TAX TIPS AND FACTS
As written by Roger A. Kahan, CPA
 

 
 
Volume 17, Issues No. 2 & 3
Febuary/March 2003

ROGER A. KAHAN
Tax and Business Advisor, Wealth Care Professional
Serving the tax and financial needs of individuals and small to medium businesses
1214 Park St., Suite 203
Stoughton, MA 02072-3738
VOICE: 781.963.RAK-1 (963-7251)
E-mail: kahan@rak-1.com

RAK-1

38970
Registered Representative with and securities offered through
SunAmerica Securities, Inc., Member NASD, SIPC.
Investment Advisory services offered through
U.S. Financial Advisors, LLC, a Registered Investment advisor
139 Wood Road * Braintree, MA 02184 * 781.849.9200

Copyright © 1995 - 2002 Roger A. Kahan, CPA
ALL RIGHTS RESERVED
 
 
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      TOPICS COVERED IN THIS ISSUE
 

 
 
Use tax question (Massachusetts)
I can best help if ...
Cheap is one thing, ...
The future
The required minimum
The case for diversification
IRA contributions
Certified?
Tax Tip of the Week
Moses and the bush
Beneficiary designations
Publication available
 
 
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     USE TAX QUESTION ON MASS INDIVIDUAL INCOME TAX RETURN
 

      

  
 

New this year on the Massachusetts Individual Income Tax Return is line 33, requesting that taxpayers report the amount of use tax due or indicate that no use tax is due. Use tax is generally due on items used within Massachusetts but purchased in a transaction where less than a 5% sales tax was paid. This would typically occur on out-of-state purchases or certain purchases over the Internet.

Commissioner LeBovidge has indicated that his main objectives in adding this line were to educate taxpayers to the rules of use tax and to make it more convenient for taxpayers to report their use tax liabilities. Taxpayers have always been able to report their use tax liabilities on Form ST-11; the new Form 1 line is an alternative form of reporting. However, DOR has access to many databases and has started to see if this information will turn up unpaid use tax. For example, taxpayers who have reported items to the US Customs Bureau are being notified by DOR of potential use tax due. We can expect more of this in the future.

CPAs need to communicate to clients their use tax responsibilities and ask them to report, either on Form 1 or the ST-11, any use tax due.

Leaving line 33 blank will not cause the income tax return to be incomplete, but the statute of limitations will not start running until either the ST-11 is filed or line 33 is answered. The statute will start running even if the box is checked that no use tax is due. If the ST-11 has been filed and the use tax paid, taxpayers should fill in the box to indicate that no use tax is due.
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      I CAN BEST HELP YOU IF
 

      

  
 

I am allowed to:

1) gather data,

2) analyze that data;

and then I can make recommendations. When visiting our office, in addition to your tax data, please bring several things with you to the meeting, including pension details, and the past year’s investment statements for all accounts and current statements for bank money-market accounts. I cannot give you proper advice without all the facts.
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       CHEAP IS ONE THING, SAFE IS ANOTHER
 

 
 

OVERHEARD AT A MEETING

Yes, I know stocks are cheap.
Yes, I know it’s going to come back.
Yes, I know four bad years in a row has never happened.
Yes, I know this fear may mean opportunity.
Yes, I know I’m making the classic investor mistake.

BUT

I heard all that last year.

AND

CHEAP IS ONE THING, SAFE IS ANOTHER!

Well then:
Have you considered INSURED EQUITY POSITIONS? Oh, you mean death benefits to protect my family? Guess what buddy. I’m concerned about me; my family can take care of themselves. Hey, what about me? I already lost half my money and I just can’t afford to loose the other half.

What I meant was Insured equity positions for you. No death is involved. You get all the upside of the market, but if your equity positions blow up, you get your money back in cash ... no annuitization.

WOW!

Call for terms and conditions. This is a story that addresses the truth today. Equities are down and apparently cheap, but people are still afraid. Call me, I may be able help you.
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       THE FUTURE
 

 
 

Some in the financial world are thinking that 2003 might be the year of the “recovery.” Some believe if we can either find a peaceful solution to the Iraq crisis, or if we go to war and it is a brief but successful campaign, the equity markets may not only stabilize, but may also move much higher. It is the uncertainty of the situation that is taking its toll on the consumer, on corporate spending, and perhaps even on the way the dollar is traded abroad. Once there appears to be a resolution and the uncertainty is lifted, those sitting on the sidelines just may move back into the equity markets. This may well be a great time to review your positions in order to see if changes are in order, to get ready for what may be the “rebound.” We can help you review your strategy to determine if your current portfolio is “right” for you and able to attain your objectives. Call us.
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      REQUIRED MINIMUM DISTRIBUTION
 

 
 

When you reach age 70½, you must take a distribution from your IRA retirement accounts. Although much easier this year, there are specific rules as to how much you must take each year. If you do not take at least the calculated annual "required minimum distribution" (RMD) each year, you will be subject to a 50% penalty on the amount of RMD not taken. If you will become age 70½, during 2003, call us to find out how much you must withdraw. If you became age 70½, before 2003, call us to find out what you have to do now.

I know I have this mentioned many times before, but it is important to you and your family that you stay away from that 50% tax penalty.

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     THE CASE FOR DIVERSIFICATION
 

 
 

Virtually any investment can have some risk associated with it. The stock market can rise and fall; an increase in interest rates can cause a negative fluctuation in the bond market. The basic key to successful investing is to reduce that risk while seeking an attractive return on your investments. One of the most effective ways to reduce your risk is to diversify your portfolio - “Don’t put all of your eggs in one basket.” Spreading your capital among a number of different investments may protect you from a significant drop in any one of them. Likewise, the power of diversification might smooth your returns over time.

