Safeguarding Your Internet Passwords

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In this day and age of technology, just about everyone has some sort of online account that requires a password. Whether it be a streaming site like Netflix, a shopping site like Amazon, or an email provider like Google or Yahoo, they all use accounts with usernames to identify individual users and passwords to protect that user’s personal information stored within the account. Passwords are a necessary protective layer for all users in order to keep their personal information from prying eyes with mal-intent. However, there are many questions that arise for account users regarding security. What makes a good password? How else can I protect my accounts and information? How am I going to remember all of my passwords? Can I use a password more than once if it is secure enough? We have the answers here.

What makes a good password?

Secure passwords are difficult for hackers to guess or figure out, which makes them an excellent layer of protection. It is important to create secure and unique passwords for each of your personal and business accounts. It is recommended that your passwords be long, but not necessarily too complex. Remember that while you want your password to be complex enough to secure your account, you also don’t want it to be too difficult to remember that you lock yourself out of your account as well. It is important to also keep your passwords unique. Try to avoid generic things such as sports teams, pop culture icons or references, and common phrases. It is best if the password is seemingly random. It is common for people to stack their upper and lower case letters and special characters in certain spots in their passwords as well. This trend weakens a password. Most people capitalize letters in the beginning, use lowercase letters in the middle, and special characters or numbers at the end of their passwords. By breaking out of this trend, your password becomes harder to guess for hackers. Spread out the capital and lower-case letters as well as the special characters and numbers in your password to ensure a more secure password. There are tools available to help you create secure passwords that are long and complex enough, yet still easy enough to remember.

If I have a secure password that I can remember, can I use it or multiple accounts?

The short answer is “NO”. It is not a safe practice to repeat passwords on different accounts. No matter how secure your password is, there is always the possibility that someone will be able to figure it out and gain access to your account, and once they have done so, they will be able to access any other account with that password. To mitigate breaches in your accounts, it is important to create one of a kind secure passwords for each individual account that you have, both business and personal.

How often should I change my passwords?

It is common practice for people to routinely change their passwords for an extra layer of security, however research indicates that there is no significant reduction in risk by changing passwords frequently. In fact, it only makes it more difficult for the user to keep track of their passwords. By creating a singular secure password, your accounts will be protected and accessible to you. This is why it is so imperative to create a secure password in the first place.

How can I remember my secure passwords?

If you have a good memory, then it should be easy for you to create secure passwords for each of your accounts and remember them. However, many people do not have a perfect memory and find it difficult to juggle multiple long and complex passwords. There are options! You can purchase or find a free password manager to maintain your passwords for you. There are many free and self-operated programs offered.  Many web browsers like Google Chrome and Fire Fox offer a basic password manager that will store and sometimes even create secure passwords for your accounts that you frequently access. While these are convenient and free, they are very limited in their storage and password generating abilities. For a few dollars a month, you can buy a password manager dedicated solely to the security of your passwords.

What is a password manager?

A password manager is like a vault for your accounts and their individual passwords. Many programs require you to create one secure password for the vault that contains all of your other passwords. This way, you only need to remember the vault password to gain access to the rest of your passwords. Having one password for all of your other passwords is much easier to remember than each individual one, however, this master password must be all the more secure. Some of the top paid password manager programs available are 1Password ($3 a month) and Dashlane ($5 a month). LastPass is a free password manager and KeeppassXC is a free self-operated management system.

How else can I protect my information?

Passwords are a great layer of protection for your account information, but they are not the only thing you can use. A commonly used additional layer of security is authentication. Authentication security comes in many forms from codes sent to your phone or mobile devise via text message, call, or email to security questions with preset answers by the user. These additional layers are often offered by sites to their users and can also be added with extensions/add-ons or settings within the account. These additional layers can be added and adjusted by the user depending on the server the account is on. Another additional yet extremely simple layer of security can be found in the settings of most accounts that require a password.  This feature is often ignored. Usually, there is an option for users to elect for the account server to remember their user name and password on a particular device or website. By selecting this option, the server or device stores your login information so that there is no need to manually enter your information to log in each time. Do NOT select this. If anyone has access to the devices that you frequently use or if you select this option while using a public device, people can easily access your account, perhaps even without your knowledge. To avoid someone gaining access to your account without your knowledge, it is possible for a user to create an alert system for their accounts. An alert system will notify the user via email or text message when a login attempt is being made and will sometimes ask for the user to verify if the attempt was valid. An example of this can be found with Google accounts. Their systems will notify the account user via email if a suspicious attempt was made to access their account from an area that they are not normally in or if a certain number of log in attempts were made incorrectly. Additional layers of protection like this are always recommended to ensure security.

Can I ever not use a password?

Yes and no. Strides have been made towards developing password-less accounts, but there are no current options available for a truly password-less account. Examples of these strides are biometrics or SMS operated accounts. Biometric accounts use things like fingerprints or facial recognition software to verify a user. Day to day examples of biometric accounts are the latest iPhones and Android models. However, these devises still require a PIN number or password to access the phone if the biometric software fails to recognize the user. SMS operated accounts are accounts that use the user’s phone number as a user name and instead of a set password, the system sends a generated code to the mobile devise via SMS to gain access to the account. Though there is no set password to remember, there is still a code required. This can be not only a hassle but also unsafe. It is easy enough for an unauthorized user to gain access to a designated mobile device and log in using the verification code sent to it. There are also physical keys being used rather than passwords to gain access to online accounts. Keys and codes are stored in devices like USBs, NFCs, and even over Bluetooth that can be used to log into accounts by connecting or plugging in the key. None of these options truly replace passwords, however, as they all require additional keys or security measures to enter into accounts. For the near future, there will always be a password for accounts somewhere, even in the background, for security purposes.

