Planning

June 2 2020

Keep track of your digital assets during estate planning

An important step in estate planning is creating an inventory of your assets. Your executor, or the person you designate in your will to carry out your last wishes, uses the inventory to make sure all of your property passes to your heirs.

It’s likely that some of your assets exist in digital form. Documenting your digital assets along with your physical belongings can help ensure your final wishes are honored and your estate is administered correctly.

Here are a few items to keep in mind as you compile a list of your digital assets:

Create a list of passwords. In order to review financial accounts with banks, brokerages or other businesses, your executor will need your current passwords. If you protect passwords with additional encrypted apps, include the master access info. Most importantly, keep your list updated when you change passwords.
Be comprehensive. Add URLs, usernames and passwords for nonfinancial accounts (such as your email and online storage sites) to your inventory. Why? These accounts can be essential for retrieving invoices, statements and other paperwork for which you’ve chosen electronic-only delivery.
Don’t forget device access. The physical assets you use to access your digital data include your phone, tablet and computer. That means your executor will need passwords and file names to access those devices. Also, list the location and encryption information for offsite or standalone storage devices, like external drives.

When it comes to planning, keeping track of your online assets can be vital. Call if you have questions how your assets may be affected by state and federal estate tax laws.

January 17 2020

Make your business meetings worth the time

Business Tips, Planning, Uncategorized

Are your organizational meetings dull, uninspiring, and inefficient? Do they drain morale, waste time, and focus on the past? Would you like them to be vibrant, engaging, productive, and future-focused? If so, here are some suggestions to supercharge your business meetings.

Assess your current situation. Be honest. Determine what is and isn’t working and commit to improvement.
Raise your expectations. Demand more from your sessions. Agendas should be circulated in advance. Attendees should be on time, prepared, and ready to actively participate.
Set ground rules. No Web surfing or crossword puzzles. Keep your sessions disciplined and business-like. But don’t forget the benefits of humor to lighten things up and reduce stress.
Have an agenda, but be prepared to leave it. If a stimulating and productive discussion develops, exploit it. Harvest those creative ideas. You can always revisit less important matters.
Challenge your meeting time and formats. If your meetings get in a rut, try something different. Don’t underestimate the power of mixing things up.
Know when to quit. If you hit a big breakthrough, consider stopping. End on a high note.
Avoid the trivial. Handle routine updates via memos or e-mail.
Stretch and challenge the team. Your meetings are valuable personal and organizational development opportunities. Treat them that way.
Recognize excellence. Praise and reward performance.
Focus on the positives and keep future-focused. Maintain a positive tone. Discuss your yesterdays only to improve your tomorrows.
Recap and take action. Resolve issues, determine a course of action, and assign action steps. It’s important to make recognizable progress.
End on a unifying note. Reinforce the common bond and move forward together.

You can make your business meetings more productive. Commitment and discipline will make it happen.

August 23 2019

Debt reduction may be your best investment

Money Management, Planning debt, financial planning, investments

Investors are increasingly uneasy about the ups and downs of the stock market. If you’re worried about your investments and want to reduce your debts, you’re in luck. Debt reduction gives you a guaranteed rate of return. By paying off a typical credit card, you’ll save about 18 percent interest on the amount you retire. Where else can you earn a guaranteed return of 18%?

Debt reduction also buys security. A low-debt family earning $80,000 a year can be financially stronger than many high-debt families earning twice as much. If you lose your job, your level of debt can make the difference between temporary discomfort and financial ruin.

To reduce debt, you should first avoid buying anything you can’t pay for in 30 days. Then start working on your existing debts. Each month, pay as much as you can on the debt with the highest nondeductible interest rate, covering only minimum payments on the others. When you’ve retired the first debt, start on the one with the next highest rate. Continue the process until you’ve paid off everything but your home mortgage.

Naturally, this is a simplified approach, and individual circumstances vary. A professional can help you set realistic goals and work with you at achieving them.

Gilliland & Associates, P.C. is a full-service CPA firm specializing in tax planning for individuals and businesses in the Northern Virginia area. We are based in Falls Church, VA and also service clients in McLean and Tysons Corner, VA. Gilliland & Associates is known for our superior knowledge and aggressive interpretation and application of tax laws. We help you keep more of your earnings by finding you the lowest possible tax on your business or personal tax return. You can connect with us on Google+, LinkedIn, Facebook, and Twitter.

August 19 2019

Look beyond the interest rate before you refinance

Estate, Planning, Uncategorized

When you’re thinking of refinancing your home mortgage, simply comparing interest rates is not enough. Here are some other factors to consider before you refinance.

Compare apples to apples. Always request a good-faith estimate from any lender. This report should disclose all the fees and closing costs, such as points, credit report fees, inspection fees, private mortgage insurance, and appraisal fees. Use this information to evaluate competing loan proposals.

