Jeffrey B. Kahn, Esq. and Windus A. Fernandez Brinkkord Discusses Financial Markets Turbulence, Abandoned Property, Taxes and the IRS On ESPN Radio – August 28, 2015 Show

Topics Covered:

1. Dealing With Financial Markets Turbulence.

2. How to stop your assets from being turned over to the State as abandoned property.

3. IRS Summertime Tax Tips:

• Job Search Expenses May be Deductible
• Key Tax Tips on the Tax Effects of Divorce or Separation

4. Questions from our listeners:

• I have IRAs, 401K, mutual funds, and savings for a rainy day. I have done this myself. My friend is trying to convince me to use a financial planner. I wonder what they may do so much better than me? Also, don’t their fees offset any gains they can make beyond what I can do myself?
• My CPA who I have been going to for years has never told me that I had to report my foreign income. Now that I just learned that I have to report my foreign income and disclose my foreign bank accounts, do I accept my CPA’s offer to represent me in OVDP or do I hire you?

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Jeff states: Yes sometimes we just have to take the money and run!

Good afternoon! Welcome to Inside Advantage – Your Financial And Tax Radio Show.
This is Board Certified Tax Attorney, Jeffrey B. Kahn, the principal attorney of the Law Offices Of Jeffrey B. Kahn, P.C. and head of the KahnTaxLaw team.
Windus states:
And this is Licensed Financial Planner, Windus A. Fernandez Brinkkord, Senior Vice President Of Investments at Trilogy Financial Services.
You are listening to our weekly radio show where we talk everything about finances and taxes from the ESPN 1700 AM Studio in San Diego, California.
Jeff states:
When it comes to knowing tax laws and paying taxes, let’s face it — everyone in the U.S. is either in tax trouble, on their way to tax trouble, or trying to avoid tax trouble!
Windus states:
And whether you are on the rebound or flying high, we have the information you need to make sound financial decisions and map out your strategy for success.
Jeff states:
Our show is broadcasted each Friday at 2:00PM Pacific Time and replays are available on demand by logging into the KahnTaxLaw website at www.kahntaxlaw.com.

Jeff states:

For today’s show we have coming up:

Segment 2 material: how to stop your assets from being turned over to the State as abandoned property.

Windus states:

Also coming up is:

Segment 3 material: our continuation of the IRS’ Summertime Tax Tips and what they mean for you.

And of course towards the end of our show, we will be answering some of your questions.

Jeff starts chit chat with Windus.

Dealing With Financial Markets Turbulence.

Jeff states, so Windus it finally happened we had this huge market turbulence over the past week and people do not know what to do. Windus for those who are not aware, please tell what has happened over the last week or so.

Windus replies with the general trends of the market over the last week or so.

Jeff states: So I can understand that people start getting jittery when the markets are turbulent. I am sure you have been getting a lot of calls. What do you say?

Windus replies: My points for market turbulence are:

Markets will go up and down and you should be investing for your time horizon.
The biggest issues clients have is watching their statements go up and down and trying to reconcile the statements with their account balances.
For example, we saw a few years where the U.S. market out performed the international markets, which didn’t mean you shouldn’t have international market exposure, but many people were unhappy if they were not out performing the S&P 500.
Be careful to compare your returns to one index.  It isn’t what is best for you and not likely what is in line with your risk tolerance.

Jeff states: I think that people forget that investing is for the long term and instead look for that quick return.

Windus replies: Ultimately, if you are not retiring for 20 years, this kind of volatility should not be driving your plan but should be something you continue investing through.

If you needed the money next year, you shouldn’t have been invested in equities in the first place AND if you did, it is better to weather the storm and look for stabilization before selling versus selling in the middle of a correction.

Jeff states: But for the market to take a large downturn – say 20% is this a sign that bad times are to come?

Windus replies: Correction typically indicates that this is not a sustained downturn or the start of a recession but a healthy pull back in the market. Now no one has a crystal ball, but ultimately, the traditional markets for a recession have not turned yet.

Jeff asks Windus: What are those traditional markets that you are referring to?

Windus replies.

Jeff asks Windus: So is there a specific time that you should get into a market?

