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Please feel free to read our client newsletter. It is provided to keep you up to date on the latest tax and accounting news.


Monthly Client Newsletter | May 2010

W elcome to Spring! With the blooming of flowers and trees, many of us look to spring cleaning. Out with the old and in with the new. Why not consider doing the same for the financial aspects of your life? This month's newsletter includes some ideas to help clean up the financial clutter in your household.

Contents

Time for Spring Cleaning

Include your finances!

Blue skies and warmer weather mean spring is on the way! As you tackle spring-cleaning in your home, don't forget to clean up your finances. Gather all of your financial documents, receipts, and folders together in one place and get to work tidying up your financial life.

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1

Check Your Credit Rating: check your credit ratings at the major credit bureaus and take action to correct any errors or omissions. Consider purchasing your FICO credit score. The FICO score is often used by banks as an indicator of your creditworthiness. If you have a good score, you may be able to negotiate better interest rates on your credit cards. If you have a poor credit rating or poor FICO score, develop a plan to improve your credit rating.

2

Document Retention: keep a minimum of three years of supporting documents for federal tax purposes and six years of supporting documents if you are self-employed or have multiple sources of income. Adjust this holding time period if you have state requirements that are different from the federal requirements. Keep all your tax documents together in one file, with separate sub-files for each tax year.

3

Organize Your Banking: consolidate your accounts, consider signing up for automatic bill pay, and shred old documents that go beyond the need to substantiate your tax returns or capital purchases/sales. Consider signing up for electronic statements to reduce your financial paperwork.

4

Critical Life Documents: gather your critical life documents (birth certificates, marriage certificates, social security cards, passports, and wills) and put them in a portable water and fire resistant home safe or a lock box at your bank.

5

Buy a Shredder: put any old financial paperwork that you want to throw out through a cross-cut paper shredder to avoid identity theft.

6

Estate Planning and Insurance: create or update your will, trust, and life insurance policies, particularly if you have experienced a major life event like the birth of a child, marriage, or divorce.

7

Review your investments: Are your portfolios properly balanced for your age, time until retirement, and your willingness to take risk? With tax law changes, you may wish to consider account rollovers or capital gain and loss strategies as well.


2010 Small Business Health Insurance Tax Credit

New!2010 Small Business Health Insurance Tax Credit

In an effort to assist small businesses offer health insurance coverage or maintain the coverage they have, there is a new tax credit to help qualified businesses cover their employee health insurance premiums. The maximum credit in 2010 is 35% of premiums paid (25% for tax-exempt organizations). As is true with most government programs, this one has strings attached:

  1. The employer must have fewer than 25 full time employees (FTE).
  2. Wages must average less than $50,000 per employee per year.
  3. The credit is maximized for employers with 10 or fewer full time employees paying an average of $25,000 or less.

The credit increases to a maximum of 50% of premiums paid in 2014
(35% for tax exempt organizations).


Facing Debt Collectors

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What are Your Rights?

Many Americans are behind on their bills due to high unforeseen medical bills extended unemployment, or mounting credit card debt. Being contacted by a debt collector can be an upsetting and stressful experience. It is important to know your rights to protect yourself from abusive, deceptive, and unfair debt collection practices.

The Fair Debt Collection Practices Act (FDCPA) protects consumers by outlawing some collection practices and regulating others.Here are some of your rights under the Act:

3The debt collector cannot discuss your debt with third parties. The debt collector may contact third parties only to find your address, home phone number, and where you work. They are not permitted to discuss your debt with these third parties. Also, debt collectors can generally only contact a third party once. A debt collector, may however, discuss your debt with you, your spouse, and your attorney.
3Debt collectors may not harass you or third parties. Collectors may not use threats of violence or harm, use the phone repeatedly to annoy someone, use obscene language, call during unusual hours like before 8 a.m. or after 9 p.m., or publish a list of names of people who refuse to pay their debts (but they can submit your name to credit reporting agencies).
3Debt collectors cannot lie to you when trying to collect a debt.
For example, they cannot falsely claim:
  • they are with a government agency
  • that you have committed a crime
  • an amount you owe in error
3The collector must apply any payment you make to the debt you select. If a collector is trying to collect for more than one debt from you and you make a payment, the collector must apply payment to the debt you select and cannot apply it to any other debts.
3Debt collectors are prohibited from saying the following:
  • you will be arrested if you don't pay your debt
  • they'll seize, garnish, attach, or sell your property or wages unless they are permitted by law to take the action and intend to do so
  • legal action will be taken against you, if doing so would be illegal or if they don't intend to take the action
3You can make the collector stop contacting you. Collection agencies are required to substantiate the debt you owe within 5 days and outline what to do if you disagree. If you think you do not owe the funds the collection agency must stop collecting the debt if you make this claim in writing within 30 days (unless they have other proof). Regardless, if you tell the collection agency in writing to stop contacting you they must do so. The only allowable future contact is to confirm your request or to tell you what action they are taking.
3Report any problems with debt collectors to your state Attorney General's office (www.naag.org) and the Federal Trade Commission (www.ftc.gov).

This is only a brief summary of your rights under the FDCPA. Many states also have their own debt collection laws that differ from the federal FDCPA. The state Attorney General's office can help you determine your rights under state law.


Stop! Before You Take that Trip to Vegas...

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Consider These Ways to Spend Your Refund Check

Almost 90% of Americans are expected to receive a tax refund this year at an average of $3,036, up 10% from last year! That's a lot of money in your pocket. While it's tempting to treat yourself to a vacation or shopping spree, consider using your refund check for your long-term benefit. Here are six suggestions on how to put that money to good use:


3Pay Down Your Credit Card Debt. Lenders are increasing fees and interest rates, making credit card debt more expensive than ever. If you have large credit card debts, the bulk of your refund should go toward paying it down.
3Add Money to Your Emergency Fund. Everyone should have a liquid savings account for emergencies. You should have liquid funds to cover four to six months of expenses, and even more if you are worried about unemployment.
3Pay Down Other Debt. Look to paying down your auto loans, home mortgage and home equity debt. It is always nice to head into retirement without worrying about debt payments.
3Save for Retirement. If you are out of debt and already have a substantial emergency fund, you may want to put the money in your retirement fund(s).
3Buy Something You Need. If you are saving for a new house, a new car, or to replace a broken appliance, spending the money on a planned and necessary purchase is a good choice.
3Splurge! ... but just a little. While spending all of your refund on a trip or a big-ticket item is not usually a good idea, give yourself permission to spend part of your refund on something fun. But limit the amount (10% of your refund or less is generally a good guideline). That way you'll feel better about spending the rest of it wisely and not feel like you are depriving yourself.


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