The old email inbox has been “heating up” of late–we’ve been talking taxes, health care, current events–and how to put MORE into your family’s bottom line.

As you know, I love talking about this stuff…and there’s plenty to discuss these days.

But I thought that THIS week, I’d take a break from your regularly-scheduled money-saving advice, and offer up a few tidbits to keep things a little light around here. After all, it’s getting *hot* out there!

So…here we go:

*You thought the IRS was after YOU? Check out THESE famous tax cheats :
http://www.thedailybeast.com/blogs-and-stories/2009-08-03/a-list-tax-cheats/?cid=hp:beastoriginalsR3#

* You thought this only happened in fables? Think again…
http://www.timesonline.co.uk/tol/news/uk/science/article6753086.ece

* Everyone makes a difference: (this is NOT a misprint)
“Xvxryonx makxs a diffxrxncx”
Somxtimxs I gxt to thinking that what I do doxsn’t mattxr.
But whxn I start thinking that way, I rxmxm¬bxr my old
typxwritxr. Most of thx kxys workxd finx most of thx timx.
But onx day, onx of thx kxys stop¬pxd working altogxthxr.
And that rxally mxssxd xvxrything up. So whxn I’m txmptxd
to say, I’m only onx pxrson, it won’t makx much diffxrncx if
I don’t do this quitx right, I rxmxmbxr my old typxwritxr. And
I say to mysxlf: “I am a kxy pxrson and nxxdxd vxry much.”

Adapted from the book Inside the Magic Kingdom, used with the permission of the publisher.

Finally, for my “Real World” Personal Strategy Note, I’d like to pass along something an old friend sent to me…feel free to send this along yourself, and remember to be thankful!

“Real World” Personal Strategy
Thanks For Your Time

It had been some time since Jack had seen the old man. College, girls, career, and life itself got in the way. In fact, Jack moved clear across the country in pursuit of his dreams. There, in the rush of his busy life, Jack had little time to think about the past and often no time to spend with his wife and son. He was working on his future, and nothing could stop him.

Over the phone, his mother told him, “Mr. Belser died last night. The funeral is Wednesday.” Memories flashed through his mind like an old newsreel as he sat quietly remembering his childhood days.

“Jack, did you hear me?”

“Oh, sorry, Mom. Yes, I heard you. It’s been so long since I thought of him. I’m sorry, but I honestly thought he died years ago,” Jack said

“Well, he didn’t forget you. Every time I saw him he’d ask how you were doing. He’d reminisce about the many days you spent over ‘his side of the fence’ as he put it,” Mom told him.

“I loved that old house he lived in,” Jack said.

“You know, Jack, after your father died, Mr. Belser stepped in to make sure you had a man’s influence in your life,” she said

“He’s the one who taught me carpentry,” he said. “I wouldn’t be in this business if it weren’t for him. He spent a lot of time teaching me things he thought were important…Mom, I’ll be there for the funeral,” Jack said.

As busy as he was, he kept his word. Jack caught the next flight to his hometown. Mr. Belser’s funeral was small and uneventful. He had no children of his own, and most of his relatives had passed away.

The night before he had to return home, Jack and his Mom stopped by to see the old house next door one more time.

Standing in the doorway, Jack paused for a moment. It was like crossing over into another dimension, a leap through space and time The house was exactly as he remembered. Every step held memories. Every picture, every piece of furniture….Jack stopped suddenly.

“What’s wrong, Jack?” his Mom asked.

“The box is gone,” he said

“What box?” Mom asked.

“There was a small gold box that he kept locked on top of his desk. I must have asked him a thousand times what was inside. All he’d ever tell me was ‘the thing I value most,’” Jack said.

It was gone. Everything about the house was exactly how Jack remembered it, except for the box. He figured someone from the Belser family had taken it.

“Now I’ll never know what was so valuable to him,” Jack said. “I better get some sleep. I have an early flight home, Mom..”

