Many of my tax clients and friends here in the Worcester area are reaching a stage in life when healthcare decisions become more and more important.

And it’s our business to not only provide counsel and hands-on service to Worcester families and businesses as it relates to setting up the best way to make tax-related decisions with your assets, but also to give some counsel on navigating the murky waters of other government programs.

Medicare and Social Security fall under this rubric, and I’d like to delve into the fun little world of healthcare funding, which is poised to become even more complex.

This isn’t to yet touch on the wonderful world of Obamacare, and how that is changing things (about which I’ll have more to say in future installments). No, this is stuff I’ve pulled together about programs currently on the books, and how they are not always as simple as they seem…

Worcester Tax Expert Guides You Through The New World of Medicare Decisions
As Americans approach age 65, they must begin making complex health insurance decisions related to the government-run Medicare program. Like food choices on a cafeteria line, there are hundreds of ways to assemble your own plate. As you begin this journey, the first big decision is whether to enroll in Original Medicare or one of the newer Medicare Advantage programs.

Medicare Advantage, also known as Part C for its place in the ABCDs of Medicare, was birthed in the Balanced Budget Act of 1997. It was created to offer much needed private competition to the government-run health program whose costs are ballooning out of control.

Public health officials assemble a package of necessary features and benefits, and private health insurers compete on price, service, and additional perks. Seniors can call their Social Security office or go to www.medicare.gov to view all of the Medicare plans offered in their area.

Like many employer-sponsored health insurance plans, Medicare Advantage plans are set up as health maintenance organizations (HMOs) or preferred provider organizations (PPOs). HMOs and PPOs are managed care plans that contract with a set of doctors, hospitals, and other health care providers to manage the costs. For example, an in-network doctor agrees to perform open heart surgery for a predetermined price.

All plans cover emergency care when traveling in the United States, but outside of your network. Most plans also offer international emergency care benefits, but make sure you confirm the details before you book your next cruise. Uninsured traveling can be costly.

Medicare Ratings System
To assist consumers, Medicare now rates Medicare Advantage programs using a star system. Using member satisfaction surveys and plan evaluations, plans are rated between one and five stars. In fact, at any time, you can switch into a five-star Medicare Advantage plan, but only if one is available in your region (only a few states have a five-star plan). Even if your area does not offer a top-rated plan, every state offers at least a four-star plan.

Advantages of Medicare Advantage
Many seniors choose a Medicare Advantage program because it can lower health costs. If you are willing to stay in network, a Medicare Advantage program is likely to have lower costs than the Original Medicare program that has no network restrictions. For this reason, it is important to check with your preferred doctors and specialists to confirm that they are part of the network before joining.

Medicare Advantage also offers greater simplicity. Those who use Original Medicare must purchase a private drug plan (Part D), and they typically buy a supplemental plan (Medigap) to limit costs. This assortment of plans requires carrying around three insurance cards that all have different copayments and deductibles. Medicare Advantage offers one comprehensive plan with one insurance card.

Unfortunately, the only way to really know if Medicare Advantage is right for you is to get an in-depth evaluation. You can pursue this personally by using the cost calculator tool available at www.medicare.gov. This helpful tool will produce a customized report listing your expected total costs for each plan after you enter all of your drug information.

If you do not feel comfortable using the online tool, you can seek advice from an independent advisor who is knowledgeable about the hundreds of Medicare cafeteria line options. Keep in mind that most Medicare insurance advisors are paid more to sell you more expensive policies.

Some of these plans are NOT “advantageous”, so I suggest that you get the help of someone who can inform your decision. Let me know if you’d like advice on that front.

Jay Walia
(508) 753-3532

What a terrible week we suffered through as a nation last week. I’m still trying to process all of it, honestly, here in my Worcester tax office.

Life does continue, however, and as such we’re starting to catch our breath around here, after a busier-than-normal tax season. Lots of our Worcester clients are on extension (an unfortunate consequence of longer-than-normal IRS delays this year from the last-minute tax deal), so we’ll continue to be around and advising our families and business owners on the best ways to continue their tax minimization strategies.

On that note, I have to point out: last Thursday (the 18th) was our “Tax Freedom Day” – that’s the date pegged as the date when you’ve finally worked enough days to pay off your taxes. The rest of the year is your “take home” pay.

The date varies year to year (this year it is five days later than last), and more information is here: http://www.taxfoundation.org/taxfreedomday/.

(And for some states, the date is even later. Here’s the state-by-state breakdown: http://taxfoundation.org/article/map-tax-freedom-day-state-2013 )

The calculating organization is the Tax Foundation, a non-partisan educational organization dedicated to informing US — the taxpayers — about the burdens of our tax liabilities, and according to the Foundation, here’s a fun little fact: Americans paid more taxes in 2012 than they did on food, clothing and shelter combined.

Which, of course, is why I and my Team Walia staff are here: keeping your tax bill as low as legally and ethically possible.

