September 2014 Letter

School bells are ringing once again as summer draws to a close. This month's newsletter covers an array of topics from the recent warning of increased telephone scams by the IRS to helping identify when it is time to help parents with their financial management. Also included are circumstances when you need to make changes to your Healthcare Marketplace account and how to use the creation of lists to save money.
As always, should you know of someone who may benefit from this information please feel free to forward this newsletter to them.

IRS Telephone Scams on The Rise

90,000 complaints received regarding tax related telephone scams Over $5 million in reported taxpayer losses Thieves are more sophisticated by using fake IRS caller IDs In a recent announcement, the IRS cautions that the use of impersonating the IRS as a means to steal your identity and your money is on the rise. While this scam is not a new one, the IRS warns us of a growing trend in this form of theft.

The new practice of thievery

The use of the telephone to imitate an employee of the IRS is becoming more sophisticated.

	Spoofing caller ID. New telemarketing scams provide caller ID to make it seem that the IRS is calling you.
	Use of threats. These new thieves are using threats to get you to pay them. The threats include loss of your drivers license and even jail time if payment is not made.
	Angry tone. Often those masquerading as government employees use anger and intimidation to get your information. While this may play into your perception of the IRS, in reality the IRS does not communicate in this fashion.
	Giving information. These new thieves demand pre-paid debit card or credit card information. They may also demand confirmation of other personal information.

What you need to know

The IRS reminds us that initial contact on tax questions occurs through the mail, not via email or telephone. If you receive a call, do not provide any information to the caller. Instead, per the IRS, here is what you should do.

	If you know you owe taxes or you think you might owe taxes, call the IRS at 1.800.829.1040. The IRS employees at that line can help you with a payment issue, if there really is such an issue.
	If you know you don't owe taxes or have no reason to think that you owe any taxes (for example, you've never received a bill or the caller made some bogus threats as described above), then call and report the incident to the Tax Inspector General for Tax Administration (TIGTA) at 1.800.366.4484.
	If you've been targeted by this scam, you should also contact the Federal Trade Commission and use their "FTC Complaint Assistant" at FTC.gov. Please add "IRS Telephone Scam" to the comments of your complaint.

IRS Telephone Scams on The Rise

In a recent announcement, the IRS cautions that the use of impersonating the IRS as a means to steal your identity and your money is on the rise. While this scam is not a new one, the IRS warns us of a growing trend in this form of theft.

Read full article

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Make Lists: Save Money

Making a list and checking it twice. Santa uses this idea to discover who is naughty and nice. You too can use this simple idea to keep more hard earned money in your pocket.

Make a shopping list. Whenever you go shopping, whether it be for back to school supplies or groceries, making a list before you go can save money. Not only will it help reduce the purchase of unneeded items, it will also save in gas as you are less likely to forget something you need. Make a wish list. Use this technique to identify large purchases. Once you create the list, put a priority next to the item and then sort the items in order of priority. When your savings allow, you will then be spending money on something you and your family have already discussed. You will also be in a better position to purchase a prioritized item when it is on sale.

	Make a destination list. Where would you like to go on vacation? Where would you like to retire? Create these lists and you not only have something to look forward to, but you can also start planning to make these destination goals a reality.
	Make a charity list. How often have you given money to a charity based upon who calls you? It is hard to say no to any worthy charity. By targeting charities ahead of time you can ensure your limited funds go to causes that mean the most to you. When someone not on your charity list calls, tell them you give generously to budgeted charities once a year. Let them know you will gladly place them on your list for consideration during your next funding period.
	Make a list of meals. Want to eat healthier? Want to save money by eating out less often? Create a menu and the related list of ingredients to make meals that are good for you and that are ready to go when you are.
	Make a list of gifts. A simple idea to save money is to purchase gifts when the gift item is on sale, versus when you need to purchase the gift. Then keep a list of the gift items you purchase and use the list to source your needed gifts when the event arrives. The gifts on your list need to have broad appeal to make this idea work. Target gifts like baby items, popular books, every-day wedding gift ideas, and gifts on wish lists from your family.
	Make a maintenance list. A great way to save money on repairs is to create a household maintenance checklist. From auto tune-ups to furnace filter replacement, staying ahead of these little things can help avoid major repairs due to forgotten maintenance.

Make Lists: Save Money

Making a list and checking it twice. Santa uses this idea to discover who is naughty and nice. You too can use this simple idea to keep more of your hard earned money in your pocket.

Read full article

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When to Notify the Healthcare Marketplace

Avoid a Premium Tax Credit bill at the end of 2014

For the millions who now use the Healthcare Marketplace to purchase their health insurance, it is important to keep your information with them up to date. Not only does this help ensure you have the proper health insurance coverage, but it also ensures your healthcare Premium Tax Credit is properly applied.
Per the IRS, here is a list of changes in circumstance that can impact the value of your Premium Tax Credit amount: getting married, the birth or adoption of a child, divorce, getting a new job, losing a job, moving,

	changes in eligibility for employer or government sponsored health care coverage,
	ANYTHING that impacts family size or composition,
	ANYTHING that impacts your family income.