At Mazur & Associates, Certified Public Accountants and Business Advisors, we understand the importance of internet security.  Like you or your Company, our firm has multiple business accounts, client accounts, and personal accounts that must be kept secure with passwords and other levels of security. If you have any other questions or need more details on this subject, please call us at (732) 936-1230 to schedule a meeting or telephone conference. We are here to help! Safeguarding your personal information should be a top priority and by working with our firm and other experts you can prevent your personal and business accounts from falling victim to hackers.

Secure Act and TEDRA

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Consolidated Appropriations Act, 2020 – Businesses

As a year-end holiday gift, Congress included a number of individual and business friendly tax provisions in its year-end spending package that was signed into law by President Trump on December 20, 2019. The “Further Consolidated Appropriations Act, 2020” (2020 Act) brought back to life many deductions and credits that had expired at the end of 2017, as well as a few others that had either expired at the end of 2018 or were scheduled to expire at the end of 2019. In addition, substantial changes were made to retirement-related tax provisions, some of which may benefit your business. The funding for some of these changes will come from increases made to various penalty provisions – notably increases in the penalties for failing to timely file a tax or retirement plan return or timely pay taxes due.

To the extent that your business tax return for 2018 could have benefited from any of the resurrected 2017 tax provisions, we should file an amended return to claim any refunds your business may be due. The 2020 Act changes may also affect your business’s 2019 tax liability.

The following is a recap of the provisions that expired at the end of 2017 but are now available for 2018 and future tax returns:

Special Expensing Rules for Film, TV, or Theatrical Productions

The owner of a qualified film or television production or a qualified live theatrical production that began after 2015 and before 2021 may elect to deduct production costs in the year the costs are paid or incurred in lieu of capitalizing the costs and recovering them through depreciation allowances.

Energy Efficient Home Credit

The credit for energy efficient homes is extended to 2018, 2019, and 2020 for homes acquired after December 31, 2017. The credit applies to contractors who construct or manufacture qualifying energy efficient homes in the year such homes are sold or leased for use as a residence. The credit is $2,000 or $1,000, depending on whether the home is constructed or manufactured and on the energy saving standards satisfied.

Alternative Fuel Refueling Property Credit

The credit under Code Sec. 30C for alternative fuel refueling property is extended to property placed in service before January 1, 2021. The credit is equal to 30 percent of the cost of any qualified alternative fuel vehicle refueling property placed in service by the taxpayer during the tax year.

Qualified Fuel Cell Motor Vehicles Credit

The alternative motor vehicle fuel credit is extended to motor vehicles purchased before 2021. The credit applies to vehicles propelled by chemically combining oxygen with hydrogen and creating electricity (i.e., fuel cell vehicles). The base credit is $4,000 for vehicles weighing 8,500 pounds or less. Heavier vehicles can get up to a $40,000 credit, depending on their weight. An additional $1,000 to $4,000 credit is available to cars and light trucks to the extent their fuel economy exceeds the 2002 base fuel economy set forth in the Code.

Two-Wheeled Plug-In Electric Vehicle Credit

The credit applicable for the acquisition of a qualified two-wheeled plug-in electric drive motor vehicle has been extended and now applies to vehicles acquired before January 1, 2021.

Credit for Electricity Produced from Certain Renewable Resources

The credit for electricity produced from certain renewable resources at qualified facilities is extended through 2020. In addition, (1) the election to treat qualified facilities as energy property is available through 2020; (2) a wind facility under construction, where the construction of the facility begins before January 1, 2021, is a qualified facility for purposes of the credit; and (3) for purposes of the phaseout of the credit for wind facilities, the credit amount is 40 percent for any facility the construction of which begins after December 31, 2019, and before January 1, 2021.

Biodiesel and Renewable Diesel Incentives

The credit for certain biodiesel or renewable diesel used or sold as fuel in a trade or business is extended through 2022. There are five components to this credit: (1) the biodiesel credit; (2) the renewable diesel credit; (3) the biodiesel mixture credit; (4) the renewable diesel mixture credit; and (5) the small agri-biodiesel producer credit. In addition, the credit for alcohol fuel, biodiesel, and alternative fuel mixtures is extended to any sale or use for any period before January 1, 2023.

Energy Efficient Commercial Buildings Deduction

The deduction available for the cost of energy efficient commercial building property is extended to property placed in service before 2021. The deduction is limited to the excess (if any) of (1) the product of $1.80 and the square footage of the building, over (2) the aggregate amount of the energy efficient commercial property deductions allowed with respect to the building for all prior tax years.

Classification of Certain Race Horses as 3-Year Property

The three-year depreciation period now applies to any race horse placed in service before 2021.

Classification of Motorsports Entertainment Complexes as 7-Year Property

The seven-year depreciation period for certain motorsports entertainment complex now applies to any such property placed in service before January 1, 2021.

Accelerated Depreciation Deduction for Business Property on Indian Reservations

The accelerated depreciation deduction for qualified Indian reservation property now applies to property placed in service before January 1, 2021.

Indian Employment Credit

Under the Indian employment credit, employers are allowed a credit for a percentage of the wages and health insurance costs paid to employees who are American Indians. This credit is now available through the end of 2020. However, the total amount of wages and health insurance costs that may be taken into account for any qualified employee for a tax year is limited to $20,000.

