Weems’ Four Good Reasons To Give Charitably, Aside From Tax Deductions

give charitablyAs I write this, the Senate has passed their version of the tax reform bill, and now we wait for the final version of the bill. The process isn’t yet finished (it needs to go through the “reconciliation” process, and the President needs to sign it), but we have some basic ideas about what’s to come for 2018.

I’ll do a deeper dive in subsequent weeks, but here’s the thing. Congress has four weeks to get this done.

To think that they will do this well, and NOT leave behind holes, “provisions” and other goodies for smart tax professionals (like me) to take advantage of … well, the prospect is almost appetizing. I’m looking forward to diving into it and passing along the savings to YOU.

Because there are always hidden savings.

And we’ll be on the case for you in 2018.

But here we are in 2017, operating under existing tax law, and there are still very good reasons to give charitably for tax reasons.

But I like to see The Woodlands residents and taxpayers give charitably — whether or not they do so for the purposes of reducing their taxable income.

About which, I have some thoughts for you.

Weems’ Four Good Reasons To Give Charitably, Aside From Tax Deductions
“My friends are my estate.” -Emily Dickinson

When we advise about or help set up tax-saving mechanisms for The Woodlands clients to deliver their philanthropy and giving (outside of normal tax deductions), there’s plenty of discussion about the benefits of the gift for the recipient.

But what about for the giver? Here are some things to consider, as you contemplate giving, during this month of year-end appeals …

1. When you give, your emotions change.
Studies show (http://www.livescience.com/health/080320-happiness-money.html) that when individuals spend money on gifts for friends or charitable organizations, their happiness increases — while those who spend on themselves get no such boost. Even Scrooge can agree that everyone wins.

2. You might just spend it on something dumb, anyway.
As pious as you are, there’s still extra money in your budget somewhere. Create a budget for charity donations, then take some of your extra money (each month or each year) and donate it to charity. Use your spending money to make a difference instead of spending it on Brookstone junk you’ll use once. And if you think you don’t have enough, take that extra 2% you’ll be earning next year and put that toward a charity fund. For someone making $100,000, that’s $2,000.00.

3. It’s probably now or never.
Don’t pretend that instead of giving money, you’re going to donate time. When was the last time you volunteered at a soup kitchen? Don’t let your mind fall for this trick. Send the money now or you’ll end up giving nothing.

4. Get ahead of your heart.
This is the biggie, in my opinion. There’s something that occurs in your psyche when you cut a big (or relatively big) check to someone in need, or to a charity organization. You feel more powerful–more dynamic. You signal to your own soul: “Money doesn’t rule me. I have more than enough, so much more than enough that I’m giving it away.”

Then, of course, something special sometimes actually happens: more money seems to find itself in your hands.

I’m not advocating a mystical pay-it-forward scheme; I’m simply making this observation over years of being a student of how money “works”. Frankly, it just seems to regularly find itself in the hands of those who give it away.

So, aside from the tax benefits … consider these as well. And I hope we talk soon …

Warmly,

Aurelia Weems
(936) 273-1188

Aurelia E Weems, CPA

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Get Lower Taxes: 4 Last-Minute Tax Moves For The Woodlands Taxpayers

lower taxesThe first round of holiday festivities are behind us, and the nation turns its eyes to Washington DC to see if this December will be festive or glum.

Well … perhaps that’s an exaggeration. Most of us don’t take our cues from DC! Either way, this season marking the end of 2017 will be particularly bright — but I will say that we tax professionals are watching the Congressional proceedings closely to see what kind of “tax reform” we end up with.

From CNN:

“With little more than four weeks — and just 12 scheduled legislative days left — and the 2018 midterm elections looming, Republicans must not only pass their contentious tax overhaul and avert a government shutdown, but also reauthorize other federal programs that are fraught with politics.”

Here at Aurelia E Weems, CPA, we pay attention to this stuff so you don’t have to. And when (if) something gets actually passed, we’ll be right here to help you weed through what it might mean for you, your family, and your taxes.

Because in all of our years of doing this in The Woodlands, we’ve seen plenty of tax reform bills churn through the Congressional sausage machine … and we have yet to see any of them make things “simpler” for the The Woodlands taxpayer, or the system.

But who knows? Perhaps this one will be different from the many others. But I wouldn’t count on it.

Either way, we’re in your corner.

