Ernie Sharp’s Five Principles For Spending That Actually Produces Satisfaction

Ernie Sharp’s Five Principles For Spending That Actually Produces Satisfaction

We’re all still basking in the World Champion US Women’s Soccer Team over here in the Ernest P. Sharp II, CPA offices. Pretty amazing to see so much excellence, and on behalf of our country. Here’s to hoping for continued unification within our culture in the aftermath.

There’s lots of conversation about different pay scales for the men’s and women’s national teams, and rather than get into that debate, I thought it might be worthwhile to step back and consider what’s underneath all of these salary/payment/money conversations.

Because, as I always like to point out, what lies beneath these conversations is a deeper conversation about what it is we really value.

And THAT conversation is one that I think every family should engage in, as well. Because you can spend your life chasing the brass ring of “better income” … but what if it actually doesn’t make you any happier?

Ernie Sharp’s Five Principles For Spending That Actually Produces Satisfaction

“Happiness is not something you postpone for the future; it is something you design for the present.” – Jim Rohn

Creating a budget really shouldn’t be the place where financial decisions begin. Instead, a comprehensive look at what you most care about and how you want to live your life is the best place to start, even before budget categories are determined.

This becomes especially clear when we consider how to raise our children with a proper financial mindset. We want them to learn how to earn, how to save (and invest), and how to spend. Unfortunately, this doesn’t spring up for them from the womb!

When speaking with our clients about their financial decisions, these are the sort of conversations that ultimately prove to be the most meaningful — often life-changing.

We get the opportunity to help them discover not only how they want to use their money, but perhaps even more rewardingly — how to align that spending with the things they care most about.

Here’s one of the places where we start:

Rich people in Ashland, KY don’t clutter their lives with liabilities — they make investments.

As a way of contrast, those in the middle class tend to accumulate such items, and are often forced to make payments on them (too-expensive cars, boats, etc.). And, of course, those who are stuck in a cycle of poverty usually see themselves as buying “things”.

The problem here isn’t that those who are poor, or “middle class” aren’t wealthy — it’s that they haven’t taken the time to figure out a healthy approach to their spending.

There is a book by Elizabeth Dunn and Michael Norton (called The Science of Happier Spending) which chronicles the “research distinguishing spending that satisfies from that which disappoints”. The authors give us five principles of the kind of spending that actually produces satisfaction. Here they are…

1. Experiences satisfy more than material things.

2. Too much indulgence wears down. Making it rarer makes it more satisfying.

3. The best investment is usually in your time.

4. Flipping the credit game — “pay now, use later” versus “pay later, use now” — gives a sense of anticipation which is far better than immediate pleasure combined with the later pain of paying for something already consumed.

5. It is happier to spend on others rather than on ourselves.

I’d say that’s a great place to start in having these conversations.

For example, recognizing that time is in much more of a limited quantity than money (as the adage says: “We are each only given 24 hours in a day”) means that it makes sense to evaluate how you are approaching the “spending” and stewardship of your time — and that it often makes sense to pay money for more of it.

The wealthy see the value of their time, and they regularly invest in it by paying others to free it up. This could range from paying for lawn care and cooking — or even sometimes paying for someone else to drive them to and from work. And this often forces them to think about using their time in the most valuable way possible.

You are the only one who can be a mother or father to your children. You are the only one who can be a spouse to your partner. You are the only one who can do the things that only you can uniquely do.

Bringing your money together with the things you most deeply care about isn’t always easy … but it IS worth it.

And this is what my team and I are here for. When you come to us for your planning this year, if you’re willing, let’s set a time to have a longer conversation about what you would like to do with your life. Because that’s really where everything comes together.

Warmly,

 

Ernie Sharp

(606) 324-5655

Ernest P. Sharp II, CPA

Three FAFSA Tips to Help Ashland, KY Taxpayers Get Their High School Grads Ready for College

Three FAFSA Tips to Help Ashland, KY Taxpayers Get Their High School Grads Ready for College

Independence Day is this week. Bombs. Patriotism. Picnics. Barbecue. All those things.

I often write about “financial independence” this time of year (yes, I like the puns) … and when I do, invariably I get contacted by a few clients (or former clients), who communicate that they are pretty dispirited about their personal situation, that anything discussing “financial independence” really seems like a pipe dream — completely unrealistic for them.

Honestly, I LOVE these kinds of emails because firstly, I know that when a few people write about it, there’s likely even more that think about it. And secondly, I get the chance to speak a word of encouragement to those that need it.

Maybe that’s you?

Don’t give up.

