Stu talks about 8 Basic Money Lessons Everyone Should Know

The news is in, and it’s scary: Americans are falling behind the rest of the world when it comes to financial literacy. A recent study of 29,000 teens across 18 industrialized countries found that financial literacy rates in the United States fell right in the middle of the spectrum, just under Latvia and Poland and right above France and Russia. The most financially literate teens were in Shanghai.

But it’s not just the younger generation that’s lacking in financial know-how; research indicates that only 40 percent of U.S. adults keep a budget, and a third of Americans can’t answer three simple financial questions on topics such as how interest works, how inflation works, and the difference between stocks and funds.

Let’s combat this lack of financial literacy. Here are eight basic money lessons that everyone should know.

1. The earlier you start saving, the better off you’ll be when it’s time to retire, thanks to the “magic” of compounding interest. Saving your money in an interest-bearing account means that it compounds itself over time.

2. If you spend more than you earn, you’ll always be in debt. Simple rule: You must bring in more than you shell out in order to come out ahead. Living not only within, but also below your means is the key to financial security for the long term.

3. There is no reward without risk. If you keep your money safe in a low-interest account, such as a
bank account, you’re passing up on the the chance for higher returns. This may be fine for the short term, but over the long term, riskier investments — such as a highly diversified portfolio (see #4) — have a higher potential to produce significant rewards.

4. Diversification is key. Remember that old saying, “Don’t put all your eggs in one basket”? That really applies to your investments. True diversification is broad and deep, and it helps you weather the inevitable ups and downs of the market. Your financial advisor can help you ensure that your portfolio is truly diversified.

5. Treat managing your money as a lifestyle choice. Decide early on that you will control your money, and make it a habit. Create a balanced budget and stick to it, revisiting it when necessary.

6. Prioritize your spending. When it comes to spending money, what matters most? Is it saving for a new car each year, taking a vacation, or living in a nicer (more expensive) area? Does it make you happier to eat out or to renovate your kitchen? Figure out what is most fulfilling, and then prioritize. Differentiating between needs and wants can help you stay within your budget and still live comfortably.

7. Save smart. Create a financial plan that includes your long-term goals; then, adjust your savings
to meet that plan. Craft your investment and savings activities around your goals, so you can avoid surprises later.

8. Avoid debt. While some debts, such as student loans, mortgages and car loans, are almost unavoidable and help you get where you want to be in life, some types of debt — such as credit card debt — should be avoided if at all possible.

These basic tips are a start, but the financial industry is constantly changing. It’s essential to continue educating yourself and improving your financial literacy in order to make truly well-informed decisions.

Listen below to Stu and Win Damon chat about this topic on Joppa Radio FM 96.3 WJOP Newburyport, MA

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About Stu: With more than 25 years of experience as a credentialed tax professional, Stu Steinberg brings a broad depth of knowledge to his work. Stu founded Erock Tax to help provide tax strategies to individuals, families and small businesses. He uses his CPA expertise to help each client navigate their long-term debt and mortgage, gaining them the best deals and rates possible. Stu is passionate about empowering his clients through education about their tax health. He is highly energetic and brings a sense of optimism, creative problem-solving and a deep level of commitment to every Erock client.

Stu talks about the Income Tax implications of drawing from an IRA

 

Do you have questions about withdrawing from your IRA? We like to describe the potential growth in an IRA as a bell curve, hopefully growing up over the years, and then slowly being drained over the rest of your life expectancy, starting at age 70 ½ years old.

There are three types of withdrawals, also known as distributions:

 

  • Owner withdrawal before age 59 ½, after age 59 ½, and after age 70 ½;
  • Owner passes away and the spouse inherits account;
  • Owner passes away and a non-spouse inherits the account.

