Barnes Accountancy Corporation https://barnesaccountancy.com A Southern California TAX PROFESSIONAL YOU CAN TRUST Tue, 25 Jan 2022 22:00:06 +0000 en hourly 1 https://wordpress.org/?v=6.4.3 https://barnesaccountancy.com/wp-content/uploads/2019/01/BAC-favicon-150x150.png Barnes Accountancy Corporation https://barnesaccountancy.com 32 32 David Barnes’s Tips on Getting Help with Medical Debt https://barnesaccountancy.com/david-barness-tips-on-getting-help-with-medical-debt/ Tue, 25 Jan 2022 22:00:06 +0000 https://orangecounty-taxrelief.tk/david-barness-tips-on-getting-help-with-medical-debt/

Before I get into my tips for getting help with medical debt, let me start out by saying… we’re less than ONE WEEK away from the IRS beginning to receive electronically-filed returns.

That means different things to different people in our Southern California client family, but I can confidently say this to YOU, no matter your circumstance (reasserting what I wrote last week):

This is not the year to dally with your tax paperwork.

Why?

1) Based on what we’ve already written and some other communication that we’ve been undertaking here at Barnes Accountancy Corporation, demand for our services is at an all-time high. So, I really do want our best Southern California clients to get our best attention.

and

2) The IRS is significantly backlogged (still) … and if we need to make adjustments, we’ll want to be as proactive as possible on your behalf.

SO… use this to get on our calendar ASAP:
714-541-4338

Moving along… Most of us grew up thinking we’d be in debt sometime in our lives – for a car, a house, maybe for a vacation, or an education.

But debt for visiting the doctor?

Yeah, that’s not usually pleasant to think about. Unlike those aforementioned reasons for debt, medical debt is usually racked up for something difficult or traumatic, bodily speaking of course. Still, it’s a reality most of us will have to face.

Let’s discuss how to get help with medical debt.

David Barnes’s Tips on Getting Help with Medical Debt
“Never go to a doctor whose office plants have died.” – Erma Bombeck

Medicine does make great progress – and it looks like what it charges makes progress, too. A recent survey found that three out of five Americans have been in debt due to medical bills, and the average burden can be almost five figures.

Sooner or later, almost all of us are going to find ourselves on the hook with our doctor (or with some hospital or some lab or some technician we’ll never even meet). What do we do then? How can we get help with medical debt?

Not all debt is created equal

U.S. personal healthcare is about the most expensive in the world – and recently Americans have borrowed into the billions every year to pay the tab.

Is it any real surprise when six months after that ER visit you get a pretty sheet of paper in the mail with lots of dollar signs and numbers at the bottom and your credit card logo on top?

Sure, it isn’t. But do you have to rush to pay the bill? We once heard of somebody with a longstanding medical condition who had four folders for medical bills: “Send to Insurance,” “Sent To Insurance,” “Sent To Insurance Again,” and “Sent to Insurance a Third Time.” There actually was no folder for “Pay This Bill.”

We can’t guarantee things will go that well, but here are some ways to get help with medical debt …

True, most debts that go to collections do remain on your credit report for seven years from when the bill is declared delinquent. But the exception is medical bills – specifically those that head into collections but your “friends” at the insurance company later pay.

You might catch an even bigger break with that medical debt not affecting your credit score. Check your credit reports to make sure there’s no medical debt on there.

Your next steps

Dealing with collections agencies for general debt is its own special animal – but many of the same tactics work for whittling medical debt, too.

Your first move is common sense: Make sure the bill is accurate and that they’re entitled to charge all they’re trying to wrangle out of you.

Hospitals are only human (more or less) and they can make mistakes, right? Hospitals have also been known to send bills for amounts that you’ve already paid. Sure, pay twice, and you’ll probably get your money back someday… maybe… Double Check.

While we’re on the subject, ever gotten a letter from your health insurance company labeled “This Is Not a Bill”? Keep these. They outline charges your Southern California hospital might hit you for.

And hospitals have been known to try to get you to pay what’s left over after they’ve agreed to a price with your insurance company. That’s a form of “balance billing,” and it’s generally illegal. Again, check with your insurer pronto – they’ll be happy to make clear what you are and are not covered for.

A new tool in your box

By the way, now there’s a federal law called the No Surprises Act that protects folks like us from a common medical bill rip-off.

Did you know that about one in every five trips to the ER in this country produces a bill from somebody the patient never even sees or because the doctor on duty doesn’t happen to take the patient’s insurance?

No more. The No Surprises Act prohibits doctors, hospitals, and other health providers from billing you for more than you’d pay for in-network care under your current insurance plan.

They also have to send the bill right to your insurance company – saving you a big headache.

A couple more pointers:

Payment plans. Financial aid isn’t just for college students. Did you know that many hospitals can help you set up payment schedules – or even lower the bill if your financial sitch justifies it? And this aid is often interest-free if you can believe it. It never hurts to ask.

Negotiate for a lower price or ask about financial aid before you pay the bill in any way.

Watch how you pay. A big bill naturally makes most of us reach for that little plastic card. Yes, paying fast with a credit card can stop calls from collection agencies.

But hold off: Paying medical debt with a credit card means you throw away some of the protections of medical debt (since it then becomes credit card debt), and you also wind up on the hook for your card’s interest rate.

Don’t panic over medical debt. I hope I’ve made it clear that you have more options than you think. Give us a ring if we can help.

