Monthly Archives: October 2017

If You Want More Success Then Know the Difference Between Important vs Urgent

Important vs. urgent. Many people confuse the two, but if you want to be more successful, then you need to be able to discern between them. Important items have great significance or value while urgent items require our attention immediately. Here are some examples:

Important:  These are items that you need to do, but do not have to be done today, such as projects and assignments, planning, exercising, learning/training, saving for the future, etc.

Urgent: These usually have to do with grabbing your attention immediately, such as text messages, social media, doing dishes (our spouses may disagree with this one), interruptions, emails, most telephone calls, etc.

The problem arises when the urgent items seem to be important because they are pulling at us, and then we ignore all of the important items that we should have done. This is probably why many people say that they didn’t get anything done because their attention was diverted to urgent items. Even worse is when we procrastinate and make the important items both important and urgent.

What are some solutions? If an item is important, then you should set aside time either daily, weekly, or monthly to take care of it and actually put it on your calendar. Once an important item is scheduled there is a high probability it will get done. As for the urgent items, you can schedule these as well to take care of them at specified times or on a specific day. If you want to be bold then try this experiment for one week or even one month: shut off all of your alerts, emails, etc. while you are working, and designate a time to check them, say twice a day. Then, see if your productivity improves, and let me know what happens.

Is it Better if I File Separately from My Spouse and Other Common Tax Questions Answered

We receive a lot of questions pertaining to tax and financial matters. Here is a sample of commonly asked questions:

Q: Is it better if I file separately from my spouse?

A: Usually the answer is no, and the only way to know for certain is to perform an analysis when preparing the tax return to split income and deductions between spouses to see if there is a benefit. However, you may want to file separately from your spouse if there are tax or legal issues.

Q: Is social security taxable?

A: That depends. If you are only receiving social security and do not have other income, then the answer will probably be no. A quick way of checking is to add one half of your social security plus your other income to see if it is greater than your base amount, which varies based upon your filing status (currently it is $32,000 for married filers).

Q: Does my son or daughter need to file a tax return?

A: Generally, if your dependent child has more than $6,300 of earned income or $1,050 of unearned income, such as from dividends, then they need to file a return.

Q: If I file an extension, will it extend the amount of time that I have to pay my taxes.

A: No, the extension only grants you additional time to file your return and all payments must be made by the original due date, otherwise additional interest and penalties may be incurred.

Q: Can the IRS levy my IRA?

A: Yes, the IRS has the power to levy almost all of your income and assets, with few exceptions, such as workers’ compensation.

Q: Are legal fees for a divorce deductible?

A: Many of the legal fees for a divorce are not tax-deductible, except for the portion relating to taxable income.

Muni Bonds or Taxable Bonds?

Investing in municipal bonds can be a benefit due to the fact that the interest income they provide is generally tax-exempt. In order to realize the full tax benefits of municipal bonds, you have to be careful not to make the following mistakes.

Low Interest Rates: Interest income from municipal bonds is usually much lower than corporate bonds, but since municipal bond interest is generally tax-exempt, your tax adjusted returns may be higher. The problem arises when you would have received a greater return by investing in corporate bonds than municipal bonds when adjusting your return for taxes. Generally, if you are in a low tax bracket, then municipal bonds may not make sense.

Purchasing Out of State Bonds: Municipal bonds are not subject to either Federal or state taxes if you purchase bonds from your home state. If you live in a high income tax state, such as California, New York, or New Jersey, then you should consider purchasing a bond from your state to reduce the overall tax exemption.

Alternative Minimum Tax: This dreaded tax, also known as the AMT, may make your tax-exempt municipal bonds taxable. If a bond is considered a private activity bond, then you may end up paying taxes on the bond interest.

You must be careful when selecting municipal bonds by doing your research. Otherwise, in the quest for tax-exempt income, you may end up overpaying taxes or unnecessarily receive a low interest rate.