Reliance Financial Services

Tax Tips for Taxpayers: Options for Paying Taxes to the IRS

Tue, 12 Feb 2019 14:50:00 GMT

Tax Tips for Taxpayers How to Pay Taxes

How to Pay Taxes: Taxpayers Have Several Options for Paying Their Taxes to the IRS

The IRS has provided the following tips for taxpayers who wish to make a tax payment.

IRS Tax Tip 2019-07

The IRS offers several payment options where taxpayers can pay immediately or arrange to pay in installments. Taxpayers can pay online, by phone, or with their mobile device and the IRS2Go app. Taxpayers should pay in full whenever possible to avoid interest and penalty charges.

Here are some electronic payment options for taxpayers:

Anyone wishing to use a mobile device should remember they can access the IRS2Go app to pay with either Direct Pay or by debit or credit card. IRS2Go is the official mobile app of the IRS and is available for download from Google Play, the Apple App Store or the Amazon App Store.

Taxpayers can also visit IRS.gov/account and log in to their account. From here, they can view their taxes owed, payment history, federal tax records, and key information from their most recent tax return as originally filed.

Source: https://www.irs.gov/newsroom/heres-how-taxpayers-can-pay-their-taxes

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Tax Preparer Tax Tips: Signs of a Data Breach

Mon, 01 Oct 2018 13:13:00 GMT

Tax Tips for Tax Preparers: Signs of a Data Breach

Tax Preparers Should Look Out for These Signs That a Criminal Stole Information

The IRS has provided the follow tips for tax preparers and says they should look out for these warnings signs of a potential data breach.

IRS Tax Tip 2018-152

Tax professionals should be alert to the subtle signs of data theft. The IRS and its Security Summit partners note that there are many cases where preparers are victims of theft and don’t even know it.

Cybercriminals often leave very few signs of their intrusion. A tax preparer might not even realize that the cybercriminal stole client data until a fraudulent tax return was filed with the information, and their client becomes an ID theft victim. This is one more reason tax professionals should use strong security protections to prevent data theft from occurring.

Here are some warning signs that a preparer’s office may have experienced a data theft:

The IRS and its partners in the Security Summit are alerting tax preparers about the signs of an ID theft as part of the Tax Security 101 awareness initiative . The goal is to provide tax professionals with the basic information they need to better protect taxpayer data and to help prevent the filing of fraudulent tax returns.

Source: https://www.irs.gov/newsroom/tax-preparers-should-look-out-for-these-signs-that-a-criminal-stole-information

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What is Divorce Mediation?

Mon, 13 Mar 2017 14:31:00 GMT

What is Divorce Mediation?

People often ask me, “what is divorce mediation?”.

Divorce and Mediation St. Louis

According to the Merriam Webster dictionary the formal, mediation definition as the “intervention between conflicting parties to promote reconciliation, settlement, or compromise”. I usually explain it by using a real life example.

Imagine that there’s a husband and wife. Husband and wife have tried to fix their marriage, but to no avail. For their own reasons, they’ve decided that it would be better for everyone if they get divorced. They have children, a business and they are active members of their community.

The spouses are still on speaking terms even through they don’t agree on everything. Each is comfortable expressing their concerns & making decisions for themselves. They find it important to handle the divorce in a private and amicably way.

This couple has two options:

Litigated Divorce

Most people are only familiar with the litigated divorce. The litigated divorce is where each spouse hires an attorney. The attorneys require upfront money (called a retainer) that ranges from $1,500 – $10,000 per spouse. The retainer gets the divorce process started in the court system.

A litigated divorce can take anywhere from one to three years to complete. The legal fees add up the longer the divorce process takes. The process takes place in the courtroom where anyone from the public can be a spectator. The judge makes the final decisions.

Divorce Mediation

Divorce mediation has become much more familiar in recent years. In this divorce process the spouses hire a divorce mediator. In divorce mediation, all agreements and discussions take place outside the courtroom . This process is completely private and confidential .

