Nevada Financial Advice

CPA In Reno Explains Debt Forgiveness

One topic of discussion I have encountered recently is debt forgiveness. Is debt forgiveness taxable, does it have to be included with my income? As a CPA in Reno, I wish I had a general answer, but it is a very complex topic.

The IRS Website states, “The tax impact of debt forgiveness or cancellation depends on your individual facts and circumstances. Generally, if you borrow money from a commercial lender and the lender later cancels or forgives the debt, you may have to include the canceled amount in income for tax purposes.”

When looking at debt forgiveness, you have to take into consideration mortgages, credit cards and many other types of forgiveness. As a CPA in Reno, the best advice I can give you is contact an accountant if you are in this situation. The topic is very complex, definitely unique to each individual case and must be handled by someone with experience.

You do not want to get in trouble with the IRS for not including forgiven debt on your tax return. In addition, if you do need to include information you may need the lender to take certain actions. The sooner you figure out what needs to be done, the sooner the process can be started. If you need a lender to take action, it is better to give them plenty of notification, that way you are sure that your return is complete.

The last thing you want is the IRS hounding you. Therefore, call Reno’s Best CPA today and get help with how to handle your forgiven debt. Taxes are a very complex topic, but when debt is involved they can become more complex. Make sure you are being proactive. Once the IRS finds a problem, they will try to get the most money out of you as possible.

Until Next Time,

Tim Nelson

Reno’s Best CPA

CPA In Reno Explains Debt Forgiveness2019-03-29T11:11:05-07:00

A Reno CPA Discusses Nevada’s Budget

There has been a lot of talk in the local and national news about Nevada’s budget shortfall. Many are wondering what the problem is or why Nevada is suffering. I do not think I have the exact answer, but as a Reno CPA who has been working with finances for a while I think I have an idea.

I think the simple answer is that Nevada’s economy is not diversified. Historically we, as a state have relied on three main industries. These industries are gaming, mining and construction. As a state, we have looked to these industries to provide a vast majority of our tax share for the state. The problem with doing this is that when one industry fails or suffers then the others have to pick up the slack. The bigger problem is, when more than one of these areas is suffering. As a Reno CPA, I am always looking for ways to help the businesses I work with stay diversified.

In Nevada, the gaming industry is definitely down. One reason for this decline is that over the years gaming has spread to 49 of the 50 states. Therefore, we are capturing a much smaller percentage of the gaming shares. In addition, the current state of the economy is not helping the gaming industry.

Turing to construction, I believe Nevada has seen the largest decrease in construction in the nation. This is because we had such a run of it for so many years, but when the economy fell, so did the construction industry. In fact, I do not think we will see a decent return in construction for another three years.

Conversely, mining is high. Gold prices are extremely high. Due to the decrease in the other areas and the increase in mining Nevada is looking towards the mining industry to provide a lot of the tax revenue. This dependence on one industry for tax relief is not enough for the state.

As a Reno CPA, I think that one way to help the Nevada economy is to push for diversification. It is not a republican problem. It is not a democrat problem. It is an overall economic problem, which can be helped by not relying so heavily on these three industries.

Reno’s Best CPA,

Tim Nelson

A Reno CPA Discusses Nevada’s Budget2019-03-28T14:48:46-07:00

Certified Public Accountant Tells You How To Write Off The Holidays

We are in between holidays and now is the time to hold those infamous office Christmas parties. If you are like most business owners, these can be fun, but can add a lot of stress to an already busy time of the year. You are focused on wrapping the year up financially and planning for next year. However, these parties might provide an opportunity to get some year-end write-offs. As a certified public accountant in Reno, it is my job to tell you about as many tax deductions as I can.

The first qualification for a tax deductible holiday party is that it must be for your employees. One of the big qualifiers for it is who attends. If the party is just for employees and their families along with the owners, then it will probably be considered a fully deductible event. If this is what a party can be, then what can it not be? It cannot be a party for your customers or for yourself. You can invite non-employees, but then the deduction gets complicated. It may be only partially deductible.

As a certified public accountant, I want to give you some tips that will help you if you are audited. Another thing to think about is the location of the party. You can have it anywhere, but a location other than your home is the best choice. Having it at an office or other venue will make it less controversial should you be audited in the future.

