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Life Situations and Finances: FAQs

Scarsdale accountant Paul Herman has all the answers to your personal finance questions!

Personal finance faqs from westchester accountant paul herman

Save money with these handy tips!


The following are common “life situations” that many of us find ourselves in at one point or another. Get to know these common questions and concerns to save big!


The following are a few ways to lessen your bank fees:


  • Look into what is necessary to get free checking and free ATM usage and do it. This is typically done by having a minimum balance and only using your bank’s ATMs. Another thought is joining a credit union instead of a bank as they generally charge less for banking services.
  • Investigate how to invest in higher interest accounts. Determine how much money you would need in case of an emergency and roughly six month’s worth of expenses and keep that amount in your savings. Take the rest of you money and make it work for you.
  • Don’t order checks through your bank. Generally speaking, check printers charge less than the printers employed by the bank.
▼ What can I do to save money on my insurance costs?

These tips will help you save on all types of insurance:

  • Shop around for your life insurance policy. Take the time it takes to periodically check the prices on different policies, as it will pay off in the end. If you have recently quit smoking, you will probably be able to get better rates in a few years.
  • Evaluate your needs in terms of life insurance to see whether you are being charged too much for coverage.
  • Use the same insurer for home and auto insurance, as you will more than likely get a break.
  • Look around for auto insurance to find the best possible rate.
  • Save on your homeowner’s insurance by installing burglar alarms, smoke detectors and sprinkler systems. Consult an insurance agent to learn more.
  • Do away with private mortgage insurance. Ask your lender to cancel this as soon as you have enough equity in the home (this is required by law).
▼ What can I do to cut my utility costs?

These are a few tips to remember to help save money with utility costs:

  • See if your utility has a subsidizing program to make your home more energy-efficient. If that turns up nothing, you can still caulk your windows and check the insulation to make sure it has a high enough “R” factor.
  • Use fluorescent lights instead of incandescent bulbs for lights that are constantly on.
  • Maintain the thermostat at the highest and lowest temperature for comfort in the summer and winter, respectively.
▼ What can I do to reduce the cost of my phone bill?

There are many opportunities due to today’s cost-cutting competition among phone service providers, such as:

  • Verify that your long-distance charges are competitively priced. Research which long-distance carrier will give you the best rate and switch if you are not with that carrier.
  • Use the phone book instead of dialing “Information.”
  • If you have children at home, block all “900″ numbers.
  • Stay in touch with relatives and friends through e-mail.
▼ What can I do to reduce the cost of my mortgage?

The options that follow will help in reducing the cost of your mortgage:

  • Think about paying down your mortgage. This is an effective way for saving and raising net worth for many people. Make a decision to pay a specific amount more than the mortgage principal and faithfully stick to it.
  • Think about refinancing your mortgage. Determine if refinancing your mortgage will save you money. Calculate to see if the costs for refinancing are worth a reduction in your monthly payments. If you intend to remain in the house for at least five years, the common guideline is that at least two points reduction will make it worthwhile to refinance.

Our Scarsdale tax preparers here at Herman & Company CPA’s are here for all your financial needs. Please contact us if you have questions about these provisions or any other tax compliance/planning issues, and to receive your free personal finance consultation!

Herman and Company CPA’s proudly serves Bedford Hills NY, Larchmont NY, Mamaroneck NY, Bronxville NY, Scarsdale NY, Greenwich CT and beyond.

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Getting Divorced: FAQs Part 2

Scarsdale CPA Paul Herman has all the answers to your personal finance questions! Continuing our “Getting Divorced: FAQs Part 1” discussion, the following are more frequently asked questions and answers regarding divorce and your finances.:
▼ During a divorce, what are the legal issues that must be handled?

Make an agreement with your spouse to plan for the legal issues that will be dealt with in the future, such as division of property, alimony or support payments and child custody. Divorce FAQS from Scarsdale Accountant


The amount of time and money that will be spent trying to reach a legal solution will be lessened dramatically if this can be done, either with the help of lawyers or court. The following are general tips to face the legal aspects of divorce:

  • If there are important issues with regards to child custody, alimony or assets, find your own attorney.
  • Use referrals from other professionals, trusted friends or the American Academy of Matrimonial Lawyers to find a good matrimonial lawyer.
  • Verify that the agreement of divorce approaches all topics such as insurance coverage, life health and auto.
  • On IRA accounts, life insurance policies, pension plans, 401(k) plans, and other retirement accounts make sure to modify the beneficiaries.
  • Update your will.
▼ How does the division of property in a divorce work?

Each state has their own laws regarding the division of property between ex-spouses. When it comes to applying those laws, matrimonial judges have a great amount of flexibility.

Whether or not an attorney represents you, you should make sure to have done the following:

  • Learn how the laws of your state function with respect to property division.
  • Make sure to have the papers to confirm that property owned separately during the marriage has been kept separate.
  • Be prepared to report any non-financial contributions to the marriage that you have made – such as any non-financial contributions to his/her financial success or spousal support while he/she went to school.
  • Be willing to report any need for alimony or child support.

Consider having the divorce agreement supply you with funds if you have not worked outside of the home during the marriage.

▼ With a divorce, what are the tax implications?

Upon completion of a divorce, individual tax returns will be filed. There are a few areas that may result in tax consequences. The following are the most common:

  • Child Support
    It is not taxable to the recipient and is not deductible by the payer. If it is specially designated as child support in a divorce agreement or lessened by the occurrence of a contingency relative to the child, meaning a child reaches a specified age, it is considered as a payment.
  • Alimony
    It is taxable to the recipient and deductible by the payers. It is known as a payment in accordance with a divorce agreement other than child support or when allocated in the decree as something other than alimony. In a separation agreement, similar treatment is in accordance with separate maintenance payments. Payments may not end upon death of the recipient and may not be front-loaded.
  • Property Settlements
    When in accordance with the divorce or separation, they are not taxable. In the event of transfers of assets amongst spouses, they do not become taxable income, gains, loses, or deductions. The recipient spouse gets the cost basis of the property. Your spouse may provide you with an equal share of the property based on a fair market value, but be careful with the lower basis. In the end, it can produce a taxable gain at the asset’s sale.
 When retirement plans or IRAs are divided in a divorce, what happens?

If in accordance with the qualified domestic relations order or other order of the court in the case of an IRA, these plans are separated as non-taxable. However, this is the case only if the assets stay in the retirement account or IRA. Once the funds are allocated, they will be taxed to the recipient. The payer does not get the benefit of a deduction and the recipient does not have taxable income when divided.

 Is the cost of getting a divorce a deduction?

Typically no, although specific fees paid for income or estate tax advice due to the divorce may be deductible. The fees used to decide the alimony amount or to collect the alimony may be deducted. These would be subject to the 2% limitation under the miscellaneous item deductions.

▼ Am I entitled to deduct the dependency exemption of a child after divorce?

Typically, the custodial parent has the right to the deduction. This is normally discussed in divorce agreement negotiations. If agreed to in writing, the non-custodial parent may have the deduction.

Scarsdale accountant Paul Herman is here to help you with all your personal finance needs. Please contact us for all inquiries and to receive your free personal finance consultation!

Herman and Company CPA’s proudly serves Armonk NY, Bedford Hills NY, Harrison NY, Katonah NY, Scarsdale NY, Purchase NY, Rye 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.