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1
How to Become a Wealthy Accountant / Re: Apparently not?
« Last post by KeithTax on June 03, 2018, 03:48:41 PM »
Contact me using the Contact button of the blog, CF.
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How to Become a Wealthy Accountant / Re: Apparently not?
« Last post by CurativeFinance on May 29, 2018, 04:21:17 PM »
I've worked in the tax prep business for a few years, mostly with a large tax prep chain (let's call it Patriot Tax). The owner was great - she knew the tax code inside out, and I learned so much from her. Unfortunately, the majority of her clients treated her like she was a fast food worker and demanded the lowest fees possible. I hated working for these people - quite a few were undocumented, and gave me false SSN's. Several were nice and had complicated returns that she let me work on if it wasn't busy.
As much as I'd like to work with her again, I'm not going back to Patriot Tax. Their business model stinks and it caters to the bottom feeders of the tax world. I'm interested in partnering up with an experienced CPA or tax firm next season with remote work. I'm going to do my best to pass the EA exam before 2019.
This is a great website and forum. I'd love to hear from others about possible future collaboration.
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I've posted a couple times in the past on a similar topic, but this post will be more comprehensive and hopefully can benefit other people who go through the same process with USAA (or even a good reference for any auto insurance evaluation). I will be finishing residency and moving form MI--> PA and just had a long conversation with a USAA representative after I found out I was eligible. FYI - if you are not directly in the military, only family member, you can't get USAA in MI (only state that's the case per the rep). I went through each of the options with the representative and I will offer what I am thinking and pose questions to the group where appropriate (bolded most important). I've also added numbers for each point to make responding easier. Background on me: 31yo, 31yo wife, 1 child, healthy, 400k net worth, 2016 owned CRV, 2016 leased CRV (will rectify that mistake shortly, long story, please don't judge). I certainly appreciate any/all feedback.
We might have swapped a thread about this on the MMM forum, but here are two posts about USAA’s business models for insurance (in general) and overall trends in vehicle insurance:
https://the-military-guide.com/usaa-answers-insurance-financial-questions/

https://the-military-guide.com/auto-insurance-premiums-rising-not-just/


-They said I can't buy an umbrella policy without having a homeowner's policy which I wasn't sure was true. I asked b/c if I had umbrella, then maybe I didn't need as high of coverages on some areas of auto as I will list below. Would be more ideal to have some lower auto options with one big umbrella on top (although I know they have certain minimums on every category in order to even purchase umbrella). If this is true, can you purchase umbrella with a different carrier?
First, I’d only insure yourself for your gross worth.  Juries don’t care about mortgages or other debt-- only about how much money they can award the plaintiff.  Right now you might be able to avoid an umbrella policy by taking higher limits on your vehicle policy.  You could juggle the coverage around in search of a sweet spot, but the USAA policy computer has probably already done that work.

Next, here’s the USAA info from their website:
https://www.usaa.com/inet/wc/insurance_home_umbrella
Click on the “See What’s Required To Qualify” link to see this text:
Quote
To purchase umbrella insurance you are required to maintain the following coverage and limits.
Automobile Insurance Bodily Injury   
$300,000 dollars limit per person
$500,000 dollars limit per accident
Automobile Insurance Property Damage   
$100,000 dollars limit per accident
Homeowners/Renters/Fire Liability   
$300,000 dollars limit per occurrence
Homeowners Insurance Personal Injury   
$300,000 dollars limit per occurrence
Watercraft Personal Liability (if applicable)   
$300,000 dollars limit per occurrence
Finally, if USAA won’t sell you an umbrella liability policy then you can certainly buy from another insurer.  Depending on your USAA eligibility you may also be eligible for membership at Armed Forces Insurance.  (AFI.org)  We’ve been with them for 30+ years, no complaints.

So for your questions #1-5, I’d try to pack all the coverage you need into your vehicle insurance policy and then add as little umbrella liability as you can.

You might also want to cover yourself for underinsured motorists and uninsured motorists.  (UM/UIM)  This was explained to me as providing a payout if a UM/UIM driver hit our car and inflicted a lifelong disability on our child.  Now that she’s grown up, we still keep UM/UIM because it’s cheap coverage for anyone in our vehicle.

6-Basic first party benefits (& Medical expense benefits): options 5k, 10k. Seems to pay for medical expenses, religious healing, etc... Required in PA. My thoughts are that if I have health insurance already, why pay more than I need to. Was going with 5k.

