Premier Tax CFO

Expat Taxes: New IRS FATCA Rule is ANOTHER Way to Penalize You $10,000

The IRS continues to roll out new ways to identify Americans holding financial and investment accounts abroad. These disclosure reporting requirements all come loaded with the highest IRS penalties, starting at $10,000 per non-filing or incorrect filing incident.

Many of you are fully aware of the filing requirements of Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR). You know if the aggregate value of your foreign bank and financial accounts reach $10,000 in any one year, you must file this report with the Treasury Department (not the IRS) the following year. Non-filing or incorrect filing of this form bears a statutory $10,000 penalty.

The IRS has added ANOTHER required form, Form 8938, to be filed WITH your annual tax return. This form is also loaded with $10,000 non-filing or incorrect filing penalties. Additional penalties may be assessed, up to $50,000 for continued failure to file after IRS notification. A 40 percent penalty on any understatement of tax attributable to non-disclosed assets can also be imposed. A special statute of limitation also applies to the filing of Form 8938. Here are some other points to note:

10 Symptoms You Have Chicken Little Syndrome, 3 Steps for Curing It

1. We talk with folks everyday who are deeply worried about the future.  As we listen, we hear fear on everyone’s lips.  As each question repeats, the level of fear rises, until the pitch drowns out all reasonable thought and historic memory.

What about America?  What about the dollar?  What about my freedoms and privacy?  What about Social Security?  What about my retirement?
    Is the sky really going to fall?

My neighbor says, “Grow your own food and stock up on ammunition.”
My barber says, “Gold is the ONLY standard, always has been – invest in Gold.”
I hear on the news, “The American dollar is on the verge of collapse.”
The political pundits say, “Your standard of living will soon be reduced to that of a third world country.  There will be rioting in the streets.”
Everyone that seems to care about this country is standing around wringing their hands with worry…  No one seems to know what to do.
    Is the sky going to fall soon?

I don’t have the nest egg for retirement I thought I would because of stock market declines.
I am upside down in my home mortgage.
I have investments that I don’t understand.
I have fears that everything I’ve worked for will collapse.
I worry that I will suffer additional financial ruin if things worsen.
    Is the sky already falling?

I can’t tell what I don’t know.
I don’t really know what I fear; I just know that I’m afraid.
I can’t tell the fiction from the facts.
I don’t know who to trust.
    I’m afraid the sky is falling, and I don’t know what to do!

A New Look at Social Security and Medicare Taxes

The U.S. Social Security and Medicare systems are quite possibly the greatest financial investment available to every American.  Since its inception in 1934, when it was simply individual retirement and disability insurance for direct premium payments, it has grown to embrace the needs of dependent spouses and children, surviving spouses and dependents, and the unexpectedly disabled.  Additionally, it provides medical care AND cost of living adjustments for all beneficiaries.  One in six Americans receives a Social Security benefit of some kind today.  It is one of the most misunderstood, misaligned, and valuable benefits available to Americans.

The Truth about Social Security / Medicare
The current financial statistics published in 2009 Social Security and Medicare Trustees Report (www.socialsecurity.gov) shows our current funding dilemma:

2009 Unfunded Social Security & Medicare Liabilities
(Trillions of Dollars)

3 Misperceptions that Threaten Your Investing Future

Hour-by-hour, we are bombarded with a whirlwind of conflicting investment information.  We read it on the internet, we hear it in the broadcast media, and we talk about it with advisors, friends, and family.  Somewhere in this mix of choices, information, and opinions, every investor is looking for an advocate:  Someone they can trust.  Someone that will understand their current situation, educate them on their various options, and see them through to accomplishing their lifetime plans.  Let’s take a moment to visit some of the most common misperceptions surrounding the investments arena.

Media Hype
For many individual investors, the print and broadcast media is their main source of investment information.  The nightly news features any number of current financial ‘experts’ to tell you what you should and should not do with your investments.  All sense and sensibility scatter when your chief financial advisor is the current financial media sweetheart.  Remember, the media is not in business to educate you; it’s there to make money on advertising.  Whether it’s a business reporter or financial editor, popular author or radio host, the information presented is sensationalized to keep you engaged through the advertising spots they’ve sold to their sponsors.  Even if there is some truth in their story, it may not be the right information for you.  Extenuating circumstances related to your unique situation can make their financial advice the WRONG advice for you.  I talk with clients throughout the year regarding media stories that focus on the sensational and miss the important, causing them to worry, struggle, or panic about their investment picture. 

4 Things Do-It-Yourself Investors Want

On a recent foray into the world of financial bloggers, I read a thread started by Jim, entitled “Your Take:  Do You Trust Financial Advisers?”  I was interested to read what savvy, do-it-yourself (DIY) investors had to say on the topic.  This post by Staci started me thinking:

“I read A LOT of books on finances, investing and follow a lot of financial blogs.  Generally, I don’t find that financial planners add much value beyond what I already know.  I’m always searching for that one planner that will give me some super compelling financial advice unlike anything I’ve ever heard or read to help us grow our money and make wise investments, but I always feel disappointed when we meet with someone.”

