Extended Individual Tax Deadline: What information do you send your tax preparer?


If you were granted a tax filing extension and want to pay more than you need to…this blog is not for you. For anyone else, who was granted an extension, this post will help you to avoid the failure to file a penalty and also guide you on everything you need to make your tax filing go as smoothly as possible.

The extended individual tax filing deadline is October 15. If you have not filed your 2021 taxes yet, you have less than a month to complete this task or risk facing steep penalties.

The fine for missing the deadline is known as the failure to file a penalty. This penalty equals 5% every month you don’t file up to 25% of what you owe.

To put this in perspective, if you owe $10,000 in taxes, and fail to file on time, you’ll owe an extra $500 a month up to $2500. In many places, $2500 is a month or two of rent.

The best way to avoid this penalty is to meet with a tax preparer as soon as possible. When you do meet with your tax preparer, here’s what you should bring to be prepared:

Forms of identification including

  • Photo ID
  • Social Security Cards
  • TIN assignment letters for you, your spouse, and dependents (if applicable)
  • Bank account information if receiving direct deposit for return (voided check can also work)
  • Last 2 years of tax returns

Income documents including

W-2 form(s) for all jobs last year

  • 1099-NEC and/or 1099-K 
  • Records of income not reported on 1099 forms
  • Records of expenses including receipts, credit statements, etc.
  • Record of estimated tax payments
  • SSA-1099 form for Social Security benefits (if retired)
  • 1099-R for pension/IRA/annuity income (if retired)
  • 1099-G (if you received unemployment income or refund of state/local income taxes)
  • 1099-R (if you received disability income)
  • Documents for income or loss from the sale of stocks, bonds, or real estate (if applicable)
  • Documents for alimony received (if applicable)
  • Statements for prizes or lottery/gambling winnings (if applicable)
  • Documents for any other income

Expense documents to claim tax deductions including

  • 401k or IRA contributions
  • Taxes paid on the state and local level
  • Mortgage and property tax bills
  • Receipts for charitable donations
  • Records for supplies used as an educator

Everyone’s situation is different. It’s best to call a tax preparer as soon as possible to know precisely what is needed for your appointment.

Don’t spend 25% more on taxes by missing the deadline. Book an appointment with a tax preparer today and be prepared by gathering all the documents you need to make your appointment go smoothly.

Don’t pay more than you need to.

File today.

A.K. Burton, PC, has been working with the IRS for our clients for many years. Our firm has experienced accountants and lawyers who can represent you before the IRS and resolve any issues you may have. Call us at (301) 365-1974 for a consultation.

We serve the Bethesda, Rockville, and Montgomery County, MD area.

For more information, visit the Tax Outreach website

Extended business tax deadline 1065, 1120S: What information do you send your tax preparer?

If you are reading this, chances are you are a business owner, who filed an extension, getting ready to file, but you need guidance on what to do next.

Also, you may be worried because the extension deadline is approaching, and want to be prepared.

You’ve come to the right place. 

With the extension deadline quickly approaching, it’s best to file our return as soon as possible.

The original deadline passed (March 15, 2022) for partnerships, S corporations, or LLCs taxed as partnerships. If you filed an automatic six-month extension, your deadline is September 15, 2022.

When you do meet with your tax preparer, here’s a list of items to get you started as to what you need to bring:

If you have it:

  • a copy of your books (for example accountant’s copy of QuickBooks)
  • applicable spreadsheets

Income documents including:

  • Receipts from sales and services (example: forms 1099-k, 1099)
  • Accounts receivable records
  • Business checking/savings accounts interest (forms 1099-INT)
  • Investment income documents (including form 1099-DIV)
  • Additional income (including rental income, tax credits, etc.)

