Monthly Archives: November 2015

5 Tips For Holiday Shopping On A Budget

Westchester NY accountant Paul Herman of Herman & Company CPA’s is here for all your financial needs. Please contact us if you have questions, and to receive your free personal finance consultation!

Shopping Blog Photo

The holiday season is upon us!  Avoid putting yourself in debt this holiday season by getting organized and developing a budget.  Here are 5 tips for holiday shopping that will keep you within a budget.

  1. Make A List

It’s always a good idea to create your shopping list ahead of time.  Write down who you are shopping for, what your budget will allow per person, and what you expect to buy.  Having an idea of what you’re looking for prevents impulse buying, and it’s a major time saver. Plus, you don’t want to forget to buy a present for little Timmy, whether he’s been naughty or nice this year.

  1. Develop a Budget

Take a look at your bank account and determine a realistic budget for yourself.  Once you have decided what you can afford to spend this holiday season, stick to your budget!  If you plan to spend $20 on a gift, only spend $20.  It’s easy to say, “What’s one of two more dollars?”  But if you spend a few more dollars on each person that money adds up and your budget has completely gone out the window.

  1. Shop With Debit Cards/Cash Instead of Credit Cards

Leave your credit cards at home and use cash or debit cards.  With a credit card it’s easy to just swipe now and worry about how to pay later.  Inevitably you’ll spend more than you intended and will be blindsided at the end of the month.  Using cash or debit cards forces you to be aware of how much you have left in your account and will help you stick to your budget.  Plus, you will avoid paying interest on your credit card bill.  The National Retail Federation predicts that the average American will spend $805 this holiday season.  If you charged all $805 to your credit card and only paid the $25 minimum monthly payment with an average annual percentage rate (APR) of 18% it would take you 45 months to payoff.  Over the course of those months, you would end up paying $1,107.70 instead of $805, meaning you paid an unnecessary $302.70 in interest. Definitely not worth it.

  1. Shop Early

Try to get your holiday shopping done as early as possible. Not only will you beat the chaos of the holiday rush but the extra time will allow you to shop wisely.  By giving yourself plenty of time to shop you get the luxury to compare prices and find deals on what you’re looking for.  Last minute shoppers are left with no choice but to buy regardless of the price.  Plan ahead so you don’t run out of time or money!

  1. Beware of “Deals” and “Sales”

Retailers are excellent at enticing shoppers and painting the picture of a “great deal.” While Black Friday and Cyber Monday sales may seem appealing (especially to a bargain hunter!) they don’t always save you the most money.  Retailers have been known to inflate original prices to make discounts seem larger than they really are.  They also make their sales seem like a one-time only deal but in reality offer the same discounts throughout the year. Don’t be fooled.

Follow these five helpful tips and give yourself the gift of enjoying the holiday season debt-free!

Paul S. Herman CPA, a tax expert for individuals and businesses, is the founder of Herman & Company, CPA’s PC in White Plains, New York.  He provides guidance and strategies to improve clients’ financial well-being.


Premium Tax Credit: 3 ways to reduce the chance of owing taxes

Westchester NY accountant Paul Herman of Herman & Company CPA’s is here for all your financial needs. Please contact us if you have questions, and to receive your free personal finance consultation!

By Taxpayer Advocate Service


This past filing season saw some people owing money at tax time that they didn’t expect. Why? Because they didn’t provide an accurate income estimate to the Marketplace when enrolling for health insurance or they forgot to report changes to the Marketplace immediately. Don’t let that be you next year!

Here are three ways to help lessen your chances of owing money at tax time, if you chose to have advance payments of the Premium Tax Credit paid to your insurer.

1) Make sure you include ALL your income in your estimate.

Remember that it’s more than just your paycheck that needs to be included. Pay special attention to these items:

  • Unemployment compensation
  • All household members’ income (not just yours)
  • Additional types of income, including interest income, capital gains, cash support, and alimony.
  • Most withdrawals and distributions from traditional IRAs and 401ks. (See IRS Publication 590-B Distributions from Individual Retirement Arrangements (IRAs) for more information.)

Some unexpected balances were due to a lump sum payment received or withdrawn during the year that was not included in the initial income estimate. Lump sum payments can be issued through retirement account distributions, Social Security or disability payments and awards from law suits. These amounts are reported to you on a IRS Form 1099.’s “Get Answers” has many articles to help you estimate your income more accurately.

2) Consider having a lower amount of the estimated Premium Tax Credit paid directly to the insurer where possible.

