You are currently browsing the monthly archive for July, 2008.
Dr. Piggy
Need to fund your HSA (Health Savings Account)? It’s a good idea. And now, the IRS lets you make a one-time contribution to begin this funding from your Regular IRA or your Roth IRA.
Normally, if you’re pulling dough out of your IRA, it’s because you “need” a Lexus, and you’ll get hit with a 10% penalty for that. But pulling money out of your IRA to fund your HSA is S.W.A. (Some What Amazing) because you won’t get slapped with that yucky penalty. Pretty cool.
When going through with this, keep these points in mind:
- It’s supposedly a one-time life transfer (but you might be able to get around this if you have an HSA when you were single earlier in the year, then get married and go get an HSA for the family toward the end of the year).
- You can’t transfer more than the law allows you to contribute to your HSA in any one year, which is $5,800 for families and $2,900 for the single folk.
- The amount you transfer comes out of the deductible contributions made to the IRA first, if it’s a deductible IRA. That means the transfer is not going to lower the earned monies in the IRA, and that future payouts from your IRA will be tax-free.
- The transfers have to come from a Regular IRA or Roth IRA, nothing else.
- There are some examples of how this works at the end of the IRS’s wonderfully clear write-up on the matter here.
Make sure you tell your friends that “the pro-rata basis recovery rules under § 72, for purposes of determining the basis in any amount remaining in an IRA or Roth IRA following a qualified HSA funding distribution, the qualified HSA funding distribution is treated as included in gross income to the extent that such amount does not exceed the aggregate amount which would have been so included if there were a total distribution from the IRA or Roth IRA owner’s accounts.” (I couldn’t make this stuff up).
Your so-called friends will beat you up, but you’ll sound smart.
IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that (i) any U.S. tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of avoiding penalties under the Internal Revenue Code; (ii) any such tax advice is written in connection with the promotion or marketing of the matters addressed; and (iii) if you are not the original addressee of this communication, you should seek advice based on your particular circumstances from an independent advisor.
1. You don’t have to talk to people you don’t want to talk to anymore. Slydial let’s you bypass a “live” phone call and go directly to their voicemail. Wow. There are many applications for this (you can be a coward now and break up with your girlfriend without having to talk to her!). Just call the Slydial number and the service will forward you to the voicemail of your choice. Maybe you’ll find it makes you more efficient (as opposed to a coward) - GoSee
2. There is an interesting summary of an old economic development strategy at one of my fav blogs. It’s called Economic Gardening and the premise behind the strategy makes a lot of sense. Basically, economic development should shift from going out and finding the big businesses and offering tons of tax-free incentives, to building the local small businesses in the community. After all, as reported, small business creates 70 to 80% of all net new US private sector jobs in the US. Makes sense to me (let me know what you think) - GoSee
3. The Back-to-School Tax holidays are coming up for many states. Here is a blog post with a chart that shows the states that offer the sales tax holidays, and what is exempt from the tax - GoSee
Thanks, Jason M. Blumer
- Uncle Sam’s hat fell over - guess what’s inside?
Our clients, and other non-nerdy people, often talk about their “income” being taxable. They use “income” in a general sense. Grass-cutting money, your whopping paycheck and the credit card debt you defaulted on last month are all considered income by the IRS. A lot of people may mistakenly think you multiply your “income” by your tax rate.
However, us nerdy CPAs speak in terms of “taxable income.” Income is everything you got paid or constructively earned (i.e., you might not have gotten it, but its gonna’ get taxed anyway because it’s considered income by the IRS). And from this “income,” you deduct allowable deductions (itemized or standard) and your exemptions. THEN, you multiply your tax rate by your “taxable income” to determine what you owe Sam (that’s kinda’ how it works).
So, remember, you may be talking about “income”, but your CPA (don’t have a CPA? - I know a good one) is probably talking about “taxable income,” which is totally different.
Now, go do stuff with all of those smarts you have - you owe it to America.
IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that (i) any U.S. tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of avoiding penalties under the Internal Revenue Code; (ii) any such tax advice is written in connection with the promotion or marketing of the matters addressed; and (iii) if you are not the original addressee of this communication, you should seek advice based on your particular circumstances from an independent advisor.
In honor of my new iPhone, which will be arriving within a few days, this week’s version of GoSee is dedicated to the iPhone, and it’s uses (yes, you can be my friend and tell people you know me, and yes, I got the 16G model)
1. Check out this application you can download to your iPhone. It reminds you where you parked the stupid car (we are in Donald Duck 25…) - GoSee
2. I’m sure you’ve heard by now that Apple botched the whole iPhone activation thing. They weren’t anticipating everyone who would want one (huh?) so their website was overloaded and couldn’t get everyone activated timely (people were saying mean stuff) - GoSee
3. Finally, wikipedia’s listing of the iPhone - GoSee
Thanks, Jason M. Blumer
Capitol Hill Loves Taxes!!
Did you know that our tax system uses what’s called a Progressive Tax? Your individual income is taxed using graduated rates, as opposed to taxing all of your income at one level. It’s progressive in that it tries to tax rich people (who have more income) at a higher rate; and poor people (those with less income) at lower tax rates.
