Timing Benefits: When to Tap into Social Security

Everyone knows that there is a magic age when a person can begin a new adventure, retirement is just such time. However, when is the right time to tap into social security? Retirement can be drawn as early as 62, but the Social Security Administration has also created an incentive program for workers that choose to wait until age 70 to retire.

Social security is an annuity that is paid out based on the age that you retire. If a person retires at age 62 then their payment will be 25% less than if they retired at age 66. If a person chooses to retire at age 70 they will earn an additional 8% per year which translates into almost $17,000 annually. The standard advice would be to wait to retire as long as possible. With other investment payouts, it is possible to delay social security payout until the time it is needed to supplement funds. By waiting until age 70 and taking advantage of the higher benefits, a person is provided with a kind of longevity insurance thanks to the government.

Now what about couples, well you are not forgotten. Couples can contemplate several options. The first being the “claim and switch” This is designed for a family that claims two incomes where both individuals are 66 years old. The spouse with the lower earnings (the wife) can retire and file for their benefits as long as the other spouse (the husband) has reached his full retirement age. The husband can then file for benefits based on the lower-earning spouse’s benefits and forgo his own benefits until age 70, when he can then retire and collect the maximum benefits. The wife can either switch to the benefit based on that of the husband or choose to keep her own; whichever is more advantageous to the couple.

Another choice would be for the couple to use the file and suspend. This works well for a couple where only one income is claimed. For example the husband works and the wife stays at home. The husband, at his full retirement age, can file and then suspend payments until the age of 70, and then the wife can file for spousal benefits. She could do this to delay taking out her own social security until the age of 70, where she could then switch if the benefit is higher.

There are many options in the vast and confusing world of social security benefits, but it is important to work with someone who can help navigate and analyze the individual situations.

Here at Crowley & Halloran CPA’s, our consultants would be happy to help you plan and manage your business budget. Click here to request a proposal.

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Looking Out for Property Tax

With any state, the majority of revenue comes from both personal and real property tax. Combined with the erosion of local tax base, many home and business owners may face higher assessed values then in past years. Some tax assessors may be too aggressive with their assessments so they can maintain the tax revenue, but it is important to keep on top of your assessed property value to make sure that you are not paying too much in property tax.

The object of property assessment is to provide fair and equitable value for each property. Most properties are assessed using fair market value. Fair market value is “the price in a competitive market a purchaser, willing but not obligated to buy, would pay an owner, willing but not obligated to sell, taking into consideration all the legal uses to which the property can be adapted and might reasonably be applied.” The property assessment is either full market value or a percentage of the market value. States then take the assessed amount and multiply it by the millage to get the amount owed in real estate taxes. This process can take place yearly, or over a mandated time, usually 3-6 years.

Determining the assessment of residential home tends to be more straightforward then the process of industrial or commercials properties. Houses are compared to other homes in comparable neighborhoods that have recently sold to determine the assessed value. Commercial and industrial properties have more variables to consider before an appropriate assessment is generated. Since there are so many variables, the chance of an assessment error is there, giving the business owner a chance for an appeal of the assessment.

Timely tracking of personal property assessment is essential to guarantee deadlines are not missed. Many only offer a brief deadline for appeal, usually 15-45 days from the assessment date. Once the business owner determines if there is a tax assessment that warrants an appeal, the appeal is filed. There are three levels to the appeals depending on the severity of the assessment. Each needs proper detailed documentation. If you think that there is a problem with your assessment then it would be beneficial to consult with a CPA firm for assistance.

Here at Crowley & Halloran CPA’s, our consultants would be happy to help you plan and manage your business budget. Click here to request a proposal.

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Frugal is Not a Kind of Fruit

Christmas BellsThe minute someone starts talking about frugality and budgets, people tend slide into oblivion and begin snoring. The thing is, being thrifty or economical or scrimpy or just plain cheap is the only thing helping people keep their heads above the water.

Everyone, in our current economy crisis, seems to have at least a little pinch where spending is concerned. There are many ways to help live within your means and the ideas are practical and useful for daily life.