When I read this, I immediately thought of Jeremy (name has been changed.)  I met Jeremy when he interviewed me for one of his articles.  He shared Staci’s opinion.  As a financial reporter, he had an education and some experience in the financial world.  On top of that, he was very, very bright and technically oriented enough to consider the finest of details.  Like Staci, he was looking for that financial advisor who could go beyond the generic and provide ‘something more.’

At the end of my interview, I invited Jeremy to experience our process of working with clients.  He took full advantage of our technology resources, pressing my service team to their fullest in implementing our programs for collecting all his information in one place.  But that’s not when Jeremy thanked me, Jeremy was used to working with advanced technology.  He did, however, LOVE the depth and breadth of our resource technology because it really did bring all of his information together in one place – something he had been looking for.

Nick Quoted in Investment News Article on Tax Breaks

While everyone is trying to understand the implications of Obama’s announcements this week, Nick was interviewed by Mark Schoeff Jr. for this Investment News article.

See the entire article at our website or at InvestmentNews.com.

Looming Tax Hikes Largest in History

It has been a tough past few years for the majority of the country.  We have all felt the sting of the “Great Recession”.  We have confronted hurdles of roller coaster volatility in the stock market, gloomy predictions of national debt, unexpected layoffs and unemployment, and suffered with friends and loved ones through a foreclosure or a short sale.  These have been historically trying times for us all. 

The next hurdle for us to jump over is coming in 2011:  Higher Taxes.
Higher taxes are a scary prospect to think of in our fragile, recovering economy.  While it seems contradictory to have higher taxes right now, there are a few reasons this is most likely going to happen.  Our current national debt is rising, Congress is uncertain in an important election year, and current tax break legislation expires this year.  ALL of these issues point to the most significant tax changes in a decade.

7 Things You Must Do NOW To Protect Your Financial World

7 Things You Must Do NOW To Protect Your Financial World

As I have mentioned in previous letters to you, we are living through historic times.  In our current economic market, many of the standard financial principles are changing.  My commitment to you, my clients, is to remain abreast of the changes in order to help you make smart decisions for the future.

These past six months have been full of uncertainty at the highest levels.  I have been doing a great deal of reading and talking with other CPAs and financial advisors.  Last week, I was at a national convention in Lake Tahoe for CPAs and financial planners.  I had the opportunity to speak with several well-known economists, political pundits, and market strategists to find out, from their perspective, what is happening in our world.

Here is a condensed version of my sense of the seven most important actions you can take right now.

1. Cash is King.  Cash will remain King for as long as interest rates remain low.  The old rule was to have between three and six months of living expenses set aside in an emergency fund.  I suggest that you diligently work to increase your emergency fund to between nine and twelve months of living expenses.
2. Simplified living is Queen.  This is the time to examine your lifestyle for ALL irrational or unnecessary expenses.  It is amazing how many recurring charges can  creep onto your monthly credit card alone!  Just as you conduct spring cleaning each year of all the unused odds and ends in your home, it’s time to review your spending habits to determine those expenses you can easily do without.  The results will surprise you!
3. Volatility is the current norm.  Market volatility will continue and will likely worsen.  This means that you will continue to experience emotional highs as the market rises 1,000 points in a single day and emotional lows when it drops by 1,000 points the next day.  In the past, the industry thought that asset allocation and time would protect us from all issues.  We now must balance that volatility by creating predictable cash flows.
4. Personal Pension Plans are possible.  Establishing predictable income streams for retirement will help you better plan for the future.  Many years ago, companies paid you a pension for the rest of your life.  Today, very few employers offer pensions.  Instead, you invest in IRAs and 401(k) plans to establish funds for retirement.  However, YOU must manage these funds to last you the rest of your life.  Identifying a portion of these accounts to purchase your own pension plan can provide you with an economic base for the future, allowing you to take direct control of your retirement cash flows.
5. Long-Term Care is confusing.  Long-term care is going to be affected by health care reform, and no one really knows what will happen to health care.  Current long-term care policies that may become obsolete as health care issues are interpreted over the next few years.  Become informed about new ways to protect yourself regarding your long-term care needs.
6. Relationships are key.  During tough times, it’s the people we can count on that help us make it through.  Long-term, supportive friendships are more important than ever.  As families are dispersed across the country, finding ethical advisors you can trust are the key to peace of mind.  There are the born crooks of the world, like Bernie Madoff, that will always be with us.  However, in tough economies, even good financial professionals may cut too many corners, pressing the boundaries of ethical conduct.  You need to be dealing with professionals in all areas of your life that will have the resources to stand by you during these tough times.  You need a positive, rational influence on your world.  Good friends, and qualified professional advisors are going to be more important than ever.
7. Your Identity is your treasure.  Identity theft is not a matter of ‘if’ anymore, it’s a matter of ‘when’.  Your information is out there, no matter how careful you believe you have been with it.  The mess that identity theft creates in its wake is an aspect of your life that really terrifies me because I know how hard it is to clean it up.  Thinking about buying identity theft protection is no longer an option.  Take action today; the price of identity protection is one of the few values today where an ounce of protection is worth a pound of cure. 

