Couples & Money: Do Whatever Works for the Relationship

I’ve worked in financial services since 2000. During that time, I’ve had a chance to see how couples handle money together. It’s been insightful. Why?

Because when I first started helping clients manage their money I thought that EVERYTHING should be handled together. Helping them ACTUALLY manage their money changed that idea.

What I came to realize and what should have been obvious from the beginning, is that everyone is different. And that includes how people think and feel about money. Some people don’t care that much about it. Others see it as the ultimate form of security. Again, everyone is different.

What has also emerged from these experiences with couples and money is that there are 3 types of money relationships that couples have. Here they are:

  • Everything together
  • Everything separate and
  • Some joint and some separate

I’ll give a quick summary of each.

The first couples’ relationship type is the type that handles everything together. They have nothing but a joint bank account. They do their taxes together. They have joint investment accounts. The home is in both of their names. They see separate anything as almost “hiding” something from the other and could result in problems in the relationship.

The second couples’ relationship type is the type that handles everything separately. They bank separately, they file taxes separately. One doesn’t know what the other has in credit card debt or student loans or anything else. They just allow each other to handle what they are responsible for.

And finally, there are couples that mesh the two prior ideas. They not only have a joint account for shared bills and responsibilities but they also have separate accounts to handle their responsibilities.

But no matter what type of money couple a couple is, I’ve come to realize that as long as the relationship works for them, that’s all that matters.

So when it comes to handling money, couples just need to see what works for them.

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How Do I Figure Out My Career Passion?

 

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Every so often, I’ll meet with a client looking to do something else with their life. Something more than their regular job.

The first and most important thing I’ll ask is, “what are you passionate about?” It’s a question that’s developed after having worked with many people over my career. Both business owners and employees.

If they aren’t sure what they’re passionate about I’ll ask two more questions. The first, what would they do for free? The second, what are they working on late at night because they love it?

I’ll even have a possible third question. That question, if someone gave you $10 million on the one condition that you got up and went to work every day, what would that work be.

Once they’ve honestly answered those questions, they’ve created a new potential path for themselves. It’s up to them on whether or not to follow it. But at least now they know what that passion is.

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Our 5 Year Anniversary!

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I never just dreamed about success. I’m working for it. This is my start up story.

I remember when TaxAssurances was just a thought. I was supposed to start a franchise with H&R Block but it didn’t work out. Later that day I talked to a friend who told me that I could do it myself, and that’s where my dream began. December 1, 2011 TaxAssurances opened, and by January 2012 my dream was alive.

-Kolonji Murray

Ten Things to Know About the Child and Dependent Care Credit

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Child care is expensive. Month in and month out, parents across the country work hard to pay for childcare. Thankfully there is some tax relief from the government.

Lawmakers years ago recognized that parents needed some sort of relief from the childcare cost burden. The relief caps out at a certain amount and it doesn’t cover every dollar spent but it does help some.

Here’s IRS guidance on how to take advantage of the child and dependent care credit:

Ten Things to Know About the Child and Dependent Care Credit

If you paid someone to care for your child, spouse, or dependent last year, you may be able to claim the Child and Dependent Care Credit on your federal income tax return. Below are 10 things the IRS wants you to know about claiming a credit for child and dependent care expenses.

  1. The care must have been provided for one or more qualifying persons. A qualifying person is your dependent child age 12 or younger when the care was provided. Additionally, your spouse and certain other individuals who are physically or mentally incapable of self-care may also be qualifying persons. You must identify each qualifying person on your tax return.
  2. The care must have been provided so you – and your spouse if you are married filing jointly – could work or look for work.
  3. You – and your spouse if you file jointly – must have earned income from wages, salaries, tips, other taxable employee compensation or net earnings from self-employment. One spouse may be considered as having earned income if they were a full-time student or were physically or mentally unable to care for themselves.
  4. The payments for care cannot be paid to your spouse, to the parent of your qualifying person, to someone you can claim as your dependent on your return, or to your child who will not be age 19 or older by the end of the year even if he or she is not your dependent. You must identify the care provider(s) on your tax return.
  5. Your filing status must be single, married filing jointly, head of household or qualifying widow(er) with a dependent child.
  6. The qualifying person must have lived with you for more than half of 2010. There are exceptions for the birth or death of a qualifying person, or a child of divorced or separated parents. See Publication 503, Child and Dependent Care Expenses.
  7. The credit can be up to 35 percent of your qualifying expenses, depending upon your adjusted gross income.
  8. For 2010, you may use up to $3,000 of expenses paid in a year for one qualifying individual or $6,000 for two or more qualifying individuals to figure the credit.
  9. The qualifying expenses must be reduced by the amount of any dependent care benefits provided by your employer that you deduct or exclude from your income.
  10. If you pay someone to come to your home and care for your dependent or spouse, you may be a household employer and may have to withhold and pay social security and Medicare tax and pay federal unemployment tax. See Publication 926, Household Employer’s Tax Guide.

