Tips

A third of major retailers’ revenue comes from the last 2 months of the year. So obviously the Holiday season gets people to spend way more than usual.

Let’s face it, there’s lots of pressure to buy gifts for lots of people. It seems once the buying starts, there’s more and more people you think of that you should buy a gift for. So we have 3 questions you should ask yourself before buying a gift for someone.

1. Why am I buying this? Are you buying someone a gift because you feel obligated to do so? Are they buying you something so you feel you have to buy them something? If you find yourself in this situation, go for thoughtful yet inexpensive. Most of the time people opt for expensive to overcompensate for not being very thoughtful. If you pay attention and listen to the person, you can probably come up with something that will mean a lot to them and not do too much damage to your budget.
2. Will I regret this? When we have people in our lives that we truly love and want to make happy, it’s easy to overdo it. But if you’ve only set aside $500 for gifts and you buy your spouse a $600 iPad, you may make them smile and happy in the moment but when they realize that in January you don’t have enough money for the things that are actually inline with your financial goals, he or she may not be that happy.
3. Is the gift something they want? Sure the basket of nice smelling soaps is “nice,” but more than likely it will go in that drawer in the cabinet. Not the nice drawer either, the one that’s in the plastic storage bin inside of the cabinet under the sink. And more than likely you’ll see all that soap there in the same place when next year’s Holiday comes along. And here, you blew it on two accounts: one, you wasted money and two, you failed to buy something that your spouse would actually use and enjoy. This is usually a case of buying something to buy something.

Rethink gift giving. Save money and be more thoughtful. It’s a win for everyone.

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If you sold your home this year for a profit, it may not be taxable income!

In most cases, if your home has been your primary residence 2 out of the 5 years you’ve owned it, you may not have to report it as income. Usually, you don’t have to report up to $500,000 dollars for joint returns—$250,000 for individuals.

If you received a 1099s, you’ll need to report the sell of your home as income however. But generally, the sell of your primary residence can be excluded.

If your have more than one home and sold a secondary home, you’ll need to report it as taxable income under a Proceeds From Real Estate Transactions, form 1099s.

While purchasing and selling real estate is viewed as investing, selling your primary home is not considered under a new tax law in 2013 called the Net Investment Income Tax.

One thing to consider though is that if you bought a home using the First-time Homebuyer Credit, you are more than likely not eligible for excluding the income from your taxable income.

Unfortunately, if you sold your home at a loss, you’re not able to claim the loss as a deduction.

Selling your home is a significant event; make sure you talk to us about the sell of your home so we can make sure you qualify for every advantage possible as well as making sure you meet all of your legal obligations.

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Deduct the money you put towards a Health Savings Account!

Contributions you make to a Health Savings Plan are deductible and the withdrawals you make from it are tax free when you use the money towards medical expenses.

If you are over 65, and you make a withdrawal to pay for something that is non-medical related, An HSA (Health Savings Account) works much like an IRA.

There are some eligibility requirements such as you have to have a high deductible plan and you cannot be enrolled in Medicare. Your minimum deductible to be eligible must be at least $2500 for joint filers or $1250 for individuals.

HSAs are also just ideal for people with high deductibles so it may be something to seriously consider with all of its tax advantages as well. Talk to us about what’s right for you. Everyone’s tax, financial and health insurance situation is different.

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Sure you’ve got an idea of what you’re gonna spend on Holiday gifts but what about all the costs that sneak up on you?

Have you ever found yourself saying, “I only spent x amount of dollars on gifts; where did all of my money go?” If so, there lots of places throughout the Holidays you get “twenty-dollared to death.” Here’s a look at some of the most common leaks in your Holiday budget.

1. Shipping
Sometimes you can’t avoid this so start and ship early so you only have to pay for standard shipping. Planning for gifts you know that will need to be shipped is the most solid way to prepare. Think about what you’re sending and to where then calculate the costs when budgeting for the Holiday season.