Other deductions and credits which were scheduled to expire but have been extended include the following:

Work Opportunity Credit

The work opportunity credit, which was scheduled to expire at the end of 2019, is extended through 2020. An employer is generally allowed a 40 percent credit for qualified first-year wages paid or incurred during the tax year to individuals who are members of a targeted group of employees.

Employer Credit for Paid Family and Medical Leave

The paid family and medical leave credit, which was scheduled to expire at the end of 2019, is extended through 2020. The credit allows eligible employers to claim a general business credit equal to an applicable percent of the amount of wages paid to qualifying employees during any period in which such employees are on family and medical leave, provided that the rate of payment under the program is at least 50 percent of the wages normally paid to an employee.

New Markets Tax Credit

The New Markets credit, which was scheduled to expire at the end of 2019, is extended through 2020. The New Markets credit provides that a taxpayer is entitled to a credit for a percentage of the amount paid for a qualified equity investment in a qualified community development entity. In addition, if the tax credit limitation for any calendar year exceeds the aggregate amount allocated for such year, such limitation for the succeeding calendar year is increased by the amount of such excess.

Repeal of Increase in Unrelated Business Taxable Income for Certain Fringe Benefit Expenses

Of interest to nonprofits, the 2020 Act eliminates the increase in unrelated business taxable income of an organization for a deduction that was not allowable by reason of Code Sec. 274 and which was paid or incurred by such organization for any qualified transportation fringe, any parking facility used in connection with qualified parking, or any on-premises athletic facility.

As you are aware, providing excellent benefits to employees can make hiring and retaining talented employees much easier. A number of retirement-related tax provisions were enacted in the 2020 Act, including several that may affect your business or might make adopting certain retirement benefits for employees more attractive.

Tax Credit Increase for Small Employer Pension Plan Startup Costs

An eligible small employer may qualify for a nonrefundable income tax credit for qualified startup costs incurred in adopting a new qualified retirement plan, SIMPLE IRA plan, or SEP (i.e., an eligible employer plan), provided that the plan covers at least one non-highly compensated employee. Qualified startup costs are expenses connected with the establishment or administration of the plan or retirement-related education for employees with respect to the plan. Before the 2020 Act, the credit was the lesser of (1) a flat dollar amount of $500 per year, or (2) 50 percent of the qualified startup costs. Under the 2020 Act, the flat dollar amount for a tax year after 2019 is the greater of (1) $500 or (2) the lesser of (a) $250 multiplied by the number of nonhighly compensated employees of the eligible employer who are eligible to participate in the plan, or (b) $5,000. As under present law, the credit applies for up to three years. You are considered an eligible small employer if, for the preceding year, your business had no more than 100 employees, each with compensation of $5,000 or more.

Small Employer Automatic Enrollment Credit

For tax years beginning after 2019, an eligible employer is allowed a business tax credit of $500 per year for up to three years for startup costs for new Section 401(k) plans and SIMPLE IRA plans that include automatic enrollment. This credit is in addition to the plan startup credit allowed under present law. An eligible employer is also allowed a credit of $500 per year for up to three years if the employer converts an existing plan to an automatic enrollment design. The credit applies for up to three years beginning with the year the plan is first effective, or, at the election of the employer, with the year preceding the first plan year.

Qualified Cash or Deferred Arrangements Must Allow Part-Time Employees to Participate

The 2020 Act requires a Section 401(k) plan to allow an employee to make elective deferrals if the employee has worked at least 500 hours per year with the employer for at least three consecutive years and has met the age requirement (age 21) by the end of the three consecutive year period (for this purpose, an employee is referred to as a “long-term part-time employee” after having completed this period of service). Thus, if your business has a 401(k) plan, a long-term part-time employee cannot be excluded from the plan because the employee has not completed a year of service as defined under the prior-rule participation requirements (i.e., a 12-month period with at least 1,000 hours of service).

Penalty-Free Withdrawals from Retirement Plans for Individuals in Case of Birth of Child or Adoption

New parents can withdraw up to $5,000 from a qualified employer retirement plan or individual retirement plan without any early withdrawal penalty for a qualified birth or adoption. A qualified birth or adoption distribution is a distribution from an applicable eligible retirement plan to an individual if made during the one-year period beginning on the date on which a child of the individual is born or on which the legal adoption by the individual of an eligible adoptee is finalized. An eligible adoptee means any individual (other than a child of the taxpayer’s spouse) who has not attained age 18 or is physically or mentally incapable of self-support.

Finally, the 2020 Act also made some taxpayer and business friendly changes with respect to disaster-related events.

Employee Retention Credit for Employers Affected by Qualified Disasters

The 2020 Act provides a credit of 40 percent of the qualified wages (up to a maximum of $6,000 in qualified wages per employee) paid by an eligible employer to an eligible employee. You are an ”eligible employer” if you (1) conducted an active trade or business in a qualified disaster zone at any time during the incident period of the qualified disaster with respect to such qualified disaster zone, and (2) if your trade or business is inoperable at any time during the period beginning on the first day of the incident period of such qualified disaster and ending on December 20, 2019, as a result of damage sustained by reason of such qualified disaster.

Automatic Extension of Filing Deadlines for Businesses Affected by Federally Declared Disasters

The 2020 Act provides that, in the case of a federally declared disaster, a qualified taxpayer is entitled to a mandatory 60-day extension with respect to filing returns and paying tax due. The 60-day period begins on the earliest incident date specified in the declaration of the relevant disaster and ends on the date which is 60 days after the latest incident date so specified.

The section below describes how this legislation will impact your individual income tax planning and taxable income.

