Taxes and Investing

The Master Archive!

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Dealing with Clients Who Want to Take Illegal Deductions

By Keith Taxguy / April 16, 2018 / 3 Comments

Tax professionals all have stories of clients who wanted to cheat on their taxes. It might be tempting to nudge the line a bit to the left to keep a client happy and collect a fee. But you need to think long and hard before you make your decision.

If you prepare your own return you can avoid all the pesky demands of tax professionals to file an accurate tax return. Just as a tax professionals face serious penalties, so does the taxpayer. If you talk a tax professional into an unreasonable position on your tax return you will be penalized a lot faster than the tax professional. Tax preparers are really just entering data. She may not be aware of the malfeasance. That leaves you blowing in the wind. And a cold wind it is.

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The Greatest Secret Between Debt and Wealth

By Keith Taxguy / April 12, 2018 / 29 Comments

There is a secret seldom spoken of by the financially independent. Those in the know can hear echoes of the secret periodically in the utterances from great financial leaders like Charlie Munger when he said the surest way to get in financial trouble is with the three Ls: liquor, ladies and leverage. Then Munger’s buddy, Warren Buffet, laughs about the comment in an interview saying Charlie was joking about the first two; it’s leverage where all the trouble lies.

Did you miss the secret? Unless you are loaded (financially, not with liquor) there is a good chance the greatest secret of wealth whistled past your left ear unnoticed.

Here is the secret for those who missed it:

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Filing Status When You Can’t Find Your Spouse

By Keith Taxguy / April 9, 2018 / 3 Comments

Determining your tax filing status can be tricky at times. I see the same questions on social media and a few times per year in my office where people are confused on what filing status to use when they are estranged from their spouse. On the tax subgroup in Reddit the question popped up a few times this tax season already and with two new clients in the past week.

I included a decision tree to help you determine your filing status. However, there are details that didn’t fit within the decision tree neatly so it is important to read the text of this post to assure you are using the correct filing status.

There are several reasons when you may want to consider filing a separate return from your spouse. In rare instances your combined tax liability is smaller. Example: spouses have widely different incomes and one spouse has a very large uninsured medical expense.

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Are Penny Stocks a Serious Investment?

By Keith Taxguy / April 5, 2018 / 5 Comments

Large international public corporations aren’t the only game in town. There is another world fraught with many risks and the promise of undiscovered gems worth many multiples of its listed price.

These quasi-public companies are followed by virtually no one. Worse, audited financial data is hard to find if available at all. And the biggest problem of all: insider trading.

People commonly call these unique animals penny stocks. They don’t always trade for pennies, but frequently trade under $5 per share.

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Peer Street Review

By Keith Taxguy / March 28, 2018 / 24 Comments

Building wealth is simple when you understand the rules. Spending less than you earn provides seed capital for investments. Index funds provide the opportunity for superior growth with reduced risk due to diversification across the broad economic spectrum.

Once you have the basics it becomes clear you need additional cash management tools to serve your financial needs. Short-term cash for emergencies or living expenses are best held as bank deposits or in high-yield accounts like Capital One 360 or Discover Savings.

With long-term investments set in index funds and short-term needs covered by liquid money market type products it’s time to fill in the remaining gap. And there are some reasonable alternatives paying a respectable rate of return.

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The Power to Do Evil: The Ethical Dilemma

By Keith Taxguy / March 12, 2018 / 23 Comments

As a society we think of certain people as more prone to ethical lapses. This might be the result of the professions involved. Police officers make repeated ethical decisions every day. Judges, prosecutors and even jury members must deal with their personal ethics and that of others. But law enforcement or military personnel aren’t the only ones thrust into serious choices. Attorneys and doctors are forced into making decisions that might not seem ethical at first, but they are often forced to make a choice and fast. No choice is an ethical choice all too often with serious consequences.

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It Never Pays to be a Bear

By Keith Taxguy / March 9, 2018 / 13 Comments

Bulls make money. Bears make money. Pigs get slaughtered! —Old Wall Street Adage

Back in the early days of my career the investment industry and the tax/accounting industry tried to merge. To be fair it was the investment industry’s idea. Tax offices were the perfect partner to sell securities (usually mutual funds with a respectable dose of insurance thrown in for good luck). Virtually every small accounting firm took the plunge.

Accounting offices are prime for solicitation. Tax professionals have a powerful relationship with their clients. Accountants also know a lot about their clients due to the data collected to file an accurate tax return.

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Tariffs, Stagflation and Stock Market Risks

By Keith Taxguy / March 5, 2018 / 11 Comments

What is so bad about a tariff? It raises money to pay for the recent tax cuts. It promises to raise prices for steel and aluminum manufacturers. Some laborers stand to benefit from higher wages and with less competition, more job security. At face value it sounds like a good idea!

Of course, it only works if the tariff takes place within a vacuum. The tariffs Trump promises this week are blanket, meaning they hit steel and aluminum from every nation. When such a draconian ax is taken to the playing field there will be a response.

Normally tariffs take a long process to change. Treaties and trade agreements go through a long process of negotiations before each member nation to the agreement presents the details to their legislative branch for approval. Passage isn’t guaranteed. Several safety nets are in place to encourage each nation to honor the terms of all trade agreements.

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