Posts Tagged ‘financial planning’

What to Do if the IRS Audits You

April 19, 2011

The best thing to do if you receive a notice saying you will be audited is to not panic.   You should speak to the auditor and refer him or her to your tax professional so that you have a better understanding of the situation.  Getting the situation organized is a great thing to do.  Make sure you ask the Internal Revenue Service, or IRS, why you have been selected to be audited.  Some reasons could be that you were randomly selected by computer; your business was part of a program to test compliance in the industry; or an employee, co-worker, or competing business told on you.

Even though you filed your taxes on time, the information you provide, correctly or otherwise (but especially the latter), may raise red flags and trigger an IRS audit. If you are audited, do the following.When handling an audit, be sure to do the following:

  • Be organized
  • Give them only the documents needed to support the deduction being questioned
  • Never give the IRS agent more or less information than is requested
  • Answer questions honestly, but briefly
  • Never give the IRS the original, and often, only copy of a document.  Make copies of the requested document(s).
  • Don’t chatter or exchange casual conversation.  Each comment only gives them more information.
  • Stay calm.  Don’t be argumentative or belligerent.
  • Wait until your representative has time to review any documents before you sign one

If you are aware of what you should be doing and have all the correct information, the audit should go smoothly.  Having a representative with you could help you stay out of trouble, legally.  Always be prepared when you are speaking with anyone from the IRS.  You do not want any mistakes to happen when dealing with them.

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Taylor P.


From Piggy Bank to Union Bank

January 20, 2011

Please retweetUncertainty drifts into peoples’ minds when they think about how to keep their money safe.  You may think that keeping your money hidden somewhere in your bedroom is the best solution, but keep in mind that piggy banks can be easily broken into.  On the other hand, Union Bank promises they can be trusted to keep your money secure.

Life lessons applied in real life. Blogger Joie describes the life lessons she learned about saving money as a child, then applying those lessons when she opens a bank account at Union Bank.Since I was little, I’ve been taught that saving money, although it is overlooked, is a very valuable skill.  Whether it was in a piggy bank or lock box, I always figured out a way to keep my money stored in a safe place.  As I got older, though, I knew it was time to start looking for more appropriate and secure ways to keep track of my money.  Opening a bank account may not seem like such a big deal to most but it is, in fact, an important step towards sound money management.  Personally, I never put much thought into opening a bank account, figuring that things would fall into place.  Now that I’m older and starting to make my way into the business world, though, I realize it is a necessary initiative. More and more adults are finding that teaching their kids to save money is an essential lesson to learn.  Millions of people have gone through some financial struggles during the recent downturn in our economy.  Now with the economy slowly improving they would like to make things better for their kids.

My dad taught me a technique that can help weather any economic fluctuation.  He told me that when I got my paycheck, I should divide it three ways: 10% to the church, 50% to the bank, and 40% to live on.  To this day, I’m grateful to him for teaching me that valuable lesson.  Once I opened my first bank account at Union Bank I was able to manage my money and achieve the financial goals I set for myself.  For those who have not been taught similar financial lessons, Union Bank offers counseling on the importance of saving your money.  If you are not able to put as much as 40% of your earnings into your savings, Union Bank’s new policy can help.  With your permission, they authorize a monthly $25 transfer from your checking account to your savings account.  Keep all this in mind when you consider opening a bank account at Union Bank or teach your kids the importance of money management.  It is never too late to start saving.  In the long run, you are only helping yourself.

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Joie Montoya

Living within your means: Avoiding life’s spending traps

April 29, 2010

Just before the economic decline that began in the last quarter of 2007, the average personal savings as a percentage of disposable personal income for households in the United States hovered just below 1%.  Over two years later, despite high unemployment, the percentage remains seemingly unchanged.  Credit card debt.  Recession.  Real estate meltdown.  What relief do we have in the face of a steady stream of economic gloom?  We can start by setting aside money for future expenses as well as keeping in mind a number of spending traps.

What does it take to live within your means and avoid life's spending traps? Awareness of your financial situation, making sound financial decisions, and discipline to follow through with a carefully made budget are a good start.Paying off debt is much harder than taking it on

We dislike being confronted with this reality until the monthly statement arrives in the mail or their inbox.  While credit cards serve a useful purpose when used carefully and with responsible planning, we cannot forget how much they can afford to pay back.  Easy access to our money with debit cards and ATM machines do not help matters, but we can take a proactive step and setup a text message alert with our bank that notifies us of our account balance before making a purchase.

The allure of home equity loans

We like the fact that home equity loans are tax-deductible and that we can use the money to pay off a large debt like a credit card.  If we do not intend on using that credit card ever again, using a home equity loan would make sense.  However, if we fall into the trap of using our newly paid-off credit card and resume our spending habits, we would have the loan AND the credit card to pay off.

Spending unexpected income in your mind

Did you or your spouse already spend the extra money in your minds?  For example, you want to remodel the kitchen, whereas your spouse wants to take the family to Hawaii.  Before the money arrives, deduct any taxes from it, then work with the remainder.

Creating a “complete” budget

Does your budget include spending on food, housing, and transportation?  Yes, as it should.  However, is it complete?  No, especially if you excluded occasional expenses such as taxes, gifts, insurance, car repairs and family vacations.  How can you include occasional expenses practically in your budget?  Estimate how much these expenses will come to on an annual basis, then divide that figure by 12, allowing you to set aside enough money each month.

Budgets are a mutual agreement

You and your spouse are agreeing not only on the “complete” budget, but also on allowances for each of you to spend money on what is important to you or them.  Drawing up a budget that excludes these allowances would cause resentment and cause one to spend the money in other ways.

So what does it take to live within your means?  Awareness of your financial situation, making sound financial decisions, and discipline to follow through with a carefully made budget come to mind.  Understanding that using credit cards produces debt straightaway whereas spending cash is merely a reduction in assets would be a significant step away from falling into a spending trap.  You can borrow money against your home to pay off a debt, but make sure you never create that debt again, lest you have two payments, the original debt and the second mortgage, to make every month.  Finally, creating a complete budget that includes spending on regular and intermittent expenses, as well as allowances for you and your spouse, will help you both live within your means and be better prepared for life’s spending traps.

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Francis M. Unson