Best of the Mensch
Financial Tips you may have Missed
Q: I landed a new job in sales and upgraded my wardrobe. Can I deduct the expenses?
–Taylor Slow
A: Nope — the tax code can be magnanimous but these are purely personal expenses. You also cannot deduct perfume, lipstick, lip balm, an electronic toothbrush or your coconut-lime shaving cream. (Okay, lipstick if it is needed for your actress gig; lip balm if you work for Mary Kay and buy samples. Or if you have a specially embroidered uniform that is specifically for your job or a costume designed for the stage only.)
Q: I’m aqua-phobic and I pay all my taxes on April 15, unless it’s raining. A month later and I ALWAYS receive a penalty notice from the IRS. Why is my CPA screwing up and why haven’t I switched?
–Captain Nemo
A: Your tax return is due April 15, but taxes must be paid throughout the year, whether you are paid as an employee or are self-employed. Otherwise you may be subject to underpayment penalties or public ridicule, whichever is the most uncomfortable. CPA’s are blessed with divine wisdom and hefty insurance policies.
Self-employed individuals, investors and others with substantial non-salary income are the most at-risk; this is why your CPA urges you to pay estimated taxes or increase your withholdings. For more on tax deadlines, read here.
Q: Should I contribute to my retirement plan or a college savings plan first?
–T Broody, Foxboro
A: The old adage is to take care of yourself first (no retirement equivalent to college loans), but your kids generally get to college before you retire (!) and you may want to have something to offer besides getting on the hook for more debt (“PLUS loans”). You may want to consider the flexibility of a Roth IRA for this very reason: while Roths are “retirement vehicles” you can always withdraw your original investment for any purpose tax and penalty free (the earnings you withdraw are taxable under certain circumstances). This may be an attractive option if you are not sure which basket to put your funds into, or if you are an older parent like the author — my parenting started late so my retirement age hits before my children will be going to college (not a great financial strategy!) As always there are details galore so educate yourself and consider seeking professional advice — especially if you have aging parents you are trying to help as well — the trifecta! (yes, we can help, and read more here.)
Because You Asked Dept
Q: Did your mother really threaten to take you out of her will when you moved into the Providence Zen Center in 1984?
–Harry Krishna, Berkeley
A: You have to understand — my sister has lived on a kibbutz since 1973, and the thought of this widow’s other child going communal scared her, briefly. My uncle talked her out of it and when she spoke at my wedding in 1993 (her finest moment!) she was effusive in her praise of what that environment had done for me. My mother was a very kind if self-tortured soul — as a prominent doctor eulogized at her service, she wasn’t the easiest patient, but much of her anxiety was rooted in her deep concern for others.
Because you asked… (and please, keep asking).
