Simonic, Simonic, Ratnecht & Associates, Inc

Simonic, Simonic, Ratnecht & Associates, Inc
Certified Public Accountants

Thursday, April 26, 2018

7 Simple Steps to a Brighter Future

Today’s economic environment, based on natural standards, is not a comfortable one for many people.  Many of you find yourselves upside down in your homes which is a recent phenomenon with the housing market today.  Many still have too many credit cards.  There are a lot of people out of work.  Some have investment properties that have lost their value, as well.

Financial security is not rocket science.  Achieving a bright financial future takes focus, discipline, organization, and faith.  I would like to share seven simple steps with you that if applied, will brighten your financial future.
1.  Organization.  Organization is a key to success in any avenue in life.  Financial organization is a key to financial success.  When you take the time to organize your finances, knowing where you have been, where you are, and establishing a plan for where you want to be financially, is not only rewarding, but provides a sense of freedom.  Although this is a simple step, it requires effort.  This means that you have to get your documents together as to how much you owe and to whom it is owed, as well as what you have been spending in the household versus what you can reasonably budget for the future.  There I go with the “B” word!  The budget is something no one wants to talk about, yet everyone needs.
2. Live Frugally.  This step is one that is practiced by millionaires.  There was a book written entitled “The Millionaire Next Door.”  It was the result of college research to determine how millionaires live.  What they found was that the guy next door who is driving the pick up truck and wearing overalls is usually the millionaire.
3. Reduce Debt.  When you establish a plan to reduce debt and work that plan, you are working towards a brighter future than those that have given up and take debt as a fact of life.  Retirees who have paid off their debts, including their home mortgages, find that it is easy to enjoy retirement without the cares of debt.  Younger people who have been working toward eliminating their debt find that removing the burden of debt is a motivator for stress elimination. 
4. Do What It Takes.  This step is very simple but sometimes the most overlooked by people who are in financial trouble.  Sometimes we are so far into a financial situation that we don’t see the “forest for the trees.”  All that means is that as things pile on you, you just don’t think clearly as to how you can resolve cash flow shortages.  All of us have different talents.  It takes very little to start a side business to bring extra money into the household.  I know this first hand because I was there in the past.  When not enough money was coming in from my regular job, I started a home based business to generate additional revenue for the household.  Whether you are good at handy work or are artistic or consulting, your talents are valuable.
5. Maximize Your Savings.  The younger you are the easier it is to save for the future.  If your company matches retirement contributions, that is an easy place to double your money.  If they don’t, saving a little earlier on in life will build wealth for the later years.
6. Don’t Put All of Your Eggs In One Basket.  In the past many people have focuses on funding their company retirement plan only to find that the retirement plan was not there for them the way they expected it to be when they retired.  I suggest that you diversify your investments.  You should split your investment money into four categories.  Low risk, moderate risk, medium risk and high risk.  If you practice this your results will always be above average.
7. Look Beyond the Dollar.  You have heard it said that stress is a killer.  That is very true.  A lot of people focus on the money and neglect the other things in life that will ensure a bright financial future.  Those things are your health, family relations, and your relationship with your Heavenly Father.  These areas, if neglected, will definitely result in dimming your financial future.  My mother always said that if you don’t have your health, you don’t have anything.  Cultivating your family relationships will strengthen your ability to have a more secure financial future.  No one cares more than family when you are in a situation.  And of course, without a strong relationship with your Heavenly Father, you may develop riches but you will never develop wealth.  Riches are temporal, as Proverbs warns us, riches take wings and fly away like an eagle.  Wealth is generational and is an outcome of a strong relationship with your Heavenly Father.

Visit our website at for more information on how to get financial help! Or visit my personal website at

Tax Effects of Forclosure

A woman’s oldest daughter became very sick and ended up in a wheelchair.  All of their finances went to medical expenses.  She ended owing over $80,000 in medical bills and lost her job as the result of taking time to take care of her daughter.  The recession hit and she did not want to give up her house.  She kept holding onto the house until she was financially devastated.  If you are in a situation like this, you are not alone…

There are lot of people in situations like this.  There are pro’s and con’s to walking away from your mortgage.  The first thing to deal with is the emotional stress that can come from being in this situation.  A lot of time people feel that they are disappointing their family as well as disappointing God.  You have to realize that you are in a position that you have to make a quality decision for the salvation of your family.  The priority should be God first, family second, and everything else next.  When you are losing your security, you have to get through the psychological part first.  Believe that God will be with you through your troubles and you can be on top again.