714-541-4338

And stay healthy out there.

 

In your corner,

Warmly,

David Barnes

 

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Southern California Taxpayers with IRS Problems: How to Choose the Best Tax Advisor https://barnesaccountancy.com/southern-california-taxpayers-with-irs-problems-how-to-choose-the-best-tax-advisor/ Thu, 20 Jan 2022 21:00:05 +0000 https://orangecounty-taxrelief.tk/southern-california-taxpayers-with-irs-problems-how-to-choose-the-best-tax-advisor/

The new year train has rolled out of the station and is picking up momentum already. First stop? Tax season.

If you haven’t been thinking about or preparing for it, you should be! Especially if you’ve got unfiled taxes or owe back taxes. It’s really time to face those things.

As long as you’ve got income flowing into your wallet, taxes will be a reality, no matter if you avoid them or not. And when it comes to getting your taxes together, who’s on your team that you trust to fight for YOU?

Well, finding a trustworthy tax preparer you can depend on to actually help you is something anyone with tax debt should be concerned with. Because it’s hard to know for sure who you can trust. A lot of the hacks and dissolve tax debt companies out there just want to capitalize on your situation for their benefit. Sure, they might help you solve your problem for now, but are they determined to do it in a way that’s focused on you not only now but also moving forward?

Despite the self-serving nature of this note, we want to assure you that not just any old tax advisor (or agency) will do.

When determining the best Southern California tax advisor to represent you and help you put things in order, you’ll want to watch out for these red flags…

Southern California Taxpayers with IRS Problems: How to Choose the Best Tax Advisor
“Put all your eggs in one basket, and then watch that basket.” -Andrew Carnegie

The first and most common red flag you’ll want to keep an eye out for when choosing the best tax advisor for you is their promise to get you a big return. If they’re really intent on getting you that sizeable return, it could also mean they get a percentage of the kickback from your return. Thus, they’re prone to do whatever it takes moving forward (legal or illegal) to get that big return for you.

Another red flag to consider when choosing the best tax advisor for you has to do with a Preparer Tax Identification Number (PTIN). Any real tax preparer is legally required to have one. If you have any checks in your system, use the IRS-backed PTIN Directory to sniff out if the preparer you’re working with is the real deal. Another thing to keep an eye out for is anyone who says they’re “endorsed by the IRS.” That’s not a thing. The IRS doesn’t put endorsement stamps on anyone.

Finally, when choosing the best tax advisor for you take note of the actual office location for a prospective preparer — if they’re looking like a “pop-up shop” in your area, it’s most likely they bounce around from location to location looking to prey on new, unsuspecting people.

Decision
Beware! Scam artists abound, and we don’t want you to fall prey to their game.

So, one fool-proof suggestion I can guarantee — whoever you choose to help you prepare your taxes should be local… and your interactions with them should start with relationship.

Taxes are important, but they aren’t life. There’s so much to take into account when filing your taxes. Your career goals and family aspirations are key factors in the process and scammers won’t give a care about those priorities — just your money.

If you haven’t landed on a particular tax advisor, please do yourself a favor and do some comparison shopping… What benefits does each option provide? Checking online reviews to see the experiences others have had with a tax professional is essential in today’s digital climate.

Deliverance
Remember, I’m here to answer any questions you have on what to look for in a Southern California tax advisor.

“Deliverance” might sound like an intense term, but until you’ve had a tax professional on your side (not just for tax season), you may not realize the relief it’ll bring. And don’t plan to “take on” the IRS by yourself – surrounding yourself with a quality team makes all the difference.

Go ahead and start the search for the right tax pro and get ahead on your tax problems now. Oh, and when you do, take time to entertain the thought: Taxes together.

 

Warmly,

David Barnes
(714) 541-4338
Barnes Accountancy Corporation

 

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Barnes Accountancy Corporation on the New $600 Reporting Requirement for Digital Payment Apps https://barnesaccountancy.com/barnes-accountancy-corporation-on-the-new-600-reporting-requirement-for-digital-payment-apps/ Wed, 19 Jan 2022 01:00:28 +0000 https://orangecounty-taxrelief.tk/barnes-accountancy-corporation-on-the-new-600-reporting-requirement-for-digital-payment-apps/

To be fair, the new $600 reporting requirement for digital payment apps isn’t a Venmo thing … it’s an IRS thing.

(Personally, I’m still amazed by how people share their transactions so publicly on these kinds of platforms. But that’s a topic for another day.)

And I normally wouldn’t be so quick to alert you to a tax change that only just went into place at the beginning of this year … but there’s a chance this might affect your Southern California business’s financial behavior, so I wanted you to know ASAP.

But before I dive into that, a quick reminder:

This year would be a great year for you to get “ahead of the game” with your 2021 tax paperwork.

Why do I say that?

1) Demand for our services here at Barnes Accountancy Corporation is at an all-time high, and I want to be sure our best clients get seen properly.

and

2) There really is no telling how responsive the IRS is going to be this year, even when you have the “Professional Practitioner Line” access we have. The agency is significantly backlogged still … and if we need to make adjustments, we’ll want to be as proactive as we can possibly be on your behalf.

SO …. use this to get on our calendar ASAP:
714-541-4338

Now … onto the Venmo stuff. This might be an important one for you to forward along to your Southern California friends, by the way.

