What's Your New Years Tax Resolution?

12 Simple Tax Savings Tips for 2009

Reducing your tax bill is much simpler than you may think. When it comes to shelling out your hard earned cash to Uncle Sam, there are easy things to do that will enable you to save money on your taxes and in many cases will even give you a return on your investment. You might also be thinking now that December 31st has come and gone and you’ve lost any further chance for a 2008 tax savings, but that simply isn’t true. Here are 12 straightforward tips to save money on your 2008 taxes and plan for 2009.

1. Contribute to your 401K retirement fund. Most employers offer a 401K program and in many cases will match your contributions throughout the year. This offers a wonderful way to save for retirement. The added benefit is that whatever is paid to your 401K is deducted from your gross pay prior to taxes thus reducing the overall income tax you pay.

{SIDEBAR} The 401K Match Game: Keep in mind that you will have a maximum allowable per year for what you can set aside but this does not include any employer matches. Most employers who offer a 401K program will offer some type of equivalent, for instance 25 to 50 cents for each dollar you contribute. No matter what the amount is, if an employer pitches into you’re plan then you’ve just added to your annual investment!

2. Make a Catch Up Contribution. If you’re 50 or older, make a catch-up payment to your employer-sponsored retirement account. The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) created this provision so that older individuals would be able to set aside enough savings for retirement. Just like a regular retirement account, any amount you pay in is pulled from your pre-tax gross income meaning you pay less income tax.

3. Make a charitable donation. Americans are generous. In 2007 alone, we gave an estimated $300 billion to charitable organizations. It feels good to give but it's also nice to see your donations pay off as a tax deduction too. Clean out your closets or garage and take your unwanted items to Goodwill, The Salvation Army or another charitable organization. Just make sure you get a receipt. Gifts to charity, whether they are cash, goods or services, are all deductible.

{SIDEBAR} Qualified Charitable Organizations: If you donate money or property to a "qualified organization" (see list below for examples) your donation can be deducted, but beware that there are limits and if you don’t itemize using Schedule A on form 1040, you cannot claim your charitable contributions. Here are some types of organizations that can qualify you for a tax deduction:

•Churches, synagogues, temples, mosques and other religious organizations.
• Federal, state and local governments, if your contribution is used for public purposes.
• Nonprofit schools and hospitals.
• Public parks and recreation facilities.
• Salvation Army, Red Cross, CARE, Goodwill, United Way, Boy and Girl Scouts, etc.
• War veterans' groups.

4. Participate in a flexible spending plan or FSA. An FSA will allow you to set aside a portion of your earnings to pay for qualified expenses. Money deducted from your salary into an FSA is not subject to payroll taxes and therefore results in a substantial tax savings on your pay check. Whether you pay for child care, have out-of-pocket medical expenses such as co-pays, over-the-counter medicines, medical equipment or other items, you can most likely submit your receipts to your flexible spending account. Beware though when you’re deciding on how much to contribute, keep in mind there are usually limits and that if you do not use it by the end of the year you may lose it.

5. Make energy efficient home improvements. Thanks to the Energy Policy Act of 2005, Uncle Sam is now encouraging taxpayers to invest in home improvements that make our homes more energy efficient. By using systems that include energy resources such as solar, a one-time tax credit can be applied to improvements made on your primary residence (not rental property). If you’re building a new home, ask your builder to seek the tax credit for making it a high-performance home. It's a "win-win" situation when you can save on your taxes as well as your energy bills and let’s not forget you’ll be helping the environment too.

6. Deduct expenses for your home business. When you use part of your home for business, you may be able to deduct expenses for what the IRS calls the "business use of your home." If you meet the requirements, you should be able to claim a percentage of many of the costs of running your home, for example utilities, rent, insurance, depreciation, mortgage interest, real estate taxes, and some casualty losses, repairs, and improvements (if they relate to the part of the house you use for business). The great news is that home office deduction is available to renters and homeowners alike.

{Sidebar} What Qualifies As a Home Office? Your home office must be a place that is used exclusively and regularly for your trade or business. If you use your garage to do mechanical repairs or a greenhouse near your home to grow plants for sale these would qualify as home offices.

