Money Talks, LLC
Susan Hammitt
 AFC, CDFA, Mediator, Financial Life Planner
August 2012


In This Issue:


Personal Financial Sustainability: Accumulate and Allocate


Highlights: 2012 IRS Tax Forum


Business of Marriage


Money Talks - We listen


Money Talks, LLC


Susan Hammitt

AFC, CDFA, Mediator,

Life Planning Specialist


511 SW 10th Ave.

Suite 805

Portland, OR  97205


Phone: 503-233-8142


Email: Money Talks



Financial Life Planning 



Divorce Mediation



I recently had the opportunity to focus on the concept of prosperity. It's interesting to consider how how we experience prosperity.

For me prosperity must include balance between financial well being, the use of my time and energy, and the quality of the society in which I live. 

Surveying about 100 people of various ages and financial situations I was surprised to find more than 1/2 of my small sampling define prosperity more narrowly.  

Having the opportunity to consider the meaning of prosperity helped tune my sensibilities about how much is enough and gratitude for the prosperous life I enjoy.

Share the conversation with friends and family and see where it takes you.

Susan Hammitt
Money Talks, LLC







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Personal Financial Sustainability 


One of the most popular strategies in Personal Financial Sustainability is Accumulate and Allocate.  Getting out of debt is certainly a priority for most American households and small businesses. Debt reduction plans may be very effective - however they do not always address the underlying problem of recidivism. Paying off debt without building reserves, contributing to retirement savings, and making fundamental purchases, creates high risk of repeating the same cycle. 


Instead plan to Accumulate savings for three months to a year and then thoughtfully and intentionally Allocate an appropriate amount to debt reduction.  Yes, it does mean that more interest will be paid on the debt.  However, the process is an excellent value for building a strong, balanced financial profile and breaking the pattern of recidivism.

Make a Plan That Works For You!

TaxHighlights: 2012 IRS Tax Forum
Here are some highlights from the IRS Tax Forum I attended last week:


The IRS has determined that victims of physical, mental, and financial abuse may qualify for relief from taxes, interest, and penalties resulting in connection with the abuse. Dispensations are made on a case by case basis and take many months to resolve. Elder and spousal abuse are the most frequently identified cases.


A couple of years ago the opportunity to payback Social Security benefits and begin drawing based on a later retirement age was circulated. The rules have changed. The payback is now restricted to one year of benefit.

Capital Gains taxes are scheduled to increase in tax year 2013.   

Mortgage Debt Forgiveness expires at the end of 2012.  Go to IRS Mortgage Debt Forgiveness Facts. for 10 Key Points.  This is "Must Know" information for anyone facing foreclosure or short sale of a primary residence.

Medicare taxes will increase for high income households beginning tax year 2013: an additional 0.9% Medicare tax on wages over $200,000 for individuals and $250,000 for married couples filing jointly and the new law adds a 3.8% tax on high investment income earners, including interest, dividends, and other investment income.

There have been changes to Forms E and D, requiring additional information including the basis for investments.

W2's will now report employer cost for medical benefits.This will not affect taxable income, or the tax reporting for employers.

Identity Theft is a significant and growing problem.The IRS has added a layer of protection for tax payers who have been victims of ID Theft. The cases they are most concerned with are related to taxpayers whose social security number has been used in tax related fraud. However, victims of ID theft can notify the IRS and add security to their account as appropriate.

Focus on 1099 contract services: Rules for treatment of 1099 contractors versus W2 employees continue unchanged. However, use of 1099 status is more likely to trigger an audit for small businesses as communication between the IRS and State governments increases though the use of technology. There are stiff penalties for misclassification.

When 1099 contractors try to collect unemployment or worker comp benefits the cases are flagged by the State and may be reported to the IRS.  California has passed state legislation with significant penalties to employers who misclassify employees as 1099 contractors. Any notice regarding the classification of a contract employee should be taken seriously, with immediate advice from a Tax Professional.

Every 1099 contractor must have a contract/agreement for services, perform duties largely independent of management, and have revenues from other "unrelated" sources.

Rental property depreciation is not discretionary. Tax payers who fail to include depreciation may not have the opportunity to reclaim the unused tax benefits at the time of sale. For tax purposes the basis will be calculated using the mandatory depreciation for rental properties, regardless of the taxpayers reporting in prior years. The end result is much higher exposure to taxable gains.

Estate tax legislation is due to expire on December 31st and revert to a 55% inheritance tax on estates greater in value than $1,000,000. For high net worth tax payers there remains many optional tax strategies. Gift and estate taxes are closely related/integrated. I strongly recommend seeking professional tax advice as part of substantial gifting and estate planning.

 BusinessThe Business of Marriage

In response to cultural, economic, and technological advances - marriage and life partnerships are changing.  Observing relationships at the beginning, during, and end of marriages provides interesting perspective supported by statistical evidence.

While we all enjoy romantic notions of unselfish love - the preponderance of love stories and fairytales end as marriage begins.  Marriage extends beyond the wedding day and more than of all marriages end in divorce.  Dysfunctional and failing marriages often failed to establish a strong plan for the Business of Marriage.

Technology has changed the texture of relationships.  Now, thanks to online banking and investment services, and social media there is far more visible access to financial and personal information. The implications stretch far beyond the scope of my professional work.  Instead, I focus on the Business of Marriage and the rights and responsibilities of both partners to be well informed and actively engaged in planning and management.

In all business partnerships the Executive Partner in Charge of Finances is likely to have more talent and interest in managing money. However, it remains the responsibility of the other Executive Partner to be well informed and to develop enough skill and knowledge to participate in planning and management. Active participation is the right and the responsibility of both partners.

Too often, during divorce mediation I hear one partner reflect on the overwhelming financial responsibility they shouldered (alone) on behalf of the marriage.  It's also common for the other partner to feel uninformed and suspicious of financial information presented at the time of divorce.  As a financial counselor I wonder how much different it might have been had they fortified their Business of Marriage - sharing rights and responsibilities implied in any partnership: updating their business plan regularly. Refreshing the plan in response to cultural, economic, technological, and personal changes is something every business must do in order to survive and prosper.

The Business of Marriage, like a musical instrument, requires occasional tuning in order to produce the most beautiful melody.

 Make a Plan for the Business of Marriage!