Barnes Accountancy Corporation on the New $600 Reporting Requirement for Digital Payment Apps
“You don’t pay taxes – they take taxes.” – Chris Rock

Up till now, whatever you made on eBay, Etsy, and the like might have seemed like tax-free cash. But now, the IRS will be in the know more and more regarding those sales… and that’s something you’ll want to keep in mind going forward.

Lowering the limit

Rules that were in effect until this month said that if you sold goods or services via platforms like eBay, Etsy, and Uber and if that platform used third-party transaction networks (think PayPal), you received a federal tax document called a 1099-K, and your income was reported to the IRS.

Thing is, you didn’t get that form unless you had at least 200 transactions worth a combined twenty grand or more.

Now, that limit’s been lowered.

Payment apps such as PayPal, Venmo, Zelle, CashApp, and other third-party e-payment networks will start using the 1099-K to report your business transactions to the IRS if you reach $600 or more annually. (That’s a lot less than 20k!) This expanded reporting is part of the American Rescue Plan recently signed into law.

Yikes. With inflation on the rise, an Etsy business could fetch that much hawking a few of its antique and handmade wares.

But don’t panic yet. Let’s go through this a step at a time…

Is the new $600 reporting requirement a big deal?

First of all, this isn’t a real tax change. It’s a tax reporting change. You were always supposed to report all income you received from online sales. In many cases, it’s been taxable money – but most folks were below that five-figure threshold.

Basically, the tax law concerning these sales just became what experts are terming “more visible.” We agree: “Visible” and “IRS” aren’t words most people want to put together when talking about all their income.

But you may not be on the hook for as much as you think.

Not every deal you do on these payment apps is taxable. Your grandma can still send you a hundred bucks for your birthday and your friend can still zap over half the price of the dinner tab from last night. You’re also in the clear if you use a payment app to make charitable contributions or even to pay rent.

And here’s a big one: You’re not on the tax hook for the income if you sell something on, say, eBay for less than you paid for it.

Again, it’s about visibility. With the new $600 reporting requirement, the IRS is looking for a better handle on business (not personal) income – and even then, you can still use legit deductions to improve your tax situation regarding biz income. Let’s also assume that if you’ve been using these platforms to get payment from a side business, you’ve been reporting the money anyway. Right?

So, the 1099-K is just going to start showing up for lower amounts.

The $600 reporting requirement: Double the fun

This change doesn’t mean, though, that you’re completely in the clear – at least in terms of keeping your tax paperwork straight.

It’s possible that a year from now your payment app may be unsure if you’re using them for business income or personal expenses. They might send you (and the IRS) a 1099-K and leave it up to you to report the income or explain that the money somehow wasn’t taxable.

(By the way, remember we mentioned that you’re not going to pay taxes on income if you sell something for less than you paid for it? A good hedge is to lay hands on your original receipt. An old credit card or bank statement might help …)

And on the business side, if you’re a Southern California freelancer, when the 2022 tax forms start coming out, you might get both a 1099-K and a 1099-MISC or a 1099-NEC for the same transaction. Again, it’ll be up to you – we’re happy to help – to explain to the IRS that the two forms represent the same transaction.

To head off this confusion, payment apps will likely ask you for more tax-related info in the coming months, including your Employer Identification Number, Individual Tax ID Number, or Social Security Number, if you haven’t already provided these. Word is most apps will also soon have a way for you to tag transactions as “personal” or “business.”

Coping with a new tax wrinkle is often a work in progress. We’re here to answer your questions on this or any other issue. Feel free to give us a buzz. 714-541-4338

 

In your corner,

Warmly,

David Barnes

 

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Southern California Taxpayers, How to Get 2021 Tax Filing Documents in Order https://barnesaccountancy.com/southern-california-taxpayers-how-to-get-2021-tax-filing-documents-in-order/ Tue, 11 Jan 2022 22:00:30 +0000 https://orangecounty-taxrelief.tk/southern-california-taxpayers-how-to-get-2021-tax-filing-documents-in-order/

Before I jump into discussing tax filing documents, I hope it’s okay that I spare you all of the “new year, new you” stuff.

If you’re anything like me, you’re being inundated with rehashed well-wishes and generic, happy-clappy “time to set some goals!!!” talk.

And I don’t know about you, but I’m here to get to work, as is my Southern California team here at Barnes Accountancy Corporation.

And now that the ball has dropped in NYC, and all of the moves that could have been made beforehand have been either A) made or B) left for later…

… it’s time to get moving.

Specifically, as it relates to taxes. And based on the glacial pace that we’re seeing with IRS response times, and the general level of disruption that tax season brings — it’s a really good idea for YOU to get your tax filing documents together just as soon as humanly possible.

And as always, if you need help, we’re here:
714-541-4338

Today, though, I thought I’d give you some quick pointers…

Southern California Taxpayers, How to Get 2021 Tax Filing Documents in Order
“I’ve always been into paperwork.” – Natalie Cole

No, it isn’t almost time to file your personal taxes (that’s going to be Monday, April 18), and it certainly isn’t everyone’s favorite time of year.

That doesn’t mean you can’t start getting ready now and take away some of the pain, right?

True, the IRS usually doesn’t even start processing forms until at least a few weeks into the new year. But given all the processing delays the IRS has had recently, getting your tax return done sooner rather than later is a good idea – especially if you’re getting a refund.

