So, last week I wrote you about your holiday spending, and making sure that you don’t find yourself caught up in all the merchandising and hooha — specifically of the retail variety. (Let’s ALL get caught up in the transcendent beauty of the season, shall we?)

And it made me think about some clients that I’ve walked with over the years who fought their way — successfully — out of debt that would have crushed other families.

How did they do that? Today I’ll tell you.

But here’s something they did NOT do: Borrow money to pay off more borrowed money (and call it savings).

That only works for Uncle Sam, apparently.

And speaking of Congress and debt — included in the upcoming highway funding bill for Congress is a small provision that would require the IRS to use private debt collection agencies to go after IRS debt. In my opinion, that would be a problem for many, despite the jobs it might create for these agencies. Treasury did a recent studythat showed that the IRS is better at this than private agencies, and those agencies would naturally be more aggressive.

So, let’s be sure to avoid that IRS debt as well, ok? 🙂

By the way, with debt reduction, I’m a big fan of automation — but not in all instances. For example, do NOT “automate” your tax preparation process with off-the-shelf software. Especially of the “free” variety. We have to clean up so many mistakes made by these products (and their users!), that I cannot, in good conscience, recommend them.

Yes, I’m obviously biased. But the facts are the facts. Take a gander at this, for just one small example: http://bit.ly/1iOy9A7

Alrighty then … let’s talk about how my clients get out of debt.

Bridges’ 6 Ways to Climb Out of Your Credit Card Debt
“What simple action could you take today to produce a new momentum toward success in your life?” – Anthony Robbins

The average credit card balance for an American household as of August of this year was $7,529, which is an increase over years previous and not something that any of us really would like to see increase further. And that counts the households that carry no debt, so the figure for those who *do* is even worse.

So, you may be in a better situation … it may also be worse. So, to answer the questions we often get around here from clients facing tough times, I’ve put together a step-by-step process which we often help people work through.

1. First, pay more than the minimums
If you only pay the minimum payment each month, your credit card debt could continue to INCREASE, even if you completely stop using your card. This is called “negative amortization”–where you think you are paying on your debt but the additional fees and finance charges are more than the minimum payment. The bottom line is: Pay more than your minimum or you will eventually be in debt over your head.

2. Create an automated system
With online banking and automatic payment options, there are GREAT tools for ensuring you don’t mess up because of administrative chaos. If you feel you can’t manage all your bills by pen and paper, there are several good software programs available for keeping track of your financial records.

In fact, I recommend that you automate a payment ABOVE the minimum monthly payment, just to be certain that you start getting ahead of the game. Those minimum payments are rigged against you, and the only way to get ahead is to … get ahead. I have some more thoughts on automation in a moment.

3. Yes, you can negotiate
No, you do not need to be an attorney or other professional to negotiate with your credit card company (negotiating with the IRS, on the other hand, is a very different story!). The rising amount of consumer debt in this country has made creditors realize that they need to be more understanding of their customers — if they hope to get any money back. If you file bankruptcy they are only going to get pennies on the dollar, so they are willing to make deals.

4. Proactively contact your creditors — in writing
Open communication always helps. Usually credit card companies get ignored and end up sending delinquent files to a collections agency. So they’ll actually appreciate your openness in contacting them and may be more understanding of your situation. Proactively dealing with your credit card debt rather than hiding will not only help your financial problem, but will make you feel better about yourself as well.

5. Develop a simple tracking system
If you are not able to pay the full amount of your credit each month, you still should still pay something to stay on top of it. You should work off a written budget so you know exactly where you stand. Some experts suggest that you divide your monthly debt budget by the percentage each bill makes of the total and pay that amount.

Here’s an example: If you owe a total of $1,000, and one credit card is $800 and the other is $200, and you only have $100 available to pay for that month… You should pay $80 on the $800 balance, and $20 on the $200 balance. This way you are reducing each debt by the same percentage.

6. Do NOT be intimidated
No matter how forthcoming and honest you are, some creditors have been taught to be mean and downright nasty. Hang in there and don’t let this tactic intimidate you.

