Accounting education

How would you like to be the primary financial coordinator for the wealthy families in your community? How would you like to be earning a healthy fee for this advice, a fee that goes far beyond completing tax returns? Does this sound too good to be true for small to midsized accounting?

In my last article, I discussed the above-the-line "education deduction" available for many individual taxpayers for qualified tuition and related expenses. Taxpayers eligible to take the education deduction often will also be eligible to take either the Hope Scholarship or Lifetime Learning Credits for the same expenses.

IRS ISSUES GUIDANCE FOR AUTOMATIC ROLLOVERS: The Internal Revenue Service has issued Notice 2005-5 providing guidance on the new automatic (or default) rollover rules for qualified retirement plans.

In his State of the Union address this week, President Bush pushed his plan to overhaul Social Security and add optional private accounts for younger workers, as the White House unveiled some new details of how that plan would work.

American Express Co. said that it will spin-off its American Express Financial Advisors unit to shareholders to focus on its credit cards, charge cards and travel services businesses.

Most chief executives of America's fastest-growing private companies say that they're likely to step down within the next 10 years, but almost half have put little to no thought into succession planning, according to a survey by PricewaterhouseCoopers.

Publisher John Wiley & Sons Inc., which publishes CPA Exam review books, has moved its test prep online via a partnership with Acadient, a Boston-based developer and distributor of online learning.

Life gets complicated for entrepreneurs who become franchisors, and many fail for lack of planning. They must exercise special care in forecasting revenues, which can take time to appear, much less mature. They must have a robust back-office infrastructure in place early on, with or without the revenue to support it. They must present audited financials to franchisees and follow detailed procedures in reporting to investors, if any.

There is an above-the-line deduction available for many individual taxpayers for qualified tuition and related expenses. The deductible expenses are defined in the same manner as they are for the purposes of the Hope Scholarship Credit and the Lifetime Learning Credit.

MOST TAX PROFESSIONALS ENTER PFP ARENA VIA BROKER/DEALER: The majority of tax professionals who enter the financial planning business do so by hooking up with an independent broker/dealer firm, according to a report by market research and consulting firm Tiburon Strategic Advisors.

Like a good grape harvest, 2004 was a vintage year for Certified Financial Planners, as the median earnings for CFPs across the country rose 56 percent, to $219,000, according to a survey conducted by the College of Financial Planning.Meanwhile, 54 percent of CFPs reported that their annual income is derived via a combination of fees and commissions, while 29 percent reported that their income was a result of fee-only planning services.The results were part of the College for Financial Planning's "2004 Survey of Trends in Financial Planning." The poll is conducted among holders of the CFP designation who also are members of the Financial Planning Association.But with added income also comes extra work: The majority of survey respondents reported that they drafted an average of 30 financial plans over the past year, compared to an average of 21 financial plans in 2003.

Tax-prep conglomerate H&R Block and the Association of Community Organizations for Reform Now have teamed up in a partnership to help boost awareness of the Earned Income Tax credit and to reduce filing costs for low-income taxpayers. Block and Acorn will canvass some 65 cities in a door-to-door joint education effort aimed at low-income filers who may be eligible for the EITC. The effort will also highlight the costs and speed factors associated with refund options, and also work to hasten the elimination of costly fees connected with refund anticipation loans. Ironically, the Block-Acorn alliance comes exactly one year after Acorn held rallies at Block offices protesting what they perceived were aggressive sales of the company's RALs, which they claim unfairly targeted lower-income taxpayers.

Many of the country's wealthiest individuals have not taken basic steps to protect their assets or mapped out an estate plan, according to a recent survey by wealth management firm PNC Advisors. The poll, which surveyed 792 affluent Americans, including 500 high-net-worth individuals found that 37 percent of those queried with $10 million or more in investable assets do not have a will, health care proxy or trust, and have not named a trustee or administrator for their estate. The PNC poll gauged attitudes about wealth among high-net-worth individuals, including concerns that their children will grow up spoiled, pressure to meet philanthropic obligations, anxiety over appropriate care for older parents, and uncertainty about future financial security. Fewer than half (46 percent) of respondents said that they have become happier as they have accumulated more money. Nearly one third (29 percent) of those respondents with more than $10 million in investable assets agreed that having a lot of money brings more problems than it solves, and 33 percent agreed that having enough money is a constant worry in their life. Half (49 percent) of those polled who have children at home worried that their kids will grow up feeling "entitled," and 44 percent believed that their children are spoiled. Just under one third -- 29 percent -- of respondents encouraged their children to take after-school jobs.

As part of its efforts to promote the Personal Financial Specialist designation, the American Institute of CPAs at its 2005 Personal Financial Planning Conference this week announced a new online financial planning resource targeted at CPA/financial planners and consumers seeking financial planning guidance.

Financial planning and tax prep firm Gilman + Ciocia, based here, has plans to expand in the Northeast, with the opening of three new offices slated for this month.

Practitioners who began adding tax planning services to their basic preparation several years back have found that it's a small step to branch out completely into year-round financial planning.

James Simpson, CPA and owner of Indianapolis-based Financial Technologies & Management, remembers all too well the continuing professional education classes of recent years.

Saving for college has become a cottage industry. There are now over 80 varieties of the Section 529 plan alone. The result is a complex maze of investment options, cost structures, tax benefits and financial aid implications. The federal government's attention to the complexities has some thinking that there might be significant changes on the way.The National Association of Securities Dealers is currently looking into the sales practices of some 20 brokers, questioning whether these brokers are actually presenting the plans that best suit each client's needs.

Hedge funds.Billionaire investor Warren Buffett thinks they're a fad, while fellow billionaire George Soros used them to strike it rich. Hedge funds are controversial, complex and often shrouded in mystery. And while they've long been a secret haven for the ultra-wealthy, mainstream investors are starting to take notice.

It's possible for transfers to a trust to be completed gifts for gift and estate tax purposes, even though that trust may still be treated as a grantor trust for income tax purposes, so that the income of the trust is taxable to the grantor even though retained in the trust or distributed to beneficiaries of the trust.