With one month left, however, the window is rapidly closing on making substantive changes to how YOU will be taxed in 2017.

But that doesn’t mean you’re helpless. Here are some last-minute ideas anyone can pull off.

Get Lower Taxes: 4 Last-Minute Tax Moves For The Woodlands Taxpayers
“Things are never quite as scary when you’ve got a best friend.” -Bill Watterson

Regardless of what happens with this bill, there are no legislative changes that can affect what happens to your taxes for 2017. It would be a PR disaster for Congress to make a bunch of changes that would immediately shift how you should have been handling your finances for the entire year.

Not that Congress has shown itself to be extremely responsive to what the public thinks, or people in The Woodlands, of course.

So, that aside, and barring some kind of massive event, here are some things you can do right now to lower your taxes, no matter what comes:

1) (Until December 15, 2017) Handle your ACA enrollment requirements.
Yes, as of this writing, it’s still the law, and the IRS says that until and if it’s repealed and replaced, they will be enforcing the “minimal essential coverage” reporting rule. Which means that your tax return won’t be accepted if you don’t have the right coverage in place. So get that handled, because you’ll pay stiff penalties otherwise.

And speaking of healthcare…

2) Spend Down Your FSA Funds.
Money set aside in a flexible spending account must be spent by the end of the year, else the funds are lost. Some The Woodlands employers allow a two-and-a-half month grace period. So check with your employer to see what your personal deadline is for utilizing your FSA savings.

3) Consider “Bunching” Your Expenses.
This really only makes sense if you itemize your deductions. “Bunching” is a tax planning strategy that lets you shift deductible expense into the tax year where they’ll be more valuable. Moves range from scheduling medical treatments to simply renewing a work-related subscription or membership if those costs will be worth more in 2017 than they would be under a 2018 tax bill environment.

If, however, you find they won’t do you any tax good — and the medical procedure isn’t time critical — you can push them into the coming 2018 tax year. It’s much easier to make these choices now, and start collecting the receipts, with an entire month left, than to scramble at the end of the month when things are much more hectic.

4) Consider Making the Switch to a Roth IRA.
Roth conversions are taxed in the year the conversion happens. However, The Woodlands taxpayers have the option to undo part or all of that conversion by their filing deadline (i.e., by April 2018). But in order to retroactively undo part of their conversion next year, they first have to convert this year. So if you are on the fence about converting, consider taking the plunge before the end of the year, knowing that you (and/or WE) can re-characterize some or all of the amounts early next year.

Now, there are plenty of other last-minute moves you could make, to affect your tax bill for this year. But these are the quickest, and the easiest (aside, perhaps, from the Roth conversion — but even that can be done quickly).

Do you have others you want to explore? Give us a call ((936) 273-1188) or shoot me an email (aew@aewcpa.com), and we’ll help you out.

Warmly,

Aurelia Weems
(936) 273-1188

Aurelia E Weems, CPA

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2017’s Been Hard For Our Nation, Can We Still Give Thanks in The Woodlands?

give thanksHere we are, suddenly finding ourselves in the week that we have set aside as a nation for the giving of thanks.

2017 seems to have been a difficult year for many to find glimpses of the light, to find goodness in the midst of seeming chaos and lots of bad news.

But, as I like to do, I’ll remind you that we’ve been here before, and worse.

In fact, this holiday was set into our federal law books during the midst of our nation’s most brutal conflict, by President Abraham Lincoln in 1863. (Here’s a link to his proclamation which is worth reading annually.)

We seem to find ourselves in the middle of culture wars, tax policy wars, political wars, and lest we forget, great tragedies like those that recently occurred in Texas, Las Vegas and elsewhere.

So … can we yet give thanks?

I say YES. Because we must, and because to do so is what sets us apart from our baser selves, and gives us that for which each of us is working and fighting: contentedness and peace.

You should sit in my The Woodlands office with me sometime, watch the procession of “wealthy” and “poor” clients — families with 7-8 figures in the *bank*, and those going underwater. You would see what I get reminded of regularly: Sometimes my “wealthiest” The Woodlands clients can be the most impoverished … and those without many zeros in their accounts can be flat-out rich.

Because being “rich” truly is a state-of-mind — and it’s tied to gratitude. It affects how you see savings, retirement, the current and future economy, career growth or investment. And, of course, gratitude is the enemy of fear. It’s like an opposite magnet for it — walk in gratitude, and fear seems to melt away.

