Author Archives: Kristina Tahnyak

(This is a guest post by David Bakke from Money Crashers Personal Finance)

As the end of the year draws closer, it is important that you and your partner set aside some time for financial planning. This can be difficult in the midst of all the holiday cheer, but it is definitely worth your while. 2013 could very well present a number of financial challenges, especially with all of the uncertainty in Washington at the moment. However, if you take the time to plan, you’ll be sure to weather any fiscal storm that may be brewing.

1. Have the Money Talk
Discussing finances with your partner can be difficult. Nevertheless, it’s an important step in maintaining a healthy financial picture and stop fighting about money with your spouse. Schedule some uninterrupted time to speak about the topic in depth. The particulars of your discussion are up to you, but some of the general topics to discuss include ways to reduce spending and planning for the future, whether it be retirement savings or setting up an emergency fund.

2. Jointly Pay Down Credit Card Debt
Paying down credit card debt is always a good idea, but you’ll struggle unless both you and your partner are committed. Set spending limits if you must, and make sure that you both know where you stand and how much debt you need to eliminate. Come up with a strategy to begin paying down these debts, with the ultimate goal of eventually ridding yourselves of them entirely.

3. Review Your Retirement Portfolio
If you’re currently not saving for retirement, now is the time to start. If you already have a portfolio set up, plan to review it at least once this year. Check to see how your investments are doing, and get rid of the ones that are under-performing. Make sure your portfolio has a healthy balance of stocks, bonds, cash, and international investments.

4. Create a Budget
Creating a budget is a great idea to keep costs in line – just make sure you both agree on it. You should both have equal input on how much you can afford to spend each month. Otherwise, you may end up with an argument and hurt feelings if there’s an overspending spouse.

5. Reduce and Organize Your Monthly Bills
Set aside a half-day or so and review all of your recent billing statements. Search for hidden fees, and contact your provider to get them eliminated. Research the competition for your cable, Internet, and cell phone needs to see if you can save money by switching, and consider bundling your services to potentially save even more. Check out your insurance and investment documents to make sure all beneficiary information is up to date, and consider implementing a filing system for your finances. This could help to make filing taxes next year much easier.

Final Thoughts
If you don’t have a solid plan to reach your financial goals, you’re sure to fall short. Therefore, record your goals in writing, and plan to review them a few times throughout the year. Make sure they’re realistic so that you don’t set yourself up for failure. Finally, reward yourself when you succeed to ensure that you stay motivated all year long.

What financial resolutions do you plan to achieve next year?

– David Bakke is a contributor for the blog, Money Crashers Personal Finance. After being married and then divorced, he now shares his insights on how couples can better manage their finances – and their relationship.

Photo by AngeloGonzallez

(This is a guest post by Greg Go from Wise Bread)

Even though the year is almost over, it’s not too late to take advantage of tax breaks for the current tax year. You have to act quickly, though. Some of the breaks are contingent upon you completing transactions before the end of the year.

Here are several tax breaks to consider before the year comes to an end.

Charitable Donations

One of the easiest tax breaks to get, if you itemize your deductions on Schedule A, is the deduction for charitable donations. You can take deductions for money donations that you make, and for goods that you donate to tax-exempt charitable causes. Now is a great time to make extra donations in order help others — while receiving your tax benefit.

No matter how you make your donations, though, you should get a receipt from the organization, even if it is a donation to your church congregation. That’s pretty easy when you donate money, but when you donate items, you need to estimate the market value (which is likely less than what you paid initially) and make sure that the items are in good condition. Ask for a receipt from the charity when you donate goods, as well as when you donate money.

Business Expenses

If you have out of pocket business expenses, you can deduct many of them, even if you work for someone else instead of having your own business.

If you pay out of pocket for expenses related to your work, such as a company cell phone or travel, and you aren’t reimbursed by your employer, you can deduct some of your costs, to the extent that they exceed 2% of your Adjusted Gross Income (AGI).

If you have expenses related to a home business, you can deduct those as well, offsetting your other income. So, if you have been thinking of buying a new computer or a new chair for your home office, do that now, before the end of the year, in order to get the deduction.

Retirement Account Contributions

You can boost your retirement account contributions if you haven’t already put in the maximum.

Your 401(k) contributions are tax-deductible (however, Roth 401(k) contributions are not tax-deductible), so adding to your account helps you boost your nest egg and can lower your tax bill. You have until the end of the year to make contributions that reduce your taxable income.

If you have an IRA, you actually have until April 15, 2013 to make contributions. As long as you are clear that you are making a previous year contribution, you have a little extra time. This can be helpful if you need an extra deduction later.

Sell Losing Stocks

You can sell your losing stocks and deduct your losses against your capital gains. On top of that, once you have offset your capital gains, you can apply any excess, up to $3,000, toward reducing other income. Finally, if you still have un-deducted losses, they can be carried forward to other years indefinitely. However, the “sell” transaction has to go through by December 31 if you want to count it on your taxes.

You do need to be careful, though. Make sure that you really want to sell your investments. The wash sale rule stipulates that you wait at least 30 days before buying the same stock back if you want to deduct your losses.

It’s also possible to sell your losing stocks, offset capital gains and/or other income, and then donate the money to charity — and then take that deduction, as well. You can also give appreciated investments to charity and deduct the full market value of the stocks, which means you avoid capital gains taxes, and get a nice charitable deduction, too.

Pre-Pay Some of Your Expenditures

If you have a deductible expense coming up earlier in the New Year, you can pre-pay it now, before the year ends, and take the deduction.

A good example is the interest on your mortgage. If the mortgage payment is due the first part of January, accelerate the timetable so that you make the payment before the end of the year, and you can deduct the mortgage interest on your 2012 tax return.

You can also pre-pay other itemized expenses. Consider bunching any costs that have an AGI threshold now, so that you can hit the limit, instead of waiting until after the first of the New Year. Common costs to consider are:

• medical costs;
• investment expenses;
• job hunt costs.

Move these expenses into the current year, rather than spreading them out. Together, these tactics can help you knock a little bit off your tax bill.

Review Your Eligibility for Credits

Don’t overlook any of the tax credits that might be available to you.

Tally up expenses for childcare, and for tuition and fees for a dependent. Go through what you have spent this past year, and compare it to allowed credits. Credits are especially valuable because they act like gift cards. They reduce your tax bill on a dollar for dollar basis, instead of reducing your income like a deduction does.

Additionally, remember that there are state tax credits for which you might also be eligible. Your state might have programs for renewable energy upgrades to your home, or other credits. When you double-check your eligibility for state income tax credits, you can save on your tax bill a little closer to home.

Bottom Line

It’s not too late to save on your tax bill. There are a number of opportunities available to reduce your income (deductions), or reduce your tax bill directly (credits). However, you need to act quickly in order to take advantage of these breaks before the year ends. Look through your finances and see whether there are some last minute changes you can make.

If you have questions about what you are eligible for, call your tax accountant today.

 – This is a guest post from Greg Go of Wise Bread, where you can find money saving advice like this list of 7 banks still offering free interest-bearing checking accounts.

Photo by cea