Kyle Nagy’s 2017 Tax Planning Guide

Kyle Nagy’s 2017 Tax Planning Guide

The third quarter of 2017 is officially behind us, and we are moving into the final portion of our year. The NFL is in full swing, school is back, and life begins to barrel at all of us in new ways. Believe it or not, the holidays are around the corner!

(In fact, there have even been Halloween decorations popping up around Kansas City and in stores here and there — which, I must say, seems a little early — but it does demonstrate my point.)

So, before this season gets REALLY busy, it’s a great time for us to take a look at where things are for your taxes over this year.

I’ve put together a simple primer, similar to what I’ve posted in years past, on what you should be pulling together by the end of the year. But the BEST way to be prepared is to have a customized conversation now about installing a proactive strategy to minimize your specific tax burden. 

January through April may be “tax season”, but September through early-November is “tax planning season” — and to that end, I suggest you call us ((816) 272-8151) or send me an email and set up a time for a tax planning session.

And this is a great start…

Kyle Nagy’s 2017 Tax Planning Guide
“The measure of life, after all, is not its duration, but its donation.” -Peter Marshall

Believe it or not, now is the time to start making sure that you’ll be ready for a few months from now, when tax time is upon us.

Generally speaking, you should keep any and all documents that may have an impact on your federal tax return. Individual taxpayers should usually keep the following records and supporting items on their tax returns for at least three years:

• Bills, Credit card and other receipts
• Invoices, Mileage logs
• Canceled, imaged or substitute checks or any other proof of payment
• Any other records to support deductions or credits you claim on your return.

You should normally keep records relating to property until at least three years after you sell or otherwise dispose of the property. Examples include…

• A home purchase or improvement
• Stocks and other investments
• IRA transactions
• Rental property records

Health insurance verification
The IRS will be sending out “information returns” (form 1095) before the end of January (presumably) that should cover your documentation … but as with everything in dealing with the IRS, it’s a good idea to be armed with your own documentation as well, which would include insurance cards, EOB forms, statements from your insurer, etc.

If you are a small business owner, you must keep all your employment tax records for at least four years after the tax becomes due or is paid, whichever is later.

Examples of other important documents business owners should keep include:

• Gross receipts: Cash register tapes, bank deposit slips, receipt books, invoices, credit card charge slips and Forms 1099-MISC
• Proof of purchases: Canceled checks, cash register tape receipts, credit card sales slips and invoices
• Expense documents: Canceled checks, cash register tapes, account statements, credit card sales slips, invoices and petty cash slips for small cash payments
• Documents to verify your assets: Purchase and sales invoices, real estate closing statements and canceled checks

Here’s the best part of all of this: 

By pulling together this information NOW, we can really work our “magic” and ensure that we aren’t simply playing catch-up for you after the fact. 

That’s what tax planning is all about, and we very well might be able to pro-actively affect your 2017 tax bill during this final quarter of the year.

So give us a call this week, and let’s plan out the rest of 2017 and beyond.

I’m grateful for the opportunity to serve you, and for your referrals.

Warmly,
Kyle Nagy
(816) 272-8151

Kyle P Nagy, CPA

Hurricanes, Tax Deadlines in Kansas City and Data Breaches

Hurricanes, Tax Deadlines in Kansas City and Data Breaches

Our hearts and prayers continue with Houston, and with those in the path or wake of the western wildfires. And now, of course with the entire state of Florida. Fortunately, some of the most dire Irma scenarios did not play out, but we are still dealing with a storm that is the 7th-worst such storm ever to hit the mainland since we’ve been recording the data. And with millions without power, and countless numbers displaced … well, it’s no fall picnic, that’s for sure.

The IRS has set up a “catch all” page for those cleaning up from Harvey, Irma, and other such disasters, and it can be found right here: https://www.irs.gov/newsroom/tax-relief-in-disaster-situations. And here’s a recent article that goes into deeper detail about financial and data recovery in the wake of disasters: https://www.accountingtoday.com/news/irs-offers-taxpayer-disaster-planning-and-recovery-advice-for-hurricane-irma

And of course, if you have been impacted by any of these disasters in any way, we are here for you (or for your friends)! Allow us to help you sort through the financial muck so you can better deal with all of the mess of cleaning up other aspects of your life.

To top it off, the news of the Equifax data breach snuck under the radar, but 140+ million people were affected. (More here: https://www.consumer.ftc.gov/blog/2017/09/equifax-data-breach-what-do) Keep an eye on your credit reports in the following months, and this is just another reason to be prepared to submit your tax returns as EARLY as possible (so scammers can’t do so with your data)! And go to the link above to see if you were affected, plus to enroll in some free credit monitoring.

