Category Archives: Financial Planning

Nanny Tax: What You Need to Know When You Hire a Household Employee

A 60-second read by the Baron Team: 

  • Nanny taxes are taxes paid to the government from a person working in and/or around your home. These jobs can include nanny, housekeeper, gardener, chef, personal assistant or caregiver.
  • The worker is considered a household employee if the employer controls what work is done and how it is done and can be full time or part time work.
  • If you pay someone that works in your home $2,100 or more a year or $1,000 in a quarter they are considered a household employee.
  • The employer must obtain the employee’s name and social security number.
  • The employer must withhold a certain amount of compensation from a household employee for FICA and Medicare.
  • As well as withholding a certain amount of money from your household employee, you must also pay your share of FICA employer taxes and federal and state unemployment taxes.
  • The employee, as well as the employer, can benefit from filing these taxes. The employee can prove she/he was working for a set amount of time and qualify for certain government benefits, such as social security and unemployment.

  • Forms Required to file:
    1. Form SS-4 to obtain your federal Employer Identification Number, which is needed for the other forms.
    2. Form I-9 is needed to be filled out by your employee to verify she/he is eligible to work in the United States.
    3. W-4 Forms are used to determine what taxes are needed to be deducted from the household employee’s wages and sent to the IRS.
    4. Schedule H Form is part of your personal return with Form 1040 & an accountant can help determine the amount the employer is taxed for FICA and unemployment.

  • Insurance requirements:
    1. You must register for unemployment insurance in your residing state.
    2. You also need to have workers compensation insurance, which is very important.
      • If you reside in NY, you will also need to purchase a separate disability policy.

  • State taxes are generally paid quarterly while Federal taxes are paid annually.
  • If you refuse to file the proper tax documents you may be subjected to an audit from the IRS leading to tax evasion. Trying to classify your household employee as an “independent contractor” is a red flag to the IRS and should be avoided.

For more information on hiring household employees visit:  https://www.irs.gov/businesses/small-businesses-self-employed/hiring-household-employees

For more information on what forms are needed for hiring employees visit: https://www.irs.gov/businesses/small-businesses-self-employed/hiring-employees

If you have more specific questions on this matter, we recommend speaking with a tax professional.

If you have any other questions, please reach out to your Baron Financial Group team.

 

 

Why You Should Review Your “Digital Estate” Plan

A 30-second read by Nicholas Scheibner:  When a family member passes away, it is of course an emotional and stressful time.  For most, a significant portion of the stress can stem from the financial decisions the deceased made, or did not make, during their life, and what needs to be carried out by the loved ones left behind.  In many instances, a will is constructed to help direct some of the financial assets, per the request of the deceased.  However, financial accounts are not the only stress inducers.  Online and social media accounts are increasingly becoming more important to people. There are things you can do now to help your family put in order your “online life”, often referred to as a “Digital Estate”, when you are no longer around.

We suggest keeping a separate document with your will, containing any usernames and passwords to your online accounts.  The most important item will be your list of email accounts.  With access to your email accounts, a trusted family member can “reset/forgot password” most of your financial and social media accounts in order to close, or manage the accounts.  Also – this can sometimes be a quicker way to stop any recurring payments for online services, instead of calling the company and proving the person has passed away.

If you are uncomfortable writing out all of your usernames and passwords, you can begin to use a “password manager” that will store all of your information in a secure digital vault.  The only information your trustee will need is the username and password for the “password manager”.

Keep in mind, it is extremely important to watch over a deceased family member’s financial assets and credit, as a deceased person has a very high risk of becoming a victim of financial fraud and identity theft.

In order to prepare your family for what needs to be done towards end-of-life and once you have passed, we recommend reading some of our other estate planning posts.  And again, do remember to consider all of the online, financial, billing, and social media accounts that will continue if you were to pass on. 

Please reach out to your Baron Team with any estate planning questions.

College and Financial Aid When Parents are Divorced

Editor’s Note: This post was originally published December 1, 2016. The information is still current as of this date.

A 30-second read by the Baron Team: For students with divorced parents who live separately, the FAFSA (Free Application for Federal Student Aid) asks that you fill out financial information in regards to the custodial parent. For FAFSA, the custodial parent is the parent who the child has lived with the most over the last twelve months.