The most important part is making sure to keep the proper documentation. You need to keep all the receipts from the party. It is also a good idea to keep a list of the attendees and their relationships and take some photos at the party. You should keep this documentation for at least three years.

I just wanted to give business owners a different way to look at the holidays. If you want to have a deductible holiday party, than you should talk to a certified public account in Reno.

Reno’s Best CPA,

Tim Nelson

Certified Public Accountant Tells You How To Write Off The Holidays2019-03-28T14:59:14-07:00

Accountant in Reno Provides Holiday Shopping Tips

This may be a couple weeks too late, but it is still important. During the holiday season or for any major celebration, it is common to pull out your trusted credit card and get to shopping. The problem comes at the end of the month or the beginning of next month when you get your credit card statement. As an accountant in Reno, I wanted to take a second to discuss holiday shopping.

Although you may feel compelled to buy everything on someone’s shopping list, you and your family could try some great alternatives this holiday season.

Set a Per Person Limit

Whether you are buying for mom, dad, your significant other or a friend, set a shopping limit. Talk with the person that you want to buy a gift for and come to an agreement on a shopping limit. This is a great strategy for a couple of reasons. First, it allows you to budget your holiday spending and, as an accountant in Reno, I am a fan of budgeting. Second, it forces you to shop. If you come to a $25 arrangement with somebody, what are you going to do? You are going to go and find the best gift or gifts that you can for that price. This means that you are going to shop smarter.

Draw Names

Another idea is to draw names. This idea is more applicable to families, but can work with a group of friends. Simply gather the family around, place each person’s name in the hat, and then draw. Whomever you draw is the person you will shop for. Having to shop for one family member means that you can spend more time on that person and afford to buy them something nicer than you would have if you had to shop for everybody.

Check Three Stores

Once you have your shopping list for each person you should go to three stores before you buy the item. Although you may think you have found the best deal, you never know what the next store will have.

Wait 24-48 Hours

Once you have found the item you want to buy someone, especially if it is a more expensive gift, you should wait 24 – 48 hours before purchasing it. With that said, make sure that the special will last that long.

My goal, as an accountant in Reno, is to help you save money and manage your finances. These are just a couple of tips to help you get through the holiday season.

Accountant in Reno Provides Holiday Shopping Tips2019-03-28T15:01:01-07:00

Certified Public Accountant In Reno Discusses New Year’s Resolutions

At the end of one year and the beginning of the next, many individuals and businesses set New Year’s resolutions. Some of these are to live healthier, others are to spend more time with the family, but many of them are about getting finances in order.

As a certified public accountant in Reno, I think it is great to have finances on your list, but there are things you need to consider.

Be Reasonable

The first piece of advice that I have is to be reasonable. Do not set a goal that you know you will never obtain. You need to have thought about what it will take to reach your financial goal, and make sure that it is something you can do. If you realize that your resolution may be a stretch, then it is a good idea to scale back. It will be better for you to have a goal that you know you can reach.

Write It Down

Do not just spew your goal out at the family’s or office’s New Year’s Party, write it down. You need to have your goal in writing. There is a different level of commitment when you write your resolution down. This will allow you to keep your resolution in front of you, whether you post it in the car or on your bathroom mirror.

Make a Plan

Now that you have a reasonable resolution written down, you cannot just forget it. One way to make it easier to reach your resolution is to create a “to do list” or a “map” on how to get there. If your resolution is to have a certain amount in savings or to pay off a part of your debt by the end of the year, than you need to make a plan of actions on how you can reach those goals. As a certified public accountant in Reno, I think planning is an essential step.

Work Together

My last piece of advice is to share your resolution with someone and then provide support for each other. Find a family member or friend that you trust and let them know what your resolution is. In turn, have them share theirs with you. This provides some support when you start drifting away from your resolution. Together you stand a better chance of reaching your resolutions than if you tried to do it on your own.

As a certified public accountant in Reno, I like to see New Year’s resolutions that are based on finances. Have a wonderful year and best of luck with your resolutions.