When to Notify the Healthcare Marketplace

Avoid a Premium Tax Credit bill at the end of 2014

For the millions who now use the Healthcare Marketplace to purchase their health insurance, it is important to keep your information with them up to date.

Read full article

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Is it Time to Step in?

Aging and help with financial matters

As the baby boomer generation ages so do the parents of the baby boomers. With this aging process there will come a time when a parent needs help. Much of the focus centers on managing things like transportation, mobility, health care, and home maintenance. Harder to spot is the need to help with bill payments and finances. This is because most of us keep this area of our lives separate from our children. So when is it time to step in and help or to ask for help? There is no right answer, but here are some warning signs that help may be needed.

Taking low-income jobs. If your parents have been retired for quite some time and then start working once again, why are they doing this? For many it is to stay active, but for others it is a necessity to make ends meet. Selling off items. Valuable items sold at garage sale prices could be a warning sign. It is natural to want to de-clutter ones life through gifts to grand kids, donations, and garage sales. But not by being taken advantage of by an opportunistic purchaser of valued possessions.

	Major life changes. If a spouse passes away or there is a change in living situation, this might signal a need for help. Who pays the bills, coordinates filing taxes, or manages the retirement savings accounts? When these life changes occur, it is probably time to have a discussion with your loved ones.
	Being fooled by solicitations. Notice what is sent out in the mail. Many direct mail solicitations are convincing and can easily deceive. Do you see responses to requests for money that are unusual? If you are seeing the barriers to these deceptive mail practices breaking down it may be a sign that help is needed.
	Worry about bills. There are certain bills that are larger than others. If a parent expresses worry about making any of these payments you may need to offer help. Common large bills are property taxes, homeowners insurance, and loan payments.
	Increased clutter. If the area of the home that serves as the office for paying bills starts to look cluttered, it may mean things are overwhelming. A quick look and offer to assist organizing the area may be a good starting point to see if help is needed.

A word for the retiree

Being aware of your circumstances can be of assistance to your children during this transitional time. Consider identifying a trusted adviser who can help with financial matters when you deem it necessary. By planning now, the transition can be a smooth one.

Is it Time to Step in?

Aging and help with financial matters

As the baby boomer generation ages so do the parents of the baby boomers. With this aging process there will come a time when a parent needs help. Much of the focus centers on managing things like transportation, mobility, health care, and home maintenance.

Read full article

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As always, should you have any questions or concerns regarding your situation please feel free to call.

August 2014 Letter

Now that home values are on the rise once more, it makes sense to review the tax benefits of home ownership. Also included this month are simple ideas to save money, a summary of an IRS announcement regarding direct deposit of refunds, and an overview of an interesting 3D printing phenomenon that may impact all of us in the next few years. As always, should you know of someone who may benefit from this information please feel free to forward this newsletter to them.

Tax Benefits of Home Ownership When it comes to tax savings it really is home sweet home. Here are some of the popular tax benefits of owning your own home and how to get the most out of your home's tax advantaged status. Mortgage interest. Interest paid on your home mortgage is still tax deductible. This deduction is taken on Schedule A as an itemized deduction. Certain upward limits apply. Property taxes. Property taxes paid on your home are also tax deductible as an itemized deduction. Home Equity. Most homeowners can take out a second mortgage on the "equity" in their home. In most cases, this interest expense is also tax deductible. Many use home equity loans for purchasing autos, boats, and the like since interest on traditional loans is not tax deductible. Idea: Consolidate credit card debt within a home equity loan or home equity line of credit if your home is worth more than your outstanding mortgage balance. You have the double advantage of deducting the interest on your tax return PLUS you avoid the higher interest rate on your credit card. A word of caution however, if you default on a payment your house is now the collateral. Capital Gains Exclusion. When you sell your home, up to $500,000 for joint filers ($250,000 for single taxpayers) of the increased value over what you paid for the home can be excluded from tax. To take advantage of this capital gains exclusion you must make the home your principal residence in two of the last five years.   Idea: The capital gain exclusion on home sale can be used more than once. For example, you could sell your qualified main home and take the exclusion. If you then made a second (vacation) home your new main home you could also take the gain exclusion once again. You would need to meet the IRS ownership and use rules to qualify. Special allocation rules might apply if this second home was also rental property. Second home benefits. A second home (cabin or vacation home) can also benefit from interest and property tax deductibility as long as total mortgages do not exceed certain limits. Should you have any questions regarding your situation please feel free to call.