The mediation process focuses on settling the divorce. It is an amicable and financially reasonable approach. It focuses on understanding the issues, goal setting, brainstorming, problem-solving and settling the divorce – in a matter of months not years.

Divorce Mediator

Divorce mediators are trained, unbiased, non-judgmental, third-party professionals. They do not have to be an attorney. Divorce mediators have special, conflict resolution training. He or she possesses the appropriate skills to help couples identify settlement issues, set goals, prioritize, brainstorm, problem-solve, and craft settlement agreements. A divorce mediator is a communication facilitator .

Breakdown in communication is a leading cause of many divorces. Divorcing couples often think that divorce mediation won’t work for them. This simply isn’t true. With their skilled training, a mediator knows how to help a divorcing couple communicate productively . They know how to assist spouses in exploring their options for each issue and to craft a solution that they are both happy with.

Mediation Definition

Mediation is the act of facilitating communication to help spouses craft settlement agreements outside the court system. The divorce mediation process fosters healthy relationships that thrive well after the divorce – it serves to heal wounds, not create new ones.

If you are getting a divorce or want to know more about divorce mediation services , your divorce options or if you are looking for St. Louis divorce mediators then give us a call at (314) 272-0727.

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Mediation: Learn the Benefits of Mediation

Sat, 21 May 2016 00:00:00 GMT

Resolving disputes in the courtroom can be costly, damaging, and on display for the entire world to see. Most often both parties leave court feeling dissatisfied by the judge’s decision. There are alternative ways to resolving a dispute outside the courtroom. Mediation is one of the the most effective out-of-court methods for resolving disputes.

Mediation: Power of the Win-Win, Preserving Relationships, and Saving Money while Resolving Conflict

The majority of us will experience conflict at some point in life. Conflict is normal and almost inevitable because everyone has their own ideas, opinions, and beliefs. If we all thought the same way and believed the same things then there wouldn’t be much originality in the world.

As a child, conflict often arises in interactions with parents, siblings, and friends. As an adult, conflict arises in our interactions with spouses, friends, neighbors, coworkers, parents and siblings. How has conflict been handled? Was it handled between yourselves with negotiations or compromise? Perhaps it wasn’t resolved at all because conflict is uncomfortable and people often avoid it. Sometimes conflicts, especially as adults, escalate to the point of taking the issue to court – actually suing a party believing that suing is the only way to resolve the issue. This article touches on mediation as a way to handle disputes outside of the courtroom.

Mediation:

Mediation is a form of alternative dispute resolution and it utilizes the facilitated negotiation process. The process utilizes a neutral, unbiased third party (the mediator) to help the parties resolve their differences. The mediator has received special training and their sole objective is to help the parties reach an agreement.

A mediator does not make decisions or impose solutions. However, they can suggest ways for the parties to improve their relationship and communicate better.

Distinguishing characteristics of mediation include:

Appropriateness:

Mediation works well when parties:

Disputes:

Mediation is an effective method of resolving many different types of disputes. It is an extremely effective and satisfying form of alternative dispute resolution. Individuals and businesses utilize mediation, instead of the courtroom, to resolve conflict.

Common disputes that utilize mediation include:

Going through conflict can be very emotional, stressful, and frustrating. Many times individuals feel as though they have no control over the situation. Reaching out to someone so that you can understand your options for resolving your conflict is something you can do today. Knowledge is power: you may just be able to move towards a peaceful resolution and get back to life.

If you’d like to learn more about mediation CALL US . We provide a free 30 minute consultation and will help you determine if mediation is right for your situation.

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Money Lessons for Children

Sat, 21 Nov 2015 23:32:00 GMT

Thanksgiving is right around the corner and with this holiday comes the big day after event – Black Friday . Black Friday is a huge shopping day for many individuals and families. The 2015 Black Friday and holiday shopping season gives plenty of opportunities for parents to teach their children about money – including advertising tactics that strongly influence buying behavior.

