Wednesday, December 30, 2009

The Best New Year's Resolutions Ever

It is time to make the obligatory New Year’s resolutions. The old, worn-out routine is out. No lose weight, stop smoking, drinking, ad nauseam. This year I have a better list; one I have a chance at keeping. Are you ready? Here we go.

• Smile more.
• Greet everyone with gratitude and a heart of service.
• Listen first, talk second.
• Try to understand from their point of view.
• Work hard when in the office so I can spend more quality time with family when at home.
• Stop and smell the roses, watch the birds, enjoy a green field of grass.
• Hope.
• Hug my kids more than ever.
• Hug my wife as much as ever.
• Tell my parents, “I love you” and “Thank you.”
• Spend quiet time each day.
• Appreciate what I have.
• Look for opportunities to serve.

Pretty good list, isn’t it? Now it is your turn. Tell me what you resolve to do this New Year.

Saturday, December 26, 2009

Each Gives Which Each Has

Before the final brick was laid on the Berlin Wall, the East Germans loaded a dump truck with garbage and other refuse and hauled it onto the West German side and dumped it. The West Germans were wild over this and rallied to load three or more trucks with garbage and take it to the East German side. Fortunately, cooler heads prevailed. Instead, they loaded a truck with blankets, medicine, and food. They attached a note: EACH GIVES WHICH EACH HAS.

The lesson requires review by all of us. When someone does us wrong, we want to retaliate. However, revenge is a caustic emotion and destroys the vessel that holds it. Sending love, kindness, and patience, even if undeserved, will benefit you more than anyone else. The message you send to yourself is that you have plenty of love and kindness to spread around.

Recently, a family member directed significant hate toward my immediate family. Sue and I discussed what we should do. We toyed with sending a return letter with an underlying jab. You see, we fell we are right in our position. Even if we are in the right, does it justify such a response? Eventually Sue and I decided no response was the best approach. I didn’t want to sink to that level or get into a pissing contest.

For Christmas, this family member sent my daughters a Christmas card, excluding Sue and me. Several jabs were taken in the letter to place blame and garner sympathy. Rather than fire back a blistering letter, Sue and I sat down thought it through. I remembered the Berlin Wall story from Zig Ziglar. We realized that if we send anger, hate, revenge, or any other negative emotion we would be condoning the activity and telling our own minds that this is all we have to give. Instead, we sent a beautiful basket of flowers with a note attached that in part read: OUR LOVE FOR YOU IS UNCONDITIONAL. WE LOVE YOU AND ALWAYS WILL. WE WISH YOU PEACE OF MIND, HAPPINESS, AND HEALTH.

I enjoyed the warmest Christmas I’ve had in years. I never knew how powerful the positive emotions can be. Sure, I expected they would be uplifting, but not like this. The message was more powerful to us than to them. Still, I pray they feel every ounce of love we sent. Maybe I am crazy, but I feel if life is worth living, it is worth living well. And living a good life doesn’t come from out there, but from in here.

Merry Christmas everyone. May you all be filled with peace of mind, happiness, love, and contentment.

Wednesday, December 23, 2009

Everything I Need to Know I learned From My Cat

Cats have the life. They sleep when they want, eat when they want, play when they want, and enjoy a sunny day as much as a rainy one.

Humans are the only mammal that sleep eight hours and then pound out an uninterrupted sixteen hour day. Cats sleep in several spurts with a few naps on the long side each day. An early evening nap leads to a short burst of horse-play, followed by a prowl around the house. Mid-morning is a good nap time for my cats. However, they get up early and get their exercise in. My goal is to take a power nap, or at least, a gentle, refreshing nap, once during the day. Hope the boss isn’t watching. If the cats are a guide, I’ll spend less time overall sleeping and have more productive time each day. Infants do it; old people do it; and cats do it. So I am going to do it. Does this mean I’m getting old?

Cats eat when they are hungry and not massive hunks of food either, unless it is a special treat and there is competition. Usually cats eat small amounts at various times of the day. Outdoor cats eat a mouse or a bird when the urge strikes and house cats chomp kitty food when they feel like a snack. The point is they eat pretty much the same thing daily. To follow the cat’s lesson, I’ll eat less more often and focus more on fresh fruits and vegetables. It is healthier and better on the stomach.

Cats jump and play when the urge strikes. They jump and run at the drop of a hat when they are in the mood. They chew human legs and arms when they get spicy. The cat lesson for humans is: Sing when the urge strikes; laugh, smile, jump, hop, or even take a little jog. So what if others think I’m nuts? My wife has known I’m nuts for over two decades, so the secret is out.

So many people whine about the weather. It is either too hot or too cold, windy or calm, wet or dry, humid or not. I’ve noticed cats watch a gentle rain, raging thunderstorm, snow, and sleet with the same calm pleasure. Their blood pressure must be purrrfect as they take whatever weather comes their way and enjoy it all. If a cat can paw at a snowflake, why should I complain about shoveling the snowflake later? The cat doesn’t care about ice, flood, or shoveling. They take it all in and then settle in for a long nap. Just because I have to shovel later doesn’t mean I can’t enjoy this moment first. And I will. If it is good enough for the cat, it is good enough for me.

We can all learn from our mammal friends. They take one day at a time, live life for the moment. That is my goal: to enjoy the moment, live the now. The past is already gone, tomorrow not yet here. All I have is now, this moment, to enjoy and savor. I think I’m going to hop, skip, and sing, followed by a light snack and a nap. Ahhhh! That is too much of a plan. I’ll just sing a silly song and dance around the house until… the wife and kids get home. Then I’ll act civilized. I will. Honest.

Friday, December 18, 2009


Over the holidays we send an organizer to all our clients with last year’s data in the margin to facilitate information gathering for this year. We also include a three page questionnaire.

Before we even sit down with the client we require the questionnaire be filled out. Without a few simple questions answered, we can’t do our job; and if we can’t do our job, we may as well go home.

About 80% of the people come in without the questionnaire filled out. Some grumble when asked to fill it out in the waiting area. I am amazed by this response. Our job is to help you pay the least amount of taxes allowed by law and you don’t want to answer a few questions? My doctor has me fill out a form listing my medical concerns/issues every time I visit. To this day I have never heard someone in the doctor’s office complain about filling out the form. In medicine, they call it: prescription before diagnosis is malpractice. The same applies to accounting/bookkeeping/payroll/tax preparation. If you prepare your own return online, the computer asks so many questions, many people start pulling out their hair. But the computer needs to know how to prepare the return. Live, flesh and blood, tax preparers can focus on your personal tax situation better than a computer, but we still need questions answered. By answering some questions in advance, we can jump to the appropriate action and save you money.

If your tax preparer doesn’t require you to answer some questions, you need a new tax preparer. It is the tax preparer’s job to serve you for the fee you pay them. Without information service is impossible.

When you see your friendly tax pro this year, be prepared to answer questions. Don’t act disgusted. We are doing our job. Don’t tempt us to take a short cut.

Thursday, December 17, 2009


The IRS, in a private ruling, stated scrip rebates donated to charity are deductible.

Charities purchase scrip from retailers (or a clearinghouse) at a discount and sell to members and/or the public at face value. Example: A local church purchases a $100 Wal-mart scrip in the form of a gift card for $98 and resells it for full price, $100, to a parishioner. The church retains the $2.

The private ruling says the IRS will consider the $2 a deductible charitable contribution. The situation addressed in the private ruling involved a charity that gave buyers of scrip the option of receiving a cash discount or letting the charity keep it. Many charities don’t give the option of taking a cash discount and I read the private ruling to mean the deduction is only allowed when the option to take the discount is present.

Donors need acknowledgement from the charity prior to filing if claiming a deduction. Rebates kept by the purchaser are not taxed, as the IRS considers this a tax free price reduction.

Wednesday, December 16, 2009

Tax Update on Home-buyers Credit

The IRS has not updated Form 5405 to carry back the tax credit on a home purchased after November 6th. The rules for the third incarnation of the credit are different than the previous credits and required a complete reworking of Form 5405.

There is now a new $6,500 credit for those that owned a home five of the last eight years. Also, homes purchased after November 6th must not exceed $800,000; there was no ceiling prior to this. A signed closing statement must accompany Form 5405.

Tuesday, December 15, 2009

Golf Cart Tax Credit

This should make golfers smile. Street-legal electric golf carts qualify for a federal income tax credit. The credit has a base rate of $2,500. This is an actual cash reduction in your federal income tax, rather than a deduction. Depending on the battery capacity, the credit can be larger, in some cases, as much as half the cost of the vehicle.