So, here’s my advice for this week: Whatever financial (or otherwise) situation you happen to be in, find a way to be thankful. There are hidden blessings in any trial … and hidden fears lying within any windfall or revenue surge. Find and savor the blessings, and watch your family, your co-workers and your domain thrive.

As I gather at my table with family and friends this week … I am thankful for you — and people like you. Thank you for your trust, for your business year after year … and for making my first step into starting and running a firm “way back when” so rewarding now.

No matter what Congress throws at us in these next few weeks in terms of tax law changes (because as I have been reminding some of my The Woodlands clients and friends this week — nothing has changed until a law is passed), I and your friends here at Aurelia E Weems, CPA are in your corner.

So … thank you.

Warmly,

Aurelia Weems
(936) 273-1188

Aurelia E Weems, CPA

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5 Tips on How to Become Wealthy in The Woodlands

How to become wealthyAs we continue to keep our eyes on what’s happening with the GOP tax reform bill in Washington, we are focusing on an entirely different kind of “tax reform” around here:

Tax planning with our smartest The Woodlands clients.

Because something that is a commonality among our wisest clients is that they get AHEAD of the game with their taxes, and don’t let life’s inertia weigh them down from taking pro-active steps to avoid paying unnecessarily high tax rates.

There are all kinds of legal and ethical deductions that can keep your taxes down — but only if you take positive action before the end of the year.

So if that interests you, shoot me an email using the link at the top of the page or call us at (936) 273-1188 and let’s get ahead of the game for your 2017 taxes.

Now, speaking of my smartest The Woodlands clients…

Many of my wealthiest clients have had to work their way up the scale, and to do so, they’ve had to adopt a different set of habits from most other people in The Woodlands.

We can learn a lot from them, these among our ranks who had to create the wealth they now enjoy. More precisely, it’s the habits that got them to where they are that we need to focus on and learn from.

I thought I’d take some time to share with you some observations I’ve made as I’ve worked with clients who have done extremely well, financially.

I’m presuming, here, that you’d like to join those ranks … so here are five things which I’ve observed, that I believe will help you get there.

5 Tips on How to Become Wealthy in The Woodlands
“The pessimist complains about the wind; the optimist expects it to change; the realist adjusts the sails.” -William Arthur Ward

As I’ve watched clients in The Woodlands go from one end of the income scale to another, over the years, here are five habits I’ve seen carried by all of them who moved *up* that scale (and those who started there — without these, well, they went the other direction) …

1. Putting off today what you can have tomorrow
The wealthy usually carry a willingness to live beneath their means for as long as it takes to reach their financial goals. While their peers are showing a tendency toward embracing the good life at the first sign of prosperity, the would-be wealthy take a pass on all of that.

While others are saving 6-10% of their annual incomes — usually for retirement — people who want to be wealthy often save 20, 30, 40 or even 50% or more of their incomes.

Imagine how much money you’d have saved in 10 years if you saved half of your income during that time? The fact that no one ever sees this happen is one of the reasons that people believe that the wealthy somehow “come into money.”

2. Spending well
The self-made wealthy learn early in life that you never pay full price. The combination of this habit with delayed gratification is a powerful force when it comes to growing wealth. Not only do you spend as little money as possible, but you buy at a discount when you do.

While most people are buying the most expensive house they can afford, the rich-in-progress buy beneath their means, and buy the cheapest house in the neighborhood to boot. They first ask themselves, “How much house can we truly afford right now?” The same is true of buying cars: If one wants to be rich someday, he buys a conservative car — and buys it used.

3. Fleeing from consumer debt
Debt represents a reduction of future cash flow and the wealthy will avoid it. By paying cash on the barrel, there are no strings attached to what you buy that might compromise your ability to continue saving money at a high rate.

Notice how the drive to save large amounts of money causes frugal spending habits, which then enable the ability to make purchases without using debt; the three habits combine to form a pattern that brings the aspiring rich to the point of great wealth earlier than an outsider might expect.

4. Seeking low risk/high yield investments
If you want to be rich, the first rule of investing is to not lose money! If you have a small amount of money to invest you might be tempted to put it all into high-risk growth stocks in the hope that a big run-up in value will make you rich. But if you have — or hope to have — a large portfolio to invest, you might not take that kind of risk. Your investments will be in assets that are unlikely to collapse in price, reasonably likely to grow in value over time, and able to provide a steady cash flow while you wait for them to grow.

