2003

Volume 9 Number 2

               Corner Office - The Governator (A Tall Tale?)               Tips And Alerts - Protect Your Checking Account
               Tax Notes - Let Us Tax Our Brains For Your Year-End Planning
               Feature article - Financial "Milestones"
               Heard In The Hall
               Back to MFAC Online

From The Corner Office

By Mitchell Freedman, CPA/PFS

The Governator (A Tall Tale?)

By the time this issue arrives in your mail the Golden State will have a new governor, Hon. Arnold Schwarzenneger. Arnold, The Running Man, handled his campaign like a Commando, causing the Total Recall of Gray Davis. Democrats throughout the country are stating that the recall election was a Raw Deal and they are now assessing the Collateral Damage that has been done. They are now in a mad search for a leading Democrat who they believe can put a damper on the Red Heat the new governor has generated. They desperately need a charismatic individual who can become a (Conan the) Destroyer of President Bush in his run for re-election in 2004.

Opponents of the new governor have accused him of telling True Lies throughout his campaign. Some have further gone on to say that his view of women is that of the principal character in Jane Mansfield Story. They even go so far as stating that he is a (Conan the) Barbarian and a Predator of women.

While Governor Davis was saying The Long Goodbye the new Governor was savoring the (T2) Judgement Day results of the election, which resulted in the End of Days for Governor Davis.

The rest of us wonder...will our Last Action Hero... Jingle all the Way to Sacramento. Will he be the Terminator he promised to be, eliminating the tripling of the tax on automobiles? Can he be the Eraser of the massive California budget deficit.

While Democrats see him as The Villain, Republicans wish he was Twins, so that they can duplicate his California success and become the next governor of (Hercules in) New York.

Personally, I think our new governor will Stay Hungry and keep Pumping Iron. He is not likely to act as Junior in Kindergarten (Cop).

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Tips and Alerts

Protect Your Checking Account

By Stacie Hancock

Sometimes we are unwittingly careless about our checking accounts. Below are some suggestions to help prevent your account from being exploited by the bad guys:

Never use an erasable pen.They can take up to four days to fully dry and can easily be altered.

Do not leave any blank spaces.Blank spaces enable criminals to alter the check. These spaces include the areas before and after the name of the payee, before and after the spelled out amount of the check, and between the dollar symbol and numerical amount.

Write or stamp deposit only and insert the account number when making deposits.When depositing a check by mail or in an automatic teller machine (ATM), be sure to write "FOR DEPOSIT ONLY" and the account number above your endorsement. This protects you should the check fall into the wrong hands.

Never keep your checking account number and PIN number in the same place.If a thief has both of these numbers it is easy for him to rob your account - even if he does not have a check.

Do not leave your receipt at the ATM. A criminal can view your balance and possibly obtain other information from your receipt to rip you off.
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Tax Notes

Let Us Tax Our Brains For Your Year-End Planning

By Tom Trent, EA

As we approach the end of the year, now is a good time to think about things that you can do to save some of those dollars you would otherwise pay to Uncle Sam. The Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA) has made year-end planning even more important than usual due to the lowering of personal income tax rates and brackets, lowering the maximum rate on capital gains and dividend income, and giving generous tax breaks to small businesses.
By now you hopefully have a fairly good picture of where things are headed for you, taxwise. Accelerating deductible expenses, deferring receipt of income, timing capital gains to match capital losses, and making last-minute contributions to tax-deferred accounts are all techniques for successful year-end planning. But be aware of the alternative minimum tax (AMT). This little-understood tax trapped over one million taxpayers last year, and continues to grow as a danger to "ordinary" taxpayers. If you are subject to AMT, you won't get full (or perhaps any) benefit for taxes paid or miscellaneous itemized deductions (such as investment or employee business expenses). Careful year-end planning can reduce your exposure to this "stealth" tax.
Changes in life's circumstances during the year, such as marriage or divorce, birth of a child, a death, promotion or job loss, inheritance, property loss or other events are important factors to be considered in year-end planning.
Please contact us for further advice on how year-end tax planning can help you save tax dollars that you will otherwise owe on April 15th.
Year-end tax planning is a useful tool, allowing you to pay "no more than your fair share." Especially during this historic year in which tax rates have dropped so significantly.
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Financial "Milestones"