The golf cart manufacturers understand the tax credit and are building golf carts that meet the tax standard. The golf cart can still be used on a golf course, but qualifies for the credit because they are manufactured for highway use primarily.

Friday, December 11, 2009

Stupid Laws

All work and no play is unhealthy. Therefore, today I am going to have some fun with stupid laws around the world. The laws listed below come from Facts of Life, a mailer from Bouwer Printing.
  • Men in strapless gowns can be fined in Florida,
  • Running out of gas on Germany's Autobahn is illegal.
  • It is illegal to carry a violin down the street in a paper bag in Salt Lake City, UT.
  • The penalty for jumping off a building in New York is death.
  • It is illegal to sell dolls without a human face in France. Sorry Elmo.
  • It is illegal to ride an ugly horse in Wilbur, Washington.
  • Butter substitutes can not be sold in Wisconsin state prisons.
  • It is illegal to set a mousetrap in California without a hunting licence.
  • It is illegal to go to bed in Massachusetts without first taking a bath.
  • Coasting downhill in neutral is illegal in Rhode Island.
  • Sleeping while you drive is illegal in Tennessee.
  • You are not allowed to dye ducks blue and then sell them in Kentucky.

Smile big and have a good weekend.

Thursday, December 10, 2009

S-Corp Dividend Rules

One of the nicest things S-corporations offers is tax-free dividends. Unlike, partnerships, regular corporations, and sole proprietorships, distribution/dividends paid out of profits above wages are not subject to self-employment or FICA taxes.

Example: XYZ is an S-corporation with two shareholders/owners and five additional employees. XYZ has $150,000 in profit before shareholders/owners are paid. Each shareholder/owner is paid a $50,000 wage, plus a $25,000 distribution/dividend. The wage is handled like any other employee wage. The dividend is only subject to ordinary tax, no FICA or self-employment tax; about a 15% savings, or $7,500 per owner.

When I tax plan with S-corp clients I sometimes have a hard time convincing them to pay a dividend rather than all wages. The IRS says S-corps must pay a reasonable wage before dividends are paid. Reasonable is a wide road and requires careful consideration. Once your S-corp pays you a reasonable wage, it is time for dividend distributions of additional funds. The savings can be significant.

Don’t overpay your taxes because you don’t understand the value of the S-corp. Invest time with your friendly accountant and build a plan for the greatest tax savings. The rules are many when it comes to S-corps and the opportunities are equally great. You don’t need to understand basis, debt basis, flow-through income, etc. to take advantage of the benefits. You need a good accountant that lays out what is available to you and how to accomplish the goal.

I encourage you to take this post to your accountant if you have an S-corp. Allow him/her to explain what I outlined above as it relates to you.

Tuesday, December 8, 2009

Harvesting Losses

The last corn fields around my house were harvested this past week. All the hard work and risk (think weather, corn prices) the farmers took has paid off.

When things go wrong (drought, flood, wind) and the crop is poor, the farmer still harvests what he can. Now that the year in closing, it is time for taxpayers to harvest losses as well.

The stock market has left many people in the hole. The rally that started in March has made some of us feel a little better, but anxious we are overdue for a correction. Locking in losses now for tax purposes can make sense and put you in a position to benefit if the market continues to rally.

If you have mutual funds or ETFs, it is easy to harvest losses with little risk. By selling a growth stock mutual fund and purchasing a different growth fund in the same fund family, you have harvested the first mutual funds loss and the new fund keeps you in the market if things keep going up without additional sales charges.

You can deduct $3,000 of capital loses on your federal tax return every year above and beyond other capital gains; Wisconsin only allows a $500 per year deduction. It still makes sense to harvest loses. If you realize a $20,000 loss from the first mutual fund, you can use that loss to reduce other capital gains now and in future years, plus the additional $3,000 until the loss is used up.

Careful planning can cut your tax burden in this tax increasing environment. Don’t waste the opportunity.

Monday, December 7, 2009

Use Drugs and Drive

I watch little television and when I do it is usually football, the history or learning channels. When I watch football I mute the sound and read, peaking above the pages to see how things are going every so often. As I write this, the Giants are edging the Cowboys and the sound is off.

Outside football season I watch even less TV. In August of this year I watched zero television. None. Not even a second. Not even with the sound off. Normally I enjoy a good science or history program several times a week and will indulge with a movie once or twice a month. Not this August. And it wasn’t intentional. I just noticed in September I hadn’t watched TV in over a month.

Now that the holidays are here I sometimes watch the game with the sound on. If I don’t fall into a pleasant slumber, I quickly bore from all the commercials. Then I start flicking between games as commercials come on. Before long a commercial storm blankets all the games on at the same time. I counter by checking the science and history channels. Then, as it always happens, every channel spends an eon spewing “important messages.”

Last night and part of this afternoon I watched and listened to the game, flicked between games when necessary, and diverted to the science and history channels as desperation set in. I noticed something disturbing about the advertisements: most were selling drugs or gas-guzzling vehicles. Let’s explore the message.

What advertisers want us to do is ask our doctor about everything, as if we are so stupid and need a pill for everything, even things we didn’t know was wrong. If I listened to these ads I would be erect 39 hours a day, would need to see my doctor because after four hours I may have a serious problem, and I should piss better, faster, more often, less often, and probably shake off the last drop with the wrong hand.

I did learn a few things from these ads. First, if a drug is advertised, don’t use it. My reasoning: If a medication really does the job your doctor will prescribe it for you if it is necessary. If the drug requires advertising to push the product, I have serious doubts about the medication. My guess is that it is very expensive and other cheaper medications may perform as well or better. I think they count on you being stupid and sending the bill to your insurance company, but when your employer’s insurance premiums go up, there is less money available to give you a raise or even pay you at all. So, is it that important to piss well with a hard-on?

Next, we tackle the vehicle ads. It seems that the only vehicles offered on TV are big, gas-guzzling trucks and SUVs. Detroit still hasn’t learned their lesson. Eventually, the government will turn us into a third- world nation bailing out idiot corporations. Letting them fail now is easier than bailing them out and watching them fail later anyway.

Once you add all the commercials together you get one simple message: Get a ton of over-priced drugs from your doctor and drive the biggest vehicle you can finance. Folks, if you want quality of life, use as few medications as possible, drive a reasonable vehicle that doesn’t destroy the environment and you financially at the same time.

Am I the only one that feels this way? I encourage you to follow my example and turn off the idiot box before it causes you permanent damage. You know, there are really good books and magazines available for entertainment. I also bet the kids would love extra time with mom and dad. And as long as we are talking mom and dad, when is the last time you had a heart-to-heart talk with yours. What about your siblings, friends, and neighbors? They are good people to know, too.

And remember: Don’t drink and drive.

Thursday, December 3, 2009


Life is easier today with computers, microwave ovens, cell phones, cable TV, etc. Rarely do we think about life without our technological tools, even though many have been around for less than a generation.

If a storm knocks out the electricity we become acutely aware of technology, or lack thereof. Still, with the current out, our cells phones and laptops work until the battery runs down.

When technology is at its best, life is easier, more fulfilling, and pleasant; we can get more work done in less time; we can enjoy entertainment in ways unimagined only a few years ago.

But what happens when technology fails? This became painfully clear to me over the past week. I planned on upgrading QuickBooks in my office over Thanksgiving and the stress followed fast.

I figured by starting over the holiday, I could resolve issues before the next work week. What’s the worst that could happen? Well, let me show you how bad things can get.

First, I ordered QuickBooks Accountant 2010 online and downloaded the program onto each computer. Things went smooth. My office is on a server. It seems QuickBooks 2010 requires Microsoft Framework 3.5 and other update files. My server didn’t update to Framework 3.5. The C drive isn’t large enough for all the added files. My computer guy had to work half the night finding enough room to get the job done. Three days later, I finally got QuickBooks to work on the server.

Technology can save time, but it also can waste so much more time, and I’m not even talking about games and wasted time surfing the web. A tax office today cannot serve their clients without technology. I’m just scared. Soon, I’ll need to install the 2009 tax software. I hope is runs smooth.

Wish me luck.

Wednesday, December 2, 2009

Federal Disaster Area

The Sunday and Monday of Thanksgiving week I testified in Atlanta in a hearing for a client; Thanksgiving rounded out a large part of the remainder of the week; and Monday and Tuesday of this week I attended continuing education classes with most of my staff. Today I am struggling with computer updates stemming from QuickBooks issues. As a result, I am really far behind and my desk shows it.

President Obama has declared my desk a federal disaster area; low interest government loans are available to clear out the detritus.