Distributions before age 59 1/2. In addition to all applicable federal and state taxes, if you take distributions before age 50 1/2, you’ll also have to pay a 10-percent penalty. However, under certain extenuating circumstances, you may avoid the penalty—though you’ll still owe the taxes. Exempt situations may include:

  • Buying your first home;
  • Paying for a child, grandchild, or spouse’s school;
  • Unreimbursed medical costs that are more than 7.5 percent of your adjusted gross income;
  • Health insurance premium costs, if you’re unemployed for 12 weeks or more;
  • In the case of disability or death.

Distributions after age 59 1/2. There are no penalties or restrictions if you take disbursements between the ages of 59 1/2 and 70 1/2. Remember, your interest, dividends, and capital gains will be taxed as ordinary income, so you may owe state and federal taxes.

Distributions after age 70 1/2. Once you turn 70 1/2, you must take distributions. Also known as minimum required distributions or MRDs, if you don’t make these withdrawals, you’ll pay a penalty of up to 50 percent of the amount you should have taken.

If you pass away and your spouse inherits your account. Good news: if your spouse doesn’t need the funds right away, they can roll them over into their own IRA then take distributions after 59 1/2. If they need the funds early and are under age 59 1/2, they can roll the funds into a so-called “Inherited IRA” account and avoid the 10-percent penalty.

If you pass away and a non-spouse inherits your account. If your IRA passes to a non-spouse beneficiary, they may transfer the assets into an inherited IRA beneficiary account. Distributions will depend on your beneficiary’s age and life expectancy, and will be taxed as part of their income.

The rules that govern IRA distribution and inheritance are complex. Meet with a trusted financial advisor to work through the details.

Considering tapping into your IRA? Know the rules first to avoid fees, taxes or penalties.

Listen below to hear Stu and Win Damon review this topic on Joppa Radio 106.1 Newburyport

 

Like what you have read? Please share with friends.

About Stu: With more than 25 years of experience as a credentialed tax professional, Stu Steinberg brings a broad depth of knowledge to his work. Stu founded Erock Tax to help provide tax strategies to individuals, families and small businesses. He uses his CPA expertise to help each client navigate their long-term debt and mortgage, gaining them the best deals and rates possible. Stu is passionate about empowering his clients through education about their tax health. He is highly energetic and brings a sense of optimism, creative problem-solving and a deep level of commitment to every Erock client.

Stu chats TAX Reform with Win Damon on FM 96.3 Joppa radio

Tax reform is front and center these days as potential plans for reform are being pushed and are in ASAP mode.  As usual there are so many stories and claims to this extremely huge issue.  After reviewing dozens of articles I am hard pressed to find any that say that reform as it is currently being debated is going to be good for America.

The one argument the GOP continues to use is the “trickle down” theory which says cut tax on the richest and the fruits of the tax cut will trickle down to the masses.  This I find to be unequivocally untrue and in fact it did not work under Reagan or Bush and will fail again if enacted.  The rich and big corporations will get richer, the poor will get poorer, and the middle class will continue to shrink.  The cut will stimulate little job creation, will not repair our crumbling infrastructure, and will most certainly lead to vital cuts for programs such as medicare and social security as well as ballooning the already massive deficit.

In fact, I have not found one article advocating for these cuts that uses any “theory” besides trickle down.  See the articles below among many others that show how amazing these cuts are for the top 1/2 of 1%.  In fact the “pass through” tax break will provide massive tax cuts to the super wealthy.  Please read for yourself below.

http://www.businessinsider.com/trump-gop-tax-plan-middle-class-effects-tpc-analysis-2017-11

https://www.cbpp.org/research/federal-tax/republican-leadership-tax-plans-pass-through-tax-break-would-provide-massive  (From the Center on Budget and Policy Priorities)

I hope I am wrong but all the intellectual studies back up my claims.  Trickle down will fail and cause far higher inequality in America.  Again, I hope i am incorrect.