While looking for deals, it is a great time to teach children about these four valuable money lessons:

Budget:

Setting a budget is one of the easiest ways to save money and avoid overspending. Understanding what you are shopping for and how much you are willing, or able, to spend will help you stay on budget. Likewise, having a budget, and sticking to it, will eliminate any regrets after you’ve finished shopping. Many families draw names for a “secret Santa” this time of year. This is a great time to teach children about budgets. If the limit for the secret Santa gift is $20 then have your child come up with a list of possible gifts within that budget. Then allow your child to go to the store and shop for the gift. Help guide them if they get off track or want to spend more than the budget. Don’t forget to help them factor in taxes and any other expenses associated with purchasing the gift, such as wrapping paper or a gift bag. Helping your child understand the total cost of the gift will allow them to develop their ability to consider the total cost of a purchase. This skill is particularly helpful when they are older and making a large purchase such as a car or house.

Advertising:

Marketing to children is BIG business; so big that budgets spent on advertising to children went from $100 million in 1983 to $17 billion according to Juliet Shor in her 2004 book Born to Buy: The Commercialized Child and the New Consumer Culture . Advertisers don’t spend that kind of money unless it is making a huge difference. If we want our children to be wise with their money then they need to be educated spenders. The best way to combat the advertisers is to educate our children about the tactics used to influence their buying behavior. The younger they are when we start teaching them about advertising tactics, the more educated and informed they will be when they start earning an income.

For older children, point out the key words that a retailer will use to get consumers to spend a certain amount of money. For example, receive “20% off when you spend $50 or more”. This equates to $10 off $50, so when you purchase $50 worth of merchandise you will only spend $40. If the budget is only $25 then help your child understand that you don’t necessarily spend $50 just to get $10 off. Spending money they didn’t intend to spend is essentially overspending the budget by $15. This additional $15 equates to overspending the original budget by 60%.

For younger children, you can take an ad to the store and have them look at the pictures in the ad and ask them if the picture in the ad looks like the item in real life. By pointing out differences between what is advertised and reality you are teaching them to be skeptical of the advertisements. You are teaching them to think about the advertiser’s true value proposition before buying.

Research:

Doing your research ahead of time can help you save both time and money. Sometimes what seems like a deal is really just a play on the numbers. Make sure you know what the “normal” price is and then compare that to the “promotional” price. Even better is enlisting the help of your children. By getting your children involved you can teach them how to make educated purchasing decisions which also teaches them not to be impulse shoppers. Help them work through the rational of why something is or is not a good deal.

Ways to Pay:

There are many different ways to pay for merchandise these days. Determine which method you will use and then discuss the differences in payment methods with your child. You can have the conversation before, during, or after the purchase. Just be sure to call their attention to the method you have chosen and then discuss the differences between paying with cash, check, debit card, and credit card. Children are much savvier then we give them credit for and explaining the differences in payment methods can start as young as 4 or 5. Make sure you use appropriate language that they can understand. Think about linking certain aspects of payments to items that they can relate to. For example, a piggy bank at home can serve as a good example for a bank account at a bank.

Financial literacy and understanding is essential to an individual’s well-being. Money can be a source of security or insecurity for most adults. By breaking down barriers and helping our children understand money basics we are in essence giving them a lifelong gift. We, as parents, are giving our children the gift to, one day, be self sufficient and confident in their ability to make wise and informed money decisions. If it seems difficult or awkward just remember this – your years of experience provide you a great deal of knowledge about this subject. If your child asks a question that you don’t know the answer to then just say, “That’s a great question. I don’t know the answer to it right at this moment. Let’s try and find the answer together.”

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Divorce Financial Mistake #2

Fri, 20 Nov 2015 12:15:00 GMT

At Reliance Financial Services we have created a series of posts called “Avoiding Financial Mistakes During Divorce” . This series covers the most common financial mistakes made in divorce settlements and mediated agreements. We are covering some of the most common financial mistakes to illustrate why it is important that individuals review their overall financial picture and long-term ramifications before signing the divorce settlement agreement. Once the divorce settlement agreement is finalized it can be very difficult to modify.

