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Daily Money Management: Is It For You?
By Ed Adkins
Several newspapers recently reported on an emerging set of financial services that you or someone you know may need. According to The Wall Street Journal, what was once just a “province of the wealthy,” is quickly finding customers from all walks of life. These services, as the San Jose Business Journal noted, lack a “widely accepted description,” but are called Daily Money Management.
Barnard, Vogler & Co. attributes this rise of interest in Daily Money Management to the lifestyle changes many of our clients have naturally experienced. Over the years that we have been providing these services, we have identified the key questions most people have regarding these services.
What are Daily Money Managers?
Far surpassing the traditional role of bookkeeper, daily money managers handle finances for their clients in a variety of ways. Services are tailored to clients’ individual needs, ranging from bill payment activities to making deposits and maintaining records.
Common services provided by DMMs include:
- Paying and organizing bills
- Balancing checkbooks
- Organizing and preparing tax documents
- Organizing and assisting with medical paperwork
- Establishing a budget
“Our most common services include monitoring client’s investments and paying bills,” says Toni Colton of Barnard, Vogler. Colton also cites that she frequently helps clients make sure their Medicare documents are organized and claims filed correctly.
Some situations, though, call for more involvement. “If the client is in a nursing home, and they ask you to get them a toothbrush, you get them a toothbrush,” Says Ginny Loessberg of Barnard Vogler. Some clients need home health care managed, or need help negotiating with creditors.
Who Could Benifit From Hiring a DMM?
The most common clients include those who can no longer manage finances due to failing health or disability, individuals who have been recently widowed or divorced, or people who are simply too busy to keep their finances in order.
According to the Federal Trade Commission, “an estimated 500,000 older people in the United states need help with their financial affairs.” Not only can DMMs help these people keep track of their finances, but the Texas Department of Protective and Regulatory Services recommends DMMs as a measure to protect the elderly from fraud. "Some of our clients," says Colton, “just don’t feel comfortable managing their finances by themselves anymore.”
For some, the death of a spouse or a divorce has put them in a position they may never have never faced before: the managing of their own finances. As a result, some DMMs focus primarily on helping people cope financially with death or divorce.
Lastly, some of Barnard Vogler’s clients are simply too busy to manage their own finances.
What are the Concerns Regarding DMMs?
First, daily money management is largely unregulated. There aren’t the same safeguards in place that a CPA, for instance, must adhere to. Because of this, many people may be apprehensive about searching for a DMM. Fortunately, Barnard, Vogler has built a reputation on solid, principles-based service in Reno.
Many people also worry about giving up their independence if they hire a Daily Money Manager. On the contrary, a DMM helps you get on track with your finances, giving you more independence. “We offer varying degrees of control based on our clients needs,” says Ginny Loessberg, “Some people bring in their bills while others have all their mail forwarded to us, and for others we come to them.”
The American Association of Daily Money Managers also states that DMMs allow “many seniors to avoid guardianship or complete loss of independence.”
What Should I be Looking For in a DMM?
“The most important factor to Daily Money Management,” says Toni Colton, “is rapport.” Many who comment on DMMs say that there must be a relationship of trust and agreement. Toni, who works to create a bond with each client, has had one of her clients over for several Thanksgiving dinners.
If you are interested in Daily Money Management, or would like to learn more about it, you can contact Barnard, Vogler & Co at 786-6141.
Tax Time Tips
Exceptions to Limitations on Meal and Entertainment Expenses
Many taxpayers account for their meal and entertainment expenses in a single expense account. The expenses included in this account may then be treated as fully subjected to the 50% percentage limitation. However, this may not always be the proper treatment. In some circumstances, certain meal and entertainment expenses are fully deductible. Some of the more frequently encountered exceptions include:
De Minimis Fringe Benefits – Occasional meal allowances or meals provided on the employer’s premises (e.g., for overtime work or staff meetings) may be fully deductible as a de minimis fringe benefit.
Expenses Treated as Compensation – Expenses for goods, services, and facilities are fully deductible to the extent that the expenses are treated by the taxpayer as compensation to the employee.
Reimbursed Expenses – Expenses reimbursed under an “accountable plan” remain fully deductible to the person receiving the reimbursement; however, the taxpayer making the reimbursement is subject to the 50% reduction.
Recreational and Social Activities for Employees – Expenses for holiday parties and other recreational events (such as picnics, going-away parties and firm dinners) are not limited. This exception also includes the cost of maintaining an athletic facility. Expenditures of this type are not subject to the 50% limitation if provided primarily for the benefit of employees other than highly compensated employees.
Meals and Entertainment Made Available to the General Public – Samples of food or entertainment given away on a promotional basis to the general public are not subject to the percentage limitation.
The common rationale for the exceptions appears to be that the taxpayer is unlikely to derive much personal benefit in the situations exempted from the percentage reduction rule. It may prove beneficial for many taxpayers to examine their meal and entertainment expense accounts to determine whether some of these expenses can be segregated into an account that is fully deductible.