By Stacie Hancock

Benjamin Franklin wrote a letter to Jean-Baptiste Leroy in 1789 stating, "in this world nothing is certain but death and taxes." He was right, but he forgot the first thing: Birth. Between the time you are born and the time you die, you are going to pay a lot of taxes and some of your birthdays are more significant than others. Here is a list of tax significant ages:
Birth - Congratulations and welcome to the world! Because of the dependency exemption and some tax credits you may make your parents eligible to pay lower taxes. But they'll first have to get you a Social Security Number. If you were born before midnight on December 31, they can claim you as a dependent for the entire year.
Age 13 - A child who turns 13 during the tax year can no longer be claimed by a parent for a child care credi This credit cannot be pro-rated for the months that the child was 12.
Age 14 - No more kiddie tax. You pay taxes just like an adult.

Age 17 - The tax year you turn 17, you no longer qualify for the child tax credit. This also marks the last year that generally your Coverdell Education IRA account can receive contributions.

Age 18 - Take the money and run! In some states you are at the age of majority. In others you will have to wait until you are 21. This means that you can do whatever you want with money you have in a custodial account.
Age 29 - Withdraw those tax free qualified education expenses from your Coverdell account!!! If there is money left in the account 30 days after your 30th birthday it will be taxed at regular income tax rates plus a 10% penalty.
Age 50 - You become eligible for "catch up" retirement provisions and can put an additional $500 into your IRA account above the $3,000 limit. Additional catch-up amounts also apply to most other retirement plans as well. Wasn't it just the other day you were a kid?

Age 55 - If you are at least 55 during the year that you leave your employer, the distributions from your qualified retirement or annuity plan will not be subject to the 10% early withdrawal penalty. The distribution will still be subject to regular income tax.
Age 59 1/2 - You can start taking distributions without risk of the 10% early withdrawal penalty.
Age 60 - If you are a surviving spouse you are now eligible for Social Security benefits from your late spouse. Sometimes a former spouse is also eligible.
Age 62 - This is the earliest age you can start receiving reduced "early" Social Security benefits. You are penalized 20% for taking your benefits so early.
Age 65 + 2 months - For people born in 1938 and later (this age will be going up) - The age you can receive Social Security benefits without any reduction.
Age 70 - If you postponed collecting Social Security beyond your normal retirement age in order to increase your benefit (3% per year), don't delay any longer. Your benefit will not increase after age 70.

Age 70 1/2 - You can no longer make tax deductible IRA contributions. You also are required to take minimum distributions from your qualified retirement plans and IRAs.
You die - What a long strange trip it's been. Unless you found a way to take it with you, your beneficiaries inherit your property. If it is 2003, there will be estate taxes if your estate is over a million dollars. That amount rises eventually to $3.5 million in 2009. If you are fortunate enough to die in 2010, there is no Federal estate tax.
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Heard in the Hall

On September 22 and 23, 2003 Mitch Freedman attended the AICPA/CICA ElderCare/PrimePlus Services Conference and on September 24, 2003 an ElderCare/PrimePlus task force meeting in Phoenix, AZ.
Mitch was featured in the July 2003 issue of CFO Magazine, in an article entitled, "Troubling Times at the AICPA." Accounting Today, featured him in two articles in its September 8, 2003 issue; "AICPA Reaches Out to Small Firms," and "Advisors Start to Recognize Need for Succession Plans." He was also featured in an article in the October 6, 2003 issue of Accounting Today, in the article, "Back Above Water, Options Re-emerge as Planning Issue."
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Volume 9 Number 2

From The Corner Office

By Mitchell Freedman, CPA/PFS

The Governator (A Tall Tale?)

Tips and Alerts

Protect Your Checking Account

By Stacie Hancock

Tax Notes

Let Us Tax Our Brains For Your Year-End Planning

By Tom Trent, EA

Financial "Milestones"

By Stacie Hancock

Heard in the Hall