People have exhausted their retirement savings and 401Ks to pay for their mortgage.  When people get behind on their mortgage, the mortgage company refinances and rates go up, making it even harder for people to pay.  If you are in this situation, you really need to evaluate your options.  When someone is in real trouble financially, they are at a crossroad. 

If you have a Fannie Mae or Freddie Mac home loan, there is a program out that will renegotiate and lower your current rate/payments if you are struggling.  

Explore all of your possibilities and options before making the decision to walk away from your mortgage.  If you do decide to give up your home, it can sometimes take a year or two for the process to be completed.   So you have some time to save up for your move to your next home. 

It should be a last resort not a first option.  Save in the process of foreclosure to get into a new home/rental.

For this year:  If it is your personal residence that is foreclosed, you may not have to pay tax on the difference between what you owed and what you sell it for. 

Tuesday, August 28, 2012

Health Care Laws - The Key Points

Aired on the 91.7 The Promise on 8/10/12

Here are the health care laws that you need to know:

  1. 10% Excise Tax on Artificial Tanning - This will affect the 28 million people who visit tanning salons in the U.S. every year.  (This took effect in 2010)
  2. Tax Credit for employers under the Affordable Care Act - As of 2011, employers with 10 or fewer full-time employees that have average wages of up to $25,000 are eligible for the maximum credit of 35% of the amount the company contributes toward its employees health insurance premium.  The credit is applied to the employer’s tax liability for the year.  The tax credit decreases as the number of employees approaches 25 and as average annual wages approach $50,000.  To qualify for the credit, an employer must pay at least 1/2 the premium for each employee.
  3. FSA & HSA Contribution limit and increase withdrawal penalties - Right now anyone with a flexible spending or health savings account can contribute up to $5,000.  Under the new health care laws, as of 2013, the contribution limit decreases to $2,500.  Also, there currently is a 20% penalty for withdrawing money for non-medical purposes.  That was increased in 2010 from 10%.
  4. Medical Itemized Deduction Increase - Beginning January 1, 2013, taxpayers that take an itemized deduction for non-reimbursed medical expenses will only be allowed a deduction which exceeds 10% of adjusted gross income, up from 7.5% now.  Taxpayers 65 and older can still use the old 7.5% threshold until 2016.   
  5. 0.9% Medicare Tax on Individuals that make $200,000 (or more) or $250,000 for couples - This will effect 2.5 million households in the U.S.  In addition to the 0.9% Medicare tax, there will be a 3.8% investment tax on top of the existing 15% capital gains rate, which is set to rise to 20% next year.  These taxes are in effect as of January 1, 2013.
  6. Starting in 2014, individuals will have to pay a penalty for not having insurance - The amount of the penalty increases annually from 2014 to 2016.  Starting in 2014, the penalty will be 1% of the family income (no more than $285, whichever is greater).  In 2015, it rises to 2% (no more than $975).  By 2016, the penalty would be 2.5% of the family income (no more than $2,085). 
  7. Starting in 2014, employers with more than 50 employees that do not offer insurance coverage will have to pay a penalty - The penalty is $2,000 annually, multiplied by the number of full-time employees, minus 30.  The penalty is increased each year by the growth in insurance premiums.
If you think any of these changes may effect you, or if you have questions regarding them then please contact our office at (904)928-1040.

Catch Nick every Friday from 8-9am on 91.7FM The Promise!

Thursday, June 21, 2012

Financial Forgiveness


Debt is a payment owed. An example is when Jesus told the story of the king who forgave the debt to one of his servants. You will find the story in Matthew 18. The debtor who was just forgiven of his debt came across another person who owed him. He physically abused him and cast him into prison because he could not pay. That man received forgiveness from the king but could not walk in forgiveness with others. Isn’t it curious that Jesus used money as an example of forgiveness?
There are three main areas where we have to walk in forgiveness concerning finances. We will take a moment to address each.
OTHERS:  We sometimes hold resentment for others in the financial arena. It could be resentment against business associates who have wronged us financially. It could be resentment against a boss who drives a new car while you drive a jalopy. It could be resentment against customers who have not paid us for our services. It could even be family members who we don’t think are being fair to us financially.
Several steps to walk in forgiveness are as follows:

Begin praying for those who have wronged us. This is a positive use of the energy that you are expending on these people.
Focus on the positives. Maybe you were fired from a job or not paid for services rendered. Perhaps you feel like a family member “short-changed” you. Whatever the case, look at how God has been there for you through it all. You may be moving from a job into a calling because you were let go. The customer who “stiffed” you may have made room for another customer who is more than willing to pay you for what you are worth.
Get rid of your need for revenge. Surrender your view to God’s view. He may have already forgiven the issue and you may be continuing to hold onto it. Let it go.
SPOUSE:  You cannot hold something against the person prior to getting married, because you were not there. We all make mistakes. However, if a spouse is financially unfaithful, or cheating with money, it has to be addressed. The process of forgiveness entails several steps.

Confront the issue with your spouse. If you are the one doing harm, it is time to confess. If you are the one being harmed it is time to address it.
Communication. The only real way to resolve a financial issue in a marriage is to communicate openly. The enemy cannot work in the light. It is time to sit down with your spouse and develop a family budget.
Keep in mind that you are each individuals in the process. What I mean by this is that you need to have a separate spending category for each spouse so that you can maintain a feeling of self-worth. So remember to take each other into consideration during the budget.
YOURSELF:  This is the biggest issue. Have you made financial mistakes in the past? Will you today or tomorrow? Most likely! We all deal with “woulda, shoulda, coulda” in our finances and we start blaming ourselves. Whether it is a wrong career choice, or a spending binge, or a credit card, or not being able to take your family on trips, guilt eats at us. What should you do?

Bring it to light. You need to acknowledge that you are only human and you have made mistakes like everyone else. You’re not alone in this.
Get to the root of the problem. Find out what it was that caused you to mess up. It could be emotional investing. It could be ignoring your budget or it could be other habits that are causing you to dig a big hole. Whatever the case, acknowledging the root of the problem, or as is said in the military, “knowing your enemy” is half the battle.
Take action. You need to begin to take a positive step daily to turn the tide on how things have been in the past. Focus on today and not yesterday. Also realize that you may have not gotten into a financial mess in one day, therefore, it will not take one day to get out of it. This will take the weight of the world off of your shoulders and you will be better off for it.
Celebrate your life! Realize that your life is God’s gift to you. You need to fill your life with the joy and purpose that God intended for you.
A final note is that others can grant you forgiveness in your finances. Your creditors can forgive you of debts. The court system can forgive you of debts. Friends and relatives can forgive you of debts. But only you can give yourself financial forgiveness. Once you understand and settle that, you can walk yourself into a forgiving way of life.
-Nicholas Simonic, CPA, MACC

Friday, March 2, 2012

IRS Releases the Dirty Dozen Tax Scams for 2012

Visit or for more information.
WASHINGTON –– The Internal Revenue Service today issued its annual “Dirty Dozen” ranking of tax scams, reminding taxpayers to use caution during tax season to protect themselves against a wide range of schemes ranging from identity theft to return preparer fraud.
The Dirty Dozen listing, compiled by the IRS each year, lists a variety of common scams taxpayers can encounter at any point during the year. But many of these schemes peak during filing season as people prepare their tax returns.
“Taxpayers should be careful and avoid falling into a trap with the Dirty Dozen,” said IRS Commissioner Doug Shulman. “Scam artists will tempt people in-person, on-line and by e-mail with misleading promises about lost refunds and free money. Don’t be fooled by these scams.”
Illegal scams can lead to significant penalties and interest and possible criminal prosecution. The IRS Criminal Investigation Division works closely with the Department of Justice to shutdown scams and prosecute the criminals behind them.
The following is the Dirty Dozen tax scams for 2012:

1) Identity Theft- Topping this year’s list Dirty Dozen list is identity theft. In response to growing identity theft concerns, the IRS has embarked on a comprehensive strategy that is focused on preventing, detecting and resolving identity theft cases as soon as possible. In addition to the law-enforcement crackdown, the IRS has stepped up its internal reviews to spot false tax returns before tax refunds are issued as well as working to help victims of the identity theft refund schemes.
Identity theft cases are among the most complex ones the IRS handles, but the agency is committed to working with taxpayers who have become victims of identity theft.
The IRS is increasingly seeing identity thieves looking for ways to use a legitimate taxpayer’s identity and personal information to file a tax return and claim a fraudulent refund.