 

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About Stu: With more than 25 years of experience as a credentialed tax professional, Stu Steinberg brings a broad depth of knowledge to his work. Stu founded Erock Tax to help provide tax strategies to individuals, families and small businesses. He uses his CPA expertise to help each client navigate their long-term debt and mortgage, gaining them the best deals and rates possible. Stu is passionate about empowering his clients through education about their tax health. He is highly energetic and brings a sense of optimism, creative problem-solving and a deep level of commitment to every Erock client.

Erock Tax lets plan for the 2016 Tax filing Season

Well folks it’s that time of year again:  Dreaded Tax Season.   Lot’s to think about as a new administration takes over.  Will tax cuts benefit you and your family or will the middle class get caught in the middle again in regards to taxes?

For you personally and professionally, it is always best to stay organized throughout the year when planning for your taxes.  Even if you do not open up all the envelopes that arrive each day in the mail it’s ok.  You can simply get a large 10 x 13 envelope and put all your tax documents in it when they come in.  When you are ready we will review all your pertinent forms, get your 2016 returns filed, and start planning for 2017 and beyond!

You see taxes are not about just filling in the forms and forgetting about it.    The planning process is often overlooked but it really is the most important part of the tax filing process, especially if you are self employed and/or pay estimated taxes.  If you plan correctly, you won’t get a huge refund or you won’t owe too much unexpected money come tax payment time.

Please reach out when you have questions; do not wait until you have all your tax documents! Do not let financial and tax issues stress you out.  Get the answers you need in a timely fashion.  You will be glad you did!

Stu has quick video message about the beginning of tax season

https://youtu.be/IHm4cagAF30

Listen below as Stu and morning guy Win Damon chat up this topic on WNBP FM Radio 106.1 in Newburyport, MA and streaming live at WNBP.com .

About Stu: With more than 25 years of experience as a credentialed tax professional, Stu Steinberg brings a broad depth of knowledge to his work. Stu founded Erock Tax to help provide tax strategies to individuals, families and small businesses. He uses his CPA expertise to help each client navigate their long-term debt and mortgage, gaining them the best deals and rates possible. Stu is passionate about empowering his clients through education about their tax health. He is highly energetic and brings a sense of optimism, creative problem-solving and a deep level of commitment to every Erock client.

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Stu and Win Damon chat with Bob Pezzella of RMS Mortgage

iStock_000062644558_Full

Stu Steinberg and  Win Damon of WNBP FM 106.1  in Newburyport had a great chat with local mortgage expert Bob Pezzella (NMLS #112811) .  As a local tax guy and entrepreneur, I love to bring others on WNBP for my weekly chats.  Bob fits perfect of course, and now is an amazing time to buy a home.  Click on our radio chat below.

Diligent, meticulous, laser-focused.  This should be your mind-set if you are preparing to buy a home or getting ready to sell the one you’re in…

This holiday-post-election season finds us in a bull market trading off of the idea that lower personal and corporate income taxes will stimulate the economy coupled with the belief that deregulation has been constraining growth.  All week and today the DOW has seen unprecedented highs breaking through 19,000.  A rate hike from the FED next week is virtually 100%.

What does this have to do with your new home sale or purchase?  Higher interest rates will cost you more money per month and for the long haul and can also affect your borrowing power.  You can help minimize this impact by carefully monitoring your credit score and financial profile to ensure that you qualify for the best rates and programs available.

When you’re out holiday shopping and you open a new store charge to reap the large discount that’s offered, make sure you get that first bill and make timely payments. Credit card late payments can crush your credit score, knocking you out of qualifying for the best mortgage opportunities.  In short, get organized now, speak with your financial planner, accountant,  loan office, realtor.  If you’re thinking “Spring Market” NOW is when that preparation starts!

Like what you have read? Please share with friends.

About Stu: With more than 25 years of experience as a credentialed tax professional, Stu Steinberg brings a broad depth of knowledge to his work. Stu founded Erock Tax to help provide tax strategies to individuals, families and small businesses. He uses his CPA expertise to help each client navigate their long-term debt and mortgage, gaining them the best deals and rates possible. Stu is passionate about empowering his clients through education about their tax health. He is highly energetic and brings a sense of optimism, creative problem-solving and a deep level of commitment to every Erock client.