But we also deal with lots of questions this time of year related to a variety of “post-preparation” issues, so I thought I’d address many of them in one swell foop. Which is not at all to say that we won’t answer YOUR questions. Here’s our number: (508) 753-3532

On to the questions…

What To Do When The Taxes Are Done, Per Your Favorite Worcester Tax Office
It’s a familiar feeling.

Relief. Exhilaration (or frustration at having to pay *more* taxes!). Gratitude for a job well done by your preparer.

But that doesn’t mean you may not still have questions. Here are some common ones we get from Worcester taxpayers this week…

1. “When will I get my refund?”
Well, the IRS does seem to have entered the 21st century.

If you had us “e-file” your return, you can check your status right now, or if you had us mail a paper return, after about 3 to 4 weeks.

When you’re checking with the following options, make sure you have a copy of your tax return on hand or know your “filing status”, SSN and the exact dollar amount of the anticipated refund.

• Online: Go to IRS.gov and click on Where’s My Refund.
[or go right to: http://www.irs.gov/individuals/article/0,,id=96596,00.html ]
• Automated Phone: Call 1-800-829-4477 24 hours a day, 7 days a week for automated refund information.
• In-Person Phone: Call 1-800-829-1954 during the hours shown in your IRS form instructions. [Of course, the hold time for the IRS is ... somewhat of an issue -- and they're closed for five days this month because of the furloughs ]

2. “Do I need to keep a copy of my return?”
Yes, for a *minimum* of three years. There’s all kinds of contexts where it’s useful. We do keep one on file, on your behalf, but it’s just smart and safe for you to keep one in a secure place at home. (I’ve already written about Amended Returns, and you need a copy for that process, of course).

As for the supporting documents from your return, anything that relates to a home purchase or sale, stock transactions, retirement, business or rental property, should be kept much longer than the three years.

3. “I think there’s a mistake in my return. What should I do?”
Sometimes, you’ll find a receipt or a documentation after April 15th which really would have changed your prior year tax return. That’s, again, when you would have us file an “Amended Return”. Here are some other, common reasons to Amend…

•          You neglected to report some income earned.
•          You claimed deductions or credits you should not have claimed.
•          You did not claim deductions or credits you could have claimed.
•          You filed under one filing status, but you should have filed under another.

You might have other questions, which I haven’t addressed here. Let me know!

Jay Walia

PS — For those of our clients who have previous years’ tax returns at another preparer, OR for their friends…
+++++++++++++++++
“No Charge” Return Review
Special Gift Certificate
As a complimentary service this year, we will provide a Return Review To Any Non-Client.
We will also review prior year returns from clients who did NOT have us handle their taxes during the year under question. No charge will be made, unless we have to file an amended return. Email our office or call (508) 753-3532 to set up this complimentary service!
Deadline May 10th
+++++++++++++++++

Wow, are we here at Team Walia ever tired! Thanks to you, our Worcester tax preparation business has been hopping this year. Because of the delays in the IRS system this year, we have many clients going on extension (about which I wrote last week), and we will continue to work with them … after we take a short break around here for some needed rest!

And speaking of the IRS, perhaps I should also thank the federal government for creating a tax system so complex and counterintuitive that it has provided myself and those who work for me with gainful employment.

Leaving my own personal Walia circumstances aside though, I’d be thrilled if our tax system was much simpler.

But it isn’t simple, and it is far better to live in the reality of what *is* (and work to make positive change), than to simply moan about a problem that is larger than what any one person can change.

Preparing tax returns is like that — it is dealing with what *is* — not with what “could be”. Which is why tax PLANNING will be the subject of a few of my Notes in the future.

And one last thing: If you have filed your taxes with us, and you had a good experience, would you…

A) Email me a note and tell me about it?

B) Share us on YOUR Facebook wall…?

Here’s something you can say:
“I had my taxes prepared by Jay Walia’s team, and had a great experience. They’re willing to review your return to make sure that everything was done right for you… Give them a call at: (508) 753-3532 and let them know I told you to call.” Join us on Facebook: http://www.facebook.com/worcestertax

Or some such… thanks again!

Lastly, I hope you’ll forgive me for taking a break from writing you a Personal Strategy Note for this week … I’m not sure that if I did so, anything besides numbers and spreadsheets would come out. It’s amazing what 4 months of staring at government forms does to a brain!

But hey — this is what we signed up for. And we are extremely grateful for your trust and for the chance you’ve given us to serve you and so many other taxpayers in the Worcester area in it, so you don’t have to suffer the same fate.

We will be in touch again soon. As long as this caffeine hangover ever releases me from its grip.

Warmly,

Jay Walia
(508) 753-3532

I’ve been saving up all kinds of wise financial and personal strategies to share with you straight from “Worcester Tax Preparer Central”, but I hope you’ll allow me some forbearance. It’s fair to say that the office has been a little busy these last few months as we’ve been preparing tax returns for our Worcester and national clients!

And, well, since we’re coming up against a hard deadline a week from Monday (April 15th), it’s important that I clarify some things for my clients and friends to whom it applies …

But before I get there, a couple quick reminders about what ELSE the 15th means…
1) Monday, April 15 is the deadline to contribute to IRA’s and HSA’s in order to have them count on this year’s (2012) taxes.