Lastly–don’t let the IRS be one of those creditors. Let us help you this tax season, and THAT will be one less creditor to worry about, I assure you!

Warmly,

Dennis Bridges
(770) 984-8008
E. Dennis Bridges, CPA

It’s hard to believe, but Thanksgiving is THIS MONTH. The October Classic is in the books (congrats to the KC Royals), and parents everywhere are enjoying their parental “Candy Tax“.

It feels like a seasonal page has truly been turned. And right around the corner will come the Christmas and other winter holidays. Stores are already stocking their shelves with gear.

That’s why now is the perfect time to start planning for your holiday spending. Even if you are a family of significant means, it’s a good idea to be strategic about how you go about it.

And by formulating a plan now, you’ll achieve more than just the happiest of holidays. You’ll ensure that the New Year will begin without worries of too little cash flow or that you went unintentionally overboard on your spending (and maybe creating some spoiled offspring in the process!).

Here’s how.

Bridges On How To Make The Most of Your Holiday Spending
“Whatever is worth doing at all is worth doing well.” – Lord Chesterfield

The best place to begin when it comes to planning for this year’s holiday spending is to examine what you did last year.

Dig up the credit card statements online (and maybe the checkbook registers if you still roll with those!), and add up how much money you spent. You’ll also want to take notes regarding where you spent it. Don’t forget to include money used to purchase gift wrapping supplies, cards, postage, food while shopping, entertainment costs, decor, and special-occasion clothing.

Now that the numbers are in front of you, it’s time to form an opinion.

How do you feel about last year’s spending? Did you spend a realistic and appropriate amount, or did you go overboard? Try to be objective. This analysis will serve as the backbone of your plan.

Look at the Present … And That Pun Is Intended
Financially speaking, how have you fared this year compared to last year? Be sure to look at any changes in income as well as expenses. If your finances haven’t changed and you’re happy with last year’s spending, then you’re starting off in very good shape. If your overall financial status has declined, or if you were less-than-pleased with last year’s performance, then you’ve got some work to do.

Begin by looking at the number of purchases you made a year ago.

Which ones would you make again and which ones have you scratching your head? It may be time to reduce your gift-buying list or change the amount you spend on each purchase. The obvious way to accomplish this is to be less extravagant with your selections. A less obvious but often effective approach is to research your potential purchases. Sometimes you end up paying extra for the convenience of one-stop shopping, so look through the newspaper to find which stores are offering deals.

Then check online to see if you can beat their prices by purchasing somewhere else. This practice will cut down on last-minute shopping, which can be an expensive proposition.

Think About Future Years
So, you’ve figured out how many purchases you need to make, as well as which ones need scaling back in terms of price. Now it’s time to create a budget. Once again, there is no magic formula. Creating a budget and sticking to it requires two main things: common sense and commitment. Let’s take a closer look.

A budget should always be based on the money you have, not the money you can borrow. If you are still paying off charges from last year, then you need to avoid using credit cards to make gift purchases this year. The amount of money you decide to allocate toward holiday spending should be based solely on what you’ve saved or what you will save from now until the time you start shopping.

When drafting your budget, start by creating a list of recipients, along with columns for the gifts you intend to buy and the dollar amounts you expect to spend. (Is that too uptight? No, I don’t think so.)

As you make purchases, keep track of the results. If you overspend on one gift, it is imperative that you make it up somewhere else. Your diligence is one of the keys to staying within your budget.

It’s also important that you watch out for potential pitfalls, including impulse shopping. Getting into the spirit of the holidays is one thing, but spending frivolously based upon a last minute decision is something else. You’ve got a list, and your job is to stick to it!

One final thing that may need an adjustment is your overall philosophy. It’s easy to look at the budget you’ve created as a restriction. After all, it’s nothing more than a set of rules. The flip-side is that these rules are there for your protection. Sticking to them will not only help you feel comfortable about your finances before and after the holidays, it will free you from the stress that comes from accumulated debt. When you look at it this way, a budget can be downright liberating. Give yourself the gift of a financially stress-free holiday, by planning in advance.

We thrive based on your referrals, and are truly grateful for them. Thanks again.

