Tax time is the right time for a financial review

January 27, 2012

Now is an ideal time to review your financial affairs. You have to gather information to prepare your tax return at this time. Why not take one more step and do something positive for your financial well-being?

 The following suggestions will get you started on your financial review:

 * Hold a discussion with your family. Spouses and children need to share and prioritize their financial aspirations.

 * Write down your financial goals. How much money will you need to meet each goal? When will you need the money, and how will you get it?

 * Do a net worth statement (a list of your assets and debts), and compare it to last year’s statement. Are you gaining or losing ground?

 * With your goals (and the effects of inflation) in mind, review the performance of your investments.

 * Take steps to protect what you already have. Goals may become instantly unobtainable if you lose your present assets or your income potential.

 * Do you have adequate disability insurance coverage to replace take-home pay if you become incapacitated?

 * Do you have the proper amount of life insurance if you or your spouse should die?

 * Do you have replacement value property insurance on your home?

 * Do you have adequate insurance for calamities such as automobile accidents or lawsuits?

 * Make sure that you need all of the insurance that you have. Do not duplicate employer-provided coverage. Review your coverage annually; do not just automatically renew policies.

 * Review your will and your estate plan. Did your situation change during 2011 (marriage, divorce, births, deaths, move to another state, for example)? This year, the top estate tax rate is 35% with a $5,120,000 exemption. Make appropriate changes to your will and estate plan.

 * Review your credit use. Keep your credit card bills current. If you’re finding that hard to do, it’s probably time to cut up some of those credit cards and get your debt under control.

 * Organize your records. If you had trouble assembling data for your financial review, you need a better system. Set one up.

 For help with any aspect of your review, call us. We’re here to assist you in any way we can.

Leave a Comment » | January 2012 | Tagged: , , , , , , | Permalink
Posted by gillilandcpa

Do your children need to file a 2011 tax return?

January 24, 2012

Check your children’s need to file a 2011 tax return. A return is needed if wages exceeded $5,800, the child had self-employment income over $400, or investment income exceeded $950. If the child had both wages and investment income, other thresholds apply. Contact us for any filing assistance you may need.

Leave a Comment » | January 2012 | Tagged: , , | Permalink
Posted by gillilandcpa

IRS announces business mileage rate for 2012

January 20, 2012

The IRS recently announced that the mileage rate for business driving in 2012 will be 55.5¢ a mile. The rate can be used for cars, vans, pickups, and panel trucks.

 Companies that don’t want to keep track of the actual costs of using a vehicle for business purposes may use this standard mileage rate instead. An annual study of the fixed and variable costs of operating an automobile is used to determine what the standard mileage rate will be for a given year.

 In addition to the mileage rate, a separate deduction may be claimed for parking fees, tolls, interest relating to the purchase of the automobile, and state and local personal property taxes.

 The standard business mileage rate can’t be used for automobiles used for hire (e.g., taxicabs) or for fleets of automobiles used simultaneously by the taxpayer. Nor can the standard rate be used if the vehicle was previously depreciated by other than the straight-line method, including using bonus depreciation or the Section 179 deduction.

Leave a Comment » | January 2012 | Tagged: , , , , , , , | Permalink
Posted by gillilandcpa

Don’t forget the “nanny tax”

January 17, 2012

If you paid a household worker, such as a gardener, housekeeper, or nanny, more than $1,700 in 2011 (or will pay more than $1,800 in 2012), you may be liable for payroll taxes on the wages paid. For details or filing assistance in meeting your nanny tax obligations, give us a call.

Leave a Comment » | January 2012 | Tagged: , , | Permalink
Posted by gillilandcpa

Do your beneficiary choices need updating?

December 30, 2011

Are your beneficiary designations up to date? Do you even know which accounts have beneficiaries and who you’ve designated? It’s easy to lose track. But it’s important to keep them current. Here’s why.

When you designate a beneficiary for an account, that person inherits the assets in the account, regardless of what your will might say. That’s why updating your will periodically might not be enough. Typically, you’ll have beneficiaries for each of your IRAs, your 401(k) or other retirement plans, annuities, and insurance policies.

Your designations could be out of date just because of life’s changes. Since you made your initial choices, you might have married, had children, or divorced. Some of the beneficiaries you chose could have died, divorced, or married. Their circumstances could have changed so you no longer want them to be the beneficiary.

Also, the tax laws change frequently, and they can have an impact on your choices. Choosing the wrong beneficiary, or failing to name a contingent beneficiary, can affect the long-term value of your IRA assets after you die. That’s why it’s important to review your choices with tax consequences in mind.