What info do you need to file your taxes? (By the way, this is a very very general list. We always treat your situation as unique. Give us a buzz with questions.)

The tax filing document chase begins

So, for all of 2021 did you carefully collect all those records to do your taxes? Got’em all lined up by type, amount, date, height, and weight? No?

Don’t worry – most people don’t right now. In fact, many tax filing documents you need aren’t even available yet. Many will be soon, either online or arriving in your mailbox, often clearly marked “Tax Documents” – keep your eyes peeled.

Let’s see what tax filing documents you need.

Personal. Have on hand the Social Security number, dates of birth, and bank account information for you, your spouse, and your dependents. Also, dig up a copy of last year’s (or your most recent) tax returns.

Income. If you’re an employee, you should have a Form W-2 “Wage and Tax Statement,” which shows what you earned and had withheld in 2021 from your Southern California employer.

If you’re self-employed (i.e, an independent contractor), you should receive the new Form 1099-NEC, which details your income. The 1099-MISC details rents, prizes, and other income, generally of at least six hundred bucks.

You probably also have other 1099s detailing interest, dividends, and other types of payments to you. They have different letters after the 1099, such as DIV for dividend, INT for interest, and R for retirement-related income. There’s also the 1099-C, -K, -G, -Q, -SA, and on and on until it looks like a bad Scrabble hand. Check with us if you need help sorting them out.

If you got Social Security benefits in 2021, you’ll get a form for that, too: the SSA-1099.

Credits and such. The good folks at the IRS also send you letters saying how much you received in stimulus and advanced child tax credit payments and other pandemic-related help. (If you receive a phone call, text, or email claiming to be from the IRS on this or any other matter, contact us at once before replying. Scammers use these tactics…).

Now, most people don’t itemize many deductions for personal taxes since they raised the standard deduction a few years back, but you do want to get together receipts and other records for what you paid in mortgage interest, student loan interest, charitable donations, and medical expenses, among other goodies that can help your tax sitch.

See, there’s a special deduction of a few hundred bucks for giving to a qualified charity in 2021. And though few people rack up enough medical expenses to deduct, we can help you figure that out, so save those receipts – you never know…

If you’re self-employed and take business deductions on a federal Schedule C, your deduction paperwork is another kind of animal. Get in touch with us and we’ll be happy to work with you.

Time on your hands

It’d be nice if all the tax filing documents just showed up in your mailbox and all you had to do was slide them into the right folder (electronic or paper) and get them to us – and then just sit back and wait for that fat refund.

Yeah, we agree it sure would be nice. Unfortunately, it doesn’t always happen. So what can you do, aside from turning your house upside down?

For your investment accounts, for example, click on the websites for your tax filing documents. They’re probably sitting there waiting for you to download (and print, if necessary). If the docs aren’t there, contact their customer support to help. If you worked for somebody who didn’t send the form they should have, get in touch with them ASAP.

Remember: You’ve still got time before filing. The important thing is to start gathering the paperwork.

If worse comes to worst weeks from now, you can file an extension of time to file (but not to pay) your taxes. But why not start now to avoid scrambling?

 

If we can help with any of the above, just let us know. We’re here to take the stress out of this chore.

Stay safe out there.

Warmly,

David Barnes

 

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Does bankruptcy clear tax debt? Barnes Accountancy Corporation’s Take https://barnesaccountancy.com/does-bankruptcy-clear-tax-debt-barnes-accountancy-corporations-take/ Thu, 06 Jan 2022 02:00:05 +0000 https://orangecounty-taxrelief.tk/does-bankruptcy-clear-tax-debt-barnes-accountancy-corporations-take/

Bankruptcy is a taboo subject of discussion in our society, despite the fact that it’s a perfectly legitimate tool for flushing debts and starting over financially. When you’re deep in the hole with credit card debt, medical debt, mortgage debt, and the like, bankruptcy can be a lifesaver.

Heck, even student loan debt can be discharged in bankruptcy in limited circumstances, which comes as a shock to most Southern California people.

But does bankruptcy clear tax debt, too? That’s money owed to the IRS so that obviously cannot be discharged in bankruptcy, right? Hmm, not so fast!

Let’s talk about Terry.

Terry is a 45 year old divorced father of three. The last couple years have been financially difficult, as it has been for millions of Americans. Terry was laid off from his job as a restaurant manager in early 2020, and unemployment just wasn’t enough to keep paying the mortgage, the car payment, the credit card bills, and still put food on the table.

Oh, and let’s not forget about the $34,000 IRS tax bill from a few years back.

Terry is in such a bad spot financially, that he decides to speak with a Southern California bankruptcy attorney and find out what his options are. I met Terry because that bankruptcy attorney brought me in to discuss the tax side of the situation.

During my conversation with Terry and the attorney, I asked some questions about the tax debt.

The first thing we discussed was what type of tax debt it was. There was no business tax debt involved here. No issues stemming from unpaid payroll taxes or anything like that. Just regular old personal income taxes from a 1040 return. This was a good start.

Next, we talked about the timeline of his tax return. Terry handed me a copy of the tax return in question, which was for tax year 2017. This was another good sign, because the tax year in question is now more than three years old.

Terry then gave me permission to obtain copies of his IRS account records for the past several years. From that research, I was able to determine that Terry filed this tax return a little bit late. It was due in April 2018, but he didn’t file until a year later, in April 2019. But that’s OK because it was still filed more than two years ago.