Last bit of “housekeeping”: Third quarter estimated taxes are due on Friday, September 15th (as well as a few other tax deadlines). If you are in one of the designated “disaster areas”, this deadline has been waived, however (see the link above from IRS.gov for more info, if that might be you).

Phew! Lots of details today, which aren’t my favorite with which to open a post here, but I wanted to make sure you saw this information, on the chance you might have been affected by any of it.

In fact, there’s so much information in the above, that instead of my normal tips for managing your finances and Kansas City household, I thought I’d leave you with a story. It’s one of those “old yarns”, and it’s a little cheesy … but I thought it fitting for this week.

Hurricanes, Tax Deadlines in Kansas City and Data Breaches
“The measure of life, after all, is not its duration, but its donation.” -Peter Marshall

A ship was wrecked during a storm at sea, and only two sailors survived. They reached a small, deserted island.

The two sailors were good friends, but they agreed that they should separate to avoid fighting with each other over food and shelter. They split up and lived on opposite sides of the island.

The first sailor prayed to God for food. The next morning he discovered a tree bearing fruit on his side of the island. From a hill, he saw his friend still scrambling to find something to eat. “God must have heard my prayers, but not his,” he thought.

That night he prayed for fresh water, and the next day he found a spring. The other sailor had to ration his own water and wait for rain.

Lonely, the sailor prayed for a companion, and soon after a small dog came swimming up to the beach, the survivor of another shipwreck. But the second sailor was still alone.

And so it went. The first sailor got everything he prayed for, while the second one struggled to survive.

One night the sailor prayed for rescue. And the very next day a ship sailed into sight on his side of the island. He jumped and waved, and soon a boat was sent to shore. The sailor and his dog eagerly jumped in, and the rescuers started rowing back to the ship.

Then a voice came into his head. “What about your friend?” the voice asked.

Believing he was hearing God, the sailor said, “We both prayed, but only my prayers were answered. Why should I do anything for him?”

“You both prayed,” the voice agreed. “But while you prayed only for yourself, your friend asked that your prayers should be answered.”

Realizing the truth, the sailor immediately had the boat turn around to rescue his generous friend.

During this season, let’s remember: we’re not alone.

I’m grateful for the opportunity to serve you, and for your referrals.

Warmly,

Kyle Nagy
(816) 272-8151

Kyle P Nagy, CPA

Should Kansas City Parents Sacrifice Their Retirement for Their Children’s College Debt?

Should Kansas City Parents Sacrifice Their Retirement for Their Children’s College Debt?

As Houston continues to recover from the devastation of Harvey, if you’ve been paying attention, you also have gotten a bit of a refresher on the greatness of humanity when pushed against the wall.

Aside from the outpouring of financial assistance flying towards Houston, here is another short roundup of humans doing wonderful things:

An armada of private boats headed to Houston. (link goes to Facebook video)

“To h*** with profits!” (link goes to Facebook video)

Stranded bakers keep on baking.

Free pizzas delivered by kayak.

Stranded elderly couple jokingly orders a boat from Chick Fil-A, and then …

No doubt, there are more. If you have any of particular note, feel free to send them along. We’d love to see them — because in this season, and this cultural moment, it’s so good to be reminded that there is goodness around us, just waiting to be discovered.

Now, as we move into fall, and with Labor Day behind us, college is on the brain for parents around the country. And with costs continuing to rise, there is an increasing amount of pressure to liquidate retirement or take on debt in order to fund the education of our children.

I have some words about this.

Should Kansas City Parents Sacrifice Their Retirement for Their Children’s College Debt?
“There will come a time when you believe everything is finished. That will be the beginning.”  -Louis L’Amour

Yes, today’s college students are more indebted than ever. But there is a worrying trend rising, with more of the college-financing burden shifting to parents–and it is something that is being encouraged by private lenders and colleges. As a result, now it isn’t just that Kansas City young people are starting their careers under the weight of a heavy debt load — many parents are ending their careers under the same kind of weight, which might be even worse.

The dangers of PLUS loans
Over the last 25 years, an increasing portion of federally subsidized education loans has shifted to parents. Whereas parents made up just 4% of all federal education loan borrowers in the 1989-1990 academic year, they accounted for 20% in the 2011-2012 academic year (the most recent year for which data is available). That data is a few years old, but rest assured, the trend has only increased since.

The average balance for these so-called PLUS loans grew from $15,323 to $40,154 in that time. Perhaps not surprisingly, in 2013, 17% of PLUS loans held by borrowers age 65-74 were in default (again, this was four years ago — imagine how it is now). In that situation, the government has the power to garnish a portion of Social Security benefits to get paid.

The rise of private lenders
Private lenders are jumping on the loan-to-the-parents bandwagon. More than a few universities have partnered with private lenders, asking them to make education loans available to parents who were looking for more financing options.

