Tax Moves to Make Before the End of 2009
December 4, 2009
Why do people give so many charitable gifts in December? The holiday spirit may not be the only thing inspiring people to give to the less fortunate this month, it may also have something to do with lowering your 2009 tax bill. If it’s taxes you’re worried about, there are a few other moves you can make after you’ve done your charitable giving. Ashlea Ebeling of Forbes has a whole list of things you can do to lower your 2009 tax bill before year’s end, we’ll mention just a few of them here:
- Fund those retirement savings accounts. As the article above points out, you can fund your 2009 retirement accounts up until April of 2010, but if you have an employer who will match your investment it’s likely they’d like to know before the end of the year what amount they’ll be matching. If you’re self employed you’re on a tighter schedule because the deadline for setting up a solo 401(k) is December 31.
- If have plans to receive any expensive medical procedures in the near future that won’t be covered by your insurance, you may want to consider having them done before January 1st. Unreimbursed medical expenses that exceed 7.5% of your adjusted gross income are deductable.
- If you’re in the market for a new home, the homebuyer credit has been extended from November 30th to May 1st 2010. This credit used to be only for newcomers to the real estate market, but is now available for both new homebuyers and longtime homeowners looking to purchase a new home.
- A different—but related—course of action is making upgrades to the home you already own. Certain energy efficient improvements to your home can also get you a credit on your taxes… if you get the improvements done before the end of the year.
- One more way you may save money on your taxes this year that you won’t find mentioned in the Forbes article is to create an estate plan. To the extent that the legal planning services cover tax advice or regard income producing property, a portion of the professional fees that you invest in establishing your plan may be deductible from your federal income taxes (providing that your itemized expenses exceed 7.5% of your adjusted gross income).
All of these are good ways to save money on your 2009 taxes, but action needs to be taken before the end of the year. That gives you only… 27 days left to take action!
Keeping Financial Stability After the Loss of Your Spouse
October 11, 2009
Losing a spouse is one of the most difficult experiences life has to offer. Even continuing to take one day at a time seems almost impossible when you’ve lost your partner, your mate, the love of your life. Many people who have lost a spouse describe feeling as though the rug has been pulled out from under their feet; they feel like a child again, having to re-learn how to interact in the world without their other half.
The emotional loss is only part of this confusion, especially if—like most partnerships—you and your spouse ran your household and finances with a division of labor, each partner taking on the responsibilities that they most enjoyed and were most suited to perform… this includes the financial responsibility. The emotional impact of losing a spouse is hard enough, but in today’s complex financial world what do you do if the spouse you’ve lost was the family “Chied Financial Officer” ?
The first and most important step, according to this article from the Chicago Tribune, is organization. Knowing what your bank balance is, what your expenses are, and where important documents are located is absolutely key to getting through the rough patches. The second step—and this one may be the hardest—is taking stock of your new financial situation and adjusting your lifestyle and spending. Losing a portion of your family’s income is a shock, and people often go through the motions of their previous lives because they simply can’t yet face the reality of their loss. In addition, death comes with its own set of expenses which can make a substantial dent in your savings.
If you feel you just don’t have the strength or focus to deal with financial issues immediately following the death of your spouse, ask someone to help you temporarily. Eventually, when the grieving process has run its course, you will surface again; and when that happens you don’t want to find that the life you knew has been buried under debt.
A Guide to Taking Care of the Details After the Death of a Loved One
September 21, 2009
“The death of a loved one imposes cruel demands on the closest survivors.” The truth of that statement from this article in moneywatch.com is known to anybody who has lost a close friend or family member. We’ve written a lot on our blog about going through the probate process when a loved one dies, but probate isn’t the only thing you have to think about; in fact, it may not even be the first thing you should think about. At a time when you are bombarded by as many emotional demands as you are mundane demands, how can you know what to do first?
The article mentioned above contains a helpful guide for those who are dealing with loss. It includes well-known items such as “contact close friends and family” and “make funeral arrangements” as well as items that may not come to mind as naturally, such as “write an obituary” and “contact the deceased’s employer.” Few people think about these things when under emotional strain, which is why this list is an excellent resource to file away for a time when it may be needed.
If you are having a particularly hard time with the grieving process don’t be afraid to ask others to help with the more difficult items, or to hand the list over entirely to someone else. This is when your own probate or estate planning attorney (or the deceased’s attorney, if they had one) can be especially helpful.
Although it sometimes feels as if time should stand still when someone we love passes away, life does go on, for better or worse. But the world is full of caring and knowledgeable people to help you through the process… if you only know where to look.
Finances Are A Family Affair
August 20, 2009
We’ve all been learning a lot more lately about economics and investment practices than we ever thought we would… but do these lessons from the global economy transfer to the family circle?
Studies have shown that most families have one person who takes care of all the finances: paying the bills, setting aside money for investment and savings, planning the family budget, etc. This may be convenient in the short term, but it can create long term problems. If both partners aren’t aware of the family budget and financial status there can be a tremendous disconnect in spending habits, leading to resentment and often a slow decline into debt. Furthermore, what happens to the family finances if the “accountant spouse” dies or becomes incapacitated? The surviving spouse often has no idea what the family financial status is, or even where accounts or investments are located and how to access that money. The best solution is for couples to talk about their finances often, or take turns being the family CFO.