7. Itemize your deductions. It can pay to itemize your deductions instead of taking the standard ones allowed by the IRS. For instance, using a Form 1040 Schedule A, you can claim medical and dental expenses, mortgage interest, charitable and employee expenses not paid for by an employer. The object is to have your total itemized deductions greater than the applicable standard ones; this lends itself to having a lower taxable income.

8. Contribute to an Individual Retirement Account (IRA). When it comes to Individual Retirement Accounts (IRA’s), you have several choices. All offer some tax savings. The general IRA deduction limit is $5,000 and there is an additional $1,000 for filers over 50. Be sure to keep in mind that when it comes to IRA’s, whatever you put in will not be a direct tax write off but rather will result in giving you a lower adjusted gross income. The less taxable income you have, the smaller the check you have to send to the IRS; this coupled with saving for your retirement is another “win- win” situation. An added benefit of contributing to IRA’s is that you can add money until April and have it counted on the previous year’s tax return.

9. Contribute to a 529 plan. A 529 college savings plan is a very simple way to save money for your kids' (or anyone else's) college education. The benefits are tremendous. One of which is that you pay no taxes on the account's earnings. Another plus is that the child doesn't have control of or access to the account, you do. If the child decides not to go to college then you can roll the account over to another family member.

{SIDEBAR} The 411 on the 529: Anyone can contribute to a 529 account (grandparents, aunts, uncles etc). There are no income limitations that might make you ineligible for an account and most states have no age limit for when the money has to be used. If the child gets a scholarship, any unused money can be withdrawn without paying any penalty (just the tax).

10. Pay your January Mortgage payment in December. A little year-end attention to your mortgage could lower your upcoming IRS bill. Unlike rent, which you pay beforehand, your mortgage payments are made at the end of your occupancy period. That means your Jan. 1 mortgage statement represents interest for the month of December, making it a tax-break-eligible bill for this year. By accelerating that payment even by just a day (Dec. 31, if your financial institution is open for business then), you get an additional deduction for the interest paid. Don't get greedy, though. You can't make your February, or any other upcoming mortgage payment, early to boost your year-end deduction amounts. Each year, you can deduct only that home mortgage interest for that year.

11. Rent out your second or vacation home. If you rent your vacation or second home to paying guests fewer than 14 days per year, regardless of the amount of rent received, that rent need not be reported on your income tax returns. Maybe it’s not an astronomical number but any tax savings is a good one.

12. Deduct your student loan interest. You are eligible to deduct some, if not all, of the interest you paid on your educational loans (that’s money used to pay for education expenses only). The deduction is based on the interest paid on the loan during the previous tax year with a maximum deduction of $2,500. Restrictions on income limits apply. Check with your tax advisor to see if you qualify. Even if you don't itemize deductions when you file a tax return you can still claim this interest to reduce your taxes.

Tax laws can vary from year to year, so it is essential to keep up with the changes if you want to maximize your savings. If you’re not comfortable with keeping up with tax law yourself, use a CPA or tax software such as Turbo Tax with a “deduction finder”. You may be able to take advantage of some or all of these tips depending on your age, lifestyle and financial standing. No matter what the changes are, it’s good to know you can be smarter with your money while making it work harder for you.

Beating the Common Cold and Flu Virus (To Be Published)

Beating the Common Cold and Flu Virus

Cut your chances of catching it before it catches you.

Between November and March millions of us succumb to the flu and common cold viruses. Those who are most vulnerable and often struck the hardest are children and the elderly. Unfortunately, there is no magic pill or formula from immunizing 100% against these viruses. Each season despite our best efforts, employers spend billions of dollars shelling out sick pay and over 200,000 of us end up in the hospital. These fierce bugs can be picked up anywhere – home, work, at the bank or grocery store and if your immune system isn’t up for the fight you can almost guarantee you’ll catch the latest and greatest version of the virus. With all this said, how do we protect ourselves and the ones we love? Here’s a list of tried and true, expert recommended ways to stay healthy during the flu and cold season as well as what to do once it hits.

Prevention is the Key
Take your best shot. A flu shot that is. A vaccination will you lower your chances of getting the virus significantly. In fact, a flu shot offers 70-90% protection against the bug. Studies have also shown that those who have been immunized and still catch the virus have much less severe cases than those who have not. According to the Center for Disease Control (CDC), adults older than 50 and children 6 months to 5 years are strongly recommended to have the vaccine because of their higher vulnerability. See your doctor to find out more.