Unlike federal loans to parents, private lenders do not charge an upfront fee (the government charges nearly 4.3% to cover the costs to originate and guarantee the loans), and for creditworthy borrowers, private loans may charge a lower interest rate.

Schools apparently like it when Kansas City parents do the borrowing, in part, because such loans are not included in a scorecard in which the U.S. Education Department discloses universities’ median student debt at graduation, a statistic some families use as a gauge of a school’s affordability.

Indeed, paying for college has never been a more complicated puzzle, which is made all the more challenging because of parents’ desires to see their kids succeed. But a heavy debt load is not a good option for students or parents.

What to do instead? Well, here’s a good place to start: Make a commitment not to borrow for college. Start there, and then work on the details.

For example, and as difficult as this option may be to entertain, consider: Should your child even go to college, or right away?

Consider having your child take a gap year after high school to earn money for college debt while better discerning what to study. Just 19% of students at public universities graduate in four years (!). Many students simply don’t know what they want to study, so they change majors, lengthening the time they spend in school, and driving up the cost.

Consider having your child go to community college for two years while living at home, and then transfer to a four-year school that you’ve predetermined will accept the community college credits.

Choose a state school instead of a private school. In a study cited in the book Debt-Free U, students who qualified for a prestigious school but decided to go to an affordable state school instead typically ended up doing just as well in their career as the ones who went to more prestigious schools.

Another important option: Have your child work part-time while in school and full-time during the summer.

Parents of younger kids, start saving in an education fund as early as possible (a 529 college savings plan and/or Coverdell Education Savings Account are good options to explore).

If someone has to take out a loan, let it be your child. Then show him or her how much that will cost on a monthly basis upon graduation, and make sure they understand what the implications are (probably living with roommates, perhaps not having a car, etc.). A recent study showed most students do not understand what they’ve gotten themselves into with their school loans.

The bottom line? Do not sacrifice your later life’s financial security for the sake of your kids’ college education.

Though it is tempting, sure, you AND your children will be grateful you made the hard choices now, so you didn’t have even harder circumstances later.

And if you need a resource to think this through, we’re right here.

I’m grateful for the opportunity to serve you, and for your referrals.

Warmly,

Kyle Nagy
(816) 272-8151

Kyle P Nagy, CPA

Preparing a Disaster Plan In Kansas City

Preparing a Disaster Plan In Kansas City

All of our hearts are with Houston, and the areas surrounding that have been devastated in the past few days. It feels a bit like Katrina did, though the true measure of the disaster is still yet to be understood (as in New Orleans).

What *is* clear is that many lives, businesses, and families have been radically altered.

How have you been processing this one?

When faced with these kinds of events, I’m often struck by how different my daily existence is from the images of devastation. The same is true here … but I must confess to feeling (at least at first) some “disaster fatigue” setting in.

It seems that the world has spawned disaster after disaster over the past few years. Perhaps it’s that social media has made everything seem so “present”. Even as compared to Katrina, which was over a decade ago, the connectivity of our lives is so much stronger.

But that doesn’t mean we turn away. No, this is the time where we actually need to “press in” a little, and care.

Charity Navigator, which is a great place to vet charities on a variety of financial (and otherwise) areas, has compiled a list of places to donate money: https://www.charitynavigator.org/index.cfm?bay=content.view&cpid=5239

So, rather than my normal tax or financial fare this week, I have something different. I’ve stopped apologizing for being such an obsessive planner … it sort of pays to be that way, in my profession, after all! This week, I wanted to remind you of what we almost never think about during “good” times: How to prepare your Kansas City family for “grid-failure” emergencies.

This past weekend seemed like a really good time to bring it back to our minds. It often takes such events to kick us into gear to make a good plan.

Preparing a Disaster Plan In Kansas City
“Prepare while others are daydreaming.”  -William Arthur Ward

With the images of devastation we’ve been seeing from Houston, in addition to being moved for those who are currently experiencing all this, I’ve been reminded how important having a plan really is.

This is true for finances (a tax plan, an estate plan, etc. — let us know if you need to set one of those up! (816) 272-8151), and it’s equally true for a big natural disaster.

We can be so complacent about the security of our daily existence, that an event like this seems unrealistic. But, we’re getting continued reminders, every year, of how fragile our modern world truly can be.

But that doesn’t mean you have to panic.

No, with a few basic points of preparation, you and your family could be vastly more prepared than your neighbors, even giving you the opportunity to be ones who can support and assist your neighbors, rather than have to *ask* for support.