The only way to attack such a pile-up is to have a game plan. I am big on goal setting and carry a Performance Planner with me wherever I go. I have set out a detailed plan to catch up. First, I have to get QuickBooks functional. That is the fly in the ointment. I don’t know how long it will take. Once QBs is working, I’ll work late and this weekend getting the paper moved.

Wish me well. When I get a serious, determined look to my eyes, look out. I am on a mission. As God is my witness, I will get all projects up to date and make additional progress on projects that need results.

And I smile while I work, too.

Tuesday, December 1, 2009

Getting Smart with Education Credits

The education credits have a new friend, the American Opportunity Credit. Let’s review the old and new education credits.

The Hope credit has been replaced by the American Opportunity credit, but is still available in the Midwest Disaster Area where the credit is double the regular credit. There are several notable differences between the Hope and American Opportunity credit: maximum credit, phase-out, eligibility, qualifying costs, and refundability. Review the list below:
  • Maximum credit: American Opportunity credit (AOC): $2,500 (100% of first $2,000 plus 25% of next $2,000)per student; Hope credit (Midwest Disaster Area only): $3,600 (100% of the first $2,400 plus 50% of the next $2,400) per student; Lifetime Learning Credit (LLC): $2,000 (20% up to $10,000) per return.
  • 2009 modified adjusted gross income phase out range: AOC: $80,000-$90,000 ($160,000-$180,000 MFJ); Hope and LLC: $50,000-$60,000 ($100,000-$120,000 MFJ)
  • Eligibility: AOC: enrolled at least half-time for first 4 years; Hope: Enrolled at least half-time for first 2 years; LLC: Enrolled in any qualifying course.
  • Refundable: AOC: 40%, max: $1,000; Hope and LLC: No.
  • Qualifying Costs: AOC: Tuition, required fees, and course materials; Hope: Tuition, required fees, books, supplies, equipment, plus room and board if at least half-time; LLC: Tuition and required fees only (Midwest Disaster Area includes more).

For most people, the phase out will determine which credit to apply. As always, check with your friendly accountant for your personal tax situation.

Monday, November 30, 2009

Tax Tip

I will be in continuing education classes Monday and Tuesday. Between class and working late to keep up on regular work, I will post late over the next few days.

Today, I'll whet your appetite with a small tax tip for today's economic environment. The first $2,400 of unemployment insurance compensation is tax-free for 2009. Wisconsin is not following federal on this and is a Schedule I adjustment. Use the worksheet to determine the amount of your unemployment that is taxable. For other states, check your state taxing authority.

Wednesday, November 25, 2009

I Am Thankful For...

It is too easy to whine and complain about the inequalities and injustices of life, at least for me. In this short post I want to share what I am so very thankful for.

I, Keith Schroeder, am thankful for:
  • a wonderful, loving, kind, gentle, and compassionate wife,
  • the two most moral, respectful and respectable, and intelligent girls I've ever known,
  • a successful business,
  • the best clients ant tax guy could have,
  • the best group of employees any employer has had the honor of working with,
  • a nice home,
  • a nice farm with animals to work everyday,
  • a community second to none,
  • a nation second to none, where rights are still honored and respected,
  • great friends,
  • all the opportunities life has to offer,
  • food on the table,
  • good books to read,
  • good neighbors,
  • health, family and mine,
  • life,
  • libraries,
  • organizations that allow me to enrich my life with service (WRWA, FVWA, church),
  • a wonderful, upbeat, caring, kind, God-fearing pastor,
  • Thanksgiving Day, when I am reminded to always be thankful for what I have, family around the dinner table, and a good game of football and conversation afterwards,
  • and you, my dear friends. Your friendly accountant is grateful for the opportunity to share my thoughts with you, whoever you are, wherever you are. May you find as much to be thankful for as I have.

Go in peace my friends. I'll be back on Monday.

Tuesday, November 24, 2009

Thought For the Day

Zig Ziglar sent me an email yesterday with some of his famous quotes. The quote that tickled me reads as follows: Maybe it wasn't meant that way, but American ends with "I can."

What a powerful affirmation. It is too easy to get down with the economy and personal problems. Thanks Zig for the upbeat reminder "we can do anything we set our mind to." Or as Zig is most famous for saying, "You can have everything in life you want if you will help enough other people get what they want."

Monday, November 23, 2009

When To Say When

I'm late today because I just got back from Atlanta. Forgive me.

Today's topic: How far should you push back on an IRS assessment? There is no hard and fast rule, but there are guidelines. If the assessment is small, it could cost more to fight than to pay. In my opinion, cutting off your nose to spite your face is foolish and a waste of time. This is the first consideration when dealing with an IRS assessment.

When the assessment is meaningful, you have a tough decision to make. If the assessment is due to an audit, appeals is your first defense. Every audit in my office ends up in appeals if the IRS assesses additional taxes, unless it is really small. Auditors look at verifiable facts only. They will deny any deduction due to lost receipts, etc. In most cases, it all comes back in appeals. Even if you played fast and loose, appeals frequently reduces the assessment, depending on the circumstances.

Appeals usually gives you about as much as you'll get in tax court. However, if they don't give that much, file with the tax court. The IRS has people that will work hard to get you off the tax court calendar. Be reasonable when filing, but don't rule out this powerful tool.

Sometimes it makes sense to file for abatement. If a large part of the assessment is penalties, abatement can help. Unfortunately, it is an all or none proposition; you either get full abatement or none. Fortunately, a lot of abatement requests are granted.

A Due Process Hearing is another option if you feel the IRS took an incorrect position. This requires its own post at a future date. Stay tuned.

And, of course, the Offer in Compromise. You see the ads on TV about IRS debt; that is what they are talking about. I recommend a competent local accountant instead of the TV guys. The TV guys charge a lot, tell you the offer will fly when they haven't followed the formula the IRS will accept, and have a low success rate. Your friendly accountant should have experience in Offers in Compromise and should have a reasonable fee.

It must be noted that federal taxes due have a statute of limitation of 10 years. That means the IRS gets 10 years to swing at you after you file your tax return or the due date of the return, whichever is later. If you own real estate, the IRS will attach it and the statute is less a tool for you.

The Offer in Compromise, tax court filings, and Due Process Hearings stop the statute of limitation clock while your request is considered. If you are approaching the 10 years and don't own real estate, you may wish to sit tight for the tax to expire instead. The clock restarts after the IRS rules on your request.

It is a good idea to get an experienced accountant on your side when dealing with these issues. At least now you can discuss your options with your accountant from a position of knowledge.

Good luck.

Thursday, November 19, 2009


A non-client business owner stopped in today for forms. I sent him to the local IRS office.

He was surprised we don't carry forms. Well, we don't; haven't for years. Everything we file is on the computer and filed electronically.

Regular clients allow me to plug the data into my computer and print clean copy. I don't have time to waste printing forms for non-clients.

Do not consider me rude. Time is money and I get about 200 requests per year. The IRS will provide forms online or at a local office for free. The government has the resources to hand out free forms, I don't.

The businessman went on to inform me he is currently working through an audit on his own and the IRS just opened several more years of returns. I told him he really needs a tax pro. He thought differently. I was a nice guy, however. As he explained the audit, I told him he will need to file an appeal to get the assessed tax reduced.

He smiled. I know he has no clue on how to file an appeal. The IRS will help reduce the tax burden for the rest of us on his dime. Too bad. He seemed like a nice guy. The IRS is taking him for a ride. I forgot to ask which auditor he has. I have a pretty good idea, anyway. Twenty-six years on the job and I have a pretty good feel for the way each auditor works.

The moral of the story: Spending a few bucks with your friendly accountant can save serious coin with the IRS. Oh, and you can order free forms from the IRS here, employers here, and state forms here.

Wednesday, November 18, 2009

Words to Ponder

At church this weekend a question was posed: What is the difference between knowledge and wisdom?

Several attempts were made before the answer that silenced the sanctuary was said: "Knowledge is what we take with us; wisdom is doing/knowing what leads to the most good and avoids the most evil/bad."

Isn't that beautiful?

Words can be a powerful builder, motivator; or, a dangerous weapon. I keep a collection of wise words I've heard through my years. When I hear words like those above, I am moved to live my life in a better way.

May we all know the meaning of wisdom and granted the strength to practice it.

Sunday, November 15, 2009


My day started at 4:30 this morning and I am tired. As a result, this post will be short.

Friday night I surprised the girls. I offered to take them to Funset Boulevard for pizza, games, and a movie. They were allowed to bring a friend. They chose a neighbor girl.

The girls had a lot of fun. Brooke ran wild from game to game. I was exhausted just following her. Sue needed paddles after an hour.