An IRS notice informing a taxpayer that more than one return was filed in the taxpayer’s name or that the taxpayer received wages from an unknown employer may be the first tip off the individual receives that he or she has been victimized.
The IRS has a robust screening process with measures in place to stop fraudulent returns. While the IRS is continuing to address tax-related identity theft aggressively, the agency is also seeing an increase in identity crimes, including more complex schemes. In 2011, the IRS protected more than $1.4 billion of taxpayer funds from getting into the wrong hands due to identity theft.
In January, the IRS announced the results of a massive, national sweep cracking down on suspected identity theft perpetrators as part of a stepped-up effort against refund fraud and identity theft. Working with the Justice Department’s Tax Division and local U.S. Attorneys’ offices, the nationwide effort targeted 105 people in 23 states.
Anyone who believes his or her personal information has been stolen and used for tax purposes should immediately contact the IRS Identity Protection Specialized Unit. For more information, visit the special identity theft page at

2) Phishing- Phishing is a scam typically carried out with the help of unsolicited email or a fake website that poses as a legitimate site to lure in potential victims and prompt them to provide valuable personal and financial information. Armed with this information, a criminal can commit identity theft or financial theft.
If you receive an unsolicited email that appears to be from either the IRS or an organization closely linked to the IRS, such as the Electronic Federal Tax Payment System (EFTPS), report it by sending it to
It is important to keep in mind the IRS does not initiate contact with taxpayers by email to request personal or financial information. This includes any type of electronic communication, such as text messages and social media channels. The IRS has information that can help you protect yourself from email scams.

3) Return Preparer Fraud- About 60 percent of taxpayers will use tax professionals this year to prepare and file their tax returns. Most return preparers provide honest service to their clients. But as in any other business, there are also some who prey on unsuspecting taxpayers.
Questionable return preparers have been known to skim off their clients’ refunds, charge inflated fees for return preparation services and attract new clients by promising guaranteed or inflated refunds. Taxpayers should choose carefully when hiring a tax preparer. Federal courts have issued hundreds of injunctions ordering individuals to cease preparing returns, and the Department of Justice has pending complaints against many others.
In 2012, every paid preparer needs to have a Preparer Tax Identification Number (PTIN) and enter it on the returns he or she prepares.
Signals to watch for when you are dealing with an unscrupulous return preparer would include that they:
• Do not sign the return or place a Preparer Tax identification Number on it.
• Do not give you a copy of your tax return.
• Promise larger than normal tax refunds.
• Charge a percentage of the refund amount as preparation fee.
• Require you to split the refund to pay the preparation fee.
• Add forms to the return you have never filed before.
• Encourage you to place false information on your return, such as false income, expenses and/or credits.
For advice on how to find a competent tax professional, see Tips for Choosing a Tax Preparer.

4) Hiding Income Offshore- Over the years, numerous individuals have been identified as evading U.S. taxes by hiding income in offshore banks, brokerage accounts or nominee entities, using debit cards, credit cards or wire transfers to access the funds. Others have employed foreign trusts, employee-leasing schemes, private annuities or insurance plans for the same purpose.
The IRS uses information gained from its investigations to pursue taxpayers with undeclared accounts, as well as the banks and bankers suspected of helping clients hide their assets overseas. The IRS works closely with the Department of Justice to prosecute tax evasion cases.
While there are legitimate reasons for maintaining financial accounts abroad, there are reporting requirements that need to be fulfilled. U.S. taxpayers who maintain such accounts and who do not comply with reporting and disclosure requirements are breaking the law and risk significant penalties and fines, as well as the possibility of criminal prosecution.