Calculate your breakeven period. This is the length of time it takes you to recover the costs a lender typically charges to refinance your mortgage. To do this, divide your closing costs by your monthly savings (your current loan payment minus your new loan payment). If you plan on selling your home in the near future, refinancing may not save you money because it usually takes several years to recover your closing costs through a lower monthly payment.
Read the loan agreement. Before you pay off your existing mortgage, check your loan for an early payment penalty clause. In addition, make sure you read and understand the terms of your new loan. For example, watch for restrictions against renting out your property without your lender’s consent.
Evaluate the risks of debt consolidation. When you refinance, it may be tempting to consolidate high-interest personal debts into a single lower-interest home loan. Securing a consolidation loan with your home may turn your interest into a tax deduction, but be aware of the risks as well. If you can’t make the payments, you could lose your home.

Whether refinancing makes sense in your particular situation depends upon a number of factors. Call if you would like a review of your situation. This extra step can help you select the loan that best fits your needs.

August 14 2019

Moving? Here’s what you need to know

Planning, Real Estate

2018 ALERT: Unless your move is a qualified move related to military service, the moving expense deduction is no longer available. Use this information for filing prior year tax returns.

Moving is expensive, but if you maintain good records, you may be able to recover some of those costs through tax benefits.

Some of your moving expenses are deductible if your move is work-related. To be deductible, the distance from your old residence to your new workplace must be at least 50 miles more than to your old place of work. If you are starting work for the first time or after a long period of unemployment, your new home must be at least 50 miles from your old home.

If you meet the requirements, here’s what you may be able to deduct:

Costs of moving your household goods and personal effects to your new home.
Travel costs, including lodging while en route, from your old home to your new one.

Other Moving Tax Facts

The cost of meals during your move is not deductible.
The costs of pre-move house-hunting trips or living in temporary quarters in the new location are not deductible.
Qualified moving expenses reduce your adjusted gross income. This treatment means you can deduct moving expenses regardless of whether you itemize deductions or take the standard deduction on your tax return. Also, by reducing adjusted gross income, your moving expense deduction may make it easier for you to claim other deductions that are limited by adjusted gross income (for example, the deduction for medical expenses, casualty losses, and miscellaneous itemized deductions).
Reimbursement from your employer for substantiated moving expenses you incurred (and have not deducted in a prior year) is not subject to either income or payroll tax.
You should keep records, receipts, cancelled checks, etc., of moving expenses incurred because the IRS will not take your word for costs involved. You must be able to substantiate your moving expense or they may be disallowed.

After You Move

Notify all current-year employers for all members of the family so that W-2 statements and other forms arrive on time at your new location.
Review your insurance policies to make sure you still have the coverage you need. Your premiums may change on some insurance due to your new location. Find out when various policies expire so that you can get insurance in your new location without a lapse of coverage.
Check on pension benefits at both your old job and your new one. If you are entitled to money from your old company’s pension plan, get advice on the tax consequences of the various options relating to the funds.
Make an appointment for a tax planning session. You may be required to file tax returns in more than one state, and state tax laws vary. Schedule this session early to give yourself ample time to do tax planning.
Review your investment portfolio. Moving may require some adjustments. For example, if you own municipal bonds issued by your old state of residence, earnings on them will probably be taxable in your new state.
If you’ve moved to a new state, find out the laws governing property rights. Some states are community property states and, in general, consider husbands and wives to be joint owners of property acquired during their marriage. Other states are common law states and property ownership depends on title and the source of acquisition funds. Get the facts so you can arrange your affairs accordingly.
Have your will reviewed to see if changes are necessary. State laws vary; be sure your will still does what you want it to do.

August 12 2019

Everyone needs a financial plan

Financial, Personal Planning, Planning disability insurance, financial planning, life insurance, Retirement

At some point you will be responsible for your own money. If that is not currently the case for you, here are some ideas to help get your financial plan in order.

Retirement fund. Saving for retirement is crucial. Even small amounts can go towards U.S. savings bonds or mutual funds with an automatic savings plan. If you have more money to work with, diversify your holdings among several types of investments. The younger you are, the more you should consider growth investments, which are likely to increase your nest egg in excess of the inflation rate. True, your strategy may change over time, depending on your age, total assets, tax bracket, and tolerance for risk. But you should never totally stop investing for growth.

Disability insurance. Of course, picking winning investments isn’t the only goal of good financial planning. Adequate insurance is also essential. For example, disability is far more common among middle-aged people than death, yet disability insurance is often overlooked. Consider supplementing any employer’s coverage with your own policy. Most people aim to replace 60%-80% of pretax income, since disability payouts are generally tax-free. A disability policy should cover partial disability as well as total disability. You should be able to save money on premiums by opting for a longer waiting period before receiving benefits.

Life insurance. If you have dependents, you need enough life insurance to protect them. This is true even if you’re a married stay-at-home mom, if your absence as caregiver would create financial hardship for your family.

Estate plan. Finally, prepare an estate plan that meets your needs. Review it with your accountant and your attorney every few years to ensure that you stay current with the tax law and with changes in your personal circumstances.

Whether you find yourself as a single parent or a widower, you may need to step up your financial understanding. Why not start the process now?