2) It is also the deadline to claim the almost $1 billion in unclaimed refunds for returns dating back to 2009. If you, for some reason, didn’t file for that year, you could be missing out. Call us for this special circumstance: (508) 753-3532
(Or for any other question — but again, bear with us, as we are extremely busy!)

And one last thing: if you have filed your taxes with us already, and you had a good experience, would you…

A) Email me, and tell me about it?

B) Share us on your Facebook wall…?
Join us on Facebook: http://www.facebook.com/worcestertax
Here’s something you can say:
“I had my taxes prepared by Jay Walia’s team, and had a great experience. They also just told me that they are willing to help procrastinators! So, if that’s you, give them a call at: (508) 753-3532 and let them know I told you to call. Or you could do it tomorrow, of course ”

Or some such… thanks again! (And you can even tell them about what’s at the end of this blogpost, if you so choose.)

Worcester Tax Office Explains What’s Actually Being Extended
Let’s clear some things up with some facts for Worcester taxpayers about getting an “extension”.

As you know, Monday, April 15th is the filing deadline for a federal tax return.  If you need more time to get your paperwork complete, you need to file (or have us file on your behalf) Form 4868 (Automatic Extension of Time to File with the IRS by the end of the day on the 15th.  This gives you an automatic six-month (until October 15, 2013) extension of time to file.

Here’s the deal: An “Extension of Time to File” is not an “Extension of Time to Pay”, unfortunately — except for certain cases (more on these in a moment). In normal circumstances, the Extension simply gives you an automatic six months of additional time to get your paperwork together and file that return.  But, if you owe more than what you paid with your estimate, you’ll be accumulating penalties and interest on the difference–so PLEASE don’t take the entire six months to do this!

The exception to this rule is for:
1) Wage earners who have been unemployed at least thirty consecutive days during 2012 or in 2013 up to this year’s April 15 tax deadline; or
2) Self-employed individuals who experienced a 25 percent or greater reduction in business income in 2012 due to the economy.

So, if that’s you — let us know! We’ll get you payment relief. (508) 753-3532

For the rest of you, when filing your “Extension of Time to File”, you’ll need to estimate what you think you owe to the IRS.  This should not be pulling numbers out of thin air (or various body parts)!  You’ll still need to go through your receipts and tax documents and get them “somewhat” organized.

From here, you can estimate both your income and your expenses, and then approximate what you owe Uncle Sam.  Keep in mind that this is an ESTIMATE.  And, you’ll have to pay what you estimate you owe at the time we file for the extension.

You can do this all electronically through our office, you can mail in the form WITH estimated payment (must be postmarked by the 15th), or you can call a specialized provider and pay by credit card. We can provide you with the appropriate number to call.

And it’s NOT TOO LATE! See below, and come by right away!

To more of your money in your wallet!

+++++++++++++++++
“PROCRASTINATORS ONLY” Special Gift Certificate
$23 Towards Any Tax Service
“Yes, I Have Procrastinated Filing My Taxes This Year … But I Still Want to Protect Myself from All the New Tax Laws and Get MORE Money Back from Uncle Sam with A Peace-Of-Mind Guarantee that’ll Keep Me Sleeping like a Baby when My Taxes are Filed with the IRS!”
Deadline April 15th
Not valid with any other offer
+++++++++++++++++

I was meaning to write my Walia blogpost this morning, but something else came up. I had to go outside and …I don’t know, sit for while.

Writing these every week can be a grind! Especially with barely two weeks left in tax season … I swear I’ll get to it soon though. I know how important it is. But it can wait — for now. Hey, now that I’m outside maybe I’ll go for a walk!

Hopefully by now you realize I’m kidding.

I truly don’t mean to mock procrastination. I can be guilty of it just as much as the next person at times, when it comes to things I don’t really want to do.

And I’ve heard rumors that (for some unknown reason) many people don’t like to file taxes — even here in Worcester?

It appears that most folks do NOT like to fill out reams of paperwork only to finally discover how much money they are really giving to the IRS!

This, of course, is why we here at Team Walia work so hard — to make this process as painless as possible, and to ensure that you keep all the money you deserve to keep, legally and ethically, under the current tax code.

And we’re in full “all-irons-in-the-fire” mode around here these days, with two weeks left to go in tax season.

So here’s my question — have you been in to see us yet? If you haven’t (or you have a friend who hasn’t), see the end of this post for a special “Procrastinators Only” Gift Certificate.

In fact, did you know that many Worcester tax firms (and “off the shelf” software companies) actually raise their prices on procrastinators? But that’s not how I believe clients should be treated.

But, although I will NOT raise prices…I will encourage my procrastinating friends with some wisdom from a former procrastinator…

A Worcester Tax Preparer’s Take on Beating Procrastination
When your day wraps to a close, are you leaving tired and satisfied? Or just … tired?

You’ve spent the day in nearly constant activity.

And you may have been procrastinating the whole time.

“Huh?” you say, “I can’t have been procrastinating.  I’ve been really busy!”

