The IRS will never call you. Never. Beware of scam.

I believe I have written about this before but it bears repeating.  The IRS will never call you.  Never.  Never.  Never.  The IRS agent wants to know that he is talking to the taxpayer in question and he can't know that if he makes a phone call.

If the IRS contacts you it will be with a Registered Letter that you will have to sign for.  That's the way they work.  They do not want the taxpayer to have the option or ability to say, "I didn't know I owed this tax." or "I was never contacted about this matter."

If they call, they could be talking to anyone claiming to be you or it could be you and you'll lie about it later.  Not that you would ever do that, but the IRS wants to make sure.

So, if anyone calls saying they are from the IRS and you need to pay some taxes you didn't know about over the phone, just hang up the phone.  Or start laughing and hang up the phone.  Or better yet tell the caller that you'll need to talk to your CPA and ask for the caller's contact information so you can get back to them.  Then hang up and call the police.

And that's another thing, after the IRS doesn't call you, they NEVER take tax payments over the phone by credit card.  YOU can contact the IRS payment system  --  the Electronic Federal Tax Payment System (EFTPS) either via phone or computer to make a payment if you wish, but the IRS never calls and they never ask for money over the phone.  They don't do that.

The IRS will never call you.

How to live well on a lower inomce -- Move back in with your parents!

No way am I moving back in with my parents!!  Or, yes, that's exactly what I want to do but they don't want me any more.  I'm 36 years old and I have no place to go, whaaaaaaaa!!

I'm not talking about freeloading.  I'm talking about sharing a home and the expenses.

Maybe neither of you have much money and by joining forces you can improve your standard of living.

My mother and I have been sharing a home for twenty-one years in this last go around.  We shared a home for the first 18 years of my life, to which I contributed very little if anything.  Then I moved out for about 12 years, somewhat on my own.  Whenever I needed a free meal I could always "drop in for a visit".  Lucky for my mom, she wasn't that good a cook so I didn't come by every night and eat up her food.

After I was diagnosed with MS, we thought it might be a good idea to move to an area where life was less stressful and we'd be closer to our relatives.  We returned to the family stomping grounds, and many a summer adventure for me, and purchased a home that we then renovated into two full houses and a large office space.

We have separate electric and natural gas bills, but share the water and the alarm system.  We also have a shared laundry room accessible from either side of the house.  The lot is 3/4 of an acre giving us ample room to plant vegetable and flower gardens, put in a swing set for my daughter and grow nut and fruit trees.  Now and then the deer and squirrels let us have some fruit and nuts.  We also share the cost of the property taxes and property insurance.  We insure our cars together for discounts.  My mom pays the AAA fee and I pay for the family cell phone plan.  The wireless wifi covers my mom's side of the house as well.

Neither of us could live as well if we lived alone.  And there are the non-cash extras such as the time my daughter and my mother get to spend together since they live in the same house.  The ease we have in caring for each other when sickness hits since we live in the same house.

We do have separate kitchens and buy separate groceries.  It works for us and we planned to live together for a long time when we moved in here so we set it up to work with an eye toward both privacy and togetherness.

Maybe your parents have a large home that you have the money to renovate into something workable for both of you.  What would it take minimum?  An extra bathroom, a small kitchen and a separate entrance.  I think both parties need to be able to come and go without going through the other's space and prepare a private meal.  Some newer homes are now being planned with an in-law or grandparents suite already included.  When one side is no longer needed, the extra home space could be rented or utilized by another relative -- sibling?  aunt?  uncle? who'd work well in a similar arrangement.

Maybe neither of you has a suitable home and need to sell both current homes and buy or build something new.  That's what my mom and I did.  Neither of us owned a home large enough to accommodate both of us and an office, so we sold what we had and bought something we could mold into exactly what we needed and raise both our standards of living.