Homesale Rules Liberalized
The IRS has issued new regulations liberalizing key aspects of the homesale exclusion. This exclusion allows an individual to treat as tax-free up to $250,000 of gain from the sale of a home owned and used by him as a principal residence (his main home) for at least 2 of the 5 years before the sale. The full exclusion doesn’t apply if, within the 2-year period ending on the sale date, there was another home sale by the taxpayer to which the exclusion applied. Married individuals filing jointly for the year of sale may exclude up to $500,000 of homesale gain if they meet a number of conditions.
The new regulations liberalize two important rules:
... The IRS originally took the position that if a principal residence consistently was used in part for residential purposes and in part for business purposes, only the gain allocable to the residential portion could be excluded. The new IRS regulations adopt a more liberal rule. They provide that all of the gain from the home sale (except for gain resulting from certain depreciation deductions) is eligible for the exclusion if both the residential and non-residential portions of the home are within the same dwelling unit (e.g., one room in the home used as the office of a sideline business). However, gain is allocated if the non-residence portion of the home is separate from the dwelling unit (e.g., an office in a converted garage).
... An individual may claim a partial homesale exclusion if he (1) doesn’t qualify for the 2-out-of-5-year ownership and use rule, or (2) previously sold another home within two years. The failure to meet either rule must result from the home being sold because of a change of place of employment, health, or to the extent provided by IRS regulations, other unforeseen circumstances. The new IRS regulations interpret these conditions liberally. For example, the health condition would be met if a person sells his home and moves cross-country to care for an ailing parent. The term “unforeseen circumstances” is defined as the occurrence of an event that the individual didn’t anticipate before buying and moving into the home, and includes divorce or legal separation, the birth of twins, and change in employment or self-employment status that results in inability to pay housing costs and reasonable basic living expenses.
The new IRS homesale exclusion regulations generally apply to sales after December 23, 2002, but taxpayers may elect to apply them to sales after May 6, 1997, and before December 24, 2002. This election may create a refund opportunity for some home sellers.
Milage Rates for 2003
For employees, self-employed individuals, or other taxpayers to use in computing the deductible costs of operating an automobile for business, charitable, medical, or moving expense purposes, the mileage rates for 2003 are:
- Business: 36 cents per mile
- Charitable: 14 cents per mile
- Medical and Moving: 12 cents per mile
Client Profile: Inland Supply Company
By Ed Adkins
Planning your spring-cleaning already? Inland Supply Company President Gordon Elliot says you need a homegrown solution. Just off of Interstate 395 on Mill Street, his company has been meeting Nevada’s cleaning and maintenance supply needs since it started here in 1946.
Roger Stewart, one of Barnard Vogler’s directors, has worked with Inland supply for 41 years. That’s a long time, Elliott agrees. “Roger has been with us longer than I have.” Elliot, who has been president for 10 years, joined Inland 30 years ago.
Elliott says that Inland’s key to success has been the advantage of being local. National corporations have entered the market, but Elliott says his company knows the best solutions for local businesses. “The industry is very competitive, but we’ve managed to stick around because of our hands-on approach.”
Inland’s eight sales people are factory-trained and results-oriented, according to Elliott, “so they fit the client with the right product the first time.” Inland employs 27 people in their Reno, Elko and Winnemucca locations, including two of Elliott’s children.
They contribute to what Elliott calls, “an old-fashioned happy crew.” His daughter Jill works in the front office, while his son T.J. is involved with sales. Elliott says that in the future, the company wants to continue its tradition of quality service and a permanent place in Nevada.
Employee Profile: Ed Adkins
Have you noticed a change in Barnard, Vogler & Co.’s newsletter lately? It looks a little different. In fact, many things are going to look different at BV&CO if Ed Adkins has his way. Ed is one of our newest additions, as Marketing Coordinator, and he favors change.
Coming from Albuquerque, NM, Ed is a recent graduate of the University of New Mexico and is currently attending UNR to get his MBA. He says that his position at Barnard, Vogler has been a great fit and an excellent opportunity.
“I’m very excited to be here,” says Ed, “not just because we’re the premier community-based firm, but because there’s so much more we can do here in Reno.” He means it, too. Right now Ed is working with all the employees at BV&CO to redesign our business plan.
Last month the accountants got together to reexamine the mission and goals of BV&CO at a retreat titled, “The Climb.” “We want to enhance Barnard, Vogler, and our community,” says Ed, “and that takes a great plan for our future.”
Originally, he confesses, that he wouldn’t have seen himself working for an accounting firm. “Like most people, I don’t write out balance sheets for fun,” he confesses, “but Barnard, Vogler was the most professional firm I interviewed with, and I was also drawn immediately to their family atmosphere.”
When he’s not at BV&CO working on their business plan, Ed still keeps very busy at home and in the community. He and his wife, Heidi, lead the teen ministry at the Greater Reno Church of Christ. The young couple say they enjoy helping kids and like to stay active.
They both love the outdoors, which he says was a great perk to moving to Nevada. “We both really love Reno,” says Ed. “The people we’ve met here have already become some of our best friends.”