Hand-to-hand combat.

Stock up on hand sanitizers. Researchers at Children’s Hospital in Boston studied 292 families for 5 months and found that families who carried hand sanitizers with them had 59% fewer cases of stomach bugs than non-users. To use your sanitizer correctly, squirt out enough gel into your hands so they still feel damp and rub them together for 10 to 15 seconds – just as if washing your hands. By using your sanitizer correctly and often (especially when out in public) you can reduce your exposure to germs.

Your pen is mightier than the rest.

As minor of a detail as it sounds – cold and flu germs are passed most often from hand-to-hand contact, so anything you can do to avoid touching objects that are frequently handled by the general public is going to cut your risk. Carry a few extra pens around with you everywhere you go and steer clear of using the community pen at the doctor’s office, bank, restaurant or wherever you may be.

Let it just wash over you.

Your mother knew what she was talking about when she told you to wash your hands constantly. Research has shown that by washing our hands at least five times a day you can significantly reduce your chances of illness. Experts agree that washing our hands often with soap and water is an easy and effective way to stay healthy year round.
Catch some zzzz’s. Lack of sleep is an invitation for the flu. If our body doesn’t get the rest it needs, our immune system wears down. If you’re too physically worn out, the flu shot and vitamins will not be as effective. In fact, researchers found that those who slept only 4 hours a night for 1 week produced only half the amount of antibodies (even with a flu shot) compared with those who slept 7 1/2 to 8 1/2 hours each night.

Friends don’t let friends get sick.

Yes, research has shown that having a good social network of friends makes you a healthier person all around. Don’t believe us? Carnegie Mellon doctors conducted a study involving 83 college freshmen, all given a flu shot. Those with a larger group of friends produced more bug-fighting antibodies while students who kept to themselves and reported being lonely actually produced lower amounts of anti-bodies.

One a day keeps the flu away.

Your basic multi-vitamin is also an effective weapon against the cold and flu. Often we are drawn to super concentrations of vitamins and herbs as well as airborne pills and other cold preventers but these really aren’t necessary. Look for a one-a-day multi with 100% of the recommended daily values of vitamins A, B6, B12, C, and D, as well as the minerals chromium, copper, folic acid, selenium, calcium, and zinc. Be sure to take your vitamin with a full glass of water and a meal that consists of a little fat so your body can absorb the nutrients better.

Let’s get physical.

Just 3 hours a day of moderate activity (walking, climbing stairs or tennis) will cut your chances of getting sick by 35%. Moderate activity not your thing? UCLA researchers also found that tai chi, the Chinese practice of slow movements, meditation, and breathing, decreases the release of catecholamine, a neurotransmitter that weakens the immune system. One study in particular showed that just three sessions a week for 4 months improved immune cell function by 45% in adults with shingles.

Coming to a town near you.

Keep up with the health of your community by watching the news or going to http://www.flustar.com/ and entering your zip code. Knowing if a flu outbreak is in your community or coming your way will be helpful in deciding whether to hit the movie theater or rent movies on the weekend. Taking extra precautions to avoid public places during an outbreak will reduce your chances of exposure.

Bitten by the bug?
Call in the reinforcements. If you start to feel the telltale aches and pains see your doctor and ask for an antiviral medication like Tamiflu or Relenza. Both of these medications are 60 to 90% effective as long as they are taken within 48 hours of exposure. Remember these medications are made specifically for the flu, so it’s important to see your doctor in person in order to let him diagnose you properly. This will help you avoid paying for medication that isn’t necessary and possibly experiencing side effects from medication you just don’t need.

On the brink? Take Zinc.

Zinc, if taken at first sign of the flu can help prevent or lessen the duration of your cold. This power-punching vitamin releases ions that stop the common cold virus from maturing and attaching to your airways. It’s most helpful if taken shortly after you suspect being exposed. Places where exposure is high (like on a plane) are instances when taking zinc is smart. Take either a zinc gluconate or zinc actate without flavoring agents like citric or tartaric acids because these appear to inhibit its preventive abilities.

Is Your Money Secure (To Be Published)

Here's my first published article (coming out January 2009). It's for a small insurance magazine and is distributed to it's policy holders on a quarterly basis.