With all of the local Ashland, KY people and families out there who are going through hard times, it’s easy for them to believe that there isn’t a light at the end of the tunnel. Especially when social media and the media keep putting the glossy and wealthy in front of our faces, it can be hard to face a different kind of facts on the ground.

But did you know that most self-made billionaires were previously bankrupt at some point in their lives? (Just Google it, you’ll see.)

In fact, it’s often the “fire” of these times of trouble which serve to clarify things — and get you making smarter financial decisions, perhaps for the first time.

So, if you’re feeling the financial heat right now, look out for the blessings in the midst of pain. I know it’s hard — but chances are, you’re being reminded of what’s REALLY important … and often, seeing this again can be a launch pad for living the kind of life that you really want to live.

And we’ll be right here in your corner.

Now … on a different note, but a similar theme. Rather than write about financial independence today (I’ve already given my sermon for the week), I thought I’d offer some pointers about when your children become more independent, i.e. go to college, and how to handle the taxes and financial aid part of it all.

Three FAFSA Tips to Help Ashland, KY Taxpayers Get Their High School Grads Ready for College

“An investment in knowledge always pays the best interest.” -Benjamin Franklin

Sending your kids off to relative independence in college is one of the scariest, most exciting times for a parent.

You do what you can, as a loving disciplinarian, for roughly 18 years and then after one weekend of stuffing a car full-to-the-brim and unloading it the next day … it’s all up to them. It’s so bittersweet.

Today, I want to help you (or any friend you know with kids heading off to university), to experience more sweet than bitter this season with a few FAFSA tax tips.

The Free Application for Federal Student Aid (FAFSA) is becoming increasingly in-demand with ever-inflating tuition fees.

Here are three FAFSA tips that might benefit students you know and love.

1. FAFSA Data Retrieval

This first tip is arguably the most important, because it will help long you after you’re done reading this article.

The IRS Data Retrieval Tool (DRT) will help college parents IMMENSELY when it comes to retrieving FAFSA tax info. The U.S. Department of Education recommends this IRS-backed service to conveniently access items like family earnings online.

You can share this service with anyone using this FAFSA website link which contains the IRS DRT.

 

2. FAFSA Questions. You Answer.

There are many financial details FAFSA will call for, and I want to make sure you and your college-prep people are prepared.

Here are a few FAFSA non-negotiables:

  • Social Security Number
  • The parents’ SSNs (if a dependent student)
  • Driver’s license number
  • Alien Registration Number (if not a U.S. citizen)
  • Federal tax info and returns
  • Records of untaxed income
  • Cash, savings and checking account information

In regard to the information listed above, I’ll say this: gathering such info is one thing, but understanding how each piece correlates to FAFSA is another. I would love to help any college-ready family with this process, and it starts with us sitting down to meet. Please give me a call or contact me using the email at the top of our site, so we can get that first meeting on the textbooks ASAP. (See what I did there?)

3. Transcript Access

One of the first items we’ll go over is a tax transcript. This document possesses most of the line items necessary to complete the FAFSA. It will also serve as an alternative to your original tax return.

This document will offer adjustments the IRS made AFTER you filed your return, and are therefore updated and accurate. To receive your tax transcript, you can get it online at Get Transcript, or pick up the phone and dial (800) 908-9946 to order one by mail.

Although there are some tedious tasks involved in completing the FAFSA, remember you’re taking one more step in chipping away at that unfortunately-high tuition cost ahead of you.

A little work will go a long way when it comes to paying for student education. And if those students don’t appreciate all the hard tax work now, one day they (hopefully) will. Please reach out if you have any more questions, and best of luck to all of the college-bound kids you know!

Warmly,

 

Ernie Sharp

(606) 324-5655

Ernest P. Sharp II, CPA

Four Ways the IRS Reform Bill Helps Ashland, KY Taxpayers Like You (and Me)

Four Ways the IRS Reform Bill Helps Ashland, KY Taxpayers Like You (and Me)

Believe it or not, 2019 is almost halfway over (!). We’re through the summer solstice, the days get shorter from here on out, and here at Team Ernest P. Sharp II, CPA we begin to turn our eyes more directly at 2020.

We’re pretty thrilled by the opportunity, because it means we get that much more time to take advantage of all the juicy tax-saving opportunities on behalf of our clients.

But those really are only available to those who communicate and meet with us … so don’t let this year pass without doing so: (606) 324-5655 (or shoot me back an email using the email button at the top of our site).

Moving on … there is an IRS reform bill (The TaxPayer First Act) that passed through Congress in the last couple of weeks that marks some encouraging progress towards the ability of the IRS to be more responsive to regular taxpayers (like you and me). There has been a small amount of controversy about it, so I thought I’d pipe in with some thoughts about why this might be a GOOD thing for you and me.

