What To Do When You Experience A Sudden Income Increase In Queens

I don’t know about you, but I am *celebrating* the end of all of the automated phone calls and ads, now that this election is behind us. And no matter how you feel about the results, I hope we can all agree that it’s good to put all the shouting behind us.

Er, well … maybe the shouting never ends. But at least we can change the topic now.

And if there’s one topic that is nice to dream about, it’s the sudden windfall. Like for the South Carolina individual who purchased the winning Mega Millions ticket last month (still wisely anonymous), or more realistically, if we get a sudden raise or an inheritance … or, really, any kind of windfall.

It’s nice to consider — though I don’t recommend “considering” it for too long, lest you become overly dissatisfied with your current circumstances.

I spend a lot of time writing about what you should do if things suddenly turn south … and we are right here for you should that occur. We specialize in helping people in Queens dig out of holes.

That said, we’ve had a number of clients who have come to us because their incomes have suddenly taken a different, much higher turn. And aside from the new tax considerations, there are a number of things you should consider when your income takes leaps that you’re not accustomed to.

What To Do When You Experience A Sudden Income Increase In Queens

“It is wrong to assume that men of immense wealth are always happy.” – John D. Rockefeller

Inheritance and sudden income increase are not nearly as uncommon as you might imagine. There was recent data from the Fed I saw in which more than nine million households in the U.S. reported getting an inheritance of at least $100,000. And there is other data which suggests that baby boomers stand to receive over $8 trillion in inheritance over the next few decades.

But sometimes such “blessings” end up as curses to those who aren’t prepared.

Consider former baseball star Lenny Dykstra, who filed for bankruptcy years ago, and was eventually imprisoned for financial crimes — after once having a net worth estimated at $58 million. And, of course, the stories of lottery winners have become so pervasive that Hollywood has even begun using them as a regular plot device.

I would highly recommend that you not follow those examples. When your income suddenly rises, whether through windfall or the sale of a business or home or some such, well, here’s what I suggest…

Don’t move too fast.

Take some time to let it sink in and get through the emotion. Most poor decisions made with sudden wealth usually occur within the first couple of months.

So lock it up in a low-yield savings account for three months, proceed as normal, and use that time productively.

While you have your new buffer locked away…

Take the time to create specific life goals, and evaluate how the money will help you achieve them.

You’ve suddenly been given some cushion, but that doesn’t have to mean your life needs to radically change. It might get easier … but if you leave behind the goals you created BEFORE this change, it’s more likely that it will get harder.

And to properly do this, you need…

A “disinterested” advisor.

It’s often best to work with someone who already has experienced handling the finances for people with means. That way they, too, won’t get caught up in the emotion of it. Be very careful to whom you give fiduciary responsibility, and perhaps split what you are able to under the auspices of more than one financial advisor, so you can get a feel for what works best for you.

And then you can allow one of these advisors to be your gatekeeper from that suddenly-interested cousin or high school friend from Queens with those “can’t miss” investment ideas.

An important step: Immediately, give a portion of it away.

I’ve written about this dynamic before, but there’s something special which happens inside your mind when you give away your money: it loses its grip on you, ever so slowly. And, far from turning you into a profligate (and unwise) giver, what can happen is that you aren’t as affected in your character by the sudden influx of funds. Which means that you don’t become more flashy, nor do you become a tightwad.

And of course, assess your tax strategy.

Coming from me, this should be a no-brainer, but every gift has a variety of ways by which it can affect your taxes. This is something that we are especially prepared to help you with, and you should ALWAYS plan the tax implications of how you receive large sums of money.

There is obviously more that can be covered in one note here, but again, whether your circumstances have improved OR taken a turn for the worse, we really are in your corner.

Until next week,

 

Salvatore Candela

(718) 894-1500

The TaxAdvocate Group, LLC

One Trump Tax Plan Mistake That Salvatore Candela Wants You To Avoid

The internet can be a confusing, anxiety-inducing space.

The national news is downright scary (and tragic), and places that used to be the province of baby pictures and goofy status updates are becoming increasingly divided over cultural questions and differences.

But on top of it all, finding good information about how to rightly handle your finances in light of the Trump tax plan is another shaky proposition. There are so many contradictory articles, confusing jargon and “explainer articles” that only leave you scratching your head.

Oh, and then there’s the fact that the IRS STILL hasn’t released full guidance for every component of the plan. Oh yeah, and Congress might change a bunch of it before the end of the year (you might have heard — there are elections coming up).

Which is why we make it our mission to be your port in the storm in Queens. To provide you personalized recommendations and guidance through the chaos of all of it.

Because the fact is that there are some strategies that, on the face of things, might *seem* like they would be super-smart.

That is, of course, until you dig into the details.

Which is what we do for you.

