Finance / Mar 1, 2021 / By

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Interesting articles on tax-related issues and finance

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Business / Mar 19, 2021 / By
What is record keeping?
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Tax / Mar 19, 2021 / By
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Tax / Mar 15, 2021 / By
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Finance / Mar 15, 2021 / By

Make it a habit to always check your credit report, this is because doing so is essential to your overall financial wellbeing.

How so?

A credit report gives a summary of how you have handled your credit accounts. Since a credit report includes the number and types of credit accounts that you have; how long each account has been open; amounts owed; the amount of available credit used; whether bills are paid on time; the number of recent credit inquiries; if there are any bankruptcies, liens, judgments, or collections, knowing all these can help you make necessary financial adjustments.

Why then is it necessary to check your credit report?

  1. It helps determine your creditworthiness: A credit report is used to calculate your credit score and this credit score is in turn used by potential lenders and creditors (this includes mortgage lenders, credit card companies, etc.) to determine your ability to pay your debt. If you have a high credit score, a lender or creditor will be assured about your credibility and will most likely give you a loan but if your credit score is low, there is little or no chance of getting a loan.

  2. It prevents identity theft: A regular check on your credit report shields you from the bad guys. Since a credit report provides a statement of your past debt repayment and your current outstanding debt, you will be able to detect any funny or unauthorized transactions.


  1. It provides important information: Your credit report gives some important information about you that helps potential landlord, creditor or employer know more about your financial status, therefore making appropriate decision. Although, there is a limit to the information that a potential employer can see on your report as opposed to a creditor.


  1. It helps detect error: Checking your credit report on a regular basis helps you know if there is an error on the report or not. There is a possibility of a mix-up of credit information between you and some other persons (especially if you share the same last name). Companies could also make the mistake of reporting a delinquent payment or nonpayment to the reporting agency which may result in a negative credit score for you. Rectifying an error could take time, but you can be rest assured that the information needed for rectification will be provided by the agencies.

Interestingly, checking your credit report is absolutely FREE. To check your credit report, simply visit or you call 1-877-322-8228. There are three major credit reporting agencies: Equifax, Experian and TransUnion. You can check your credit ratings from all three. However, do not panic if the report on them do not correlate. This is because some creditors do not report to all three, they may decide to report to one, or two, or none.

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Retirement / Mar 12, 2021 / By

As you draw near retirement, you must know how the Requirement Minimum Distribution (RMD) rules work, especially if you have a retirement plan.

RMD is the amount of money that must be withdrawn from your retirement plan account if you own a traditional IRA, SEP-IRA, SIMPLE IRA, Keogh plan, 401(k) plan, or 403(b) plans. RMD is mandatory because most of the aforementioned plans are tax-deferred and you must start paying taxes on them when you reach a certain age (70.5 or 72 years as the case may be).

So, here’s the deal:

The SECURE (Setting Every Community Up for Retirement Enhancement) Act became law on December 20, 2019, and with it came some adjustment to the RMD rules. Therefore, if you turned 70.5 before Jan. 1, 2020, you must begin RMDs at age 70.5, and if you turned 70.5 on or after Jan. 1, 2020, you must begin RMDs at age 72.

RMD rules work such that you must start taking an annual distribution from your qualified retirement plan starting from April 1 of the year after which you reach the required age. Subsequently, you take the distribution on December 31 (this is inclusive of the year in which you took your first distribution on April 1). The minimum amount to be taken from your account every year is usually dictated by the RMD rules.

It is important to note that there is a penalty for not taking your distribution when you are supposed to. The penalty is that you’d have to forfeit 50% of the amount you ought to withdraw. In order not to be a victim of this penalty, you must give your plan administrator a heads-up so he/she can have enough time to process the distribution and get it ready for you before Dec 31st. However, if you are still employed at age 70.5, you have the choice to delay withdrawal from your current employer’s plan until you retire.

Although the amount of your RMD is calculated using Uniform Lifetime Tables issued by the IRS, you should confirm on the IRS website that you are using the latest calculation worksheets and the appropriate table. This is because different calculations call for different tables. These tables provide percentages that are applied to the value of your retirement account as of December 31 of the year preceding your distribution. Currently, the rules make it simple for you to calculate your distribution, but the rules for retirement plans are not that simple. Moreover, there are different calculations for each type of retirement plan.

You and your spouse are not allowed to take distributions from one another’s plan to make up your Required Minimum Distribution but if you, as a person, have more than one Individual Retirement Account (IRA), you are at liberty to calculate a combined RMD and withdraw it from one or any combination of the accounts. However, if the account is a non-IRA, the RMD must be calculated and withdrawn from each account.