This might not work for you at all, but it's certainly something to consider if making ends meet isn't as easy as it used to be.  Living side by side will make it easier to share as many expenses as possible especially the largest -- property taxes, property insurance and the mortgage.  Also, if your parent, or you, ever needs someone around to make sure everything is "all right" there's no need to make an extra trip or interrupt the day to check on your parent, just open a door and say hello.

It will take some working out, maybe even some growing up -- for parent and child -- but I don't subscribe to the do-it-all-on-your-own theory.  I think families should help each other out as much as they can when necessary.  Many things might not be possible but surely a warm, dry place to live with a little food on the table can be achieved with a some forethought and consideration.

And if incomes are low enough, there might be some tax implications to consider.  There's nothing wrong with being a boomerang kid as long as you hold up your end of the boomerang.

Why has it been a year since the last post?

Could it be that I've not published an entry because the tax code has not changed?
No, I'm sure there have been a lot of tax law changes in the past year.

Could it be that I've lost interest in this blog or the tax law?
No, that is not the case either.

So what's the reason?

I am only a part-time CPA because my health doesn't allow me to work full-time as I would like to do and as I enjoyed doing before I was diagnosed with Multiple Sclerosis.  As you might imagine I've had a very up and down career.

My income consists of annuity payments from investments I was lucky enough to acquire as a disability stop gap before I was diagnosed.  But time and the stock market have lowered these payments a great deal from where they started.  I still make a small amount of income from my CPA practice but it's difficult to grow a practice when health gets in the way.  New clients want a healthy, strong CPA that they can depend on in case of trouble.  When the IRS comes knocking, or more likely sends a registered letter, the client wants the CPA to jump right on the case -- not have to schedule it in around health issues.

It's also difficult to know how to charge a new client.  Would a healthy CPA have taken this long to finish this task?  Was I slower because it's difficult for me to concentrate and I'm tired?  I don't want to over bill or do a poor job for a client who expects and deserves only my best.

So, last year I got the brilliant idea of giving a series of lectures to small business people about what to expect in the way of taxes.  Of course, they could read books, but I found books too general.  Books covered too many topics that had nothing to do with starting a small business in Tennessee.

Alas, the only one who thought this was a good idea was me.  No one signed up to come to my seminars.  Therefore last August I was faced with some very difficult decisions.  Did I go out of business completely for a year, have no income, and then try for Social Security Disability?  A pretty big risk.  No guarantee I'd quality and after a year, my practice would certainly be dead.  Even my most loyal clients would have found another CPA in that time and clients don't switch CPAs easily or quickly.

I had taken on little jobs here and there, my most exciting was stripping furniture at a local upholstery shop.  I really loved that job.  I could set my own hours, work 10 hours a week and make the extra income I needed.  But when the summer came, I could not find a time when it was cool enough for me to get my work done.  By the time fall and cooler temperatures came around I was eager to try my new seminar business and all my extra time and energy went into preparing for that.  I wrote lectures and prepared handouts.  I practiced my delivery and attended Toast Masters and rented a venue.

I learned a lot but nothing that would help me make money in the long run or the short run.  More bills were coming due.  My line of credit was almost maxed out.  When all seemed lost, the local county library received the funding to hire two new part-time librarians and I applied for one of the jobs.  I needed a job that had no stress, didn't require a long commute, and that I felt competent to do.  I was very lucky to be hired.

So that's what I've been doing.  I'm going to try and keep the blog updated more than once a year now that my finances are stabilized.  Sorry to be away for so long

And I'm going to change or widen the blog topics.  I'm still going to cover tax issues, and feel free to ask questions if you have any, but I'm also going to discuss how to live well on a limited income.  I'm looking forward to it, I hope you are, too.

IRS to recognize same sex marriages on September 16, 2013.

