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Archive for November, 2014

Job Decision Made!

November 10th, 2014 at 03:46 pm

By 9 a.m. this morning, I had chosen a fork in the road. At 8:10, I received an email from the recruiter telling me that the accounting firm wanted an answer by close of business today. I then sent an email to the President of the financial planning firm, telling him that I had to make a decision today. He responded by 8:20 with an email including the offer letter, telling me that he'd dropped the hard copy into the mail on his way in to work this morning. The offer is at a salary that is fully 50% higher than the accounting firm offered, with full benefits, and the job starts next Monday. With that salary (at a level that I was thinking it might take me another 4-5 years to attain), the decision was literally "no contest." I called the Principal of the accounting firm to tell him, with regrets, that I was turning down his offer and why, and then the Recruiter, who worked very hard on my behalf to get me the accounting firm offer, so I feel badly that she gets nothing for her efforts on my behalf in the end (I will send her a Harry & David type gift). So, before 9 o'clock this morning, the decision was made and I set off on the new path. Today was mostly reveling in happiness and sending thank-yous; tomorrow I will figure out more clearly what I need to get done before I start work and work on that list.

Knocking on Wood, Two Job Offers in one week!

November 9th, 2014 at 02:00 pm

After a very long transition from academic to accountant, I am hoping that last week marks the end of one phase and the beginning of the next. Fingers crossed, knocking on wood, finding a lucky rabbit's foot, and all that, because I thought three years ago that I had reached the "holy Grail" of the full-time job with benefits, but that one turned out to last only three months. So I'm not going to believe that this really IS a turning point for at least half a year into this.

Just in case you have not previously encounted my blog, my brief backstory is that I once was an untenured college professor and ten years ago, I decided to become an accountant instead. I finally attained my CPA earlier this year, after five years spent on schooling and exams and another five years spent gaining experience at part-time and temporary/contract jobs.

Now it looks as though I'll have two offers--one of them is just an oral offer, though, so I'm waiting for the actual offer letter, which I expect to get tomorrow, that will state details such as salary, benefits, and starting date.

One of the job offers is at a smallish (15 permanent staff) full-service CPA firm 22 miles from home. This would be a contract-to-hire job, with the owner indicating a very high probability that it would turn permanent after tax season. I'd be in the corporate tax area, with some individual tax, and would have the opportunity to work on reviews, compilations, and audits during the non-tax season part of the year. 51 hours a week during tax season (mandatory Saturday mornings), 29 hours a week over the summer (Fridays off), and 40 hours a week the rest of the year. A couple of years of this type of experience and I would feel that I had the necessary background to consider opening my own firm, which is not yet the case (nor do I really anticipate wanting to open my own firm--it might be another story if I were 10 years younger). This is the type of job I've have been focused on getting for the past two years.

The other job offer is rather different, and is in line with what I planned when I originally set out on my new path a decade ago. My background is in psychology, and I used to do research on self-defeating behavior. So when I thought about switching careers, I remembered my own lack of financial smarts during my 20s and first thought about becoming a financial planner, since CFPs are interested in both aspects of people's psychology (their goals, their risk tolerance) as well as in their finances. But then I looked into CFP programs and found out that most graduates landed in sales jobs for firms like Ameriprise. Becoming a salesperson and working on commission really did not appeal to me, so that's the point at which I decided to get my CPA instead and become a tax accountant and "back door" into also offering planning services.

The second offer is to actually BE a CPA/Financial Planner for a small, fee-based financial planning firm targeting high net-worth taxpayers, primarily doctors, lawyers, and executives. In this role, I'd spend about 50% of my time on tax planning, and I'd also learn about retirement, education, estate, and risk planning and get my CFP along the way. I wouldn't actually be doing returns, however. But what's really neat about this job is that they *like* the fact that I have the psychology background. While I've been focused on applying for tax accountant jobs, I've considered my PhD my "dirty little secret" and it doesn't appear on my resume...you have to google my name or scroll down to the bottom of my Linked In profile to find out about it. But while I DO love the tax work, I ALSO love psychology as much as I ever did, so there's an additional excitement about this job for me.

The planning job feels like the risky but potentially higher reward choice (risky since I haven't done much of the planning before), while the accounting firm feels like the safer choice.

I still have yet to get the offer letter in hand from the planning firm, but I expect based on our conversation that the planning job would pay at least as much as the accounting firm job, would start six weeks earlier (this month rather than Jan. 5), benefits could apply from the beginning (depending on whatever waiting period is included in their plan rules), and also, it's basically an 8-5 job (with a one-hour lunch) that is located precisely ONE MILE from my house--I'd be walking except on days when the weather is extreme in one way or another.