But there’s the rub: when we’re busy, we can easily trick ourselves into thinking that all of that activity means we’re not procrastinating. Yeah, we’re busy — but we’re not focused on the things that should really have our attention. If someone were to tap us on the shoulder and say, “that thing you’re doing — is that the best use of your attention right now?,” we would hesitate to agree.

We’re busy procrastinating.

The explosion of digital channels and the mobile web makes it very easy to integrate busy-ness and procrastination. There are a lot of “channels that lead to you.”  Email, sure. But also Facebook and Twitter and instant messaging and LinkedIn and … etc., etc.

The inputs from these channels come at us thick and fast. That makes it tempting to let the real-time arrivals drive us. Procrastination is always only a click away.

But ask yourself: what are the odds that email at the top of your inbox is the best thing to focus on next? If it’s not, and you choose to deal with it next anyway, then you’re being driven by “latest and loudest,” and are letting your channels dictate your priorities.

So, if you’re struggling with procrastination, then what should you do? To get it under control, we need to make getting moving on the right things as attractive as possible.

Procrastination usually boils down to: 1) Not Thinking or 2) Not Doing. Here’s how to beat each…

1) Not Thinking.
I’m avoiding thinking about things I know I should think about.

There can be all kinds of reasons we don’t want to think about a given item, or issue. Whatever the reason, it is usually because of the size or complexity of the issue.

So, boil it down to its contingent parts, and address the smaller issues within the larger whole. Ask yourself: What’s the exact, smallest action that can be taken to move this forward? And, What do I want to see happen from that action? You can always address those questions.

Which leads to…

2) Not Doing.
I’m avoiding doing things I know I should be doing.

Again, break it down into something smaller. Take the tiny action, do it again … and you’ll find yourself suddenly settled into taking the larger action you had been putting off in the first place.

Here’s one small action…

Consider us “The Ultimate Procrastination Solution”.

Allow us to take the pain away from that big pile of forms and obligations … and allow yourself to move into sustained action on those bigger things.

Call us: (508) 753-3532

And, of course, here’s something which will make it even easier…
+++++++++++++++++
“PROCRASTINATORS ONLY” Special Gift Certificate
$23 Towards Any Tax Service
“Yes, I Have Procrastinated Filing My Taxes This Year … But I Still Want to Protect Myself from All the New Tax Laws and Get MORE Money Back from Uncle Sam with A Peace-Of-Mind Guarantee that’ll Keep Me Sleeping like a Baby when My Taxes are Filed with the IRS!”
Deadline April 15th
Not valid with any other offer
+++++++++++++++++

To your family’s financial and emotional peace … even if you’re a procrastinator!

Firstly, if your March Madness bracket is busted, apparently, you’re not alone.

Not that we’ve had much time for those shenanigans around here in our Worcester offices — we’re running faster than hamsters in a research lab!

Seriously though, it’s crunch time around here … but that doesn’t keep us from reaching out to you this week. And before I get into my main note to you this week, I wanted to make brief mention of an article someone sent us from the New York Times, and its “Ethicist” column. Apparently, there’s a [name withheld] tax lawyer who doesn’t like his clients very much:

http://www.nytimes.com/2013/03/24/magazine/a-tax-lawyers-quandary.html?ref=magazine&_r=0

Because let me be abundantly clear: finding *legal* loopholes for our clients is our job. And, of course, we do so ethically. If the tax law allows it, and it retains the spirit of the law, we do everything we can to help our clients find ways to save their hard-earned revenue.

If you don’t like that … well, I’m not sure why you wouldn’t like that!

Now, we’re under the 3-week mark for when personal taxes are due. Believe it or not, there are some out there who don’t yet think we’re in the “procrastination” stage yet. I’ll address you more next week. Perhaps some have learned too well what I’m addressing this week….

Expert Worcester Tax Advisor on The Power of Waiting
You can learn a lot from marshmallows.

In the late 1960s, a five-year-old named Craig Weisz was presented with a tempting offer. Walter Mischel, a research professor from Stanford University, gave Craig a marshmallow and said that he (Mischel) needed to go out of the room for a few minutes. If Craig did not eat the marshmallow during that time, he would be rewarded with a second marshmallow. Those who have years of practicing impulse control may have a hard time imagining the agony this proposition would cause a young child.

This study has been reproduced many times over, and the videos of the children participating, some of which can be found online, are quite entertaining. Some stare closely at their target; others try to distract themselves by singing. One child hits his head on the table, and another pulls his hair while waiting. Some start off by licking the marshmallow, and others take tiny bites before consuming the rest.

In the end, most kids eat the marshmallow before the researcher reenters the room fifteen minutes later. Craig ended up eating his marshmallow before Mischel returned; his sister delayed and earned a second.

Michel continued to track the behavior of all these students through adulthood. The results of his research showed an overwhelming connection between the power to delay and high academic and professional achievement. The delayers also displayed lower levels of obesity and were less likely to use narcotics. They had developed a strong future-time perspective.