Your financial institution is expected to report your name to the IRS if you are expected to take a distribution, this will help the IRS know if a distribution does not reflect on your tax return. You can decide to take your distribution on a monthly, quarterly, semi-annual, or annual basis, so far you are able to withdraw your required total for the year. You can request a calculation of your required distribution amount from your financial institution, or they give you this information, they are also expected to inform you about the deadline for taking minimum withdrawals.

In conclusion, Since RMDs are taxable, you should give consideration to making your quarterly income tax estimates to cover your liability, or you give your plan administrator orders to hold back taxes from each distribution.

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Finance / Mar 12, 2021 / By

How deliberate are you about your retirement plan?

 Are you paying close attention to it or you do not give a hoot yet?

You may be thinking, ‘I just need some more time, I’d give it consideration when I’m a bit older.’

As much as I’d have loved to tell you, ‘oh, it’s fine. You can start planning for your retirement when you feel ready.’

Reality states the exact opposite.

In other words, it is only wise for you to make plans for your retirement as early as possible. I bet you do not want to solely depend on social security when you are too old to work.

In case you do not really understand what a 401(k) plan is, here are some basics:

A 401(k) plan is a retirement plan that is typically tax-deferred and is sponsored by an employer to aid an employee to save (and invest) towards retirement. The name- 401(k) comes from the section of the Internal Revenue Code. Under this plan, a percentage (that you choose) is usually deducted from your income before tax removal. This, in a way, reduces the tax you are expected to pay. Your employer may also decide to make contributions to the plan.

Although, it is your employer’s duty to run the plan according to law, guidelines, and arrangements of the plan which includes but not limited to; deciding who is qualified for the plan; investment options available; how often you can reallocate your investment assets; plan features (such as loan and hardship withdrawal) that will be available, it remains your choice to partake in the plan or not.

Some benefits that a 401(k) plan affords you are:

  1. Lowers your total taxable income.
  2. Offers you the privilege of compound interest if you invest early.
  3. Gives you the flexibility of determining or changing your contribution levels at any time depending on the plan limit.
  4. Protects you from creditors



How then can you optimize this plan?

  • Invest at an early age: The earlier you start contributing to your plan, the better the returns. Moreover, as a young person, you can take more risks in investments. If you are lucky, the investment pays off big, if otherwise, you have the age advantage to stomach losses and recuperate, since retirement is still a long way ahead.

For instance, if you decide to start the plan in your mid-twenties and you save about 250-300 dollars monthly, with about 8% annual return on investment, you’d have an estimation of 1 million dollars by your mid-sixties. You might not get up to half of that if you choose to start the plan in your mid-thirties.

  • Perform an annual evaluation of your portfolio: An annual review of your portfolio is a good way to keep abreast of the performance of your investments. It is highly recommended that you carry out this review with a financial advisor.

In addition, reviewing your portfolio from time to time gives you the opportunity to maintain your preferred risk levels such that your investments are protected according to your specific financial goals.

  • Resist the urge to consume your savings when you change employers: There is a likelihood that you get tempted to consume what is in your initial savings when you change employers. You’ve got to tell that voice asking you to do so, ‘get thee behind me’ (lol).

Seriously, do not give in to the urge of diving into your retirement savings plan because you are changing employer, instead make inquiries as to what to do, and ensure the continuity of the plan. You may have the option to leave what you have in the old plan, and if not, you can transfer it to your new employer’s 401(k) plan.


  • Be shrewd about investing in your company’s stock: According to a column in U.S. News & World Report, it is advisable not to have more than 10% of your 401(k) balance in your company’s stock, you can even do less than 10%. No matter how awesome your company is performing at the moment, it is always good that you diversify your investment, and do it wisely.
  • Compare investment fees: Each 401k investment plan has its fee. While choosing your investment, analyze the charges that you're paying. Do not overlook this subtle act, because no matter how minimal the difference is, it has an effect on your savings in the long run.
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Digital Currency. / Mar 08, 2021 / By

This is the initial content of the editor

All virtual currency you own is now classified as property by the internal Revenue service notice 2014-21. Indeed, no Government has officially accepted this medium of exchange as a legal tender though it is getting more popular as the day goes by. The outcome of this notice is not good for users. IRS wants you to know and treat your virtual currency:

  • As income: The income you receive via virtual currency is subject to employment tax and is taxable to you. As an employee, your virtual income must be reported on a W-2 but if you are self-employed, you must follow the Form 1099 reporting requirements.
  • Determining value: For you to accurately determine the value of your VC, you will need to compare the purchasing power with a valid virtual currency exchange such as USD. So, you still need to determine the fair market value every time you buy and sell using VC
  • As property: Assets appreciate and depreciate. Therefore, as you use amass virtual currency, you must keep an eye on the amount you acquire and the amount when you dispose of it. You must calculate your short-term and long-term profit as virtual currency is a capital asset.
  • Miners have income: People who validate VC transactions and maintain Public VC ledgers are called miners. The job generates revenue every time there is a transaction and the revenue is taxable.