Get a Deep Freezer

This practical appliance will enable a family to purchase meat and vegetables in bulk and at discount and keep it good for months to come. Even fresh foods can be frozen on a cookie sheet and then transferred to containers and stored.

Deli Meat vs. Whole

If you enjoy making sandwiches with deli meat, the most cost effective way to purchase it would be to buy a whole ham and ask the grocery store deli to slice it for you. Use some and freeze the rest. Buying just a few slices at a time ends up costing you three times as much.

Direct Deposit/Debit

Our culture has gone the way of automation. This can be a beneficial tool for keeping within your budget. Banks often have options to withdraw chosen amounts from your paycheck and put it into savings and even your bills get deducted right away so you don’t have to worry about spending money allotted for something else.

Make Friends with Local Growers

Sometimes a local orchard has such an excess of product that they want to unload it. Make an arrangement to pay a flat fee to pick your own produce and save money in the process. Can or freeze extra.

Price Shop

You do it when getting ready to make a large purchase like electronics, why not for food? Visit your local stores, even some which are further away, and take a list of the staples you use in your house. You will find that certain stores have items that are generally cheaper than anywhere else and shop around. Then stock up when you find a sale.

Cook Smart

Find recipes that are hearty and savory and last several meals. You will find that you can feed a family of four for several evenings at $1-$2 for each person.

Revive Old Clothing

Everyone has those old sweaters or skirts that keep you warm, but have those irritating fuzzies all over. Rather than discard them or pass them off to Goodwill, there is a way to revive them for future use. Using a razor to take off the pillings will give your clothing a brand new lifespan and save you money on your wardrobe.

Clean your House

Now, how does that save you money exactly? If you pick up and wipe down, your home will not collect all the grime requiring the expensive cleaners.

Check your Bills

This may be a no-brainer, but people have spent money they didn’t need to by simply failing to check their bills with the phone company, cable and internet and not catching mistakes.

Winter-proof Your Home

Energy efficiency is important to keeping down your gas and electric bills. A simple way to save money is to buy insulation for your windows and cover them during cold weather.

There are so many creative ways to live a frugal life without pinching pennies and being stressed out.

Here at Crowley & Halloran CPA’s, our consultants would be happy to help you plan and manage your business budget. Click here to request a proposal.

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Prosperity Amongst Holiday Spending: Reality or Myth?

Merry ChristmasNo one likes to be Scrooge during a time of celebration and festivities unless you are actually Scrooge. But as every person who has more than one friend in the world knows, when it comes time to show your appreciation and love during the expected gift-giving moments, your pocketbook begins to scream as its contents are unceremoniously yanked out with abandon.

Can you actually save money during the holidays or is this simply a myth? The following are ways to ensure your wallet is not overspent this year.

Decide in advance how much you can spend.

Making a budget sounds as appealing as watching someone else clip their toenails, but being thorough about your finances will only help you in the future.

When drafting your budget don’t forget to include everything including postage for the cards, holiday favors, home decorations and any other items included in the process of holiday celebrations.

Double-check your gift list

After making your budget, write down all the people you intend to buy gifts for and then go through the list again and decide how much you can spend on each person. If you find yourself over-budget, you may need to consider cutting names or amounts. Stick to your budget, no exceptions.

If you have a large family, talk to them about making a “secret Santa”
policy so everyone gets a gift without breaking the bank.

Credit Cards are Short-Term

Despite the reality of credit cards, this option is really the lesser of two options. Go for the ‘cash only’ approach. But if that is simply not possible, using your credit card as a short-term loan is also acceptable. The problem is that it is so easy to lose track and get out of control before realizing it. Choose the card with the lowest interest rate and keep track of how much you spend by recording all the receipts.

Cash Only

Sometimes it is easy to lose track of how much you’ve spent. Rather than poring over your receipts, withdraw cash and keep it in a “holiday” designated envelope. Once the money is gone, it’s over.

Look out for #1

Putting yourself on your shopping list is smart. You know, without a doubt, that impulses run high during the holidays. Account for the splurge up front and budget for it.

Economical Gifts

Are there people who didn’t make your gift list that you still want to express affection and appreciation for? There is always holiday baking being done. Make an extra batch and send it across the street to your neighbor. Offer to babysit, walk the dog, or take an elderly relative on an outing. The cost is negligible, but the gift is priceless.

