The fall is here, but before we’re able to *really* enjoy it around here at Team Bridges, we are carefully working through our roster of 2014 tax returns that were put on extension.

As I mentioned last week — we are still able to set appointments for other matters (like tax planning, etc.), but our focus is pretty strongly set upon these extensions for the next week or so.

But there are a few things that may matter to you for BEFORE October 15th that you might consider:

1) Open and contribute to a SEP retirement plan if you are self-employed and got an extension. This may not apply directly to YOU, but if it does, you should consider it. Contributions to these self-employed retirement plans are above the linedeductions, which means that they directly reduce your tax burden and are very smart vehicles.

2) Re-characterize a Roth IRA conversion? It may have seemed smart last year to convert your traditional IRA to a Roth, but with the way the stock market has been acting recently … perhaps now not so much. You have until Oct. 15th to “undo” this move. This makes sense for some folks, when and if the retirement account lost value since the change. So not only is the Roth worth less (because it lost value), but you owe tax on the converted amount. This reality can erase the reason for the original conversion to Roth.

Let us know if you need help with either of these propositions.

Now … speaking of adjustments to your tax status, one of the things that is sure to come up these next few months is the question of gifts.

I’d love for you to consider what I have to say here, as you ponder this question.

Dennis Bridges On How to Win Through Giving
“Think of yourself as on the threshold of unparalleled success. A whole clear, glorious life lies before you. Achieve! Achieve!” – Andrew Carnegie

We’re into the final quarter of 2015, and since this is the biggest quarter of the year for giving, I’d like to take the opportunity as one of your financial advisers to make a few points about giving to charity.

Why do you give to charity? Is it for the tax deductions … or for a different reason?

Now, as someone who prepares tax returns, much of what we do is obviously centered around tax avoidance strategies. I have ZERO problem whatsoever in helping my clients use all available strategies to their utmost, ethical advantage. But I love it when I see my clients and friends make giving decisions which seem to run counter to immediate, short-term self-interest.

And, I believe it’s actually enlightened self-interest in the long run. And not just in our sense of feeling good.

I see the balance sheets of people from every walk of life and every kind of income class, and over the years I’ve noticed an interesting phenomenon: individuals and families who make giving a priority, even when they aren’t “wealthy” by others’ standards, seem to eventually do better in the long run. And I do mean financially — not just in their state of mind.

(Though, there are great “state of mind” reasons for giving. Have you seen, as I have, that those who freely give seem to be much more pleasant company?)

So, in my line of work, I have made it a point to observe how money works. And, for some reason — money gets attracted to those who aren’t in hot, desperate pursuit of it. It’s almost like in romance — potential lovers are usually turned off by the overly-aggressive seeker.

So, because of (and not despite) the looming fiscal realities in Washington, may I suggest that you consider increasing your giving? You might be surprised by what happens in your heart. And, dare I say, in your balance sheets.

And, of course, we might as well take some good tax deductions while we’re at it — if at all possible. We’re only an email or phone call away for that kind of strategizing.

But don’t make that the contingency for your gifts.

Give more — our world needs it!

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

As I’m writing this, chances are good that we are headed towards yet another federal government shutdown of some sort, due to Congressional disagreement over a host of different funding and tax related items. (Forbes just bumped the probability from 67% to 75%.) And if doesn’t happen October 1, it may be happening in December.

Gotta love those lawmakers.

Snarky comments aside, I will say this: there is a certain genius in the system of checks and balances envisioned by our founders. It’s a good thing that we don’t typically have a “ruling party” situation, wherein one particular group wins power and simply shoves through all of their pet provisions without any check from different branches of the government (whether it’s judiciary or executive or legislative).

I’m glad for that. But it doesn’t make navigating through the labyrinth of their decisions any easier!

Which, I suppose, is why we have jobs around here — and why (I hope!) you are grateful to have us by your side. We pay attention to this stuff so you don’t have to!

I think it was former Congressman Barney Frank who said, “Government is just another word for the things we choose to do together” — in which case, well, we may need to work on becoming a little less dysfunctional … together!

Speaking of government deadlines — allow me to remind you, if you are working with us on an extended return, that these are due in about two weeks — on October 15th. Most of our clients have given us all we asked for … but if you haven’t yet, consider this to be another little “bump”!

And, well … as we’ve been working on extension returns, it made me remember something that I really like to communicate to ALL of my clients whenever possible: A tax return is a report, not a strategy.

Here’s what I mean…

Dennis Bridges On How Having a Tax Strategy Wins Out
“You may be disappointed if you fail, but you are doomed if you don’t try.” – Beverly Sills

It’s true — there are certain people for whom this Note doesn’t apply. There are those who are perfectly fine paying the amount of tax they pay every year, thank you very much.