It had been about two weeks since Mr. Belser died. Returning home from work one day Jack discovered a note in his mailbox. “Signature required on a package. No one at home. Please stop by the main post office within the next three days,” the note read.

Early the next day Jack retrieved the package. The small box was old and looked like it had been mailed a hundred years ago. The handwriting was difficult to read, but the return address caught his attention. “Mr. Harold Belser” it read. Jack took the box out to his car and ripped open the package. There inside was the gold box and an envelope. Jack’s hands shook as he read the note inside.

“Upon my death, please forward this box and its contents to Jack Bennett. It’s the thing I valued most in my life.” A small key was taped to the letter. His heart racing, as tears filling his eyes, Jack carefully unlocked the box. There inside he found a beautiful gold pocket watch.

Running his fingers slowly over the finely etched casing, he unlatched the cover. Inside he found these words engraved:

“Jack, Thanks for your time! -Harold Belser.”

“The thing he valued most was…my time”

Jack held the watch for a few minutes, then called his office and cleared his appointments for the next two days. “Why?” Janet, his assistant asked.

“I need some time to spend with my son,” he said.

“Oh, by the way, Janet, thanks for your time!”

“Life is not measured by the number of breaths we take but by the moments that take our breath away,”

If you have a great friend, take the time to let them know that they are great.

Send this letter to all the people you care about, if you do so, you will certainly brighten someone’s day and might change their perspective on life…for the better.

To everyone I write this: “Thanks for your time.”

To a LOW tax bill for you!

As you know, from previous notes we’ve exchanged, I really do try to steer clear of political disputes. My clients hail from all sides of the political spectrum, and it does me no good to tick off a bunch of friends to somehow “prove” my bona fides to another.

But I think we can all agree that our political system isn’t what it should be. That said, I still believe we live in the best country on the planet–despite how disappointed we can be with individual politicians. And with these individuals, I think it’s fair and appropriate to point out that “promises” made on the campaign trail sometimes must bow to facts on the ground.

Why do I write about this?

Well, it’s now in the news that President Obama may indeed be contemplating a tax increase on middle-class families, despite his promises to the contrary: http://finance.yahoo.com/news/2-Obama-officials-No-apf-2491158742.html?x=0&.v=7 . Again, people may (vigorously) disagree about the particular economic strategy of raising taxes in the midst of a downturn, but after working with the IRS for years, I’ve discovered this unassailable truth…

The government really likes to have your money.

And sure–putting yourself in their shoes, it’s hard to blame them! Of COURSE individual bureaucrats and politicians believe that THEIR particular initiatives deserve funding–it’s normal human nature, right? It’s just that the funding comes in the form of being taken from your and my paycheck.

Which is why we do what we do here.

I’m all for paying my fair share–I just hate when I see families hit with a “stupid tax” because they didn’t know all the relevant tax code…or because they worked with somebody who didn’t take the kind of time we take.

On to this week’s Personal Strategy Note: now’s a great time to get the education you’ve been putting off to advance your career. Once you’re done (hopefully) the job market will be MUCH better than it is now! I’ve got some money-saving tips for you this week…

“Real World” Personal Strategy
Go Back To School…At No Charge!

Recessions often see a “boom” in adult education, and this one’s no different. But if you’re seriously considering how to get ahead, do NOT leave behind these strategies to get the thing paid for!

Scholarships
Many scholarships don’t have age limits, which makes anyone eligible to apply. Check out www.Fastweb.com  and www.SuperCollege.com  to search for available scholarships.

Professional and Trade Organizations
Local and national professional and trade organizations often offer grants and scholarships. For instance, The San Diego Foundation (http://www.sdfoundation.org/grant/ ) has several scholarships for adults. Begin by doing an Internet search for your particular locale and specialty. You can also contact your local Chamber of Commerce to see if they have any information on local grants and scholarships.

Colleges and Universities
Many schools offer scholarships created especially for adults who are returning to school. Check a school’s individual Web site or contact the admissions office for details.