Here’s how to update your designations. At a minimum, you should have copies of your beneficiary designations in one place. If you don’t, call the trustees of your retirement accounts and your insurance agent, and request copies.

Then review the documents and decide what changes you’d like to make. Make an appointment to review your decisions with your tax and estate planning advisor. Discuss matters such as naming secondary beneficiaries and naming your estate as a beneficiary (sometimes not a good idea).

Finally, send your changes to the account trustee, ask for a confirmation, and keep copies in your records. For any assistance you need, contact our office.

Leave a Comment » | December 2011 | Tagged: , , , , , | Permalink
Posted by gillilandcpa

IRS ends two-year limit for spouse relief

December 27, 2011

If you file a joint income tax return with your spouse, you are considered “jointly and severally” liable for the payment of all taxes owed. The IRS can come after either you or your spouse for the entire amount of tax due, plus any penalties and interest due.

The law has “innocent spouse” rules that may limit an individual’s responsibility for unpaid taxes resulting from filing a joint return. If the “innocent spouse” can establish that he or she did not know, or have reason to know, that there was an understatement of tax when signing the joint return, relief can be requested. Under previous rules, this relief had to be requested within two years after collection proceedings were initiated by the IRS.

In a new 2011 ruling, the IRS has decided to eliminate the two-year time limit for requesting innocent spouse status under the “equitable relief” provision in the law.

Leave a Comment » | December 2011 | Tagged: , , , | Permalink
Posted by gillilandcpa

Put financial gifts on your holiday shopping list

December 23, 2011

When planning gifts for children on your holiday list, you might want to think beyond the traditional retail offerings. Consider financial gifts that can bestow benefits for many years to come.

Some financial gift options you might consider:

* U.S. savings bonds. Savings bonds are used by many families to introduce children to the savings concept. I bonds are indexed for inflation and can provide relatively attractive rates of return.

* IRAs (regular or Roth). For 2011, you can contribute the lower of $5,000 or the earned income of the child. An early financial start can produce amazing benefits from compounded interest accumulated over several decades.

* Stocks or mutual funds. Equities are a good way to introduce a child to the investment world.

* Collectible stock certificates. Vibrant framed certificates are available for many companies. A Disney, Dream Works, or Coca-Cola stock certificate can provide a colorful reminder of the importance of investing for the future.

* Collectibles. Postage stamps or coin collection kits can provide years of enjoyment and form the basis for some life-long hobbies. An interesting gift idea is an official U.S. mint proof coin set for the year the child was born.

Please call us if you would like to review the tax issues related to any of these financial gift options, especially if you are considering a larger amount.

Leave a Comment » | December 2011 | Tagged: , , , , | Permalink
Posted by gillilandcpa

Watch out for “wash sales” on stocks

December 20, 2011

Thinking of selling a security before December 31 to take advantage of a capital loss? To make sure the loss is deductible, refrain from buying a substantially identical security during the 61-day period that begins 30 days before you sell and ends 30 days after. Such a purchase would violate the “wash sale rule” and make your loss nondeductible.

Leave a Comment » | December 2011 | Tagged: , , , | Permalink
Posted by gillilandcpa

President Obama signs new tax law

December 16, 2011

On November 21, 2011, President Obama signed the “Three Percent Withholding Repeal and Job Creation Act” into law. This new law repeals three percent withholding on certain payments to government contractors. The law, H.R. 674, was amended to include the “Vow to Hire Heroes Act” which provides tax credits to employers who hire unemployed veterans.

The law creates the “Returning Heroes Tax Credit” and the “Wounded Warriors Tax Credit.” Employers may qualify for a credit of up to $5,600 for hiring a veteran who has been looking for employment for more than six months. A credit of up to $2,400 applies for veterans who have been unemployed for more than four weeks but less than six months. Employers who hire an unemployed veteran with service-connected disabilities who has been looking for work for more than six months may be eligible for a tax credit of up to $9,600.

The credits apply to new hires after November 21, 2011, through December 31, 2012. For more information about the new law, contact our office.

Leave a Comment » | December 2011 | Tagged: , , , , , | Permalink
Posted by gillilandcpa

Residential energy credit expires soon

December 13, 2011

Claim the last of the residential energy credit. Install certain energy efficient property in your home by year-end (such as insulation, doors, and windows) and get a federal tax credit of up to $500. That’s the aggregate total credit, including amounts you claimed in prior years. The credit is scheduled to expire after December 2011.

Leave a Comment » | December 2011 | Tagged: , , , | Permalink
Posted by gillilandcpa

« Previous Entries
Follow

Get every new post delivered to your Inbox.