Windus replies: Avoid “timing” the markets. Many people ask me should I invest now, or does the market have more down to go? That is a pretty reasonable question but the problem is, you can’t answer this until after the fact.
What you should do is slowly deploy money through a strategy called dollar cost averaging. Dollar cost averaging allows you to trickle money in over a period of time, helping you to avoid buying all on one up day or a down day.
Now, you can obviously put more in if we’ve seen a 10% sell off in 3-4 days, but regardless, it is best to hedge your bets and spread out when you put the funds in.

Jeff asks Windus: So what do you say to our listeners who are living off of their income and can’t handle the volatility?

Windus replies: The great thing about being retired and having dividend income, is that dividends are paid per share you own. They are not paid per the balance.  So as long as you are not taking from the principal, your income should remain stable in a down turn or in a market correction. Be careful of reacting to these bumps in the market, the reaction is often very hurtful to your long term growth.

Well it’s time for a break but stay tuned because we are going to tell you how to stop your assets from being turned over to the State as abandoned property.

You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord on Inside Advantage on ESPN.

BREAK

Welcome back. This is Inside Advantage – Your Financial And Tax Radio Show on ESPN and you are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord.

How to stop your assets from being turned over to the State as abandoned property.

Jeff states: Windus, an article in the August 21, 2015 Wall Street Journal http://www.wsj.com/articles/protecting-your-mutual-fund-accounts-1440191878

caught your attention of how States in an effort to raise more revenues are becoming more aggressive in claiming abandoned property as it benefits them for the period of time this property is unclaimed. What usually happens is that State law will define when something becomes abandoned, so whether you are a bank, brokerage house or other financial institution, there will be a point when that dormant account must be turned over to the State as abandoned property.
Windus replies: We are seeing this more and more, your address doesn’t get updated correctly, the bank, brokerage house or other financial institution gets returned mail, and all of the sudden, you are receiving notices that your funds are going to be reported as abandoned property to the state.

Jeff asks Windus: So what should one do?
Windus replies: First, don’t melt down, this is typically an easy fix.  Normally, you can just reach out, properly prove your identity and update your address and take back over your funds.

Jeff states: Well whether the financial institution is holding the funds or the State is holding the funds, the funds still belong to the account holder so what good is it for the State to now hold this “abandoned property”?
Windus replies: Now states argue that it benefits a consumer, especially in the case of a deceased family member, for this to happen.  If the states claim it, you can search for it on their sites.  Otherwise, you’d have to call every financial institution to track down assets for that relative. That is a lot of work as opposed to going to one centralized database maintained by the State. And if you are now expecting an inheritance from a deceased family member consider this….
Windus PLUG: Trilogy Financial Services will provide you with a retirement cash flow analysis which is a $600.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Windus A. Fernandez Brinkkord. The number to call is 858.314.5169. That is 858.314.5169.
Jeff asks Windus: So you have some comments to the tips listed in this Wall Street Journal Article.

Jeff to read each tip and Windus replies:

1. Notify financial institutions of any address change, name change or change in ownership due to death or divorce. Also change your address with the U.S. Postal Service when you move.

Windus comment:  If you notice for some reason that mail is still getting through to the old address, please let your advisor know.  Sometimes the first update doesn’t go through.  It happens.

2. Open all mail from the financial institutions where you have accounts.

Windus comment:  It is both important to be informed on your accounts, but also keep up with what they are trying to communicate.  Always open, stay informed.

3. Cash all dividend checks and insurance benefits, no matter how small.

Windus comment:  Yes, this is one thing that can very quickly cause unclaimed property for a needless reason.

4. Initiate account transactions, such as small deposits, annually. Even a $1 deposit will be considered account activity in some states, though automated deposits and withdrawals may not count.

Windus comment:  You should always be contributing to your assets BUT in the event that you can’t work this into your budget it doesn’t hurt to put a small amount in annually to keep the account active.

5. Contact each institution at least once every three years, by calling or logging in to an online account.

Windus comment:  every 3 years, institutions are required to do a mailing.  When your information is out of date, this can trigger the assets to go to unclaimed property.  Make sure you are aware of this.

6. Search relevant government unclaimed-property websites periodically. There is no reason to pay for a search elsewhere as the state sites are free.

Windus comment:  pretty straight forward.  Unfortunately, people pay for services that are free all the time because they don’t know they are free.  Know to look directly with the state and do not pay for someone to conduct this search for you.

