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Taxes and Investing

Lifestyle, Small Business, Taxes and Investing

Treat Taxes Like a Game

staunton_chess_setLife in the accounting business can be difficult at times. Clients are as close to friends as you can get without actually being friends. You know all the details of their private lives. I know a divorce is imminent many times before the spouse does. I get details on illnesses in the family. I have to. Part of the tax preparation process is to know your client. When you ask about medical expenses you get the details too. In Wisconsin we have a deduction for certain private school tuition. When I ask about the kids I get the low-down on little Billy. And I don’t mind one bit. I care about my clients so I listen and interact. The line between client and friend is thin indeed.

That is why it bothers me when I can’t communicate a message to a client. Try as I may, some clients could care less about their taxes. They are willing to overpay their taxes to get out of all the reporting. They don’t understand the amount of money left on the table.

A few weeks ago I emailed a client reminding them to verify their retirement contributions and to provide a log for business miles and business overnight stays. To be honest, I didn’t expect a response. They are awesome clients and I love’em to death, but they just don’t engage at the level I would like and it bothers me because it is costing them dearly.


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Year-End Tax Planning 2016




imagesThe end of the year is fast approaching. Time is running out to modify your finances to optimize tax savings. I will run down the more common ideas to reduce taxes. Keep in mind this is not a comprehensive review. Your facts and circumstances will determine what is best for you. Use this review as a guide to reduce your tax liability.

Investments

Most readers here have significant investments so we will start there. All adjustments to investments should have an economic reason beyond taxes. Reducing taxes is the goal, but the increased costs of selling can offset a portion or all of the benefit.

If you are not using an automatic tax loss harvesting program such as Betterment, now is the time to review your non-qualified (non retirement) portfolio. Mutual funds and stocks with losses can reduce the capital gains distributions of other mutual funds or ETFs. You can also report up to a $3,000 loss against other income on your federal return. Your state taxes will differ. In Wisconsin, for example, the loss against other income is limited to $500.Continue reading

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Stay the Course with Your Investments




dollarrThere are two dangerous times in a retirement plan: when things are going really bad and when things are going really good. We have been lucky the last seven and a half years. The market has marched higher at a steady pace with nary a pullback to be seen. There are people in their 20s who have only seen the mildest of market corrections (a decline of 10% or more) and have never seen a bear market (a decline of greater than 20%).

The steady beat higher for so long is unusual. Regular investments have only known one direction: up. Money invested last year is worth more this year, same for the year before that, and so on. It is easy to invest in such an accommodating environment. The goal of early retirement looks so easy when every year is an up year.

Now the election is over and we have seen a serious move higher in the stock market. Bonds have been down more than stocks are up. The rally is narrow. High dividend yielding stocks and growth companies are down significantly. Banks and other financials are drinking the Kool-Aid. For the first time in years I have clients calling and readers emailing me for my opinion on borrowing money to invest in the market. Ahhhhhhh!Continue reading

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Credit Cards, Lifestyle, Taxes and Investing

Permanent Interest Free Loans

debt-1Credit cards were always a powerful cash management tool for business owners. Individuals can harness the same power, but frequently use credit cards wrong, piling on high interest debt, and suffering financially. In times past, credit cards allowed for easy payment and tracking of expenses. As banks grew more competitive, the opportunities also grew. Most people are familiar with cash-back and bonus offers when opening a new credit card, but there is so much more.

There is a whole additional universe of value available from credit cards missed because it is buried in fine print. In this post we will focus on one of those benefits: interest free loans. Tomorrow I will focus on the litany of advantages you can use to make your life simpler.

Interest free loans from credit cards are not for everyone. I will focus on three groups who should find value in the strategy I will soon outline. The three groups are: people digging out of debt, people interested in accelerating their investments in index funds, and individuals and business with seasonal revenue.


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Workflow in a Tax Office

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Workflow system.

The more traffic grows on The Wealthy Account the more questions I get from accountants wanting to know how to run their office more efficiently. The tips below can be tweaked to work in many business settings and can be applied to personal management of time with family and friends while allowing ample “me” time for reading, thinking, and relaxing.

The workflow process in my office evolved over time as the tax industry changed and my practice transformed from a tax office to an accounting/payroll/bookkeeping office to its current incarnation as a quasi-communications company focusing on tax issues. So you understand my thought process I will walk through how I handled workflow in the past and why I changed procedures when I did. By seeing each stage of my workflow history you can pull the pieces that fit your situation best and modify them for your needs.

In the Beginning. . .

Organization in a tax office is not optional. From day one workflow had to be recorded and tracked. In business and even in our personal lives it is important to write things down. We start each client with a line item on a legal sized piece of paper. Since there are so many steps we take with our clients we break down each task into its components. Accountants track their own work and the computer monitors progress. My front desk is used as a redundant system, preventing mistakes. An empty checkbox on the legal paper requires investigation.

Before workflow even enters the office, client flow must be managed. In your personal life you can’t visit 38 different friends in different locations at the same time. The same applies in business; you see one client at a time. The early years of my business grew fast. People would frequently drop in without an appointment. Then one year in early February there was a line out of my building and half way down the parking lot. Something had to be done.


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Working with the Wealthy Accountant




20160323_165144One of the occupational hazards of having a very public blog is demands from readers. I love hearing from all of you. Your ideas spark me into action, looking for new ways to manage and reduce tax bills. The downside is all the time required handling requests for personal help. Normally a simple answer would suffice, but when people have a tax question it takes time to flesh out an accurate answer. There are just too many emails to answer them all. It bothers me immensely. So I will initiate a new procedure to help maximize the number of people I can serve adequately.