For someone who is starting out, a perfect investment asset might be an undervalued (and therefore very likely to grow) blue chip stock (not likely to collapse) with a history of above-average dividend yields (steady cash flow). Or a good index fund. He doesn’t need for his investments to make him rich — he’s already on his way there, and just wants to further grow his wealth, steadily and predictably. (Of course, the specific strategy will vary from person to person, and at different stages of life, so this isn’t necessarily intended to be personalized investment advice for you.)

5. Only doing what matters most
My wealthiest The Woodlands clients have the ability to center on the most profitable ventures and to let go of nearly everything else. They often do this by delegating non-profitable activities to others, if not making those activities somehow go away altogether.

This is easier to do when you have money to pay others to handle them for you, or when your finances are relatively uncomplicated. If, for example, the rich person has a business, he might pay someone to handle specific aspects of the operation that are necessary but produce little or no revenue. That frees him to concentrate all of his efforts on generating more income for his business. As a result, his business and his income grow much more quickly, making him wealthier still.

One thing I’ve seen in my clients with means: How to become wealthy is really a lifestyle as much as anything else. Once you adopt it — by living beneath your means, staying out of debt, and saving large amounts of money constantly, you have capital to invest (conservatively) and to pay others with, in order to free you up to make even more money. It’s not so hard to see why the wealth of the self-made rich seems to spring out one day as if there’s a winning lottery ticket in the mix.

But that’s simply not the case, and my self-made wealthy clients know this.

We’re just a phone call (or email) away: (936) 273-1188 (aew@aewcpa.com)

Warmly,

Aurelia Weems
(936) 273-1188

Aurelia E Weems, CPA

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Four Simple Steps To Increase Productivity In The Woodlands

Increase ProductivityFirst of all, our hearts are with Sutherland Springs, TX. What a senseless, terrible tragedy for that community, and our nation. Words fail.

+++

But as difficult as it is to “move on” from the remembrance of such things, our nation continues along with the arguments and concerns of the day. Specifically, the recently-released House GOP tax reform legislation is already causing a great deal of stir.

Mind you, this legislation has NOT been passed. And with the way things are going, things are already changing so quickly that it’s difficult to make an authoritative judgement on what exactly WILL get passed, and what it will mean for regular The Woodlands taxpayers, like you and me.

For now, if you want to get the simplest, most “propaganda free” look on what *is* in the bill, you can dive into the summary (with commentary) from the House Ways and Means Committee (which is the committee tasked with writing it in the first place).

But even that is 82 pages.

That same committee is “marking up” the bill, even now as I write, this week, and much of the analysis that we’ve all been reading this week might end up being moot by the time it’s actually through the committee.

And as usual, there is a steadily-accumulating number of opponents to this bill, and not just the natural ones on the Democratic side of the political aisle. Just a small sampling:

– prospective adoptive parents (elimination of the adoption tax credit)
– non-profits who rely upon giving (because of the significant decrease in itemization, which would disincentivize givers who use the charitable deduction)
– Divorcees who pay support (elimination of deductibility of alimony payments)
– those with student loans (elimination of deduction for student loan interest)
– certain home buyers and sellers
– and more

Importantly, these changes are intended to be offset by increases in other deductions, specifically the significant increase in standard deductions.

And if it’s alright with you, let’s not have specific conversations about any action steps these changes might require from you until the dust settles and something is actually passed. Then, we’ll help you make a good plan.

Because MOST importantly, we have no “dog in this hunt”, and will be here for you regardless of what happens. For unfortunately, when politicians talk about “simplification” … the result is almost always anything but.

So, we’ll be watching with you to see what actually gets done from this. Right now, it’s all just talk.

Lastly, and speaking of getting things done, I’ve noticed an increasing crisis of productivity for many people in these days of “always on” entertainment. So I thought I’d switch gears from all the tax talk and give you some quick thoughts on how to increase productivity throughout your day…

Four Simple Steps To Increase Productivity In The Woodlands
“Only I can change my life. No one can do it for me.” – Carol Burnett

I’ve discovered a few tricks when it comes to getting things done through the day — and managing others who do so. Here are some productivity tricks I’ve found to be helpful:

1. Turn off cell phone alerts. 
Resist the temptation to stop what you’re doing every time your phone beeps with a new message. You’ll be better able to focus on tasks when you’re not constantly distracted and interrupted.