7. Make sure there is a current list of financial accounts and other assets available to family members, an executor or adviser, in case of death or disability.

Windus comment:  For my clients, I have a single portal that they can link all of their accounts into and I provide them with a binder.  My goal is that all clients have a paper trail summary of their accounts so that the family can know where to go in the event something happens and so consider this…

Windus PLUG: Trilogy Financial Services will provide you with a retirement cash flow analysis which is a $600.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Windus A. Fernandez Brinkkord. The number to call is 858.314.5169. That is 858.314.5169.

Jeff states: Stay tuned because after the break we have Amy Spivey joining in to tell you some important summertime tax tips that can help you avoid tax problems with IRS.

You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord on Inside Advantage on ESPN.

BREAK

Jeff states: Welcome back. This is Inside Advantage – Your Financial And Tax Radio Show on ESPN and you are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord.

Calling into the studio from my Walnut Creek Office is my associate attorney, Amy Spivey.

Chit chat with Amy

Jeff states:

Starting July 1^st, the IRS began offering its Summertime Tax Tip series which include useful information in English and Spanish. Tax Tip subscribers receive a new Tip via email three times a week during July and August. They also get a Tax Tip each weekday during the tax filing season. The IRS also issues Special Edition Tax Tips on important tax topics throughout the year. Taxpayers can sign up for the IRS Tax Tips subscription through a free service on www.irs.gov. For this segment we have pulled some of these tips which we want to share with you and add our comments to them.

IRS Summertime Tax Tip 2015-23 issued August 24, 2015:

Key Tax Tips on the Tax Effects of Divorce or Separation

Jeff states: Income tax may be the last thing on your mind after a divorce or separation. However, these events can have a big impact on your taxes. Alimony and a name change are just a few items you may need to consider. Here are some key tax tips to keep in mind if you get divorced or separated.

Jeff asks Amy: How does the tax law treat Child Support, Alimony Paid and Alimony Received?

Amy replies:

• Child Support.  If you pay child support, you can’t deduct it on your tax return. If you receive child support, the amount you receive is not taxable.

• Alimony Paid.  If you make payments under a divorce or separate maintenance decree or written separation agreement you may be able to deduct them as alimony. This applies only if the payments qualify as alimony for federal tax purposes. If the decree or agreement does not require the payments, they do not qualify as alimony.

• Alimony Received.  If you get alimony from your spouse or former spouse, it is taxable in the year you get it.

Windus asks Amy: But since alimony is not subject to tax withholding, how would a spouse receiving alimony prepare for that end-of-year tax bill?

Amy replies: So that spouse receiving the alimony may need to increase the tax that person pays during the year to avoid a penalty. To do this, you can make estimated tax payments or increase the amount of tax withheld from your wages.

Jeff asks Amy: What if a spouse previously established a spousal IRA and now in 2015 the dissolution of the marriage is final, can that spouse make a tax deductible contribution in 2015 to that spousal IRA?

Amy replies: If you get a final decree of divorce or separate maintenance by the end of your tax year, you can’t deduct contributions you make to your former spouse’s traditional IRA. You may be able to deduct contributions you make to your own traditional IRA.

Windus asks Amy: I know that most women after their divorce change back to their maiden name. If one is looking to that what must they do with the government?

Amy replies: If you change your name after your divorce, notify the Social Security Administration of the change. File Form SS-5, Application for a Social Security Card. You can get the form on SSA.gov. The name on your tax return must match SSA records. A name mismatch can delay your refund.

Jeff states: It’s hard enough dealing with the issues of divorce especially when children are involved but you cannot be ignorant of the tax consequences so it is important to contact…

PLUG: The Law Offices Of Jeffrey B. Kahn will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Jeffrey Kahn, right here in downtown San Diego or at one of my other offices close to you. The number to call is 866.494.6829. That is 866.494.6829.

IRS Summertime Tax Tip 2015-24 issued August 26, 2015:

Job Search Expenses May be Deductible

Jeff states: People often change their job in the summer. If you look for a job in the same line of work, you may be able to deduct some of your job search costs.

Jeff asks Amy: What are some key tax facts you should know about if you search for a new job:

Amy replies: The main one is –

• Same Occupation.  Your expenses must be for a job search in your current line of work. You can’t deduct expenses for a job search in a new occupation.

Windus asks Amy: What are typical expenses that could be deductible?