The Government
Individual states may also provide grants to help people attend re-training programs that they sponsor. Information and links can be found at www.careeronestop.org . In addition, the Obama administration has launched www.opportunity.gov  to help unemployed adults return to college. The site includes information on a variety of federal student aid programs.

Employers
A large number of employers still offer tuition assistance, especially if you can show how the educational program will help your job performance. For adults who want to return to school while they are still working, this is another avenue to consider.

The Bottom Line
With a little research and a little effort, returning to school may be a whole lot easier…and a whole lot cheaper…than you think!

Hope this helps!

This subject came up in a note I wrote in mid-June, and the topic is back in the news.

You see, unlike my clients, there is a growing number of individuals and families who feel like they get a bit taken advantage by unethical and poorly-trained tax preparers and professionals. Families get sold on promises of fat refunds and excellent service…and then reality sets in. Errors, unfulfilled promises and worse–audits (!) come down the pike, and these families are left hanging in the lurch.

Well, the federal government is considering requiring a license for *anyone* who prepares taxes on another’s behalf. And yes…you might think I’d be opposed to these additional standards and licenses, but, in fact, legitimate businesses generally welcome higher standards as a way of announcing to our clients that we meet those standards! The American Bar Association and H&R Block are just two of the organizations that have announced they support the IRS effort.

Further, you can add your own comments for the IRS here: http://www.irs.gov/newsroom/article/0,,id=211141,00.html . Feel free to add your thoughts–it will NOT increase your likelihood of an audit .

Moving on to the subject of this week’s Strategy Note, we’ll be talking CARS. Specifically, of the “clunker” variety, as the new federal program started on Friday. Plus, there’s some other ways you can save on your taxes through qualifying vehicle purchases, which I lay out in this week’s note.

Oh, but before I go there, let me remind you of our “Independence Month Special”, esp. for your friends who may want the peace-of-mind from having some REAL professionals review their previous years’ returns–up to three years previous can still trigger an amendment which can save on taxes!

“Real World” Personal Strategy
Cars, Cars and CARS…

Two items today, re: vehicle purchases…

There’s been a bit of controversy surrounding the new program for trading in low-mileage vehicles (see here: http://abcnews.go.com/Business/story?id=8154897&page=1) , but regardless of your opinion on the program, it started on Friday.

To recap…

*Trade-ins must be 1984 models or newer, get no better than 18 miles per gallon, and have been registered and insured for the past year. (An interesting note is that buyers’ trades will actually be completely scrapped and have no value to the dealership above the amount of the voucher. A 10-year-old Lexus might qualify for the biggest ($4,500) voucher, but it’s almost certainly worth more than that on the open market, so you should keep that in mind.)

* The mileage you get in your daily driving does not matter one bit. What matters is what’s on record with the government; its source of data is www.fueleconomy.gov. A muffler-dragging 23-year-old Honda may meet the popular definition of “clunker”, but if the government’s estimates show it should get more than 18 mpg combined new, it’s not a clunker. You’ll see two sets of fuel-economy numbers for most cars: one calculated under an older EPA system, the other recalculated to reflect a new formula. Use the new one.

*The numbers:
- New passenger vehicles must have a combined mpg of 22mpg; “Light duty” trucks must be 18 mpg; and trucks over 6,000 lbs. must get 15mpg

- To qualify for the program, the “old” vehicle must get…

>Passenger vehicles– 4 mpg LESS than the new for $3500 credit; 10 mpg LESS than the new for $4500 credit

>”Light duty” trucks– 2 mpg LESS than the new for $3500; 5 mpg LESS for $4500

>Trucks over 6K lbs– 1 mpg LESS than the new for $3500; 2 mpg LESS for $4500

Let us know if we can help…

SEPARATELY from “Cash for Clunkers”…

A special deduction will be available on your 2009 individual tax return, next year, whether you itemize deductions or not.

If you purchase a new passenger vehicle between February 16, 2009 and before January 1, 2010, you may qualify for the deduction. There are income limitations after which a phase-out will occur. For example, if your modified adjusted gross income is between $125,000 and $135,000 for individual filers, or between $250,000 and $260,000 for joint filers, the deduction may be discounted or disallowed.