Since 2009, 30,000 individuals have come forward voluntarily to disclose their foreign financial accounts, taking advantage of special opportunities to bring their money back into the U.S. tax system and resolve their tax obligations. And, with new foreign account reporting requirements being phased in over the next few years, hiding income offshore will become increasingly more difficult.
At the beginning of this year, the IRS reopened the Offshore Voluntary Disclosure Program (OVDP) following continued strong interest from taxpayers and tax practitioners after the closure of the 2011 and 2009 programs. The IRS continues working on a wide range of international tax issues and follows ongoing efforts with the Justice Department to pursue criminal prosecution of international tax evasion. This program will be open for an indefinite period until otherwise announced.
The IRS has collected $3.4 billion so far from people who participated in the 2009 offshore program, reflecting closures of about 95 percent of the cases from the 2009 program. On top of that, the IRS has collected an additional $1 billion from up front payments required under the 2011 program. That number will grow as the IRS processes the 2011 cases.

5) “Free Money” from the IRS & Tax Scams Involving Social Security- Flyers and advertisements for free money from the IRS, suggesting that the taxpayer can file a tax return with little or no documentation, have been appearing in community churches around the country. These schemes are also often spread by word of mouth as unsuspecting and well-intentioned people tell their friends and relatives.
Scammers prey on low income individuals and the elderly. They build false hopes and charge people good money for bad advice. In the end, the victims discover their claims are rejected. Meanwhile, the promoters are long gone. The IRS warns all taxpayers to remain vigilant.
There are a number of tax scams involving Social Security. For example, scammers have been known to lure the unsuspecting with promises of non-existent Social Security refunds or rebates. In another situation, a taxpayer may really be due a credit or refund but uses inflated information to complete the return.
Beware. Intentional mistakes of this kind can result in a $5,000 penalty.

6) False/Inflated Income and Expenses- Including income that was never earned, either as wages or as self-employment income in order to maximize refundable credits, is another popular scam. Claiming income you did not earn or expenses you did not pay in order to secure larger refundable credits such as the Earned Income Tax Credit could have serious repercussions. This could result in repaying the erroneous refunds, including interest and penalties, and in some cases, even prosecution.
Additionally, some taxpayers are filing excessive claims for the fuel tax credit. Farmers and other taxpayers who use fuel for off-highway business purposes may be eligible for the fuel tax credit. But other individuals have claimed the tax credit when their occupations or income levels make the claims unreasonable. Fraud involving the fuel tax credit is considered a frivolous tax claim and can result in a penalty of $5,000.

7) False Form 1099 Refund Claims -
In this ongoing scam, the perpetrator files a fake information return, such as a Form 1099 Original Issue Discount (OID), to justify a false refund claim on a corresponding tax return. In some cases, individuals have made refund claims based on the bogus theory that the federal government maintains secret accounts for U.S. citizens and that taxpayers can gain access to the accounts by issuing 1099-OID forms to the IRS.
Don’t fall prey to people who encourage you to claim deductions or credits to which you are not entitled or willingly allow others to use your information to file false returns. If you are a party to such schemes, you could be liable for financial penalties or even face criminal prosecution.

8) Frivolous Arguments- Promoters of frivolous schemes encourage taxpayers to make unreasonable and outlandish claims to avoid paying the taxes they owe. The IRS has a list of frivolous tax arguments that taxpayers should avoid. These arguments are false and have been thrown out of court. While taxpayers have the right to contest their tax liabilities in court, no one has the right to disobey the law.

9) Falsely Claiming Zero Wages- Filing a phony information return is an illegal way to lower the amount of taxes an individual owes. Typically, a Form 4852 (Substitute Form W-2) or a “corrected” Form 1099 is used as a way to improperly reduce taxable income to zero. The taxpayer may also submit a statement rebutting wages and taxes reported by a payer to the IRS.
Sometimes, fraudsters even include an explanation on their Form 4852 that cites statutory language on the definition of wages or may include some reference to a paying company that refuses to issue a corrected Form W-2 for fear of IRS retaliation. Taxpayers should resist any temptation to participate in any variations of this scheme. Filing this type of return may result in a $5,000 penalty.

10) Abuse of Charitable Organizations and Deductions- IRS examiners continue to uncover the intentional abuse of 501(c)(3) organizations, including arrangements that improperly shield income or assets from taxation and attempts by donors to maintain control over donated assets or the income from donated property. The IRS is investigating schemes that involve the donation of non-cash assets –– including situations in which several organizations claim the full value of the same non-cash contribution. Often these donations are highly overvalued or the organization receiving the donation promises that the donor can repurchase the items later at a price set by the donor. The Pension Protection Act of 2006 imposed increased penalties for inaccurate appraisals and set new standards for qualified appraisals.