We’re only a phone call ((718) 894-1500) or an email away. Don’t make this kind of scary mistake…

One Trump Tax Plan Mistake That Salvatore Candela Wants You To Avoid

“All adventures, especially into new territory, are scary.” – Sally Ride

One of the big changes to come down the pike this year is the limit placed upon how much you can deduct for state and local taxes (the SALT deduction).

As it was before,  you could deduct all of your property taxes, and all of your state and local taxes. In most situations, you could deduct almost all of your mortgage interest paid.

This policy was put in place to spark a greater percentage of us to opt for homeownership, because as the value of your house (presumably) went up, you could get the deductions on your interest and property taxes.

But now things have changed.

And this has especially struck those who live in high tax states. California is tops on most lists (depending on how you calculate it, with or without sales tax — this list includes sales tax and has New York as the highest, with CT, NJ and CA not far behind).

But really, if you have a higher income, or a larger mortgage, this is something we should consider for you, because as of 2018 (that would be this year), you can only deduct $10,000 TOTAL in SALT. (There are separate, new caps on mortgage interest as well.)

Some of these states sprung into action by enacting provisions that would allow taxpayers to contribute to charity at a higher level instead of property tax, but the IRS nixed that.

So some “smart” tax professionals that I’ve seen started pushing a different strategy: set up an LLC, put your home under that entity, and then “rent” it from that LLC.

On the face of it, this seemed super smart. You now have a “business”. You can deduct your mortgage interest and property taxes as a business expense. You MIGHT even be able to take the QBI deduction! 

But there is a significant catch to this strategy that I’m not sure everyone has thought through.

And this is why it pays to have somebody in your corner who is paying attention to this stuff (so you don’t have to): it keeps you from making a possibly-frightful mistake.

Because in this scenario, if you EVER sell your home, and it has increased in value, you are no longer eligible for the gain exclusion of $500K (if you’re married filing jointly) or $250K (if you’re single).

Now, if you know FOR CERTAIN that your property won’t sell at a gain, or only a negligible one, this might make sense for you. We can help you run those numbers.

But consider…

Let’s say you’re at the 24% tax bracket (which is for incomes between $82,501 to $157,500 as a single, or $165,001 to $315,000 when filing jointly) and your property tax is $10,000/year. And we’re assuming you sell at a gain, let’s say of $250K. It will take almost 20 YEARS of this strategy for you to have made up the difference that you would lose from the gain exclusion.

If your property taxes are lower, it would take even longer.

The point is this: there is a downside to every tax strategy. And you need to have somebody in your corner in Queens who is looking at things from every angle to make sure you are making the smartest decision for YOU.

There are ways around many problems. But sometimes following the advice from the “guru of the day” can bite you in the rear. And you could make a frightening mistake.

But remember … we’re in your corner.

Is there anything more that we could do for you, to help?

Until next week,

 

Salvatore Candela

(718) 894-1500

The TaxAdvocate Group, LLC

 

Delayed Gratification: Staying Focused to Get Ahead (Later) in Queens

delayed gratificationFor sports fans, that was quite a run last week. The NHL crowned its champion (and the nation’s capital seemed like it was one massive street party for the weekend), the rest of the NBA conceded to the Golden State Warriors, and we witnessed another Triple Crown in horse racing.

Now, well … there’s baseball.

But this is a good thing, as far as I’m concerned, and for anyone who is a sports fan, because it allows you even greater incentive to free your mind from these smaller (albeit enjoyable) things, and to move your life forward in a fruitful direction.

Last week, I wrote about FOCUS, and the difficulties which the summer can bring to that task. And it is a “task”, because as I said, it’s not just the summer that preys against our personal productivity … it’s everything that *we* allow in.

I thought I’d take up the subject once more today, but before I do, a few quick tax things for Queens taxpayers:

1) Reminder that estimated taxes for the 2nd quarter of 2018 are due Friday, June 15th. Let us know if you need any help with that. We’re in your corner.

2) (This shouldn’t apply to any existing clients) Thursday, June 14th is the deadline to avoid more serious late-filing penalties for your 2017 taxes. If, for some reason, you (or perhaps one of your friends) has NOT filed their taxes yet, a higher penalty scheme kicks in after Thursday. This is because the IRS offers a 60-day window after the initial filing deadline (April 17th this year), during which penalties are smaller.

So, I know you’re not a delinquent … but if you have a friend who might be, let’s help them avoid any further unnecessary fees.

And again, we’re here to help: (718) 894-1500

And speaking of delinquency. Let’s talk again about your focus. Because it’s something we all need to become more and more ruthless about in this heavily-distracted age…

Delayed Gratification: Staying Focused to Get Ahead (Later) in Queens
“You are the only person on earth who can use your ability.” – Zig Ziglar

Recently, I was reading about a study done years ago regarding the effects of instant gratification…

Edited excerpt from Wikipedia
Mischel’s famous research study, “The Marshmallow Test,” showed the importance of impulse control and delayed gratification for academic, emotional and social success.