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Mike & Karen Pence’s 2006-2015 Full Tax Returns

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Mike & Karen Pence’s 2006-2015 Full Tax Returns:

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

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Bill & Hillary Clinton’s 2015 Full Tax Return

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Bill & Hillary Clinton’s 2015 Full Tax Return:

2015 Tax Return

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The President and First Lady’s Full Tax Return for 2015

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The President and First Lady’s Full Tax Return for 2015

Click to access Obamas%202015%20Taxes.pdf

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IRS Rules on Deducting Charitable Giving

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Every year people give away billions in money and items to charities. This giving helps people in need. There are tax benefits that can come with that giving. To help provide guidance on that giving, the IRS has guidelines. Here are the guidelines:

Rules for Charitable Contributions of Clothing and Household Items

To be tax-deductible, clothing and household items donated to charity generally must be in good used condition or better. A clothing or household item for which a taxpayer claims a deduction of over $500 does not have to meet this standard if the taxpayer includes a qualified appraisal of the item with the return.

Donors must get a written acknowledgement from the charity for all gifts worth $250 or more that includes, among other things, a description of the items contributed. Household items include furniture, furnishings, electronics, appliances and linens.

Guidelines for Monetary Donations

To deduct any charitable donation of money, regardless of amount, a taxpayer must have a bank record or a written communication from the charity showing the name of the charity and the date and amount of the contribution. Bank records include canceled checks, bank or credit union statements, and credit card statements. Bank or credit union statements should show the name of the charity, the date, and the amount paid. Credit card statements should show the name of the charity, the date, and the transaction posting date.

Donations of money include those made in cash or by check, electronic funds transfer, credit card and payroll deduction. For payroll deductions, the taxpayer should retain a pay stub, a Form W-2 wage statement or other document furnished by the employer showing the total amount withheld for charity, along with the pledge card showing the name of the charity.

These requirements for the deduction of monetary donations do not change the long-standing requirement that a taxpayer obtain an acknowledgment from a charity for each deductible donation (either money or property) of $250 or more. However, one statement containing all of the required information may meet both requirements.

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A Diva’s Budget

  • NEW Everyday Diva Logo PNGPutting together a budget is an extremely helpful tool for someone trying to get their financial house in order. During the process, they can find out what expenses are necessary, what expenses aren’t and what expenses they should start to incur.

Prepare the Budget with an Advisor

I recently sat down with an opera singer who is a friend of mine to go over her budget. For some time she’s had the feeling that she was making a pretty penny but didn’t have anything to show for it.

During the review we were able to determine that certain bills had to be paid. They included rent, car, power, medical insurance, student loans, retirement savings and a number of other necessary bills.

Know the Goals and Outcome of a Budget Review

Now part of the reason that she wanted to go through the exercise was to determine how she could set aside money for simple savings for a rainy day but also carve out a portion of her income for continuing her opera lessons.

With this review we also came across expenses that where secretly and subtly draining her pocket book. Namely food. This included not only the food that she bought for the home but also what she spent every day for breakfast, lunch and dinner. It was adding up.

On top of those expenses she noticed that going out with her friends was hurting her finances. She realized that she was spending too much going to dinners, movies, and generally hanging out with her friends.

Do What the Budget Plan Recommends

Now to be fair, the review was not designed to say that she should stop doing what she was doing all together. It was however designed to let her know where the challenges where and how to fix them. Namely watching what she buys outside the home for lifestyle.

This part of the review is critical. Once we identified what needed to be done she needed to do it. This is not to say that she won’t spend a little extra here and there but she needed to follow the plan to make it work. That way she can achieve a healthy financial balance in her life.

Putting together a budget with a financial advisor can go a long way in getting ones financial house in order. They provide independent, expert eyes that can look at the finances of their clients and determine what the best use of money is and where they can make improvements.

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You Cannot Deduct Your Commuting Expenses

SONY DSCEvery so often during tax season I get a client that wants to deduct the expense of going back and forth to work on their taxes. They cannot do it. Here is what the IRS says about it:

“You cannot deduct the costs of taking a bus, trolley, subway, or taxi, or of driving a car between your home and your main or regular place of work. These costs are personal commuting expenses. You cannot deduct commuting expenses no matter how far your home is from your regular place of work. You cannot deduct commuting expenses even if you work during the commuting trip.

Example. You sometimes use your cell phone to make business calls while commuting to and from work. Sometimes business associates ride with you to and from work, and you have a business discussion in the car. These activities do not change the trip from personal to business. You cannot deduct your commuting expenses.”

 

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