2. Food
Think about how much extra food you buy throughout the Holidays. You usually buy more food and more treats and go to more parties and socials than normal. If you’re budgeting $800 a month for food, it’s safe to say that bumping that up to $1100 or $1200 or so for Thanksgiving through the New Year would not hurt.

3. Stockings
Stockings are the leading culprit of twenty-dollaring your Holiday budget to death. It always takes more than you think to fill those huge “socks” that are about 10 times larger than what anyone would ever wear. Candy, trinkets and toys add up to a lot. That should all be planned out in your Holiday budget.

The better you budget and plan for the Holidays, the more you can do for others and give the type of Holiday to your loved ones that you’d love to give. You should be planning and budgeting for gift-giving and Holiday expenses all year so you don’t have to go into debt and spend the first 3 months of the new year with things being “tight“.

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Looking for ways to ensure there’s some extra money at the end of every month? Cut out these 4 expenses.

Just because affordable is in front of affordable luxury, it doesn’t mean you should afford it. There are lots of big ticket luxuries that we’d love to indulge ourselves in but we responsibly deny ourselves on a regular basis only to make those big ticket purchases when it is most wise. But as a reward for saying no, we often fall prey to making “affordable” luxury purchases.

Here are a 4 luxuries that are costing you thousands of dollars:

1. The 5-Dollar Daily Coffee
It’s no surprise to see this on this list. But remember a time when if you wanted coffee before work, you just made it yourself? Or went to a diner and was completely happy with cup of .79 cents coffee? While lattes are delish, they can be a steady leak in your monthly budget.

2. Premium Cable
Cable companies know what they are doing. They always seem to have that one channel that has that one show or sporting event that you just have to have and that coaxes you into signing up for a couple hundred channels that are worthless to you. A lot of times premium cable can triple your bill. Some households are paying up to $250 per month in cable. Before making sure you get to see that one show to avoid spoilers, think about what you are giving up for it. What else could you do with an extra $100 a month? What would that hundred dollars look like invested in solid growth mutual fund?

3. Express Shipping
Sure it’s a modern marvel that you can be in North Carolina and with a touch of a button have a new gadget delivered from Seattle the next day. But does it really make a difference if you have it tomorrow or next week? You’ll be just as excited, if not more, when it comes in.

4. The Unused Gym Membership
You want to go to the gym. You have really great intentions about going. And you say you are going to go someday. But you’re afraid that if you cancel it, you’ll be admitting failure...that you gave up and you’ll never go back. Well if you’re paying for it and not going, you’re failing at responsibly managing your budget. Try establishing a workout at home and when you’ve proven to yourself that you can manage getting the full value of a gym membership, go ahead and go back. But for now, go ahead and cancel it.

We’re pros at helping people identify ways to save and manage money. We’re here to help. Everyone has a unique situation and it’s always best to get advice from a professional that understands where you are financially.

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Grandparents can help with college and lower taxable income.

A grandparent helping their grandchild pay for college can be a win all around. When a grandparent that contributes to a 529 savings plan, it lowers assets within the grandparent’s estate. This helps lowering estate tax.

Another great thing about a grandparent who owns a 529 college savings plan is that the account isn’t taken into consideration when the grandchild is applying for financial aid.

Grandparents and other taxpayers can contribute $70,000 at one time to a Section 529 college savings plan. It should be noted that $14k is the annual gift deduction amount and the $70k accounts for what would be spread out over five years and in this case can be made at once. A married couple can contribute up to double that amount to a grandchild’s 529 plan account by “splitting” the gift.

We’re always happy to help you set up a 529 or provide any other service that helps you meet your goals for saving for college. Everyone has a unique situation and it’s always best to get advice from a professional that understands where you are financially.

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Travel expenses for charity help lower your taxes.

The IRS allows you to deduct your expenses when traveling for a charity cause. However there are a few criteria that you need to meet to be able to qualify for the deduction.