The girls decided to watch 2012. It has been years since I watched a movie in a theater. 2012 disappointed. The science was all wrong; nearly everything that happened stretched the imagination to the breaking point. The movie lacked plot and leaned on special effects and apocalyptic imagery completely.

Here is an example of the stupidity in 2012. A wealthy Russian needs to get from Las Vegas to a rescue ark in China. They need to stop in Hawaii to refuel. Of course, Hawaii is a mound of molten lava. They continue, acknowledging they will run out of fuel over the South China Sea. While enroute to China, the Earth's crust shifted over 1,500 miles and in the perfect direction to get them to within a mile or so of their destination. As crazy as this sounds, the Earth's crust shifting 1,500 miles in a matter of hours is only one in a litany of errors that beg the watcher to turn off the brain and accept any idiocy they dish out.

I enjoy a good movie and I love special effects, but give me a real story. Stretch the rules to make a better story if you must. But, please, please, don't expect me to be a complete idiot. I know more about science than the average person. Regardless, I think any layman will find 2012 too much to accept. I dislike movies that assume only idiots will watch. It will be a long time before I lay down hard earned dollars on such drivel again.

Wednesday, November 11, 2009


The amount of email I receive grows every day, spam excluded. The length of email messages keeps growing, too. It feels like people want to ramble on when writing an email.

There is a downside to writing a long email: I don’t read them. To be more precise, I skim. If I read every email received, my day would be nothing but reading email.

Another habit I see growing is the long email response to a short email request. Example: I inform a business client I need more information to complete a project. The client then has four or five people within the organization send me emails as long as 3,000 words. You know what happens when I get email bombed? I send it to a folder for later review, unread. Do you know what the chances are I’ll ever have the time to go back and read all those emails? Sure you do.

Writing an email is not the same as writing a novel. Brevity is a must when communicating. Otherwise, you get tuned out.

Most posts on this blog range from 300 – 500 words. Do you know why? Because after 250 words, half the readers are already skimming or clicking elsewhere. Don’t believe me. This post is just over 200 words. Are you looking to click on another post or link?

Reading email is different than reading a book. I read a book to relax and dig in deep. I read email for quick pieces of information. If the email rambles, I leave. In the few instances I weathered the storm to the end, I find the email continued to ramble and never accomplished anything.

So, what did we learn in today’s lesson? Keep emails brief or they’ll end up in the “worry about it later” folder. We also learned that once you set a pattern of useless, wordy emails, future emails are never opened until everything else is done.

Look at that. Just over 300 words and only one sentence fragment.

Tuesday, November 10, 2009

Have Problems? Read On.

Below is an email I received today from Zig Ziglar's son, Tom. For those who don't know, Zig Ziglar fell down stairs two years ago and is struggling back from the injury. He just turned 83. What a remarkable man; what a remarkable life.


It has been an incredible few weeks for the Ziglar family. Dad just turned 83, Mom and Dad will be celebrating their 63rd wedding anniversary later this month, and Julie and Dad's new book, Embrace The Struggle just came out. We are thrilled with the results of the book. So many are facing their own struggles and when they see how Dad is embracing his struggle they find hope and encouragement.

To see a short movie showing Dad's struggle, click here.

I know that Dad has made an impact in your life, and in the lives of thousands of others. As a family, as hard as this struggle has been on a personal level for us, we all agree that God is using it in an amazing way. We believe this message will impact more people than anything Dad has ever done.

Join Zig Ziglar for a special evening as he discusses how he has learned to embrace and even thrive during a time of struggle. Julie and I will join Dad as we discuss how anyone can survive during tough times. I think you are going to love hearing directly from Zig how he is doing.
If you could help us get the word out it would mean a great deal to us and to the people who attend the webcast. In addition to signing up to attend this webcast you will also want to forward this to all your friends and post it on your Facebook, Twitter, etc.
Embrace the Struggle

Featuring Zig Ziglar, Julie Ziglar Norman and Tom Ziglar November 17, 2009, 7:00-8:15 PM CSTRegister HERE

Tom Ziglar
Proud son of Zig Ziglar

P. S. If you want to purchase a copy of the book, click here.

Ziglar, Inc.5055 W. Park Blvd, Suite 700Plano, Texas 75093

Monday, November 9, 2009

Volunteer When to Pay Your Taxes

You can choose when to pay some of your taxes. I touched on this issue last week Thursday when discussing bonus depreciation for businesses. Individuals need to think hard about tax planning, too, with future individual tax rates likely to rise.

For many years, the mantra was to defer taxable income and accelerate expenses. Except for those hit by the Alternative Minimum Tax (AMT), the theory worked well. You have control on when certain items (property tax, contributions to charity) are paid and are thus, deductible. Time value of money says to take your cash now, so we happily deferred our tax bill with a little planning.

Depending on your tax bracket, deferring taxes is not the default choice anymore. You now need to consider future tax increases into your tax plan. Today’s savings could cost you dearly the next year. Think of poor tax planning as a high interest loan on foolishness.

I can not give specific advice in a blog. The tax code is changing too much for me to give blanket advice. You can keep your tax bill within reason if you take steps to protect yourself. Talking to your friendly accountant April 10th is not taking appropriate steps. The time for action is now. I don’t care who your tax pro is; call them now and set an appointment to review your tax status. You would be amazed at the things I come up with to help clients that come in now. Come spring, you just pay the revenuer.

Friday, November 6, 2009


It should be illegal to engage in serious thought on Fridays; serious tax thought, at any rate. Next week I’ll present more tax saving tips. So today I will discuss an important habit of successful people: training.

I have the enviable position of working with people at various levels of success in their personal and business life. Certain traits highlight each group. As an optimist, I’ll focus on the winners.

One of the most common traits of the successful person is training. Profitable and growing business owners, even in tough economic times, almost always spend time training with seminars, audio tapes, and videos. The winners never stop looking for good ideas and implementing them.

It is interesting how winners train. A roofer may listen to regular doses of motivational tapes in addition to classes on new industry products and procedures. Your friendly accountant takes insurance classes, tax and accounting seminars, listens to motivational, spiritual, and business audio and video programs. Winners consider it wise to build a solid base of knowledge for the inevitable day when unforeseen difficulties arise.

And the one thing successful people do less than any other demographic is watch TV. Of the TV they do watch, much of it is viewing training and personal or business development videos. In their car they listen to tapes that further their career, build their business, or motivate.

Turning off the TV is not enough. Taking action is the one necessary key to get anything done. Success is a result of actions taken. You might fail. But as Wayne Gretzky said, “You miss one hundred percent of the shots you never take.” And if you are well trained, you will make a good number of those shots.

Enjoying a fulfilling marriage and raising intelligent, moral, decent kids takes work. I know work is a four letter word, but not all four letter words are dirty. Work is a good word. To have a marriage second to none and to raise successful kids requires more than a piece of paper (marriage license or birth certificate). Modeling marriages that last the duration and families with kids that grow up as valuable citizens of the community is important. There is nothing wrong with taking classes on being a better parent, husband, or wife. You don’t need to wait for disaster to attend a seminar on building and maintaining a wonderful marriage. You don’t need to wait for your kids to try drugs before talking with them about these issues and listening to self-development programs for teens. Doing these things is not an admission of defeat, rather a commitment to a great family life.

Challenges will arise. You need to be prepared. And if things always go well for you, you still had the opportunity to learn, grow, and enjoy.

Thursday, November 5, 2009

Home-Buyer credit Extended, Expanded

All that is left is for the President to sign the bill and the $8000 new home-buyers credit is extended to April 30, 2010. The credit is expanded to include a $6,500 credit for those owning thier home for at least five years.

Plan accordingly.

Wednesday, November 4, 2009

Tax Tip: Standard Deduction Increasers

It’s that time of year to get serious about tax planning. With nine weeks before year-end, time is running short to reduce your tax burden for 2009. I’ll rapid fire tax tips over the next few weeks, so check in often.

Today, we will discuss the additions to the standard deduction.

There are three things that will increase your standard deduction for 2009. 1.) Property taxes up to $500, $1,000 for married filing joint returns. 2.) Casualty loses in a federal disaster area. 3.) Sales tax on a new vehicle purchased after February 16, 2009 up to a $49,500 purchase price. Multiple vehicles qualify. Phase-out begins at $125,000 for singles, $250,000 for joint filers.

Issues to keep in mind: Alternative Minimum Tax and phase-outs. Normal tax planning goes out the window if you pay AMT. I’ll cover AMT in another post. Your deduction gets reduced (phased-out) after your AGI exceeds a certain level. Note: The personal exemption and itemized deduction phase-outs disappear in 2010, something to consider when building your tax plan.

