Taxes for the holidays?

“Attitudes are contagious. Are yours worth catching?”

- Dennis Mannering

I realize many of my clients have the holidays *on* the brain. And, even if they ARE able to focus this week … well, implementation of my advice would be short-lived. Advice on this topic doesn’t actually affect your daily life until 01/01/11 … so, I’m keeping my powder dry for a bit, until the right moment … and will pause on detailing all the tax implications for you, with a Note below instead that I think you’ll appreciate this week.

But just so you know…

In addition to keeping the current six tax rates that range from 10 percent to 35 percent, the bill contains a raft of other tax breaks for both individuals and businesses.

Most of the provisions relate to 2011, but these are some of the individual tax provisions that expired at the end of 2009 and were extended retroactively for the 2010 tax year:

* Alternative minimum tax (AMT) patch

* State and local sales tax deduction (itemizing required)

* Tuition and fees deduction

* Teachers et al write-off for $250 of out-of-pocket expenses

* Private mortgage insurance (PMI) deduction

* Direct donation of IRA money by older account holders

So all of that is good news for THIS year.

I’ll be back later, to give you my particular input on those upcoming tax breaks. Some of them are really pretty nice.

But now, in keeping with my mission to send you actionable items for THIS week … well, read on, and you tell me if this isn’t actionable?

Holiday Prayer

This was sent to me by a friend, and I thought it worth sharing … this holiday week, traveling can be chaotic, shopping even worse. Let’s all remember to keep our heads about us…

“God, help us remember that the jerk who cut us off in traffic last night is a single mother who worked nine hours that day and is rushing home to cook dinner, help with homework, do the laundry and spend a few precious moments with her children.

“Help us to remember that the pierced, tattooed, disinterested young man who can’t make change correctly is a worried 19-year-old college student, balancing his apprehension over final exams with his fear of not getting his student loans for next semester.

“Remind us, Lord, that the scary-looking bum, begging for money in the same spot every day (who really ought to get a job!) is a slave to addictions that we can only imagine in our worst nightmares …

“Help us to remember that the old couple walking annoyingly slow through the store aisles and blocking our shopping progress are savoring this moment, knowing that, based on the biopsy report she got back last week, this will be the last year that they go shopping together.

“Father, remind us each day that, of all the gifts you give us, the greatest gift is love. It is not enough to share that love with those we hold dear. Open our hearts not to just those who are close to us, but to all humanity. Let us be slow to judge and quick to forgive, show patience, empathy and love. ”

Amen.

Best to you. May your season be truly bright.

Strong words about giving

“People with many interests live, not only longest, but happiest.”

- George Matthew Allen

Whichever faith tradition you hold dear, it’s likely to have become extremely commoditized and “shopping-ified” (look, I’m an accountant–not a word smith) around this time of year.

And we all complain about it, reliably, loudly and regularly–yet there we are at JCPenney, stocking up on plastic toys and off-brand cologne, all to “celebrate” the holiday.

Now, far be it from me to decry the operation of a healthy economy, but may I make a humble suggestion? Regardless of your tax-deduction needs, consider making GIVING a large part of your holiday plans.

In fact, I was a bit provoked to write more about this topic by the comment of a neighbor, so read on for some strong words about *why* you should be giving, and doing it now…

Six Reasons You Should Be Giving To Non-Profits, NOW

I was at a holiday party recently, and as often is the case, when I tell someone my profession this time of year, I got cornered for tax tips.

That happens often, but what doesn’t happen often is when I mention giving to charity, my listener gets angry and provoked and launches into a diatribe about why charities are terrible investments, etc. etc., ad infinitum.

I was too interested in avoiding an argument with this gentleman, so instead of saying this, I thought it (later, of course). Here’s what I WOULD have said to the Angry Scrooge, six reasons why you should be giving money to charity, right now–regardless of the impact the money will create…

1. Tax Rate Leapfrogging.

You can bump yourself into a whole different (lower) tax rate, at times, by reducing your taxable income. That’s one to consult with us about, if you wonder if you’re on the fence.

2. Your heart changes.

Studies show (http://www.livescience.com/health/080320-happiness-money.html) that when individuals spend money on gifts for friends or charitable organizations, their happiness increases — while those who spend on themselves get no such boost. Even Scrooge can agree that everyone wins.

3. You can double your money without doing any work.

Instead of simply sending off your money, why not find out if anyone is offering to match? Sites like www.DonationDoubler.org have lists of companies that will match your charitable contribution. Find one you like and suddenly you contribution goes twice as far!