Consolidated Appropriations Act, 2020 – Individuals

As a year-end holiday gift, Congress included a number of individual and business friendly tax provisions in its year-end spending package that was signed into law by President Trump on December 20, 2019. The “Further Consolidated Appropriations Act, 2020” (2020 Act) brought back to life many deductions and credits that had expired at the end of 2017, as well as a few others that had either expired at the end of 2018 or were scheduled to expire at the end of 2019. In addition, substantial changes were made to retirement-related tax provisions and new disaster-related tax provisions have been added. Some of the funding for these changes will come from increases made to various penalty provisions – notably increases in the penalties for failing to timely file a tax return or timely pay the tax due.

To the extent that you could have benefited from any of the resurrected 2017 tax provisions on your 2018 tax return, we should file an amended return to claim any refunds you may be due. The 2020 Act changes may also affect your 2019 tax liability.

The following is a recap of the provisions that have been extended that may require the filing of an amended tax return for 2018.

Deduction for Qualified Tuition and Related Expenses

The deduction for qualified tuition and related expenses is now available for 2018, 2019, and 2020 and applies to qualified education expenses paid during the year for yourself, your spouse, or a dependent. The maximum deduction is $4,000 of expenses if your modified adjusted gross income does not exceed $65,000 ($130,000 in the case of a joint return). If your income is more than that, you can still deduct $2,000, as long as your adjusted gross income does not exceed $80,000 ($160,000 in the case of a joint return).

Expansion of Section 529 Plans

Several changes were made to the rules involving Section 529 plans – tax-advantaged savings plans designed to accumulate funds for future educational needs. First, tax-free distributions for higher education expenses now to apply to expenses for fees, books, supplies, and equipment required for the participation of a designated beneficiary in an apprenticeship program. The apprenticeship program must be registered and certified with the Secretary of Labor under Section 1 of the National Apprenticeship Act. Second, tax-free treatment applies to distributions of certain amounts used to make payments on principal or interest of a qualified education loan. No individual may receive more than $10,000 of such distributions, in aggregate, over the course of the individual’s lifetime. Third, a special rule allows tax-free distributions to a sibling of a designated beneficiary (i.e., a brother, sister, stepbrother, or stepsister). This rule allows a 529 account holder to make a student loan distribution to a sibling of the designated beneficiary without changing the designated beneficiary of the account.

Treatment of Mortgage Insurance Premiums as Qualified Residence Interest

For 2018, 2019, and 2020, you can treat amounts paid during the year for qualified mortgage insurance as qualified residence interest. The insurance must be in connection with acquisition debt for a qualified residence.

Exclusion from Gross Income of Discharge of Qualified Principal Residence Indebtedness

For 2018, 2019, and 2020, gross income does not include the discharge of indebtedness of a taxpayer if the debt discharged is qualified principal residence indebtedness which is discharged before January 1, 2021.

Elimination of Certain Kiddie Tax Provisions

If you have a child that was subject to the new kiddie tax rules that went into effect in 2018, those rules have now been repealed retroactive to the date they were adopted. As a result, the onerous trust and estate tax rates that applied to the child’s unearned income in 2018 no longer apply. Similarly, the reduced AMT exemption amount for such children has been eliminated.

Nonbusiness Energy Property Credit

The nonbusiness energy property credit is extended to property placed in service in 2018, 2019, and 2020. The nonbusiness energy property credit is available for (1) 10 percent of the amounts paid or incurred for qualified energy efficiency improvements installed during the tax year, and (2) the amount of residential energy property expenditures paid or incurred during the tax year.

Alternative Fuel Refueling Property Credit

The credit for alternative fuel refueling property has been extended to property placed in service in 2018, 2019, and 2020. The credit is equal to 30 percent of the cost of any qualified alternative fuel vehicle refueling property placed in service by the taxpayer during the tax year.

Two-Wheeled Plug-In Electric Vehicle Credit

The credit available for the purchase of a qualified two-wheeled plug-in electric drive motor vehicle is extended to vehicles acquired in 2018, 2019, and 2020.

Another change made by the 2020 Act which may affect your 2019 tax return and future tax returns includes the following:

Reduction in Medical Expense Deduction Floor

The floor for deducting medical expenses for 2019 and 2020 has been reduced from 10 percent of adjusted gross income to 7.5 percent of adjusted gross income. In addition, there is no adjustment to the medical expense deduction when computing the alternative minimum tax for 2019 and 2020.

Some of the retirement-related provisions which may be of interest to you include the following:

Repeal of Maximum Age for Traditional IRA Contributions

The prohibition on contributions to a traditional IRA by an individual who has attained age 70½ has been repealed.

Increase in Age for Required Beginning Date for Mandatory Distributions

The required beginning date for required minimum distributions has been increased to 72 years old from 70 ½ years old. The former rules continue to apply to employees and IRA owners who attain age 70½ prior to January 1, 2020. The new provision is effective for distributions required to be made after December 31, 2019, with respect to individuals who attain age 70½ after December 31, 2019.

Penalty-Free Withdrawals from Retirement Plans for Individuals in Case of Birth of Child or Adoption

A new exception to the 10-percent early withdrawal tax applies in the case of a qualified birth or adoption distribution of up to $5,000 from an applicable eligible retirement plan. A qualified birth or adoption distribution is a distribution from an applicable eligible retirement plan to an individual if made during the one-year period beginning on the date on which a child of the individual is born or on which the legal adoption by the individual of an eligible adoptee is finalized. An eligible adoptee means any individual (other than a child of the taxpayer’s spouse) who has not attained age 18 or is physically or mentally incapable of self-support.