Forms related to Costs of Goods Sold (if applicable)

Expenses documents include:

  • Advertising
  • Phones (landline, fax, or cell phones related to business)
  • Computer & internet expenses
  • Transportation and travel expenses (include taxi fares, tax, tips, food, gas, and all expenses incurred to facilitate any business trips)
  • Commission and fees
  • Labor expenses paid to subcontractors and independent contractors
  • Depreciation
    • Cost and first date of business use of assets
    • Any records for using assets for personal activities
    • Documentation of prior year depreciation
    • Sales price and disposition date of any assets sold
  • Intangible assets (copyrights, etc.)
  • Business insurances
  • Interest expense (can include mortgage, business loan, or any investment expense)
  • Professional fees (lawyers, accountants, consultants, tax preparers, etc.)
  • Office supplies expenses
  • Rent expenses (if applicable)
  • In-home Office expenses (if applicable)
  • Payroll including wages, benefits, and other employee expenses
  • Repairs, maintenance of office facility, etc.
  • Total mileage 
  • Business mileage
  • Estimated taxes paid
  • Other business-related expenses

Every business is different, so it’s best to contact a tax preparer to know if there are any items not listed you may need.

Of course, if you don’t file by the extended deadline, there is a Failure to File penalty. The basic penalty is 5% of the unpaid taxes for each month a filing is late. The maximum penalty is 25%. If the return is more than 60 days late, the minimum penalty is the lesser of $435 or 100% https://cpa-maryland.com/services/tax-preparation/of the tax required to be shown on the return.

Late filings can also be charged interest. Visit the IRS website to get an exact calculation https://www.irs.gov/payments/interest

Be prepared. File today.

AK Burton, PC serves small businesses with all of their tax needs. Our experienced tax preparers can file your business and personal tax returns and represent you to the IRS. Call us at (301) 365-1974 for a consultation. 

We serve the Bethesda, Rockville, and Montgomery County, MD area.

Sources:

https://www.irs.gov/payments/failure-to-file-penalty 

https://www.blockadvisors.com/tax-preparation-checklist/ 

https://www.irs.gov/payments/interest 

https://turbotax.intuit.com/tax-tips/tax-planning-and-checklists/important-tax-deadlines-dates/L7Rn92V1d 

Income Tax Preparation Update: What to do if you receive a Correspondence Form from the IRS


There are few things scarier than a letter with “IRS” stamped in bold on the envelope addressed to you. What next black helicopters? Trial? Prison? 

All of those worst-case scenarios may run through your mind as you begin to open the envelope. The good news is this: Millions of tax-paying citizens get these same letters every year. You will not be handcuffed and taken by helicopter to prison.

There may be several reasons that the IRS has contacted you. They could be any of the following:

  1. Inquiring about a change of address.
  2. Requesting payment for income taxes.
  3. Notifying you about changes to your account.
  4. Request for additional information.
  5. Sending you a tax refund. 

All of those reasons are fairly typical. Most correspondence is a request for more information. It is quite innocent. ***   

However, when you do get a Correspondence Form from the IRS, there are several things you should do:

    1. Open it immediately. Don’t put it off. The letter needs to be read immediately as most correspondence from the Internal Revenue Service has a deadline date for you to respond. Do not delay as delaying could be costly.
    2. Contest the item if it is incorrect. Humans run the IRS and all humans are capable of mistakes. For instance, and this is common, you had a balance due on your tax returns. You paid that amount after you were billed by the IRS. Six weeks later, you receive the same bill from the IRS even though you know you paid it. Send them your bank statement showing it or call them to get it resolved. That is just one example but if they are wrong, you have the right to contest it.
    3. Most correspondence from the IRS can be handled just by calling the 800- number at the top right-hand corner of the notice. When you call, take notes of the date, the name of the person you spoke to and their ID number, and the details of the call. But if you call, keep a record of who you talked to, their ID number, and the next steps that need to be taken. Always keep copies of all IRS correspondences and your responses.  

