Posted on June 18, 2010August 8, 2017 by Jan Roberg

World Cup and Productivity

Has the World Cup affected your work day? It’s been creeping into mine all week.

I rent my little office for my local practice here in St. Louis from a global conglomerate. Although the people who share my space with me are pretty much small, local businesses, the company we rent from has offices all over the world. One of their cardinal rules is that all the offices must be the same. Therefore, my little office in St. Louis has World Cup soccer on the TV in the lounge all day long. It’s addicting.

For some reason, the only station we get that shows World Cup soccer is in Spanish. It doesn’t matter though, as it was pretty easy to figure out that “Gooooooooooooooooooool!!!!!!!” means “Goal!” in Spanish. Other than that, it doesn’t much matter what else they say. It’s just kind of fun.

At first, I thought I was the only one who cared. Okay, I really was the only one who cared in my office. But, today, with the US playing, there were more converts. Fortunately, this is not my busy time of the year so I can afford to relax and watch a little television once in awhile.

Am I being productive? Well, let’s see, this is supposed to be a tax blog. Oops. I guess that I now have evidence that World Cup Soccer messes up worker productivity. I can live with that, at least for awhile.

If you’d like to stall your productivity too, click on the link below. It shows the Australian soccer team getting some training assistance from African animals. As for me, I really do need to get back to work.

Australian Football Teams Secret Training Camp Exposed

Posted on June 10, 2010August 8, 2017 by Jan Roberg

Scam of the Month Club

One of the things I like about summer is that I have more time to catch up on my reading. Not just my summer beach novels, but my business related journals as well. During tax season, I basically read what I have to and get back to work. In the summer, I have time to read about all the new laws and new tax proposals and have time to really absorb the information.

There’s a whole hierarchy to the newsletters I receive: 1. Important and relevant–those that come from my professional organizations or the IRS itself. I pay for the privilege of getting this information and so I read it immediately. 2. Other legitimate tax information services–there’s a wealth of information out there. I can’t read it all, but in the summer, I like to catch up. And 3, the group that I consider to be the “scam of the month club.” I’m guessing that doesn’t need much explanation there.

One of the necessary evils of my job is going through my spam folder. Occasionally I receive legitimate business mail that gets diverted to spam, so I have to sort through it. Of course, my spam folder is where I usually find my tax scam of the month. Now to be honest, most of the spam is so obvious that I don’t even bother to open it, but sometimes it’s kind of fun to look at.

For example: “Write-off your Rolex, We’ll Show You How!” No, don’t even try it. It’s not a legitimate business expense.

One that’s been popular this year, “Never Pay Taxes Again, it’s Unconstitutional!” Actually, that argument is a little old. The income tax was declared unconstitutional in 1895. In 1909 Congress proposed to make it part of the Constitution and it was ratified as the Sixteenth Amendment in 1913. The government has had a right to collect an income tax for almost 100 years.

One that caught my eye the other day was “Tax Deductible Cruise.” That one was intriguing because, to be quite honest, there are some cruises, or portions thereof, that can legitimately be claimed as tax deductions. But, there are a lot of things out there that aren’t.

For one thing, you cannot deduct the cost of a cruise (or any other type of travel for that matter) to attend one of those investment related seminars. You can only deduct travel related to your trade or business. Just because the promoter of a convention says it’s tax deductible, doesn’t mean it is, you have to go by tax law.

That said, there are times when you can legitimately combine your business trip with personal travel and claim a deduction. For example, the IRS is holding one of it’s National Tax Forums in Orlando this summer. The IRS Forums are a very legitimate deductible expense for me. If I spent an extra day down there visiting my good friend, Mickey Mouse, my trip would still be deductible. I couldn’t deduct the hotel cost for the extra day spent at Disney World, but the travel costs for the trip would still be written off.

There are even some times when you may even be able to deduct that cruise, or maybe part of it, for business. The key of course is legitimacy and excellent records. (That’s both, not either/or.) Legitimacy meaning that you have a real business purpose relating to that cruise. And by record keeping, I mean that you substantiate the amount of money you spent, the time you spent it, the place and business purpose of every expenditure. And you do it while you’re on the cruise, or right after, not six months later in your accountants office while doing your taxes. You can pretty much guarantee that deducting a cruise as a business expense is going to get a thorough review by the IRS. Your best defense is to have flawless records.

If you’ve read about some tax idea on the internet and you’re wondering if it’s true or not, get a professional opinion. You certainly don’t want to miss out on a valuable opportunity, but you don’t want to be duped either. Many scams have some point of fact in them to start with. (Like the unconstitutionality argument, it was true back in 1895.) You know the old saying, if it sounds too good to be true, then it probably is.

Posted on November 21, 2009June 10, 2016 by Jan Roberg

How Much Should I Put into my 401(k)?

The more you save for retirement, the more you’ll have when you retire.

Updated June 10, 2016.

One question I hear all the time is, “How much should I put into my 401(k)?” A good answer to that question is, “as much as you can.” But how do you figure that out?

For 2016, the maximum amount that you can put into your 401(k) is $18,000, unless you’re 50 years old or over, then you can put $24,000 per year in. If you can afford to put the maximum into your retirement plan, I recommend you do so. I have never yet heard anyone complain of having too much money for their retirement.

But what if you can’t afford to put $18,000 into your retirement? What if that’s all you make? How do you determine how much to save? As much as I always want to encourage people to put money into a retirement plan, if your financial situation is tight, and you might be forced to take that money out within the same year, don’t even put it in. The very first thing you want to do is have a little cushion in a savings account. If the car breaks down, or the roof needs a repair, you’ve got a little back up.

Let’s say your annual income is $30,000 a year and you have no savings whatsoever. Make a goal of saving 10% of your income. That’s 10% of $30,000, not 10% of your take home pay. To do that, you’d need to save $60 per week to save $3,000 in one year. (I gave you two weeks of vacation there.) If you can’t live with that, adjust down a little until you find an amount that you can save regularly without hurting yourself.

Once you’ve got a little savings cushion, then you can start the retirement savings. I always recommend that if your employer has a matching program, put in as much money as your employer will match. For example: let’s say your income is still $30,000 and your employer has a program where he’ll match what you put into your 401(k) up to 5% of your income. If you put in $1,500, he’ll match it with $1,500. That’s a 100% return on your investment. If you put in $3,000, he’ll still only match with the $1,500. If you can afford to save extra, that’s great, but the priority is the match.

Another consideration when deciding upon retirement contributions is reducing your income. Suppose you’ll have a graduating senior in the spring. 401(k) contributions would lower the income reported on your tax return, which could impact your scholarship potential. On the other hand, if you already have a child in college, education credits start phasing out at $80,000 ($160,000 if married filing jointly). If you’re near a tripping point for a tax credit or deduction, it might make sense to increase your 401(k) contributions so that you can qualify for the credit. Check with your tax professional to see what works best for you.