The 3D Printing Phenomenon Just as nobody could have predicted the impact of the steam engine in 1750 - or the printing press in 1450, or the transistor in 1950 - it is impossible to foresee the long-term impact of 3D printing. But the technology is coming, and it is likely to disrupt every field it touches. The Economist, February 2011 While 3D printing has been around for a number of years, just recently it has started to make inroads into mainstream America. So what is 3D printing and why should you care? What is it? 3D printing (also known as Additive Manufacturing) is the process of producing a three dimensional object of various shapes from digital program input. The process reads the design instructions and then lays down successive layers of material to produce the object. The material creating the object could be plastics, metals and many other source materials. What's the big deal? The 3D printing industry is now a multi-billion dollar category. If it is fully adopted, it could change many manufacturing processes from mass production to individualized manufacturing. Here are some applications currently being used. Part replacement. Need a missing or broken part? Instead of large inventories at far away locations, the part could be made to order locally using a 3D printer. Medical applications. Dentists use this to create personalized material for their patients. Limb replacement companies also use the technology to build better fitting products. Scientific applications. From scientists making fossil replicas to creating sandstone coral structures to help coral colonies prosper, the application of the technology by scientists is expanding every day. Even space exploration becomes easier if you can manufacture a broken replacement part on location. Endless ideas abound. Want a custom smart phone case? Perhaps you need a replacement part or your student needs a shape for a school project. With open source files from places like Thingiverse and 3D Warehouse, you have instant access to many great ideas. Why Care? Price. The cost to own your own 3D printer is now within reach of most households. What once cost $10,000 - 20,000 now can be owned for less than $1,000. Open Source. There are groups dedicating themselves to making sure the digital plans to create objects stay in public domain. The more digital models available for everyone, the more likely you may find a use for one. Personal Products. Want to make personal trophies for the soccer team? No problem. Don't have a digital plan to replace that broken part? No problem, just add a digital scanner and you can create the digital plan to output the part to your 3D printer. Small Business Applications. If you have an idea and you wish to create a prototype, it now is very easy to do. Simply create a model, digitally scan it and then output it to your 3D printer. Is it all good? While the buzz around 3D printing is getting louder, there are those that wonder if the 3D phenomenon is a good thing. A recent open source digital file was made available to create a working hand gun. Authorities quickly moved to try to make the plans inaccessible. Many firms are trying to corner the intellectual property rights to digital files limiting the availability of 3D designs to produce items of interest. Other manufacturing processes using lasers also show promise versus the 3D printer "additive manufacturing" approach. While there are many doubters, if 3D technology catches on it could become a mass-market household product that enables consumers to save money by creating versus purchasing household items.

In the News. IRS Limits Direct Deposit of Refunds Beginning in January 2015, the IRS will be limiting the number of direct deposits into a single account to three transactions. This includes all bank accounts (savings and checking accounts) and any pre-loaded or pre-paid debit and credit card accounts. Any requests beyond three will automatically be converted to a paper refund check and mailed to the taxpayer. The purpose of this change is to reduce the problem of taxpayers having their refunds stolen by criminals. Taxpayers who file multiple tax returns for different family members and have the refunds all deposited in a single account may be impacted by this new policy. In addition, this new direct deposit limit stops the practice of having filing fees directly paid out of a refund amount. As an additional form of security, the IRS reminds us that direct deposits must be made to an account bearing the taxpayer's name.

Seven Little Money Savings Ideas Money savings ideas are around us every day. Here are seven that can quickly be put to use to save more of what you earn. Play the waiting game. When you want to make a purchase, force yourself to wait before you buy it. If online, leave the site and come back in an hour. For large purchases wait a month. You might surprise yourself how many of these impulsive purchase decisions do not occur when using this technique. Reduce spending as entertainment. Too often the mall becomes a place to burn a few hours with family and friends. This form of entertainment can be a costly one. Find another entertainment outlet. Go for a walk. Review your community bulletins for free events. When going out to eat, do not choose a restaurant attached to a mall. Pay yourself first. When sitting down to pay your bills, pay yourself first. Put the payment in the mail to a bank account that is inconvenient to make withdrawals. Use this account to build up three to nine months of spending needs. This will become your emergency fund. Prioritize your debt repayment. First pay those items that have a strong legal obligation (like your tax bill). Then pay high interest credit card debt. Be very deliberate about the order in which you pay or make extra payments on your outstanding debt. Review annuity payments. Many suppliers rely on the strategy to charge you a little bit each month. Some suppliers actually thrive on charging for add-on services. Review your monthly bills and eliminate items you don't need. Typical vendors include cell phone providers, cable companies, internet providers, and traditional phone companies. Add on fees could be call forwarding, or excess charges for data plans, or monthly fees for premium cable channels. Every monthly bill you eliminate comes back as savings every month of the year. Ask for less. Whenever possible ask for a lower bill amount. Call your credit card company or bank to challenge their fees. Be willing to leave them if they do not. Negotiate for lower pricing on all your large purchases. Use the internet to comparison shop for the same item. While negotiating for a lower price is difficult, you will be surprised how many vendors will say, "yes, I can give you the item for less." Plan large purchases like your parents. In the old days our parents would save their money and then purchase an item. With today's ready access to credit cards, this great savings habit has become somewhat of a lost art. Why not rediscover this habit by identifying something you wish to buy and then saving your money to make the purchase when you have the cash to pay for it.

As always, should you have any questions or concerns regarding your situation please feel free to call.