Save or Give???

Just recently my daughter was going over all that she wants for Christmas…..Yes I do realize it is only August and that is the main reason I was only halfway listening to her.  What caught my ear was “and more food for the children’s home in case they ate it all already and toys for the kids”.  Just a few weeks back we had the opportunity to donate food to a children’s home.  It was announced at church and I thought to myself “ I will write them a check and it will make it easier for everyone”  I had no clue my daughter was listening until later that day she asked when we were going to the store to buy food for the kids.  I made sure we went to the grocery store on a day both of my daughters could go help.  We loaded up the bags with food on the list and unloaded it at the church.  She was just so pleased with herself knowing that she made a difference in those kids' lives.

This finally brings me to my point.  So many people in this day and age are living with debt.  There are quite a few following all the right steps to get out of this debt and have more freedom financially. All they can think about it save, save, save.  Saving is good but giving plays a huge part in our ability to have the right mindset to save.  

I heard on Dave Ramsey one day a gentleman ask if he should stop contributing to his church in order to put that money towards debt.  Dave's answer hit the nail right on the head, he said "no, continue giving, if you can’t live off of 90% of your income you won’t be able to live off of 100%”. When you sit down and put a pencil to your personal finances there are so many places in your life you can cut back, things that are unnecessary such as eating out, cable tv, and entertainment.  Those are the places you save.  By not giving and tithing you are only harming yourself and getting set back from your goal to get out of debt. Giving not only generates good but also generates contentment.  There are so many movies I have left thinking “I could have lived without that”  There is not a single time in my life where I have intentionally helped someone in need, a charity, or my church and walked away feeling regret.

Give with a joyful heart, out of love and not guilt, and you will be blessed while being a blessing to others.  

 

Summer Budget Tips

Easy Summer Budgeting in 1...2...3!

 

 

1)  Plan Your Meals

There are often less activities and obligations for families during the summer months.  This can mean more time spent at home and more meals being consumed at home.  Summer is the perfect time to really sit down and plan your meals.  This will make it easier to skip on the urge to pick up another fast food meal on the way home. With your meals planned out you can make a list and get everything you need in one trip to the grocery store. Eliminating the stops at the store to pick up “just one thing” that always turns into a basket full of unneeded items.   

2)  Entertain at Home

When the kids get bored it can be tempting to jump in the car and head to a movie. This adds the extra expense of admission tickets, snacks, drinks, and gas.  For a budget friendly way to burn off some energy turn them loose in the backyard. You will be amazed at how their imaginations and the outdoors can keep them entertained. If you need to get out of the house explore some activities in your neighborhood, at the local library or pack a lunch and head to the park. 

3)  Shop Around for Services

Do you ever feel like you are paying too much for cable, cell phone, car, home or health insurance? Just about anything that you pay for on a regular basis is worth a few spare minutes to research your options.  Call around and get quotes from different companies.  After doing a bit of researching your current service provider might even be up to negotiating a bit. 

Final Thoughts

Saving money this summer doesn’t require drastic steps. Instead, small, simple methods can make a big difference in your budget. It might take some getting used to, but with your family on board with your plan you can create a little wiggle room in your budget, making all these little steps worth the extra effort. 

Saving Documents

Do I REALLY need this??

As we are closing in on the last few weeks of summer break I know a lot have begun the final push to get the house cleaned and decluttered.  Some things that usually take up the most space are all of those pesky tax documents that we have been told to hold on to FOREVER.  In reality most documents can be discarded after only a few years, freeing up more space for everything we NEED.  You know like all of those boxes of craft supplies, toys your kids couldn’t possibly part with or those jeans you will one day squeeze back in to. 

Period of Limitations that apply to income tax returns

The length of time you should keep a document depends on the action, expense, or event which the document records. Generally, you must keep your records that support an item of income, deduction or credit shown on your tax return until the period of limitations for that tax return runs out.

The period of limitations is the period of time in which you can amend your tax return to claim a credit or refund, or the IRS can assess additional tax.

For personal taxes you should hold onto all supporting documents for 3 years.  If however you have underreported income, you should then hold onto documents for 6 years. 

Are the records connected to property?

Generally, keep records relating to property until the period of limitations expires for the year in which you dispose of the property. You must keep these records to figure any depreciation, amortization, or depletion deduction and to figure the gain or loss when you sell or otherwise dispose of the property.

Note: Always keep copies of your filed tax returns. They help in preparing future tax returns and making computations if you file an amended return.

Tax Scams

Your phone's ringing.  It's the IRS??

Some of the most urgent calls I receive are of terrified individuals that have just been contacted via phone by the "IRS".

These callers may demand money and can sound very convincing. They can alter the caller ID, use fake IRS badge numbers and names often becoming very threatening. The IRS however has very formal processes in dealing with individuals with tax issues.   

If you get a phone call from someone claiming to be from the IRS and asking for money, here’s what you should do:

• If you know you owe taxes or think you might owe, call the IRS at 1.800.829.1040. The IRS workers can help you with a payment issue.
• If you know you don’t owe taxes or have no reason to believe that you do, report the incident to the Treasury Inspector General for Tax Administration (TIGTA) at 1.800.366.4484 or at www.tigta.gov.

Some things to remember.......

The IRS will NEVER:

1. Call to demand immediate payment, without first having mailed you a bill.
2. Demand that you pay taxes without opportunity to  appeal the amount they say you owe.
3. Require you to use a specific payment method for your taxes
4. Ask for credit or debit card numbers over the phone.
5. Threaten to bring in local police to have you arrested for not paying.

Gas Receipts

Do I save my gas receipts?

Taxes for small businesses can get confusing. The IRS has rules on gas, travel, and expenses claimed on your business; these rules can change every year. One of the most commonly asked questions is about gas receipts, mileage, and car expenses for travel.

For bookkeeping and tax purposes it is always a good idea to have supporting documentation such as receipts for all your expenses; however if you are a small business you also want to keep track of your mileage in addition to receipts.

Definition

Actual Expense- The actual expense amount deducted for business purposes based on receipts.

Mileage Expense- The actual mileage amount that you use to calculate your deduction based on the rate published by the IRS yearly.

Mileage is a tax deduction that you can take for the amount of miles that you use for business. Remember, if you use your vehicle for personal and business, you can not claim your personal mileage as a tax deduction on your taxes.

One of the easiest ways to keep track of your mileage is to purchase a log book. This log book can be given to your CPA each year at tax time. In return, your CPA will look up the current rate that the IRS is giving for mileage and calculate that in your taxes.This will make your mileage deduction.

There are rules to deducting expenses for your business. For example, you can not double claim a gas expense. Your business can use actual expense deduction or mileage deduction- but not both.

 At Kirby Urrabazo CPA, PLLC we are committed to helping you get the best refund possible. At Kirby CPA. "It all adds up!"