JDawn Consulting

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So You've Decided to Cohabitate...

Good for you! Love is a many splendored thing, and nowadays a record number of couples are enjoying that splendor without getting married.

If you’re like most folks, when you shacked up you made an agreement to split all costs straight down the middle. There is an interesting theoretical conversation about whether that’s appropriate when different occupants earn markedly different salaries. But I’m not your couples therapist, so we’re going to skip that part.

When you’re renting, this is all super easy. The rent is X, you each pay half of X, life is good. But what about when one of you (and by “one of you”, I mean “the bank”) owns the space?

Well, that’s different.

But why? Can’t you just split the monthly mortgage payment like you would rent? You could. But one of you may be getting a raw deal in that scenario. The reason is quite simple and has to do with an enormous government assistance program that’s specifically targeted to people who think they don’t need government assistance programs. That’s right: deductions for mortgage interest and property tax.

I have a lot of clients and friends who think by splitting the monthly mortgage payment they are splitting the expense. Not true. The person whose name is on the mortgage gets to claim deductions for the entire amount of interest and property taxes for the year, even though they only paid half.

Hardly fair, right?

This is all solved fairly easily by determining the value of those tax deductions and allocating it via an unequal split in the monthly mortgage payment. Or whatever else you might negotiate. Maybe the homeowner bears the bulk of the repair costs. I’d go for laundry duty, but that’s just me. As with all things in relationships, communication is key.

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Though I’m not taking new clients right now, I still love talking to y’all about interesting things that cross my path. If you have a question or situation that you think would make a good blog post, give me a shout.

Dawn Howard
IN PRAISE OF THE SCREW-UP CLIENT

[Note: I’ve not yet found a gender-neutral pronoun that sounds elegant to my ears so please forgive the antiquated “he” throughout.]

I’ll tell you a little secret about what I do. Tax work when the client comes in with his records in pristine condition and just needs me to translate that to a return isn’t that fun. Bookkeeping work when the client does everything right and just needs me to take a look and bless it isn’t that fun.

Now that I read that, it probably isn’t all that much of a secret, huh? Don’t get me wrong, I still like that work because the CLIENTS are fun. But what I want to talk about today is what is to me a very underappreciated part of CPA life: The Screw-up Client.

The Screw-up Client doesn’t have his financial life together for any number of reasons. I have clients who have emotional issues around money so severe they discuss them with a therapist. I have clients whose ex “always handled that stuff”. I have clients who really just think it’s boring but have finally accepted that it’s part of life so SOMEBODY (but not them!) needs to do it.

The Screw-up Client generally comes to me a bit apprehensively. He doesn’t like accountants (tough but fair). He’s had an accountant that either talked above his head or talked down to him and he’s not sure which was worse. He’s been invested in “if I ignore this I don’t have to deal with it” for so long the whole thing makes him anxious. He’s afraid I’ll be unapproachable. He’s afraid I won’t “get” what he’s about or what he needs. He’s afraid I’ll try to sell him a bunch of services he can’t afford. He’s afraid I’ll judge him when I hear just how much of a Screw-up he is.

Well, here’s what really happens.

We sit down (or if you’re remote we talk on the phone or do a Google Hangout) and I type notes while you talk because I can’t read my own handwriting. Don’t let it make you nervous. I ask what your current situation is. You tell me something you think is shameful (“My business is entirely cash and I want to go legit”, “I don’t even know the last year I filed a tax return”, “Somebody mentioned sales tax to me last week and I have literally never even thought about that”, “I’ve been putting IRS letters in a stack on my kitchen table, but they froze my bank account today so I probably need to talk to someone”). If you laugh, I laugh. If you’re stoic, I’m calm and unfazed. You cope how you cope and I’m adaptable. Then I outline an action plan, quote you an hourly rate, request that you sign a (tax-only) power of attorney, and ask how much you want to be kept in the loop on what I’m doing. I’ll copy you on every email I send, or I’ll send you a final answer and the bill if that’s possible.

That’s it. For you. As for me, I get to have FUN. I love solving a problem. I love a unique situation. I love doing something that I know I do at least as well as anybody around.

I left my job earlier this year for many reasons, but chief among them was the feeling that I should be doing something to help people. At the time, I was certain that meant a career change, but it turns out that isn’t the case. I’m not changing the world, but I’m changing the lives of individual people, and that works too.

Reach out if you’re ready to be a Reformed Screw-up Client.

Dawn Howard
Estimated Payments Due June 15

Hi everybody. Getting this blog properly up and running is very much on my to-do list, but for now I just wanted to check in and remind y'all that estimated payments for Q2 2017 are due on June 15.

Estimated payments are one of those things busy people tend to forget but missing them is the best way to end up with a penalty, so don't do it! You can even make them online at https://www.irs.gov/payments.

If you need help with estimated payments, get in touch.

Dawn Howard
Should Your Business Be Filing a Property Tax Return?

One of the more common things I see when I pick up a new small business client who has been doing their own taxes is failure to file a property tax return.

In Kentucky, if you have tangible property that you are using in your business - anything from desks to copiers to artwork - you have a filing obligation. Form 62A500 is how this is reported and it's a bit confusing all around.

First, it's called a "Tangible Personal Property Tax Return". Personal? I thought we were talking about business property. Well, that's how a regular person would react to that, but in the tax world, there are only two kinds of tangible property - personal and real. Real property is buildings and land. You're familiar with that because the assessment comes automatically from your county PVA. Personal property is all the rest. (Your "personal property" in the common use sense of the term isn't covered by this at all.)

Second, it's a 2017 form. Aren't we filing our 2016 taxes right now? We are, but (for reasons unknown to me) property is assessed on January 1st instead of December 31st. So we are currently in the 2017 filing season. 

All of this to say, your return is due in Kentucky on May 15, 2017. No tax is paid with the return. You'll receive an assessment later. 

If you'd like to know more about personal property tax, Get In Touch.

Dawn Howard