There are three primary areas where you need to be prepared:
Energy/Power/Heat
Water & Food
Family

1) Energy: However unlikely a massive grid failure might seem now, it’s important that you at least think through what you and your family would do about heating your home during the winter (wood stove? indoor propane heater? burning your furniture?), and/or cooling your home during the summer (which may not be quite as critical).

Additionally, consider what parts of your existence are dependent on power, and what it would be like to live without it. Write down your plan.

2) Food & Water: For water and food, it’s a very good idea to have food and water for at least 3 days on hand, and in permanent storage. Typically, you need about a gallon of water, per person, per day … and non-perishable food is now so readily-available, that you have your pick for how to stock up. You can save water in a leech-proof plastic jug and just switch it out every 5 years.

3) Family Plan:
* Identify meeting places where you and your family would come together, in the event of some sort of catastrophic grid failure or event, in which you aren’t able to stay at home.
* Put together a “Go Bag” for your family, which carries critical supplies and information for whatever circumstance you may run across. Here is what your bag should include …

  • A disaster plan including location of emergency centers, rallying points, possible evacuation routes, etc.
  • Positive Identification, such as driver’s license, state I.D. card, or social security card
  • Enough medicine to last an extended evacuation period
  • Cash and change, as electronic banking transactions may not be available during the initial period following an emergency or evacuation
  • A first aid kit
  • Fire starting tool (e.g., matches, ferrocerium rod, lighter, etc.)
  • Professional emergency literature explaining what to do in various types of disaster, studied and understood before the actual disaster but kept for reference
  • Maps and travel information
  • Standard camping equipment, including sanitation supplies
  • Weather-appropriate clothing (e.g., poncho, headwear, gloves, etc.)
  • Bedding items such as sleeping bags and blankets
  • Medical records
  • Pet, child, and elderly care needs
  • Battery- or crank-powered radio
  • Lighting (battery- or crank-powered flashlight, glow sticks)
  • Firearms and appropriate ammunition
  • Fixed-blade and folding knife
  • Duct Tape and rope/paracord
  • Plastic tarps for shelter and water collection
  • Slingshot, pellet gun, blowgun or other small game hunting equipment
  • Wire for binding and animal traps

This all might seem a bit excessive now … but so does every disaster plan — until disaster actually strikes.

So, perhaps make it a fun family activity to work through setting up these plans, and you’ll sleep much better knowing you’re prepared!

I’m grateful for the opportunity to serve you, and for your referrals.

Warmly,

Kyle Nagy
(816) 272-8151

Kyle P Nagy, CPA

Summer Chaos, Total Eclipse and Nagy’s Key Reminders

Summer Chaos, Total Eclipse and Nagy’s Key Reminders

How was your TOTAL ECLIPSE experience? Did you get to see the totality? Did you travel for it? Would love to hear about your experience.

Well, the world is still standing, even after all of the chaos that we’ve been experiencing as a nation. Social media remains an extremely divided (and divisive) place right now and even the upcoming football season doesn’t seem to be immune from the relentless culture clashes we’re experiencing as a society.

Will the things that we’re going through as a nation settle into a calmer, more just and peaceful state? It remains to be seen.

But what does still seem clear is that what I wrote about last week still seems prescient, and perhaps even more appropriate. I’ll rehash it here, with some comments…

Nagy’s Key Reminder #1: What you choose to “ingest” over these next few days will greatly impact your state-of-mind.

If you chose to ignore this advice, it’s likely your blood pressure felt the consequences. Truly — the “mass” media do better (financially) when there is chaos, so there is a very real, monetary at least, incentive for them to highlight turmoil. If you’re wise, you steer clear. I’m not suggesting that you stick your head in the sand, just … use a strong filter.

Nagy’s Key Reminder #2: The only thing certain about the stock market is that it’s volatile.

This is NOT “investment advice”: but I will remind you that it’s almost always a good idea to hold fast — sure, the short-termers may have profited from recent gyrations, but what’s most important, for your family’s financial future, is that you keep the loooong view.

Which, of course, leads me to my last reminder…

Nagy’s Key Reminder #3: The only thing you can truly control is yourself. 

With every passing week, I see the growing truth of this statement. The economy, your job situation, your retirement — it’s all out of your hands, in a very real sense.

That said, we met with families and clients last week in Kansas City who were taking positive action. With our advice, just a few small tweaks can realize real, tangible savings over the course of years.

Which is why I’m giving you one more chance on what I suggested last week:

Call my office this week: (816) 272-8151 (or reply to this note by sending us an email) and request one of our limited Tax Planning Saver Sessions. During this session, we will analyze your current situation and identify clear action steps for the last quarter of 2017 — designed to save your bottom line hundreds (or even thousands).

You CAN control your tax strategy… and we can help. Until then…

Warmly,

Kyle Nagy
(816) 272-8151

Kyle P Nagy, CPA

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