I then had to look for any further IRS actions against Terry for this tax return. They did audit this tax return in 2020, and they did bill him for some extra tax. That extra tax was tacked on last summer, and the audit closed out. Since last summer was more than 240 days ago, Terry is also in luck.

Since Terry owes no other tax debt besides this one year, and he meets the three timing rules, Terry is in a good position to potentially have this IRS debt included in his bankruptcy. There’s some additional work to be done, but at least Terry meets the all-important legal barrier of these timing tests. So, does bankruptcy clear tax debt? In Terry’s case, it did.

If you’re in a similar situation to Terry, this clearly isn’t one of those things you want to tackle by yourself. If you owe back taxes to the IRS and are already speaking with a Southern California bankruptcy attorney, then the three of us – you, your lawyer, and me – should have a conversation. Your tax debts might already be dischargeable in bankruptcy, or you might be able to delay your bankruptcy filing in order to meet the timelines necessary to make them dischargeable. Either way, this requires advance planning involving both your tax adviser and your bankruptcy attorney.

To get started, let’s schedule a time to chat:

714-541-4338

Because we want to help you start the new year off right by answering the question for your situation: Does bankruptcy clear tax debt? We’d love to find out.

 

Warmly,

David Barnes
714-541-4338

 

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Barnes Accountancy Corporation on Last-Minute Tax Moves for 2021 https://barnesaccountancy.com/barnes-accountancy-corporation-on-last-minute-tax-moves-for-2021/ Wed, 05 Jan 2022 10:00:04 +0000 https://orangecounty-taxrelief.tk/barnes-accountancy-corporation-on-last-minute-tax-moves-for-2021/

I remember reaching the end of 2020 … it seemed as if all of us were breathing a huge collective sigh of relief.

And then … more chaos.

Is it wrong to hope that 2022 will turn out better? Hard to say … but I do know that what I DON’T want to do is retreat into bitter cynicism. That’s hard to avoid sometimes (especially in a tax and accounting practice — dealing with the IRS can breed massive cynicism).

But I am choosing to wrap up this year with hope on the horizon. I hope you’ll join me in that.

This is also a HUGE week for our profession. Because if you want to make ANY 2021 moves (outside of IRA things, which can be retroactively applied after 12/31) … well, we’re running out of time.

I hope that by the time you read this, you’ve already made the tax moves you need to make.

But if you want to talk, we’re here:
714-541-4338

I would ask you to have patience with us. Because of the volume of client requests this time of year (on top of family and holiday-related disruptions), we’re not always able to respond as quickly as you might need.

In which case, I’m going to take the quick opportunity in my last Note of 2021 (!) to recap your possible year-end moves…

Barnes Accountancy Corporation on Last-Minute Tax Moves for 2021
“Every task, goal, race, and year comes to an end…therefore, make it a habit to FINISH STRONG.” – Gary Ryan Blair

Because time is short, and some tax moves do require more than this week to pull off, I’m restricting myself to those items which you can realistically handle before the end of the year (Friday).

This will be short, and (hopefully) sweet to your wallet…

1) Use Your FSA Funds
Money set aside in a flexible spending account must be spent by the end of the year, else the funds are lost. Some Southern California employers allow a 2-and-a-half month grace period. So, check with your employer to see what your personal deadline is for utilizing your FSA savings.

2) Make an Extra Payment on Your Mortgage
If you own a Santa Ana house with a mortgage, and you can swing the cash flow hit, add an additional payment before year-end, and the interest on that payment will be deductible for 2021. Of course, that means that it WON’T be so for 2022, but perhaps you can use this as an “extra” payment … and get ahead of the escrow game.

3) GIVE
You know how I feel about charitable giving by now (I hope). This week, of course, is a big one for non-profits (including local Southern California charities) who are the happy beneficiaries of our last-minute donations. And with the $300 deduction available even for those who take the “standard deduction” ($600 for couples), your money goes even further. Please, if you can, give.

You can pay early on a monthly gift or give a lump-sum gift. The purpose (aside from the many, many benefits to the organization, and to you, of course), being to knock more income into a different tax bracket perhaps, or to simply cut your tax bill, regardless of the bracket status.

Now, there are plenty of others. But these are the quickest, and the easiest.

Others:

  • Max out personal gifts — if you have means, you can give up to $15K tax-free to a family member or friend.
  • Max out workplace retirement accounts (if you have one).
  • Evaluate (quickly) what your income might look like in 2022, and try to accelerate or decelerate any kind of income (that you can control) accordingly.

Hope this helps!

More (much more, especially about any 2022 tax changes) in the future … which starts next week.

Warmly,

David Barnes

 

 

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David Barnes’ “Help Me Remember” Holiday Prayer https://barnesaccountancy.com/david-barnes-help-me-remember-holiday-prayer/ Wed, 29 Dec 2021 02:00:06 +0000 https://orangecounty-taxrelief.tk/david-barnes-help-me-remember-holiday-prayer/

These last couple weeks of 2021 are already a little unusual.

Current events are swirling around virus policy, the big Biden “Build Back Better” Act seems to have hit a Joe-Manchin-sized brick wall, sports leagues are in an uproar around rising case numbers, and more.

And this, of course, on top of the normal holiday haze that Southern California families and businesses are in the midst of.