11) Disguised Corporate Ownership- Third parties are improperly used to request employer identification numbers and form corporations that obscure the true ownership of the business.
These entities can be used to underreport income, claim fictitious deductions, avoid filing tax returns, participate in listed transactions and facilitate money laundering, and financial crimes. The IRS is working with state authorities to identify these entities and bring the owners into compliance with the law.

12) Misuse of Trusts- For years, unscrupulous promoters have urged taxpayers to transfer assets into trusts. While there are legitimate uses of trusts in tax and estate planning, some highly questionable transactions promise reduction of income subject to tax, deductions for personal expenses and reduced estate or gift taxes. Such trusts rarely deliver the tax benefits promised and are used primarily as a means of avoiding income tax liability and hiding assets from creditors, including the IRS.
IRS personnel have seen an increase in the improper use of private annuity trusts and foreign trusts to shift income and deduct personal expenses. As with other arrangements, taxpayers should seek the advice of a trusted professional before entering a trust arrangement.

Monday, February 13, 2012

New Government Mortgage Settlement

California and Florida have been the worst hit by the housing crisis. Last month, Duval County had the highest number of bankruptcies since September, 2010.

The Government instituted a $25 Billion Mortgage settlement on Thursday. Because of the majority of the problems occurring in California and Florida, an estimated 75% of the funds will be distributed to these two states.

It was noted that many homes were being seized by the private banks improperly. Foreclosure paperwork was forged, paperwork was robo-signed and improper procedures were followed.

Those who benefited from the new program are homeowners who are underwater. It is estimated that it will bring relief to about one million homeowners. It is estimated that mortgage balances will be reduced by an average of $20,000 per homeowner. But this only represents ten percent of those in trouble. This program requires banks to use foreclosure as the last resort. Also, banks are not permitted to institute bankruptcy on those who are currently being considered for a loan modification.

Only those mortgages whose loan is with a private lender qualify for the program. If the mortgage is owned by government controlled Fannie Mae or Freddie Mac, the homeowner doesn't qualify for the program.

Those who already lost their homes unfairly may qualify for a check for $2,000. There are about $750,000 of those. This is not much consolation, but it's something.

Lenders who violate the rules of this program are subject to a $1 Million penalty. Repeat offenders are subject to a $5 Million penalty.

For more information go to The five banks and their contacts are ALLY/GMAC (800)766-4622, Bank of America (877)488-7814, Citi (866)272-4749, J.P. Morgan Chase (866)372-6901, and Wells Fargo (800)288-3212.

Tuesday, August 23, 2011

The Chauffeur

Here is a little humor to lighten up the day...

After getting all of Pope Benedict's luggage loaded into the limo (and he doesn't travel lightly), the driver notices the pope is still standing on the curb.

"Excuse me, your holiness," says the driver, "Would you please take your seat so we can leave?"

"Well, to tell you the truth," says the pope, "they never let me drive at the Vatican when I was cardinal, and I'd really like to drive today."

"I'm sorry, your holiness, but I cannot let you do that. I'd lose my job! What if something should happen?"

"Who's going to tell?" replies the pope with a smile.

Reluctantly, the driver gets in the back as the pope climbs in behind the wheel. The driver quickly regrets his decision when, after exiting the airport, the pontiff floors it, accelerating the limo to 295 kph. (Remember, the pope is German.)

"Please slow down, your holiness!" pleads the worried driver, "I'm going to lose my license - and my job!"

The pope pulls over and rolls down the window as the cop approaches, but the cop takes one look at him, goes back to his motorcycle, and radios headquarters. "I need to talk to the chief," he says to the dispatcher.

The chief gets on the radio and the cop tells him that he's stopped a limo going 205 kph. "So bust him," says the chief. "I don't think we want to do that, he's really important," said the cop.

The chief exclaimed, "All the more reason!"

"No, I mean really important," said the cop with a bit of persistence.

The chief then asked, "Who do you have there, the mayor?"

Cop: "Bigger"

Chief: "A senator?"

Cop: "Bigger"

Chief: "The Prime Minister"

Cop: "Bigger"

"Well", said the chief "who is it?"

Cop: "I think it's God!"

The chief is even more puzzled and curious, "What makes you think it's God?"

Cop: "His chauffeur is the pope!"