 

A Review of GOP Presidential Candidate Donald Trump’s Income Tax Plan

Close - up US Tax income form

I spoke with Win Damon last week about Mr. Trump’s income tax plan.  His plan would cut taxes and lead to higher incomes for taxpayers at all levels of income, including the wealthy and the super wealthy.  In many ways it is a classic GOP tax plan where the money flows from the rich in the form of huge tax cuts and trickles down to the middle and lower incomes though jobs and further economic gain.

Single filers making less than $25,000 and married filers making less than $50,000 will pay no taxes on the plan.  Currently around 45% Americans do not pay any tax and the number would increase under Trump’s proposal.

One point of interest is that Mr. trump wants to go after one particular group of super wealthy folks and make them pay their fair share:  The Hedge Fund Guys.  He’s talking about them everywhere.  They pay income tax at the long term capital gains rate of 23.8% instead of the ordinary income tax rate of 43.4% on monies that they earn.  The key here is that they are not risking their own money, and should be taxed at the ordinary income tax rate like all other workers who are not risking there own money!

In the end, Trump’s plan cuts rates at the top and the very top even more than Jeb Bush, and this will surely lead to more arguments about trickle down and inequality in America.

With more than 25 years of experience as a credentialed tax professional, Stu Steinberg brings a broad depth of knowledge to his work. Stu founded Erock Tax to help provide tax strategies to individuals, families and small businesses. He also uses his CPA expertise in many areas of personal finance.  Stu is passionate about empowering his clients through education about their tax health. He is highly energetic and brings a sense of optimism, creative problem-solving and a deep level of commitment to every Erock client.

Click below to hear the chat with Win Damon on WNBP.com and FM radio 106.1 WNBP in Newburyport, MA.

Stu chats mortgages on Radio WNBP with Bob Pezzella

iStock_000062644558_FullI recently spoke with local mortgage banker Bob Pezzella about the real estate market here in the beautiful seaside city of Newburyport.  Bob has been at his craft for close to 20 years helping families navigate the mortgage world and helping them buy and refinance homes. It is always great to have someone on your professional team who fully understands the ins and outs of the mortgage world and who genuinely cares about you and your family.

Rates are still at historic lows and now may be a great time to check in to see if a deal can benefit you.  We can help you analyze your current debt structure and see if a new mortgage will work. Or maybe you are considering selling your home and moving into a new home.  Either way it pays to be proactive and get all the information you need before making such a big decision.

Listen below to our chat on FM 106.1 WNBP Newburyport and streaming live on WNBP.com. We talk about the new mortgage disclosures that are required and how it is more important than ever to get pre-approved for any mortgage you may want.

Tax Fraud – You WILL Get Caught!

handcuffs on an American 1040 income tax form indicating tax fraud or evasionAre you a U.S. Citizen? Are you sure? I ask as news headlines are all abuzz with the astounding fact that, this “guy”  one of the husbands of the New Jersey Housewives show, apparently did not realize he was not a legal citizen? Hmmm.

I have got to tell you, I am not a viewer of this series but what a position they put themselves in.  Joe and Teresa Giudice from Real Housewives of New Jersey are going to jail for Mail, Wire, and Bankruptcy Fraud?  Just crazy.

People…..LISTEN, YOU – WILL – GET – CAUGHT. Honesty continues to be the best policy; especially when it comes to important issues such as taxes. One minor omittance turns into another and another and, it just snowballs. Hiding assets, lying on loan applications, claim withholding, they are all Federal offences. This Giudice couple was initially indicted in 2013, when they were accused of hiding their fortune in a bankruptcy filing. Joe was also accused of failing to file tax returns between 2004 and 2008. Clearly, they thought they were untouchable.

Here is a case where their tax advisors failed. The advice he gave this couple was not heeded.

