Did you know…
The average length of retirement is 18 years, and the average 50-year-old has just $43,797 saved, according to statisticbrain.com.
How long would $43,797 last you?
If you don’t love your answer to that question, join us for Girls Just Want to Have Funds (for Retirement!) workshop on Tuesday, April 29. See the attached flyer for all the details!
Remember how your grandmother bought you a share of Disney stock as a birthday gift; or when you bought a few shares of Duquesne light stock in the 70’s as “everyone was” because it was paying a great dividend? Did you buy those shares of XYZ Company because your bartender gave you a stock tip, or did you work for one of those numerous companies that issued stock awards or stock options? In many cases these gifts or purchases of stocks came with the actual physical shares for you to hold.
Today most stocks exist as “book entry,” meaning you don’t get the shares in your hands.
But years ago you could…and if you did, then you probably still have those shares in a safety deposit box, shoe box, jewelry box, or in the back of a closet somewhere. Maybe the Disney stock is in a frame hanging on the wall. Or perhaps you have no clue where the shares are, but you keep getting dividend checks on a quarterly basis.
Holding physical shares of stock brings a myriad of potential problems. If they are in fact lost, it can be very costly to replace them. If you want to sell them quickly, that is not possible as they need to be placed in an investment account and/or returned to the Transfer Agent of the stock company before this can be done.
If you need to transfer ownership due to divorce or death, this can be another time consuming issue. These shares could also end up in your Estate. They may need to be valued for inheritance tax purposes. They may need to be made available and valued if you go into a Long Term Care facility.
Tracy Zihmer, Estate Planning Attorney with Feldstein Grinberg Lang & McKee, P.C., reminded us that “having physical shares is a huge pain when settling an estate.” Tracy says, “The biggest advantage of having shares in your investment account with your financial advisors–like The Musuneggi Financial Group–is the ease of transfer after death. It is such a pain to transfer stock that is in paper form. Usually the stock must be transferred into the estate and then from the estate into the heirs’ individual accounts, and then they can sell it or not. In addition, each stock may have a different transfer agent and you have to go through each transfer agent separately–it’s a very time consuming and costly process; and then you may run the risk of when you get all of the paperwork filed, the stock company switches transfer agents and you have to start over again.”
If you receive dividends from physical shares and you like using them for income, you can continue to do that after switching those shares to an investment account. You may also be able to have them reinvested in additional shares or accumulated in another investment.
Remember, even though you may have initially bought the shares for “fun” or you laughingly thought your one share could be worth thousands if the stock split someday, and even if they are just hanging in a frame on the wall…these shares are an asset, like any other financial asset.
If you are holding physical shares, or if you are getting dividends from shares you cannot locate, give us a call and we will be glad to discuss the ramifications of keeping the physical shares or offer recommendations for what you can or should do with the shares.
If you haven’t done it, now’s the time.How prepared are you to prepare your 1040? The earlier you compile and organize the relevant paperwork, the easier things may be for you (or the tax preparer working for you) this winter. Here are some tips to help you get ready:
As a first step, look at your 2012 return. Unless your job, living situation or financial situation has changed notably since you last filed your taxes, chances are you will need the same set of forms, schedules and receipts this year as you did last year. So open that manila folder (or online vault) and make or print a list of the items that accompanied your 2012 return. You should receive the TY 2013 versions of everything you need by early February at the latest.
How much documentation is needed? If you don’t freelance or own a business, your list may be short: W-2(s), 1099-INT(s), perhaps 1099-DIVs or 1099-Bs, a Form 1098 if you pay a mortgage, and maybe not much more. Independent contractors need their 1099-MISCs, and the self-employed need to compile every bit of documentation related to business expenses they can find: store and restaurant receipts, mileage records, utility bills, and so on.1
In totaling receipts, don’t forget charitable donations. The IRS wants all of them to be documented. A taxpayer who donates $250 or more to a qualified charity needs a written acknowledgment of such a donation. If your own documentation is sufficiently detailed, you may deduct $0.14 for each mile driven on behalf of a volunteer effort for a qualified charity.1
Or medical expenses & out-of-pocket expenses. Collect receipts for any expense for which your employer doesn’t reimburse you, and any medical bills that came your way last year.