7-Added First Part Benefits:
a)Medical Expense: options - decline 25k, 50k, 100k. Not sure how this is different than medical expense under the first party benefits section (I guess it is optional coverage unlike the basic benefits). However, was going to take lowest option possible. I just don't see how this is important if you already have health insurance which inherently has an out of pocket max. Why do they even offer these options? Is it only for those that don't carry health insurance, or will it pay you for the Out of pocket max on your medical insurance?
b) Funeral expenses: options - decline, 1500, 2500. Plan to self insure here.
c) Accidental death benefits: options - decline, 5k, 10k, 25k. If I die, spouse gets a benefit. Was going to decline since both of us have individual life insurance already.
d) Work loss: options - decline, 5k per person/1kmonth, 15/1, 25/1.5, 50/2.5; begins after 5 working days lost. Planned on declining. Self-insure in short term (<90 days) & have disability insurance already.
Yep, those options are medical coverage for people who (for whatever reason) don’t have their own health insurance or who feel that they need more coverage when driving.

Your decisions there look good.

8-Other than Collision: options - decline, 50, 100, 150, 200, 250, 300, 500, 1k. As cars are relatively new, was going to opt for 1k here and self-insure up to that amount. When car values <10k, then will drop the coverage entirely.

9-Collision: same options and ultimate decision as "other than collision" section.

10-Car Replacement Assistance: options - decline, 20%. if vehicle is considered a total loss, they can pay you an additional 20% to help. For instance, 10k car gets totaled. They pay you 10k without the benefit or 12k with the benefit. Was going to decline and self insure.
Yep.

In general, the sooner you can drop collision & comprehensive insurance (or boost the deductibles way up) the happier you’ll be.  I realize that might not be an option with a leased vehicle, but CRVs seem to be very long-lived and resistant to collision damage.  If you don’t have to care about cosmetics then you can self-insure as much as possible and (here’s the important part) add the saved premiums to your vehicle replacement fund.

11-Accident Forgiveness: options - decline, accept. If you choose coverage, they will give you "one free pass" every five years for an accident without raising your rates. This is for the entire policy, not per individual. Forgot to ask how this applies if you are found NOT at fault vs AT fault. Not sure about adding this option or not and am curious other's thoughts. I think I'm a pretty good driver with lower commutes (as an attending), but I've been in 2 accidents in residency (I wasn't at fault in either and other parties received tickets so I think it was just bad luck).
This depends on whether PA is a no-fault state.  If this is only $20/year then you’d probably take the coverage, but if it’s $20/month then you’d probably decline.

And, of course, this is one more reason to commute by bicycle or foot where possible.  The majority of vehicle damage occurs within a few miles of home.

12-Rental reimbursement: options - decline, economy, standard, truck, large SUV. Plan to decline and self-insure and borrow family members vehicles if necessary.

13-Towing and Labor: options - decline or accept. I currently have AAA so will decline. However, not sure if I should decline AAA and go with this option. However, AAA does have other perks with discounts, etc...
Yep.

The only addition I have here is that you might be able to negotiate a better deal with AAA by sharing your USAA quotes with them.
4
I've posted a couple times in the past on a similar topic, but this post will be more comprehensive and hopefully can benefit other people who go through the same process with USAA (or even a good reference for any auto insurance evaluation). I will be finishing residency and moving form MI--> PA and just had a long conversation with a USAA representative after I found out I was eligible. FYI - if you are not directly in the military, only family member, you can't get USAA in MI (only state that's the case per the rep). I went through each of the options with the representative and I will offer what I am thinking and pose questions to the group where appropriate (bolded most important). I've also added numbers for each point to make responding easier. Background on me: 31yo, 31yo wife, 1 child, healthy, 400k net worth, 2016 owned CRV, 2016 leased CRV (will rectify that mistake shortly, long story, please don't judge). I certainly appreciate any/all feedback. 

General Questions: 

-They said I can't buy an umbrella policy without having a homeowner's policy which I wasn't sure was true. I asked b/c if I had umbrella, then maybe I didn't need as high of coverages on some areas of auto as I will list below. Would be more ideal to have some lower auto options with one big umbrella on top (although I know they have certain minimums on every category in order to even purchase umbrella). If this is true, can you purchase umbrella with a different carrier?

Policy Specifics:

1-Bodily Injury: options - 100/300, 300/500, 500/500, 500/1mil, 1mil/1mil. Was thinking 300/500 as I know this is a big area for high income individuals as I believe lawsuits can garner future earnings. However, some people have said you can't get enough of this. I currently have 300/500 as that was the most my existing insurer offered, yet now I see USAA has much higher options. Was thinking 300/500 with umbrella on top, but now as I'm unsure if I can even get umbrella, do I need more?

2-Property Damage Liability: options - 5, 10, 25, 50, 100. Was thinking 100 as that is highest. Is this necessary, and again, how does/would umbrella fit in here?

