More flexibility from the IRS Fresh Start program

The IRS on Tuesday announced that it is making the terms under which it will accept offers in compromise more flexible (IR-2012-53). The changes are part of the IRS’s expansion of its Fresh Start program and are designed to help financially distressed taxpayers clear up tax problems more quickly.

The changes affect the financial analysis used to determine if a taxpayer is eligible for an offer in compromise. In calculating a taxpayer’s reasonable collection potential, the IRS will now look at only one year of future income for offers paid in five or fewer months (down from four years). It will look at two years of future income for offers paid in six to 24 months (down from five years). All offers must be fully paid within 24 months of the date the offer is accepted.

Among other things, the new rules revise the calculation for the taxpayer’s future income; allow taxpayers to repay their student loans and to pay state and local delinquent taxes; and expand the allowable living expense allowance category and amount.

Other changes include narrowed parameters and clarification of when a dissipated asset will be included in the calculation of reasonable collection potential. Equity in income-producing assets generally will not be included in the calculation of reasonable collection potential for ongoing businesses.

The changes are reflected in revised Internal Revenue Manual Section 5.8.5.

—Alistair M. Nevius (anevius@aicpa.org) is the JofA’s editor-in-chief, tax.

Colleges Get Career-Minded

“Some schools are beginning to make career development a mission-critical aspect of the college experience, with everything from ramped-up career services to academic programs emphasizing real-world applications and efforts to engage faculty in practical mentoring.

“We’re seeing the emergence of a new model of education that blends liberal and applied learning,” said Debra Humphreys, head of public affairs at the American Association of Colleges and Universities.

The changes are sparking a debate on college campuses over the extent to which job preparation and training should be part of a liberal-arts education.

For decades, liberal-arts schools largely have been insulated from such questions, even as for-profit and community colleges have faced scrutiny over low graduation rates, high rates of loan defaults and whether they truly prepare students for employment in their chosen fields.”

Complete WSJ article at: http://online.wsj.com/article/SB10001424052702303448404577410592488795980.html?mod=WSJ_PersonalFinance_CareerJournal

Your Social Security Statement – Now Online

From SmartMoney, May 7, 2012

By Glenn Ruffenach

One of the best tools to help with retirement planning is back: Social Security statements are now available online.

Last week, the Social Security Administration added a feature to its website – My Social Security – that enables workers to view online their earnings and benefit information. Starting in 1999, that data had been mailed annually to workers, but the agency suspended the paper mailings early last year as a cost-cutting measure.

At the time, the decision drew mixed reactions: While the savings in paper and money were welcome (the mailings cost about $60 million a year), the statements were a simple and effective means of highlighting the expected size of one’s Social Security benefits at various retirement ages, along with estimates for disability and survivors benefits.

At the same time, the annual mailings provided a history of the worker’s annual earnings. As such, individuals could easily see whether their earnings had been posted accurately in Social Security’s database. (Your eventual monthly benefit is based on your average earnings over your lifetime. If your earnings records are incorrect, your eventual benefit is likely to be in error, as well.)

Now, all this information is available again – online. (Note: In February, the Social Security Administration resumed mailing paper statements to workers age 60 and older who are not already receiving benefits. Later this year, the agency plans to mail paper statements to workers in the year they reach age 25.)

The new system, designed for people age 18 and older, first seeks to verify your identify. You are asked to provide information about yourself, as well as answer security questions. If the information matches the data already on file with Social Security, you then create a “My Social Security” account with a user name and password. At that point, you can access your Social Security statement online.

Among other features, the electronic statement provides:

– Estimates of retirement and disability benefits

– Estimates of benefits your family may get when you receive Social Security or die

– A list of your lifetime earnings according to Social Security’s records

– The estimated Social Security and Medicare taxes you have paid

– Information about qualifying and signing up for Medicare

– Issues to consider for those age 55 and older who are thinking of retiring

– The opportunity to apply online for retirement and disability benefits

– A printable version of your Social Security statement

Hope, Stupidity and Other Causes of Your Own Financial Crises

From the NY Times blog section:

“A few weeks ago, Tim Geithner, the Treasury secretary, stated what many of us know but few want to admit:

“Most financial crises are caused by a mix of stupidity and greed and recklessness and risk-taking and hope.”

Yes, many people bear responsibility for letting this particular crisis happen on their watch, but we can’t ignore the key roles of stupidity, greed, recklessness and hope. Many of our personal financial crises are also caused by that same potent mixture of greed, hope, ignorance and the overriding mistake of overconfidence.

