerships with foreign partners. Deferred compensation will be taxable when the amount is determinable. If the compensation is not determinable when it is deferred, the individual must pay a 20 percent surtax, plus interest, when the amount is determinable. The law applies to compensation for services performed after 2008 and is expected to raise $25 billion.

Comment. This provision is aimed at compensation schemes for executives who are paid by an entity that is located in a low- or no-tax jurisdiction and is “indifferent” to the arrangement because it is not losing a deduction when it defers the income. The provision does not apply to an entity whose income is taxable in the U.S. or subject to a “comprehensive foreign income tax.”

For the full CCH Tax Briefing

SUMMARY OF THE “EMERGENCY ECONOMIC STABILIZATION ACT OF 2008

SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

CPAs Look Beyond Wall Street Carnage

2008-09-22T12:15:00.000-07:00

Rule 1: Don’t rely on Social Security. What’s your best financial planning advice? Sound off here.

September 22 2008by Rick Telberg/At Large

Lehman. Merrill. AIG. Bear. Legendary names all.

And the story of each adds to the uncertainties that CPAs are facing with clients every day.

Looking to help clients financially prepare for the future, CPAs are counseling restraint. But, first of all: don’t count on Social Security.

WHAT ARE CPAs TELLING CLIENTS? What to do next? How to fix the markets and the economy? What’s your best advice? SPEAK OUT HERE
(Free. Confidential.)

“Due to the lack of certainty, Social Security benefits should not be assumed in the financial plan,” said Gary Manion of Olney, Md.

Echoing that sentiment, Mike Williamson, Sr., CPA, CFE, of Ennis, Texas, advises his clients to “plan your retirement as though Social Security and Medicare [do] not exist.”

Many professionals agree with Manion and Williamson and are urging their clients to reduce high interest debt and invest, invest, invest.

These may be uncertain times for investors, but these times may also present opportunities for CPAs to provide needed advice and services.

According to our CPA Trendlines research, nearly half of all CPAs (48%) believe that CPAs will become “somewhat more” involved in personal financial planning services during the next three to five years. When asked what services they or their firm will likely be providing over the next 12 months, more than half (56%) pointed to retirement planning.

These results are hardly surprising given the financial hurdles facing the nation’s retirement system.

Of course, Social Security was never meant to be the sole source of income in retirement and clients are often advised that a comfortable retirement is based on a “three-legged stool” of Social Security, pensions and savings. But the pressures facing pensions and Social Security mean that saving and investing have never been more critical.

“Social Security is not sustainable at currently scheduled levels over the long term with current tax rates [and] without large infusions of additional revenue. There will be a growing shortfall once the trust fund reserves are exhausted in 2041,” according to the Social Security Administration. In 2008, more than 50 million Americans will receive nearly $614 billion in Social Security benefits.

Gary Davis, CPA, of Columbus, Ohio, urges his clients to “start maximizing their retirement savings, contribute to Roth IRAs if possible, create a ‘rainy day’ fund of readily available cash and obtain long-term-care insurance.”

“Obtain and maintain adequate insurance coverages [such as] health, disability and liability. Save until it hurts, then invest to address longevity risk,” said Hal S. Hershgordon, JD, CPA, PFS, of Maple Glen, Pa.

Professionals are also advising clients — especially today’s younger workers — to adopt a “pay yourself first” attitude and reduce high-interest debt to free up cash.

“Young workers need to immediately adopt a 'pay yourself first' attitude by putting 10 percent to 15 percent of their salary into a retirement investment vehicle. Secondly, credit cards should be used as a convenience only and always paid off in full each month. Third, long-term care insurance should be investigated and planned for by workers at a young age to lock-in rates,” said Cheryl Panther, CPA, PSF, of Nashville, Tenn.

“First get out of high-interest debt, so that not as much cash-flow is needed to meet recurring cash outflows. Second, invest for income and hedge against inflation. Third, establish low-cost lines of credit to plan for contingencies. Finally, have enough liquid cash available to meet six months worth of expenses,” said Edward Greenlee of Ruidoso, N.M.

It is important, however, that clients maintain realistic goals.

“There are no magic bullets to solve these issues and it will take diligence and objectivity. If you don't know how to plan, save and invest, see someone who does,” advised Milt Fullen of Columbus, Ohio. “Don't assume you know it, find out. Don't be penny-wise and pound-foolish. Time wasted is time that can never be recovered.”