3-Limited Tort vs Full Tort: this was new to mean as I think is a PA specific item (although other states may have their own versions). "Limited tort" seems to limit the amount of pain and suffering or other non-monetary damages except in serious injury whereas "Full Tort" would cover them. Didn't run the cost comparison but was told ~15% savings with limited. Trying to figure out situations where pain/suffering comes into play and ultimately, which makes more sense for me. 

4-Uninsured/Underinsured: options - 15/30, 20/40, 25/50, 50/100, 100/200, 100/300, 300/500, Same as Bodily Injury. I was most likely going to keep the same coverages as I had for bodily injury at 300/500, but the decision will ultimately depend on what I finally decide to do with that section (see above). However, I'm trying to determine how important this section is. If I get hit by someone w/o insurance and have big medical bills, I have health insurance. If they total my car, there are other parts of the policy that cover that and it wouldn't financially ruin me. If someone gets hurt/killed, the bodily injury kicks in. If they are the ones who cause the damage and there is property/bodily, etc... can I be at fault? Am I missing something? Trying to find the importance of this section and if I should be much less than 300/500.

5-Coverage Stacking: options - non-stacked, stacked. I was unaware of this with my current policy but the way it was explained to me is that it will add the Underinsured/Uninsured coverages together if you have more than one vehicle. So if I have 300/500 on car #1 and 300/500 for car #2, then getting a stacked option would make it 600/1mil. Therefore, what is better: stacked policies with high limits (300/500) making sure lots of coverage, stacked policies with lower limits (100/200 or 100/300 for instance) since they will add together, or non-stacked with high limits (300/500)?

6-Basic first party benefits (& Medical expense benefits): options 5k, 10k. Seems to pay for medical expenses, religious healing, etc... Required in PA. My thoughts are that if I have health insurance already, why pay more than I need to. Was going with 5k.

7-Added First Part Benefits:
a)Medical Expense: options - decline 25k, 50k, 100k. Not sure how this is different than medical expense under the first party benefits section (I guess it is optional coverage unlike the basic benefits). However, was going to take lowest option possible. I just don't see how this is important if you already have health insurance which inherently has an out of pocket max. Why do they even offer these options? Is it only for those that don't carry health insurance, or will it pay you for the Out of pocket max on your medical insurance?
b) Funeral expenses: options - decline, 1500, 2500. Plan to self insure here. 
c) Accidental death benefits: options - decline, 5k, 10k, 25k. If I die, spouse gets a benefit. Was going to decline since both of us have individual life insurance already.
d) Work loss: options - decline, 5k per person/1kmonth, 15/1, 25/1.5, 50/2.5; begins after 5 working days lost. Planned on declining. Self-insure in short term (<90 days) & have disability insurance already. 

8-Other than Collision: options - decline, 50, 100, 150, 200, 250, 300, 500, 1k. As cars are relatively new, was going to opt for 1k here and self-insure up to that amount. When car values <10k, then will drop the coverage entirely. 

9-Collision: same options and ultimate decision as "other than collision" section. 

10-Car Replacement Assistance: options - decline, 20%. if vehicle is considered a total loss, they can pay you an additional 20% to help. For instance, 10k car gets totaled. They pay you 10k without the benefit or 12k with the benefit. Was going to decline and self insure. 

11-Accident Forgiveness: options - decline, accept. If you choose coverage, they will give you "one free pass" every five years for an accident without raising your rates. This is for the entire policy, not per individual. Forgot to ask how this applies if you are found NOT at fault vs AT fault. Not sure about adding this option or not and am curious other's thoughts. I think I'm a pretty good driver with lower commutes (as an attending), but I've been in 2 accidents in residency (I wasn't at fault in either and other parties received tickets so I think it was just bad luck).

12-Rental reimbursement: options - decline, economy, standard, truck, large SUV. Plan to decline and self-insure and borrow family members vehicles if necessary.

13-Towing and Labor: options - decline or accept. I currently have AAA so will decline. However, not sure if I should decline AAA and go with this option. However, AAA does have other perks with discounts, etc...