2. Fine-tune your to-do list.
When planning your day, add estimated times to each item on your to-do list. This will help you decide what to do first and what can be saved for later.

3. Run two-minute drills.
Every few hours, look at your list for tasks that can be done quickly — answering emails and phone calls, confirming appointments, and the like. Spend a few minutes clearing those away, and you’ll have more blocks of uninterrupted time to take on bigger tasks.

4. Take regular breaks.
You’ll burn out if you go full throttle for eight or 10 hours. Determine how long you can effectively concentrate on a single task (usually between 30 minutes and an hour, for most people). Take a break after that time — walk around, get out of the building, talk to co-workers — and you’ll return feeling refreshed.

Let’s get more done this week, shall we?

We’re just a phone call (or email) away: (936) 273-1188 (aew@aewcpa.com)

Warmly,

Aurelia Weems
(936) 273-1188

Aurelia E Weems, CPA

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Weems’ 5 Retirement Money Mistakes You Can Avoid Ahead of Time

Retirement MoneyWe’re turning the corner into November this week, which means that 2017 is close to being over. And based on what I’ve heard from more than a few of my The Woodlands clients, turning the corner into 2018 is going to be a welcome event. It’s been a rough year for the nation, and for some people who are close “friends of the firm”.

But we do have a couple more months before that comes, and plenty still to see and do. This also means you still have two months in which you can make positive progress in keeping your tax bill down — no matter what comes from potential tax reform. (Because even if serious tax reform is passed by Congress, it won’t affect this current tax year.)

It’s a good idea to project your 2017 tax bill, and make sure there won’t be any big surprises this year, and do whatever we can to keep things manageable. If you need help with that, send me a note by clicking the email button at the top of the page or give us a call at (936) 273-1188.

And speaking of surprises, one of the worst surprises that can strike is believing that you are “all set” as you head into retirement, and then having the harsh reality of negative cashflow sink in.

We’ve walked with some people who have gone through this, and invariably they made some basic mistakes before they entered into retirement, and I’ve gathered them here for you to consider.

Note: It perhaps goes without saying, but none of this should be construed as specific investment advice. These are general principles, and every person’s situation is obviously going to be a bit different.

But that said, it’s good to be aware of these tendencies…

Weems’ 5 Retirement Money Mistakes You Can Avoid Ahead of Time
“Opportunity is missed by most people because it is dressed in overalls and looks like work.” – Thomas Edison

One or two mistakes in handling your retirement money could mean paying a stiff penalty as you grow older — whether financially, or in the emotional drain that “guessing wrong” can take on you. Watch out for these mistakes we’ve seen people make over the years…

1. Obsessing about market losses (or gains).
Focus on your long-term needs, not the daily ups and downs of the DJIA. Catastrophic events and long-term health care needs can cause as much damage to your nest egg as a shaky market.

2. Forgetting about inflation and taxes.
Your retirement savings may be a lot smaller than you think when you start factoring in the rate of inflation and the taxes you’ll have to pay when you start drawing out of it.

3. Not saving in the last years before retirement.
Just because you’ve got only a handful of years left before you retire doesn’t mean you should go ahead and buy that new Lexus. Some people are able to build up substantial savings in their last five years of work because they get serious about saving and investing.

4. Believing you can withdraw more than you really can.
If you rely on average annual returns on your investments to determine just how much you can withdraw, you could be drawing down your retirement fund faster than you should. Average returns are seldom steady. A safe rule of thumb: Count on a 3 percent rate of withdrawal.

5. Not planning for a long life.
Despite the dramatic rise in life expectancy in recent decades, many people still underestimate how long they’ll live. If you’re not thinking about longevity, you could tap out your savings much faster than you should. Look at the figures and add in at least a few extra years as you make your plans.

We’re just a phone call (or email) away: (936) 273-1188 (aew@aewcpa.com)

Warmly,

Aurelia Weems
(936) 273-1188

Aurelia E Weems, CPA

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Will a Trump Tax Cut (or Raise) Affect You in The Woodlands?

tax cutThere’s a lot of chatter around Washington and the media (at least the media which cares about such things) about a tax cut, and whether or not the Trump administration is actually going to do anything of substance in this area.

And, of course, there’s talk about tax RAISES, alongside these cuts. Because, well, math. And politics.