No matter whether you purchase a new car, light truck, motor home or motorcycle, this deduction will be limited to the state and local sales and excise taxes paid on up to $49,500 of the original purchase price of the vehicle. According to the IRS, this deduction will enable you to buy now and get cash back later on your 2009 tax return.

Hope this helps!

It’s pretty crazy that we’re already nearing the end of July! Is it just me, or is time really flying by? More than halfway through 2009…

Well, I often try to avoid discussing taxes with you in these personal notes. I find that too many tax professionals and accountants are so full of tax jargon, that the regular family just ends up buried in a blizzard of gobbledy-gook.

I hope you can already tell that I take a different approach . And, of course, it’s our JOB (and our true pleasure at my firm) to take care of most of that stuff on your behalf in the first place!

But I did want to make some suggestions this week for how you can plan ahead NOW to avoid getting nailed next tax season.

That’s my subject for this week’s Personal Strategy Note…read on, and leave your feedback or questions!

“Real World” Personal Strategy

Tax Cutting Tips For The Summer

Here are just a few summertime tax-saving ideas to consider:

* If spring cleaning left you with outgrown clothing and household items you no longer use, donate them to charity. Items in good used condition qualify for a tax deduction.

* If you and your spouse work, consider sending your children to a summer day camp. The cost may qualify for the dependent care tax credit.

* If you operate an unincorporated business, consider hiring your children to work for you this summer. You can deduct reasonable wages paid to them for the work they perform, and there’s no social security tax on their wages if they are under age 18.

* Summer is great for entertaining customers or clients.  Keep records of the cost, the date, who was entertained, and what the business purpose was. However, your tax deduction is limited to 50% of your cost.

* Combine business with your summer travel, and you may be able to take a tax deduction for the business portion of your costs.

Need To Make Some Home Improvements?

Make energy efficiency changes and you might be able to cut your 2009 tax bill at the same time.

The 2009 tax law signed in February expanded energy tax credits in order to encourage homeowners to make improvements that will make their homes more energy-efficient and save money over the long run.

Qualifying improvements – such as adding insulation, energy-efficient exterior windows, and energy-efficient heating and air conditioning systems – could cut your taxes. Previously the credit for energy improvements was 10% of the cost, with a $500 lifetime limit. The new law increases the credit to 30%, with a $1,500 limit.

The new law also eliminates the cap on the 30% tax credit for alternative energy equipment, such as solar water heaters and geothermal heat pumps installed in homes.

For details and guidance in maximizing the enhanced energy credits for your home improvement projects, give us a call. We’re here to help you benefit from every available tax break!

Hope this helps!

To a LOW tax bill for you!

Thanks for your responses  from last week’s Strategy Note on achieving financial independence. It was so well-received, that I thought I would spend a bit more time on that subject in this weeks’ note for you.

But, before I get there, I’d like to speak some encouragement to you. A few people wrote to me saying that they were feeling pretty dispirited about their personal situation…and that anything discussing “financial independence” really seemed like a pipe dream, and unrealistic for them.

As usual, I know that when a few people write about it, there’s many more that think it, and I’d like to speak a word to you, if you’re in that category.

Don’t give up.

Yes, simplistic perhaps–but with all of the folks in this economy who are going through hard times, it’s easy for them to believe that there isn’t a light at the end of the tunnel. Did you know that most millionaires have previously been bankrupt at some point? In fact, it’s often the “fire” of these times of trouble which serve to clarify things–and get you making smart decisions, perhaps for the first time.

So, if you’re feeling the financial heat right now, look out for the blessings in the midst of pain. I know it’s hard–but chances are, you’re being reminded of what’s REALLY important…and often, seeing this again can be a launch pad for living the kind of life that you really want to live.

So go for it!