If it is a correction notice, review the information and compare it to the information on your tax return. You have two options: 

  1. If the correction is accurate, don’t do anything unless a payment is due. 
  2. If you disagree with the correction, send a detailed, written explanation. Include appropriate documentation to support it.   

As you see, a letter from the IRS is not the end of the world as we know it. You can correspond with the IRS and not be concerned with any ramifications.

A.K. Burton, PC, has been working with the IRS for our clients for many years. Our firm has experienced accountants and lawyers who can represent you before the IRS and resolve any issues you may have. Call us at (301) 365-1974 for a consultation. 

We serve the Bethesda, Rockville, and Montgomery County, MD area.

*** For more on IRS correspondence, visit the IRS website.  

    

Small Business Accounting: What is the Difference Between a Contractor and an Employee?


Many people have chosen to leave their job and become self-employed. They now work remotely from their home.  

This is a popular trend in today’s economy. It’s exciting but there are tax implications, of course, that should be considered. 

If you are planning to start your own small business, you need to know the difference between a contractor and an employee. Let’s start with definitions: 

  1. Employee: On the company payroll and receives wages and benefits in exchange for doing their job correctly.
  2. Contractor: An autonomous, independent worker who does not receive health insurance and paid time off. 

If you are now a “contractor” or self-employed, note the following: 

  1. A contractor is compensated by form1099-NEC. Form 1099-NEC, Nonemployee Compensation, is a form that solely reports nonemployee compensation. Form 1099-NEC is not a replacement for Form 1099-MISC. Form 1099-NEC is only replacing the use of Form 1099-MISC for reporting independent contractor payments.
  2. A self-employed contractor needs to pay the Self-employment (SE) Tax. The SE tax consists of Social Security and Medicare taxes for individuals who work for themselves. This tax is both Social Security and Medicare taxes for individuals who work for themselves. The tax rate is 15.3% and consists of 12.4% for social security and 2.9% for Medicare. 
  3. Retirement: There are five self-employed retirement plans: Traditional or Roth IRA, Solo 401(k), SEP-IRA, SIMPLE IRA, or Defined benefit plan. Working for yourself, you need to set up your retirement plan. Interested in potential tax implications as to which plan suits your needs best?  – contact your tax advisor. 
  4. Health insurance: Self-employed individuals must choose their health insurance plan. It could be Blue Cross, HMO, PPO, Signa, United Health Care, or any one of many options. *** 
  5. Estimated tax payments: This is a method used to pay income tax and is not subject to withholding. This income includes income from self-employment, interest, dividends, rents, and alimony. Self-employed individuals who do not have taxes withheld from other taxable income should make estimated tax payments. Other income may include unemployment compensation and the taxable part of Social Security benefits. 

Individuals who are employed by a business or organization typically have the following:

  1. Compensated by Form W2. As an employee, your wages and your share of Medicare and social security tax are reported on your W2.
  2. Retirement: Businesses may offer a retirement plan such as a 401(K) and/or Roth for employed individuals. Employers may even match the employee contribution up to a certain percentage (depending on the plan set up by the employer). 
  3. Medical insurance: The most common employee benefit is medical or health coverage. It covers medical appointments, checkups, ER visits, basic medical procedures, and surgical procedures.
  4. Prescription benefits: Lower co-pays for medicines and no-cost prescriptions are included. There is a list of the available medications with tiered pricing for prescription drugs.
  5. Life Insurance: Usually it is group-term life insurance. The employer extends life insurance coverage to all staff members and is in effect for a set period. It lasts for the time that the employee works for their employer. It costs less than individual insurance policies. 

In addition, there are many more benefits that can be included in a company employment package such as paid time off, paid sick leave, paid vacation time, extended leave, family leave, disability, and worker’s compensation.    

AK Burton, PC can help define what becoming an independent contractor means to you and the steps needed to set yourself up for successful tax preparation. Our experienced tax preparers can file your business and personal tax returns and represent you to the IRS. Call us at (301) 365-1974 for a consultation. 

