Organizing Your Paperwork for Tax Season

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 material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations.

1 – bankrate.com/finance/taxes/7-ways-to-get-organized-for-the-tax-year-1.aspx [1/6/14]

2 – irs.gov/Businesses/Small-Businesses-&-Self-Employed/How-long-should-I-keep-records [8/8/13]

3 – irs.gov/Individuals/International-Taxpayers/Taxpayer-Identification-Numbers-%28TIN%29 [1/17/14]

4 – irs.gov/Businesses/Small-Businesses-&-Self-Employed/Use-of-Electronic-Accounting-Software-Records;-Frequently-Asked-Questions-and-Answers [5/22/13]

5 – turbotax.intuit.com/tax-tools/tax-tips/Rental-Property/Cost-Basis–Tracking-Your-Tax-Basis/INF12037.html [1/23/14]

6 – irs.gov/uac/Newsroom/Starting-Jan.-13-2014-Business-Tax-Filers-Can-File-2013-Returns [1/9/14]

7 – irs.gov/taxtopics/tc301.html [1/22/14]

Introducing The Family Legacy Initiative

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.

This is a no cost, no obligation event. This information should not be considered as tax/legal advice. You should consult your tax/legal advisor regarding your own tax/legal situation.

Christopher S. Musuneggi Selected for 2013 NAIFA Quality Award

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.

The Pittsburgh Foundation Scholarship Search

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:

• High school students who are about to graduate,
• Undergraduate students,
• Graduate students or someone who is about to enter graduate school, and
• Elementary school students.

Tweet, tweet…

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.

Toys for Tots Toy Drive a Great Success!

“Christmas is doing a little something extra for someone.” ~Charles M. Schulz

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!).

Vice President of Business Development Completes Entrepreneurial Fellows Program

Here Christopher is joined by J. Jeffrey Inman, Associate Dean of Faculty & Research, and Ann Dugan, Assistant Dean of The Institute for Entrepreneurial Excellence.

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.

Why We Support Small Business Saturday

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.”

Confused About Health Insurance Options?

OBAMACARE.  AFFORDABLE CARE ACT. MEDICARE. MEDIGAP. MEDICAID. GROUP MEDICAL. HSA. HRA.

Could this possibly be more confusing?

Don’t go there alone!

As a client or friend of The Musuneggi Financial Group, please know we are concerned that your medical choices are in your best interest.  To help with these decisions we have engaged George Zaras of 4i Insurance Group and Mike Lauro, Senior Health Specialist at Health Benefit Options, to assist you. 

If you are approaching age 65, even if you are still working, you need to sign up for Medicare or face a penalty.  If you are no longer covered by your current medical plan as a result of the Affordable Care Act, you need to find an alternative or risk paying a fine.  If you have lost your job or been relegated to less than 30 hours, you need to find another form of coverage. If you own a business and wonder what is the best plan for you and your employees, having professional guidance is important.

Please let us know if we can help. 

Both Mike and George are here to help you find a plan that fits your needs and to help you find a plan that allows you to keep you doctor and/or your hospital network. Their consultation services are available to individuals, families, seniors and small businesses at no charge.

To learn more about how they can help, please call Emily at our offices, at 412-341-2888 x 0, and she will arrange an appointment for you to meet or talk with either George or Mike.

Securities & Investment Advisory Services Offered Through H. Beck, Inc. Member FINRA, SIPC. H. Beck, Inc., and The Musuneggi Financial Group, LLC are not affiliated. The Musuneggi Financial Group is not affiliated with George Zaras of 4i Insurance Group or Mike Lauro of Health Benefit Options.

Ladies: A Man is Not a Plan

We’re excited to share a post straight from the desk of our President & CEO, Mary Grace Musuneggi…

So the conversation went something like this…

“I see you just graduated from college?”

Young woman: “Yes, with a Bachelors of Arts Degree.”

“And what kind of career will you pursue?”

Young woman: “I am really not planning on pursuing a career. I am planning on staying at home and raising children.”

“Well that is a terrific career that a young woman can choose when she has children.  But have you given any thought to what you might do when they go off to school or grow up and leave home?’

Young woman: “No, as I am not planning on ever working. I am hoping to never need to. I am planning for my husband to provide me the opportunity to always stay at home.”

“Well that’s great! I didn’t know you were married.”

Young woman: “I’m not.”

“You’re engaged, or there is someone special in your life?”

Young woman: “Not yet.  But I am sure there will be.

It may sound as though this conversation should have taken place in the 1950’s.  But unfortunately, I had this talk with a 23 year old a few months ago. Yes, it is the year 2013. So just at the point where you think “we’ve come a long way, Baby,” and women are making better life choices, there is a segment of the female population who believe that their life goals should center around the man in their life…whether he exists or not.

Studies suggest 87% of all women will spend some part of their adult life as a single.  This means they will be totally responsible for their well-being and their wealth.  Some statistics tell us that 51% of first marriages end in divorce. And it doesn’t get any better.  A reported 52% of second marriages end in divorce, as do an estimated 48 % of third marriages. And the average age of widowhood is 55.

With statistics like these, it amazes me to think that any woman would leave her fate totally in the hands of another human being.  And what if you are one of the countless women over age 65 that statistics say is living on an average household income of $1250 a month[1]? Could it be that it’s because your husband had no pension, no savings, no retirement plans?  He didn’t pay off the mortgage, buy the life insurance, or handle the finances well? Do you think you would somehow regret leaving all the planning up to the man?

I am sure that during my conversation with this young woman, she saw herself as Cinderella.  That someday her prince would come and take her away from it all. But the chances of her losing her glass slipper at the king’s ball are slim to none. I always think the Cinderella story ends too soon. What do you think happens years after the prince took her off to his castle? Are they still living happily ever after?

Even if you have been fortunate enough to meet your white knight, the probability exists that he will ride off into the sunset long before you.  Sometimes by choice; and sometimes by chance. And just as a frog can turn into a prince, so can a prince turn into a frog.

And even if you are one of the 13% who stay married until the end, you being educated and financially savvy should be a priority. If he is the prince he seems to be, he will want to do all he can to make sure that you can take care of yourself. So for your sake and his, stay informed, keep on top of your financial situation, and build good business relationships.  Only in this way will you truly live happily ever after.

Join Mary Grace Musuneggi at 6:00 PM on November 19, 2013, at the Westminster Presbyterian Church Fellowship Hall (Room 176) in Upper St. Clair for her free community workshop, A Man is Not a Plan. There is no obligation associated with this event. For more information, visit https://www.mfgplanners.com/events/.

Securities & Investment Advisory Services Offered Through H. Beck, Inc. Member FINRA, SIPC. H. Beck, Inc., and The Musuneggi Financial Group, LLC are not affiliated.