In the face of uncertainty, be sure you have a secure understanding of all the moving parts of your financial world.  Work with ethical advisors that can help you establish a flexible financial plan that creatively suits your unique situation.  If you have not reviewed your long-term financial goals within the past six months, I encourage you to do it now.  Remember, we don’t charge our clients for phone calls.  If you have unanswered questions, be sure to contact us today.

Please feel free to pass this along to anyone you think might benefit from this information.  We appreciate all referrals.

Your Money Concepts’ financial advisor is here to help.  We are happy to work with you and your other professional advisors to help insure you the greatest diversity of opportunities in your financial planning.  If your advisor can be of any help, please give him or her a call.

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INDEPENDENT CONTRACTOR OF MONEY CONCEPTS INTERNATIONAL, INC.
All Securities through Money Concepts Capital Corp.  Member FINRA/SIPC
11440 N Jog Rd., Palm Beach Gardens, FL  33418  Tel: (561) 472-2000
NCH Wealth Advisors and Money Concepts are not affiliated.

The World Didn't End - But it DID Change

The World Didn't End - But it DID Change
Five Key Economic Changes that Affect YOUR Future

In October of 2008, I sent out to my clients, friends, and family what I believed to be the most important letter I had ever written. In the face of unprecedented upheaval in our financial and housing markets complicated by sensationalized media reporting, I assured you that the world was not coming to an end. We agreed then, that the common sense, practical values, and smart decisions that have seen Americans through tough times in the past, would see us to the future. As I look back, I think we can say:

• We kept our heads and made smart decisions in the face of conflicting information.
• We took care of what mattered most, cultivating love and trust with our friends and family.
• We stayed focused on the tried-and-true principles that got us to here and that sustain us through times like these.
• We used this opportunity to teach great financial lessons to our children and grandchildren.

At 18 months out, we can also agree that the world didn't end in 2008. However, some things are quite different now, and I want you to know about them. I also want you to know that we have adapted our operation to help facilitate the practical actions you should be thinking about today. You will find that throughout this letter, I have provided you with additional links in order to provide you with my extended thoughts on each topic. I hope you will appreciate this different style - there is so much that I want to share with you today.

As I visit with so many of my tax clients this tax season, I am being asked a host of questions:

Will unemployment rates improve or not? My answer is Yes.
Unemployment is more concentrated in some areas and industries than others. It is more important than ever to have strong professional networks and deep client relationships. Both individuals and small businesses need to adapt to these changing times. Click here for more.

Will the middle-class become richer or poorer? My answer is Yes.
This recession has lasted longer than anyone expected. Many Americans have exhausted their rainy day funds and have experienced substantial changes in their retirement options, affecting their plans for the future. At the same time, others have increased their overall net worth, becoming millionaires. It is time for everyone to reorganize their financial expectations and responsibilities to make involved choices about their future. Click here for more.

Will we have inflation or deflation? My answer is Yes.
As Americans have defined new criteria for Needs and Wants, we are seeing the prices of necessary items go up and the prices for discretionary purchases dropping to lows not seen in decades, making them a bargain for others. Should you be prepared for inflation? Yes. Can you take advantage of deflation? Yes. Click here for more.

Will the market go up or down? My answer is Yes.
Before September of 2008, many investors had unrealistic expectations that their account values should double every few years. In the face of unprecedented gains in the stock markets, these investors ignored their risk tolerances and delayed making decisions to manage their downside risk. When the market tumbled, they cashed out at the bottom, violating all the basic rules of investing. Today, these same investors are only investing in CDs, cowering in fear for the future. There are tried-and-true solutions available for managing downside risk while still participating in market gains. Click here for more.

Will my retirement be better or worse? My answer is Yes.
Faced with the impact of unemployment, uncertain markets, and rapidly changing economic conditions, we are challenged not only to redefine our picture of retirement, but also our current lifestyle. For many, this reframing includes the possibility of engaging in part-time employment, downsizing residences, and rebuilding their income base. All retirees and pre-retirees need to revisit their plans for the future and creatively define a lifestyle that is rewarding and predictable. Click here for more.

Well, we can say that the world did not end in 2008. We did not see soup kitchen lines around the block as in the Great Depression. However, our world today is different in so many arenas and you can expect to see more changes in the future. Make sure you adapt to these changes and prepare for YOUR future. We can help.

As I mentioned at the beginning of this letter, we have made changes within the firm to be able to help you manage your entire financial world with confidence. Through our Premier Tax CFO Services, clients can have their tax return prepared by a qualified CPA, see their entire financial world on one secure website, and receive individualized financial planning advice all in one place. With our Small Business Tools Package, we are helping small businesses manage their payroll accounting, bookkeeping, tax preparation, business accounting and more. We are still a full-service tax, accounting and financial planning firm, offering holistic solutions for your unique situation. Contact us today to find out what we can do for you.