Contributions to charity, elective medical and state taxes can be planned to take full advantage of the new rules, allowing for maximum tax savings between the standard deduction and itemization. By bunching deductions every other year, it is possible to itemize some years, taking the standard deduction in alternate years.

Any tax plan must consider future tax years. Keep 2010 taxes in mind when planning.

With all the new tax changes this year, I recommend you sit down with your friendly accountant and plan your tax strategy. The tax savings should be well worth your time.

Tuesday, November 3, 2009

New Clients

New clients always get me excited. I get the largest tax reductions when a client comes in the first time. Below is a list of some things I need to see on your first visit (for businesses):
  • Previous two years tax returns.
  • Do you work out of your home? Have a shop? Office?
  • Are you a sole prop, partnership, corporation, LLC?
  • Future plans for business.

There are so many ways to reduce taxes for business. Individuals can save, too, but it is more difficult.

I set a goal to bring in 100 new business clients by the end of 2010. I have 6 since setting the goal. It isn’t hard or unusual to save $3000 - $5000 for a new business client. If I use the low end number, my new business clients will save $300,000 in taxes over the first year. Not bad.

Regular clients can save, as well. I send out letters each year inviting clients to review their tax situation. A handful of individuals and a quarter of my businesses take me up on the offer. That is too bad, since only those that take my offer reap the benefits.

Here is the offer I make my clients: I’ll charge $100 for the consultation. It will take 1-2 hours. If I can’t save you money, the consult is on me. If you don’t like my ideas, the consult is on me. The cost is low to start and if you feel you gained nothing, you owe me nothing. I think that is fair.

New client get their first consult free regardless. I need to know my client before I invoice for services. What do you think of my on-going offer?

Monday, November 2, 2009

More Censorship Stupidity

It seems that certain areas of college football don’t understand proper behavior. I’m talking about fines levied against players and coaches for disagreeing with referees.

Can you imagine people in authority demanding that all comments must be nice and agreeable under threat of sanction? Politicians would love this, so would business leaders (think Enron). Our world would be such a nice place if we held no one responsible for their actions. Wouldn’t we?

Our founding fathers felt it important to include freedom of speech in our highest law, the Bill of Rights of our Constitution. We should be teaching these kinds of things in our higher education institutions. Instead, we see a group of people that think they are above reproach. It never ends well. Once a group of people is able to work without criticism, failure is sure to follow. Others will want the same opportunity to work without responsibility.

There is only one reason for such a rule to be instituted by college football: they know they are wrong, they don’t want to change their wrong behavior, so they threaten those that would call them out and hold them accountable. If any referee has any honor at all, he would scream out against such a stupid rule.

Friday, October 30, 2009

Tax Tip

It’s Friday night and I don’t want to write a long post. The tax tip below will outline a concept, no phase out numbers or anything like that. If the idea has merit for you, call your friendly accountant to facilitate the strategy.

The tax code has a juicy nugget available for 2010-11. Anyone, regardless of income, can convert a traditional IRA to a Roth IRA. If you don’t know, the Roth IRA grows tax free and doesn’t require distributions at 70 ½.

Here is my tax tip: If your income is too high to make a Roth IRA contribution for 2009, put the money in a non-deductible traditional IRA instead. Convert this IRA to a Roth in 2010. This allows you to get additional money into a Roth for tax-free growth. The original money is not taxed on the conversion.

How about a two-fer Friday? Consider converting all traditional IRAs in 2010-11. If the value of your IRA is down, you are converting at a discount. You also lock in today’s tax rates. My crystal ball says tax rates are going up over the next years to pay for additional government programs and to balance a budget $1.5 trillion in the red.

Chew on it over the weekend and then decide. See you Monday.

Thursday, October 29, 2009

Life Insurance Audits

Some people think “life insurance” is a dirty word; I think it is a tool. Life insurance cash values are over $3 trillion, second only to mutual funds in size (Accounting Today Vol. 23 No. 17, Pg. 18). This vast store of wealth requires more attention than many give it. This blog post deals with those that already have life insurance and is in no way a recommendation to buy, cancel, or change your life insurance situation. Rather, use this post as a guide to discuss your life insurance with your agent. Also note, I am life insurance licensed, but haven’t sold a policy in five or so years. I like to keep informed on financial matters to serve my clients best and defer personal insurance needs to agents that make a career in insurance. Much of the information in this post is from the above listed article in Accounting Today. For more information, check out their website at

All assets should be reviewed periodically to ensure it is optimized. You and your agent should review your insurance plans on a regular basis. Life insurance comes in many flavors. “Cash Value” life insurance is powerful tool when used correctly. The greater your wealth, the more likely it is you will need some sort of life insurance, term or cash value (whole, universal, etc.) to reduce your tax burden now and in your estate. Business owners need to consider life insurance to protect their business. Used correctly, life insurance can assure a smooth transition of a business to new owners and survival of the business should a key employee or owner die.

Many new life insurance products handle business and personal needs better than older policies at a lower premium. A good insurance agent can help you plan accordingly.

Families also need to consider life insurance. Children and the surviving spouse may need funds to keep the house, send the kids to college, and so forth. A good plan is always preferable to flying blind.

The details of life insurance are vast. A short blog post doesn’t do it justice. See your agent. And while you are there, ask to review your home, auto, and umbrella insurance. Demand an explanation on the differences in uninsured, underinsured, and liability. Some day I’ll write a post on these issues. Until then, do yourself a favor, review your insurance. That is what your agent is paid to do.

Wednesday, October 28, 2009

It Pays to Ask

Today I will outline how your friendly accountant handles services provided by major corporations and how you can get many of the things you have for a fraction of the cost.

I live in the country where cable TV is unavailable. Instead, DirecTV provides my family with several hundred channels of quality programming. {cough} When local stations switched to digital, a few channels didn’t work, including the channel that broadcast most of the Packers games. Since I watch little TV, I was not bothered… until the Packers game situation arose.

The Packers play Minnesota in Lambeau Field this weekend and if the situation is unresolved I will miss it. {sigh} So, I call DirecTV and tell them to add the local channels. They say, “Sure, you just need a new receiver box. Fifty dollars please. Oh, and your bill goes up three bucks a month.” I explain I don’t want it that bad since I could swing for a new $20 antenna and get it for free. In the grand spirit of customer service they transferred me six times before I hung up and took a different approach.

The accountant in me was boiling by now. The only way to win this battle is to make it personal. I called Disk Network and got their best deal that included a free receiver and local channels and then called DirecTV back and told them I wanted to cancel. This brought me to a totally different department. They didn’t transfer the call then. Now I was offered a FREE receiver and an instant $50 credit on my bill to pay the next twenty months of local channel costs. They install the whole thing Friday morning.

To sweeten the deal, about six months ago I called and talked them into giving me a $10 per month discount for a full year. All the new goodies are in addition to the $10 a month discount I already had.

I tell this story so you can use it as a template to save money. Commodity items are easy to get discounted. You can apply the same philosophy to phone service, cable, credit cards, bank products, and more. A rule of thumb is: if it is a mass produced product or mass provided service, it is subject to discount.

Where doesn’t it work? Let me illustrate with an example I am intimately familiar with: accounting services. You can keep your friendly accountant and get a discount if you do it right. If you are a business and have your books in order, I am willing to discount my fee in some cases. Never ask for a discount in the middle of tax season when I am working sixteen hour days. I will not take a pay cut to work more hours February through April; I would rather lose an account and spend more time with my girls. Sorry.

A better approach: ask for a free tax-saving consultation when tax season is over. I will always say YES. It is something I can do later, get my work done now, and is more valuable to you than a fee reduction. Let me save you hundreds or thousands of dollars in a free tax review versus a fifty or hundred dollar tax season discount. You see, even non-mass produced services can be discounted if you try. And I really don’t mind sitting with a client outside tax season working tax saving strategies.

When in doubt, ask. No harm, no foul. The worst that can happen is you stay where you are at. Ask businesses for goodies. There are many unadvertised deals to be had. I know I give a lot of tax consults gratis. If you don’t ask, I’ll bill. I’m not mean; I just want to feed the wife and kids.

Tuesday, October 27, 2009

A Good Deed

You never know when a good deed done will benefit you later. Life works that way. Treat someone nice and you may later find that person in a position to make your life better. Not always, but sometimes. And if you treat enough people nice, the odds go way up.

I bring this up because recent circumstances have allowed me to help one of the nicest people I know and in ways I will never be able to measure.

Back in the mid 90s I purchased Zig Ziglar’s “How to Stay Motivated” series. It includes 3 parts: Changing the Picture, Developing the Qualities of Success, and The Goals Program. I have listened to each tape over a hundred times and it allowed me to build better relationships with my family, friends, and clients; set and keep goals; and see myself in a positive light.

