With all the talk during the pandemic to save money, it is possible to go too far. Included here are some ideas to make sure this does not happen to you. The Social Security Administration recently announced its 2021 cost of living adjustments. More wages will be taxed and retirement checks will go up. The annual details and some interesting Social Security information are outlined here. Also included are some of the most popular tax-advantaged retirement vehicles for small business owners in 2020 and some tips on saving for retirement. A short piece on scammers targeting people looking to make money while stuck at home. All this and some handy every-day tips EVERYONE should know.
Please call if you would like to discuss how this information could impact your situation. If you know someone who can benefit from this newsletter, feel free to send it to them.
Upcoming dates
- November 11 – Veterans Day
- November 26 – Thanksgiving
- November 27 – Black Friday
- Reminder – Conduct year-end tax and financial planning
In this issue:
- Social Security Benefits Increase in 2021
- Everyday Tips For Easier Living!
- Steer Clear of Money-Making Scams While You’re Stuck at Home
- Retirement Savings Tips for Small Business Owners
Social Security Benefits Increase in 2021
Everyday Tips For Easier Living!
Too often you find yourself in a situation and aren’t sure what to do. Here are some everyday tips that could come in handy!
- Chew the aspirin. Taking an aspirin at the outset of a heart attack could save a life. But for an aspirin to save your life during a heart attack, you need to chew it. Aspirin, which inhibits platelets that speed blood clots, works fastest if chewed.
- Celsius to Fahrenheit conversion: Degrees in Celsius x 1.8 plus 32. Only 5 countries measure temperature using Fahrenheit, so it is good to know how to convert from one to another. C to F: Take the temperature times 1.8 and add 32. F to C: Reverse the math. Subtract 32, then divide by 1.8.
- Cats like milk, but it often does not like them. It’s not healthy for your cat to eat or drink anything that contains dairy. Cats have a degree of lactose intolerance and can get sick from large quantities of milk.
- Miles to kilometers? Use the 3-5 method for an approximation.
- Kilometers to Miles: Divide by 5, multiply times 3
- Miles to Kilometers: Divide by 3, multiply times 5
- Easily restore browser tabs. Control+Shift+T restores most closed browser tabs. Control+Alt+Shift+T restores entire closed browser windows.
- Never fear calls from the IRS. Don’t be afraid of a phone call from the IRS – because they will never call without mailing you first. If you owe money to Uncle Sam, the IRS will always initiate communication via mail.
Should you have any questions regarding your situation, feel free to call.
Steer Clear of Money-Making Scams While You’re Stuck at Home
Scammers are targeting people looking to make money while stuck at home.
While there are plenty of legitimate opportunities to earn extra cash, the Federal Trade Commission (FTC) says to steer clear from the following money-making scams:
At-Home Medical Billing Businesses. Many medical billing business opportunities are worthless. Their promoters don’t tell the truth about earnings potential and fail to provide key information.
Envelope-Stuffing Schemes. Offers that promise quick and easy income from stuffing envelopes at home virtually never pay off.
Telemarketing Resale Scams. Selling brand-name merchandise from home can be a great way to work at home making some extra money. But fraudsters sometimes call to lure you into a resale proposition. They’re the ones who make the money – and they make it from you.
Work-at-Home Businesses. Many work-at-home opportunities are promoted by scam artists. If you pay in, it’s likely that you will spend more than you can earn.
How to Protect Yourself
- Do your research. Talk to other people and read reviews about the work-from-home opportunity you are considering. Also consider checking out a company with your local consumer protection agency, your state’s Attorney General office or the Better Business Bureau.
- Request the FTC’s one-page disclosure document. Sellers of work-from-home opportunities are required by the FTC to give you a one-page disclosure document that offers key pieces of information about the opportunity. Click here to see what the document looks like.
- Ask follow-up questions. In addition to reviewing the disclosure document, ask the sellers various follow-up questions such as the following: What tasks will you have to perform? Will you be paid a salary or be on commission? What is the basis for the company’s claims about what you can earn? When will you get your first paycheck?
Reporting a Scam
If you have spent time and money on a work-at-home program and now believe it may not be legitimate, contact the company and ask for a refund. If you can’t resolve any disputes with the company, file a complaint with the FTC at ftc.gov/complaint or call 877-FTC-HELP.
Also file a complaint with your state’s Attorney General office or the state where the company is located.
Retirement Savings Tips for Small Business Owners
As an owner of a small business, you’ve proven that you’re a self-starter by operating a successful private enterprise. Of equal importance is applying your skills towards saving for your future. Here are some of the most popular tax-advantaged retirement vehicles for small business owners in 2020 and some tips on saving for retirement.
Options if you’re not currently enrolled in a plan
For small business owners not currently enrolled in a retirement plan, here are three of the most popular retirement account options:
- Simplified Employee Pension (SEP) IRA Account. Contribute as much as 25% of your business’s net profit up to $57,000 for 2020.
- 401(k) Plan. Contribute up to $57,000 of your salary and/or your business’s net profit.
- Savings Incentive Match Plan for Employees (SIMPLE) IRA Account. You can put all your business’s net profit in the plan, up to $13,500 plus an additional $3,000 if you’re 50 or older.
Which plan should you choose? SEP and SIMPLE IRAs are ideal for either sole proprietors or really small businesses (no more than one or two dozen employees). Due to higher administrative costs, 401(k) plans are usually more suited for larger small businesses (more than one or two dozen employees).
Tips to maximize your retirement contributions
For small business owners who are currently enrolled in a retirement plan, here are some suggestions for maximizing your annual contributions into your retirement accounts:
Pay yourself first. Instead of funding your retirement account with whatever is left over after paying your monthly bills, decide at the beginning of each month how much you want to set aside to fund your retirement. Make funding your retirement each month as important as your other bills. Then assume that you pay your retirement bill first. If you run out of money before paying all your bills, decide if there are any expenses that can be pared back for subsequent months so you can meet your monthly retirement savings goal.
List your retirement contributions on your income statement. It is easy to forget about retirement planning when running the day-to-day operations of your business. To keep retirement contributions top-of-mind, record these as a separate line item on your business’s income statement.
Review your tax situation at least twice a year. Tax planning is now more important than ever with the uncertainty caused by the recent pandemic. So review your tax situation at least twice every 12 months to see how to maximize each year’s retirement contributions.
As always, should you have any questions or concerns regarding your tax situation please feel free to call.
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This newsletter is provided by
R.D.M. Tax Service & Notary Public
47865 Stillwater Dr
La Quinta, CA 92253-7119
Phone: 760-564-1408
Dave@RDMTaxService.com
RDMTaxService.com
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