Accounting for Small Businesses

Credit Monitoring – Does It Protect Me?

You may have heard about credit monitoring, but may not be exactly sure what it entails or if it can protect you in there is a data breach or hack that allows your information to fall into the wrong hands.

How Can Credit Monitoring Help You?

Identity theft is one of the great big fears to come out of a data breach or hacking situation. This is where someone else halfway across the country, outside the country, or even in your same state assumes your credit persona and takes out credit in your name.

Unfortunately, these people rarely have the intention of paying for the things they purchase with the good credit you’ve worked so hard to build. This means you’re left holding the bag (or in this case, interest bearing bill) for their high dollar purchases.

Credit monitoring is a valuable tool that can help you become aware of fraudulent accounts that have been opened in your name, as well as loans that may have been taken out using your Social Security number.

Credit monitoring looks for these suspicious activities as they are happening. It notifies you immediately so that you can take action at the first sign of trouble, rather than only finding out after serious damage has been done to your reputation, credit rating, and, possibly, to your financial security.

What Does Credit Monitoring Involve?

Depending on the service you subscribe to, credit monitoring can include a wide range of features. These are some you might want to make sure are included in the credit monitoring services you choose to protect your identity from harm.

  • Daily monitoring of credit reports.
  • Daily scanning for unauthorized use of your Social Security Number.
  • Protection for lost or stolen wallets.
  • Nationwide alerts for change of address notifications in the event that someone changes your address.

Credit monitoring is a proactive step you can take to protect your financial interests from identity thieves. You should review your credit reports often in order to look for suspicious activities that might indicate identity theft. Report anything suspicious right away in order to reduce your risks and, in a worst case scenario, limit the scale of the damage.

Protecting Your Assets

A comprehensive estate plan should accomplish far more than just deciding who will receive your estate property after your death. Because of the unique nature of estate planning, the additional goals you include in your plan will depend on your needs and concerns. Asset protection, however, is a popular component included in many estate plans. A better understanding of what is meant by “asset protection” may help you decide whether or not it should be included in your estate plan.

If you have worked hard, saved frugally, and invested wisely over the course of your lifetime you undoubtedly want to protect the assets you have amassed as a result. Whether you realize it or not, your assets could be at risk in a number of ways, including:

  • Creditors – creditors of yours as well as of beneficiaries can attach assets to an unpaid debt.
  • Spendthrift beneficiaries – a “spendthrift” beneficiary can quickly deplete assets that are gifted outright to the beneficiary.
  • Divorce – you may have considered the impact of your own divorce on your assets but have you considered what the divorce of a beneficiary can do to gifted assets?
  • Bankruptcy – likewise, a beneficiary’s bankruptcy can mean a loss of gifted assets if the asset is not protected from bankruptcy proceedings.
  • Medicaid eligibility – statistically speaking you stand about a 50 percent chance of needing to qualify for Medicaid during your “golden years” to cover the high cost of long-term care. To qualify you may first be required to “spend down” your own assets, resulting in the loss of your life savings in a matter of months.

Proper estate planning can dramatically reduce, if not completely prevent, the loss of estate assets. A well drafted trust agreement, for example, can protect assets from creditors, beneficiaries, divorce, and bankruptcy. Likewise, the incorporation of Medicaid planning techniques into your estate plan early on will ensure Medicaid eligibility without the loss of valuable assets should the need arise during your retirement years.

At Morey and Associate CPAs, we help our clients protect their life long accomplishments.  If you’d like to discuss your situation, simply call 949-759-5626 or 949-485-2011 and ask for Jerry.

Morey and Associates has convenient locations in Newport Beach and San Clemente CA.  As part of our practice, we work with successful entrepreneurs, small business owners and high net worth individuals.

Why Taxes for Professional Athletes and Entertainers Are Complicated

Taxes for Pro AthletesThe only two things in life that are certain, as they saying goes, are death and taxes. The problem is, taxes have become quite complex, especially for pro athletes and entertainment professionals who travel to certain cities, states, and even foreign countries for the purpose of business.

In the case of professional athletes, the business is the sport in question. Football teams travel for at least eight games in a typical season. NBA teams play more often and travel to other states more frequently during their seasons, as do NHL players who have the added burden of traveling to Canada for several games during their season too.

What this all means for taxes, is that it’s really complicated! Here’s why.

State and City Taxes

Many cities, especially those hosting facilities that bring in professional sports games, have adopted special city taxes to impose on professional athletes in order to help offset the costs of their sports facilities. It’s an ingenious method, on behalf of the cities, to bring in tax revenue, without involving their constituents.

State income taxes are a given in most states, and is something players are expected to pay in every state in which they play in a given year and for every game they play in each state.

Complicated Formulas

Face it, few athletes are mathematical geniuses. They may have more than a little skill when it comes to reciting states, but complicated accounting formulas are often a little outside their wheelhouses. They have better things to do with their brain power, after all, like devoting themselves to improving their games.

Unfortunately, the formulas are so complex that only an accountant could possibly love them, oh and city and state bean counters who can’t wait from the dollars to roll on in from the 53 players on the rosters of at least eight different NFL teams each year.

Don’t forget the tax revenue for trainers, coaches, equipment managers, officials, and more that travel with these teams as they take their games on the road. Other sports have even more games in other cities throughout the season raising the stakes even higher for host cities and states.

Mitigating the Costs of Doing Business Across State Lines

There are things players can do to help relieve some of their excessive tax burdens, otherwise known as the “jock tax.” They aren’t big bold moves, but they can save a great deal of money in taxes each year for players that take advantage of them.

Establish Permanent Residence in States that do not Tax Income

This will not eliminate all your tax burden, but it will go a long way towards relieving some of the burden to give athletes extra breathing room. Popular states for consideration are Florida, Texas, Nevada, and Wyoming.

Take Advantage of Available Deductions

They exist to help relieve tax burdens. Use them for that purpose. This is especially true of expenses related to training camp, like the following:

  • Hotels
  • Apartments
  • Meals
  • Rental Cars

Tax Planning for Professional AthletesFinally, and perhaps most importantly, seek tax help from qualified professionals. Rules and exceptions get trickier by the year. Tax professionals are trained to deal with tricky situations. Let them do the heavy lifting for you so you can focus your attention on pursuits that are far more profitable for you.

If your taxes are complicated, call Morey and Associates CPA at 949-759-5626 and ask for Jerry Morey.  We provide high net worth accounting and tax services for Orange County residents.  Our offices are conveniently located in Newport Beach and San Clemente.