For complete information on any of the above, including charges and expenses, obtain a prospectus. Read it carefully before investing. The investment return and principal value of an investment may fluctuate so that an investor’s shares, when redeemed, may be higher or lower than their original cost
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      IRA CONTRIBUTIONS
 

 
 

QUESTION: How much can I contribute to my traditional IRA?

ANSWER: For 2002 and 2003, you can contribute $3,000 to your Traditional or ROTH IRA. Additionally, since you have attained the age of 50, you can make a catch-up contribution of $500. So, for 2002 and 2003, you could contribute as much as $3,500.
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      CERTIFIED?
 

 
 

Your doctor is certified.
Your lawyer is certified.
Is your accountant certified?
If your accountant isn’t a Certified Public Accountant, think twice about where you are getting your advice. Who do you want handling your financial and business matters?

The Massachusetts Society of CPAs represents over 8,800 certified public accountants working in public accounting, industry & business, government and education.

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      TAX TIP OF THE WEEK
 

 
 

I am now writing TAX TIP OF THE WEEK that is periodically distributed over the Internet to a select list of people. Items may also appear in the printed monthly version. If you would like to be included in the weekly electronic distribution, just send your e-mail address with the subject of: “TTW subscribe” to kahan@rak-1.com and please include your name, city, and state of residence in the content of the message. We cannot accept a new name without a location. Thanks.
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      MOSES AND THE BUSH
 

 
 

Recently while going through an airport during one of his many trips, President Bush encountered a man with long hair, wearing a white robe and sandals, holding a staff. President Bush went up to the man and said,

"Aren't you Moses?"

The man never answered but just kept staring ahead.

Again the President said, "Moses!" in a loud voice.

The man just kept staring ahead, never answering the president.

Soon a secret service agent came along and President Bush grabbed him and said, "Doesn't this man look like Moses to you?” The secret service agent agreed with the President. "Well," said the President, "Every time I say his name, he just keeps staring ahead and refuses to Speak. Watch!” Again, the President yelled, "Moses!" and again the man stared ahead. The secret service man went up to the man in the white robe and whispered, "You look just like Moses. Are you Moses?"

The man leaned over and whispered, "Yes, I am Moses. But the last time I talked to a bush, I spent 40 years wandering in the desert!"

Thanks to Jeff Kahan for sending me this joke.

 

Did you know we do more than just prepare, compile, and crunch numbers? We are not just “bean-counters.” We can also advise you on estate and business planning and offer financial strategies to meet your goals. As your CPA, we know your needs better than any other professional.
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      BENEFICIARY DESIGNATIONS
 

 
 

You have a company-sponsored 401(k) plan, or you have a company sponsored retirement plan, or you have one traditional or ROTH IRA, or you have many traditional or ROTH IRA accounts. Your plans and accounts may be with a bank, a credit union, a brokerage house, or some other financial institution.

Each of those plans require you to designate at least one beneficiary for payment of benefits in case of your untimely demise. When was the last time you checked to make sure your beneficiary designations are up to date? When was the last time you checked to make sure your administrator still has your beneficiary designation on file? With all of the mergers, buy-outs, consolidations and changes of personnel and computer systems, do you know if their records are up to date? The questions are: Who will get your money?? Will it be to whom you intended? Do you think it worth checking?

DON’T FORGET: “IT’S NOT WHAT YOU MAKE THAT COUNTS; IT’S WHAT YOU KEEP!”
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      PUBLICATION AVAILABLE
 

 
 

The Internal Revenue Service announced that a revised Publication 520, Scholarships and Fellowships is now available. You can get a copy of this publication by calling 1-800-TAX FORM, writing to the IRS Forms Distribution Center nearest you, or, download it from the IRS internet web site at www.irs.gov

If you are pleased with our services, please tell others. If you are not pleased with our service, please tell us; that way we can please you.
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Roger A. Kahan is a Certified Public Accountant, Business Advisor, and Wealth Care Professional with an office in Stoughton, Massachusetts, serving the tax and financial needs of individuals and small to medium sized businesses almost anywhere in the United States. And with the advent of the Internet, his professional consultation extends into several other countries.

Roger is always seeking additional clients and professionals wishing to save money and better manage their own, a friend, a relative, or a client's personal or business life. Do you know of someone that could use our professional services? Please let us know if we can use your name in an introductory letter or phone call.

Thank you.

 

Planning for the future is a lot like planting a tree. You’ve got to do it today if you want your family to enjoy it tomorrow.

Remember: “A failure to plan is a plan to fail.” (Anonymous.)
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ROGER A. KAHAN
Certified Public Accountant, Wealth Care Professional
and Business Advisor
STOUGHTON, MASSACHUSETTS
VOICE: 781.963.RAK-1
FAX:     781.961.RAK-1

A member of:
Massachusetts Society of Certified Public Accountants
Massachusetts Association of Public Accountants
Randolph Business and Industrial Commission
Computer Organizations of New England, Inc.
South Shore Women's Business Network
Randolph Chamber of Commerce, Inc.
National Society of Tax Professionals
South Shore Chamber of Commerce
U.S. Insurance Brokers, LLC
U.S. Financial Advisors, LLC
National Notary Association
Knights of Pythias

Mass CPA online

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Copyright © 1995 - 2003 Roger A. Kahan, CPA.  All Rights Reserved.