The recordings are on cassette tapes. My car now has a CD player and I wasn’t able to listen as often as I liked so I bought a new set in the CD version about 30 days ago.

Fast-forward to today. A long-time client is struggling in her personal and business life. I will not share details, but rest assured, it is a litany of serious issues. She is a hard worker, mild-tempered, and nice person. She sees herself as always being a victim. I asked her if she could afford the Zig program. She can't. She really has no money right now. None. She has a cassette player in her car, so I borrowed her the cassette tapes version of the Zig program.

One message Zig has is that you should treat other with respect at all times, even if they don’t deserve it. You never know where it will lead. The point is: things come round full-circle.

For some reason, I can feel, deep down inside, this client will pull herself up and have a positive self-image before long. I can’t shake the feeling I did something good for me, too. I did it for her, not expecting anything in return. Yet, somehow, some way, I know I will be very happy I helped another human being today, grow. I wonder if my daughters will benefit. Maybe my children will have a better life as a result. Who knows? Only time can tell.

Anyway, I feel good about myself. And that is good enough for me.

If you want a real treat, check out Zig and his programs by clicking here. I don’t get paid to say this. Zig has no idea who I am. Consider this my gift to you.

I think I am on a roll today.

Monday, October 26, 2009

10%+ Guaranteed Government Bonds

Okay, I’ve exaggerated a little. It isn’t government bonds, it is Social Security. Yes, Social Security pays over 10%, except this year (it only pays 8%), and might even be tax-free.

How can you get in on these goodies? Simple. Delay taking your Social Security. Don’t run for the door; I’m serious. Let me explain.

Here is how it works: From your normal retirement age to age 70, you get an 8% annual boost in your benefits on top of normal COLA (cost of living adjustment) increase. Once you lock in the higher benefits, your surviving spouse also gets the additional benefit.

You want to collect benefits now? No problem (if you are married). You can collect Social Security benefits based on your spouse’s benefit now, and collect your own benefit later. Granted, you only get half the benefit amount, but look at the total advantage. Each spouse collects half of each other’s benefit until ago 70 and then collects their own higher benefit. Get a little now and a ton later.

Maybe you already collect Social Security. Boy, do I have a trick for you. You can collect at any age and later pay it back, qualifying for the much higher benefit. You get interest-free use of the money. The problem is to come up with all the money. Not everyone can do this. If you paid tax on any repaid Social Security, you qualify for a refund. Run the numbers, folks. It really works. (If you live at least five or so years.)

And remember, I said it might be tax-free. Under the current tax code, singles under $25,000 of MAGI (modified adjusted gross income) and marrieds under $32,000 get all their social security tax-free. No matter what, 15% is tax-free, regardless of income. Many states don’t tax some or all of Social Security.

Want to read another article on this, click here.

Friday, October 23, 2009

History 101

Why do we have the taxes we have? I will attempt in a series of posts to expose historical tidbits of the tax code in the United States. Every week or so I will cover little known or understood historical tax issues that affect us today. On to today's lesson:

In colonial times, the Federal Government’s source of tax revenue came from tariffs, excise taxes, and customs duties. Each colony had greater responsibilities than the colonial government prior to the Revolutionary War. Each colony chose the taxes they would levy. Southern colonies relied heavily on import and export taxes; some middle colonies taxed property or had a poll tax; New England focused on real estate, excises, and occupation taxes.

The Constitution, adopted in 1789, endowed the Congress with the power to "…lay and collect taxes, duties, imposts, and excises, pay the Debts and provide for the common Defense and general Welfare of the United States." Many tax scams exist today claiming the Federal government has no authority to tax. As you can see, the government has the authority. Later, the 16th Amendment allowed income to be taxed, too.

Under President Jefferson, all direct taxes were abolished. From 1802 – 1812, only excise taxes were collected. War and economic difficulty are the leading cause of significant tax changes. The War of 1812 is no different. Internal taxes were again levied, but repealed in 1817. For 44 years the Federal Government collected no internal taxes. Most Government revenues came from customs duties and the sale of public lands during this time. How things have changed.

Debt is nothing new to the Federal Government. At the beginning, the Federal Government took responsibility for much of the each state’s debt. To fund the War of 1812, additional Treasury notes were issued. Only one President can claim a debt-free Federal Government under his term: Andrew Jackson. And it didn’t last for long, but that is another story.

Thursday, October 22, 2009

Continuing Education

It’s that time of year when I spend more time in class than I do in the office. At least it feels that way. Yesterday afternoon was endless tax issues on agriculture; this morning I listened to a bank exec wax on endless about the financial industry. In each case, I gathered good information that will make me a better accountant/tax preparer.

Five more days of my life before the end of the year will be in a classroom. The wealth of information I receive will serve my clients well in the year to come. A lot of folks groan about these classes, but I like them. The interaction with my peers and the new ideas always invigorate me. The knowledge I gain will make a difference in my client’s lives and that juices me.

If I miss your call, don’t worry. I will call as soon as I get in.

Wednesday, October 21, 2009

It's Never Too Late

Once or twice a week I get a request to prepare five or more years back tax returns. I like the work. It is steady all year round and I enjoy the summer work. I also require a retainer, so I know I’ll get paid.

Many people are shocked when I tell them I take in about 100 clients a year this way. “How can they get away with that?” I am asked. “They don’t,” I reply. “That is why they are calling me. Something changed to make them want to file.” Getting a mortgage requires completed tax return. And IRS letters bring me frantic calls.

Other accountants tell me they don’t get as many new clients per year as I do with multiple returns to file. I don’t know why I get so many, other than to say, I let people know I specialize in unique tax situations. Since starting this blog a few months ago, three new clients with five or more returns to file called me. One became a client. Old habits die hard.

Too many of these people are repeat offenders. I don’t keep statistics on this, but it feels like about half fall off the wagon within a year or two. The sad part is many have refunds and the statute of limitations expires and they lose the refund. I just can’t feel sorry for people that do this.

My advice if you missed the tax extension deadline: Call your local, friendly accountant and set an appointment. The longer you wait, the greater the risk. Tax pros are here to help and we are qualified to do so. Make sure you call a CPA or enrolled agent. They should also have a few years experience, too.

Don’t be embarrassed because you haven’t files since 2002. Accountants don’t care why; all they want to do is get you filed. We have seen it all before.

Remember, if you are required to file and don’t, it is a crime; you can go to jail. If you can’t pay, there are options. So file.

I see someone at the back of the room picking up the phone. Good man.

Tuesday, October 20, 2009

Words To Live By

After the cheers have died and the stadium is empty, after the headlines have been written and after you are back in the quiet of your room and the Super Bowl ring has been placed on the dresser and all the pomp and fanfare have faded, the enduring things that are left are: The dedication to excellence; the dedication to victory; and the dedication to doing with our lives the very best we can to make the world a better place in which to live. --Vince Lombardi

Is there any doubt why Vince Lombardi was a winner? It gives me shivers just thinking about it.

Doing It Right

I finished a large tax return today (I am writing this Monday night) for filing later in the week. He had a valid extension, but he waited until it was impossible for me to prepare an accurate return. Several pieces of information didn’t arrive in my office until after the due date.

As much as I hate missing a deadline, even if not my fault, I hate inaccurate returns more. I will never file an inaccurate return intentionally. This brings up a good question: Where do you draw the line on accuracy?

Remember your college days? All the quizzes and exams had a correct answer from the information provided. In the real world, people forget to keep receipts, lose mileage logs, and sometimes wait years before deciding to file.

Rather than go into a long dissertation on what the tax code says, I want to provide some user friendly guidelines. First, if the information is obtainable, you need to acquire it before I am willing to file the return. If documentation is lost or never recorded, a best effort to get a reasonable number is allowed. This is the least preferred way to file a return and used as a last resort only. But you still need to file. If data is impossible to get, you need to make a best guess.

The IRS will do the same thing if you lose documents. However, their reasonable number will be different than your reasonable number. A good accountant comes in real handy at times like these. I use formulas that have withstood IRS scrutiny and help clients build a strong reasonable number.

Accountants refer to this as Cohen’s rule. I will not bore you with tax court rulings; this is a family-friendly blog. The only way I will delay a return is if the information is available and forthcoming. Otherwise, we file the return and amend later if better data becomes available.

To reduce or eliminate this problem, start early. Lowers stress, too.

Monday, October 19, 2009

If You Want To Sell Me Something...

Everyone has pet peeves and I am no different. The phone skills of most telemarketers guarantee I will not buy. Here is what the typical call sounds like:

TELEMARKETER: Is the decision-maker available? (Or they start with: Can I speak with the owner/manager/boss/head kahuna?)

