Reporting Tax Scams

The Internal Revenue Service has kept taxpayers updated on new scams throughout the year that could possibly affect taxpayers. They also have a page on their website that lets taxpayers know how and where to report tax scams. Schemes to avoid paying taxes are illegal, and could result in imprisonment and fines, as well as having to pay back the unpaid taxes plus possible interest. If you are aware of any tax scams, it is important to report them to the correct Internal Revenue Service department. To access the Internal Revenue Service’s website, click here.

518 Arbor Hill Rd.

 Kernersville, NC 27284

 Ph: 336-996-3338

 www.cpamcdaniel.com

 

10 Retirement Tips to Practice in Your 20s

Although retirement can seem like a long way off when you are in your 20s, it is actually the perfect time to start taking steps towards saving for retirement. Bok Financial lists 10 retirement moves that you should make in your 20s:

1.      Get a grip on compound interest: The earlier you save, the more interest that will be added to your retirement account.

2.      Pay yourself first: Have money sent straight to a savings account when you receive income. Your savings will be guaranteed, and you will not even miss the funds that are transferred.

3.      Control your spending: Every dollar you spend could be a dollar saved. Try to spend less than you earn every month, and save what you can.

4.      Stay educated: Research all retirement options you have at your disposal now and you will be prepared for decision you have to make in the future.

5.      Kick debt to the curb: Try to avoid going into debt, and if you are already in debt, try to get out as soon as possible. Debt is one of the biggest obstacles Americans have when it comes to planning for retirement. Pay down loans and credit cards as soon as you are able.

6.      Meet smaller financial goals: Set small savings goals for yourself that will encourage you to stay on track for major savings goals, i.e. retirement.

7.      Max out employer-match benefits: If your employer offers matching retirement savings benefits, take advantage and set back as much as you can afford.

8.      Boost your contributions each year: Increase retirement contributions as you are able, such as when you receive a bonus or a raise. Boosting contributions is an easy way to grow your account.

9.      Diversify early: Your 20s are a perfect time to diversify your retirement portfolio and take some risks; just don’t invest 100% of your retirement savings in stocks.

10.  Make a habit of financial organization: Organize all financial documentation (paycheck stubs, tax returns, etc.) and keep track of all of your expenses. Being financially organized is the simplest way to always know where your money is going.

If you have any questions about preparing for retirement, please contact us!

518 Arbor Hill Rd.

 Kernersville, NC 27284

 Ph: 336-996-3338

 www.cpamcdaniel.com

 

Government Shutdown in January Possibly Avoided

The impending government shutdown in January might not occur after all. Congress has reached a bipartisan budget deal that will avoid some of the sequestration’s spending cuts, and possibly prevent another government shutdown. This budget deal was announced on Tuesday, December 10^th. The proposed bill will set overall discretionary spending at $1.012 trillion, which will increase to $1.14 trillion in 2015. This spending amount is a compromise, as the House of Representatives proposed a budget of $967 billion and the Senate proposed a budget of $1.058 trillion. This agreement would reduce federal deficits by roughly $22 billion, and eliminate budget cuts to educations, medical research, and the military, among other groups. The proposed budget deal is controversial as it does not include extending unemployment benefits for those who have been long-term unemployed. Congress has approved the bill, and the House and Senate are set to vote on the bill in the next coming weeks.

http://www.bizjournals.com/bizjournals/washingtonbureau/2013/12/10/budget-deal-avoids-government.html?ana=twt

http://www.politico.com/story/2013/12/paul-ryan-budget-deal-101011.html

518 Arbor Hill Rd.

 Kernersville, NC 27284

 Ph: 336-996-3338

 www.cpamcdaniel.com

 

Social Security: When to Cash In

Collecting hard-earned Social Security benefits as soon as they are available is a tempting option, but waiting just a few extra years can increase the benefits you would receive. The longer you hold out on dipping into your Social Security payments, the better. CNN Money points out that “The rough math: If instead of getting 100% at 66 you start collecting 132% at 70, it takes 12½ years for that 32% difference to equal the four years of benefits you would have collected starting at 66”.

 But there is a downside to not cashing in early: if you pass away before you start receiving your benefits, you and your survivors will receive nothing. This situation is what insurance companies call mortality risk. Experts recommend following a middle path, where you withdraw your benefits, but not necessarily right at the age of 62. Below is a chart that CNN Money provided to show benefits that people born through 1954 would receive:

Age:     Percentage:
62         75%
63         80%
64         86.6667%
65         93.3333%
66         100%
67         108%
68         116%
69         124%
70         132%

Tell us in the comments: do you plan on withdrawing benefits at age 62 or waiting?

518 Arbor Hill Rd.

 Kernersville, NC 27284

 Ph: 336-996-3338

 www.cpamcdaniel.com

 

Unemployment Lowest Since 2008

Unemployment rates for 2013 are lower than they have been since 2008. With the addition of 203,000 jobs in November, unemployment fell to only 7%, the lowest it has been in five years.  This job growth suggests strong economic expansion, especially considering that the sectors where jobs were created are not all low-paying.  “The sectors that saw the strongest jobs gains in November were transportation and warehousing, which added 31,000 jobs; health care, which saw 28,000 additional jobs; and manufacturing, which added 27,000 jobs. The labor force grew by 455,000 in November, following a 720,000 decline in October that was partly caused by the government shutdown” (Politico). This job growth comes as a surprise to many economists who assumed that the government shutdown would negatively affect the economy and employment rate. Tell us in the comments: Has your company increased hiring in late 2013?