Reno’s Best CPA,

Tim Nelson

Certified Public Accountant In Reno Discusses New Year’s Resolutions2016-09-22T21:57:58-07:00

Ways to Start Talking to Your Children About Financial Planning

[youtube]http://www.youtube.com/watch?v=zocentEI7rQ[/youtube]

After hearing all the news about a struggling economy, I felt it was time to talk about financial planning. More specifically I thought it was time to talk about teaching your children about financial planning.

Too many people seek the help of an accountant in Reno, Nevada because they have no clue about financial planning. That is because they did not learn about it as a child. Parents can make a huge difference in how their young ones view spending, saving, and even giving, by taking a few simple steps. Providing your kids with an allowance gives them the opportunity to learn to budget and to track their spending. It’s never too early to start learning how to manage your money.

Allowances

In order for children to understand finances and learn to start financial planning, they must have access to money. An allowance serves this purpose. It should be just enough to meet the needs of the child, but not every want. This will force a child to make decisions and to see the consequences of their spending decisions. It also allows the introduction of a budget and planning for future purchases.

Spending

The art of spending is a huge part of financial planning. Of course, children love to spend their money, but doing so wisely is a skill that must be taught. They must learn to budget for bigger expenses like special toys or activities they wish to do. Then, a child must also learn to be a smart shopper by learning skills like comparison shopping and understanding unit prices. One good way to do this is to involve the children in purchasing decisions of the family such as meal planning.

Saving

An accountant in Reno, Nevada will advise you that a savings plan is a vital part of financial planning. The same is true for children. The first step is to discuss savings goals, then have the children set aside a percentage of their allowance to meet that goal. This should be done before anything is purchased. For children older than 7 or 8, set up a bank account and make regular trips for deposits. For younger children , invest in a compartmentalized piggy bank. One final note – do not deny the child access to the money; they will become reluctant to make deposits.

Giving

Just like with savings, children also need to make giving a part of their financial planning. Again, a percentage should be determined and set aside for charities of choice. For some, this might mean a local charity or it could simply mean tithing to the church. It is also a good idea to have them participate in fundraisers so that they truly begin to appreciate the value of charity. In addition, make giving presents a part of this plan. Children should budget to buy gifts for friends and family.

Accounting

So, your kids have been taught how to spend and save, but do they know if they are doing a good job? An accountant will tell you that a budget only works if the spender knows where his or her money is going. Children are the same. For young children, have them put their receipts into an envelope for each month. A brightly colored chart that tracks spending can be a great teaching tool for them to see where the money is going. For older children, teach them how to record their spending on a spreadsheet.

As a parent in Reno, Nevada, it is never too early to start teaching children about financial planning. Do not just give them an allowance and expect them to spend wisely, because they will not. Instead, give them an allowance and discuss with them the things they need to purchase versus what they want to purchase. In addition, include in the financial planning discussions on savings and giving. Then teach the children how to track their own budget. As an adult, they will thank you.

Reno’s Best CPA,

Tim Nelson

Accountant in Reno, Nevada

Ways to Start Talking to Your Children About Financial Planning2016-09-22T21:47:31-07:00

A Certified Public Accountant Explains Goal Getting Versus Goal Setting

I am frequently asked about the importance of setting goals when you are trying to get your finances in order.

I have been to many classes on goal setting through the years. The most influential classes I have attended have been about goal GETTING as opposed to goal setting. While it is important to dream about or visualize your goals, it is even more important to plan how you are going to get there! The old adage goes that a journey of a thousand miles begins with one step. We can apply that to finances via the phrase you can’t get to retirement if you don’t start putting away money TODAY.”

An important part of good financial management begins with organization. If you do not know what you have (or what you owe), how can you begin to manage it? For example, I have a client who came into some money and asked me which of their credit cards to pay down. Should it be the largest balance card, or should they wipe out a few of the smaller cards. The correct answer was whichever card was charging the highest interest rate! It did not matter what the balance was, if the interest rate was low.

Once you figure out where you are (and that can be daunting), figure out where you are going. Determine spending habits, and more specifically WANTS versus NEEDS. Make sure the needs are taken care of, and then determine if the WANTS are worth the price you are paying for them. For example, I had a client who gave up their cable at a monthly cost of $60 because the programs she was watching just were not worth the cost. Instead, she committed to a healthier lifestyle, getting out and walking, riding a bike, or just sitting in the park. You would be surprised how entertaining people watching in a public place can be!