So you can probably tell that I'm leaning towards the CFP job, pending seeing the actual offer in hand.

But recalling my previous experience getting hired for a "permanent" job with benefits and getting let go 3 months later when they lost their biggest client, I am trying to keep my excitement in check.

Hopefully this is the start of a new phase in both my career and for my personal finances, where my balance sheet continues to improve as the markets have done well and our local real estate market is rebounding, but where I have now amassed some personal loan debt, most at low or zero percent rate, but personal rather than mortgage loan debt nonetheless, enough that it will probably take a couple of years to pay off to get myself back to the state of my only debt being mortgage debt that I was in five years ago when I left teaching.

Have you been getting a health insurance subsidy this year?

November 9th, 2014 at 12:57 pm

Some interesting things to know if you are one of the people who, like me, is buying their own insurance from the healthcare exchanges and receiving an advance subsidy from the government to help pay for it:

1. If you received a subsidy this year that was directly paid to your insurance company, you MUST have your return filed by April 15th. No extensions--not even if you are missing crucial information like K-1s from partnerships etc. Your preparer will have to make a good faith estimate, note the number under question in a statement attached to the return, and file an amended return if needed. The IRS needs the return in order to calculate whether you received too much subsidy and need to return the advance payments, or whether you received too little and get a refund.

2. This January (or actually, for 2015, February 2) and every year henceforward, you (EVERYONE, not just people buying care off the exchanges) will receive a new tax information form to be brought to your return preparer with information about your health insurance. Most of these forms are numbered 1095 with a letter indicating whether the insurance was purchased through your employer or from other sources. Your preparer cannot file your tax return until you have your information form, so tax season will be delayed and abbreviated this season. Expect very harried tax preparers especially as tax season progresses. Also because of the additional work required to reconcile the information, potentially up to an additional hour per return, especially if your insurance changed during the year or if you had a coverage gap during the year, expect tax return costs to go up this year. On the other hand, you are much more likely to be able to avoid or minimize penalties if you are using a qualified tax preparer--and especially if you have a tax planning meeting before year end--so the value provided in return for the fee only increases. But if you are focused only on the cost, it will probably go up more than usual this year.

3. If your income changed during the year in any substantial way from the way you estimated it last year when signing up on the exchange, you should have gone on to healthcare.gov or your state exchange and updated your information during the year. Especially if your income went up substantially, you could lose the subsidy and have to repay it--even if your modified AGI was just one dollar over the limit for your filing status.

4. If you chose to remain uninsured this year, you will owe a penalty. The MINIMUM penalties rates are relatively low this year (the $95 Single minimum penalty number has been much bandied about) and will rise steeply over the course of the next two years, but if your income was a middle class income and you went uninsured, your penalty could be quite steep--up to 1% of income this year (going up to 2.5% by 2016), and capped for this year at $9800 (the national average price of a bronze plan for a family). Some taxpayers are going to be in for a nasty surprise.

5. Now here is something that I heard from a trustworthy source but which I find a little bit unbelievable, so take this with a grain of salt until I can find the IRS Regulation that governs it or else get my 2015 software installed and see it for myself: according to the lawyer who taught our update class, if you owe a penalty and have a balance due on your tax return, as opposed to a refund, you will not be assessed an extra payment for the penalty--they will be taking the penalty payments from tax refunds and will just wait until you have a tax refund year and take the money then. Again, I need to see this in writing before I believe it. UPDATE: Apparently, it's better to say that you WILL be assessed the penalty but they won't go after you if you fail to pay it and have a balance due. They'll just wait until you do have a tax refund year and grab the penalty then. Interest and penalties will continue to accrue until the penalty is paid. I still need to find the discussion of this in the Regs--I do like to be able to cite my sources.

6. The subsidies are now under Supreme Court challenge for those of us who receive the subsidy from Healthcare.gov, as opposed to from a state exchange. The Supreme Court on Friday accepted the King v. Burwell case, which challenges the legitimacy of subsidies received from the federal as opposed to the state exchange, since the governing law refers to "State" subsidies. Two different Circuit Courts decided differently on this issue, hence the Supreme Court acceptance of the challenge. TBD by June-yet another way the Right is trying to make the Affordable Care Act go away. Two-thirds of people would lose their subsidies if the word "State" is interpreted in the narrow rather than in the broad sense, making insurance unaffordable for them and effectively undermining the law.