Divorce Financial Mistake #2: Thinking the value of the retirement accounts is equal to the value of the non-retirement accounts

It is important for individuals to realize that the money in a retirement account is not the same value as money in a non-retirement account (such as a savings account). This is because retirement accounts are most often funded with pretax dollars. Put simply, this means that the pretax dollars that go into the employee’s retirement account did not have income taxes taken out. Likewise, if the employee’s company contributes any amount to the employee’s retirement account then that money is also placed in the retirement account without income taxes taken out. Money in the account is considered “tax deferred” because the employee has deferred paying income taxes on the contributions until he or she begins withdrawing the money during retirement.

Special note: The Roth 401(k) is still a fairly new alternative that some employers have made available to their employees. A Roth 401(k) is different than a traditional 401(k) because the employee’s contribution to the Roth 401(k) is made after income taxes have been taken out. It is important to understand that while the employee’s contributes to the Roth 401(k) are made with after tax dollars the employer’s contributions are still made on a pretax basis. Therefore, when funds are withdrawn during retirement, a portion of the funds will be included in the retiree’s taxable income. Income taxes will be due on the portion that was contributed by the employer. In this instance the value in the retirement account is still not the same as the value in a non-retirement account.

Below is a list of the most common retirement accounts:

So you may be asking yourself: “Why is it important to understand that the money in a retirement account is not equal to the money in a non-retirement account?” Simply put, the money in a non-retirement account such as a checking, savings, money market, and individual investment accounts have been funded with after tax dollars. This means that when the money is withdrawn from these accounts there will be no income taxes due because the accounts were funded by after tax dollars.

To illustrate the importance of this difference we will use an extremely simplified example .

Case Study: John and Mary

John and Mary have been married for 10 years. They have decided that going their separate ways is the best option for them – they have decided to divorce. They have no children, no debt, and they rent a house. They both make $50,000 per year, they have $100,000 in a joint savings account, John has $66,000 in his 401(k), and Mary has $120,000 in her 401(k). For simplicity sake, we will also assume that the value in the 401(k) is all due to contributions; therefore, we are assuming that there has been no appreciation or growth of the retirement funds. John and Mary were married when they both started contributing to their retirement and savings accounts. All of their assets are considered marital property. The chart below illustrates John and Mary’s assets.

Scenario 1 Property Division:

We assume that John keeps his 401(k), Mary keeps her 401(k) and the joint savings account is divided to equalize the division of property. This is what the division of property would look like:

From a dollar perspective it looks like everything is equal and fair. However, in the long-term, this settlement scenario is not equitable. If we assume that both John and Mary are in the 15% federal income tax bracket at retirement then:

Mary’s portion, in today’s dollars, is worth $8,100 ($125,000 v $133,100) less than John’s.

Scenario 2 Property Division:

We assume that John and Mary should each have the same amount in retirement assets and then split the joint savings account. This is what the division of property would now look like:

In this scenario, Mary would transfer $27,000 of her 401(k) to John through the use of a QDRO (Qualified Domestic Relations Order). From a dollar value perspective it looks like everything is equal and fair. If we assume that both John and Mary are in the 15% federal income tax bracket at retirement then:

In this scenario the property division, after income taxes, is $129,050 for both John and Mary.

Summary

This example, although extremely simplified, serves as a clear illustration of how important it is to understand the overall financial picture, and long-term impact, associated with the division of property. In this scenario, many attorneys, mediators and individuals may think that a CDFA ^TM isn’t necessary since John and Mary’s situation seems simple. However, a CDFA ^TM assists attorneys, mediators and individuals in understanding both the short-term and long-term impact of proposed settlement scenarios. A CDFA ^TM would have only cost a fraction of the money that Mary saved in future taxes.

A Certified Divorce Financial Analyst ^TM assists attorneys, mediators, and individuals in avoiding the most common financial missteps throughout the divorce process. A CDFA ^TM has been specially trained and is skilled at performing the necessary analysis that will help determine the tax implications and fairness of proposed property division scenarios. By adding a CDFA ^TM as a member of the divorce team, an individual can understand the short-term and long-term ramifications of dividing retirement and non-retirement marital property.