It is easy to see the stupidity in others.

A bit too easy I’m afraid. I have found that if we focus on the actions of others and continually look for some third party to blame, we have a tendency to repeat the same mistakes over and over. But if we instead examine our own decisions so we can learn from them, we have a shot at changing that behavior.”

For the full commentary:

http://bucks.blogs.nytimes.com/2012/05/07/hope-stupidity-and-other-causes-of-your-own-financial-crises/

 

What’s In It For Men?

The Wall Street Journal’s Women in the Economy conference has generated a lot of talk about advancing women in the workplace. But with men and women alike competing hard for jobs in a sluggish market, the idea isn’t always warmly received.

Many raise a fair question: What’s in this for men?

Tackling career obstacles that hamper women isn’t a zero-sum game. Research shows that what’s good for women is also good for men, and for business in general, according to Catalyst, a nonprofit research and consulting organization.

For the entire article:

http://blogs.wsj.com/juggle/2012/05/07/whats-in-it-for-men/

 

Good Financial Advisors Do Much More Than Manage Money

A recent Forbes article on financial advisors discusses some key contributions that true financial practitioners offer to their clients – important differences from both the once traditional product salesman model and what can be found on web site content.  A few highlights:

“In a recent blogpost, Betterment made the broad-sweeping claim thatFinancial Advisors are Bad for Your Health. To make their position clear, they included an unfortunate image of a human face on the body of a pig. It didn’t take long for the Reformed Broker Josh Brown to draw the conclusion that Betterment thinks Financial Advisors are Pigs.

The argument made by firms like Wealthfront and FutureAdvisor is simple: young people don’t want to work with a flesh and blood advisor. They believe that advisors are generally poor investors who get paid too much for selling products that aren’t in the best interests of the client. Their solutions, they say, would completely remove the need for a physical advisor. On the other side of the coin, firms like Personal Capital and BrightScope believe that financial advisors are fundamentally good and that many consumers will still want to work with a physical advisor even if the process is increasingly enabled by technology.

The arguments made by firms like Betterment,Wealthfront, and FutureAdvisor demonstrate a basic misunderstanding of what good financial advisors do with their clients. Top advisors serve as a quarterback in their client’s financial life and help coordinate estate planning, tax planning, insurance coverage, as well as providing a comprehensive process to help the client understand their funding needs and life goals.

People want the comfort of a human presence when things aren’t going well. A computer arguably may know how to allocate funds in a normal market environment, but can it talk you off the cliff when things go to hell? I don’t think so. Financial advisors continue to grow in to one of the most powerful players in the financial services world and the entrance of online investment advice providers will not reverse that trend.”

For the complete link:

http://www.forbes.com/sites/brightscope/2012/05/02/why-betterment-wealthfront-and-other-online-investment-firms-are-wrong-about-financial-advisors/

 

Twelve Important Life Lessons

I always enjoy hearing what other people have discovered to be important life lessons through their ownexperiences.  Sometimes there’s a direct match with my own thoughts, and sometimes there are new insights that can either expand or enhance my perspectives.  Here’s some thoughts from Tuesday’s HRB contributor Tony Schwartz:

http://blogs.hbr.org/schwartz/2012/05/turning-60-the-twelve-most.html?referral=00563&cm_mmc=email-_-newsletter-_-daily_alert-_-alert_date&utm_source=newsletter_daily_alert&utm_medium=email&utm_campaign=alert_date

Turning 60: The Twelve Most Important Lessons I’ve Learned So Far

Tomorrow is my birthday — always an opportunity for reflection, but especially this time. For several weeks now, I’ve been thinking about what I’ve learned during the past six decades that really matters. Here’s a first pass:

1. The more we know about ourselves, the more power we have to behave better. Humility is underrated. We each have an infinite capacity for self-deception — countless unconscious ways we protect ourselves from pain, uncertainty, and responsibility — often at the expense of others and of ourselves. Endless introspection can turn into self-indulgence, but deepening self-awareness is essential to freeing ourselves from our reactive, habitual behaviors.

2. Notice the good. We each carry an evolutionary predisposition to dwell on what’s wrong in our lives. The antidote is to deliberately take time out each day to notice what’s going right, and to feel grateful for what you’ve got. It’s probably a lot.

3. Let go of certainty. The opposite isn’t uncertainty. It’s openness, curiosity and a willingness to embrace paradox, rather than choose up sides. The ultimate challenge is to accept ourselves exactly as we are, but never stop trying to learn and grow.