I was especially interested in the fact that the children who came from poorer backgrounds were more likely to eat the marshmallow immediately. This makes intuitive sense because these children are more likely to have experienced insecurity at home. I would guess that some may have endured a time when there was no food in the house at all. Others may have suffered when money they had saved was taken by another family member to pay for groceries or some less essential purchase.

My point is that you need to have a basic level of trust in the security of a system before you will delay. If there is great risk to saving part of your allowance, you learn quickly that it’s better spent than saved. The ability to delay is probably due in part to our specific genetic makeup (Craig ate his marshmallow but his sister did not), but it is also highly dependent on the environment in which we have been nurtured.

Researchers are now looking for ways to teach delayed-gratification. Mental distraction is one such tool when tempted with instant gratification. The children who took to singing were exercising this strategy.

Mischel also taught children to pretend the marshmallow was only a picture surrounded by an imaginary frame. By mentally shifting the marshmallow from the plate in front of them to a pretend place, children who were barely able to wait 60 seconds learned to delay for the entire 15 minutes.

Like the marshmallow study, saving and investing for your retirement requires putting something small at risk with the expectation that it will grow significantly over time. Disciplined investors have exercised these muscles of delayed gratification for many years. And like the marshmallow study, investment discipline also requires trust. No one will invest if they believe they may not be treated fairly or if they think the result too unpredictable. To encourage risk-taking, investors need to have a reasonable expectation that they will receive their capital back with appreciation.

Parents can encourage these traits of delayed gratification in their children by teaching them mental tricks to cope with hot impulses. Assuming you have a sound investment strategy, disciplined investors also need to nurture mental games that encourage delay.

Learning to avoid these hot impulses can be particularly challenging for investors and families because the financial media is more likely to capture your attention by inflaming the very emotions you wish to control. And while the children sang and played mental games to redirect their attention for a time, adult investors will need to develop their own coping mechanisms.

Even though we’re primarily tax advisors, we can still provide you with a sounding board and a planner’s perspective on what you are doing with your assets.

Call us today: (508) 753-3532

To your family’s financial and emotional peace … even if it means waiting sometimes.

Firstly, we’re getting some nice feedback on last week’s message re: “making the switch” to Walia — and here is a small reminder for you here in Worcester (and beyond as well!), in case you missed it…

+++++
Make the “switch” to Jay Walia for your 2012 tax filing — and receive a complimentary post-season tax planning session.
($250 value)
First TEN new clients only
+++++

And, of course, last week’s news that over 600,000 returns would be delayed due to training errors by Block came on top of the news from the state of Minnesota that TurboTax users would be delayed and affected by programming issues. And then we hear over the weekend that the State of New Jersey will be delaying refunds by 90 days in many cases …

It’s already been a wild tax season for Team Walia.

But I do hope that you’re assured that having a carefully-trained expert on top of YOUR file has been (or will be) the way to go for your tax filing.

And, as much as I’d like to say that things will improve in the future … with the IRS taking the forefront on enforcing and implementing the ACA Act (aka Obamacare) … we can expect that “more user-friendly” won’t be said of future tax forms.

But enough about all this. You should have received information from us about what you need to bring in, and if you have any further questions, feel free to drop us an email or give us a call at (508) 753-3532.

Now, I’d like to switch gears for bit, and address my clients and contacts who are facing momentous retirement decisions…

Worcester Tax Service Explains Social Security Election and Retirement Planning
Social Security benefits can represent a big stack of cash for a Worcester couple. A typical monthly benefit of $2,200 has a present value of well over $500,000.00! So, despite the fact that it seems like an easy decision, you need to consider all your Social Security options carefully to avoid making a costly mistake.

Like all government law, Social Security is not a simple piece of legislation. Since the Social Security Act became law in 1935, hundreds of amendments have been piled onto it, and have thereby added to the complexity. So to make the best decision about how to file for it, you’ll need to consider four things: 1) health, 2) income before retirement and 3) income during retirement, and 4) taxes.

Retirees cannot rely on conventional wisdom! Simplistic “rules” such as “Always file for early benefits” or “You need to stop working to receive benefits” are NOT always true. There are specific cases that break every rule of thumb. And these one-size-fits-all answers leave many retirees failing to maximize the benefits they have earned.

At least four methods are used when electing how to take Social Security. And if you’re married, the two of you can mix and match these in more than 16 different ways (!). Each choice results in a different cash flow. By using the cash flows and the time value of money, you can determine which method will offer you the best maximum value.

So these methods differ significantly… they depend on your historical earnings, marital or divorce status, continued work in retirement, life-longevity and rates of return. The choice alone could be worth $250,000 of income or more. Filing options include “early filing,” “standard filing,” “delayed filing,” “file and suspend,” and many combinations of these options for married couples. It is DEFINITELY worth careful study and analysis of each option… yet a majority of Americans make their choice impulsively and emotionally.

The decision is even more crucial for women. For 42% of single women older than 62, Social Security is their sole source of income. Women on average outlive men. Thus, planning for retirement is usually much easier for men (who statistically tend to have more assets and die younger). Widows are twice as likely to live under the poverty line as men who have lost their wives. And the poverty rate for elderly single women is 23% compared with just 5% for retired couples.