We serve the Bethesda, Rockville, and Montgomery County, MD area.

*** For more information, visit the IRS website

Summer is the Perfect Time to Do Tax Planning for Now and 2023


The summer is a good time to take a break. Head to the beach. Take a few weeks off. All of that is good and healthy.

However, summer is also a great time to do some minimal tax planning. It won’t take a lot of time to do it and you can still enjoy your summer. Trust us, you can take a few substantial steps now that will help you later.

So, before you pack the cooler and swimsuits, let’s do a few things:

  1. Retirement planning: You can still make plans by allowing for employer contributions to be made until the extended due date of the return. One way to do it is by making the maximum allowable contribution to your retirement plan. This year, 401(k) and 403(b) have a $20,500 contribution limit. There is also a $6,500 contribution for taxpayers who reach age 50 by 12/31/22. 
  2. Real Estate holdings: The DMV area has a hot real estate market. So §1031 can be used by rolling proceeds from a sale into the like-kind property within a timeframe. (It is specific and must be followed to the letter.)
  3. Capital gains: You may want to defer the tax liability with an Opportunity Zone investment. This is reinvesting capital gains in an Opportunity Zone within a 180-day window. Then defer the tax on the original gain until December 31, 2026. Opportunity Zone investments can be held for ten years as they will not be taxed by the IRS. 
  4. Depreciation: Depreciation, for business owners, need not be determined when the asset (business property) is used. Bonus depreciation is already automatic. “Out of bonus” depreciation can be claimed for each asset class. Attach a statement to the timely-filed tax return and then depreciate the asset over its life. 
  5. Required Minimum Distributions: Your brokerage can pay your RMD directly to the charity you designate. A qualified charitable distribution (QCD) is not recognized as income. It keeps your adjusted gross income lower, and it may even reduce Medicare premiums. You can still make the standard deduction but remember that you can only claim a total of $100,000 per tax year.
  6. Donor-advised funds: You are allowed to take a tax deduction in the year that cash or other assets are transferred to a DAF. They can be invested until you recommend the DAF distribute the funds to all of the charities you support. You are not taxed on interest, gains, and dividends generated by investments made by the DAF. It’s a great way to accomplish tax planning goals. You can also claim a deduction for the fair market value of the donated assets and not have to pay capital gains tax on the appreciation.

These are just a few of the ways you can plan for your 2022 tax returns and beyond. Be sure to consult the IRS, your tax advisor, or your accountant. ***

AK Burton, PC, knows the current tax laws and how to work with the IRS. Our experienced tax preparers can file your business and personal tax returns and represent you to the IRS. Call us at (301) 365-1974 for a consultation. 

We serve the Bethesda, Rockville, and Montgomery County, MD area.

*** For more information on tax preparation, visit the IRS website

Tax Advisor: What If You Missed the Deadline on Your 2021 Tax Returns?


As we write this blog today, April 18-Tax Day 2022, has passed. The deadline to file for most US citizens is over. 

You read this and say, “I missed the deadline. Now, what do I do?” 

The good news is that if you missed filing on April 18, then you have options. All is not lost and no, there won’t be any black helicopters landing in your backyard. You can still file, so all is not lost.

In fact, here are some steps you can take that will resolve your tax filing deadline miss situation:

  1. If you owe money on your 2021 tax return and have not filed an extension: You should file your tax return as soon as possible. The IRS hands down two penalties if you owe: failure-to-file and a late payment penalty. Failure-to-file penalty applies when your return is late. It is five percent (5%) of your unpaid tax bill for each month or partial month your return is late. It maximizes to twenty-five percent (25%). The late payment penalty is 0.5% of your unpaid tax bill for each month or partial month your return is late, up to a total of 25%. The bottom line is that the quicker you get your tax returns filed after the deadline and pay your bill, after being late, the smaller the penalty you will have to pay. However, if you are unable to pay your tax bill in full, you can request the IRS to put you on an installment plan. It doesn’t erase your late penalties, but it will protect you from the IRS garnishing your wages. Just keep in mind, that the longer it takes for you to file your return, the greater the late payment penalty.
  2. If you don’t owe money for your 2021 tax returns: You may be due a refund from last year’s returns, but you missed the April 18 deadline, anyway. Believe it or not: You’re safe. You will not be penalized. You will have to wait longer to receive your tax refunds, though. Nevertheless, file your tax returns soon so you can get your money back.
  3. Missed deadline unknowingly: That’s okay, too. Just submit your return as soon as you can. Next year, if it looks like you may be filing your tax returns late again, ask for a tax extension by the filing deadline. *** You then have six more months to file your return. If you request the extension and still don’t get your return completed by the deadline, a late payment penalty will apply to any unpaid taxes from the current tax year. You won’t be charged with the aforementioned failure-to-file penalty as long as that extension request is made on time. And you don’t even have to give a reason to be granted an extension. The IRS doesn’t ask why you need more time to file. 

So, you see, it isn’t “Doomsday” after all. You do have options. Just be sure to act quickly to save yourself money and stress. 

AK Burton, PC, knows the current tax laws and how to work with the IRS. Our experienced tax preparers can file your business and personal tax returns and represent you to the IRS. Call us at (301) 365-1974 for a consultation. 

We serve the Bethesda, Rockville, and Montgomery County, MD area.

*** If you’d like more information on IRS Tax Return extensions, visit the IRS website.  

How to Avoid an Audit on Your 2021 Tax Returns

Audit!

That word sends shivers into any honest taxpayer. You do everything you know to do on your tax returns. Your CPA has signed it and filed it. 

However, despite all that, the audit notice from the IRS has arrived. You’re stressed.

It doesn’t have to be that way. You can avoid an audit on your 2021 tax returns if you take the right preventative steps to do it. Here are some smart and legal ways to do it: 

    1. Don’t lie or attempt to cheat the IRS: This is the first and foremost reason! SO many people try to cheat the IRS every year. Some get away with it but most do not. Besides that, it’s just wrong. Dishonest tax filers claim excessive or unreasonable tax deductions. They are so obvious, that the IRS flags them and begins investigating. Their agents will ask for additional information. If discrepancies are found, the agency may levy penalties. Instead, be truthful in all your deductions and credits.
    2. Keep accurate and detailed records: There is a boatload of different forms that are available based on deductions and income. They can be confusing and it’s easy to make mistakes or forget them. Thus, the importance of keeping accurate and thorough records during the year. Keep all expense receipts in a file labeled for that year. That file should be accessible at all times. File your taxes only when you have all the required forms so you won’t have to amend your tax return.
    3. Don’t overdo it with your home office deduction. Self-employed people who have businesses in their homes are considered independent contractors. The deductions designated for that should be “reasonable” as the IRS defines it or it may become a huge red flag, especially if the home office is where you derive most of your income. So, claim just a percentage of your mortgage or rent that is your true workspace. Other expenses, such as phone, AC/heat, supplies, and other expenses can be claimed as business-related.
    4. File electronically. A good way to avoid audits is to file them online. The IRS encourages this for one big reason: paper filing usually contains many more errors than electronic files. Hard copy errors are 21% as electronic filing is 0.5%. The IRS software has protections in place so that filers have fewer errors. 
    5. Hire an experienced bookkeeper, accountant, or CPA. Tax laws change every year. It’s almost impossible to keep up with them unless you are an accounting professional. So, protect yourself and hire an accountant or bookkeeper to file your taxes for you. Most good accountants will also represent you to the IRS, which can be invaluable to prevent an audit. 

Tax Day is April 18, 2022, which is only a few weeks away as we publish this blog. No one wants to be audited. It can be agonizing. If you have not done the above steps or wonder if you are going to be audited, please contact an accountant for a consultation. 