Warmly,

Dennis Bridges
(770) 984-8008
E. Dennis Bridges, CPA

Many people think that preparing taxes for a living is a somewhat easy assignment.

Bless their hearts.

It’s NOT just “filling in the boxes” and having the spreadsheets or the software spit out the results. I WISH it were so simple. There’s three big reasons why it’s much harder than that — even for many professionals.

1) The tax code is incredibly long. The version of the tax code we just wrapped up using for extensions and also back in the spring before the April 15th deadline is74,608 pages long (and that is about 186 times LONGER than it was back in 1913 when we started with it) — and it will only be getting longer this year. Congress has yet to decide about certain tax “extenders” that will affect things for everyone.

2) The code also happens to be pretty complicated and laden with contradictory incentives. Take this credit, and watch that other credit go bye-bye. Fail to deduct this item, and then you won’t be able to deduct that other item. You get the picture.

Sorting through all of them is most definitely NOT a task for a computer software program. It requires sitting down with an individual, a business owner, a family, determining what they most care about, and then use that complicated code to plan for it all properly. Really, that’s the only way to do it. Everything else is just “after the fact” clean-up work.

Which is why it’s so critical to meet with someone before the end of the year to make sure that you’re set up to hold a tax position which represents the real picture of where you really want to be going.

This is the essence of tax planning. Some may say that this is overstating it — but after years of doing this, I’ve become convinced that it’s the truth. I’m in the business of helping you fulfill your dreams by helping you hold on to as much income/revenue as possible!

3) Oh, and as I alluded to previously, there is one more big reason this job is no cupcake — staying up to date with how the law is constantly changing.

And I’m as patriotic as the next person … but Congress makes THIS task no cupcake.

How The Tax Code Makes Regular Greater AtlantaTaxpayers Angry
“You can conquer almost any fear if you will only make up your mind to do so. For remember, fear doesn’t exist anywhere except in the mind.” – Dale Carnegie

Despite what certain fringe voices might claim (and they cite all kinds of “facts” behind their claims), the truth is that we don’t have the choice to “not file” or “not pay” what the tax laws say we owe. That’s why the IRS audits returns and has all sorts of “encouragements” (liens, refund offsets) to encourage us to file by each April 15, and to do so correctly.

But even with automatic payroll deductions, etc. we U.S. taxpayers are trusted to fill out the forms, ensure the correct amount was withheld and let the IRS know what our true final bill was. That’s called tax filing. And if we discover that we owe the U.S. Treasury, then our system (as it stands now) relies on us to send in the necessary payments. This, of course, is what we spend much of our time on around here at Team Bridges — helping YOU do this ethically, but ensuring you’re not overpaying.

But Congress makes this much harder than they need to.

They do this — probably unintentionally — by tinkering with our tax laws so much.They change them, sometimes slightly, sometimes quite a bit, and they do so constantly. What’s worse is the annual rite of procrastination in the House and Senate. I see this all the time. As a regular course of business. We’re seeing it now, here in the fall of 2015.

And these delays in tax changes — or the decision to make some laws retroactive months later (extenders, estate tax, etc.) — totally screw up basic tax planning, sometimes negating options that could have been used to legally lower a tax bill.

(Which, incidentally, is why I have to pay so much attention to what’s happening in the legislation NOW, during the offseason. I do this so you don’t have to.)

So some people fudge their returns. And, unfortunately, they feel justified in doing so.

One recent example was the first-time homebuyer credit that was created a few years back … then revised … and revised again. Many homebuyers had to “pay back” a credit that was taken under existing law — then later canceled.

And I know (from conversations with real people) how many felt justified in finding ways to “skim back” (i.e., fudge) that $500 back into their returns because they were annoyed at how Congress handled it.

And there are plenty other tax laws with similar histories that tick off filers enough so that they look for ways of getting payback when they fill out their 1040’s.

Now I’m not condoning these taxpayers’ decisions to “even up” the tax code where they may find it unfair. Life can be unfair and taxes are a part of that often unfair life.

But Congress can do a lot to prevent these they hurt me, so I’ll hurt the tax system right back attitudes, by doing its tax-writing job in a more rational and professional manner.

