Wednesday, March 27, 2013

Is a Health Savings Account for you?

The question of whether an HSA is right for you can be answered with: "It depends." If you already have a high-deductible health insurance policy (individual or family), adding an HSA is a good idea. Also, it may be a good bet if you are in good health and if you've been paying more for health insurance premiums than you've been using in health care. People with chronic diseases, such as diabetes, requiring frequent doctor visits and medication, may need to think twice about enrolling.


·        Invest pretax money to fund them; withdrawals are tax-free (assuming they are used for medical expenses).
·        Invest in a variety of financial products, such as mutual funds and stocks, and contributions can be rolled over from year to year.
·       You can save up for when you really need the funds for a medical expense. 
·       Take out your money at any time to reimburse a medical expense.  
·       There is no time limit as in the traditional “use it or lose it” FSAs.   
·        Savings this year can offset a medical expense next year or the year after.


·         You must enroll in a health plan with a high deductible and high out-of-pocket maximums to open one.
·         Penalties and taxes are assessed if a HSA is not used for health care expenses.

David Prusaitis, CPA, CVA

Tuesday, March 19, 2013


There used to be a saying in retail business that “The customer is always right”.  Meaning of course, that we are in business to serve the customers so we had better listen to them.  When I first started in business, fresh out of college, I thought I was much smarter than my clients.  When a client said they thought the answer I came up with didn’t look right, I not-so-patiently explained why I was right and they were wrong.  To my own credit it only took me a few months to discover what an idiot I was.  I learned that if the client thought my answer did not look right, I needed to go over my figures again.  The simple reality is that you usually know your own situation better than we do.  You may need our expertise in tax or other financial matters but you can often tell better than us when something just does not seem right.  Sometimes the answer is that you just could not foresee the end result because of the complexity of the matter and our answer is correct.  But sometimes we may have misunderstood something you said and that led us to a wrong result.
So the point of this is to encourage you to feel free to let us know if our answer just does not feel right to you.  There is no harm in asking us to take another look at things.  Our financial lives are so complicated these days we all need to be careful not to get so focused on the detail that we miss the overall picture.
Loren L McCann, CPA, MS(Tax)

Friday, March 15, 2013


Now that Congress finally passed a reasonable estate tax law with a $5,250,000 exemption that is both indexed for inflation and transferable to one’s surviving spouse, who needs to do estate planning?  Well, truthfully, some do not need much estate planning, but remember that estate planning always should have been more than just tax motivated.  Estate planning involves issues like; who will take care of our minor or disabled children, who makes my end-of-life decisions, how is the best way to divide our assets among our heirs considering their differing needs and tax status, can your heirs manage what you are leaving them or should the assets be in trust with an experienced manager, and how should you title your assets for the best distribution to heirs.  These and other decisions still should be made.
Most of us would like to ignore the issue if we could (myself included), but we do our heirs a disservice if we do not address these questions.  I have seen many, many sad estate settlements (with unhappy children of the deceased) that could have been made so much better with only a small amount of planning.  For a modest amount of legal fees you can put some certainty into your will or trust and often avoid some unpleasantness for your heirs that you might not have expected or intended.  Sometimes the biggest mistake we can make is to think too much about our feelings on the matter instead of thinking about their feelings on the matter. 
For your family’s sake, put some thought into the planning sooner rather than later.  If you do not have an attorney we can give you some names of good estate attorneys and you can always ask us some questions about the kinds of things you should consult with your attorney about.
Loren L McCann, CPA, MS

Friday, March 8, 2013

Record Retention

You’re going through your files and want to know how long you need to keep your tax return copies and tax related documentation?  We suggest that all copies of tax returns be kept indefinitely.  You never know when you might need them.

According to the IRS, taxpayers should keep a copy of their tax returns and all return-related, substantiating documents for three years after filing the return (the three-year statute). However, records relating to real estate, stock transactions, retirement accounts and business or rental property which can help establish cost basis and gain or loss, should be kept for as long as you have the property plus an additional three years after you dispose of it.

Such tax records can include brokerage statements, bills, credit card receipts, canceled checks and other receipts, invoices, mileage logs, proofs of payment and any other records that support deductions or credits claimed on a tax return.

Of course if you do have documents that are old and are safe to dispose of, you want to make sure you properly dispose of “personally identifiable information” and any financial information. We recommend that paper documents get cross-cut shredded or completely burned.

For more information on what kinds of records to keep go to

David Prusaitis, CPA, CVA

Wednesday, March 6, 2013


I recently read where one of our Congressmen accused Social Security recipients of sucking on the government welfare teat and being one of the major causes of the government’s financial crisis.  This Congressman seemed unaware that Social Security is a trust fund set up for the benefit of those designated as beneficiaries.  Trust law is one of the better defined bodies of law.  Trustees are legally bound to manage a trust for the sole benefit of the beneficiaries.  Trustees are prohibited from self-dealing or in any way diverting the funds to anyone other than the beneficiaries.  The Internal Revenue Service recognizes these rules quite well in their efforts to collect taxes that have been withheld from workers and held in trust for the Federal Government by the employer.  If the employer does not pay over the trust funds withheld, the IRS will assess a penalty on the person or persons who should have been acting as trustee for the funds.  And lest you think the function of trustee is not viewed seriously, the penalty is 100% of the taxes withheld from the employees and not paid to the government.
When our Congresspersons talk about the Social Security Trust Fund, they do not seem to know what a trust is or what their responsibility as trustees is.  Rather than decrying the payment of the funds to the beneficiaries, they should be trying to secure the principal so that those beneficiaries receive the funds that have been (or should have been) set aside for them.  As trustees of the funds, they are responsible to see that the funds are available when needed.  We as the people of this nation need to hold Congress responsible, not letting them try to avoid their duty by blaming someone else or redefining the purpose of Social Security to the detriment of the intended beneficiaries.
Loren McCann, CPA, MS (Tax)