Well, I’ve got some additional thoughts for you about what I wrote in last week’s Personal Strategy Note…

“Real World” Personal Strategy

How To Achieve Financial Independence (Part 2)

Money has no value unless you’ve got the time and good health to enjoy it. In fact, if you have to be poor, would you rather be poor now or at retirement? By planning carefully and investing wisely, you shouldn’t have to make this choice.

Planning for Financial Independence

I believe that you ought to save early and often, making regular scheduled investments in the stock market through the use of mutual funds.

Over the long term, the U.S. stock market yields an annualized return of about 10% (assuming dividends are reinvested). Yes, things are volatile right now…but “market risk” is not the greatest danger to your savings – inflation is the greatest danger. The value of your retirement erodes at a rate of roughly three or four percent every year.

But the stock market has always recovered from even the steepest declines.

Here’s an historical note for you (pertinent now): the worst one-year period for the Dow ran from 01 July 1931 to 30 June 1932. It lost 68.92% of its value. Would you have bought stock then? If your goals were long term, that’s exactly what you should have done. The best 30-year period for the Dow ran from 01 July 1932 to 30 June 1962, during which time it offered an average annual return of 14.34%.

Becoming Financially Independent

Reaching financial independence isn’t always easy. It takes time and work. You cannot accomplish your goal of achieving it by wishing. It takes doing. It takes being committed to and being absolutely determined to act.

One way you can act now, is to take a look at your personal expenses. Here’s some tips to cut them…

    * If you and your partner both work, try to live on only one income. Invest the other.

    * Save an emergency fund, but don’t make it too large. I like a small (one-month of expenses) emergency reserve, with everything else invested in mutual funds.

    * Never borrow money, except to buy a home. If you use credit cards, use them only as a convenience, not to borrow.

    * Pay yourself first. Every month, invest some portion of your income for your future.

Finding more money to actually invest is the best way for you to reach financial independence. And one great way to find extra money is to cut back on your existing expenses.

Yes, you can achieve financial independence, but you can’t get there overnight, and you can’t get there without setting goals and making sacrifices.

So start now.

Hope this helps…

To your greater independence!

I truly hope you enjoyed your Independence Day festivities.

Interestingly, did you know that the Declaration of Independence was actually approved on July 2nd, and most of the delegates didn’t sign it until August 2nd? While John Adams expected Americans would celebrate July 2, the date on the publicized copies of the document was July 4th…so that’s why we celebrate it then!

Some other facts you may not know about our just-passed holiday…

* Three presidents died on July 4th: Thomas Jefferson and John Adams in 1826, and James Monroe, in 1831. Calvin Coolidge was the only president born on July 4th, in 1872.

* The Massachusetts General Court was the first state legislature to recognize July 4th as a state celebration, in 1781.

* The first recorded use of the name “Independence Day” occurred in 1791.

* The U.S. Congress established Independence Day as an unpaid holiday for federal employees in 1870. They changed it to a federal paid holiday in 1931.

For those of you who enjoyed a paid holiday on Friday–thank the Great Depression-era Congress!

So…all of this about “independence” got me thinking about YOUR *financial* independence. Are you on track for it?

I’ve got some thoughts for you about how to get there in this week’s Personal Strategy Note…

“Real World” Personal Strategy

How To Achieve Financial Independence

Often, as we strive to keep our heads above water in these financially crazy times, it’s easy to lose sight of why we’re doing this. What is the goal? What is it we’re trying to accomplish by earning wealth? For me – and for many others – the answer is Financial Independence.

I would define this as “having an income sufficient for your basic needs and comforts from sources other than paid employment”. Financial independence implies freedom. It’s the condition of having saved enough money that you can do whatever you choose. Whether you elect to keep working doesn’t matter – you have enough saved and invested to follow your dreams.

But is financial independence just a pipe dream? Is it something only for the lucky and the strong? No, it’s a goal that anyone can fulfill as long as they’re armed with some basic knowledge, as long as you make smart choices.

As I see it, there are four keys to accumulating wealth:

1. Start investing as early as possible. It takes significantly less money to accomplish what you want, and you have more time working for you.