So, instead of my normal fare today, I am sending you this “help me remember” prayer I found a few years ago that I like to send out to my Southern California clients around the holidays.

But if there is anything we can do for you in the days before 12/31 … please give it a try here: 714-541-4338

I can’t guarantee our availability, as we have a LOT of client work to handle these few days before year-end … but we’ll do our best!

So I will leave you with this. It is something I stumbled across some time ago, and I can’t take credit for its authorship. But it’s worth pausing to consider.

And while it’s framed as a prayer, no matter your belief system, I believe that you will find that it’s rather pertinent to this chaotic cultural moment…

David Barnes’ “Help Me Remember” Holiday Prayer
“People travel to wonder at the height of the mountains, at the huge waves of the seas, at the long course of the rivers, at the vast compass of the ocean, at the circular motion of the stars, and yet they pass by themselves without wondering.” -St. Augustine

“God, help me remember that the jerk who cut us off in Southern California traffic last night is a single mother who worked nine hours that day and is rushing home to cook dinner, help with homework, do the laundry, and spend a few precious moments with her children.

“Help me remember that the pierced, tattooed, disinterested young man who can’t make change correctly is a worried 19-year-old college student, balancing his apprehension over final exams with his fear of not getting his student loans for next semester.

“Remind us, Lord, that the scary-looking bum, begging for money in the same spot every day (who really ought to get a job!) is a slave to addictions that we can only imagine in our worst nightmares …

“Help me remember that the old couple walking annoyingly slowly through the store aisles and blocking our shopping progress are savoring this moment, knowing that, based on the biopsy report she got back last week, this will be the last year that they go shopping together.

“Father, remind us each day that, of all the gifts you give us, the greatest gift is love. It is not enough to share that love with those we hold dear. Open our hearts not to just those who are close to us, but to all humanity. Let us be slow to judge and quick to forgive, show patience, empathy, and love.

Amen.”

To a season that is truly bright,

David Barnes

 

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Bad Money Habits Keeping Southern California People in Debt https://barnesaccountancy.com/bad-money-habits-keeping-southern-california-people-in-debt/ Thu, 23 Dec 2021 15:02:55 +0000 https://orangecounty-taxrelief.tk/bad-money-habits-keeping-southern-california-people-in-debt/

Today’s topic (bad money habits) calls for a little bluntness… a bit risky, I know, but necessaryfor any Southern California person finding themselves in debt to the IRS.

And I’ll give a caveat here and say that what I’m talking about today has nothing to do with people in truly difficult financial circumstances… You know, balance-sheet-wrecking things completely out of your control. Things like unexpected medical emergencies not covered by insurance or a business situation that takes a detour for the worst… or a deadly tornado ripping through your hometown. (Our hearts go out to those who were affected this weekend – here are some ways you can help those areas hardest hit in Kentucky.)

But for anyone else, it’s time for an early intervention.

Things are expensive no matter what situation you’re in… single, married, parenting, divorced, retiring, etc. And with inflation ballooning right now, it’s certain we’re all feeling some strain on our finances. Some of you may even be working multiple jobs to stay afloat.

But, using any of these as reasons for why you’re struggling to keep money in the bank means there’s a bigger issue lurking behind the curtain.

If you’re up for it, I’d like to put on my “coach” hat today and inspire you to break some bad money habits and reach for financial security (‘cause I think you owe it to yourself to chart a new path).

I want my Southern California clients to think properly about these things … because when times of crisis do come – however intense or unexpected – it’s much easier to work from a place of continued strength than from weakness.

Bad Money Habits Keeping Southern California People in Debt
“Knowing trees, I understand the meaning of patience. Knowing grass, I can appreciate persistence.” – Hal Borland

We’ve seen all kinds of clients waltz through our doors asking for help to get out from under IRS debt. That’s what we do.

And let’s get this in the open right away: There’s no shame here. We understand that for every “bad money habit” or trend, there are deeper issues at play. And our job is to help you deal with “what is” — and not make you feel bad about “what should have been.”

The purpose of this note is to wave some flags at you that will be truly helpful. Our goal is to serve our clients by offering help for these kinds of situations.

But perhaps there are a few habits pulling you down right now…

Bad Money Habit #1: Not budgeting.
Yes, sticking to a budget (or starting one) can be scary, and learning about your true financial situation can be a downer. Frankly, get over it. PLEASE. At the very least get some help with it, find your net worth, add up all your debt, track your spending, and build a budget that reflects your true reality — not the world you prefer to live in. Only when you face the facts — by spending the time to manage your money — will you stop losing ground.

Bad Money Habit #2: Not paying off debt.
If you’re lacking a plan to conquer your debt, then you’re going to do more than “lose ground” — you’ll go broke.

It’s time to look at ways to increase your debt payments. Paying just the minimum balance is a sure-fire way to keep the debt around your neck like a noose forever, so dig into that debt by paying it off sooner.

Bad Money Habit #3: Not saving.
Perhaps you used to be a saver — and now you’re resting on previous good habits. It may be time to INCREASE on that front, or at least return to what brought you upward in the first place. Saving even just a smidgen more of your income is a wise way to get started again. Take a good hard look at your spending patterns, your subscriptions and services, and find ways to cut back.

For example, downgrading your television package — or canceling it completely — adds up to money that could be put into high-interest savings or investment account. The idea is to be consistent and set up automatic deposits into a specific account set aside for emergencies and long-term plans. (Again.)