For more information, click on the links below:

http://www.cbsnews.com/news/unemployment-rate-dips-to-7-percent/

http://www.politico.com/story/2013/12/november-2013-unemployment-numbers-100780.html#ixzz2mjLDW2eH

518 Arbor Hill Rd.

 Kernersville, NC 27284

 Ph: 336-996-3338

 www.cpamcdaniel.com

 

Standard Mileage Rates Decline Slightly for 2014

The Internal Revenue Service has announced that optional standard mileage rates for company use of a vehicle will decrease by one-half of a cent per mile in 2014. The optional mileage rates allow taxpayers to calculate the deductible costs of operating a vehicle. The rate for business use of a car, van, or pickup/panel truck in 2014 will be 56 cents per mile, and driving for medical or moving purposes is rated at 23.5 cents per mile. These rates are both one-half cent lower than in 2013. The IRS notes that “taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates”. If you have any questions about mileage rates, please contact us.

http://www.irs.gov/2014-Standard-Mileage-Rates-for-Business,-Medical-and-Moving-Announced

http://www.journalofaccountancy.com/News/20139210.htm

518 Arbor Hill Rd.

 Kernersville, NC 27284

 Ph: 336-996-3338

 www.cpamcdaniel.com

 

Keeping Finances Separate Could Create Problems

Couples and spouses who live together but keep their finances separate could potentially run into problems further down the road. Keeping finances separate can be smart, considering the estate-planning advantages that occur when couples own separate properties, but there are also downfalls. The Wall Street Journal listed the following potential pitfalls of keeping finances separate:

1.      Assets owned separately might be distributed differently than the owner would like, should the owner pass away without making an estate plan. Experts suggest consulting with a professional to make an estate plan to avoid the confusion.

2.      Separate accounts may cause couples to lose communication with each other, especially in regards to finances. Communication about finances, especially retirement accounts, is very important. Just because accounts are separate does not mean that finances do not affect the other spouse or partner.

3.      Separately owned property holds a greater risk when it comes to bankruptcy or lawsuits. Property that is owned jointly is more secure, as only half of the property will be gained by a bankruptcy claim or lawsuit.

4.      Separate accounts can be problematic, especially when it comes to a partner or spouse passing away. When an account is not in your name, you cannot simply withdraw money or change the account.

There are pros and cons to keeping accounts separate. If you have questions or would like advice on managing your finances, please contact us.

518 Arbor Hill Rd.

 Kernersville, NC 27284

 Ph: 336-996-3338

 www.cpamcdaniel.com

 

IRS Warns of New Phone Scam

The Internal Revenue Service has issued a warning about a new phone scam that targets taxpayers, including recent immigrants. This phone scam involves scammers impersonating IRS agents to coax taxpayers to submit payments through pre-loaded debit cards or wire transfers. If the victims of the scam do not cooperate and submit payment, the scammers will threaten the victim with arrest, deportation and/or suspension of business or driver’s licenses. These scams are often hard to detect, as scammers will create fake badge numbers, call on toll-free numbers, and create background noise so the call sounds as if it’s coming from a call center. These scammers may even have your Social Security number and other personal information about you.

If you receive a call from someone claiming to be from the IRS, it is best to contact the IRS directly. The IRS will NOT ask for PINs, passwords, or financial information over the phone. Report any suspicious phone calls you may receive to the IRS at the phone numbers listed on the website here.

Tell us in the comments: Have you had scammers call you claiming to be from the IRS?

518 Arbor Hill Rd.

 Kernersville, NC 27284

 Ph: 336-996-3338

 www.cpamcdaniel.com

 

Myths about Credit Scores

If you are like most Americans, you are probably confused about your credit score. A good credit score can save you money in the long run, so it’s important to understand some basic facts about credit scores. The Huffington Post recently posted an article debunking the top 3 myths about credit reports and scores. Listed below are the top 3 myths, along with actual facts about credit scores.

1.      Myth: You have just one credit score.

Fact: You actually have many credit scores, from a dozen to a hundred. Different credit scores are given for different things. An auto lender will receive a different credit score than your mortgage lender. Although the scores can differ, they will all be in the same range. If you have a good credit score from one model, all scores are probably good.
 

2.      Myth: Checking your own credit hurts you score.

Fact: When you request copies of your credit score from an accredited organization, this is called a soft inquiry. When your credit score is requested for making lending decisions, this is called a hard inquiry. A soft inquiry will not hurt your credit, unlike a hard inquiry. You are also entitled to three free credit reports each year, so it’s easy stay informed about what your credit score is. The three major national credit bureaus that offer these reports are Equifax, Experian, and TransUnion.

3.      Myth: Closing your oldest credit card hurts your score.

Fact: Closing an old credit card account will not hurt your score, unless it’s your credit card with the highest limit. All accounts in your name, whether open or closed, will show up on your credit score for ten years. After ten years, credit bureaus will remove them from your credit report. Before you close a credit card, just be sure that all other credit card balances are low and not maxed out.

518 Arbor Hill Rd.

 Kernersville, NC 27284

 Ph: 336-996-3338

 www.cpamcdaniel.com