However, since YOU have chosen to invest yourself in our services (or at one point considered it), you are probably in the second group: those who would love to pay less in taxes, THIS year.

If that’s the case, well there are two main things which you need to understand:

Bridges’s Irrefutable Fact #1: Our tax system is not fair.
It is too true — the Donald Trumps, Warren Buffetts, Barack Obamas, Mark Zuckerbergs etc. operate under a vastly different system than most “regular” taxpayers. This is NOT because they are politically-connected (though they are), but because of the people they have who do wonders on their behalf.

And the sooner you quit complaining about those who *seem* to be connected … and make the decision to JOIN their ranks, the sooner you will pay less in taxes.

Because all of those people, and other people like them, understand the second fact …

Bridges’s Irrefutable Fact #2: A tax return is a report, NOT a strategy.
Yes, we’re pretty good at coming behind with our magic brushes and cleaning up the mess made by many of our clients in their finances and taxes. But there is a much better way to fly.

It’s called tax planning, and it’s essentially comprised of three parts:

1) Strategic review:
Assess the current situation, and identify short-, mid-, and long-term strategies to lessen your taxes, and grow your income.

2) Implementation:
This can be a little tricky (especially if you do it yourself), because there are bound to be accounting and local regulatory questions which arise. We recommend that you stay with your same team who developed the tax strategy so they make sure you’re doing what you need to do.

3) Proper compliance:
There are plenty of people out there who will give you “the secrets to paying less taxes!!!” — but are they willing to put their name on a dotted line and defend it? If not, RUN from these people. They are hype artists. Or worse, they know that their advice will lead to a fraudulent return.

The main thing to understand is that in order to REALLY get your tax situation improved, you MUST plan ahead with a team and have a solid tax strategy in place.

Otherwise, you’re just cleaning up a mess that was already made (and can’t be fixed) when filing your tax return.

The good news is that there is still plenty of time to do some great work on your 2015 taxes, even now that we are in the final quarter. We have a pretty full two weeks ahead of us with extension returns, but we can still schedule a time to talk about ways to better your tax strategy now, so that we aren’t just cleaning up after a mess.

Drop me a note, and let’s set a time to talk.

Warmly (and until next week),

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

Last week I wrote about preparing for financial chaos, and gave you some step-by-steps for what your priorities should be right now.

Got a bunch of wonderful feedback, so THANK YOU for taking the time to do that. I see every email that comes my way, and I love getting responses to what I put out there for you.

So, I’m continuing along with the theme then, and while this doesn’t, perhaps, pertain *directly* to financial preparation, it’s a circumstance that some families are forced into, others choose, and still others take it up for other financial reasons.

I’m referring to sustaining your family on one income. And whether or not this is on the horizon for you, it’s worth considering in advance because sometimes, well, things aren’t always as stable.

Including the tax code. There are changes coming in the tax code that (depending on what Congress decides upon) could mean significant tax increases for some families.

And aside from the tax situation, and as I think we can all agree, these next few months and years will be extremely “interesting” … and it’s all the more reason why it’s so good that you have someone like me in your corner. Because those who don’t have someone who can plan ahead on their behalf are going to be facing some significant changes on the tax horizon, whether they like it or not.

So … whether you are planning ahead, perhaps dealing with unemployment, or are looking at one spouse staying home for other reasons (like children!), here is a great way to think about living on a single income…

Dennis Bridges Shares On Family Life on a Single Income
“We have to dare to be ourselves, however frightening or strange that self may prove to be.” – May Sarton

I’ve recommended before that couples who are ultimately planning on one person staying home with children, start running their finances and their budget that way from the beginning. That’s simply the best way to be prepared for what is to come.

I’ve also pointed out that one of the best times to save is before having children. But with marriage happening later and later in our culture (and the transition into parenthood for those marriages therefore happening perhaps a bit more quickly than it otherwise might), this important savings period has been crunched. So here’s some quick advice for those who are single: realize that you are saving now for your future family’s financial life.

That aside, here is some advice for those who are starting down this road toward a single income for their family, or even for those who already find themselves walking it out…

Try It Out In Advance
I recommend that couples contemplating a stay-at-home arrangement first take a period of living as if they had only one income for at least three months before one of them quits a full-time job. They may find that even though their expenses will be cut for needs such as day care, transportation and clothing, they may find it hard to continue to dine out frequently or splurge in other ways. If that’s you, it’s a good idea to bolster an emergency fund to cover unexpected things that come up, such as household repairs.