AK Burton, PC, knows the current tax laws and how to work with the IRS. Our experienced tax preparers can file your business and personal tax returns and represent you to the IRS. Call us at (301) 365-1974 for a consultation. 

We serve the Bethesda, Rockville, and Montgomery County, MD area.

How to Save Money on Your 2021 Tax Returns


Tax season has already started. Many people are scrambling to get all of their documents together for their 2021 tax returns.

If you’re one of those people gathering their tax documents, keep in mind some of the following four ways you can save, now, on your 2021 tax returns:

  1. Contributing to your retirement account, such as an IRA, may reduce your tax bill by reducing your taxable income (depending on your tax bracket). This works especially if you haven’t maxed out on your 2021 IRA contributions. Your tax deduction is determined by your total income and filing status. You or your spouse may be covered by a retirement account at work- which limits your tax deduction. You can contribute to your IRA until April 15, 2022, so you have time! The limits are $6,000 per year for 50 years old and under and $7,000 per year for people over 50 years old.
  2. Charitable donations: Donations to qualified charities last year may help you save on your 2021 tax returns. Taxpayers who don’t itemize can also benefit. For the tax year 2021, individual taxpayers may deduct up to $300 in contributions to qualified charitable organizations. Married couples filing together can deduct up to $600 in cash donations made to approved charities. Donations must be made by Dec. 31, 2021. This deduction may reduce your taxable income for 2021 and, in turn, lower your federal tax bill.
  3. Deduct eligible business expenses: Self-employed business owners must keep detailed business expenses. These expenses may include business meals, business travel, legal fees, computer purchases, subscription fees (Microsoft Word, etc.), accounting fees (QuickBooks, etc.), marketing/advertising costs, and other eligible business expenses. Business deductions lower taxable income, which results in a lower tax bill for 2021.
  4. Earned Income Tax Credit (EITC): this is available for the 2021 tax year dependent on your adjusted gross income (AGI). Income limits vary depending on your filing status, AGI, and the number of dependents. If you qualify for this credit, it may offer significant tax savings. 

As you prepare to file your 2021 tax return keep these 4 tax savings tips in mind. Please consult your tax preparer for more information.

AK Burton, PC, knows the current tax laws and how to work with the IRS. Our experienced tax preparers can file your business and personal tax returns and represent you to the IRS. Call us at (301) 365-1974 for a consultation. Our office is open. Covid protocols if requested. We serve the Bethesda, Rockville, and Montgomery County, MD area.

The Expectations for the 2022 Tax Preparation Season


The holiday season has come and gone but “tax season” is always with us. This tax season may be as complicated as ever due to the pandemic and a flurry of new tax laws that came down from Congress. 

Your expectations for your personal and business tax preparation may have to be adjusted, particularly with working with the IRS (always a challenge) and the child and dependent tax credit. Here are some facts to keep in mind as you get your documents in order to file for 2021:

  1. The Internal Revenue Service (IRS): Delayed and behind 
  2. E-filing begins January 24, 2022: The IRS is already way behind in preparing for this tax season and is still working on 2019 and 2020 tax filings. These disruptions are blamed on the ongoing pandemic along with budget cuts, a shrinking workforce, and outdated technologies at the IRS.
  3. Delayed refund for returns claiming Additional Child Tax Credit (ACTC). The IRS cannot issue refunds before mid-February 2022 for returns that properly claim ACTC. This time frame applies to the entire refund, not just the portion associated with ACTC.
  4. The Child and Dependent Care Credit: 
    • Differences in credits for qualifying children and other dependents tax year 2021
    • Enhanced child tax credit. For 2021, the child tax credit applies to qualifying children who have not attained age 18 by the end of 2021. Also, the initial amount of the child tax credit is increased to $3,600 for each qualifying child who has not attained age 6 by the end of 2021 and $3,000 for each other qualifying child who has not attained age 18 by the end of 2021. The credit for other dependents has not been enhanced. 
    • In the know. Important abbreviations: ACTC means additional child tax credit.  ATIN means adoption taxpayer identification number.  ITIN means individual taxpayer identification number.  NCTC means nonrefundable child tax credit.  ODC means credit for other dependents.  RCTC means refundable child tax credit.
    • Delayed refund for returns claiming ACTC. The IRS cannot issue refunds before mid-February 2022 for returns that properly claim ACTC. This time frame applies to the entire refund, not just the portion associated with ACTC.
    • 2021 Child and dependent care credit information: The American Rescue Plan Act of 2021, was enacted on March 11, 2021, making the Child and Dependent Care credit substantially more generous and potentially refundable (up to $4,000 for one qualifying person and $8,000 for two or more qualifying persons) only for the tax year 2021, This means an eligible taxpayer can receive this credit even if they owe no federal income tax. Your federal income tax may be reduced by claiming the Credit for Child and Dependent Care expenses on your tax return. ***