If you’re turning to a tax preparer, stand out by being considerate. If you present clean, neat and well-organized documentation to a preparer, that diligence and orderliness will matter. You might get better and speedier service as a result: you are telegraphing that you are a step removed from the clients with missing or inadequate paperwork.
Make sure you give your preparer your federal tax I.D. number (TIN), and remember that joint filers must supply TINs for each spouse. If you claim anyone as a dependent, you will need to supply your preparer with that person’s federal tax I.D. number. Any dependent you claim has to have a TIN, and that goes for newborns, infants and children as well. So if your kids don’t have Social Security numbers yet, apply for them now using Form SS-5 (available online or at your Social Security office). If you claim the Child & Dependent Care Tax Credit, you will need to show the TIN for the person or business that takes care of your kids while you work.1,3
While we’re on the subject of taxes, some other questions are worth examining…
How long should you keep tax returns? The IRS statute of limitations for refunds is 3 years, but if you underreport taxable income, fail to file a return or file a claim for a loss from worthless securities or bad debt deduction, it wants you to keep them longer. You may have heard that keeping your returns for 7 years is wise; some CPAs and tax advisors will tell you to keep them for life. If the tax records are linked to assets, you will want to retain them for when you figure out the depreciation, amortization, or depletion deduction and the gain or loss. Insurers and creditors may want you to keep federal tax returns indefinitely.2
Can you use electronic files as records in audits? Yes. In fact, early in the audit process, the IRS may request accounting software backup files via Form 4564 (the Information Document Request). Form 4564 asks the taxpayer/preparer to supply the file to the IRS on a flash drive, CD or DVD, plus the necessary administrator username and password. Nothing is emailed. The IRS has the ability to read most tax prep software files. For more, search online for “Electronic Accounting Software Records FAQs.” The IRS page should be the top result.4
How do you calculate cost basis for an investment? A whole article could be written about this, and there are many potential variables in the calculation. At the most basic level with regards to stock, the cost basis is original purchase price + any commission on the purchase.
So in simple terms, if you buy 200 shares of the Little Emerging Company @ $20 a share with a $100 commission, your cost basis = $4,100, or $20.50 per share. If you sell all 200 shares for $4,000 and incur another $100 commission linked to the sale, you lose $200 – the $3,900 you wind up with falls $200 short of your $4,100 cost basis.5
Numerous factors affect cost basis: stock splits, dividend reinvestment, how shares of a security are bought or gifted. Cost basis may also be “stepped up” when an asset is inherited. Since 2011, brokerages have been required to keep track of cost basis for stocks and mutual fund shares, and to report cost basis to investors (and the IRS) when such securities are sold.5
P.S.: this tax season is off to a late start. Business filers were able to send in federal tax returns starting January 13, but the start date for processing 1040 and 1041 forms was pushed back to January 31. Per federal law, the April 15 deadline for federal tax returns remains in place, as does the 6-month extension available for those who file IRS Form 4868.6,7
This year we’re excited to launch a new program, The Family Legacy Initiative. Through this initiative, we will be able to provide our clients and their families with programs and information to help them have “The Talk”; make preparations for later life issues and lifestyle changes; explore medical, financial, and living arrangements; and prepare for happiness and security as they–or their parents–age.
Please join us for our Kickoff event, Having “The Talk,” on January 30 from 6 – 8 PM at the Carnegie Municipal Building. Mary Grace Musuneggi, President & CEO of The Musuneggi Financial Group, will discuss how to use the Family Meeting and the Family Letter to communicate your plans and wishes for financial matters, living arrangements, and final arrangements to your family. Parents, bring your adult children; adult children, bring your parents!
This event is free for clients and their guests.
For more information about this event click here.
Please join us in congratulating Christopher S. Musuneggi, our Vice President of Business Development, for receiving the 2013 National Association of Insurance and Financial Advisors (NAIFA) Quality Award. This award is considered a mark of distinction for financial advisors, and it recognizes Christopher’s professionalism, quality service provided to clients, adherence to the NAIFA code of ethics, and service to the industry association.