2. Be determined to save on a regular basis. It is an easy way to accumulate wealth.

3. Begin investing with the largest possible sum you can. You will have more money working for you over a longer period of time.

4. Reach for the highest rate of return you believe you can safely receive on your money over time. Each additional percent is important. The higher the rate, the less money it takes to accomplish what you want.

Financial independence is built upon these four guidelines.

Confronting your financial challenges

In order to save money, you must fight to keep from spending it. I encourage you to set goals, to prioritize wants. Since money can be spent only once, you need to decide which wants are most important. To do this, it may be helpful to place a value on each of your wants.

So…here’s an exercise for the week: Pull out a piece of paper and list your wants.

These can range from a new house to a hot tub to a trip to London to a new blender for the kitchen. Next to each item, write why you want it. (You might want a hot tub, for example, because it would allow you to relax with family and friends.)

When you’ve finished, take another piece of paper and re-order the list based on how important each want is to you. If a trip to London tops the list, are you still willing to delay it by spending $40/month for that gym membership you rarely use?

Confront this issue first (keeping in mind those four keys mentioned above), and I’ll be back with more thoughts for you next week.

Hope this helps!

To your greater independence…

Well there’s potentially depressing news all over the place these days. The loss of an American Icon (two, if you include Farrah Fawcett), unrest around the world and all of the political developments can leave your head spinning, I bet!

Further, if you do follow the news, we continue to get barraged with stories like this:

http://www.istockanalyst.com/article/viewiStockNews/articleid/3317499

Essentially, not only are many Americans falling into debt…but so is the country! It would be even worse were it not for the fact that many other established countries are in even worse shape (UK, Germany, etc.).

But here’s my advice on this: Enlightened Ignorance. By “enlightened”, I mean that it’s not a bad thing to be aware of the fact that our national money situation ain’t great. But by “ignorance” (despite the negative implications of that word), I mean that you CANNOT waste your time worrying about things you can’t control (outside of the ballot box).

It doesn’t help you to spin your wheels in worry and frustration over our national debt. In many ways, it’s just like how it doesn’t serve your peace-of-mind (or even your wallet), to be endlessly spinning about your own personal situation. In fact, debt and financial unrest can be a cleansing process–it can help you remember what’s MOST important in your life (and it’s not money). Embrace the clarification which your situation is bringing.

Perhaps our country can have a similar, national epiphany. We’ll see.

But speaking of our nation, there’s a new law coming, and we’re starting to get questions around here about it: “Cash for Clunkers”.

In this week’s Personal Strategy Note, I break down what you need to know about this new bill, and what it could mean for your wallet.

Enjoy, and leave your feedback and questions!

“Real World” Personal Strategy

The Truth About “Cash for Clunkers”

The new law, which offers owners of older vehicles up to $4,500 to trade them for brand-new vehicles, came into law this week…but beware!

Official-looking sites have sprung up, offering information on the program and asking for personal data or preregistration. Here’s a quick way to know if it’s not official: If it uses the term: “cash for clunkers,” it’s not official at all. The program’s *official* name is the Car Allowance Rebate System.

All the details aren’t yet in stone–regulators have 30 days to set up the details and a system for distributing and collecting vouchers, making late July or early August the soonest the incentives could be available.

But the bill does provide $1 billion for the program through November, 2009. An estimated 250,000 vouchers will be issued on a first-come, first-served basis.

Here’s how it’s likely to go down: Dealers will let you know that your trade qualifies, credit the amount to your down payment, then apply on your behalf for the voucher. Only new vehicles qualify — domestic or imported, purchased or leased — and they must have sticker prices under $45,000.

IMPORTANT: Buyers do not have to register or apply for any part of the program. Dealers do.

Some other guidelines for you:

* Trade-ins must be 1984 models or newer, get no better than 18 miles per gallon, and have been registered and insured for the past year.

(An interesting note is that buyers’ trades will actually be completely scrapped and have no value to the dealership above the amount of the voucher. A 10-year-old Lexus might qualify for the biggest ($4,500) voucher, but it’s almost certainly worth more than that on the open market, so you should keep that in mind.)