If you are unsure your divorce options or whether the services of a CDFA ^TM are right for you then please contact us . We would be happy to help you determine if such services are right for your individual situation. You can also learn more about your options and divorce financial planning by visiting the St. Louis Divorce and Mediation Services website where you have access to additional divorce information.

Going through a divorce is a very trying and emotional time for many individuals. Sometimes it helps to be surrounded by others that are going through the same thing as you. If you would like to find a Divorce Support Group, in your area, please visit the DivorceCare® website. The support groups are open to anyone and the majority of them are free.

Disclaimer: All articles/blog posts are for informational purposes only, and do not constitute legal or tax advice. If you require legal or tax advice, retain a lawyer or CPA licensed in your jurisdiction. The opinions expressed are solely those of the author, who is not an attorney or a CPA.

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Financial Divorce Advice: Should You Keep the Marital House?

Sun, 08 Nov 2015 02:32:00 GMT

Keeping Marital Home in Divorce

At Reliance Financial Services we provide divorce financial planning services in St. Louis, Missouri. We know the financial complexities involved in the divorce financial settlement – even when finances seem simple. To help, we’ve created a series of posts called “ Financial Divorce Advice “ which covers the most common financial issues that come up in the divorce process.

Financial Divorce Advice: Should I Keep the Marital House in the Divorce?

People going through a divorce may wish to keep the marital home. The reasons are different for each person. However, some of the most common include:

There are important things to considered before you decide to keep the house in the divorce.

Can You Afford It?

You should work with a divorce financial expert to determine the affordability of keeping the house after divorce. Your divorce lawyer will have you gather information related to your income, expenses, assets, and debts. This information is used in the divorce paperwork filed with the court. Working with a divorce financial specialist will help you take that financial information and analyze it for your divorce financial planning needs. A qualified professional, such as a Certified Divorce Financial Analyst, can provide you financial divorce advice. They will help you create a post-divorce budget showing whether you can afford to keep the house. Having this answer, before you begin negotiating a divorce settlement, will make for smarter negotiations. You can also use an online mortgage calculator to estimate a monthly mortgage payment should you need to refinance or get a loan to buyout your spouse’s equity in the home.

What is the Financial Impact?

Consider the overall financial impact of keeping the house after divorce. A house is an asset that costs money to keep and maintain each month. Expenses such as the mortgage, insurance, taxes, & lawncare can really add up. While homes typically go up in value, they don’t usually appreciate at a greater rate than the total annual expenses. The recurring annual expenses can take away from your ability to put funds toward retirement, savings, children’s college fund, and debt reduction.

Now compare the value of the marital home to an asset such as a retirement or investment account. Retirement and investment accounts have relatively low annual expenses and depending on the type of account they could also have annual tax expenses. Even with these expenses, the stock market has shown that these assets tend to outpace their expenses long-term. So it’s important to understand that even when you can afford to keep the marital house after divorce, it often comes at a price. A qualified divorce financial expert can help you weigh the overall financial impact of keeping house after divorce. With this information you will be better prepared to negotiate a fair divorce settlement.

Summary

A Certified Divorce Financial Analyst ^TM can perform the necessary analysis to determine your ability to keep the house after divorce. They will also help you determine the long-term financial tradeoffs should you choose to keep the marital home. Their divorce financial advice will help you avoid common divorce financial mistakes and transition divorce more financialy secure.

Contact Our Certified Divorce Financial Analysts for Financial Divorce Advice in St. Louis, Missouri

To learn more about our divorce financial planning approach, contact us online or by phone at (314) 250-3865 to schedule a free consultation. We would be happy to help you determine if our financial divorce advice services are right for you.

Going through a divorce is a very trying and emotional time for many individuals. Sometimes it helps to be surrounded by others that are going through the same situation. If you would like to find a Divorce Support Group, in your area, please visit the DivorceCare® website. The support groups are open to anyone and the majority of them are free.

The post Financial Divorce Advice: Should You Keep the Marital House? appeared first on Reliance Financial Services .