Certain Taxable Non-Tuition Fellowship and Stipend Payments Treated As Compensation for IRA Purposes

For tax years after 2019, an amount includible in an individual’s income and paid to the individual to aid the individual in the pursuit of graduate or postdoctoral study or research (such as a fellowship, stipend, or similar amount) is treated as compensation for purposes of IRA contributions.

Disaster-related provisions in the 2020 Act include the following:

Exception to Penalty for Using Retirement Funds

An exception to the 10-percent early withdrawal tax on a retirement-related distribution applies in the case of “qualified disaster distributions” from a qualified retirement plan, a Code Sec. 403(b) plan, or an individual retirement account (IRA). In addition, income attributable to a qualified disaster distribution may be included in income ratably over three years, and the amount of a qualified disaster distribution may be recontributed to an eligible retirement plan within three years. A “qualified disaster distribution” is any distribution from an eligible retirement plan made on or after the first day of the incident period of a qualified disaster and before June 18, 2020, to an individual whose principal place of abode at any time during the incident period is located in the qualified disaster area and who has sustained an economic loss by reason of such disaster, regardless of whether a distribution otherwise would be permissible.

Special Rules for Qualified Disaster-Related Personal Casualty Losses

Under a new provision, in the case of a qualified disaster-related personal casualty loss which arose as the result of a net disaster loss, such loss is deductible without regard to whether aggregate net losses exceed 10 percent of your adjusted gross income. In order to be deductible, however, such losses must exceed $500 per casualty. Such losses may be claimed in addition to the standard deduction and may be claimed even if you are subject to the alternative minimum tax.

Special Rule for Determining Earned Income

If you qualify, you may elect to calculate your earned income tax credit and additional child tax credit for an applicable tax year using your earned income from the prior tax year. Qualified individuals are permitted to make the election with respect to an applicable tax year only if their earned income for such tax year is less than their earned income for the preceding tax year. You are a qualified individual if (1) at any time during the incident period of a qualified disaster, you had your principal residence in the applicable qualified disaster zone, or (2) during any portion of such incident period, you were not in the applicable qualified disaster zone but your principal residence was in the applicable qualified disaster area and you were displaced from such principal place of abode by reason of the qualified disaster.

Automatic Extension of Filing Deadlines in the Case of Federally Declared Disasters

In the case of a federally declared disaster, qualified taxpayers get a mandatory 60-day extension period for filing and paying taxes.

As you can see, the provisions in the 2020 Act are quite extensive. Without a doubt, our CPA staff has the expertise to guide you through the many changes brought about by this legislation.  In fact, you may be able to amend your 2018 business and individual tax return and seek a refund of taxes previously paid!  Please call 732 936-1230 at your earliest convenience to schedule an appointment to discuss how these changes will impact your tax situation.  Happy New Year!

Getting Married and Filing Taxes 

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Loving couples have tied the knot left and right through November! Between the wedding planning and the excitement, we want to make sure couples aren’t forgetting about their financial planning. There is a difference between filing your taxes as single and when you file as married when you filing your tax return, but don’t worry! We have some advice for the happy brides and grooms to be on how to properly plan for your financial future with your partner.

It is important to check your financial compatibility with your partner and create a plan together. Have open conversations with your partner about finances and savings. The following are some big decisions you will have to make before you get married:

  1. Together or Separate?
    • Discuss how finances will or will not be mingled
      • Fully: Combine your checking, and savings accounts, share credit cards, and make payments out of joint accounts.
      • Somewhat: Separate personal accounts, a joint savings account or a family credit card with ground rules on how to handle household expenses (i.e.: rent, insurance, utilities, etc.)
  2. Decide on Roles
    • Discuss the division of financial labor
      • Typically there is one partner that takes on the role of the primary bookkeeper that makes sure all of the bills get paid on time and accounts aren’t overdrawn.
      • It is incredibly important to make sure both are informed.
        • Consider setting a monthly or quarterly date to meet to review your planned budget to see what has been going well, what has been going wrong, and what needs to be tweaked. This is also a great time to discuss any upcoming large expenses such as vacations, holidays and home repairs.
  3. Budget
    • Track your spending! Creating a budget together and sharing financial priorities will make your shared financial life more secure.
      • We suggest that you save 10% of your income and start an emergency fund for unexpected circumstances such as job loss or major necessary repairs on cars or homes. This also allows for an opportunity to invest in a retirement account.
        • When creating a savings account for this emergency fund, we also recommend that you open the account in a different bank than the one you use for your everyday spending in order to make immediate access less convenient.
      • Handle your debt together. Plan to pay down existing debt, but keep in mind that one taxpayer’s credit can be negatively affected by their spouse’s preexisting debt. This is why it is important to not keep financial secrets.
      • Plan for retirement early. Once your emergency fund has been built up to your satisfaction, begin to plan for retirement. Each partner should have their own account to save for their retirement.
  4. Housing and Transportation
    • We know that newlyweds are ready and excited to get their lives together up and running. Some may want to begin planning for a family while others may have different goals, but our advice on housing and transportation is the same for everyone.
      • Start with a small house. You probably do not need as much space as you would think. Starting in a small home or apartment will keep your bills lower and make life more affordable while still provide an opportunity to create your dream home.
      • You do not NEED a new car. Although you may want one, it is more economical to buy a later model used car than a top of the line brand new one. With a used car, the insurance and car payments will be far less, allowing a new couple to remain financially stable as they go through the process of sorting out their future.
  5. Filing Status
    • There are five filing statuses: 1)Single, 2) Married Filing Jointly, 3) Married Filing Single, 4) Head of Household, and 5) Qualifying Widow(er) with Dependent(s)
      • To file as single, the taxpayer must be unmarried, legally separated, or divorced on the last day of the tax year (December 31).
      • To file as married, the taxpayer must be legally married on or before the last day of the tax year (December 31).
        • If you can legally file as married, you MUST file as such, but can choose to file jointly or separately.
    • Married Filing Single Vs Jointly
      • Single: Allows the married taxpayers to file two separate returns similar to when they filed as Single.
      • Jointly: Allows the married taxpayers to file a single tax return with both of their information on it. This option saves time and money, however, each status affects the tax bracket, deductions, and credits allowed.
      • The clearest difference between filing single and married, jointly or separately, is the tax bracket changes. The minimum and maximum income changes in each bracket for married couples who file jointly while those who file separately have the same income requirements as those filing as single. Below is a chart to demonstrate.
Tax Rate Income Filing Separately Income Filing Jointly
10% Up to $9,525 Up to $19,050
12%/15% $9,526 – $38,700 $19,051 – $77,400
22%/25% $38,701 – $82,500 $77,401 – $165,000
24%/28% $82,501 – $157,500 $165,001 – $315,000
32%/33% $157,501 – $200,000 $315,001 – $400,000
35% $200,001 – $300,000 $400,001 – $600,000
37%/39.6% $300,001 and up $600,001 and up
      • There are also changes in deductions. The standard deduction in TY 2018 is $12,000 for single filers and for joint filers, it is $24,000. Single filers can deduct up to $3,000 of their capital gains losses from their income. Couples filing jointly, although there are two people filing, can also only deduct $3,000 in total.
      • It is important to check your withholding once the decision has been made to file separately or jointly. Filling out a W-4 form to distribute exemptions amongst a couple is different than for a single filer. For example. If one partner qualifies for three exemptions and their partner qualifies for one, the number of exemptions should add to four total between the two W-4 forms. Both partners should not take four exemptions each as this will result in owing money to the IRS when they file together. Sorting out exemptions as a jointly filing couple can be made easy by using the withholding and marriage calculators. For the most up to date information about withholdings, see our blog post about it here.