If you have been frustrated the past filing your individual and/or business in the past, this year will not be any different. We are constantly hearing from clients who are having difficulty contacting the IRS to get important information or a consultation on a previously filed tax return. 

AK Burton, PC, knows the current tax laws and how to work with the IRS. Our experienced tax preparers can file your business and personal tax returns and represent you to the IRS.  Call us at (301) 365-1974 for a consultation. Our office is open. Covid protocols if requested. We serve the Bethesda, Rockville, and Montgomery County, MD area. 

*** For more information on Child and Dependent Care Tax Credit, visit the IRS website.   

 

How to Set Your Financial Goals for 2022


When is a good time to set financial goals? The time is now; in December, when one year is ending a new year is on the horizon. This is the best time to set a few financial goals for the New Year. 

So, after the holidays, before you get caught up in work, school, and other busy parts of your life, you can meet with your financial advisor. They can review your current plan and make recommendations. 

Before you meet with them, there are several things you can do to improve our financial outlook for 2022 and beyond:

  1. Set short-term goals: In planning for the coming year, it is best to look at the short-term. You will not accomplish your retirement goals in one year. Make goals that you can accomplish in a few months. 
  2. Create an emergency fund: Hopefully, you will not have some type of emergency and need an emergency fund. An emergency can present itself in a multitude of unexpected ways; it may be medical, unemployment, or automobile related. Ideally, a good emergency fund has 3-6 months of money to pay the bills. This may seem impossible. However, you can start saving a small percentage of your paycheck by placing it into a bank account which you do not touch unless the emergency occurs. (Use this emergency fund calculator to figure out how much to save.) Over time, an emergency fund will accumulate and help you and your family if an emergency occurs.   
  3. Retirement savings: Even though there is Social Security, you may still want to enroll in a retirement savings plan. If your employer supports a 401(3) (k), you should consider signing up for it. Your employer may pay matching funds toward it. If you are self-employed, see your financial advisor for information on the array of retirement accounts that you can enroll in. 
  4. Pay off high-interest debt: Credit card debt and interest are a savings killer. Make it a goal to pay them off as soon as possible and cut up cards that are not needed. Begin with the debt that has the largest percentage of interest and whittle it down. Once you have erased your credit card debt, it will be surprised as to how much money you have available each month.
  5. Set a budget: This is the last point and, perhaps, the most difficult. Setting a family budget can be agonizing. It calls for discipline and restraint. So, to make it easier, create a spreadsheet with income and expenses. This budget will help you track your spending and saving. It is essential as you check off your goals and make progress. 

Setting financial goals can be daunting. But with these financial planning suggestions. They can be accomplished with resolve and hard work. Start now and get on the road to financial freedom. 

A.K. Burton has licensed and experienced financial advisors on staff. If you have questions concerning your financial goals, call us at (301) 365-1974 for a consultation. We serve the Bethesda, Rockville, and Montgomery County, MD area.