So couples must take their joint longevity into account before either one files for benefits. The person with the longer life expectancy will inherit either a wise or a foolish decision that will last a lifetime. Given that a husband’s benefits are often higher and the wife’s life expectancy longer, each case needs to be analyzed carefully.

Unfortunately, many people file after considering only one or two options in isolation. Even worse–the Social Security Administration’s new online filing system enables quick decision-making. People can easily submit their request without any professional advice or planning.

Before filing, then, you obviously should be informed about all the options. To begin, you need to know your personal Social Security earnings and the projected benefits for both you and your spouse. You can request an estimate at www.ssa.gov/estimator and then print the results. Or call the Social Security Administration at 800-772-1213. You can also get a copy of “Retirement Benefits” (Publication No. 05-10035) online.

Social Security planning is crucial for everyone. People with significant assets should carefully consider both the lifetime benefits and tax consequences of Social Security in light of their overall portfolio strategy. For the less well-off, Social Security benefits will dictate their retirement lifestyle. Proper planning could well determine what they can afford to eat.

So … there’s obviously a lot to consider here. I recommend you sit down with somebody here in Worcester you trust that can walk you through your different options. It could make a BIG difference in your lifestyle!

Regardless, I do hope this helps.

While I’m still recovering from the weekend’s news that actual government workers owe over $3.5 billion in unpaid taxes, I would like to take a minute here to address you looking for the best tax preparer in Worcester who haven’t yet made the decision to use our services.

After all, we’ve helped many Worcester (and beyond) families “make the switch” over to us, year after year. I know that you’ve probably established a rhythm with your current provider (even if it’s not a “good” rhythm), and that you may dread the prospect of having to teach a new tax preparer about your family’s financial dreams and goals.

(By the way, are you using a tax professional who cares about those?)

Which is why this blogpost would be for you. (And if you’re already using us, then you can safely ignore this particular message, and skip to the end where we do have some information for you, perhaps merely as a reminder.)

Many Worcester families are pulling together their paperwork to deliver to their preparer this week … and before you do that with your existing preparer, I’d like to give you a reason to try us out.

I’d rather not “bad mouth” other tax accountants in the area, but suffice to say that we’ve had to do our share of re-doing other accountants’ work. In some cases, we’ve recovered significant sums during an amendment process, by reviewing an old return (from the last 3 years), and taking advantage of ethical and legal tax credits and deductions which other accountants don’t utilize.

But even more than that … we want to give you a gift:

+++++
Make the “switch” to Jay Walia for your 2012 tax filing — and receive a complimentary post-season tax planning session.
($250 value)
First TEN new clients only
+++++

Call us now, and we’ll book your tax planning session for sometime in May or June (after the chaos of tax season subsides), and we’ll work PRO-ACTIVELY on your asset and accounting mix to ensure that your 2013 returns are as well-protected from Uncle Sam’s grasping hands as possible.

(508) 753-3532
(First ten new clients only)

Now, back to our regularly-scheduled programming…

Walia’s Tax Time Checklist (Again)
In early January, I sent a “checklist” email to our list (and if you’re not receiving our weekly emails, you really should fill out the quick form here on this page to receive a copy of one of our free reports — we’ll add you to our list as well, so you’ll be the among the first to receive important updates and exclusive offers from us), and it was one of our most popular messages. I guess it was handy!

Putting together this list may run slightly counter to my business goals — after all, we do get paid to do this on behalf of clients! That said, our mission is to ensure that EVERYONE in our local Worcester area saves the most possible when the IRS comes calling! Some of these may seem small, but trust me when I say that they add up.

So…even if for some strange reason you won’t be using our cost-effective services this year, and because we’re getting so close to April 15th, here it is again for you: what you’ll need to prepare your taxes…

Personal Data
Social Security Numbers (including spouse and children)
Child care provider tax I.D. or Social Security Number

Employment & Income Data
W-2 forms for this year
Tax refunds and unemployment compensation: Form 1099-G
Miscellaneous income including rent: Form 1099-MISC
Partnership and trust income
Pensions and annuities
Alimony received
Jury duty pay
Gambling and lottery winnings
Prizes and awards
Scholarships and fellowships
State and local income tax refunds
Unemployment compensation

Homeowner/Renter Data
Residential address(es) for this year
Mortgage interest: Form 1098
Sale of your home or other real estate: Form 1099-S
Second mortgage interest paid
Real estate taxes paid
Rent paid during tax year
Moving expenses

Financial Assets
Interest income statements: Form 1099-INT & 1099-OID
Dividend income statements: Form 1099-DIV
Proceeds from broker transactions: Form 1099-B
Retirement plan distribution: Form 1099-R
Capital gains or losses

Financial Liabilities
Auto loans and leases  (account numbers and car value) if vehicle used for business
Student loan interest paid
Early withdrawal penalties on CDs and other fixed time deposits