6. Consult a CPA

    • It is always a good idea to get expert advice when it comes to your finances, whether you are single, engaged to be married, or already married. Professional help will enable you to obtain your goals and make educated financial decisions about your future.

We at Mazur & Associates offer custom professional advice for our clients based on the information they provide about their particular situation. We highly recommend that if you are seeking a personalized tax plan that you call us at (732) 936-1230 to set up an appointment with one of our CPAs or tax professionals so that we can get you set up for a successful and worry-free financial future. We are eager to help!

Congratulations to all of the newly wedded couples and to those who have spent years of happiness together thus far, we wish you many more!

Multi-generational Management: Part II

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Here’s a link to Part I of this series!

The owner of Mazur and Associates, Stephen J. Mazur Jr., recently went to the Annual Convention & Expo hosted by the NJCPA and was able to sit in on a talk held by Jason Dorsey of The Center for Generational Kinetics. Mr. Dorsey and his firm use generational analysis as clues to understanding people and how to manage them as employees as well as how to gain them as a client base. This following post is a summary of key points and advice from Mr. Dorsey’s presentation on “Crossing the Generational Divide at Work”.

According to Mr. Dorsey, generations are groups of people born at the same time and raised in similar places. He asserts that location and geography are important in analyzing generations and that connecting across generations is the key to better results within your business. There are unprecedented opportunities for employers that are able to adapt well to communicating inter-generationally.

It is important to realize that the driver of growth historically has been Baby Boomers but as that generation ages out, the power of growth is shifting to Generation Y. Where Baby Boomers believe that “less is more”, Generation Y is making money, spending, investing, building families, etc. For employers and business owners, the best way to offset the loss of Baby Boomer generated income is to gain Generation Y revenue. According to Dorsey’s research, Generation Y has the greatest lifetime value for business owners because they are the number one generation to refer their friends to businesses they’ve tried. As a generation Millennials also do not have any established loyalty to companies yet. According to Dorsey, both the job and the consumer markets are currently flooded with Generation Y adults and now is time to take advantage of it. A simple wat to begin using Generation Y’s habits to your advantage as a business owner and employer is to understand that Generation Y adults are excited to work but want to feel as though they are part of the team. Employers should give their new Generation Y hires business cards with their names on it. This way, they can refer their friends to your business using their card.

Though the job market is flooding with excited Generation Y applicants, Baby Boomers do have needed skills that generation y adults simply do not have. Millennials may outspend all other generations and be the largest generation in the workforce, but they also have a delayed adulthood that inhibits them in ways that other generations never had to face. Because of that, it is important to keep your employees diverse in generation. Teams are more valuable with more generations involved and integrated.

As previously mentioned, it is imperative for employers to understand how to communicate with each generation. While it is likely easier for today’s employers to understand and communicate with Baby Boomers, one tip Dorsey provides on how to communicate with younger members of your team or workforce is to understand how the generation thinks. Generation Y adults are not linear thinkers like Baby Boomers are. They are goal-oriented and outcome-driven workers. To reach them as an employer, it is best to start with the last step when explaining a project and backtrack to show the outcome and then steps to get there so that those steps will be followed.

Dorsey also touched upon technology during his talk. He spoke about how technology is only new if you hold onto the way it was before. Adapting is major in keeping up with Generation Y which is the main target for every business owner. He also noted that Millennials are tech-dependent rather than tech-savvy. They cannot build a phone yet they build their life around it. Technology for this generation is used for communication mostly via messaging, texting, and emailing. As an employer, it is important to be fluent in these forms of communication.