It’s even better if this “trial run” can begin at the start of a marriage, which should allow for a fantastic period of saving before having children.

More Life Insurance
Couples should buy life insurance on both partners, not just on the working spouse. If the stay-at-home parent dies, the surviving spouse can use the benefits to pay for outside child care, live-in nannies, housekeepers and other functions that had formerly been handled by the stay-at-home parent.

I see clients using this advice, and then dropping the insurance as their youngest was heading to college — and that’s smart.

Home-Based Tax Deductions Used Correctly
If the stay-at-home parent or both parents operate a home-based business, both should be listed on IRS Schedule C and all related business documents when they file taxes.

I’ve reviewed past returns (which we do for free, for non-clients — our clients, of course, already being well taken care of!) where only the information of the spouse who actually filed the taxes was submitted, in effect denying the other spouse from accumulating Social Security benefits.

Finally, what is most important: YOU.
Stay-at-home parents should make sure they are well on their way to funding their own retirement before paying for a child’s college education. The best thing you can do for your kids is to take care of yourself first. If your children have to take out student loans, despite all the bad publicity, they do have 40 years to pay those loans back — and at favorable interest rates, at that.

Again, I welcome your thoughts …

Warmly (and until next week),

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

Here at Team Dennis Bridges, we are working hard through a pile of returns for our Greater Atlanta tax clients, both from extensions and for corporate filings (due tomorrow, 9/15, as I sit down to write this on Monday morning!) — but that doesn’t mean I won’t carve out the time to write a blogpost for my Greater Atlanta area (and beyond!) friends.

First of all, we should all be mindful that the current economic situation may not last, perhaps for ill. Here’s a somewhat technical walk-through.

If and when the Federal Reserve raises interest rates, it will be very … interesting to see what happens in the markets, and here in Greater Atlanta. And, as 2008/9 reminded us, this doesn’t simply affect investors, but has implications for all of us.

I can’t recommend a specific course of action in this post for a variety of reasons, but nonetheless, it’s something to be aware of.

I do NOT recommend giving into fear.

Instead, as I’ve recommended in the past during times of tumult, it’s a time to take positive action and make a few positive steps towards shoring up your family’s finances, whatever state in which you find them today.

So, in that light, I have some thoughts for you today.

Bridges’ 6-Step Plan For Preparing For A Financial Emergency
“Life is either a daring adventure or nothing. To keep our faces toward change and behave like free spirits in the presence of fate is strength undefeatable.” – Helen Keller

The peak of the September hurricane season has been remarkably quiet.

“As we reach the historical peak of the Atlantic hurricane season, there are no active hurricanes in the Atlantic or the Pacific basins.” (Source)

That’s great news for many on the Eastern seaboard.

However, there are other storms that can be seen on the horizon. And this is ALWAYS the case, regardless of the world economic outlook — because for every Jane Smith here in the Greater Atlanta area (or anywhere else) who has shored up her finances for whatever may come, there is a John Smith next door who has not.

And, of course, nothing is ever *truly* fully within our control. It’s a falsity that we could ever create a hermetically-sealed financial boat, completely impervious to any outside factors. Even if you were to convert everything to cash and gold, these currencies are subject to the vicissitudes of market fluctuations. Even raw goods (always handy in a real crisis) can fail us.

That said, it does, indeed, pay to be prepared.

Here’s the first step for my Greater Atlanta clients and friends: Watch your mindset. Were the market to collapse overnight, how would you carry your heart? Where would you place your ultimate security? It’s helpful to realize that no matter what may come, there are certain things — family, relationships, eternal matters — that will NEVER be shaken by mere circumstance. Remembering this deeper truth will help you through whatever might come.

Second, ensure you have some small amount of ready cash available. I recommend having $1,000 in some capacity, whether in cash in a safe place in your home, or in an account that provides you immediate access. This should be the case,no matter what kind of debt you are carrying. “Paying yourself first” means preparing for any kind of emergency, and this is a very helpful buffer. Only access it in a true financial emergency.

Third, kill your credit card debt — forever. There are loads of articles out there, from Dave Ramsey to Suze Orman (yes, they run across the philosophical spectrum) on the proper step-by-step plan for this, so I won’t rehash that here. Needless to say, this is an important first step … and it will help you face whatever might come, without starting from a major hole. And it leads to the fourth:

Adjust your monthly cashflow. Ideally, you’ll be able to create a budget under which you can live off approximately 65% of your take-home pay each month. After all, the biggest difference between the wealthy and the working poor is much less about the money they bring home … it is more about the money they keep. Live off that 65, then send 10 percent to long-term savings for big purchases, 10 percent to retirement accounts, 5% to taxable savings … and make room to be able to give at least 10 percent to charitable sources. This will help your mindset AND, of course, will enable you to be a source of supply for those who are in need.