But the fact of the matter is that we here at Aurelia E Weems, CPA take a skeptical eye at chatter, and we try to live in the real world of what really is. And I suggest you do the same. Because you and I both know that a tax cut (or a tax raise, for that matter) will affect us — our families right here in The Woodlands.

Which, of course, is why I’d love to get your answers to the following questions, so that YOU at least can have a little tax cut of your own.

Because there may be a few moves we can make that can help your tax hit NOW, before we’re forced into “reaction mode” — which is the only mode out of which after-the-fact tax work can be done.

So, if you haven’t already done so, would you send me your answers to these questions (just click the email button at the top of this page)…? 

1) Have you had a significant change in your wage income this year?
<Put YOUR answer here in your email reply>

2) Have you taken capital gains or losses this year? Are you planning to?
<Put YOUR answer here in your email reply>

3) Did you start or sell a business this year?
BONUS QUESTION: Do you know anyone who did, that would like input on their tax situation?

<Put YOUR answer here in your email reply>

4) Did you purchase real estate?
<Put YOUR answer here in your email reply>

5) Did you make your full contributions to retirement accounts? 
<Put YOUR answer here in your email reply>

6) Have you considered a Roth IRA?
<Put YOUR answer here in your email reply>

7) Did you withdraw from retirement accounts, and for what purpose?
<Put YOUR answer here in your email reply>

**8) Have you sent your family and friends our way — and, if not, is there something which we can help you with, to make this easier?
<Put YOUR answer here in your email reply>

9) Are there any other tax or financial (or other) issues you think we should know about?
<Put YOUR answer here in your email reply>

Your answers to these questions will help us to know which direction to take as we work with you over the next two months to prepare for year-end. With your permission, we’ll contact you back, as appropriate, and set up a time to discuss them further with you, whether by phone or other method.

I hope to see your answers in my inbox soon.

We’re just a phone call (or email) away: (936) 273-1188 (aew@aewcpa.com)

Warmly,

Aurelia Weems
(936) 273-1188

Aurelia E Weems, CPA

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9 Key Questions for Your 2017 Taxes by Aurelia Weems

2017 taxesNow that extended returns have been filed, we set our gaze towards year-end around here, and on making sure that YOU are doing everything possible to ensure that your 2017 tax burden is as low as legally and ethically possible.

I did receive some feedback and questions about the Equifax information I shared, and I should clarify that while I’m not a specific expert in these matters, I’m glad that I could cut through that noise on your behalf.

Again, I encourage you to consider a credit freeze with all three bureaus for at least a year, unless you are applying for a new credit card, applying for a loan or mortgage, or switching cell phone carriers (where monthly credit is extended). In which case, the “unfreezing” process (or “thaw”, as it’s known) is still worth the hassle for the protection it provides.

But back to your 2017 taxes…

Let’s you and I make a plan for your 2017 taxes that will set you up for long-term success. In fact, there may be a few moves we can make that can help your tax hit NOW before we’re forced into “reaction mode” — which is the only mode out of which after-the-fact tax work can be done.

So, if at all possible, I’d like to change that paradigm for you by having you answer a few short questions for me. Send me your answers by clicking the email button at the top of this page. Here are the questions

1) Have you had a significant change in your wage income this year?
<Put YOUR answer here in your email reply>

2) Have you taken capital gains or losses this year? Are you planning to?
<Put YOUR answer here in your email reply>

3) Did you start or sell a business this year?
BONUS QUESTION: Do you know anyone who did, that would like input on their tax situation?

<Put YOUR answer here in your email reply>

4) Did you purchase real estate?
<Put YOUR answer here in your email reply>

5) Did you make your full contributions to retirement accounts? 
<Put YOUR answer here in your email reply>

6) Have you considered a Roth IRA?
<Put YOUR answer here in your email reply>

7) Did you withdraw from retirement accounts, and for what purpose?
<Put YOUR answer here in your email reply>

**8) Have you sent your family and friends our way — and, if not, is there something which we can help you with, to make this easier?
<Put YOUR answer here in your email reply>

9) Are there any other tax or financial (or other) issues you think we should know about?
<Put YOUR answer here in your email reply>

Now — your answers to these questions form the “tip of the iceberg”, and they will help us to know which direction to take as we work with you over the next two months to prepare for year-end. With your permission, we’ll contact you back, as appropriate, and set up a time to discuss them further with you, whether by phone or other method.

I hope to see you in here soon.

