Do you want to be the tax client from hell?
Don’t let your frustrations get the best of you during the tax season. There is a better way to handle all the stress of filing your taxes. Listen to our Bookkeeping 4 Success Radio Show, and take note of strategies that will help get you through tax season.
THE STOCK MARKET: AN EMOTIONAL ROLLER COASTER
There is no magic potion or hidden secret to a guaranteed method of making a killing in the stock market.
Let’s be real, every business is in the business to make money. Their method of doing so depends on their level of integrity. It’s believed that the stock analysts reports are the inside scoop as to how a company is performing and the expected projections of profits. But is that really how it works? Take for instance, when news comes out on a particular stock that causes the price to rise drastically. The enthusiasm by the average investor is to jump on the band wagon of this “hot tip”. Doing so will continue to drive the price up, making the stock look very attractive. In the meantime, those who already hold the stock may not even buy additional shares. Why? Because they are waiting for the price to max out so they can sell at a profit. Another question is who is giving this information to the market? I don’t mean to sound skeptical here but, we as investors need to be careful not to get caught up in the artificial enthusiasm behind hot stock tips. The corporate scandals of early 2000 are a prime example of this sort of activity. Many Wall Street analysts, brokers, and executives unfairly profited from activity such as this. Information was either acted upon in secret before being given to the general public or false information was given to the public, while executives secretly benefited from the information. Although the government has strict rules concerning the fiduciary responsibility of publicly traded companies, many of these regulations were side stepped intentionally for the sole benefit of profit. By the time the government found out, executives had already claimed millions in profits, and the general public or investor was left bankrupt. What’s the lesson to be learned here? When investing be extra careful about how you use the information you receive. Remember to stick to your investment strategy, which should be based on factors such as, income level, investment knowledge & financial goals. What I learned in economics 101 still holds true: prices are based on the laws of supply and demand. When the supply is fixed, the price will fluctuate based on the demand. If demand is high, the price will go up. If demand is low, the price will go down. And thus the stock market also follows this rule. So the next time you hear about a “hot stock tip”, do some research to find out who disseminated the information and why? You just might be surprised.
Partnering for your success
Jacqueline Williams
Financial Strategist
TAXES DON’T HAVE TO BE SO TAXING
Tax season is here. Most believe that it only occurs once a year, but actually the season lasts all year. Whether for businesses or individual, events continually occur all year long that represent potential tax benefits or blunders, depending upon how they are handled. Although the major events occur from January through April, the remainder of the year should be utilized as the planning phase or preparation phase for the next filing period.
Just recently I had a discussion with a colleague about performing tax services. She proceeded to tell me what I should do during the busy season from January to April, in order to file taxes properly for clients. First she talked about how unfair the tax code is to the average citizen, and then she proceeded to explain how necessary it is to receive a refund. She viewed it as some sort of payback from the government for taking her hard earned money all year. She also talked about maximizing deductions, tax credits, and exemptions. As I listened intently, I waited patiently for her to come to the part about her role as a taxpayer and what she was willing to do to educate herself on the process. As the conversation concluded, I expressed my frustration with trying to educate individuals, who were only concerned with the size of their refund instead of overall planning. My colleague finally admitted that she fell into that category, and that her only concern was that she wanted a refund, the bigger the better. Anything that occurred outside of that reason was to be challenged. In conclusion, we both determined that we want to have the best experience possible. I want clients to be properly prepared throughout the year, and she wants to have a better overall financial experience. At this point I realized to achieve this will take a great coordination of efforts.
There appears to be a great divide that exists between tax preparers and tax clients. Why? For many reasons. The average tax client feels challenged by the complexity of the US tax code, and therefore has created a barrier of distrust concerning this system. They believe the majority who pay into the system are low to mid level wage earners, while the wealthy take advantage of laws written in their favor.
The tax preparers goal is to complete the tax form as accurately as possible, which allows the client to take advantage of all deductions and credits to their benefit. The tax preparer is committed to portraying the information based on the requirements of the US tax code.
How can we collaborate efforts so that everyone comes out on top?
The first course of action should be to clear our minds of what previously existed by way of action plans. It’s clear that what has happened has not worked very well for either of side. A shift in our mindset must occur. Change only comes from within.
Secondly we must take on new habits of behavior. The ultimate goal is to have each person financially solvent and to minimize their tax liability, while taking advantage of any credits or deductions. One must remember that every financial event that happens in our life has a potential direct impact on our tax situation. Start with educating yourself on simple processes like properly filing your W-4.
Third, we must take the necessary steps to plan in advance. Planning alleviates the stress of having to figure out important information months after it occurred. One procedure I’ve trained myself to do is to make a folder at the beginning of each year labeled “Tax File 200_”. As items occur throughout the year, such as donating clothes to Goodwill, or attending tax deductible fund raising events, I keep a copy of the notice or receipt, or whatever evidence is provided, as documentation of the possible deduction. I also make small notations or notes about what occurred and for what purpose. At the end of the year I just refer back to my folder and categorize all the information based on the type of expenditure. This process has helped numerous clients be better prepared for reporting special tax events. But still the trick here is you have to do it yourself.
Once we all make the decision to join efforts, we can all have a better tax experience!
Jacqueline E. Williams
Financial Strategist
Year end financial tips during this holiday season
Year end has quickly caught up with us all. With the holiday season in the midst of all our daily activities, we get caught up in the cycle of spend, spend, spend. We buy gifts, plan vacations, purchase enormous amounts of food and spirits, as our way of creating a season of tidings and great joy! After all the dust has settled, and we make our way back to the everyday hustle and bustle of life, it is then we take notice of all the resources we used to make such a joyous occasion happen. There are ways to still enjoy ourselves while keeping a close watch on how much money we spend. Planning ahead for major events always puts us in a better situation than if we haven’t planned at all. Take note of what your financial limitations are and put yourself on a budget. Giving yourself these parameters to operate within will guide you through this period of spontaneity, when you feel like having just a little bit more won’t hurt. And remember, tax season is right around the corner. This is not the time or place to have the attitude that your refund will cover all your holiday expenditures. That’s like robbing Peter to pay Paul. Your tax profile should be well organized so that you can have the best tax filing experience ever. Below are some suggestions to help keep you on track.
1. Set up a holiday budget for gifts, parties, vacations, etc. Be sure to add a cushion of maybe 5-10% extra to allow for surprises (ex: I forget to get cousin Susie a gift)
2. DON’T USE CREDIT CARDS. It makes no sense to create more debt during this period. It’s very easy to go overboard with your spending. I personally am a big proponent of using my debit card from my checking account. This way I can’t spend more than I actually have. If you use credit cards, be prepared to pay them off immediately in January.
3. Find unique ways to give gifts, such as hand crafts, baking a favorite dish, or even performing an act of kindness.
4. Keep a receipt for all purchases during this period. During the holidays many events occur, such as parties, galas, and fund raisers, that are actually tax deductible events. You will need this information come tax time.
5. REMEMBER: the holidays are a time for sharing and enjoying the company of family friends. Reach out to someone who you haven’t heard from in awhile and let them know you care. It’s not always about the “things we get”, but more so about the “things we give”, such as Love.
Have a joyous and safe holiday, and remember spend wisely!
Jacqueline Ford
Financial Strategist