Anyone is welcome to contact me. Understand if I don’t respond, it is due to an overload of requests. Readers contacting me for help either want tax preparation services or consulting; consulting is the largest request. I block four hours per work day for consulting with clients. This includes research time and review of client documents.

Returning phone calls is a huge sinkhole of time; I only get through about 20% of the time. I’ve resorted to sending return emails requesting the reader to contact my office and schedule an appointment along with my consulting fees. I started that process a few weeks ago and got only a small response back.

With that in mind I want to outline how I will handle this extra workflow. Rather than readers sending me long emails and asking for my fee, how about I give you my consulting fee here and let you decide if it is worth it before you contact me.

My consulting fee is simple: $(to be updates soon) per hour with a one hour minimum.

If you are good with that, feel free to contact me. You can also contact me to prepare your tax return or if you want me to consider you for a Reader Case Study, which I will start doing on this blog as we approach the 2017 tax season.

Tax returns will still need a quote and I have added staff and opened several slots for new tax returns. Depending on the size of the tax returns coming in, my guess is we will accept around 100 new clients in 2017. This is a small number compared to the volume of requests, but a large investment of time as most readers contacting me have a multitude of issues.

The consulting fee is low so I anticipate a reasonable number of requests. I am also opening up slowly to American ex-pats on a limited basis. We will help catch up back tax returns, too.

My goal is to provide better service in a timely manner to more people. The massive transformation at Tax Prep & Accounting Services, Inc. has stretched my management skills. I needed the kick in the pants. It was time to up my game.

If you emailed me in the past without a response, feel free to do so again. I look forward to working with you.

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My Daughter Retired at 22 — Here is How She Did It

img_20161018_075051For five years I played treasurer at the Wisconsin Writers Association (WWA). The annual conference is their big event. Every year great minds gathered to share ideas writers could use to write better and promote their work. I always tried to snag a spot for a presentation on promotion for writers.

WWA is a small writers association. Only a small portion of the members are actually published, not including self-published books. I had tons of ideas for those few who did have a book in print and in bookstores. When it comes to promoting a small business — and writing is a small business (which can get really big for some) — I have a massive arsenal.

Three years ago I presented at the WWA annual conference in Wisconsin Rapids. My idea for writers was simple. Stop doing book signings at bookstores and focus on libraries. A gasp rose from the crowd. Sacrilege! I had to explain when you are at a bookstore you have thousands of competitors an arm’s length away. It is common for an author at a bookstore signing to have fewer than five people buy their book; many times they sell none!

Libraries are different. Your competitors are available for checkout, but a signed copy is available only with purchase. Libraries are hungry for authors willing to speak to their patrons. Not only will you sell books, you will also get paid for the speaking engagement in most cases. Libraries are the unsung heroes for people looking to supercharge their writing career.

I went into more detail at the conference than I will here. I will chase to the end. During the 50 minute presentation I outlined how an author can earn six figures annually working ten or fewer hours per week. I was soundly admonished. Authors disagreed vehemently that this would work. I stood my ground. As the presentation came to an end a man in the back of the room raised his hand and said, “I am with the Door County Library system and what Keith has said is 100% true. We can’t get authors to show up even when we pay them. And when authors work with us they sell books and get paid for that too. We also sell the author’s book at wholesale price to patrons so the author sells even more books and gets more royalties.” I rest my case.

My oldest daughter, Heather, was in the audience that day. She is also the only one who took notes and followed through.

Play all Day

Heather is not a normal kid; she is a lot like her dad. She does not want to run a business like I do, but she isn’t excited about working for the man. She struggled with her true dream: art. The kid is talented, for sure, but so are another couple million people, too. Heather wanted to attend art schools around the planet and I refused to pay her way. I told her she doesn’t want to produce the same art everyone else is producing. Be different if you want to survive with art.


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Plate Lickers Unite: Leave Your Money at Home




img_20161012_063728In the United States we have a ritual we put people through age 50 and over. It starts slow and builds momentum. The first indication shows up in the mailbox offering loads of financial information and a FREE! meal. In no time our kind 50 year old has a mailbox full of invitations for free dinners. There are opportunities to screw the Social Security system, opt out taxes, earn huge yields on your investments, and the best ones scream THE SKY IS FALLING!!! and only they can save you.

The answer to each problem, of course, is to invest in what they are selling, usually annuities. Fuck’em! I call their bluff and sign up for every free dinner gracing my mailbox. By now I must be the most sought after seminar attendee on Earth. There is a name in the industry for people like me: plate lickers. I love it!

Mrs. Accountant and I rarely go out to eat, but when we do it is usually free. Restaurants I would never try now get scratched off my non-existent bucket list. All because I am a plate licker.

Now before you think ill of me, let me explain. My goal is never to harm the presenter. They offer the free meal and information; all I do is take them up on their offer. If they ever come up with a valuable product I am more than willing to pry open my wallet and blow out the cobwebs.

Baby Boobers

My dad was born the first year of the baby boom and I was born the last year of the boom. It’s an interesting fact that has nothing to with our story, but something I find interesting. The Baby Boom finally ended because guys discovered coitus interruptus. Child support attorneys have seen declining sales ever since. Back to our story.

As a Baby Boomer I get lots of invites. Tuesday night Mrs. Accountant and I attended one of these free meals/seminars. As always, the food was great. I had high hopes going into this one. The invite promised and 8% return investing in mortgages backed by assisted living homes. I understand the demographic and the profit potential so the idea intrigued me. The vast majority of my money is invested in Vanguard index funds. A few hundred thousand in my portfolio is looking for a home with a fixed rate worth accepting. Eight percent backed by local assisted living homes held promise.Continue reading

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