4. You’re just going to blow it on something dumb anyway.

As pious as you are, there’s still extra money in your budget somewhere. Create a budget for charity donations, then take some of your extra money (each month or each year) and donate it to charity. Use your spending money to make a difference instead of spending it on Brookstone junk you’ll use once. And if you think you don’t have enough, take that extra 2% you’ll be earning next year and put that toward a charity fund. For someone making $30,000, that’s about $500!

5. Face it: If you don’t help now, you never will.

Don’t pretend that instead of giving money, you’re going to donate time. When was the last time you volunteered at a soup kitchen? Don’t let your mind fall for this trick. Send the money now or you’ll end up giving nothing.

6. Be a leader, not a follower.

This is the biggie, in my opinion. There’s just something that happens in your psyche when you cut a big (or relatively big) check to someone in need, or to a charity organization. You feel more powerful–more dynamic. You signal to your own unconscious: “Money doesn’t rule me. I have more than enough, so much more than enough that I’m giving it away.” Then, of course, something special often happens: more money seems to find itself in your hands.

I’m not advocating a mystical pay-it-forward scheme; I’m simply making the observation over years of being a student of how money “works”. And, it just seems to find itself in the hands of those who give it away.

So–was any of this convincing? Did it help you see things in a new light? Let me know…

And remember– I’m in your corner!

Take a day off … and save money?

“Your big opportunity may be right where you are now.”

- Napoleon Hill

As I write this, Congress is still dawdling around with the politics of extending the current tax rates. They call it a “tax cut”…but really, it’s the avoidance of a tax *increase*. By the time you read this, it may have already been “resolved” … and I’ll give you fuller commentary once they’ve done SOMETHING.

Sheesh.

Moving on from taxes, this holiday season is probably busy for you (it is for us!) … and I’ve become increasingly aware that though I send you strategies, tips and whatnot every week — it can be a pain to pull them off in the evenings, when the demands of family and the necessity for down-time pulls at you.

So, I have a bit of a novel proposal for you in this week’s post. I believe it could help you in multiple ways–your bottom line, your taxes … and even your mental health!

Let me know what you think!

[Oh, and we have a couple spots left for clients who want to talk over last-minute tax moves to make in order to keep their 2010 taxes low. Call: 414-325-2040 to snag one of these final spots!]

Your Fiscal Sanity Day

It’s true: inactivity is costly.

You see, if you’re like most people, I bet that when you get your house insurance renewal notice, you quickly glance at the price — and renew it.  You renew it simply because you don’t have the time to search around for better prices.

In my experience, working with family finances for YEARS, I’ve learned that most people have a good sense of what needs to be done to improve their finances but they simply cannot find the time.

So here’s my proposed solution for you:  Take a day off work.

In fact, many financial tasks simply cannot be completed in the evening or on the weekend.  By taking a day off work, you can contact people who may only be available at regular business hours.

On top of the true bottom-line impact a day like this could create, there is, of course, the “mental health” aspect of it all. HR professionals often recommend taking a mental health day, from time to time–well, call this your “Fiscal Health” Day!

Possible tasks to consider accomplishing on your day off:

1. Dump your savings account with a puny interest rate and open a high yield savings account.

2. Get quotes for cheaper insurance: health, life, auto, house, and any other insurance. And you can even do a little calculating to determine how much you could save by changing your deductible.

3. Complete any important (but not obviously-pressing) financial tasks like making a will. Best done with a professional, by the way!

4. If you’re carrying credit card debt, call the companies and ask them to reduce your credit card interest rates. Believe it or not–they’ll often say yes! Take time to develop and formulate a good plan to get out of credit card debt.  Find or prepare a debt reduction plan.

5. Apply for a cash back debit card.

6. Get more organized with your finances by shopping around for and using a good personal finance software program.

7. Review your budget, get caught up on your budget, or learn how to budget.

8. Shop around for the best online broker.  Be sure you’re getting the best price for your stock trades.

9. Make energy efficient changes to your home and lifestyle.

10. Find a good second hand store to shop at instead of the local department store.

11. Set up automatic payments for your bills to be sure you avoid late payments.

12. Google It.  Use the phrase “how to save money”, and then fill in the blank “on groceries”, “on gasoline”, “on kitchen expenses”, “on babies” …

13. Sell stuff on Ebay. Look for junk lying around the house and list it on Ebay.

Undoubtedly, there are more things which can go on this list, if you’re industrious about it. But simply put, I’m hoping to give you “permission” to see your financial health in a similar light as you see your mental health.

And remember– I’m in your corner!

Love the Speed an Accuracy of Your Work!

One of the things that most impresses me about The Neal Group is that even though I am only in your office twice a year, your staff always remembers me and my twin grandchildren who are usually with me. THAT is great customer service! It makes me feel like an important customer.

Ann Lincoln

« Previous Entries