CPA FINANCIAL PLANNING: What’s your best advice for clients today?

What are other CPAs recommending? Join the survey; get the results.
WATCH: Tune in to Video Snacks on related topics.
COMMENTS: Rants, raves, questions or ideas? Contact Rick Telberg.
Copyright © 2008 CPA Trendlines/BSG LLC. All Rights Reserved. Used by Permission. First published by the AICPA.

QuickBooks Opens to iPhone and BlackBerry

2008-08-28T16:47:00.000-07:00

In my recent work “Seven Hot New Financial Planning Trends”, I have identified one trend as “Be on Top of Your Numbers”. “Be on Top of Your Numbers”, means using QuickBooks or a similar accounting software to track your Personal AND Business financial affairs.

I believe you have to have a business to take advantage of the tax code. When you pull profits from the business and drop them into your household; it is like running another business and the household is where most people have their true wealth, in their Personal Financial affairs, not their business.

Tracking your financial affairs means having access to current financial statements consisting of a Balance Sheet and a Profit or Loss Statement.

I saw the article "QuickBooks Opens to iPhone and BlackBerry" on WebCPA.com, and found it very interesting, you can find the article at http://www.webcpa.com/article.cfm?articleId=28980. What I found most interesting is a confirmation of my belief and teachings as outline above.

Not only does it suggest keeping on top of your numbers with online accounting software capable of downloading transactions directly from your bank or financial institution to make it easy… It also suggests accessing your numbers frequently from your iPhone or BlackBerry. By frequently I mean more frequently and more formally than simply pulling numbers from everywhere for your tax preparer who then puts them into your tax return after the close of your tax year.

Not only does your tax preparer only work with your “taxable” income and “tax deductible” expenses he or she completely disregards non-tax related income and expenses. What is even worse is the fact that income and expense items appear on your Profit or Loss financial statement and nobody is looking at your Balance Sheet where all of your assets, liabilities and your net worth are recorded.

Call me to find out more about the “Seven Hot New Financial Planning Trends” which are part of my Abundant Life Strategies work. Take advantage of a free consultation to identify opportunities for you to preserve and grow your wealth to achieve balance in Seven Key Areas of Life.

AICPA Wealth Provider

2008-08-21T14:28:00.000-07:00

Newly Divorced Client Advice

Tax Planning for Elderly Clients

Long-Term Care Insurance and Tax Planning

Flyer Nets $16,000 in Commissions!

2008-08-20T23:52:00.000-07:00

Corrine Barlow, with Barlow Williams Realty in Camarillo, California, understands the power of human curiosity. So after listing a house, and struggling to find buyers, she used a flyer from the By Referral Only Solution Center to pique the neighbors’ curiosity, and generate quality ready-to-act buyers.

Corrine spent just $180 and earned $16,000 in commissions - an $88-to-$1 return.

And it was easy – the flyer is available and ready to print in the By Referral Only Solution Center.

It’s easy, it’s inexpensive – and it produced $16,000.

Do you want the secrets to getting the same great results without spending a lot of money?

Give us a call today at 877-403-3455 and we’ll give you a free tour of the Solution Center and discuss what specific strategies you can use to get your phone ringing with ready-to-act clients.

The Solution Center is a complete suite of turn-key marketing strategies, systems and tools that will generate new high-quality prospects for you - automatically. AND it will give you more free time with your family and friends.

Just call us at 877-403-3455 Monday - Friday 8:30 AM - 5:00 PM to schedule your free tour and get your hand-picked marketing secret. And start building a business that gives you MORE COMMISSIONS and MORE TIME to live the life you always dreamed of.

Mortgage Meltdown & Real Estate Bubble Solutions

2008-08-18T16:46:00.000-07:00

For assistance in understanding your options related to rising mortgage interest rates and the dramatic drop in real estate values visit this site of my client Michael Doan, Attorney. The Doan Law Firm very knowledgeable in Real Estate, Bankruptcy and Personal Injury Law.

http://www.doanlaw.com/foreclosure.html

Paper Planes (Take Your Money)

2008-08-18T16:37:00.000-07:00

http://www.youtube.com/watch?v=71iJyO5brR8