We’re just a phone call (or email) away: (936) 273-1188 (aew@aewcpa.com)

Warmly,

Aurelia Weems
(936) 273-1188

Aurelia E Weems, CPA

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A Credit Freeze How-To, and Why Aurelia Weems Recommends It Now

credit freezeI hope you’re well today. This is the final week before extended returns are due (Monday, October 16th is the due date this year), so we are working hard with those clients who placed an extension on their filing to make sure that everything is set up and filed properly.

So, it’s a busy week for us in our The Woodlands offices this week, and I’d ask for your understanding about that for your communication with us.

But just because it’s busy, doesn’t mean that I wouldn’t take the time to communicate with you, and this week I’m addressing the big Equifax data breach, and what you should know about it, and what you should do. I’ve received some questions about it over the past couple weeks, but based on my research, it’s a messy situation overall, and rock-solid answers to certain questions seem hard to come by.

That said, I have some advice and rock-solid answers to some questions, and a few thoughts on the ones for which information seems unclear.

Here we go…

A Credit Freeze How-To, and Why Aurelia Weems Recommends It Now
“The best way to convince a fool that he is wrong is to let him have his own way.” – Josh Billings

It’s been about one month since the massive “data breach” at Equifax, which affected about 145 million Americans (more than half the country), led to the firing of their CEO, and has caused a great deal of stress to millions of people — including most of us here in The Woodlands. And, well, if you’ve done any research on the matter, you’ve also no doubt seen conflicting advice and a fair amount of nonsense.

First of all, it’s still unclear whether the data on the Equifax site EquifaxSecurity2017.com is actually accurate. In other words, you might get a “false positive” and you might get a “false negative” when you submit your information there. There have been multiple reports I have seen in which people submit the same information multiple times and receive varying information. No doubt that their systems were slammed after all of the press coverage, but the fact remains that the site still apparently remains unreliable.

So, it’s a good idea to just assume that your information was part of the breach, even if you have checked and think that it wasn’t.

So what should you do? I’ll keep this simple because there’s just so much noise out there about this topic: First of all, request a credit freeze at all three credit bureaus (Equifax, Experian, Transunion).

Here are the online links to do so:

Equifax:
https://www.freeze.equifax.com/Freeze/jsp/SFF_PersonalIDInfo.jsp

Experian:
https://www.experian.com/ncaconline/freeze

Transunion:
https://freeze.transunion.com/sf/securityFreeze/landingPage.jsp

Don’t trust the online process? Here are the phone numbers for it:
Equifax: 1-800-685-1111
Experian: 1-888-397-3742
TransUnion: 1-888-909-8872

Why a credit freeze, and what does this do?
A “credit freeze” essentially locks your credit from being issued to any other person (including yourself). It seems like overkill, but consider it to be like “locking the doors to your financial house”. (In this way, it is far superior to programs like “LifeLock”, which can be understood as a “delayed alarm” system for your credit.)

“Unfreezing” your credit, while it does take a bit of doing, is not burdensome. It takes about 20 minutes to freeze your credit at all three agencies, and as long as you keep the PIN from that process, temporarily unfreezing them as needed is almost instant.

The only time you really need your credit to be active is when you are applying for a new credit card, applying for a loan or mortgage, or switching cell phone carriers (where monthly credit is extended). As long as you are not doing these things several times per year, the hassle is minimal.

Here are a couple things you do NOT need to do:

  1. Check your credit score. All this really does is verify your “credit worthiness” and doesn’t help you determine if you’ve been affected or if your credit is being used by a third party.
  2. Subscribe to a paid credit monitoring service. All that you need is provided for free, especially if you freeze your credit.
  3. PANIC. We are in your corner, no matter what comes.

I do recommend you ensure you are prepared to submit your tax returns as early as possible in 2018. That may sound self-serving coming from me, but the reason security experts agree on this step is so you can close the window for scammers to file in your name, with information they may have obtained from the breach. Obviously, some of my clients have complicated situations that mean waiting on K-1’s, 1099’s, etc. However, it’s a very good idea to not dawdle in the process, and this is ESPECIALLY true if you will be expecting a refund.

Certain people can get a personalized PIN for their taxes, which is another safeguard against fraudulent tax returns in your name. Here is a link to more information about it, but it’s currently only available by IRS invitation, or if you have an address in Florida, Georgia, or the District of Columbia: https://www.irs.gov/identity-theft-fraud-scams/get-an-identity-protection-pin

I do hope all of this helps. I am not a dedicated expert on these matters, but I have seen enough nonsense to be able to cut through the garbage a little bit for you.