Bad Money Habit #4: Not resisting the temptation to spend good money on junk.
The marketers for sure love it when you spend your hard-earned money on modern debris. You know… the stuff that’s cluttering your house and bursting out of your front door. It’s the disposable, upgradeable, and superfluous stuff you buy in a heartbeat because “You’re worth it!”

But it costs. It consumes your space, it can initially make you feel good but can lead to feelings of guilt, and can make you (eventually) broke. Please, learn to identify junk and end the spending spree — because yes, you’re worth it. <smile>

Bad Money Habit #5: Not earning enough.
This is a toughie. If you’ve cut the junk, you’ve made a budget, and you’re still inching down your savings, you need to fix the income side of the equation. I’ve known people with 3 jobs — THREE JOBS — to make ends meet. They work their tails off to earn enough money to cover the rent, buy better quality food, and pay off student debt. If need be, they didn’t own a car, didn’t wear fancy clothing, and didn’t wine and dine on the weekends.

The answer here isn’t easy — you’ll have to find a way to make more money. Even in a choppy economy, *if* you can swallow your pride, there’s always a way. And, with the Great Reshuffle, there are plenty of jobs out there right now for the taking

Bonus, there are more ways than ever before to build something on the side. Leverage that social network of yours and take the entrepreneurial leap.

If any of these resonate with you, then good … if not, then I do hope that you keep on maintaining the excellent habits that got you here in the first place.

I hope this little dose of “tough medicine” goes down smoother than anticipated. And also, I hope you’ll forgive me for my possible insensitivity. The reality is, I wouldn’t say this if I wasn’t in your corner. If you’re one of my clients doing quite well, huzzah. Keep at it. But sometimes it’s important to admit when you’re not.

 

Fighting for you,

David Barnes
714-541-4338

 

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David Barnes’s Strategies for Fighting Inflation https://barnesaccountancy.com/david-barness-strategies-for-fighting-inflation/ Tue, 21 Dec 2021 22:00:43 +0000 https://orangecounty-taxrelief.tk/david-barness-strategies-for-fighting-inflation/

If you’ve been in a Southern California store lately or visited your local gas pump, you’ve probably noticed some price fluctuations – up and up and up. Every visit, it seems.

Inflation is here, and it doesn’t seem to be going anywhere. So, we all have to figure out how to fight inflation by deciding what to do when our hard-earned dollar seems to get us less and less.

Before we get there though, while we still have a few weeks left in 2021, another plug for us to HELP you get ahead of the game and make proactive moves to reduce your tax burden.

After 12/31, the vast majority of our options wipe off the table, and we are reduced to doing “after the fact” clean-up (which, to be frank, we’re still pretty great at).

But if this is something that you want to discuss … we’re right here: 714-541-4338

Now to making your dollars work harder for you…

David Barnes’s Strategies for Fighting Inflation
“Price is what you pay. Value is what you get.” – Warren Buffett

The federal government likes to see an inflation rate of about 2%. But hey … who wouldn’t right about now? Because the actual rate is just north of 6% – socking the average American household for an extra $175 a month, or so (and no, wages have not kept up).

The U.S. Bureau of Labor Statistics says that inflation accelerated last March through September and is the worst year-over-year inflation rate in 30 years.

Inflation can flare up for many reasons. Some right now include supply and demand: Normally, you demand and they supply, but shipping snarls, the pandemic, and a shortage of labor are making getting stuff to you harder – and costlier.

Let’s hope inflation doesn’t go much higher. (We can hope, can’t we?) If you’d like to do something more useful than hope, here are some strategies any Southern California person can utilize for fighting inflation.

Good first moves
Let’s start with the good news. Believe it or not, inflation and the shortages partially causing it aren’t all bad news.

If you’re selling a car right now, for instance, you can probably get a great price because of both inflation and a shortage of computer chips used in automaking. If you’re looking for a raise at work, you might get more now because of inflation and a huge shortage of labor.

Other than that, it’s all uphill, so to speak. Here are some countermoves:

Fighting Inflation Strategy #1: Watch that budget: Seems obvious, but trust me – You can’t pay too much attention to your spending right now.

Look around to see what’s going up fastest. How about gasoline, for one – up about a buck a gallon just about everywhere from a year ago. Your move? Drive less if you can and if you can’t drive less, budget a little more cash for the tank.

Sometimes dealing with inflation is just adjusting temporarily to stuff you can’t change.

Fighting Inflation Strategy #2: Take charge of your debt: If you’ve got debt now, look at the bright side: With the dollar being worth less, you’re not giving up as much buying power when you pay off old debt. Just try to avoid new debt.

Also, inflation tends to drive up interest rates, which means you’ll pay more in the long run for money you borrow today.

Fighting Inflation Strategy #3: Think differently about savings: It’s pretty tough to find a savings account that pays any interest these days, let alone enough to keep up with these rising prices. Sorry to say, you’ve got little choice but to put your money into some investment. Otherwise, you’re taking a hit to the tune of that 6% we talked about.

Before you do invest, though, sock away an emergency fund of a few months’ expenses in a money market account or, if you can find one (usually online), a savings account that pays at least a little interest. This move isn’t for growth but just to keep you liquid in case of a rainy day.

Fighting Inflation Strategy #4: Keep your income rising, too: Prices don’t have to be the only thing going up. Ever thought about a gig job? Dreamed of selling something on the side for extra cash? Renting out that spare room? Now might be the time. And don’t forget what we said before about raises – you might have more leverage now than you think.