N.B IRS does not regard VC as a currency, not a bit. This is because they cannot calculate foreign currency gain or loss for VCs. So, companies using VCs need not show their VC on their financial statement, it becomes impossible to calculate the gain or loss.


Finally, there will always be new and alternate means to trade. You must learn and understand these new means if you want to remain relevant in the market. Just so you know, if you are offered VC in exchange for goods or services provided, it will do you good to know it is not tax-free.

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Digital Currency. / Mar 08, 2021 / By

I’m sure you are familiar with the popular cliché that states, ‘proper planning prevents poor performance.’ This doesn’t just apply to academia but it is true in all aspects of life. If you do not plan and pay close attention to your finances, you’d soon be on the same ride with bankruptcy. 

Ouch! That was harsh.

I know, but it is the truth.

Do you intend to:

Fund your children’s college education? 

Buy a house?

Have annual vacation trips with your family?

Have enough to live comfortably after retirement?

Whatsoever your dreams and aspirations are, financially, you need a good plan. You can only achieve your financial goals when there is a workable plan in place.

Also, to have a good and feasible financial plan, you will need to be sincere with yourself about your current financial status. Knowing your current net worth is vital. This is because your current financial status plays a huge role in determining how far you need to go to achieve your future aspirations.

You can determine your net worth right now by getting a paper and a pen. Make a detailed list of your assets (what you own) and liabilities (what you owe), obtain the total for each of them, then subtract your total liabilities from your total assets.

Yes! That is it. You just calculated your net worth. 

Here’s something you also need to take note of while calculating your net worth: It is essential to review the documents for fixed assets and liabilities and explicitly record account numbers, recognizable proof, and dollar sums. It's most likely you forget assets and liabilities details and list deluding data.


Below are some questions to answer after you have determined your current net worth:

  • Is there an increase in your net worth since you last calculated it?

If there has been no positive change in your financial status from the last time you calculated your net worth and now. Then, there is a need for a serious adjustment in your spending and saving habits. 

For you to achieve your financial goals, you have to be deliberate about the way you handle money.


  • Does your net worth statement prove you to be more interested in personal assets than investment assets?

Does your financial statement mirror you as someone more interested in enjoying the ‘quality life’ (e.g., using expensive accessories and gadgets) now rather than investing your money in profitable ventures?

To cut the chase with your financial goals, your asset and liability sheet must show your commitment towards profitable investments, and not undue personal comforts that have momentary satisfaction.


  • What’s your debt-to-income ratio like?

To have a stable financial future, you cannot afford to have your debt out-of-control. You’ve got to keep your debt at a reasonable level. Not to mince words, it is quite bad to have excessive debt on your balance sheet, especially if these debts are a result of extravagant spending. If you can relate to this, I will advise you to do an urgent review of your spending.


  • Do you have a retirement plan?

It is not enough to dread social security or daydream about having a blissful retirement. You’ve got to work towards it and the work should start NOW. If your sheet doesn’t show that you have a plan towards retirement, then it’s time to roll up your sleeves.


  • Do you believe in scattering your eggs?

This is another very important point to consider. Do you believe in multiple ventures and investments, or you are a keep money in bank kinda person? 


The blunt truth about money is that you cannot play it safe and be rich. You have to be willing to take calculated risks. However, in taking these risks, it is only wise to scatter your eggs, such that there is always a backup provided a venture or an investment fails.


In summary, diversification is a good way to shield yourself from inflation and an unstable economy.


  • What’s your short- and long-term financial goal like?

 Where do you intend to be as regards your net worth in a year; 5 years or 10 years?

Having a projection of where you’d like to be financially in a year, 5 years or 10 years will go a long way in keeping you accountable and helping you achieve your goals.


Conclusively, to increase your net worth and be financially secure, you have to be deliberate about your finances, this will help you not to spend more than you should.

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Tax / Mar 05, 2021 / By

Hardly will you find anything more intimidating than receiving notification of a tax review from the IRS. This feeling of intimidation is unofficially termed “audit anxiety”. Many taxpayers are honest on their tax returns just because of audit anxiety.

DIF scores count

IRS uses the Discriminate Function System to assess tax returns. This assessment is based on your DIF scores, which is a set of formulas IRS never disclose. A DIF algorithm picks seventy-five percent of all the tax returns for comparison. The algorithm compares the selected returns with the average returns in each bracket. The algorithm uses deductions, credit, exceptions, and other taxpayers’ information to place taxpayers into income brackets.