(Here is another great place to find answers if I haven’t addressed everything you are concerned about — the New York Times’ continually-updated FAQ about the Equifax breach:
https://www.nytimes.com/interactive/2017/your-money/equifax-data-breach-credit.html )

I’m grateful for the opportunity to serve you, and for your referrals – and we’ll be in touch again next week, after the extension deadline!

We’re just a phone call (or email) away: (936) 273-1188 (aew@aewcpa.com)

Warmly,

Aurelia Weems
(936) 273-1188

Aurelia E Weems, CPA

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Should You Set Up A Trust? 5 Questions For The Woodlands Families

set up a trustWe all woke Monday morning to news of more senseless tragedy and horror, this time, as you no doubt have heard, from Las Vegas. Yet another picture of a kind of terror that I cannot fathom; imagine going to a simple music festival and suddenly having death rain down from the sky. Words cannot describe.

Our hearts are with you, Vegas.

It seems brutal to “move on” from such a thing, even here in this space, but such is life in the modern world. As we grieve, we press forward with what we must set our hands to.

And Congress must set its hands to figuring out whether or not President Trump’s tax reform agenda will actually take shape. As with many things Congress- or policy-related, we here at Aurelia E Weems, CPA will choose to withhold judgment or action until something actually takes place. And we’ll be right here to explain it for you if it ever does.

But one thing that is certain in the future is that we would all like to be wise about how we would set up the next generation, financially. And so today, I’m covering some information about what you should consider along those lines…

Should You Set Up A Trust? 5 Questions For The Woodlands Families
“Act the way you’d like to be and soon you’ll be the way you act.” – Leonard Cohen

Parenting here in The Woodlands is more than reading to your children or getting them to eat their vegetables. It’s also about securing their financial future. One way to do that is by drafting a trust and naming a trustee.

This is a great tool to consider, and it supersedes a will in many cases. It’s definitely something to consider.

Here are a few questions to ask yourself to determine if a trust is right for your family:

Do you anticipate leaving your children more than a modest sum of money? 
A trust may not be worth the effort if you think you’ll only be leaving a child (or children) $100,000 or less. On the other hand, if you’re leaving life insurance money to cover four years of school and you own a home, there’s a good chance a trust would make sense for you.

Do you want to have some say in how your children’s money is spent? 
A trust allows you to restrict spending to basic support, including food, clothing, education and health care.

This is something that can’t be done with a custodial account. If the custodian is a soft touch, he could end up lavishing your child with designer jeans and a fancy car, leaving very little left for the college years. Even worse, if the custodian is also the guardian, he could start writing himself large “support” checks to help cover his other expenses.

Would you prefer that your children not inherit the money when they turn 18 or 21? 
If you think giving a high-school senior a large sum of cash is a recipe for disaster, then you should consider a trust. The ability to delay inheritance is one of the great benefits of a trust.

Should something happen to both parents, for example, kids can receive half of their inheritance at age 30, and the remaining amount when they reach 35 (or some other pre-established benchmark). Our 20’s are such a transitional time that it often makes sense not to burden children with weighty financial decisions.

Do you want the money to be used for a college education? 
If you specifically bought life insurance so that there would be enough money to help fund college in the event of your death, then you’ll definitely want to delay the age at which your kids inherit your money. Otherwise, your child could think a red Ferrari is a better investment than a diploma.

Would you like your children to have recourse if their money is mismanaged? 
One more benefit of a trust that you don’t get with a custodial account is that a trust is a legal contract; the trustee has an obligation to follow your directions and act in a reasonable and prudent manner. If the beneficiary feels the trustee spent the money frivolously, he can demand an accounting, and can sue for reimbursement if the trustee acted improperly with the funds. It may be pretty tough to prove illegal or improper actions with a trust, but just the threat of a possible lawsuit can keep someone in line.

I hope these questions (and answers!) are helpful. Feel free to share this information with your The Woodlands friends.

I’m grateful for the opportunity to serve you, and for your referrals.

We’re just a phone call (or email) away: (936) 273-1188 (aew@aewcpa.com)

Warmly,
Aurelia Weems
(936) 273-1188

Aurelia E Weems, CPA

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