• The charity work that you are doing has to be the primary purpose of your trip. You can’t take a “vacation” and do a little charity and say it was an out-of-pocket expense for a charity. But you are allowed to enjoy yourself on the trip however.
• Maybe you are a doctor and performing the duties of a doctor as a part of your charitable contribution however, you cannot claim the value of the service as a deduction. Your expenses on the other hand are eligible for deduction.
• The organization you are volunteering for also much maintain a tax-exempt status with the IRS. So make sure you ask before you claim the deduction.
• As for what qualifies as a deduction, check out the following: transportation costs (airfare, taxis, ferries etc.), lodging and meals.

If you have any questions about what qualifies for the deduction, we’re happy to help. Everyone has a unique situation and it’s always best to get advice from a professional that understands where you are financially.

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So your friend was in a pinch and you thought they’d be good for it and they weren’t. It’s not all bad; you can lower your taxable income as a result.

Maybe you loaned money to a friend to help with a struggling situation. But now it’s beginning to look like you are never getting paid back.

Good ol’ Uncle Sam is there to help you take the sting out of never seeing that money again. As long as the debt has zero value, you may qualify for a deduction up to $3000.

This is different than an investment. This type of loan is considered a “non-business” bad debt. Non-business bad debt is considered a short-term capital loss. You don’t have to wait until the payment is due to consider it worthless; you just have to be able to prove that there is a qualifying reason that it won’t be repaid. Also, you must claim the deduction in the year that it becomes worthless.

If you need help understanding whether or not you qualify for the deduction, we’ll be happy to help. Everyone has a unique situation and it’s always best to get advice from a professional that understands where you are financially.

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Many businesses regularly overlook 3 common mistakes that wind up costing them dearly and obstructing their path to a successful venture.

A lot of business owners go into business because they are good at making widgets or good at providing a service. New business owners quickly find out that managing financial operations is quite a monumental task. It’s common for business owners to encounter the following pitfalls:

Neglecting To Clearly Identify Desired Results

Zig Ziglar once said, “If you aim at nothing, you will hit it every time.” A lot of business owners make it a “goal” to just have more money coming in than going out. It’s much more beneficial to specify exactly what you want to achieve in your business so you can plan finances appropriately. Money is the number one thing that holds businesses back from achieving desired results. But if you plan for it and work through it with a trusted professional advisor, the sky's the limit for your business.

Incorrectly Forecasting Costs

There are always unexpected costs that come up. Maybe a competitor launched a campaign that’s taking away market share and you need to respond to stay competitive. Or maybe insurance didn’t cover as much of accident as you thought it would. These things come up. We’ve been advising businesses for years and can help you identify those costs that can blindside you and wreck your budget.

Unsuccessfully Adjusting

Every month you should make it a point to evaluate what you’ve spent so far and what’s changed about your financial landscape. Remember, while a plan is practical and wise, you were also making plans based on older knowledge and circumstances. Things change quickly in this economy and it’s imperative you adjust to stay on track.

We’re always here to offer advice on preparing a budget and helping you make real-time assessments while you are living out said budget. Everyone has a unique situation and it’s always best to get advice from a professional that understands where you are financially.

How does the government shutdown impact the IRS?

The 16-day government shutdown came at a pivotal time for the IRS as they were prepping their complex systems for the 2014 tax season. Only 10% of IRS were open during the government shutdown. This put the IRS behind by almost 3 weeks.

The tax date that taxpayers could start filing was January the 21st. Now with the delay, the IRS will not be accepting returns until at least January 28th–however no later than February 4th. The IRS will be confirming the dates sometime in December.

IRS systems are highly complex as they need to be altered every year to accommodate new tax laws. This requires an enormous effort from a programming and quality assurance perspective. The IRS had also increased the workload as they were stepping up measures to better identify fraud and inaccuracies.

We’re always up to date on what is going on with the IRS and how the shutdown has impacted new tax laws and the tax season timeline. We’re always happy to help you navigate your tax situation by planning and preparing you for the 2014 tax season.

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