Another option for friends and family who live far away is to send e-cards. They are free and are a fun way to show you’re thinking of them.

Wedding Plans

If you are planning a wedding for a different season, it is an excellent idea to search for the wedding party dresses during the winter season because it is the slowest time of year for bride apparel and you will often find excellent deals.

Vacations

During this time, resorts and cruise lines are really hurting for business. If you have always dreamed of a luxury getaway, this would be the time. Escape from all the strain and fluster of holiday shopping and have yourself a ‘merry little Christmas “somewhere else”.

Here at Crowley & Halloran CPA’s, our consultants would be happy to help you plan and manage your business budget. Click here to request a proposal.

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Charitable Deductions: Individuals Going to the Limit

Charitable DedutionsThe leaves are changing and the weather is getting cooler, and people are starting to think about the upcoming holiday season. We all know it will be here before we know it, and it is the time to give to those less fortunate then us. Charitable giving by individual donors accounts for 75% of all US giving according to recent reports by Blackbaud Inc. and Atlas of Giving, national organization that provide analysis trends over charitable giving in the United States.

Charitable giving as defined by the IRS as a contribution or gift to, or for the use of the following:

  • A state, but only if the contribution is made exclusively for public purposes, such as a gift to reduce the public debt.
  • A corporation, trust community chest, fund, or foundation that is created or organized in the United States exclusively for religious, charitable, scientific, literary, educational purpose, to foster national or international amateur sports competition, for the prevention of cruelty to children or animals, for war veterans, an auxiliary unit or society of, or as a trust or foundation for an entity.
  • A cemetery company owned and operated for the benefit of its members or a corporation chartered solely for burial purposes.
  • A domestic fraternal society, order or association operating under the lodge system, but only if the contributions is exclusively used for purposes stated above.

Once you know to whom you want to give your donation, it is important to know how much you can deduct on your taxes. When giving charitable donation, if an individual gives 20% or less of their adjusted gross income then there is no limit considerations. Depending on the type of donation and organization, there may be a limit of 20%, 30% or 50%.

There are very stringent documentation rules that govern donations. You must have a record of the amount of the donation and how the donation was made, example: cash, noncash, or out-of-pocket expense. Some documentation that works is bank statements, credit card statements, written communication from the organization, payroll deduction record. These must have the amount donated and the name of the organization.

By knowing the legal restrictions and regulations governing charitable giving, the process is easier for everyone. Having a good, trusted financial advisor to help is always the best course of action when making large donations.

Here at Crowley & Halloran CPA’s, our consultants would be happy to help you plan and manage your business budget. Click here to request a proposal.

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IRS Payment Plan

If you were unable to file your taxes by April 15, you are not alone. Around 5.5 million business tax extensions are filed every year. This extra six months is a nice cushion if you just couldn’t get everything done on time, but the next deadline, October 15, is coming. And since the IRS only allows one 6-month extension to file form 1040, it is time to scurry.

It is vital that you file on time or you may be subject to fees and penalties. If you are concerned that you will be financially unable to pay everything you owe immediately, consider the IRS’ installment agreement. Let’s look at this "payment plan" so you are prepared.

It is perfectly acceptable to make monthly payments with the IRS installment agreement if you are financially unable to pay your tax debt.

To proceed with this IRS installment agreement process, you must:

  • File all required tax returns
  • Consider other sources, like a loan or credit card, to pay your tax debt completely to save money
  • Figure out the largest monthly payment you can afford to make, with a $25 minimum payment, and
  • Understand that any future tax refunds will be applied to your tax debt until it is paid off

Next, you can avoid the fee for setting up an installment agreement if you pay the full debt amount within 120 days. If that is your plan, you will need to specify this option when you sign up. But you will still need to call if you owe more than $50,000.

The fees for setting up an installment agreement are:

  • Direct Debit – $52
  • Standard or Payroll Deduction – $105
  • Lower Income Level – $43

There are a few ways to apply for an installment agreement:

  • If you owe $50,000 or less (including individual income tax, interest and penalties), apply online
  • You may call the phone number on your bill or notice
  • You may mail the completed Form 9465-FS.