Automobiles
Personal property tax information
Department of Motor Vehicles fees

Expenses
Gifts to charity (receipts for any single donations of $250 or more)
Unreimbursed expenses related to volunteer work
Unreimbursed expenses related to your job (travel expenses, entertainment, uniforms, union dues, subscriptions)
Investment expenses
Job-hunting expenses
Education expenses (tuition and fees)
Child care expenses
Medical Savings Accounts
Adoption expenses
Alimony paid
Tax return preparation expenses and fees

Self-Employment Data
Estimated tax vouchers for the current year
Self-employment tax
Self-employment SEP plans
Self-employed health insurance
K-1s on all partnerships
Receipts or documentation for business-related expenses
Farm income

Deduction Documents
State and local income taxes
IRA, Keogh and other retirement plan contributions
Medical expenses
Casualty or theft losses
Other miscellaneous deductions

While some of these statements, and their ensuing deductions, may seem like “pocket change”…just a few minutes of effort can pay a nice hourly rate! And, better in YOUR pockets than in Uncle Sam’s, right?

So, I hope this helps.

To your family’s financial and emotional peace…

Well, it’s hard to believe but we’re just about at the halfway point to our “tax season”. And I should tell you — it’s been fairly messy, on the IRS side.

Certain specific tax forms are still (!) not available, many refunds are being significantly delayed, there are communication problems to consumers and to professionals … and I have been hearing from a lot of colleagues in the industry, here in Worcester and beyond, that all of this muss has significantly affected their clients and their business.

In our little world, we’ve done all that we can to keep these issues from impacting our clients, but when a screaming headline on the Drudge Report last week declares that most refunds are delayed and the IRS is a mess … well, if you’re feeling frustrated with them, know that you’re not alone!

Now, this week, I’d like to put together a primer on something that I’m not sure I’ve ever clearly communicated, but I believe that it will help in any circumstance in which you’re dealing with a pro. Consider this some friendly advice.

Worcester Tax Expert, Jay Walia, on How To Be a Great Walia Tax Client
I’m sure that none of these things are ever really an issue for you! And, in fact, these tips aren’t intended to be a correction to my own Worcester tax client base. But I’ve discovered over the years that sometimes you just need to be clear about your expectations.

So, here are mine…

Lying or hiding will wreck everything: Denying or hiding your tax obligations will do just one thing: get you in deeper tax trouble. So never lie about a tax situation. Remember, even though you’re getting help, it’s you, the taxpayer, signing your return. That makes you ultimately responsible for what’s on the forms and schedules.

Our reputation, however, is also at stake. So if you knowingly falsify information that leads to headaches for you and for us, you can bet you won’t be welcome as a client in future tax seasons.

Remember that this is a professional relationship: Some of my best friends are my tax clients, and this presents a tricky — and occasionally awkward — scenario this time of year.

Here’s my advice in this area: if you hire a friend to do your taxes, you need to remember that this is a business arrangement. Don’t expect special treatment, and don’t bug your tax pro just because you know him or her personally.

And never call your tax preparer at home or after hours unless it’s an extreme tax situation. And no, a missing W-2 doesn’t count!

All that said — I sure love talking with my friends in this context, and coming alongside their families. But it’s always better when they keep these things in mind.

We love thorough: Please remember that any “magic” we are able to make with your return starts from the foundation of the clarity of information that YOU provide! If you inadvertently (or worse, knowingly) omit or withhold key tax information (see my first point, above), your tax return results will not be what you had hoped for.

So, when we ask for certain information or documentation, provide it. And do so quickly, and completely. Don’t try to hide income, and don’t fabricate receipts. If you’re missing some tax material, we can definitely help you recover it, or provide acceptable substitutes.

Please act your age: Yes, we know. You hate paying taxes. So do I.

Get over it. It’s the law of the land and you know that, or you wouldn’t have hired us help to file your taxes.

So please refrain from acting like a spoiled child, and/or complaining about the tax laws that we cannot change. Tell it to your Senators and Representative — they make the tax laws by which we must cope and comply. Oh, and we are also not the direct representatives of the IRS to the consumers. We aren’t able to speed up your refund.

What we CAN do is help you to make the best of the current laws. Especially when we are operating in a no-whining zone, we’ve found that there isn’t anyone else in the Worcester area who does a better job keeping the IRS off your back, and ensuring that you are keeping as much income as legally and ethically possible.

I’m hoping that sounds good to you. If so … just remember the above, and we’ll all be in great shape!

And please do feel free to call [(508) 753-3532] or email me and my staff with any tax or financial-related questions.

Last week was eventful — Valentine’s Day (how’d it go, by the way — if you celebrated?), the State of the Union, ASTEROIDS (!), etc. Gratefully, no meteorites struck our Worcester tax preparation office — or else we’d be writing something more urgent!

But I would like to highlight something President Obama said during his SOTU speech, because it’s pertinent to you. He said (my emphasis added):
“The American people deserve a Tax Code that helps small businesses spend less time filling out complicated forms, and more time expanding and hiring, a Tax Code that ensures billionaires with high-powered accountants can’t work the system and pay a lower rate than their hardworking secretaries, a Tax Code that lowers incentives to move jobs overseas, and lowers tax rates for businesses and manufacturers that are creating jobs right here in the United States of America,” he said. “That’s what tax reform can deliver. That’s what we can do together.”