4. Never seek your value at the expense of someone else’s. When we’re feeling devalued, our reactive instinct is to do anything to restore what we’ve lost. Devaluing the person who made you feel bad will only prompt more of the same in return.

5. Do the most important thing first in the morning and you’ll never have an unproductive day. Most of us have the highest energy early in the day, and the fewest distractions. By focusing for a designated period of time, without interruption, on the highest value task for no more than 90 minutes, it’s possible to get an extraordinary amount of work accomplished in a short time.

6. It’s possible to be excellent at anything, but nothing valuable comes easy and discomfort is part of growth. Getting better at something depends far less on inborn talent than it does the willingness to practice the activity over and over, and to seek out regular feedback, the more precise the better.

7. The more behaviors you intentionally make automatic in your life, the more you’ll get done. If you have to think about doing something each time you do it, you probably won’t do it for very long. The trick is to get more things done using less energy and conscious self-control. How often do you forget to brush your teeth?

8. Slow down. Speed is the enemy of nearly everything in life that really matters. It’s addictive and it undermines quality, compassion, depth, creativity, appreciation and real relationship.

9. The feeling of having enough is magical. It rarely depends on how much you’ve got. More is rarely better. Too much of anything eventually becomes toxic.

10. Do the right thing because it’s the right thing to do, and don’t expect anything in return.Your values are one of the only possessions you have that no one can take away from you. Doing the right thing may not always get you what you think you want in the moment, but it will almost always leave you feeling better about yourself in the long run. When in doubt, default to calm and kind.

11. Add more value in the world than you’re using up. We spend down the earth’s resources every day. Life’s primary challenge is to put more back into the world than we take out.

12. Savor every moment — even the difficult ones. It all goes so fast

Any matches for you?  Or something new to add to your “ponderings”?  LAB

Medicaid Gets Harder to Tap for Long Term Care

From the Wall Street Journal Personal Finance section:

‘Families hoping to use Medicaid to help pay for long-term care are facing tougher restrictions—though some states are getting stricter than others.

In Texarkana, Texas, for example, you can get Medicaid to pay for a nursing-home stay after simply buying an annuity with any savings that exceed the qualifying limit, says John Ross IV, a lawyer who specializes in elder-law issues there.  But just across the state line, Arkansas’s Medicaid program has told him it won’t accept the same practice, he says.

To be eligible for Medicaid in most states, you generally can have no more than $2,000 in cash and investments, along with a house and a car. (Spouses are allowed to keep varying amounts as well in different states.) In the past, regulators looked at any gifts you made up to three years before applying for Medicaid. In 2006, a new federal law increased the “look back” period for most transfers to five years.

States are in charge of qualifying people needing long-term care for Medicaid, working within federal rules, and that leaves room for different interpretations, says David Zumpano, an estate-planning lawyer and CPA in New Hartford, N.Y.

In some cases, states—many of which are anticipating budget shortfalls—are trying to retrieve money from the estates of people who used Medicaid to pay for long-term care, Mr. Zumpano says. Iowa, Minnesota, Missouri, Nevada, New York, North Dakota, South Dakota, Tennessee and Virginia are all tinkering with ways to recover Medicaid expenses.’

Link to the entire article: http://online.wsj.com/article/SB10001424052702304177104577308071565334812.html?mod=WSJ_PersonalFinance_PF15

Secret to success for financial advisors? Get an easy chair.

After interviewing financial advisors about their credentials and experience, perhaps checking out their room design should be on your list too?

“A living room is more conducive to successful financial planning than an office.

So says psychologist and wealth consultant James Grubman, who recommends that financial advisers eliminate the business feel of their offices and install comfortable chairs and a sofa — just as he has done with his elegant, living-room-like office.

“A great client meeting room is a place for conversations about personal and family issues, where the family sits around the room,” said Mr. Grubman, principal of FamilyWealth Consulting in Turners Falls, Mass.

Over the years, he has applied the principles of physician-patient communications to financial planning and has developed what he thinks is an ideal client-friendly design for meeting spaces.

“You will be amazed at how the conversation changes,” said Mr. Grubman, who has counseled other advisers about how to design their work space.

See the full article by Lavonne Kuykendall at http://www.investmentnews.com/article/20120325/REG/303259993

Me, Save?

There’s a great site for young adults (and the young at heart looking to learn) that covers a variety of financial planning issues in an interactive way.  Interested to see about www.feedthepig.org yourself?  Check out this section on “Me, Save?”…..and cruise around the rest of the site too……

http://www.feedthepig.org/mesave