The Blog Of TL Wall Accounting

Archive for May, 2016

Buy New Or Go The Repair Route

It doesn’t take a business person to know that some purchases are pretty costly. When things start to go wrong and you don’t have a lot of money, you’re forced to make the best financial decision possible.

Even if you have a lot of money, you don’t want to go spending your money indiscriminately. Therefore, you need to have a set of guidelines to determine whether it’s time to purchase something new, something formerly owned or go for the repair option.

1. Accumulative cost of repairs

Sometimes a simple fix can take care of all your problems, so this is an easy decision. However, if you find yourself constantly putting money into repairing something, whether it’s new or not, and especially if it’s not under warranty, it might be time to consider buying new.

For instance, if you have a car that’s paid off but every time you take it to the shop you’re walking out upwards of $500 or less, and you’re going to the repair shop every 2 or 3 months, it might be time to buy a new vehicle. Sure, you’re going to have monthly payments but these days your warranty for most things lasts upwards of 10 years or 100,000 miles and you’ll have your vehicle paid off way before then.

2. Determination of what the issue might be

Computers are a dicey thing for the overwhelming majority of people. Even the simplest thing can cause a lot of grief and consternation because you’re unsure where the problems lie.

This is one of those times where getting a diagnostic might save you a lot of money, no matter the age of your computer. Depending on who you go to the costs range from $60 to $150 an hour. They’ll run your computer through a series of tests to figure out where the problems lie.

Truth be told, most of the time the cost of replacing something significant isn’t really that expensive on a computer and it’s possible that you’ll walk out with a computer that’s humming for less than the cost of a new computer.

The flip side is that it depends on the cost of your original computer. If you only paid $250 for one and it starts going faulty it’s cost prohibitive to try to repair it unless you can do the work yourself. If you paid anywhere around $700 or more, then a diagnostic could end up saving you a lot of money.

3. Age of your item

Strangely enough, these days it feels like a lot of things you buy have a short term life before they become obsolete. Think about many of the appliances in your house; if they’re older, don’t they seem to last longer than something you purchased a few years ago?

In the short run, calling someone to see if your item is repairable is the smart way to go, warranty or not. The downside is that the older your item is, the less likely there’s anyone who can repair it because finding old parts isn’t easy for a lot of things, and what you might get is a recommendation for someone to do a “fix” that they’ll say is as good as new. That never seems to work, so in this case the smarter thing to do is to buy new.

These are only a few ways of looking at cost effective ways to address your issues. Each situation is different, but there are always patterns that should help you make the proper decision.

States Will Garnish Your Federal Tax Refunds

One of my clients was ecstatic when he was informed that he’d be getting a nice tax refund. I was betting that he had already spent some of the money. Later on I ran into him at a networking function and found out that almost all of the refund had been absorbed by the state.

What happened is the client owed a sizable amount of tax from the previous year. He’d done the right thing and set up a payment arrangement with both the state and federal government, since he owed something to both of them. He’d been making regular monthly payments to both to offset the balance.

The bulk of the refund was coming from the federal government. The client knew that was going to happen but assumed that the rest would be coming his way.

Thus, he was surprised when he found out that one source of the state refund, which was coming from another state for work his wife had performed, had been garnisheed by New York state. Not only that but at the end of the same week, he received another letter saying that the state had put out a claim on the rest of his refund, to the extent that all he was going to receive back was around $40.

That’s a major blow when one is expecting more money, yet it’s a cautionary tale when it comes to paying on back taxes owed. Whereas the federal government doesn’t put out a garnish on state taxes, every state in the union files with the IRS to recover any outstanding funds owed to them before they make it to your bank.

What you need to know is that it doesn’t only go to taxes if requested. If there’s any other outstanding federal debt, your refund can be intercepted by them. States can also garnish refunds if there’s child support payments that are outstanding, and if you’ve been ordered to pay back any workers compensation you might have received from your state, and in some cases even student loan payments if you haven’t been paying them on a regular basis.

There is a caveat to intercepting refunds though. If you filed a joint return but filed separately, the spouse who doesn’t have an obligation can request their part of the refund without the states being allowed to take any of it.

As always, the government will make sure they get their money from you. If you’re independently employed, you can only help your case by making quarterly payments when you can. It also helps if you can make bigger payments instead of the bare minimum when setting up payment arrangements.

In any case, it’s good to know what could happen so you don’t get caught off guard when you don’t receive the refund you were expecting.