In order to build the ideal, diverse and intergenerational team that he described throughout his talk, Dorsey left his audience with a bit of insight into the value of soft skills within a team or workforce. He asserted that soft skills like project management, collaboration, influence, problem-solving, and leadership are really important as personal attributes that enable someone to interact efficiently and harmoniously with other people. Below we have broken each of those soft skills down for you to make them easier to understand and identify within potential new hires as well as within your current staff and even yourself as an employer and leader in your business.

  • Collaboration: Requires a cooperative spirit and mutual respect in order to achieve your client’s goals
  • Influence: Ability to help clients and teammates to make a decision one way or another
  • Problem Solving- Not always having an immediate answer but having the ability to think on your feet assess problems and develop a well thought out solution
  • Leadership- Providing a level of experience to give the client comfort and show that they are getting significant value from their investments with you
  • Project Management- Ability to initiate a plan, execute, control and complete the work in order to help your team and client achieve their goals

Stephen had high praise for Mr. Dorsey’s segment at the convention as well as for the NJCPA event itself. We here at Mazur and Associates make sure to keep up with the latest information on both tax/accounting news as well as news on being business owners and employers to ensure that we are the best possible resource for our clients regardless of what sort of advisement they come to us for. If you have any questions or are seeking professional advice, give us a call at (732) 936-1230 to set up an appointment!

Feel Secure About Social Security

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We all have questions about retirement and social security. Will I have enough money after I retire? When is the best time for me to start taking my benefits? How do I plan out my future? Luckily, there are answers to all of these questions. We will take you step by step through a series of hot topic questions about social security benefits and provide you with the answers and tools you will need to make the best decision possible about your future. That way, you can feel secure about your Social Security.

  1. What should I know before I start planning my retirement?

You should know that:

  • Full retirement age is between 66 and 67 years old and your age can affect the amount of benefits you receive and when they start.
  • You can start to receive social security benefits as early as age 62 or as late as age 70; however, monthly benefits are reduced if they are started before full retirement age.
  • If you begin receiving benefits before full retirement age, continuing to work may have an effect on the benefits you receive.
  • Delayed retirement credits can be added to benefits if they are started after full retirement age.

Please also note that the Social Security Administration provides a retirement estimator that can provide personalized estimated of your benefits based on age and “stop work dates” that you enter. We recommend taking a look at it before applying for benefits.

  1. How can I apply for retirement benefits/benefits as a spouse?

There are options to call at 1-800-772-1213 or schedule an in person appointment at the local Social Security Office, however there is now an online application that is faster and more convenient. It only takes around 15 minutes to complete and submit electronically. The qualifications for an online applicant are:

  • At least 61 years and 8 months old
  • Not currently getting benefits on your own record
  • Want the benefits to start within 4 months of application

Note that you can still apply for benefits if you already have Medicare. If you do not have Medicare but are within 3 months of age 65, you can use this application to apply for either Medicare and retirement benefits or just Medicare. Here is a checklist with all of the documents you may need when applying for benefits provided by the SSA.

  1. Will I (we) have enough money?

After understanding the information and using the estimators/calculators provided by the Social Security Administration to run the numbers on how much your benefits and pension(s) will provide for you, it is likely that you will need to bridge the gap between what is provided and what is needed with personal savings. There is a general rule that can help you save enough money to retire. The rule is simple, for every dollar of annual shortfall between your projected income and expenses, it is suggested you save $15 to $20 dollars. For example, if your projected retirement lifestyle expense exceeds your social security benefits and pension(s) income by $20,000 a year, it is likely that you will need to save between $300,000 to $400,000 dollars to ensure that you will have enough money.

  1. When is the right time to take social security benefits?

That all depends on personal situations. There is a Retirement Age Calculator that will help you determine your full retirement age and how your monthly benefits may be affected if you begin to take benefits before your full retirement age. As per the information included with question one, there are many factors that can affect your social security benefits from the age you begin to take them and whether or not you continue to work. Depending on your financial situation or your spouse’s situation, the correct choice may be for you to begin taking benefits early.  However, most people ought to take their benefits right on time–at their retirement age. By deferring until your full retirement age, you avoid deductions.  This also permits one to take full advantage of reaping the maximum possible social security payments provided one’s lifespan is the average, currently 78 to 79 years old.

Feeling secure about Social Security benefits is a rarity, but it does not have to be. With the information and links above, you are well on your way to making an informed decision about when and how to begin earning Social Security benefits. If, however, you are still unsure, there is more information available at https://www.ssa.gov/. As always, here at Mazur and Associates we are readily available to help you make the best and most informed decisions about your Social Security benefits. Call us at (732) 936-1230 to set up an appointment with one of our qualified professionals

What You Need to Know About the New Form W-4

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The IRS has recently released a new draft of the redesigned Form W-4, which helps a taxpayer determine their tax withholdings. This redesign was prompted by the Tax Cuts and Jobs Act (TCJA) passed in 2017 which made significant changes to the tax code and taxpayer liabilities, resulting in numerous taxpayers unpleasantly surprised upon filing their 2018 federal tax return. This new and improved Form W-4 is meant to compliment the changes made by the TCJA and simplify the process of determining how much taxpayers should withhold for the 2019 calendar year.

The redesign has simplified the Form W-4 into 5 simple steps and many employees will only need to complete steps one and five. Step one is filling out personal information like the taxpayer’s name and filing status and step five is signing the form. If only steps one and five are completed, the taxpayer’s withholding is calculated using the filing status’ standard deduction and tax rates without any other adjustments.