Four Ways the IRS Reform Bill Helps Ashland, KY Taxpayers Like You (and Me)

“Sometimes the only answer people are looking for when they ask for help is that they won’t have to face the problem alone.” -Mark Amend

On June 13th, the Taxpayer First Act (TFA) passed through the Senate. As of this writing, it still awaits the President’s signature, but it looks as if it will be signed and confirmed.

If this doesn’t seem like much of a big deal, here’s a brief but powerful fact:

The TFA is the first significant piece of legislation addressing the workings of the IRS since the IRS Restructuring and Reform Act signed in 1998.

Twenty years later and it’s time for a change.

But if you’re in the dark as to what changes are heading your way, allow me to provide four ways this bill can help you in the months and years to come.

Customer Service

When thinking about the IRS, the term “customer service” isn’t exactly what first comes to mind (at least, not in a good way).

But one goal of the TFA is to tip the customer service scale in a more favorable direction. At the top of that list? The IRS is now required to devise a “customer service strategy” which they can then instill in each employee.

Simply put, more focused training in this area for IRS employees will only benefit Ashland, KY taxpayers like you should any interaction arise. This component of the law will be a great way to take an unfortunate stigma and turn it around for taxpayers for years down the line.

Independent Appeals

In the event you have to appeal an IRS decision, the TFA changes will also benefit your case. There is a newly-appointed independent appeals office that would be available, which would allow for greater access for taxpayers to view the case against them.

This adds a new level of transparency and communication to the whole tax dispute resolution process.

Change for the Private Collection Agency (PCA)

In 2017, PCAs were formed to collect unpaid tax bills. Under the TFA, PCAs can no longer specifically target low-income taxpayers who are behind on their tax bills. In other words, PCAs can no longer pressure them into payments they can’t afford.

Specifically, PCAs will not be able to collect from any taxpayer with a gross income of 200 percent below the poverty level.

Theft Prevention

The TFA follows suit with a nationwide, technological pursuit of greater identity protection.

Under the new provision, taxpayers who have had their identity stolen can request an Identity Protection Personal Identification Number (IP PIN). The IP PIN is a preventative measure to stop criminals from accessing items like taxpayer Social Security Numbers.

In turn, the IRS will assign a worker to the individuals with IP PINs so that their case can be filed unto completion.

These are just a few improvements that Ashland, KY taxpayers like you can expect to see under the TFA.

But if you have any question moving forward, please let me know. I would love to sit down and discuss other ways the TFA might affect your filing. For now, take heart in these promising changes, and know there are people trying to make filing easier for you.

I would love to help do the same.

Warmly,

 

Ernie Sharp

(606) 324-5655

Ernest P. Sharp II, CPA

Tax-Smart Ways to Run a Savvy Ashland, KY Side Hustle

Tax-Smart Ways to Run a Savvy Ashland, KY Side Hustle

I’m so old, I still remember the days when “hashtags” were only about a particular button on your phone.

Yep, the world has shifted massively underfoot. You know it; we all know it.

And one of the developments we’ve all seen is the proliferation of news feed gurus, ready and willing to help you start your new business — for the low, low price of three payments of $5,997.

What once was a sanctuary of grandkid photos and food pictures, has now become another marketplace for more barkers to shout their wares at you.

But it’s all for good reason … because lest I come across as TOO much of a cynic, the proliferation of onramps for (truly) ANYONE to start a business is a net positive for our culture, in my opinion.

There are so many great tax reasons to have a real business, even if it’s just a “side hustle” like the kids say.

And today I want to clear some of the fog around this topic, especially for your wallet — and your taxes.

Tax-Smart Ways to Run a Savvy Ashland, KY Side Hustle

“The struggle you’re in today is developing the strength you need for tomorrow. Don’t give up.” -Robert Tew

Despite having full-time employment, many Americans need some sort of work on the side to supplement month-to-month living expenses. In fact, a recent MarketWatch survey says one-third (!) of Americans depend on a side hustle.

Do you fall into that category? If so, I’m here to help you figure out the (multiple) tax ramifications for self-employment. Whether it’s you or someone you know, I love to come alongside any endeavor that helps pay the bills. There’s no reason that tax questions should hinder all that hustling.

Here are a few tax tips, whether you’re in the middle of a Ashland, KY side hustle or thinking about starting one, that will help keep your taxes in order.

Research and Report

There are a few basic differences between W2 and 1099 employees. And if you’re doing some freelance work for another Ashland, KY business, they’re not required by the IRS to send you a 1099 unless they’ve paid you $600 or more. HOWEVER, even if you earned less than that, with no documentation required, your money is still taxable income.

