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STRATEGIC ISSUES...ONLINE 
For week of January 16, 2006, Issue #245
 
Featured Articles:
1. Make Some New Year Tax Resolutions
2. Focus on Fraud:  Corporate & Identity Theft, Part 13 - Notes
3. Tech Tip Weekly:  Thinking About an External Hard Drive
4. Compliance Calendar
 
 
If you would like to have further information on any of these articles, let us know.  We would appreciate receiving your comments and/or suggestions, anytime!
acarroll@pmcpa.com
 
1.   Make Some New Year Tax Resolutions

Expand your list of New Year resolutions to include the following:

1. Review and adjust your withholding.
If you receive a big tax refund for 2005, resolve to file a new Form W-4 to adjust your withholding and reduce your refund to a reasonable size. It’s comforting to receive a small refund, but remember that a refund means you’re making an interest-free loan to the government — money you could be investing or using to your own benefit.
 
2. Maximize your tax-advantaged retirement savings.
Resolve to contribute at least enough to your 401(k) plan to earn your employer’s match. Otherwise you’re giving up “free” money. If you can afford to contribute more to your retirement plan or to an IRA, do so. You’ll be glad you did in later years.
 
3. Review your investments quarterly.
Resolve to review your investments regularly. Decide on investments to keep or sell, and rebalance your portfolio.
 
4. Set up an education plan.
If you have children or grandchildren, resolve to meet with your tax advisor and establish a tax-advantaged plan to fund their education.
 
5.
Keep better records.
One secret of good tax planning is good recordkeeping. Resolve to set up a simple system to maintain essential records.
 
6. Update your estate plan.
Resolve to update your estate plan this year. You’ll be surprised how quickly changes can occur. And remember that good estate planning includes more than just a will or living trust.
 
7. Let Your Tax Preparer Take You to Lunch.
Some time after April 15, let your tax preparer take you to lunch. Bring a copy of your return and review it line by line, discussing ideas for additional tax savings.

Please call our office if you have questions or if you would like to set up an after-tax-season lunch appointment!

2. Focus on Fraud:  Corporate & Identity Theft, Part 13 - Notes
 
Identity Crimes Escalating - Legislation is Lacking
 
Misappropriation of "business" identities is a developing extension of traditional "personal" identity theft, with some variations.
 
Although criminals will continue to figure out how to beat the system, effective legislation can certainly help to thwart them if it were enacted.
 
For example, Gramm-Leach-Bliley Act, the FTC Privacy Rule, the Safeguard Rule, and others do require information technology security compliances, but it does not secure people and processes and on their own will not safeguard personal information.
 
Most laws are reactive, not proactive, so they are hastily enacted and typically reflect lack of knowledge.
 
Many police departments to not take identity theft complaints.
 
Law enforcement being experts on crime are oftentimes presumed to be experts on identity theft crimes, which they are not.
 
Current reactive laws increase penalties and fines, although most research shows that that is not a deterrent.
 
California has taken lead in identity theft regulation:
 
Recent amendment to the Identity Theft and Assumption Deterrence Act penalizes insiders who use their employment positions to commit fraud or help others to commit fraud.
 
Not preventative, but it is a real beginning towards a real solution.
 
Part 14 - Notes...next week Legal Requirements for Businesses
3. Tech Tip Weekly:  Thinking About an External Hard Drive
 
In the old days, hard drives were large and couldn't fit into the computer case.  Many hard drives were external, out of necessity.  Then drives started getting compact, and storing them inside the computer case became the norm.  With the advent of FireWire and USB 2.0, drives are crawling back out of the computer case. External drives can be found on any computer retailer's shelves.  The price for an external drive ranges from $150 to $400, depending on its capacity.
 
The interest in external drives is driven by two primary reasons: easy backups and easy data transfer.
 
As the amount of data on a typical PC gets larger, the ease of doing backups -- even on CDs -- gets harder.  CDs can handle just over 600MB of data, but most hard drives are now at 40GB or more.  That's a lot of CDs to use for backup!
 
An easier and faster solution is to use an external hard drive, Plug it in -- normally via a USB or FireWire cable -- and Windows XP recognizes it as just another hard drive.  You can copy your files to the hard drive, unplug it, and store it in a safe place.  The process is much faster than using either a CD or DVD solutions.
 
Regarding data transfer, suppose that you work part time at an office and the rest of the time at a client's location -- or even at home.  If you work on the same projects in both places, synchronizing data between locations quickly becomes a big chore.
 
The solution is an external drive.  If you store your data on the external drive, you can take it with you and plug it into all the systems.  When you do, the data is immediately available and ready to use.
 
4.  Compliance Calendar
 
January 19
-Monthly depositors deposit Social Security, Medicare and withheld income tax for January 11, 12, and 13.
 
January 20
-Monthly depositors deposit Social Security, Medicare, and withheld income tax for January 14, 15, 16, and 17.
 
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