Until it does, well then Capitol Hill is going to keep creating bad attitudes.

But here’s where some hope comes in…

For my clients and contacts, you can rest assured that we are paying attention … and that we will be on top of even these woefully-procrastinating legislators. We’ll do all that is ethically possible to make sure you don’t make moves that you’ll regret after the fact.

And the best way to help us help YOU, is by giving us a call to talk things through NOW, while we can still make a difference with 2015 returns.
(770) 984-8008

Or simply shoot me an email by clicking the button at the top of the page. Let’s do something great for you before the year ends.

Please do let us help you. It’s what we’re here for.

Warmly,

Dennis Bridges
(770) 984-8008
E. Dennis Bridges, CPA

Last week, we tied a bow around all of our client tax returns for 2015, i.e. for “tax year 2014”, as the extension deadline came and went. It feels good to turn the page and move into our intensive preparation season for tax season 2016.

(And now I’m searching for a third metaphor for that paragraph — which it needs like a fish needs a bicycle.)

Over the weekend, we also found out that when the US Treasury closed its books for our government’s 2015 fiscal year on September 30, they had taken in a record $3.25 trillion in payments from US taxpayers (and yes, that’s trillion with a “tr”). The $3,248,723,000,000 was the most tax ever collected here (maybe anywhere?), and represents an 8% increase over last year’s figure.

And, well, the feds still operated at a deficit, even under that figure.

Hopefully, you and your family have figured out how to operate on a budget more effectively than has the Congress.

And while we’re still waiting for Congress to make some decisions about extending certain tax credits for THIS year (which they *should* do by the end of the year, but you never know), well, we’d love to help you make some smart moves that will pay off on your tax bill, no matter what might come down the pike.

You’ll hear from me more than once on this sort of thing … but now’s a perfect time to start in on some of them.

Dennis Bridges’ 11 Smart Ways To Reduce Your 2015 Tax Bill
“It is common sense to take a method and try it. If it fails, admit it frankly and try another. But above all, try something.” – FDR

Here are eleven simple things you can do before the end of the year to keep your income taxes as low as possible next year. And, as I do hope is clear, we can (and will) help!

1. Consider an extra mortgage payment.
The extra interest you pay will be added to this year’s mortgage interest by your lender, boosting your itemized deductions.

2. Pay your property taxes right now (not next year).
Real estate taxes are tax deductible. If your property tax bill is due in early 2016, you might want to pay it now and take the deduction.

3. Donate to charity–it’s ok to do good and save at the same time.
It pays to be charitable, especially at the end of the year. Donating cash is always a good idea. You can also donate household goods, clothing, and other items. Under the Pension Protection Act, you will need a written receipt for all charitable donations, and donated items must be in good or better condition. You can also deduct the cost of driving for charity at 14 cents per mile. You cannot take a deduction, however, for the value of your time or services when volunteering.

4. Take care of those medical bills.
Pay doctors, insurance premiums, buy eyeglasses, or stock up on prescription medications. You can take a deduction for medical expenses exceeding 10% of your adjusted gross income.

FOR BUSINESS OWNERS:

5. Boost business expenses.
Business owners and independent contractors can buy office supplies, invest in new equipment, or pay bonuses to their employees. They should also review their retirement plans or decide about setting up a retirement plan. Many retirement plans need to be established by the end of the year if owners want to make tax-deductible contributions for 2015.

6. Get Your Papers In Order NOW.
Good record-keeping can really pay off at tax time. Not only will it make your tax preparation easier and faster, but you might uncover enough tax deductions to be able to itemize. More importantly, the IRS will require receipts and other records in the event of an audit. Plus, it helps us out A LOT.

FOR INVESTORS:

7. Sell losing investments to offset capital gains.
Investors can lower their capital gains taxes by selling securities that have lost money. Losses offset gains dollar for dollar, and losses in excess of your gains can be deducted, up to a certain amount per year.

8. Wait to invest until after the ex-dividend date.
Avoid buying mutual funds held in taxable accounts until after their ex-dividend date. You’ll avoid paying capital gains tax on the dividend.