For example, the rates for 2008 for those filing Married Filing Jointly are as follows:
10% on the income between $0 and $16,050
15% on the income between $16,050 and $65,100; plus $1,605.00
25% on the income between $65,100 and $131,450; plus $8,962.50
28% on the income between $131,450 and $200,300; plus $25,550.00
33% on the income between $200,300 and $357,700; plus $44,828.00
35% on the income over $357,700; plus $96,770.00
So, as seen above, only the first $16k of your income will be taxed at the 10% rate. And every other married couple in America will also have the first $16k of their income taxed at 10%. Then your income will be taxed as you move up from there. It’s actually more complicated than this, but this is a good start.
Now you know - go conquer the world.
Thanks, Jason M. Blumer
IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that (i) any U.S. tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of avoiding penalties under the Internal Revenue Code; (ii) any such tax advice is written in connection with the promotion or marketing of the matters addressed; and (iii) if you are not the original addressee of this communication, you should seek advice based on your particular circumstances from an independent advisor.
1. Microsoft pulled the plug on our beloved Windows XP OS. Whaaaa. It really was a great OS (definitely compared to Vista). Don’t worry, you can still buy Windows XP online… - GoSee
2. I probably need to do a more detailed post on this, but the zero capital gains tax rate can really bring some wealth to a lot of taxpayers (when sold in 2008, 2009 or 2010). You can sell some capital property you’ve held long term (over one year, that is) and pay no taxes (rules may not apply to you so check with your tax adviser). Forbes has a great article on this - GoSee
3. I’ve been trying out the Jott service, which transforms voice into text. This could be in the form of e-mails, blogs, tweets, etc. Basically, you call the service (after you’ve signed up) and tell it whom you want to Jott, and it sends an email to that person (and text message to their cell phone if you so chose). You can Jott yourself as reminders, or even Jott groups (like the Accounting Department, which is very near and dear to my heart) - GoSee
Thanks, Jason M. Blumer
I always enjoy my meetings with my business coach (see me in the picture to the left after a recent meeting - however, I don’t remember those clouds). I’m always challenged because he keeps asking “why?” It gets hard always answering that question, but I truly need it.
He mentioned a talk he did recently for some financial nerds somewhere and told them about Three Entrepreneurial Phases of Growth: (1) Lead Generation, (2) Lead Conversion, and (3) a Client “Wow” Process.
The first phase finds them, the second one gets them, and the third one keeps them. I identified that we don’t do enough to keep our clients. He scared me when he said other CPAs are out there looking for your clients. And now YOU (yes, YOU dang it) can take that to heart - there are other industries and businesses hunting down your clients right now - what are you doing about it?
Here is what I’m going to do to keep my clients:
1 Everytime I sign up a new client, we are going to mail them a thank you letter with a piece of firm collateral. The firm collateral will tell them everything we do, will highlight our theories of operating and serving our clients, and will remind them of why they chose us in the first place.
2 We will break all of our clients down into one of three categories: Gold, Silver or Bronze. Depending on which clients provide the most income to our firm, the most referrals, the most blah blah blah, will be in the Gold category. The ones whom we serve periodically will be Silver, while the ones we see only annually will be Bronze. “Why don’t you just serve everyone as if they are a Gold client?” you may say. To that I say, “what a stupid question” (just kidding). Actually, that’s a good question. The reason is because as you grow YOU WILL NOT be able to serve everyone like a Gold, and when you have started serving everyone as a Gold client, then you must continue or they will notice and get ticked off. So, serve your clients according to the value that they add to your firm, or you’ll load yourself down providing Customer Service you can’t continue to support (and stop asking stupid questions).
3 We will implement a more proactive Customer Service Program that focuses on our Gold, Silver and Bronze clients. I already know who my Gold clients are, and they will probably start receiving Customer Service calls from someone in my firm (not me) to see how we are doing, and to ask them what else they need. Gold clients will also receive small gifts every now and then. Our Silver clients will probably receive a call quarterly and a note from me every now and then just to say “thanks”. And our Bronze clients will probably receive a call once a year just to say “thanks”.
4 We will probably start sending “Thanksgiving” cards to every client in the firm. This seems like an innovative way to say “Thank You” since no one else sends “Thanksgiving” cards.
What are you going to do to KEEP your clients? (because I’m trying hard to take them).
Thanks, Jason M. Blumer
1. LPs are coming back. “What’s that?,” asks my wife. “It’s what you scratch on a turntable,” so I say (she doesn’t appreciate Run DMC). Anyway, according to the article, the come back of LPs is due in large part to the iPod. Huh? As reported, ”Everything got so sterile with digital that people were not spending time with the physical manifestation of their music.” Huh? - GoSee
2. The IRS split a year again where you’ll be tracking mileage at 50.5 cents/mile for the first half of the year, and as of July 1, 2008, you’ll be tracking the deductible mileage rate at 58.5 cents/mile. Now when we do tax returns for our clients, we’ll have to ask for the mileage for the first half of the year, and the mileage for the second half of the year. Here’s a good blog about this change - GoSee
3. Did you know that the minimum wage is going up again on July 24, 2008? It will be $6.55/hour on that date. Then, changes to the law will kick it up another 11% on July 24, 2009 to $7.25/hour. What joy - we have a government helping us know what to pay our employees. I’m so glad they’ve researched our small businesses, our costs, our labor burdens and have made a blanket generalized statement about what we should be paying our employees (that last part was sarcastic, if you couldn’t tell). In honor of this change, here’s a beautiful and poignant history of the minimum wage - GoSee
Thanks, Jason M. Blumer
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