In the 1960s at the preschool on the Stanford University campus, Mischel put marshmallows in front of a room full of 4-year-olds. He told them they could have one marshmallow now, but if they could wait several minutes, they could have two. Some children eagerly grabbed a marshmallow and ate it. Others waited, some having to cover their eyes in order not to see the tempting treat and one child even licked the table around the marshmallow!

Mischel followed the group and found that, 14 years later, the “grabbers” suffered low self-esteem and were viewed by others as stubborn, prone to envy and easily frustrated. The “waiters” were better copers, more socially competent and self-assertive, trustworthy, dependable and more academically successful. This group even scored about 210 points higher on their SATs.

Fascinating study.

And though there have been recent attempts to duplicate this famous study that have failed, the results and the underlying principle therein provide an important lesson for those of us who want to move our lives forward with intention.

Business thought leader, Jim Rohn, could see it a mile away, when he wrote about the harvest.

Paraphrasing Mr. Rohn: it’s about planning, focus and execution (and later … harvesting) vs. chasing the fad of the week, getting distracted and wasting time you can’t ever get back.

How many “get rich yesterday guru” emails did YOU get today? How many shiny-object advertisements were attempting to allure you out of what you knew you needed to get done?

How many “pressing” business or organization questions did you manage, rather than focusing on growth-oriented tasks for your vocation or business? How much time do they waste?

How many rabbits can you chase at one time?

Now, more than ever, in this digitally-saturated age: Plan, focus, execute and harvest.

Be ruthless about your time. Don’t let the guru of the week waste it by trying to convince you that there’s a golden goose and only they know where it is… and trust me, it’s not in Queens. The real experts produce results for themselves AND help multitudes of others do the same.

The guru of the week produces results for the guru of the week and their insider buddies.

Don’t bite.

And, separately — chances are very good that you’re personally executing tasks which could be easily handled by a $15/hr employee/helper (or $10/hr even) … and which are keeping you from pursuing what only you were put on this earth to do.

There really is a tyranny of the urgent.

Fight against it. Instead: Do at least one thing today to grow yourself or your vocational calling. That is your most important task.

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

Warmly,

Salvatore Candela
(718) 894-1500
The TaxAdvocate Group, LLC

Focus Training For Folks In Queens

focus trainingNow that we’re into June, it really does feel like summer is here. The air conditioning kicks in, the days are hotter … and, if you’re like me, “focus” becomes something I have to set myself towards. It doesn’t just “happen” — especially when the days are hot.

It might be simply because tax season is now fully behind us, and we’ve already turned the page into year-round work. No matter the fact that we work with our Queens clients all year, there really is something very focusing about that April 15th deadline every year (or the 18th, in this year’s case).

But as I said: focus is a decision. And whether you’re an employee, retired, a Queens business owner, or some other vocational expression — really, WHOMEVER you are — living a life of intentionality has never been more difficult.

Devices, screens, “the internet of things” — all of it is pulling against our mind, our imaginations and our wills. Much of that influence is very positive, obviously (who doesn’t love ordering food with a click and a swipe??) … but it’s probably no big surprise that this digitally-overwhelming world can be a little distracting.

Yes, this topic isn’t *exactly* financial, and clearly not tax-related. I don’t pretend to be any kind of “life coach”.

But we like to see our role here at The TaxAdvocate Group, LLC as more than merely transactional. We’re in your corner, for all kinds of decisions that affect your finances — and this issue can certainly become a financial drain as well.

So again … focus is a decision.

And here are some things that might be hurting it for you.

Focus Training For Folks In Queens
“What’s right isn’t always popular. What’s popular isn’t always right.” -Howard Cosell

Just because you work harder doesn’t mean that you are accomplishing anything of actual significance.

In fact, many times it’s the opposite.

Busyness does NOT equal effectiveness.

Sometimes, you find that you are “working harder” because you have fallen into a pit of poor productivity and efficiency.

What I have found to be helpful is recognizing how there are certain habits and practices that are very likely sucking all of the life-force from your day’s productivity.

As an idea starter for focus training, here are four things that very well might be killing your momentum. For you, these might not be an issue, so I urge you, therefore, to consider what really is robbing your attention these days.

These are not all merely related to DIGITAL OVERLOAD, either.

But all of them are decisions — those that are made, and those that are avoided.

1. App Addiction
If you’re constantly checking Facebook, answering or originating random text messages, or have any social media account alerts turned on, you’ll never be as productive as you could be.

One simple way to decrease your Facebook use is to remove the app from your phone. Even if you just use the browser to access it, it’s that extra step or two that it requires that can help your weaker self resist the constant dopamine hit of social media activity.