9. Max out your retirement savings.
Contributions to a retirement plan reduce your taxable income.

ADVANCED TAX STRATEGIES:

10. Make the most of your Flexible Spending Account.
You should use up any funds in your Flexible Spending Accounts, or risk losing that money forever. Use your FSA funds to buy eyeglasses, medications, or get a checkup.

11. Avoid the gift tax by giving $14,000 or less per year per person.
Gifts over that amount will reduce your lifetime gift tax exclusion, and gifts over the exclusion will be taxed to the giver. (Giving is a tax strategy used by taxpayers who are facing a potential estate tax bill and need to remove assets from their taxable estate).

We thrive based on your referrals, and are truly grateful for them. Thanks again.

Warmly,

Dennis Bridges
(770) 984-8008
E. Dennis Bridges, CPA

I had someone suggest this piece of advice to me early in my career, and it was good advice. Heck, it’s good advice for me NOW (and it was useful for me to put the article together, to clarify my mind on it all).

Simply put, I believe that this method is the BEST way to advance in a career, as a parent, or any other venture you’d like to pursue: ask someone who has gone ahead of you.

Dennis Bridges’ 5 Tips for Successful Business Lunches
“It is never too late to be what you might have been.” – George Eliot

For those of you in the early stages in your career, this article might be worth more than many of the classes you took in college — if you follow my advice.

And, for those of you who are further along in your career … frankly, the advice still applies. I can’t tell you how many business lunches (or coffees) I’ve been to with ill-prepared, meandering partners. And while some of the specifics of your questions might change, from the below, and from person to person, and over the years … there simply isn’t a better way to build relationships with someone who is busy and successful than what I suggest below. After all … they gotta eat!

1. Go somewhere easy — and YOU pay.
Nobody has time to meet you for a fancy dinner in the middle of a busy work day. A cup of coffee works because you pay in advance. You don’t want that awkward moment where you both wait for the bill to come, or to have the server interrupt you a dozen times.

And yes, you might be young and poor-ish. But if you’ve chosen your lunch partner properly, it’s simply good manners to ante up the $20-$30 (or less) to pay for their meal. This signals your valuing of their time, and it will build up good will.

2. Ask questions the entire time.
You convened the meal — so it is your turn to ask the questions, pick this person’s brain, and get as much feedback as you possibly can on your topic. I highly suggest that you come loaded with questions, ready to fire out.

Oh and there’s one thing about questions that you need to know…

3. Ask good questions.
Please don’t ask for their “best tips or advice”. That’s horribly lame and they won’t know where to start. So make it a rule to not ask general questions, because you’ll simply get vague responses that won’t help you much.

So what are some good questions?
Well, that of course, does depend on your lunch mate, and your own goals for the time. But, for general-purpose networking, and learning the stories behind someone’s success, here are some good places to start:

* What did you do right after high school? What did you do after college? [You want to see what a successful person has done right after completing their studies. This will usually surprise you.]

* What does an average day look like in your life? I wonder if there’s time for video games?

* Who else do you work with? [This way, you can find out the other players involved in making their team work.]

* What would you do if…? [Then you present a specific scenario — hopefully one that you’re experiencing yourself.]

4. Don’t talk about yourself, unless asked directly.
Or, as The Rock used to say: “Know your role and shut your mouth.” This is your time to be all ears and become a sponge for information. Don’t give your input on every single comment.

5. Do some research.
Don’t walk in confused or clueless about what this person is all about. It’s important that you take some time to do your research and figure out exactly what this person has been working on. This will score you some bonus points. It pays to be interested. People want to know that their work is being taken seriously.

I do hope this will save you some embarrassment, and, even, open some doors for you that will take your career to the next level. Feel free to forward along, of course!

We thrive based on your referrals, and are truly grateful for them. Thanks again.

Feel very free to share this article with a Greater Atlanta business associate or client you know who could benefit from our assistance — or simply send them our way?While these particular articles usually relate to business strategy, as you know, we specialize in tax preparation and planning for Greater Atlanta families and business owners. And we always make room for referrals from trusted sources like you.

Warmly,

Dennis Bridges
(770) 984-8008
E. Dennis Bridges, CPA