Is Your Money Secure?
Important facts to know about your bank, broker and mortgage company.

These are some scary times in the world’s financial markets. With the failure of so many banks and mortgage companies, we’ve been left questioning the safety of our money and our homes. Even if your household hasn’t been affected directly, the fact that our government passed a $700 billion economic bailout recently is enough to send shivers down most of our spines. So what’s next? Here are the answers to some of the most common questions as it relates to the security of your finances. Hopefully this will set your mind at ease a little when it comes to your money that you’ve worked so hard for.

BANKS

What if my bank is on the brink of bankruptcy? Good news! As long as your financial institution is FDIC insured you have nothing to worry about. The FDIC guarantee is ironclad, so regardless of your banks financial standing your money is safe. Keep in mind that funds are only covered up to $100,000 for the total of all your accounts within one company. If the amount of cash exceeds $100,000, move the excess to a different FDIC insured bank.

Are all my accounts safe? All account types are covered, whether it’s a credit union, checking, savings, retirement or money market as long as your banking institution is insured by the FDIC. For IRA’s and other types of retirement accounts all deposits in these types of accounts are added together and insured up to $250,000 per person. For example, if you have both a regular and Roth IRA totaling $350,000 you are guaranteed up to $250,000 at that bank.

What about my money market account? Your money market account is covered but will be combined with all other accounts in your name. Funds that you keep in a money-market mutual find are now insured too. Thanks to the US Treasury, a one-year temporary guaranty program for taxable and tax-free money market funds is now in effect using a fund that was created during the Depression. Keep in mind that a fee must be paid to participate. By paying this fee guarantees you that your share price remains a constant $1.

How can I be sure all my funds are covered? If you are still anxious about your money you can check the FDIC web site (http://www.fdic.gov/) or the National Credit Union Administration’s site (http://www.ncua.gov/). Both sites have calculators that allow you to plug in all your accounts and the amounts deposited so you can find out whether your money is insured.

BROKERS
What happens if my broker goes belly up? You can breathe a sigh of relief since brokerage firms are required to follow very strict rules when it comes to a client’s money verses their own. So for example, even if your brokerage firm or broker goes under, your accounts should remain intact. How does this work? Stocks, bonds and mutual funds are all physically held by an independent institution not the broker or the firm.

What happens if my firm mishandles my assets? Nearly every firm is registered with the Securities Investor Protection Corporation (SIPC). The SIPC was created specifically to restore funds to investors. If your broker fails, the SIPC will first try to transfer your securities to another firm. If that doesn’t work, then they will work to rebuild portfolios, even buying new stocks or bonds to make up for missing shares. If the investments aren’t available, SIPC will give you cash based on their value when the brokerage failed.

How much am I covered if my broker goes under? The SIPC covers up to $500,000 per account and has a $100,000 limit on cash. If you have more than $500,000 at one brokerage the limit will apply only to the maximum amount of its own money SIPC will spend to make up for any missing securities, not the total amount you get back. A fact to rest easy over is that over the history of the SIPC only 349 people have not received the full value of their shares back.

Once the SIPC takes over how do I get my money? Be ready to wait between one week and as long as two to three months to gain access to your money once the SIPC takes over. Understandably, it takes them some time to sort things out especially when the broker was involved in fraud or kept poor records. Keep in mind that the SIPC does not protect you against market losses while your account is in transition between your broker and the SIPC

MORTGAGE LENDERS

What happens if my mortgage company shuts down? Continue paying your mortgage – this is your lenders problem not yours. During the bankruptcy process your loan will be transferred to a new owner or “servicer” and you will be notified by letter once the change occurs. If you mail your payment to the old lender by mistake, don’t worry you won’t owe a late fee or be penalized if you are within the federally mandated 60-day grace period after the transfer takes place. It’s wise during this period to keep careful records of your payments and any correspondence.

What about my escrow and taxes? This is your money, held in trust and will not be part of your lender’s bankruptcy assets. Once the new servicer takes your loan over they will resume making the tax insurance payments from your account. During the transfer period and for some time afterwards, be sure to carefully check over your monthly statements. Double check your escrow account, if anything seems fishy call your lender, insurance company or your local property tax office to be sure payments are being made and are current.