This came in today from Karen Brosi at Western CPE.  She has done all the work but I will make some comments, especially as this change pertains to Tennessee tax payers. Karen Brosi All Legal Same-Sex Marriages Will Be Recognized for Federal Tax Purposes   In late August 2013, the U.S. Department of the Treasury and the IRS ruled that same-sex couples, legally married in jurisdictions that recognize their marriages, will be treated as married for federal tax purposes. The ruling applies regardless of whether the couple lives in a jurisdiction that recognizes same-sex marriage or a jurisdiction that does not recognize same-sex marriage. Tennessee doesn't recognize same sex marriages.  If a same sex couple marries in a state that recognizes same sex marriages, then Tennessee still will not recognize the marriage.  And Tennessee taxes, such as the Hall Tax on investment income, would still have to be filed separately as if the spouses were still single. Rev. Rul. 2013-17 implements federal tax aspects of the June 26th Supreme Court decision invalidating a key provision of the 1996 Defense of Marriage Act. Under the ruling same sex couples will be treated as married for all federal tax purposes, including income and gift and estate taxes. The ruling applies to all federal tax provisions where marriage is a factor, including filing status, claiming personal and dependency exemptions, taking the standard deduction, employee benefits, contributing to an IRA, and claiming the earned income tax credit or child tax credit. Any same-sex marriage legally entered into in one of the 50 states, the District of Columbia, a U.S. territory, or a foreign country will be covered by the ruling. However, the ruling does not apply to registered domestic partnerships, civil unions, or similar formal relationships recognized under state law. Legally-married same-sex couples generally must file their 2013 federal income tax return using either the “married filing jointly” or “married filing separately” filing status. Individuals who were in same-sex marriages may, but are not required to, file original or amended returns choosing to be treated as married for federal tax purposes for one or more prior tax years still open under the statute of limitations. I don't advise rushing off to amend past returns without a great deal of careful analysis.  When a tax return is amended the statute of limitations starts again from the date amended.  This may not mean a problem at all.  I would analyze if the amount of refund resulting from amending the return is worth extending the statute of limitations on the tax return.  Extending the statute of limitations means the return will have a longer time for possible IRS audits.  Additionally, employees who purchased same-sex spouse health insurance coverage from their employers on an after-tax basis may treat the amounts paid for that coverage as pre-tax and excludable from income. Taxpayers who wish to file a refund claim for income taxes should use Form 1040X, Amended U.S. Individual Income Tax Return. Future Guidance.  Treasury and the IRS intend to issue streamlined procedures for employers who wish to file refund claims for payroll taxes paid on previously-taxed health insurance and fringe benefits provided to same-sex spouses. Treasury and IRS also intend to issue further guidance on cafeteria plans and on how qualified retirement plans and other tax-favored arrangements should treat same-sex spouses for periods before the effective date of this Revenue Ruling. I don't know that this would cause any need for refunds to Tennessee employers since Tennessee doesn't recognize same sex marriages.  On the other hand, these deductions are for federal business income tax returns, so this might very will apply to Tennessee businesses.  If a business owner in Tennessee wants me to research it, I will.  I will also keep my eyes open for any information that comes from the Tennessee Department of Revenue regarding this issue. I have a feeling they will make a statement and when they do, I'll let you know. Treasury and the IRS will begin applying the terms of Revenue Ruling 2013-17 on September 16, 2013, but taxpayers who wish to rely on the terms of the Revenue Ruling for earlier periods may choose to do so (as long as the statute of limitations for the earlier period has not expired).

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What? You want to start your own business? Why? part 2

It's very difficult to know how long a blog entry is until it's posted, so please forgive the overly long previous entry.  If you did make it all the way through to the end, then you know how I came to be in the position of needing more work and why I chose to create a seminar for small businesses.  I won't waste a lot of space going over the previous post.  The short of it, and I'm sure you want the short version, is that I have a lot of information I've either figured out the hard way or have discussed with others in business and I want to pass this on to anyone thinking of starting a small business or already in one and wanting to make certain they are going down the right path.