Even children benefit from a certain amount of involvement in the family financial planning. Having a regular allowance or earning pocket money for chores not only teaches kids about money management, but also helps them understand when they have to wait to get that new video game, or when the family may have to cut back on certain luxuries. Including children in certain financial decisions, such as which charities to support or how to spend surplus cash, teaches them accountability, and that the choices they make can have a lasting impact.
Many of us look upon our finances with dread; but it doesn’t have to be that way. Skill with money matters can bring us just as much pride and joy as skill with a paintbrush, tennis racquet, or any other skill that must be acquired with practice and hard work. With a little education, and the involvement of the entire family, we can all become the masters of our own financial futures.
“Second Childishness and Mere Oblivion”
July 30, 2009
Shakespeare wrote about the seven ages of man, in which he describes the human journey from helpless child to adult and back to helpless child again:
“…Infant, schoolboy, lover, soldier, justice, pantaloon, and second childhood, ‘sans teeth, sans eyes, sans taste, sans everything’”.
Anyone who has had to watch as their parents age knows how true this passage can be. And just as difficult as watching your parents age can be talking to them about it. No parent wants to show weakness in front of their child, or admit that they need help; and often their reluctance to talk is fueled by the fear that they’ll be “put away”, or have their freedom and independence taken from them. Adult children are reluctant to bring up the subject as well—they’re afraid of angering their parent, or sometimes their afraid of having their worst fears confirmed.
But ignoring the subject won’t make it go away, and waiting too long can be disastrous. The best way to talk to your parents about aging is to bring it up early, before fear and obstinance have set in. Having these discussions ahead of time prepares both parent and child for what may lie ahead, insures everybody is on the same page and that there are no surprises in store.
However, even with advance discussions and planning, it is likely that a few uncomfortable subjects will still come up. This article from Reader’s Digest has some advice on how to broach these difficult subjects (including the subject of estate planning), and even provides a few scripts to help get the conversation started. If you’re still uncomfortable, having a third party mediator can be helpful; a trusted doctor—or even your estate planning or elder law attorney—can be a calm voice of reason in deep emotional waters.
Talking Taxes Now Brings Big Savings Next April
July 29, 2009
Everyone knows that March and April are tax season, when everybody scrambles to get their taxes done, mailed off, and out of mind for the rest of the year; but according to this article from Reuters the taxes you pay in April can be significantly lower if you take the time to think about them now.
Author Linda Stern recommends mid-year as the best time to start thinking about your taxes because it gives you plenty of time to take advantage of various planning strategies and tax breaks, many of which she outlines in her article. Stern also points out that scheduling an appointment with your accountant in July—when accountants are not nearly as busy as March or April—means you’ll have more one-on-one time to strategize and discuss your financial situation.
Stern’s article is full of good advice and suggestions for saving on your taxes this year, but she forgets one important strategy: Creating your estate plan. Talking to a lawyer about your estate plan not only helps in understanding and organizing your finances, and protecting your assets for the future; but the money you spend in creating an estate plan can be tax deductable. Talk to your lawyer and accountant now about how you can protect—and save—your money in the future.
Not All Healthcare Directives Are Created Equal
July 23, 2009
Google is getting into the healthcare industry. Google recently made it possible for individuals to store their healthcare records online through their Google Health Records Management Service, a move that has met with mixed reviews. Even more recently, Google Health has started offering another, similar, service: storage of your “end-of-life wishes” along with your healthcare records in their online database.
At first glance, this may seem like a great idea; what could be better than having your healthcare records and your end-of-life wishes stored in one easily accessible place? And Google does their best to make it easy for you to create an advanced directive with them as well. The problem is, not all advanced directives are created equal.
As important as it is to have an advanced healthcare directive, and to specify your wishes for your healthcare agent and your end-of-life care, it is just as important to do it the right way. First of all, each state has its own rules and regulations regarding the legality of your healthcare directive. Secondly, those laws have a tendency to change periodically, and if you aren’t going to be able to keep abreast of these changes you need to have an attorney who will. And last but not least, hospitals take their responsibility regarding patient privacy, the wishes of the patient, and the wishes of the family very seriously. Hospitals will often not talk to your agent or release information about your healthcare status unless you have a directive that complies with all the laws of your state AND you have a signed and updated HIPAA Authorization.
Before jumping on the “great deal” Google offers, talk to your attorney about your own healthcare directive and HIPAA Authorization. If you are determined to take advantage of the opportunity to put all of your healthcare documents online, rather than using Google’s “easy” forms, it might be a better idea to upload your own professionally created documents.
Internet Tools to Improve Your Personal Finances
June 9, 2009
The realm of personal finance is in the midst of being revolutionized. The crash on Wall Street has made many armchair investors mistrustful of professional financial advice, and many people are now taking the time to manage their own personal finances with the focus shifted from investing and earning to budgeting and saving. The problem is that after all the effort people put into learning how to spend and play the market from their laptops, many now don’t know how to budget and save responsibly.
This is where the revolution begins.
A recent article in The Wall Street Journal has collected some of the best websites on the internet to help you keep track of and plan your finances. These online tools run the gamut of personal finance categories; from budgeting your household expenses to creating a financial plan to managing personal loans between friends and family. And these aren’t just educational resources, these are interactive tools to help you implement the processes you prefer—and many of these tools are free.
We hope our readers will find these resources helpful, but if you are one of those who would still like the advice and services of a professional financial planner but aren’t sure who to call, please contact our office. We would be happy to recommend one who would fit your family’s needs.
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