I certainly agree with most everything he said there … perhaps except for the part that I highlighted, which before construing or misconstruing a particular political affiliation for me, allow me to explain here:

1) It’s probably unrealistic to expect that billionaires won’t continue to work any system which is set up, and to say otherwise … well, this *is* politics, I suppose.

2) It’s not just for billionaires.

You see, “working the system” is what we do for Worcester-area taxpayers — but not for some sort of nefarious purpose. We are simply leveraging the hundreds of hours that we spend immersed in the tax code, and using it like a targeted laser-shot to protect our clients’ balance sheets from the grasping hands of the government.

There really are TWO tax systems in this country, but with apologies to our fine President, it’s not ‘one for billionaires and one for everyone else’ — it’s more like one for those who know the code cold … and another for those who use software, or jimmy preparer down the street. But happily for you, you’re now on the better side of that equation. (And I was flattered, I must say, to have the President call me “high-powered”!)

But, speaking of equations, I have a bit of an ugly one to share with you today. Let me know what you think…

Worcester Tax Preparer Declares: Unless The Bubble Bursts, Better Start Saving
According to the most recent College Board Annual Survey of Colleges, the sticker price of a college education keeps rising, faster than the price of groceries, health care and almost everything else in the basket of goods used to determine the Consumer Price Index (CPI). In the last 10 years, in-state tuition and fees at public four-year colleges increased 5.6% annually on top of a CPI growth of 2%. The average estimated total expenses for most public in-state four-year students (depending on the state) vary in the astounding range of $65,000 to $90,000.

S0, that means that if you were blessed with the birth of a child recently, you will need to save $430 monthly to pay for in-state college tuition, fees, room and board. Double this rate to cover the full costs at the average private institution. And this doesn’t even include money for a cell phone, pizza, room decor or other stuff that college students deem “necessities.”

Now it’s true: most students don’t pay full price for college. In 2011-12, undergraduate students received an average of $12,894 in financial aid, split almost equally between loans and grants. Grants are the most attractive because students are not saddled with a repayment plan after college. Federal grants make up 26% of total aid. Institutional college grants account for 17%, state grants for 6% and private and employer grants (scholarships) for 4%.

But that hasn’t stopped the fact that students are graduating with larger debt loads than they were 10 years ago. Public four-year college borrowers graduate with an average of $19,800 in debt; their nonprofit private college counterparts graduate owing $26,100. This private college debt is 17% more than it was 10 years earlier, even after accounting for inflation. In addition, a growing percentage of all college debt is unsubsidized and begins accruing interest immediately.

Perhaps there are some good things which are shaking out here. That is to say, degrees might have to be evaluated a little more closely — that anthropological art history degree might should be scrutinized a little more, yes?

So, students will have to make smarter education choices. Today’s global marketplace puts more value on hard skills such as engineering, computer technology, teaching and finance. Technical degrees and certificate programs will become commonplace. A liberal arts education will likely diminish in popularity and become more focused at the elite institutions. More students are likely to begin their education at lower-cost community colleges, and complete a four-year degree at schools that specialize in their concentration.

Parents may feel overwhelmed about the amount they need to save for college. But college education is one of the two lifetime investments for which we approve borrowing money (the other is a home mortgage). Students should plan to graduate with a debt load no higher than half of what they can reasonably expect from their first year’s salary. For example, those with a starting salary of $40,000 should keep their debt at or below $20,000. Thus graduates can dedicate 10% of their annual salary to school debt and pay it off in five years.

New parents who are able should immediately begin saving $430 a month for college. Alternatively, a one-time $50,000 investment should cover tuition, fees, room and board at an in-state college 18 years from now. Yes, this is pretty scary. But there are other options…

Giving a child the gift of a college education and a debt-free start to adulthood is one choice. Other parents believe their children should participate in financing their college education and can apply the 50/50 savings approach. Parents commit to saving half of the money needed, and their children commit to the other half. Students participate by working hard in high school, applying for scholarships, taking summer jobs, seeking out work-study opportunities and accepting reasonable loan levels.

The support of grandparents can help tremendously. The vast majority of the college accounts that I’ve seen are owned and funded by grandparents. Instead of buying the latest gadgets for their grandchildren, they make annual contributions to a college savings account. If the grandparents own the account, it has the added advantage of not being included as a resource on the student’s financial aid forms — and that is a beautiful advantage, trust me!

One last thing: I’m not a stocks advisor, but–I do NOT recommend prepaid college tuition plans. At best, they tend to match college inflation, and if used at an out-of-state institution, returns are based on money market rates, which are abysmally low right now.

Even worse … who knows? This bubble may just burst, and you don’t want to have locked into a tuition which might fall through the floor on its own some years from now.

If you’d like to talk this over with someone experienced in such matters, let me know, and I’ll give you a recommendation. Until then, I am hoping that my thinking ahead in matters of taxes and finances here isn’t scaring you, but is helping you to be prepared!

And please feel free to call [(508) 753-3532] or email me and my staff with any tax or financial-related questions.