After my unscientific survey, which consisted of asking as many small business owners as I could about their interest in a seminar like this, I decided to proceed.  What was the first step?  First I needed to research the topics for my seminar.  I could not come up with two and a half hours of small business insights and knowledge on the spur of the moment.  Well, I guess I could but no one would want to pay me to listen to it.  I needed to be more organized and through.

I went to the web page of my favorite professional education vendor and looked over their course list.  In the past the normal course provided eight, sixteen or twenty-four hours of continuing credit which was fine.  In depth is the way to go with tax and accounting topics.  But this time I needed a lot of information about a lot of different topics and didn't have the time or the money to take ten or twelve eight hour courses.  Lucky for me, this year the educational group had come up with some short courses that covered all the topics I wanted to know more about.  Perfect!  I purchased and downloaded my classes and got to work.

I wanted to develop two things before I gave my first seminar, the first was a seminar manual which would go hand in hand with what I was going to talk about and the other was the actual seminar.  The manual would be provided in PDF format so that seminar participants could have it loaded on their computer, iPad, phone or other electronic reading device and be able to refer to it as I conducted the seminar.  The manual would have links to web pages of interest which could be accessed through the manual if the Internet was available.

This seemed to be going well and I was making good progress, then tax season hit.  I took a few months off from my preparation to get some work out and some money in.  Then it was back to work in June on the companion manual which is now almost finished.  I had visited a web page in which all the FAQs were presented in a question-answer format that I found to be easily understood and to present information that I needed without a lot of extra language I didn't want wade through.  I decided to structure the companion manual in that way making it easy to read and not filled with extra information.  Just the facts, ma'am.  The seminar is the place to get the facts filled out and plumped up with extra knowledge. 

Next blog entry will discuss finding a place to hold the seminar and advertising.  One proved easier than the other but both were new experiences for me. 

BEST for Small Businesses - Get Started & Keep Going

Look on the page listing to the right for more information and to sign up.  There's also more in an earlier blog post.  Just page on down.  Hope you can make it.

Ask some questions, if you like, to see if this is for you.

What? You want to start your own business? Why?

I'm in the process of trying to expand my CPA practice into a new area.  I want to give seminars to other small businesses about how to start a small business, what to expect once started, and if the small business is already plugging along, how to make sure the business is moving in the right direction and not heading over a cliff.

I didn't come up with this over night.  It was a long process.  As I stand on the verge of actually giving a seminar in September, I thought there might be some people who'd like to know how the process of starting a business works.  What?  You want to start your own business?  Why?  Believe me, I sometimes ask myself those same questions.

First some background.  I am a CPA.  I've been a CPA for over two decades and I grew up in my father's small CPA practice in Knoxville, TN.  As soon as my sister and I were able, he had had us pulling blank tax forms from the file cabinet and filling in the tax payer name and ID so he wouldn't have to take time to do that when the client came for their appointment.  (Yeah, I'm so old we used to prepare taxes by hand with paper and pencil.  But I try to stay current.)

I didn't start out to be a CPA.  It wasn't something I dreamed about or planned to do.  In fact, I was certain I didn't want to be in business at all and majored in Liberal Arts with a concentration in Creative Writing while at the University of Tennessee at Knoxville.  Well, that lasted about as long as it took me to realize that the pay check of a "secretary", which was the best job my major could achieve, was not for me.  I could survive on that pay but I didn't want to.  Eventually my father wanted to retire and sell his practice.  My mother suggested he offer the practice to me or my sister first.  My sister had no interest at all, but I thought, "Hey, he makes more money than I do."  I also liked the freedom being self-employed would bring.  I was in.