Provided that the ex-spouse is the non-custodial parent:

  • Many private colleges assume that the non-custodial parent could be a possible source of funding, and therefore require that they fill out a supplemental financial aid document.
  • In that case, any financial support the non-custodial parent may give would only affect financial aid provided by the school, not the student’s federal and/or state aid benefits.

For more information, you can go to FinAid.org and StudentAid.gov.

If you have any questions, don’t hesitate to contact the Baron Financial Group team.

Baron Financial Group is an Independent, Fee-Only Fiduciary

Fee-Only, Fiduciary, Independent: Three Important Criteria to Consider When Choosing a Financial Advisor.

Click on the video below to learn more.

For more information on Fee-Only Advisors, read our “What Does Working with a Fee-Only Advisor Mean for You?” blog post.

For more information on NAPFA (National Association of Personal Financial Advisors), click here.

If you are looking for an independent, Fee-Only Advisor, that acts as a fiduciary,  reach out to the Baron Financial Group Team.

 

Why Choose Fiduciaries?

A 30-second read by the Baron Team:  Registered Investment Advisers (RIAs) are fiduciaries. We are legally bound to put our clients’ interests above our own.  As a fiduciary, we are required to act with undivided loyalty to the client, which includes disclosure of compensation.

Not all advisors have the same legal responsibilities as a fiduciary, but can still call themselves financial planners, advisers, or consultants. Those who aren’t RIAs are not subject to the same fiduciary standard of care and are not required by law to put the client’s interests above their own. You have to ask – and should, so you’ll understand what possible conflicts of interest may arise when their real allegiance is to their firm, rather than to you.

At Baron Financial Group, we don’t accept commissions or incentives to sell investment vehicles. We provide fee-only financial planning and investment advice to serve your best interests. As fiduciaries, we are required by law to place your interests above our own.

To learn more about what a fiduciary is, click here to view our “What is a Fiduciary?” blog post.

If you have any questions about our role as fiduciaries or our services, please feel free to reach out to your Baron Team.

5 Financial Actions to Consider at Year-End – 2017 version

A 90-second read by Anthony Benante:  What 5 things should you be thinking about at the end of the year when it comes to your finances?

1. Review your personal budget and commit to a savings plan for 2018

a. On January 1, write down the balance in your checking account. Do this on the first of the month for the next three months. After you incorporate your income for the period, as well as take note of any cash withdrawals from other accounts, you can get a general sense of what your monthly spending is.

b. We work directly with our clients at Baron to help understand how their budget and all of their financial assets work together.  If you would like a budget sheet (either electronic or hard-copy), let us know. 

2. Review your long-term investment strategy

a. Is the long-term strategy in place for you still right for your specific circumstance? Are you going to be making any large purchases coming up in the New Year? Are you thinking about revisiting your risk tolerance – becoming more aggressive or conservative?

b. At Baron, we use a customized approach to design client portfolios.  We not only consider potential return, but also risk, as well as how the investments complement each other.  Having a long-term investment strategy is critical for investing success and provides a guide for when markets act unexpectedly or make a major directional move.

3. Rebalance your investment accounts

a. Rebalancing brings the portfolio into alignment with the original target weights of each asset class. It also helps to reduce long-term portfolio volatility.

b. Client portfolios at Baron are rebalanced on a contingent basis.  This means the actual holdings are regularly compared to the recommended strategy.  Triggers are in place to help identify when investments deviate too far from strategy and trades are placed. This keeps client portfolios close to their strategy.  Most individuals do not follow this disciplined approach. 

4. Review your tax situation for the year and take advantage of tax trading in your investment accounts, if possible

a. Understanding how your investments may impact your tax circumstance is important.  The last trading day for 2017 is Friday December 29th.  That is the last day you can make any changes to your portfolio for your 2017 tax return.

b. Throughout the year, we review Baron clients’ tax situations and see if any strategic trades can be made to help reduce tax burdens.  As year-end approaches, we look to minimize tax impacts when possible.  However, our main focus is adhering to portfolio strategy, while minimizing taxes when possible.

c. A new tax  bill has been passed and there will be changes for 2018.  Check in with your accountant or tax preparer to see if they recommend any changes prior to year-end or to your tax plan for 2018.

5. If you are 70 ½ or older, or if you have inherited a tax-deferred account, make sure you understand how required minimum distributions (RMDs) apply to you

a. If either of the above applies to you, you will need to take an RMD.  Contact your advisor or custodian to help understand the amount and how to take your RMD.  It is important to take your required minimum distribution in order to prevent any penalties from the IRS.

b. At Baron, we advise our clients on the timing, the structure (lump sum or regular distributions throughout the year) and the correct dollar amount needed to be withdrawn from retirement accounts requiring RMDs.