If steps two through four apply to a taxpayer, it is recommended that the instructions are followed to ensure that their withholdings are adjusted to match the tax payer’s liability more accurately. The IRS suggests that taxpayers who hold more than one job at a time, have a household where both spouses are employed, or have income from alternative sources aside from a job that is not subjected to withholding increase their withholding. If those adjustments are not made, the taxpayer may owe additional taxes upon filing as well as interest and penalties. The IRS also suggests that certain taxpayers consider decreasing their withholding if they are eligible for tax credits like child tax credits or similar dependent based credits and other deductions outside of the standard deduction.

If a taxpayer has multiple jobs, there are three options they may choose from when filing a Form W-4 with this new redesign pending final release for the tax year 2020.
•  Use the calculator provided by the IRS which will guide the taxpayer to add an additional withholding on Line 4c. The taxpayer will need to know the approximate amount that each job pays to complete the entry properly. However, the information is only required to be put on one Form W-4 for one of the jobs held, ensuring accuracy and privacy.
• Please note that if the payment for any of the jobs changes significantly, a new Form W-4 must be filled out and submitted.
•  The taxpayer may achieve the same results as option one by using Worksheet 1 on page 3. This worksheet will also guide the taxpayer to enter additional withholdings on Line 4c. The taxpayer will need to know the approximate amount that each job pays to complete the entry properly. However, the information is only required to be put on one Form W-4 for one of the jobs held, ensuring accuracy and privacy.
• Please note that if the payment for any of the jobs changes significantly, a new Form W-4 must be filled out and submitted.
•  If there are only two jobs held at the same time, the taxpayer can check the box in step 2 on the Form W-4 for both jobs. The standard deduction and tax bracket will be split equally between the two jobs.
• Please note that there is no need to submit a new Form W-4 if the payment amount changes for either job; however this option is a less accurate option that numbers one or two described above. The more similar the payments are between the two jobs, the more accurate the withholdings will be. This option also reveals to the employer that the taxpayer has multiple jobs or has multiple jobs in their household.

The release of the final draft of the redesigned Form W-4 is scheduled for mid to late July as well. Payroll processors will need to update their systems before the final release of the form this coming November. Be aware that taxpayers are not required to submit a new Form W-4 because of this redesign. For the tax year 2019, continue to use the current Form W-4. If there are any other questions about the new Form W-4, there is an FAQ page that the IRS has provided.

With these new changes brought about by the Tax Cuts and Jobs Act, we here at Mazur and Associates CPAs and Business Advisors assure you that we are readily available to help you make the best decisions for your specific tax situation. Make sure that your 2019 federal tax filing is a pleasant endeavor instead of a headache! If you are concerned about your federal withholdings or amount of estimated tax payments, check out our blog post on Paycheck Checkups. Or telephone us at (732) 936-1230 to schedule an appointment.

How To: Multi-Generational Management

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Managing a company is hard enough, but managing multiple generations can make it even more overwhelming. Managers and employees alike struggle with generational differences at the workplace and many let these differences inhibit or get in the way of their work. However, these phenomena can be addressed in a non-confrontational way. Managers should strive to take steps that will benefit both the Company and their multi-generational employees. By doing so, employee relationships will improve and therefore smoother operations will result.

There have been many articles written about dealing with a multigenerational workforce that emphasize how difficult and massive these generational age gaps can be, but perhaps these differences are not as acute as first thought. In general, employees, regardless of their age, want the same basic things: clear expectations, company and decision-making involvement, growth opportunities, and resources for professional development. Focusing on these common desires can help cut away at any perceived generational gap. This mind set can also assist in overcoming unconscious biases about generations.

As a manager, it is important to be versatile in the way that you communicate with your employees. Methods of communication can range from text messaging to emailing to face-to-face interaction. Finding a balance in methods of communication within your particular workplace will allow for a higher level of focus and engagement from your employees. It is important to keep in mind, however, that to be the most effective manager you must manage employees based on their goals, abilities, and strengths rather than their generation.

To ensure that all employees are comfortable at the workplace, it is best to avoid generalizations, particularly those about generational differences. Not only does this negative thinking enforce false stereotypes, but it could make certain employees feel less engaged or singled out, thereby causing them to seek employment elsewhere. Drawing less attention to generational age gaps minimizes the potential issue and allows more opportunity to focus on work. It is also critical to encourage everyone to embrace what they have in common. This encouragement can increase collaboration and build trust among coworkers.

Teamwork is an integral component of any workplace and it cannot be avoided simply because of a multigenerational workforce. However, the multigenerational aspect of a team can be a huge positive rather than a negative. Holistic project outcomes are more common when different levels of experience are blended on a team by combining team members with higher level technology skills with others having more career and industry skills. Teams should be created based upon individual skill sets in order to allow everyone on the team to broaden their horizons.

Informal mentoring and reverse mentoring opportunities are perfect for a multigenerational workforce. Each generation has something to teach those before and after it ranging from written or verbal communication skills to prowess in technology, insight, experience, or leadership skills. Taking advantage of mentoring will benefit the organization as all employees feel engaged and valued by the company and management.

Although managing a multigenerational staff can be trying, it is far from an impossible task. Utilizing these tips will help any manager tremendously with the end result being highly productive employees, content in their work environment regardless of their age! Of course, at Mazur and Associates, Certified Public Accountants and Business Advisors, PC, we are poised to assist you in any way we can. Our firm employs multigenerational staff; therefore we possess insight on this issue and can counsel you on how to extract the greatest productivity from your staff and enhance employee job satisfaction at your Company! To schedule a consultation, please contact us at (732) 936-1230 or communicate through our website: http://www.mazurcpas.com. We look forward to hearing from you!