Sorry for long post, but I think this is applicable to many people and hopefully will not only benefit me. While I am most interested in those with USAA, obviously anybody with car insurance can offer their 2 cents. I have yet to get quotes from some other companies in Pennsylvania, but wanted to start here. Thank you for your consideration.
5
General Discussion / PA (or similar state) Auto: Full Tort vs Limited Tort?
« Last post by Swat on March 25, 2018, 08:07:00 AM »
I am in the process of moving to Pennsylvania and will need to switch auto carriers. One of the unique things I found out about Pennsylvania is they have an option of "Full tort" vs "Limited tort". I'm not sure if other states have something similar but I was wondering what brighter minds than I think about it and if it's worth it. I haven't put in the exact differences for a quote yet, but I believe you can save ~15% by choosing the "limited tort" option rather than the "full tort." A few references for those who are unfamiliar: 

https://www.wikiwand.com/en/Full_tort_and_limited_tort_automobile_insurance
https://www.edgarsnyder.com/car-accident/auto-insurance/insurance-tips/limited-tort-vs-full-tort.html
https://www.hg.org/article.asp?id=26718

From my reading it seems like the "limited" option puts restrictions on how much you can be awarded with in regards to "pain and suffering." It seems a little vague so I wanted to see if anyone else from this forum has any thoughts/experiences. I certainly subscribe to the "insure what you need and self-insure the rest" philosophy, but since I don't fully understand this option, I would like to know what the best option is going forward. Thank you. 
6
Taxes / Re: Best Practices for Saving Tax Returns and Supporting Documents
« Last post by Swat on March 25, 2018, 08:06:13 AM »
Keith,
Thanks for the reply. Surprised you have time during your busy season. I will further look into data protection options going forward. I certainly appreciate it. Good luck with the next month :)
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Taxes / Re: Best Practices for Saving Tax Returns and Supporting Documents
« Last post by KeithTax on March 24, 2018, 09:35:33 AM »
Swat, digitizing all the data is the best course at this time. Have your tax preparer do it for you if you don't have access to a scanner. In my office we scan all important docs from clients. The data is encrypted and behind a firewall. We also backup with a third party offsite with equal security measures.

For the record, I'm the only guy in my office who likes to keep the paper after digitizing. But then again I am a Neanderthal.
8
Taxes / Best Practices for Saving Tax Returns and Supporting Documents
« Last post by Swat on March 20, 2018, 10:26:32 AM »
As tax season is here, I was just wondering what the best practices are for storing/saving the tax documents. I know there are different posts online about how long you should be saving the documents (with some variability in those recommendations), but was curious what most people do on this forum. Some specific questions/categories:

-Actual tax returns: probably the most important forms. I'm assuming save the hard copies of course in a file cabinet (and the accountants may save their own copy) but are people keeping a digital copy as well. If so, how are they filing and subsequently protecting the file. For instance, is the file password protected, did you redact/remove SS# at the top, are you only keeping it locally on your computer vs in a dedicated password protection app such as 1Password or LastPass where there only service is dedicated to protection.

-Supporting documents (statements from financial institutions, HSA's, etc...): how long do people keep these forms and if so, do they even keep the saved document when they can easily be accessed on the financial sites such as Vanguard, Fidelity, Ally, etc...

-Receipts: direct business receipts, purchase price of items (for later depreciation considerations). My thoughts would be that these would be the easiest to scan and file without concerns for privacy as their usually is no important information on a regular receipt.

Thanks. 
9
Currently my wife (stay at home; 31yo), son (15mo) and myself (31yo) are all on the same medical plan under my employer. I will be starting as an independent contractor this summer and therefore will be purchasing insurance on the open market for the first time. My son and I are completely healthy and have no medical problems and only use preventative screenings. Unfortunately, my wife has struggled with some anxiety/depression after the recent passing of her mother and now sees a counselor ~2x/week and a psychiatrist every 3 months or so. After doing some digging and talking to a few health insurance reps on the open market, they suggested that instead of having all three of us under one health plan, they recommended having me and my son under a bronze level plan that is eligible for an HSA. Since both my son and I are on the plan we would be able to contribute the full FAMILY amount to the HSA compared to an individual and would benefit from lower premiums since we are both healthy. Separately, my wife would then get on a higher tiered silver or gold plan that had better coverage for mental health since she would likely use the health insurance more. A few questions:

1- Does this strategy make sense? Am I still able to claim the family HSA deduction on tax returns due to me and my son on HDHP even though I am married filing jointly?
2-Are the health insurance premiums deductible for both me/son as well as my wife? My understanding is that it will all be deductible since I am the one paying for it and we are married filing jointly but just wanted to make sure it wasn’t just me/son and not my wife. I had heard that in 2012 by IRS Chief Counsel Advice (CCA) 201228037 that this was found to be ok but wanted to make sure before I proceeded any further.
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Taxes / Re: To LLC or not?
« Last post by cfoleverage on March 12, 2018, 09:29:00 AM »
An LLC is more an asset protection and segregation of liability device more than a tax strategy method. Setting up one or more single member LLCs would end up with the same numbers on your Federal returns, but with increased fees and filing costs. You could consider an LLC electing to be taxed as a C-corp or an S-corp if you want to think about different taxation results, but the devil is always in the details, so to speak, and the decision for whether another structure for your business would best be made by a professional who knows all the details.
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