If you have any questions, don’t hesitate to contact the Baron Financial Group team.

 

Baron Financial Group Attends Autism New Jersey’s 35th Annual Conference

We recognize that the financial planning challenges faced by families with special needs members are significant. When it comes to planning for the special needs community, the need for financial professionals who have comprehensive knowledge and experience is essential to meet the specific challenges of these families. We take great pride in helping families address today’s needs and plan for those that are likely to follow.

Nicholas Scheibner, CFP®, of Baron Financial Group, attended Autism New Jersey’s 35th Annual Conference on October 19th and 20th in Atlantic City. Sessions included government benefits, transitioning period for children out of school, and Special Needs trusts.

Autism New Jersey is the state’s leading autism advocacy organization, supporting families and professionals through their four service pillars:

  • Information
  • Education & Training
  • Public Policy
  • Awareness

“Autism New Jersey advocates, with a strong and unified voice, for appropriate and effective policies and services that will benefit children and adults with autism living in New Jersey. Autism New Jersey is a nonprofit agency committed to ensuring safe and fulfilling lives for individuals with autism, their families, and the professionals who support them.”
                                                        -Autism New Jersey 

 

Please contact the Baron team to learn more about our services for families with special needs.

Medicare Webinar: Prepare for the 2018 Medicare Open Enrollment – Oct. 15th – Dec. 7th, 2017

Medicare is health insurance for individuals who are 65 and older, under 65 with certain disabilities, or those who have End-Stage Renal Disease (ESRD).

The 2018 Medicare annual open enrollment period will begin on Oct. 15, 2017 and run through December 7, 2017. Baron Financial Group’s informative webinar, presented by independent Medicare Consultant Mary Jean Cullen (MedicareAssist, LLC), discusses how Medicare works and what you need to know prior and during your Medicare years. This presentation was first held at the September 13, 2016 Wine & Wealth event for Baron Financial Group clients.

You can learn more at Medicare.gov, the official U.S. Government site for Medicare.

If you have any further questions, please don’t hesitate to contact the Baron Financial Group team.

What Does Working with a Fee-Only Advisor Mean for You?

An Advisor who is compensated by only YOU, the client:

Working with a Fee-Only advisor means that the advisor is only compensated by the fee that they charge, not by any commissions. The fee could be charged hourly, or it could be calculated as a percentage of a client’s assets under management (AUM), or even a retainer model. The National Association of Personal Financial Advisors (NAPFA) is the country’s leading professional association of Fee-Only financial advisors and they define a Fee-Only financial advisor as “one who is compensated solely by the client with neither the advisor nor any related party receiving compensation that is contingent on the purchase or sale of a financial product.” 

Working with a Fee-Only advisor means that the advice you receive is not motivated by the need to sell any products or influence from outside interests. The advice is objective and tailored to meet your specific needs.

An Advisor who works in YOUR Best Interest:

Continue reading What Does Working with a Fee-Only Advisor Mean for You?

Important information regarding Equifax data breach

You may have read that hackers broke into the Equifax database and stole personal information tied to 143 million people.  Ongoing updates from Equifax about this incident are available at equifaxsecurity2017.com

Baron Financial does not use Equifax for any services, but we are sharing this information for educational purposes.

Equifax is one of the three main credit reporting agencies.  They collect and maintain individual credit information and sell it to lenders, creditors, and consumers in the form of a credit report.   

What you should consider doing now:

  1. Order a Credit Report at www.annualcreditreport.com.
  2. Freeze Your Credit Reports (after ordering a copy).  A freeze stops thieves from opening new credit cards or loans in your name, but it also prevents you from opening new accounts. So each time you apply for a credit card, mortgage or loan, you need to lift the freeze a few days beforehand.  Equifax said it will waive all fees until Nov. 21 for people who want to freeze their Equifax credit files. 
  3. Regularly Monitor Your Financial Accounts, Credit Cards and Loan Accounts for any suspicious activity

Something else to consider: Sign up by November 21 for the free Credit Monitoring offer from Equifax (equifaxsecurity2017.com). Some experts have offered differing opinions on taking advantage of this service.  However, we did want to make you aware of the offer.

Continue reading Important information regarding Equifax data breach