* The mileage you get in your daily driving does not matter one bit. What matters is what’s on record with the government; its source of data is www.fueleconomy.gov . A muffler-dragging 23-year-old Honda may meet the popular definition of “clunker”, but if the government’s estimates show it should get more than 18 mpg combined new, it’s not a clunker. You’ll see two sets of fuel-economy numbers for most cars: one calculated under an older EPA system, the other recalculated to reflect a new formula. Use the new one.

* The numbers:

- New passenger vehicles must have a combined mpg of 22mpg; “Light duty” trucks must be 18 mpg; and trucks over 6,000 lbs. must get 15mpg

- To qualify for the program, the “old” vehicle must get…

>Passenger vehicles– 4 mpg LESS than the new for $3500 credit; 10 mpg LESS than the new for $4500 credit

>”Light duty” trucks– 2 mpg LESS than the new for $3500; 5 mpg LESS for $4500

>Trucks over 6K lbs– 1 mpg LESS than the new for $3500; 2 mpg LESS for $4500

Finally, don’t let the ring of “$4,500 in free money” hitting the table distract you. Negotiate on a new car the same way you always would. The only thing different is that all the parties involved know exactly what the trade is worth upfront.

Hope this helps!

To a contented summer!

I hope your Father’s Day was special…that you took the time to thank (or remember) your father, wherever he may be.

On to the subject of my note: You know, I deal with taxes all the time of course…it’s my job, right?

But that still doesn’t mean I like paying taxes–who does? Certainly none of us are opposed to contributing to the necessary functions of our government–police, roads, fire, administration, etc.

Yet I must say that I really do take a special pleasure in helping my clients keep their tax obligations to a minimum. Dave Ramsey calls the unnecessary fees and payments we make when we don’t make wise financial decisions the “stupid tax”.

Well, I won’t be so blunt perhaps–but the unnecessary taxes which many families pay because they just don’t have the time to follow all the changes and updates to our gargantuan tax code…well, that’s another kind of “stupid tax.”

A couple items from last week really brought this to my mind, the first I’ll just mention briefly and the second will be the subject of my full Personal Strategy Note.

First–did you see this? http://money.cnn.com/2009/06/12/technology/irs_cellphones/index.htm?postversion=2009061215 Looks like in their never-ending search for new sources of revenue, the IRS is considering taxing usage of an employee cell phone for non-work purposes. Watch this space…I’ll let you know if they end up following through.

But the bigger news is the health care debate, and how to pay for all of the changes which are being considered. Whatever they decide may affect you, so read on… and let me know if I can help!

“Real World” Personal Strategy

Taxing Health Care…and What It Could Mean For You

I pay attention to Washington politicians and their tax tendencies so you don’t have to!

You see, President Obama has announced he is open to the idea of taxing Americans on the value of their employer-provided health benefits. Right now, benefits are not taxed, but the congressional Joint Economic Committee estimates that this tax “break” costs the Treasury $226 billion per year in revenue.

The goal, here, would be to raise revenue to thereby pay for coverage for those who currently have no insurance, those who can’t afford the insurance they do have, and those struggling to pay for continued health insurance in the wake of losing their job.

It’s a new proposal, and the details aren’t all out there. However, what I think is the most likely scenario, is that they would seek to tax coverage above a certain ceiling. If Congress sets that ceiling at $1,000 per month, and your employer pays $1,250 per month for your coverage, you would be taxed on the extra $250 per month.

Taxing benefits would reverse decades of tax-free treatment dating all the way back to World War II. It’s a thorny issue for Obama because of promises he made on the campaign trail not to tax these items…but they seem to be pretty serious about getting something done on the health care front.

Unfortunately, the proposal would likely mean substantial middle-income tax increases. That’s because the extra tax is tied to the value of health care benefits, not income. Many middle-income earners with comprehensive benefit packages, like teachers and other municipal employees, could see their tax obligation shoot up.