Here are the mistakes: 1.) Caller didn’t introduce themselves. 2.) Caller did zero research; they don’t even know who I am.

Depending on my mood, here is how I answer:

KEITH: Which owner?
The company is shutting down.
You have the wrong company.
He died.
Do you know who you are calling?
And if a phone company calls: We don’t have a phone.

Why do I respond in any of these ways? First, because you called me and I expect you to introduce yourself. Imagine a stranger walking up to you on the street and asking you how much money you have on you. How would you respond? Now you know how I feel. Second, you did no research. You don’t even know my name so you are making the coldest of all cold calls. Here is what could work:

TELEMARKETER: Hello, my name is Alice with XYZ Taxes R Us. I am calling for Keith about our new tax program.

This doesn’t guarantee I’ll buy, but at least you didn’t blow the sale before you finish the first sentence. In most cases, I will listen. I get 10-20 sales calls per day and I never buy from a sales call. But I do ask for more information a few times a month. When I have quiet time to review, I go over those that sent me the information requested.

If a sales call comes from a computer, as most do, you lose every time. I know the telemarketer sales person doesn’t control this, but it is a deal breaker for me. If I have to wait for someone to pick up on a call made to me, even for a fraction of a second, forget about it. If it isn’t important enough to have a live person contact me, then the product or service is something I really don’t care to have.

Break my taboos and I shoot you down every time. You want my time, and if you want my money, better follow my rules. “That isn’t fair,” I hear you say. Maybe. But my money, my rules. If you want a chance, call yourself, don’t send a machine; introduce yourself, company, and reason for the call; and know who you are calling. If you don’t know who handles the phone service/copier/computer/on ad nauseam, how can I trust you know anything about the product you are selling?

Friday, October 16, 2009

First-Time Homebuyer Credit Running Short

If you have plans to buy your first home, you better hurry. The first-time homebuyer credit expires November 30, 2009. There is no plan to extend the credit at this time.

The $8,000 credit is refundable, meaning, if your taxes are under $8,000, the excess will be paid to you. You can amend your 2008 tax return to claim the credit immediately.

The old credit for 2008, capped at $7,500 was no more than an interest-free loan. Those credits must be paid back in 15 equal installments starting with the 2010 tax return.

For 2009, the credit expanded to $8,000 and doesn't get paid back. The home must remain your primary residence for three years or the credit is forfeited.

You must close on the home prior to filing an amended return for the credit. Use form 5405. The IRS is slow sending checks for this credit due to the volume received and for fraud prevention. The credit has turned into a fraud problem for IRS, so they are reviewing all claims for the credit.

Follow-up note: After I wrote this post I read that there is an effort in Congress to extend the credit. Stay tuned; I'll fill you in if it is extended.

Thursday, October 15, 2009

Times Up

If you haven't filed your taxes you may suffer a late filing fee. If you have a refund, no problem; if you owe, penalties and interest will apply.

Note on how to make a tax accountant happy: Get you stuff in early.

A couple people in my office waited so long (and brought in boxes) so I couldn't finish on time. Sorry. Get it in sooner or you risk financial loss.

Wednesday, October 14, 2009

Great Minds and "I Can"

Zig Ziglar asks in his motivational seminar series: Why is that with only 3 million Americans in 1776, we produced Washington, Jefferson, Adams, Franklin, Paine, and many more, and today, with over 300 million Americans we produced...

He lets the words hang intentionally. It is a powerful question to ponder.

Later he talks about an inner city LA school with all the problems inner city schools have; how they started an "I Can" program and solved the problems. The "I Can" program started to reward kids for good behavior rather than focus on punishing bad behavior. Teachers and administrators would give coupons or points to kids caught picking up trash, helping another student, being polite to others, and so on. Six months later there were zero instances of drugs, graffiti, assault, or other crime. He goes on to explain an administrator talking about six kids chasing down one piece of trash blowing across the school yard from an adjacent park. When the picture of themselves changed, they changed. And the community was better for it. Most of all, the kids learned so much about themselves. What it is like to help others, be kind, and respect their community.

I bring this up because I think the United States has it all wrong when dealing with crime. We have over 2.5 million people in our prisons and jails as I write this, and the problem continues to grow. No society has ever incarcerated so many per capita or per volume, save modern Russia. The policy doesn't work. Most of these people will rejoin society with a chip on their shoulder. The families that are broken become bitter and the cycle keeps on growing. Even worse, some states are opening prison doors due to economic contraints. Is this really the way to run a society?

I am an optimist. I think an "I Can" program for adults would go much further than building another prison. It would work like this. Businesses would allow the police to hand out $5 certificates redeemable for services. Fast food restaurants and retail stores would find this a low-cost advertising program. The stores wouldn't be charged for distribution of the certificates. They would just have to provide the $5 discount, their only cost.

The police would reward adults and children alike. Imagine: You pull into a parking lot and a police officer follows you. (I don't think the police should pull anyone over for this.) The officer says to you as you leave your car, "I noticed back there you yielded right-of-way when you didn't have to. That was neighborly of you." He then hands a certificate for the store you are at.

I know I am crazy, but imagine: A probation agent rewarding an individual for good behavior rather than gearing toward punishment for bad behavior. If you want attention, do good. The person on probation for DUI gets recognition or a certificate for a period of sobriety. A prison inmate gets additional privileges for walking away from a fight. Instead of punishing bad actions, reward the positive and reinforce it.

A blog post is too short to spell out the whole program as it sits in my head. Maybe I live in an idealized world... in my head. It's my world as I see it. I think we would all be better off praising the uplifting. We should end our squandering of resources dealing with bad behavior only. Just think, fewer victims and lower taxes. Am I really nuts to think this is worth trying?

I know we still need jails for the incorrigible. But how many are really incorrigible? How many became incorrigible from the ongoing cycle? And is it possible to prevent people from becoming this way by adjusting our view of ourselves. How does it make you or the officer feel when an arrest takes place? If the police are friends rather than accuser, our community is better off.

In Japan, where crime is significantly lower than it is in the United States, where it is safe to walk the streets, day or night, the attitude is different. People have a high moral view of their community and feel they belong. We can learn a lot from those succeeding at social stability.

I dream. Our world can be better. I can say thank you, smile, be kind and friendly, pick up the trash, and speak highly of my community. I dream. It starts with me. I can do this. One person at a time, we make our society a better place. I bet it is contagious.

Tuesday, October 13, 2009

6 Degrees of Separation

I love the concept that every one of us knows each other in 6 steps of less. The idea of six degrees of separation has been around since shortly after WWI under different names. The mathematical models have changed, depending on the research performed, and has included email/internet testing in recent years. The number isn't perfect, but a rough idea of how things stand.

If you are unfamiliar with the concept, six degrees of separation says we know everyone on the planet in six or fewer steps, where your acquaintances are step one, their acquaintances step two, and so forth. So, how can we use this data personally?

First, I recommend being nice to everyone you see. They probably know someone that knows you, if in your local community, and only two or three steps for someone regionally or nationally. People on the other side of the planet are a mere six or seven steps away, so be nice when on vacation, too.

The importance of six degrees is even larger for businesses. People talk. We know that. People spread a bad experience faster and more often than a positive one. Do good work and ask your clients to spread the good vibes.

A group of people that needs buzz more than just about anyone is authors. Authors can't see every person that will purchase her book. Understanding six degrees of separation plays well here. Imagine: Author has a friendly gathering at her local, small town library. Let's say 100 people show up. Author gives a wonderful presentation, is personable, asks guests to buy her book, and politely reminds guests to spread the words to their friends. Something so simple can get the snowball rolling.

I haven't advertised my practice in over ten years; yellow pages don't count. Still, I acquire 3-4 new clients per month during the summer and 30-40 during tax time. A cordial attitude goes a long way. Be nice and people will talk... and talk... and talk...

Before you know it, you can have a real business or tons of book sales. Smile big.

Tax Deadline October 15th

The deadline to file your taxes is October 15th, assuming you filed an extension. After that... [friendly accountant drags index finger across his throat].

Monday, October 12, 2009

High Taxes

If you didn't already know, Wisconsin has very high taxes. We are number 12 on the list. Read all about it here.

IRS Email is a Fake

I have seen an increase in the number of fake IRS emails over the last month. Below is the bulk of the email.