Amy replies:

• Résumé Costs.  You can deduct the cost of preparing and mailing your résumé.

• Travel Expenses.  If you travel to look for a new job, you may be able to deduct the cost of the trip. To deduct the cost of the travel to and from the area, the trip must be mainly to look for a new job. You may still be able to deduct some costs if looking for a job is not the main purpose of the trip.

• Placement Agency. You can deduct some job placement agency fees you pay to look for a job.

Jeff asks Amy: But there are got to be a catch to this or else everyone would be looking to deduct job search expenses each year?

Amy replies: There is –

• First Job.  You can’t deduct job search expenses if you’re looking for a job for the first time.

• Substantial Job Break.  You can’t deduct job search expenses if there was a long break between the end of your last job and the time you began looking for a new one.

• Reimbursed Costs.  Reimbursed expenses are not deductible.

Windus asks Amy: Where on the Form 1040 do you claim these expenses?

Amy replies:

• Schedule A.  You usually deduct your job search expenses on Schedule A, Itemized Deductions. You’ll claim them as a miscellaneous deduction. You can deduct the total miscellaneous deductions that are more than 2% of your adjusted gross income.

Jeff states: Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS and one of them is the right to representation, and that’s where we come in because…

PLUG: The Law Offices Of Jeffrey B. Kahn will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Jeffrey Kahn, right here in downtown San Diego or at one of my other offices close to you. The number to call is 866.494.6829. That is 866.494.6829.

Thanks Amy for calling into the show. Amy says Thanks for having me.

Stay tuned as we will be taking some of your questions. You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord on Inside Advantage on ESPN.

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Jeff states: Welcome back. This is Inside Advantage – Your Financial And Tax Radio Show on ESPN and you are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord.

Windus PLUG: Trilogy Financial Services will provide you with a retirement cash flow analysis which is a $600.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Windus A. Fernandez Brinkkord. The number to call is 858.314.5169. That is 858.314.5169.

You should also know that the securities and advisory services are offered through National Planning Corporation.(NPC) Member FINRA, SIPC, and a Registered Investment Advisor.  Trilogy Financial Services and NPC are separate and unrelated Entities.

Jeff states: If you would like to post a question for us to answer, you can go to my website at www.kahntaxlaw.com and click on “Radio Show”. You can then enter your question and maybe it will be selected for our show.

OK Windus, what questions have you pulled for us to answer?

Windus states:

Bill from La Jolla states: I have IRAs, 401K, mutual funds, and savings for a rainy day. I have done this myself. My friend is trying to convince me to use a financial planner. I wonder what they may do so much better than me? Also, don’t their fees offset any gains they can make beyond what I can do myself?

Jeff states, Well Windus you are the financial planner so I will let you respond.

Windus responds.

Windus states:

Sanjay from Sunnyvale, California asks: My CPA who I have been going to for years has never told me that I had to report my foreign income. Now that I just learned that I have to report my foreign income and disclose my foreign bank accounts, do I accept my CPA’s offer to represent me in OVDP or do I hire you?

Taxpayers looking to come forward in the Offshore Voluntary Disclosure Program (OVDP) to report unreported foreign income and undisclosed foreign bank accounts would be best served by a tax attorney who was not involved in the preparation of the originally filed false tax returns. This is because the tax attorney does not have a conflict of interest and can present your case in the most favorable manner. This is especially important if you are looking to apply in the new Streamlined Procedures announced by the IRS. The best way to explain this is by example – if a great defense is that you relied on your tax preparer to tell you whether you had to report your foreign accounts and foreign income, do you think your tax preparer will put himself under the bus to save you from the IRS – chances are not. But proving non-willfulness on the new streamlined procedures is not based on one factor. We have identified over 50 factors to consider in building a case for a successful streamlined procedure submission. A tax attorney who had no involvement in the preparation of your past returns can make these arguments thus truly serving your best interests.

Jeff PLUG: The Law Offices Of Jeffrey B. Kahn will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Jeffrey Kahn, right here in downtown San Diego or at one of my other offices close to you. The number to call is 866.494.6829. That is 866.494.6829.

Jeff states: Well we are reaching the end of our show.

Remember you can send us your questions by visiting the kahntaxlaw website at www.kahntaxlaw.com.

Windus states: Have a great day everyone!