How do you show on IRS’s Audit radar?

Some of the flags include:

  1. High returns: If you generate high revenue, you become a target for the IRS. It is more profitable for the IRS to audit a taxpayer with high revenue than a taxpayer with low revenue.
  2. Tax complaints: You run a greater risk of getting flagged for an audit if you file a Tax complaint. Any and such complaints that the IRS and Tax court consider as a tax protest raise the interest of the IRS to audit your tax returns.
  3. Professions: Yes, your profession can be the reason you are being audited. IRS is on the lookout for professions that generate cash returns. IRS assumes there is a higher probability of unaccounted cash returns.
  4. Self-service or Flagged-service: You could get flagged for auditing if you prepare your tax return yourself or you engage the service of a preparer that has been flagged. If you don’t know, the IRS has such a list.
  5. Flagged deductions: The IRS also has a list of Flagged deductions. The DIF algorithm has access to this list. The list includes travel and entertainment deduction, office in the home deduction, and other similar write-offs
  6. Family business: If you pay a salary to your family a lot, you could be audited. IRS has always shown interest in Taxpayers that pay their relatives split returns among family members.
  7. Abusive tax shelters and offshore accounts: IRS considers taxpayers with offshore accounts and credit cards as potential tax evaders. One of the factors that made this a point of interest for the IRS is the recent explosion of abusive trust tax evasion scheme.

Tax Audit strategy: Offence is the best defense

Should IRS want to start an audit, they have three years which starts counting from the date of your return. Naturally, most of the filing of the selected returns date us within the space of two years. These premises will hold unless there is a notion of fraud.

Your strategy

  1. Offense: Document in detail all your deductions and credits
  2. Defense: Once you receive a notification of an audit, consult your accountant immediately.

Your offense limits what the IRS could throw at you while the defense prepares you to take anything the IRS may throw at you.

An expert will assure and reassure you about the situation, save you resources (both money and time) by getting a positive conclusion to the audit.

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Finance / Mar 05, 2021 / By

Have you had the money talk with your fiancé or fiancée?

Of course, having conversations about finances can be a tense one. It is most likely you do not even want to talk about it at all while dating or courting.

Why spoil the fun and make yourselves feel uncomfortable when there is other interesting stuff to talk about?

However, if there is a very important conversation to have before saying, ‘I do,’ it is the conversation about money. No matter how uncomfortable it makes you feel, it shouldn’t be ignored, because it will save you many headaches and heartaches in the future.

Therefore, if you are planning to walk down the aisle, below are some steps to aid you to start your marriage on a good financial foot:

  1. Have a genuine and deep premarital financial discussion with your partner: You’ve got to be as broad and specific as possible while having this kind of discussion with your partner, you cannot just brush the surface and leave it at that. The fact that you two have a common interest in almost everything doesn’t mean you handle or see money in the same light. You have to be double sure about your financial compatibility.

Ask questions about his or her assets, credit ratings, debts, spending and saving habits, and financial attitude. Be ready to also give answers to the questions, and ensure your answers entail all that your partner needs to know.

Besides, it is equally important to know his or her financial goal(s). Does their dream correlate with yours or some disparities can be a threat?

Do you two share similar thoughts about buying a home, starting a family, etc.?

What will the plan be if any of you intend to continue your education after the wedding?

You cannot afford to ignore having a heart-to-heart discussion with your partner and coming to a consensus about these issues before saying your marital vows.


  1. Embrace Premarital financial counseling: Do not limit your financial conversation between yourselves. Seek professional advice where necessary. Be as open as you can with your accountant, be comfortable with them handling your budgets, preparing and controlling your taxes, and helping you set up financial goals.


  1. Seek legal advice: Another important step to take is to seek legal counsel especially if you possess substantial assets, let your advisor enlighten you about the advantages of a premarital agreement. Conversely, if your partner has substantial premarital debt, you will know how to be exempted from such. 


Additionally, your legal advisor is the best person to seek if you decide to combine financial accounts or you want to buy a house. He/she will guide you appropriately about the best way to retain title to your assets.


  1. Know what financial methods will work for you two after marriage: Having a good understanding of each other’s belief in money is key, this will serve as a guide for you both in handling money as a married couple. You have to be certain if a joint account or separate account is what will work for you two. You also have to talk about the sharing of responsibilities as it relates to household spending.

The truth is "what's mine is ours" mentality might not work for you and your spouse-to-be.


In conclusion, you cannot know all about a person’s financial situation from their net worth. It is essential to have open conversations about financial beliefs and obligations to avoid future problems.

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