Automate an investment strategy. With that money that you are peeling away for retirement and other savings, find a strategy that has enough diversity for the purposes of safety but which is still angled towards growth. And AUTOMATE the contributions so you aren’t “deciding” each month to send it where it should go.

Lastly … well, you’re ready for an emergency. And you can mobilize what you need if (rather, when) something unpredictable strikes your family or the broader economy. You’ll also be able to see whether your budgets and plans held up under pressure, and be able to adjust accordingly for the future.

As I look back over this post, I’m realizing that this can even serve as a step-by-step plan for your financial growth. For a variety of reasons, each person’s actual strategies within each step might vary, and there is a lot of hard work required in between each step. But it’s a battle worth fighting NOW, and I recommend that you train yourself up for it.

Again, I welcome your thoughts …

Warmly (and until next week),

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

I’ve become increasingly aware that although I share with you strategies, tips and whatnot every week — it can be difficult to actually act on them, in the evenings for example, when the demands of family and the need for down-time pull at you.

That’s ESPECIALLY true as we ramp up on the cusp of fall. And even for the non-parents, or those with children out of the house, there is something about this season that brings a building sense of “busy-ness” to our lives, as everyone seems to be coordinating the start of their initiatives right around the start of school.

So, I have a bit of a novel proposal for you in this week’s Strategy Note. I believe it could help you in multiple ways–with your bottom line, your taxes … and even your mental health.

Before I get there, though — a few tax reminders:

1) Estimated taxes for the third quarter are due on Tuesday, September 15th. If this applies to you, you know who you are. We’d love to help you, though, if you need a quick word of advice. Shoot me an email (click the email button at the top of this page).

2) Corporate filings are also due on the same day (9/15). Again, you know who you are if this is for you … but let these simple reminders not be wasted!

Now … to my proposal for you — let me know what you think.

Dennis Bridges’ 11 To-Dos For Your ‘Financial Health’ Day
“Seize the day, put no trust in tomorrow.” – Horace

It’s true: inactivity is costly.

You see, if you’re like most people, I bet that when you get your house insurance renewal notice, you quickly glance at the price — and renew it. You renew it simply because you don’t have the time to search around for better prices.

In my experience, working with family finances for YEARS, I’ve learned that most people have a good sense of what needs to be done to improve their finances but they simply cannot find the time.

So here’s my proposed solution for you: Take a day off work.

(You may have just missed Labor Day … but that’s alright, because you probably have other days available that you can take. And it really can be very much worth it!)

In fact, many financial tasks simply cannot be completed in the evening or on the weekend. By taking a day off work, you can contact people who may only be available at regular business hours.

On top of the true bottom-line impact a day like this could create, there is, of course, the “mental health” aspect of it all. HR professionals often recommend taking a mental health day, from time to time. Well — call this your “Financial Health” Day.

Possible tasks to consider accomplishing on your day off:

1. Dump your savings account with a puny interest rate and open a high yield savings account.

2. Get quotes for cheaper insurance: health, life, auto, house, and any other insurance. And you can even do a little calculating to determine how much you could save by changing your deductible. Even better — a good broker can do all of this shopping for you.

3. Complete the most important (but not obviously-pressing) financial tasks like making a will. (This one is best done with a professional, by the way.)

4. If you’re carrying credit card debt, call the companies and ask them to reduce your credit card interest rates. Believe it or not — they’ll often say yes. Take time to develop and formulate a good plan to get out of credit card debt. Find or prepare a debt reduction plan.

5. Get more organized with your finances by shopping around for and using a good personal finance software program. Mint, YNAB and Quicken are all good options. There are many more.

6. Review your budget, get caught up on your budget, or learn how to budget.

7. Shop around for the best online financial broker. Be sure you’re getting the best price for your stock trades.

8. Make energy efficient changes to your home and lifestyle.

9. Find a quality second-hand store to shop at, as an alternative to the local department store.

10. Set up automatic payments for your bills, to be sure you avoid late payments.

11. Sell your junk on eBay. Look for junk lying around the house and list it (or depending on the item, you might consider eBay’s “Valet” service, which lists and sells items for you). Or use a service like 1-800-GOT-JUNK, and have them come to your house, and you just point at the stuff you want to get rid of.

Undoubtedly, there are more things which can go on this list, if you’re industrious about it. But simply put, I’m hoping to give you “permission” to see your financial health in a similar light as you see your mental health.

Again, I welcome your thoughts …

Warmly (and until next week),

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