2. Email Addiction
Turn off your alerts here, too. Don’t leave your inbox continually open when you are engaged in real work.

Because whenever you click on that “Get Mail” button, your brain drip feeds small doses of Something-Important-Is-About-To-Happen-Juice (i.e. dopamine).

Except, it’s hardly ever actually urgent. It can usually wait for your actual focused attention.

So try this out for just one week and see if you don’t accomplish more than you thought possible.

3. Other People’s Emergencies
Emergencies aside, send your calls to voicemail first and return them only during set times (and perhaps even state those times on your voicemail greeting). This has three instant benefits.

First, it tells people you are a focused person, which they will respect and even appreciate. Second, it makes you a focused person — keeping you on task and freeing you from interruptions you can’t anticipate.

Third, you can determine if you’re the right person to handle the call or if it can be delegated.

4. Delegation
As I’ve said, there is a big difference between being busy and being productive. Want to know where you’re just “busy”? Keep track of everything you do every 30 minutes, every day, for one week. Then take all the items that aren’t moving you toward your goals and stop doing them, delegate them to someone else, or hire someone to do them for you.

What will you do with all that extra time? Concentrate only on activities and processes that make money or move you ahead.

The key to more productivity is not more work. The key is more focus. Creating your “Not To Do” List will reset your priorities, refresh your morale, and could even remake your career.

Don’t let your best energy be sucked out of your day.

I’m grateful for our chance to serve you and your family  — and we are dedicated to your thriving. Which means we want to protect you from all of what could tear you down…

Warmly,

Salvatore Candela
(718) 894-1500
The TaxAdvocate Group, LLC

Instilling Financial Literacy For Kids In Queens

financial literacy for kidsMemorial Day weekend can often feel a little disjointed.

There we are with our burgers, our pools, our picnics — all while we are supposedly remembering the sacrifice of so many thousands who laid down their lives in the line of duty for this country, and for the sake of our constitutional freedoms.

However, when you talk to veterans from Queens (as I get the chance to do in the course of our tax preparation work), they do often tell you that these very freedoms (the ones much bigger than backyard barbecues, of course) are exactly why those sacrifices are worthwhile.

So I suppose that despite how jarring it can feel, parades and picnics are exactly the right sort of thing to honor those men and women who made the ultimate sacrifice.

And so we pause and remember.

Memorial Day is much more than simply the “start of summer”.

Moving forward … now that summer *is* here, for many Queens families, children are much more “underfoot” than they are during the school year.

So I have an idea for you: Might I suggest the summer to be the PERFECT time to rework your children’s relationship with money? Here are some thoughts on financial literacy for kids that might help start the conversation…

Instilling Financial Literacy For Kids In Queens
“Adversity doesn’t test character, it reveals it.” James Lane Allen

Teaching children to save money when they’re young can help them deal with financial emergencies when they’re older. Here’s how to get them started, even this summer…

Encourage kids to save *something* over the summer. 
Whether you’ve got a 10-year-old stashing away a dollar or a teenager opening a savings or checking account, get your children in the habit of saving no matter how small the amount. Start them small over the course of the summer, and have them build towards something for the end of the season that will be a real treat.

Help kids balance treats and sacrifices. 
Work with your kids to set and meet small goals, which will allow for small indulgences along the way. Once these smaller goals are met, allow them a little withdrawal to buy something for themselves. Go for the little victories in the beginning.

Instill the idea of an emergency fund. 
Loose change can add up, so don’t let kids toss pennies or leave them lying on the ground. These can become the perfect seeds for the concept of an emergency fund (which will help them as they grow into adulthood).

Set an example. 
Children don’t miss much. If they don’t see you saving, they might wonder why they have to save. Share with them what YOU are saving towards so they can see the process of building towards a victory.

Keep kids away from credit as long as possible. 
Credit card companies expend lots of effort on marketing to teenagers. And with the rise of app-related money systems, many children with smartphone access have even readier availability to the kinds of “time-saving” money traps that so often ensnare adults. Make sure your kids understand what credit pitfalls could lie ahead.

Schedule money meetings. 
Meet with your child at regular intervals to discuss their savings and emergency accounts, answer questions, and discuss money issues he or she might encounter. Especially if they are working a summer job in Queens, helping your children to see where their money is going over each month of the summer will help them to get financial clarity.

Which of course, leads to…

Help children set up a real budget. 
The earlier that young people learn to manage a budget, the easier things will be down the line. Younger ones can start learning by jotting their pluses and minuses down on a piece of paper, while older kids can be introduced to budgeting on software and apps.

The main thing is that you should not rely upon “school” to train your children in financial literacy.

And the summer is a great time to get started.

Warmly,

Salvatore Candela
(718) 894-1500
The TaxAdvocate Group, LLC

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