When possible, opt to have less than 100% of the calculated credit used as advance payments. If you are eligible for a larger credit, you will receive the difference when you file your tax return. So if you can afford to take less, even a little bit, doing this will give you at least some cushion of safety should the unexpected happen or you miscalculated your income.

3) Report all income and life changes to the Marketplace immediately.

Don’t wait to report changes. The longer you wait to report changes to the Marketplace the larger the difference between the advance payments and the final allowable credit will be. Changes can also affect your insurance coverage.

Don’t know which changes to report? has information on which changes should be reported. Or see IRS Publication 5152, Report changes to the Marketplace as they happen (also available in Spanish).

Another handy tool is our Premium Tax Credit Change Estimator. The Premium Tax Credit Change Estimator can help you estimate how much your premium tax credit will change if your income or family size changes during the year. It won’t report those changes to the Marketplace, you must do that yourself, but it will give you a better idea of how those life changes affect the total amount of your premium tax credit.

Of course you never know what’s going to happen in the coming year. That’s why it’s so important to update your Marketplace information all year round whenever you have income or household changes that could affect your coverageand your taxes.

If you should you find yourself owing money to the IRS at tax time, but can’t afford to pay it all at once, there are options. See I can’t pay my taxes for more information.

Herman and Company CPA’s proudly serves Bedford Hills NY, Chappaqua NY, Harrison NY, Scarsdale NY, White Plains NY, Mt. Kisco NY, Pound Ridge NY, Greenwich CT and beyond.

Tax ID theft victims now can see fake filings

Westchester NY accountant Paul Herman of Herman & Company CPA’s is here for all your financial needs. Please contact us if you have questions, and to receive your free personal finance consultation!

By Bankrate

Repairing the damage done when a criminal steals your identity is a complex, time-consuming and exasperating exercise.

Tax ID theft victims can now see the fake return that had been filed in their names (and Social Security numbers).

When your ID is used to commit tax return fraud, you face an additional level of frustration because of the Internal Revenue Service’s strict rules regarding privacy.

The IRS, however, has come to realize that some taxpayer data needs to be shared to fight tax identity thieves. The federal tax agency announced in October that it, its state counterparts and tax industry partners now will share more filing information among themselves in their continuing efforts to stop tax ID theft and return fraud.

Now the IRS says it will share some information about fraudulent filings with the victims whose identities were used on the fake 1040s.

Victims want to know

“We know that identity theft is a frustrating process for victims, and we are taking aggressive steps to stop fraudulent returns before they are processed,” the IRS says on its website. “We understand victims want to know more about the information used on the fraudulent returns using their Social Security number.”

Such victims now can request a copy of the fraudulent federal return filed in their names.

However, the IRS isn’t throwing out all its privacy rules. Some of the information on fraudulent returns sent to tax ID theft victims will be blacked out.

In addition, the IRS is not releasing copies of identity theft returns that it is still working to resolve.

And only individuals whose names and Social Security numbers are listed on the fraudulent return as either the primary or secondary taxpayers can request a copy of the fake document. That means if you (or one of your children) are listed as a dependent on a fraudulent return, you won’t be able to get a copy of that filing.

Written request required

If you do qualify to get a copy of a return that was illegally filed under your name and Social Security number, the IRS has created a special Web page with details on how to do so.

Basically, you’ll need to send the IRS a letter that includes:

  • Your name and Social Security number,
  • Your mailing address,
  • The tax year or years requested, and
  • The statement, “I declare that I am the taxpayer.”

To back up your declaration that you are the real you, you’ll need to include a copy of your government-issued identification, such as a driver’s license or passport.

The IRS says it will acknowledge any request within 30 days after it receives it. You should get a copy of the fraudulent return, or any follow-up correspondence, within 90 days.

Psychological rather than practical relief

So what good will such information do a tax identity theft victim? The dirty deed is done and you can’t change that.

You can, however, get an idea of just what kind of personal information was stolen, or at least used on the fake refund.

And that’s a valuable part of an identity theft victim’s recovery process.

The best defense against identity theft is a good offense. You should be aware of who’s looking at your personal data.

Herman and Company CPA’s proudly serves Bedford Hills NY, Chappaqua NY, Harrison NY, Scarsdale NY, White Plains NY, Mt. Kisco NY, Pound Ridge NY, Greenwich CT and beyond.

Any U.S. tax advice contained in the body of this website is not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.