Make sure all documents and deductions you provide are accurate and can be provided if asked by the IRS. If you can’t prove it, don’t list it! If you have it, claim it!

The government does not care who you are; celeb or a regular “Joe” from the burbs; everyone has to pay their taxes.

It’s All About Balance.

April 15th! Tax Paying deadline, NOT the filing deadline!

Erock photo - Tax dayAs April 15th rapidly approaches, I see more and more tax folders and faxes and client documents come through my office.  With all of us leading more “complicated” lives, our tax returns have become more complicated as well.  But here is the main catch:  Do you know when your tax return is due?  If you said April 15th, you are wrong!

See, our world is filled with media over indulgence.  When one thing happens we see it all over the place in every news source over and over again.   It’s no different for the tax deadline so to speak.  April 15th is not the deadline to file your taxes. It never has been and never will be.  But, this is all you will hear from every newscaster and internet reporter from sea to shining sea. Not from me!

So what is this mystery day anyway?  April 15th is the day we need to settle up with Uncle Sam (and the state) for the previous year.  What does that mean usually?  Well it often means completing 80+ % of your tax return to see approximately what you owe.  Just the money is due, and often with one form that does not even have to be signed!  I put a form or 2 on my clients’ secure portal, they print the form(s) and mail to government with the amount due.  That is our only requirement for April 15th

So, why do people run to the post office on the 14th or 15th by midnight to file returns?  Because they are getting incorrect advice.  They are putting unnecessary stress on themselves to get something filed that they really don’t have to!  I am sure the lousy, hastily filled out forms that get filed that day have more mistakes and get questioned more than any other returns filed at different times of the year

“But I am going to get audited if I extend my return.”  FALSE. This is never been true.  The word extension makes people feel nervous and it has negative connotation in an area that already causes so much anxiety for many people.  So, let’s not use the word extension or extend.  Let’s use a new word, continue. You as a taxpayer can “continue” your return until October 15th, as long as you settle up with payment due on April 15th. Yes, continue is a much better word!

Listen below to Win Damon and I review this very topic on WNBP, FM 106.1 and WNBP.com every Tuesday at 8:20 AM

About Stu: With more than 25 years of experience as a credentialed tax professional, Stu Steinberg brings a broad depth of knowledge to his work. Stu founded Erock Tax to help provide tax strategies to individuals, families and small businesses. He uses his CPA expertise to help each client navigate their long-term debt and mortgage, gaining them the best deals and rates possible. Stu is passionate about empowering his clients through education about their tax health. He is highly energetic and brings a sense of optimism, creative problem-solving and a deep level of commitment to every Erock client.

Erock CPA Tax Tips – IRS Form 2106 Unreimbursed Business Expenses

erock - photos - expenses

Tax Tips from Stu Steinberg – CPA, National Speaker & Financial Advisor

“Celebrating 25 Years in the Business”

IRS Form 2016 is used if you have expenses that you incur while working as an employee of a firm and you do not get reimbursed by your employer for these expenses.  These unreimbursed expenses can include auto and truck expense, unreimbursed business or office supplies, education, if needed to maintain your career, and business use of your telephone or computer.  There are complicated rules for employees who work out of their homes as well, so please seek competent advice when filing.  Once all expenses have been totaled, you still need to exceed a floor of 2% of your adjusted income before you can take any of these expenses as deductions.  Also, you may have these expenses limited by the alternative minimum tax (AMT) but that’s a story for a different blog!

About Stu: With more than 25 years of experience as a credentialed tax professional, Stu Steinberg brings a broad depth of knowledge to his work. Stu founded Erock Tax to help provide tax strategies to individuals, families and small businesses. He uses his CPA expertise to help each client navigate their long-term debt and mortgage, gaining them the best deals and rates possible. Stu is passionate about empowering his clients through education about their tax health. He is highly energetic and brings a sense of optimism, creative problem-solving and a deep level of commitment to every Erock client.

 

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