Going to market

Just a word about investments. A lot of the safest ones – most bonds, let’s say, or certificates of deposit – simply don’t return enough to keep up with inflation right now.

Some people try cryptocurrency, of course, which has splashy big returns – and sometimes splashy big failures. Ditto that hot stock tip your cousin’s been whispering about.

About the safest way to dance with Wall Street is through exchange-traded funds or mutual funds; these funds are generally reliable and tend to make money more in line with today’s inflation. These are baskets of various stocks, so you won’t take a bath if one company turns out to be a flash in the pan or some CEO decides to scoot to Mexico with the company coffers.

The details are many many many. Check with us if you need advice to get started.

 

You don’t have to feel helpless in the face of inflation. We’re with you in this. Give us a buzz if we can help.

714-541-4338

 

In your year-end corner,

David Barnes

 

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David Barnes on Year End Tax Strategies https://barnesaccountancy.com/david-barnes-on-year-end-tax-strategies/ Wed, 15 Dec 2021 02:00:04 +0000 https://orangecounty-taxrelief.tk/david-barnes-on-year-end-tax-strategies/

I’m going to go further than I did last week and offer you some tangible things you can do NOW.

And look … probably taxes aren’t the first thing on your mind now that the holiday lights are flickering. After all, it’s a happy season for every Southern California resident, right?

But if you want to be happy next spring, there are good moves you can make now, before the end of this year to make your next tax-filing merrier and brighter.

If any of these ring your holiday bells, and you want to get ahead of the game (and onto my calendar), use this:

714-541-4338

Let’s get to it.

David Barnes on Year End Tax Strategies
“By failing to prepare, you are preparing to fail.” – Benjamin Franklin

When it comes to end-of-the-year tax moves, one of the first things Southern California taxpayers want to do is figure out their federal tax bracket (we’re going to talk about federal taxes here – contact us for more specific help on the state bad boys). This is basically the chunk of your income Uncle Sam is going to want, and it depends on how much you make. These rates run 10% to 37% for 2021 and were recently adjusted for inflation.

Second, check your filing status for this year. If your marital status has changed, it’s never a bad idea to check that your form W-4 reflects that.

Next, check your expenses for the year to see if you can itemize tax deductions. (We’ll get into the specifics in a little bit.) You probably can’t take more than the new big standard deduction, but again, you never know.

And if your last tax filing gave you a nasty surprise or you had a big life change in 2021 (like having a baby), then double-check that Form W-4 at work to make sure your withholdings are on target. If you need it, we can help you figure this out.

General year end taxstrategies

Now for moves based on your above info.

Year end tax strategy #1 – Up or down? If you think you’re headed for a higher tax bracket in 2022, it’s a no-brainer to move any possible income from 2022 to 2021. By the same token, if you’re headed for a lower tax rate, put off any income you can into next year.

Year end tax strategy #2 – Land, lotsa land: Every deduction you can grab means less cash you have to part with. Sound good? Of course. And timing the deduction for your best advantage is the cherry on top. For instance, paying some or all of your Southern California property taxes early may mean you can get the federal deduction in 2021. (This does not work for everybody, especially if the alternative minimum tax is involved.) Accelerating a house payment can give you an extra bit of mortgage interest to deduct, too.

Year end tax strategy #3 – The right medicine: If you itemize, you can write off what you spent on qualified health expenses, but only the amount that’s greater than 7.5% of your income. You’d be surprised what expenses qualify, even transportation to the doctor.

You might be tempted to time medical stuff, but make sure any move is best for your health, too.

By the way, check your Flexible Spending Account for any money remaining there and then confirm your deadline for spending it. It may vanish after Dec. 31 or have a limited carryover.

Year end tax strategy #4 – Giving feels good: Under recent pandemic relief, there’s a new charitable deduction up to three hundred bucks for cash donations to a qualified charity –  more for a couple filing taxes jointly – even if you don’t itemize.

If you’re a senior, you can make a qualified charitable distribution and give up to six figures straight from an IRA. No deduction here, but the money doesn’t count as taxable income.

Also, ask us about “bunching” donations. If your total annual itemizable deductions for 2021 will be close to your standard deduction, consider bunching them so they exceed the standard deduction in one year, and you then use the standard deduction in the next year. If you give regularly, it’s a great move, but it does take some planning.

Year end tax strategy #5 – Next egging: Feeding your traditional IRA or other retirement savings plan can really trim your taxable income. Max those accounts out ASAP.

If you’re staring at a higher tax bracket in 2022, consider a Roth conversion using money in your IRA. You’ll pony up tax as if the assets had been distributed from the traditional IRA, but your future Roth IRA distributions can be tax-free.

Profit and loss: Capital gains are profits in taxable accounts and capital gains tax is usually considered a wallop to avoid at all costs. But if your taxable income is modest for 2021, you might actually want to sell and realize some gains: The rate on sales for those with the lowest income can be just 15% – even 0%.

If your investments tanked in 2021? Generally, if your losses exceed your gains for the year, you can deduct up to three grand of the excess against regular income, carrying unused amounts to future years.

Again, your best tax plans depend on getting the most out of your individual situation. And that’s what we’re here for …

714-541-4338

 

In your year-end corner,

David Barnes

 

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