I had to go back to UT and take all those business courses I'd avoided during my first pass at a college education.  Luckily I was going back to school during the last few days when an individual could sit for the CPA exam with any undergraduate degree and thirty-six hours (if I remember correctly) of accounting and business.  Currently a candidate for the CPA exam must have a Masters in Accountancy which I didn't want to do.  With my extra business credits in hand, I signed up for the Becker CPA review.  Forty hours a week and then some, studying for a two and a half day exam.  It's not that way now but back then, the first time a candidate sat for the CPA exam it started on Wednesday afternoon and finished Friday evening.  Yes, you got to go home in the evenings, but Thursday and Friday, you were back at the testing desk taking that exam.  It was brutal.  The studying was brutal.  The worry over making mistakes was brutal.  I had never studied for an exam in my life the way I studied for that exam.  I had decided to sit for the CPA exam only once, sink or swim.  I was not going through this again.  Since I did want to be a CPA, I wanted to pass the first time.  And pass I did.  I will never forget the day I received my grades in the mail along with the happy news that once I passed my ethics exam and spent two years as an apprentice CPA I'd have my certificate to practice.  It was a happy day for my dad as well.  The day I received my permit to practice, he walked out of the office never to return.

Over night I had a small CPA practice in my hands.  Since all the clients knew me, I didn't lose any business.  During my wandering and unplanned journey through the UT educational system, trying to find a major I enjoyed enough to finish, I had taken a public speaking class.  I now put this skill to good use by giving short talks about various tax issues to business groups at luncheon and dinner meetings all around town.  The practice was growing.  I was in charge.  Life was great.

Then my left leg began to go numb.

Eventually I was diagnosed with Multiple Sclerosis.  Remember I'm old (well, older) and when I was diagnosed there were no medicines for MS at all.  The best that could be done was to try and stop the progression of a flair up and return the patient to "normal" as quickly as possible.  MS is an extremely unpredictable disease and at the moment of diagnosis it is impossible to determine how the disease will progress, but most people lose mobility rapidly and are unable to work.  I didn't know what my future would hold.  I continued to work and had massive MS attacks at every tax deadline.  Lucky for me, I had purchased private disability which my doctor suggest I use, and my mother and I retired to her home town of Woodbury, to await our mutual declines.

The loss of my tax practice was devastating.  I love taxes.  The tax code is crazy and funny and weird.  I love reading it.  I love preparing taxes.  I love talking with clients.  My Knoxville monthly write-up clients followed me to Woodbury, first via mail and phone, and then by email and skype.  I didn't have to be in the same town as my clients to do my job.  But working still wasn't easy.

Gradually as client's needs changed my practice contracted and I started a family.  The decline in the stock market and the US economy decimated my disability income.  I needed more work.  As a stop gap measure I went to work for a local client who was in need of reliable help.  It wasn't easy work but it was steady and gave me time to think.  I came up with the idea to give seminars for small businesses.  Not the small business by IRS definition of grossing five to fifteen million dollars, but the real small business with one employee - the owner.  The small business owner who sells the job in the morning and goes back in the afternoon to do the job.  The small business consisting of the husband and wife working together; one doing the work, the other handling the paperwork while their kids played under the kitchen table.  The small business that doesn't have time to stop and ask questions because they are living on the edge and stopping to reflect and ask questions doesn't happen very often.  Most often, when something happens to throw the whole train off the track.

I began to ask the small business people I know if they would have been interested in a seminar like this when they were starting out.  Oh, yes, was the answer every time.  So I began to do the research and put together my seminar while living off the line of credit on my house.  The line of credit is running low and the time is now to begin.  Even after being in business for decades, starting a new type of business is frightening.  If it's frightening for me, a seasoned business professional, I can only imagine what it's like for someone with no experience.  Therefore, these blog entries.

As I write this I don't know if my Business Education Seminars Today or BEST of Small Businesses will even pay for the advertising I have already agreed to buy.  And it is frightening.  But nothing ventured, nothing gained.  Let go of the rope.  You know all the old adages as well as I do.  The bottom line (another old adage) is that I have to start somewhere and I've started.

Next blog entry: how I prepared and shaped my new venture before I booked the venue or advertised.