December Newsletter

With the outcome of Congressional action as uncertain as ever, what can be done to manage your own affairs as the 2015 tax year winds down? Included here are a number of areas for possible year-end review and tips to make your charitable giving more effective. There is also a recap of key tax code provisions that expired in 2014, but may still impact your 2015 taxes.

Looking for something to talk about at the next family gathering? Consider sharing a quick, fun quiz regarding an iconic reindeer with a big shiny red nose.

Should you wish to review your situation please call. Also feel free to forward this newsletter to someone who may benefit from this information.

Tis the Season…for Review

As 2015 winds to a close, there are a number of tasks that should be reviewed. To help you plan accordingly, here are some things to consider.
Checkmark Employee benefits. Most employer benefit plans have enrollment periods that coincide with the calendar. Please review your benefit options with your employer and make any necessary changes. Common areas of review include employer-provided health insurance, dental benefits, childcare benefits, Health Spending Account contributions, Flex Spending Account contributions, disability insurance and employer retirement account contributions.
Checkmark Beneficiary review. Make it a practice to review beneficiary assignments on all your key accounts. This is especially important for your retirement accounts as the beneficiary assignment within the account can supersede a will.
Checkmark Retirement plan contributions. Review and adjust your contributions to your retirement plans. At minimum, try to contribute enough to take advantage of any employer matching funds in your work sponsored plan. This review should include IRAs (Roth, Traditional, SEP and SIMPLE), 401(k)s, 403(b)s, and 457 plans.
Checkmark Insurance review. Consider an annual review of your insurance policies. This includes health insurance, life insurance, disability insurance, home insurance and potential umbrella policies. Are the beneficiaries up to date? Are you happy with the coverage?
Checkmark Automatic billing. Review your checking account’s automated billing transactions. This is a good time to identify what automatic monthly expenses should be reviewed, reduced or eliminated. You may also discover billing for services you thought were cancelled. This specific review often catches errors that a simple account reconciliation may be missing.
Checkmark Withholdings. Sometime in December or early January you may wish to review your payroll withholdings. Many of us do this after our tax return is filed. However, if you file close to April 15th, you are losing four plus months of proper withholdings.
Checkmark Develop your own list. The review suggestions mentioned here impact most of us. However, everyone’s situation is not the same. Use this time to develop a list of your own annual review items. It might include reviewing College Savings Accounts or having an annual sit down to go through an aging parent’s financial accounts.

Be a Better Charitable Giver

Simple moves to make your giving go further
These days, we all want our money to go further and charitable donations are no exception. Yet sometimes, even well-intentioned gifts may end up going to a poorly run charity or the charity does not receive the full benefit of your gift.

Here are some tips to ensure that your donation makes the biggest impact:

Maginfying Glass Research the Charity. Make sure the charity you donate to is a good steward of your resources. Websites like track the financial health and effectiveness of charities. Effective charities spend 75% or more of their resources on their services and 25% or less on fundraising and administrative costs.
Donation Jar
Light Bulb Be Proactive. Identify the causes that are most important to you and your family and then target those organizations – it’s just too easy to give haphazardly to whomever asks you for money.
Wallet Do Not Give Over the Phone. Charitable telemarketing campaigns generally use for-profit fundraisers who take a percentage of your gift. This means the charity often receives substantially less of your donation if you give over the phone. If you truly support the organization, hang-up. Then contact the charity directly to make your donation.
Circular Arrows Focus Your Support. Focus on one or two charities that you are passionate about. Repeat donations from reliable donors save charities money because they don’t have to go looking for more donors and are not wasting money trying to woo uncommitted, one-time donors.
Communication Arrows Share Your Intentions. Whether your donation is a one-time gift or part of a long-term commitment, tell the charity so that they do not continue to spend money on seeking more donations from you.
As part of your holiday season of giving, consider giving to a favorite charity. It can also serve as part of your year-end tax planning.

The ”Special” Reindeer Quiz

As the holidays approach, we will quickly be flooded with holiday specials, iconic movies and lit-up everything. As you sit around the fire staying warm, consider your knowledge of that iconic reindeer who guided Santa’s sleigh on a stormy winter night.
Question How old is Rudolf?
Answer The story of Rudolf is now 76 years old.

Question Who wrote the now famous glowing nose reindeer story?
Answer Robert L. May. He created it for Montgomery Wards in 1939 as a free promotional book. The first year they printed over 2 million copies of the product.
Rudolph Nose

Question The Reindeer was not originally going to be a reindeer. What animal was he?
Answer A moose.

Question The reindeer’s nose was not initially going to be red. Why not?
Answer Montgomery Wards was afraid the red nose would be associated with chronic alcoholism. It was only when the cartoon shape was fashioned after a deer, that the shiny red nose was established and approved.

Question Who made the now popular Rudolf the Red-Nosed Reindeer song famous?
Answer Most of us know the tune as sung by Burl Ives in the popular holiday TV show using stop motion animation. But the song was made popular by Gene Autry in 1949. Autry was widely known as the singing cowboy. He was also a former owner of the Angels major league baseball team. This song is one of the most popular holiday songs recorded of all time.

Déjà vù All Over Again

Will the habit of late law changes continue?
1040 and GavelThe Congressional habit for repeatedly making late tax law changes is now so bad that the IRS is reserving blank lines on the form 1040 for possible law changes this month. Given the potential for retroactive tax law changes in 2015, please prepare for the extension of the following tax laws that expired in 2014. While there is no guarantee that tax law extensions will be made, by being prepared with the proper documentation you can take advantage of any forecasted changes.
Gavel Bullet Educator’s $250 tax deduction
If you are a teacher and have out-of-pocket expenses please keep your receipts. You may be able to deduct up to $250 of qualified expenses even if you do not itemize deductions.
Gavel Bullet State sales tax itemized deduction option
Keep receipts of any large purchases. The sales tax provision allows for you to take either a general sales tax deduction or a state income tax deduction as an itemized deduction.
Gavel Bullet Direct contribution from retirement accounts for qualified seniors
In 2014, qualified seniors who donated funds directly from their retirement plan could exclude the plan withdrawal from income. Hold off using this technique in 2015 until you receive confirmation from Congress this tax law is extended.
Gavel Bullet Itemized deduction for mortgage insurance premium costs
Keep your mortgage insurance documentation for a potential itemized deduction.
Gavel Bullet Changes in small business depreciation
Through late November, 2015 there is no longer bonus first year depreciation. In addition, Section 179 amounts are greatly reduced from $500,000 in qualified assets to $25,000. Even if the law changes, you have little time to purchase and install equipment. Please plan accordingly.
If other late law changes impact you, rest assured those changes will be applied to your tax return as they become known.

Note: Special thanks to the late Yogi Berra, baseball great, for our article headline.

As always, should you have any questions or concerns regarding your situation please feel free to call.

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