December is officially with us. It’s cold. And time is running out.
By that I mean that we are ONE MONTH away from year-end. That’s one month away from doing anything positive to affect your tax burden (with the exception of IRA contributions and a few other various back-dating strategies that are allowed).
So here’s a quick and dirty tax plan:
1) Unless your income has radically changed this year (in which case we should probably talk), take a quick look at your withholding and make a last-minute adjustment up or down.
2) Consider the following before December 31 …
* Adding to your 401(k) or other company-sponsored retirement plan.
* Winterizing your home with upgrades that qualify for the energy efficiency tax credit of up to $500 (some details here: http://bit.ly/1A88hmj )
* Spending down your medical flexible saving account (FSA) balance.
* Bunching deductible expenses, both miscellaneous and medical.
* Maximizing the sales tax deduction with a tax-qualifying major purchase.
* Considering ways to defer income if it will push you into a higher tax bracket.
* One more, which is my broader subject for today …
All of these (and more) are good options to make a dent in your 2014 tax bill. Help us help you make the right decisions and call: (440) 720-0959 to set up a year-end tax planning appointment (or, of course, you can also email us: https://mayfieldheightscpa.com/contact).
About that last tax-reducing move…
Jeffrey Campbell Asks: To Give … Or Not
“Be thankful for what you have; you’ll end up having more. If you concentrate on what you don’t have, you will never, ever have enough.” – Oprah Winfrey
When we advise about or help set up tax-saving mechanisms for clients to deliver their philanthropy and giving (outside of normal tax deductions), there’s plenty of discussion about the benefits of the gift for the recipient.
But what about for the giver? Here are some things to consider, as you contemplate giving, during this month of year-end appeals …
1. When you give, your emotions change.
Studies show (http://bit.ly/1A8bp1t ) 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.
2. You might just spend 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 $100,000, that’s $2,000.00.
3. It’s probably now or never.
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.
4. Get ahead of your heart.
This is the biggie, in my opinion. There’s something that occurs 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 soul: “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 sometimes actually happens: more money seems to find itself in your hands.
I’m not advocating a mystical pay-it-forward scheme; I’m simply making this observation over years of being a student of how money “works”. Frankly, it just seems to regularly find itself in the hands of those who give it away.
So, aside from the tax benefits … consider these as well. And I hope we talk soon …
Jeffrey A Campbell CPA