Are you planning for a college education or trying to pay for one right now? Whether you are a student or a parent of a student, we recommend using The Pittsburgh Foundation’s Scholarship Search to browse scholarships established by Pittsburgh Foundation donors.
This site provides information on scholarships for a variety of students, including:
A little birdy told us…er, tweeted…that social networks are a great way to share valuable information with our community, so now you’ll find us on facebook and twitter.
Please like us at facebook.com/TheMusuneggiFinancialGroup. And follow us at https://twitter.com/MFGPlanners.
Of course, we’re still available the old fashioned ways, too: you can reach us in our office, on the phone, and at www.mfgplanners.com.
THANK YOU to everyone who contributed to our 2013 U.S. Marine Corps Reserve Toys for Tots toy drive!
On December 5, 2013, we celebrated another successful toy drive. Each year, we are humbled by the generosity of our clients, staff, colleagues, Manor Oak Two neighbors, and even strangers who stop by and help to fill our office with toys.
This year you really outdid yourself: when the South Fayette Student Government members arrived to collect the donated toys, they needed a school bus to transport all of the games, bikes, art sets, skateboards, LEGOs, cars and trucks, books, and stuffed animals to their temporary home, the local Toys for Tots donation center. From there, the toys will be given to local families in need of a little something extra this Christmas.
In just a few months, we’ll start planning for next year’s Toys for Tots drive. But for now, treat yourself to a mug of hot cocoa—you deserve it!—and take a moment enjoy the pictures from our 2013 Holiday Toy Drive party (including a few of that toy-filled school bus!).
We are proud to announce Christopher S. Musuneggi, Vice President of Business Development, recently completed the selective Entrepreneurial Fellows Program at the University of Pittsburgh’s Institute for Entrepreneurial Excellence.
CEOs, company founders and family business leaders who have achieved at least $1 million in sales are invited to join the yearlong program. The program is designed to assist entrepreneurs manage rapid growth, develop strategic plans for sustained success, network with successful entrepreneurial peers, propel their businesses to the next level and match business founders and leaders with established entrepreneurial mentors. Christopher is one of 36 graduates representing a range of businesses, including professional services, real estate and construction, retail and apparel, printing and design, and manufacturing.
The Entrepreneurial Fellows Program is part of the Institute for Entrepreneurial Excellence at the University of Pittsburgh’s Joseph M. Katz Graduate School of Business. Founded in 1993, the Institute’s mission is to be the innovative leader of economic renewal and growth serving enterprising people and businesses in the region. A dynamic economic development organization created by entrepreneurs for entrepreneurs, the Institute for Entrepreneurial Excellence at the University of Pittsburgh provides the power fueling the entrepreneurial vitality of western Pennsylvania.
Here at The Musuneggi Financial Group, we know first-hand the value of supporting our community’s small businesses.
Rosalind Frazier-Francis, our Vice President of Operations, recently shopped for new tires. A national chain advised her to purchase four tires at a cost of $700. This seemed expensive, and as Rosalind considered her options she remembered that throughout her childhood her father went to a privately owned tire company on the South Side when he needed new tires. Her father was a city firefighter, and she recalled him saying this place treated firefighters very well.
Rosalind drove to the local shop and spoke with the owner, who inspected her tires and determined she really only needed two new tires; the other two were still good and would make it through another Pittsburgh winter. He changed the tires on the spot, and the total cost was $250. Shopping locally saved Rosalind $450 that day, and that savings came with the added value of honest and friendly customer service.
We often think that large companies are more competitive because of their buying power, and in some cases that may be so. But before you walk past the local, family-owned small business assuming it is more expensive, stop in and see for yourself. You have nothing to lose and something to gain: the hidden advantage of local small businesses is often excellent, personal customer service.
November 30th is Small Business Saturday. Whether you need to buy or not, visit the small businesses in your community. They will be more than happy to meet their “neighbors.”