Taxpayer ID: keiths-8253US
Issue: Unreported/Underreported Income (Fraud Application)
Please review your tax statement on Internal Revenue Service (IRS) website (click on the link below):
review tax statement for taxpayer id: keiths-8253US

The header reads: "Internal Revenue Service []"

The IRS never sends this kind of email. Before you respond or click on a link, call me. I'll talk you down and put the fear of God in you so you don't do something stupid. I didn't check the link, but my guess is that it is a pfishing scam.

NEVER, NEVER, NEVER open an email like this. Send it to the spam folder. I've blocked the sender several times and they come up with new ways to sneak things through. The same goes for fake IRS emails offering an additional refund. The IRS NEVER sends refund requests via email. They don't audit by email either. Get it?

Friday, October 9, 2009


I must be doing something right, I’ve been censored. What surprises me is who censored me.

Proposed FTC regulations requiring bloggers to disclose if they receive payment or free product, has some blogger’s up in arms. I pooh-poohed the idea and got censored. I commented to a post with humor, downplaying the idea that disclosing payments or free products, is a real issue. The blogger refused to post my comment.

Here is the part that may shock you: I was censored by a member of the publishing industry. Censorship is a far greater issue to the publishing industry than any FTC regulation. Yet, she exercised her right. Good for her.

Her argument is that disclosing free products for review or payment will harm her ability to make a living. Why? On this blog I allow Google to place ads so I can, you guessed it, make some coin for my efforts. You also understand I will charge for my tax and accounting services, don’t you? If not, you’ll find out soon enough.

If I receive a free product and review it, I want to disclose that fact. Likewise, I will tell you if I am compensated for an opinion. My opinion remains unchanged, but you need the facts to make a quality decision.

This morning I received a blistering email from above discussed blogger, complete with four-letter words. It was an email, a private correspondence, so I will not share details here. However, if you write a comment to this blog, it will post after I review it. As long as the comment doesn’t contain private information (this is a tax blog after all, I’ll answer those privately), is illegal or unethical, it will post. Before you hit the send key, know this. Once posted, it will stay posted. Nothing you say or do will make me take it down. If you comment, it is a public discussion.

I like getting paid for what I do. I like getting free stuff. I am not bashful about it when it happens. You shouldn’t be either. And no, the FTC didn’t pay me to write this blog. If someone clicks a Google ad, I’ll eventually get some spare change. If you become a client, again, I’ll have greenbacks to pay the light bill. Is this something the publishing industry should censor? Now I need this person to spout-off publicly so I can get a quarter million viewers on this blog per day. Can you help? For free?

Thursday, October 8, 2009

Scam Alert

Guess what I got in the mail today. A nice letter from Check Into Cash: Your One Stop Money Shop.

They want me to promote their services. They will send me, your favorite accountant/tax preparer, ten bucks every time you cash a check there, including refund checks. If a tax office asks you to do something so stupid, clutch your wallet tight, and run. You DO NOT pay to have your refund check cashed. Once you walk into a payday loan store you are poorer. Much poorer. What they do is legal, but in my opinion, unethical. I call it financial rape.

A few tips: If you need to get your refund fast, use direct deposit. If you don't have a bank account, go to a small bank or credit union that charges no fees for opening a money market or savings account and open the account with $5. Bring the bank info to your friendly tax preparer and he will see that your refund, federal and state, is direct deposited. Your refund will be fast, 10 days or so, and no added fees. Isn't that nice? No financial rape required. Same goes for Refund Anticipation Loans. Save your money.

Now I want to share additional details of the letter I received. The letter is hand signed. Very nice. They must care. They care so much they addressed the letter to: To Whom it [sic] May Concern. I am informed that I will get $10 every time a client comes in and cashes a check. If 100 people come in, they will give me $1000. Woooo hoooo! Then they ask me to "share" the enclosed flyers with employees and customers. You know, I really like my employees and customers. Why would I introduce them to the local loan shark?

There's more. The nice lady that sent me the letter says, "We also have pens, pencils, and rulers," if I would be interested. Ahhhh, no. "Marketing goes both ways," she continues. She invites me to send a stack of my business cards and flyers. "...we would be more than happy to share them with our customers." Let me make this clear: I don't want clients that frequent payday loan stores. People that have this nasty habit do not remain clients for long. They go broke is what they do.

Please, please, please, do not use payday loans or check cashing products. As a nice accountant, I must inform you, I've only seen disaster from people who do. These companies are not a last resort. They are the dirt packing tight on your financial grave.

Wednesday, October 7, 2009

WRWA Conference In Pictures

And now, for your viewing pleasure, the Wisconsin Regional Writers' Association's fall conference in pictures.

WRWA's Youth Member Services Coordinator, Cassie Hansen, and Board of Director (BOD), "Boone", conduct serious WRWA business.

The future of the industry.

Note to Barbara Poelle: Expect queries from these folks any day now.

Books on tape are expensive so we had LaMoine McLaughlin read his poetry for us.

If I only understood poetry.

Hellooooo ladies.

I wish I had names.

If names are left in the comments sections, I'll update the post.

Barbara Poelle, agent extraordinaire at the
Irene Goodman Literary Agency, spreads the gospel.

Amen, Sister Poelle!

What? A pop quiz? I'm outta here.

<---- is thinking "These Wisconsin people are so dear. I could just pack them up and take'em home with me.

Our Youth Member Services Coordinator is now running the show.

Jean Feraca shares her wisdom and compassion.

Never point the camera at the floor while your finger is on the button.

Nice shoes.

Boyd Sutton, WRWA's secretary, is snuggled in between two lovely ladies. Mrs. King is to the right. Please provide full names and I'll update.

James Boone? I hope I have the name right. WRWA BOD.

Dave Rank, WRWA BOD. "You wanna take a poke at me? Go ahead, make my day."

WRWA treasurer. Ohhhh, what a fine looking specimen he is. Looks familiar in a weird sort of way. I think I saw the guy in the mirror this morning.

Did he have more hair last week?

Outgoing WRWA president, Robin Butler. He looks serious, but I've heard him read his material. He ain't that serious.

Thanks for your years of dedicated service. I think I speak for everyone in the organization when I say, we look forward to your guidance in the future.

All right class, face the front, hands on the table, and give us your complete attention.

It was a remarkable conference. See y'all at the spring conference.

Tuesday, October 6, 2009

The Greatest Query Ever Told

I have a few more writing blogs to post before I get back to pressing tax issues. Tomorrow I will post on the WRWA fall conference in pictures. They are a fine looking bunch, I guarantee you. Now, for today’s topic: The Greatest Query Letter Ever Told.

Nearly 146 years ago, President Lincoln addressed a crowd of 15,000 at the dedication of the Soldiers’ National Cemetery in Gettysburg. Pennsylvania. His query… his plea to preserve this nation is arguably one of the most important speeches ever delivered. With so much at stake, President Lincoln, without the luxury of internet query samples, gave us the greatest query ever told.

In just over two minutes, Lincoln spoke a mere 10 sentences, sentences that echo down to us today. Let’s look at the address from a query point of view.

  • Four score and seven years ago our fathers brought forth on this continent a new nation, conceived in Liberty, and dedicated to the proposition that all men are created equal.

Lincoln delivered the hook. Number of words (years), and the theme of the story (the reason our nation should continue).

  • Now we are engaged in a great civil war, testing whether that nation, or any nation, so conceived and so dedicated, can long endure. We are met on a great battle-field of that war. We have come to dedicate a portion of that field, as a final resting place for those who here gave their lives that that nation might live. It is altogether fitting and proper that we should do this.

Now, in four sentences, we get the book. If Lincoln can explain the state of affairs in 1863 in four sentences, why can’t writers describe their book with the same brevity? I aspire to communicate as clearly and concisely as Lincoln. Wish me luck.

  • But, in a larger sense, we can not dedicate...we can not consecrate...we can not hallow this ground. The brave men, living and dead, who struggled here, have consecrated it, far above our poor power to add or detract. The world will little note, nor long remember what we say here, but it can never forget what they did here. It is for us the living, rather, to be dedicated here to the unfinished work which they who fought here have thus far so nobly advanced. It is rather for us to be here dedicated to the great task remaining before us—that from these honored dead we take increased devotion to that cause for which they gave the last full measure of devotion—that we here highly resolve that these dead shall not have died in vain—that this nation, under God, shall have a new birth of freedom—and that government: of the people, by the people, for the people, shall not perish from the earth.

And the cook. Agents love to talk about query letters containing: the hook, the book, and the cook. Lincoln, without the benefit of endless samples to draw from, produced the greatest query ever told with the nation at stake.

Notice how the cook begins. Lincoln provides our nation’s resume the way a writer will outline his publishing credits. There are no wasted words, only clear, concise phrases. When I read the last 15 words, a shiver runs down my spine. I think he would have had no problem finding an agent.