Once you have your financial goals down on paper, in a specific format, with measurable results, it is time to act on those goals. Put away what you have committed to, and stick to your guns. Use the common phrase “pay yourself first,” since the bills will always be there.

Determining where you are, what the plan is to get you where you want to be, and ACTING on those plans, are the three steps to ultimately getting what you want. And if you’re weak from time to time, see a Reno CPA for support!

Reno’s Best CPA,

Tim Nelson

A Certified Public Accountant Explains Goal Getting Versus Goal Setting2016-09-22T21:35:18-07:00

A Reno CPA Talks About Motivation

With the tax deadline fast approaching, I thought I would take a second to talk about motivation.

There is no question that during “tax season” CPAs are extremely busy (not complaining, I actually enjoy it). However, from time-to-time, I am asked how I stay motivated during tax season.

I find that the busier I am, the more productive I am. Therefore, during tax season, it is not a problem to stay motivated. It is the rest of the year that is the problem!

Appreciative Clients Help

Seriously, it helps to have clients be appreciative of what you are doing for them. Often, they are unaware that you have just saved them thousands of dollars or gotten them out of a mess that they did not even know they were in. Those clients that take the time to say thank you or acknowledge the service I provide really give me a boost of energy.

Simple Lesson In Motivation

The best thing I can say about being motivated is that it has to come from you. In my opinion, motivation from outside is a short-term thing. The German philosopher Friedrich Nietzsche was quoted as saying, “he who has a WHY can overcome almost any HOW.” My recommendation is to focus on the results. If you do not have results in mind, then you are definitely going to struggle to stay motivated during the slow times, the fast times, and well, all the time.

Keep It In Front Of You

Often, people search for motivation, but forget that the easiest way to stay motivated is to keep your goals or desires in front of you. If you want that shiny red sports car, put in on the fridge. Do internet searches on what kind of car, what the prices are, and can getting a used one still make you as happy? I had a friend who purchased a 1996 Model 944 Porsche in 2005. Rather than saying he bought a 9 year-old car, he said, “I’ve finally fulfilled my 9 year-old dream of buying a brand-new 1996 Porsche!” Kind of funny, but perspective is the key!

In the end, you need to remember that motivation comes from within. However, it helps to keep your goals, wants, and desires in front of you. Lastly, although tax season is the busiest time of the year, it truly is the most fulfilling for me. For most people it is not the busy times when they need to stay motivated, it is in the slow times.

Reno’s Best CPA,

Tim Nelson

A Reno CPA Talks About Motivation2016-09-22T21:29:21-07:00

What is the Big Deal with Financial Planning?

[youtube]http://www.youtube.com/watch?v=4iguTKNyX84[/youtube]

In today’s uncertain economic times, financial planning has become critical in order to meet life’s financial goals, including retirement. A thorough analysis of the current financial picture will help point the direction toward meeting those goals and will help avoid excess spending. This includes maintaining a rainy day fund, not relying on social security and calculating the amount of the nest egg. As a Reno CPA, I thought I would take some time to talk about the importance of financial planning.

What is Financial Planning?

Financial planning means analyzing the current financial picture, determining what the long-term goals are and then devising strategies to reach those goals. Strategies can include a variety of things, including automatic deposits into savings accounts, investments in stocks or real estate, or even insurance plans. The key is to make sure those plans are flexible. Not only can goals change, but so can strategies as your situation changes. Marriage, kids and a home all have a way of changing our priorities.

The Here and Now

However, financial planning is not just about the future; it’s about the present. Because this type of planning requires a full analysis of the family’s current financial picture, they know their exact net worth, income, and expenses. As a result, they are better able to manage spending and can avoid living paycheck to paycheck. They will also avoid being caught unaware by massive debt. An important bonus considering the average American carries a credit card debt of around $16,000.

Expect the Unexpected

A major component of any financial plan is a rainy day fund. This is a separate savings account that is set aside for emergencies only and usually contains at least three to six months of expenses. The reality is that no one is safe from unexpected illnesses, accidents or unemployment. Insurance, while another important part of the plan, may not cover everything and may not be easily accessed. In fact, some studies have shown that families without such a backup are far more likely to accumulate debt during a disaster.