Health care reform has been a consistent issue in Washington. Back in 1984, President Reagan proposed taxing benefits above $2,100 per year. Back then, strong opposition, especially from labor unions, torpedoed the idea. But healthcare costs have soared to the point where the average family’s health insurance premium is often more than the average family’s mortgage. So while this latest proposal is no sure thing, we all have to take it seriously.

Fortunately, there are strategies that employers and families can use to cut the overall cost of health care. And many of them rely on the tax code–and it’s something we can help you with. Flexible-spending accounts, Health Savings Account plans, and Section 105 Medical Expense Reimbursement Plans can all help beat the high cost of health care.

So…if you’re worried about your health care costs, call us or drop me an email to see how we can help. We can take you by the hand and walk you through this stuff. We can even give you ideas to take to your employer!

When it comes to rising health care costs–and the taxes which may accrue–don’t ever believe you don’t have anybody on YOUR side!

To your family’s financial health!

So there’s been a bit of a flurry recently in the tax professional community about some proposals to further regulate our profession. Specifically, the federal government is looking at licensing anyone who prepares taxes on others’ behalf (this is already the case, essentially, in California and Oregon). The goal is to nab the people who are helping others cheat on their taxes…and get the IRS more revenue, of course.

So what do I think about this?

Well, you might think I’d be opposed to it… but, in fact, legitimate preparers generally welcome higher standards as a way of announcing to our clients that we meet those standards! The American Bar Association and H&R Block are just two of the organizations that have announced they support the IRS effort.

How will this all affect you?

In the end, it will actually make your life easier. I’ll still focus my time and attention on helping you cut your taxes to the legal minimum. I just won’t have to help you carry the weight of so many fellow Americans who don’t pay their share.

So when you read or hear that the IRS is regulating tax preparers, don’t think it means a harder hit to your wallet…we’ve got you covered!

Moving on, as much as I write about keeping your head up about money, I still get notes and questions from my clients and friends who find themselves falling into a pit of worry.

So, I’ve got some additional thoughts about how to free yourself from the morass of money worries in this week’s Personal Strategy Note.

“Real World” Personal Strategy

How Not To Worry About Money

With all of the news about spiraling federal debt, it’s natural that Americans are taking a hard look at their own situation, and it sometimes leads to worry–even for those who are relatively secure.

Interestingly, my clients who have MORE cash in the bank often worry more! Funny, right? But it’s normal human nature…

You see, under all guidelines and measures, my finances are very solid. I’ve got a thriving business which is more secure than most people’s jobs. I work with numbers and am very good at taming balance sheets.

Yet, I still sometimes worry about money.

After a lengthy time of thinking and discussion and some more thoughts into the matter, below are a couple areas that can help us all reduce the worry for money.

1. Realize that It’s Exaggerated – Worry is a funny feeling – it seems to exaggerate any problem. While there are certainly many people who actually run out of money, those are usually not the people that tend to worry.

2. Spend the Same Time Making Money Instead – If you are going to spend time worrying about money, why not use that time and get a side job instead? Maybe start a website (or two, or three). I know it’s easier said than done, but the more you work at it, the easier it gets.

3. Confidence – Part of the reason why we worry about money is because of the lack of confidence in our own abilities to earn an income. How can we boost our confidence you ask? Confidence comes from success, and success starts from taking action. So try a few things. Learn from it and try again.

4. The workplace plays a big role in all this as well. Are your colleagues encouraging? Is your boss supportive? If not, then do something about it. Don’t get into the thinking of “I can’t find another job”. Yes you can. If you got this job, you can get another one.

5. Worrying A Little is Actually Good – A little worrying is actually healthy for us. It’s what drives us to be better. It’s what turns our energy switch to the on position. The right way to deal with it is to channel it into your work ethic, and your desire to be better.

How Do You Deal with It?

Of course, what I listed are just the tip of the iceberg. How do you deal with worrying about the lack of money? Or do you? What has worked for you? Let me know!

To your greater peace of mind!