After all this work to file an installment agreement, be sure to keep your account in good standing. This is easily accomplished by:

  • Paying, at the very least, your minimum monthly payment when it is due
  • Including your name, address, SSN, daytime phone number, tax year and return type on each payment
  • Filing all tax returns on time
  • Paying all taxes you owe completely and promptly
  • Continuing to make all payments even if a refund is applied to the account balance

If you would like to know more, you may contact Crowley Halloran CPA’s at www.crowleyhalloran.com.

Here at Crowley & Halloran CPA’s, our consultants would be happy to help you plan and manage your business budget. Click here to request a proposal.

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Tips for picking a CPA

Mike Crowley | Crowley Halloran CPA

Michael W. Crowley, CPA - Principal

One of the most critical decisions anyone can make is picking a good-quality, reliable accountant. There are several things to keep in mind when a business owner chooses an accounting firm. Many accountants are excellent, but are they going to meet your business needs?

There are a few basic tips to keep in mind, as a business owner, when choosing a CPA firm:

Certification: The CPA should meet all the states requirements and passed the required exam. It is important that an accountant has met all the requirements and even continues their education to stay certified. It is the best way to know that they are current in all the new procedures and tax laws.

Experience: Make sure the accountant or CPA firm is experienced in the business field that your business specializes in. It is important that they know what the unique business needs are and how to handle any problems that may arise. They should have worked with that business industry before or something very similar.

Size: While the larger, more popular CPA firms may be ok, do not over look the smaller firms. The larger firms can probably take care of all the business needs and more, but the smaller firms will offer a more personalized approach. Many of the larger firms will contract out the smaller firms to work on small accounts anyway, so why not start with the local, smaller firm and go from there. Just make sure they meet the requirements that your business needs.

Get a Referral: One of the most important factors to finding a good, reliable CPA is to get a referral. Ask your friends, family, co-workers and other business owners to see who they would recommend. The best reference usually comes from word of mouth.

Once all the references have been compiled, do some research on the CPA firm and then ask to meet them and conduct an interview. Ask questions and find the right fit for you. Remember your CPA is to be one of your most trusted advisors, so make sure they are the right fit for you and your business.

Here at Crowley & Halloran CPA’s, our consultants would be happy to help you plan and manage your business budget. Click here to request a proposal.

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Small Business Tax Deductions- What to be Thinking About before Tax Time

Since the year is now more than half way over, it is important to keep in mind the different tax deductions that can help your business. There are a few basic tax deductions that small business owners need to think about before tax season approaches. As a business owner it is important that you help your business in every way possible.

Here is a list of a few tax deductions that are easy to keep track of and can help when tax time approaches.

  • Mileage – If a car is used for business purposes then mileage can be recorded. The reimbursement rate for mileage is 55.5 cents per mile. Parking fees and business related tolls may also be deducted. Make sure that you are keeping a mileage log for record all the mileage used for business purpose. No not count any mileage that is personal use.
  • Books and Professional Fees – Spending money on books, including books on legal or tax information, to help you run your business can be very helpful when starting a business. All of these books are deductible at tax time. Also any fees spent on lawyers, tax professionals or consultants can be deducted in the year that they occur.
  • Travel – With some business, travel can be very important in building client relationships. Many business related travel expenses, including plane fare, rental car expenses, taxies, lodging, meals, shopping for business materials, cleaning clothes, phone calls, faxes and tips are all deductible. When combining business and pleasure id ok as long as the main reason for going is business. If the family comes along their expenses are not deductible.

Business Entertaining- Another way to build client relationships is to take them out for a meal. When entertaining a client or perspective client 50% of the check can be deducted at tax time, if business is discussed before, during or after the meal. Make a note on the bill to remember which client and the purpose of the meal.

There are many deductions that can be taken during tax time, and these are just a few. Remember that a good tax professional will guide you through tax time and what you will need.

Here at Crowley & Halloran CPA’s, our consultants would be happy to help you plan and manage your business budget. Click here to request a proposal.

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