Retirement Numbers

Retiring some day? Well, don’t count on social security. Not only is the age being increased to 67 for those born after 1959, but it may not be there. The reserves held in trust to fund social security are expected to be exhausted in 2037. After that income tax will only be able to pay 75 percent of expected benefits. Medicare isn’t any better and is expected to remain solvent only until 2029. As a result, Americans had better get busy with financial planning if they want to have a nice retirement.

How Much Is Enough?

The answer to this really depends on a person’s standard of living and the goals he or she has. However, some experts suggest that people should expect to spend about four percent of their savings each year. That means if expenses are approximately $60,000 per year, they should have a targeted retirement fund of 1.5 million. Sadly, most Americans are not even close. Those between the ages of 65 and 75 have an average of around $56,000. That means they get to spend roughly $2,200 a year.

These numbers suggest one thing – Americans need to get busy financial planning! Analyzing their current financial picture will help them avoid being buried under a mountain of debt and will help keep them on the road to a wonderful retirement, even when disaster strikes. Plus, a failing social security system will not blindside them and leave them penniless. As a Reno CPA, I am here to tell you that financial planning is the smart and responsible thing to do.

Reno’s Best CPA,

Tim Nelson

What is the Big Deal with Financial Planning?2016-09-22T21:21:29-07:00

Tip from Your Accountant in Reno: Two Steps to Creating a Rainy Day Fund

A rainy day fund is an essential part of any family’s financial planning. By putting away a specified amount to be used only during emergencies, a family will be able to weather any emergency easier. The creation of a emergency fund is a simple two-step process. First, conduct a thorough analysis of your family’s current financial status to determine the amount of the fund. Next, set up the account and make regular deposits until the emergency amount is reached. As an accountant in Reno, it is very important to talk about rainy day funds.

Defining a Rainy Day Fund

Most financial planning experts agree that a rainy day fund is a must for any family, but what exactly is it? First, it is money that is set aside to be used only in the event of an emergency. “Emergency” should be taken literally and should not be mistaken with a financial want. For example, buying a new car is generally not an emergency unless your car was totaled and transportation to and from work is put at risk. Also, the rainy day fund should be a liquid asset that can be easily accessed without any kind of delay.

The Importance of an Emergency Fund

The importance of a having a rainy day fund as a critical part of any family’s financial planning cannot be underestimated. No one is immune to unexpected emergencies like car accidents, loss of jobs, or sudden illnesses. Yes, most people carry insurance, but insurance does not cover everything, and there may be a delay in accessing those funds. The rainy day fund will fill in that gap and prevent a family from getting behind in their bills.

How Much Is Enough?

As an accountant in Reno I have to admit that there is some disagreement as to how much money should be deposited into a rainy day fund. However, that figure really depends on a family’s needs. In general, three to six months of expenses should be the minimum. Some experts will even advise that a year’s salary is necessary, but this depends on things like insurance coverage and whether that is even possible for a family to save.

Step 1 to a Rainy Day Fund

In light of this, the first step to establishing a rainy day fund is to review the family’s current financial picture including required spending, discretionary spending and current net income (after taxes). The rainy day fund should come from the discretionary fund. If that is non-existent, then the family should review what it considers to be needs versus wants. Furthermore, a family should review insurance policies and other investments to determine if additional income can be generated.

Step 2 to a Rainy Day Fund

Once the amount of required funds is determined, the family needs to open a low-risk savings account. Since this is an emergency fund, it must be easily accessible which means no CDs or other such investments. It’s a good idea to set this account up with direct deposits in a separate bank from the family’s primary account. The deposits can be stopped when the amount is reached. This takes temptations out of the way. Deposits happen without thought and withdraws require a special trip.

So don’t make the mistake of thinking that nothing bad will ever happen, because it just might. By including an emergency fund in your family’s financial planning, you can minimize the impact. All that is needed is a full analysis of the family’s current financial status and needs. This financial picture will help determine how much to stash away in a savings account. Just remember – it’s for emergencies and not for big purchases.

Reno’s Best CPA,

Tim Nelson

Tip from Your Accountant in Reno: Two Steps to Creating a Rainy Day Fund2016-09-22T21:13:05-07:00