I can’t overstate this enough: if you are earning money on the side, you are still responsible for keeping track of and reporting all earnings.

By Tax Day, you’ll need to report all earnings, with or without a 1099, to the IRS.

Many freelancers end up filing Schedule C as sole proprietors. You and I can tackle this document together, but it’s imperative your numbers are accurate for filling out each box.

Pay Up

A side hustle is just that: a hustle.

But these gigs aren’t as simple as a childhood lemonade stand. That ice-cold cash is (sadly) not all yours. Unfortunately, this is taxable income we’re talking about and it’s vital to pay those estimated taxes…

…four times a year (April 15, June 15, Sept. 15 and Jan. 15). That’s right, things like self-employment taxes are required from all the strenuous (but fun!) work you complete throughout the year.

But don’t get discouraged! This is another part of the hustle, yet it has to be accurate for continued success. Just one more reason I’m in your corner all year round.

Stay Healthy. Stay Hungry.

The IRS also wants to help the self-employed in regard to health insurance and retirement benefits. Those contributions can be deducted, but are filed on your personal tax return as an adjustment to personal income.

Now, I can help you with any of the aforementioned items. I know the tax side of self-employment can seem like a lot, but there are many benefits of self-employment if you can make it through tasks like filing your taxes.

Please reach out so we can get our first meeting on the books. No one should have to hustle alone, for it can quickly lead to burnout.

You need a team around you, and I’d love to join.

Warmly,

 

Ernie Sharp

(606) 324-5655

Ernest P. Sharp II, CPA

Key Tips For Ashland, KY Newlyweds On Marriage and Taxes

Key Tips For Ashland, KY Newlyweds On Marriage and Taxes

Do you know what the number one month is for weddings? Check today’s date and there it is: June.

With that fact in mind, I’m not sure where you currently fall on the wedding spectrum…

Are many of your friends getting married? Are your friends’ kids getting married? And if you or someone close to you is getting married soon, congratulations! Weddings are a huge deal (for obvious reasons) and, as a bonus, can often act as mini “family reunions” to gather with loved ones.

But, once the dust has settled…

And the honeymoon is over and the boxes are unpacked and the thank you’s have all been written, there are some tax implications for the newlyweds in your life. Marriage and taxes may not be the most exciting topic, but messing up your taxes is not fun either.So whether the following tips are useful for you personally, or something you can forward to others, there’s no reason these tax changes should damper anyone’s newlywed bliss.

Key Tips For Ashland, KY Newlyweds On Marriage and Taxes

“A successful marriage requires falling in love many times, always with the same person.” -Mignon McLaughlin

Perhaps the most obvious change after the big day is a new surname for one or both parties. If that’s the case, then it’s imperative the person changing their last name reports it to the Social Security Administration.

This is key because, during filing season, the IRS will look to the SSA for your personal data, and if the new surname is not accounted for, your tax refund will be delayed.

A change in marital status will also directly affect your filing status with your Ashland, KY employer. Make sure you connect with HR at work to adjust your workplace withholding. Failing to do so may result in inaccurate payments from each paycheck, which may mean an unexpected tax bill come filing time.

New Home. New Status.

Upon marriage, there is usually at least one party who has a change of address. In addition to notifying the post office of the change, it’s important the IRS knows the address change occurred as well. The reason being, so that they can mail any important documents to the right address moving forward.

As married couples think about the tax year ahead, it’s their marital status on December 31st which will determine how they file — jointly or separately.

This is where I step in to help many newlyweds determine which is the right filing status for them. Figuring out marital tax implications is tricky enough as it is, so I don’t recommend doing it all alone.

Health Benefits

Reassessing healthcare options is another key change that accompanies newlywed tax status. The move requires a proactive attitude, as it’s not necessarily fun stuff to change. But it will make a difference when one least expects it.

Although I’m no marriage expert, I know marriage usually comes with plenty of unexpected twists and turns.

If you’re insured through the Affordable Care Act (ACA), you might qualify for the premium tax credit. And if that’s the case, a change in marital status will affect the credit you receive.

Again, reconfiguring healthcare, and the tax implications as a result, is one more (tricky) area I’d love to help you or someone you know navigate in the future.

With all that being said … marriage is a joyous occasion (with many logistics to follow). Many couples out there don’t see the tax ramifications as a fun new change, but there are some, like me, who love to explore how to maximize its benefits.

Even though June is great for weddings, we all know April is when things really heat up.

Let’s start planning for that dance ASAP.

Warmly,

 

Ernie Sharp

(606) 324-5655

Ernest P. Sharp II, CPA

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