Sunday, October 18, 2015

Why you should contact your Tax Accountant now!

It's October, and I've been thinking about my potential tax bill.  You may find it strange that I am thinking about it now, when the calendar year hasn't even ended yet, but actually, now is the perfect time to consider it.  Let me explain.

If you have had an increase in your income in the past year, you may find yourself in another tax bracket.  Also, if you've had any "life changing" events, it could also impact your tax situation.  My situation is that my income is higher.  While I have enjoyed the higher income this year, I realize that it could make my tax situation drastically different.  Typically, I get money back, but this year it could be different.  So, I am going to contact my accountant.  

October 15th is the date that taxes are due for people that filed extensions.  Wait until after that date by a week or two in order to contact your Tax Accountant because they may be very busy right around that date.  If you have experienced any of the following:  income increase, inheritance, property sale, marriage, added dependent, less dependents, divorce, or other life changing event, you should consider checking in with your Tax Accountant  sometime in the next month.

Your tax professional can  help you assess whether or not you will owe the government come tax time.  It will be an estimate, but a fairly close one.  There are a few things that can be done during the course of the remainder of 2015 to help you minimize any potential tax bill, but first you have to know if you are in that situation or not.

The first step might be to make some transactions that make your Adjusted Gross Income (AGI) lower.  You see, your Gross Income is the amount you are being paid before taxes or any other withholding are taken out.  Your AGI, is the amount that the government is actually taxing you on.  The lower your AGI, the smaller the amount you are responsible for in taxes.  After that amount is set, there are an additional series of things that you get credit for.  These "credits" go toward your tax bill, lessening the amount you actually pay to the IRS.  Your tax accountant might tell you to donate more to a charity, contribute to a traditional IRA, tax-deferred annuity contributions, health savings account contributions, maximize any educator expense deduction, and several more.

The point is, if you've had an event that could change your tax picture, contact your preparer or accountant.   Your email should basically go something like this:

"Dear so-and-so, I wanted to check in with you before the end of the tax year.  I have had _____________ event come up this year, and I am not sure how it will change my tax situation this year.  Is there anything that I should do before the end of the year in order to plan accordingly?"

Then, they will have a few questions (most likely), after which you will have a solid game plan to complete within the calendar year.

Of course, there is one additional thing to be prepared for...  Paying the preparer.  It is possible that if it is just a quick check in, that they may not charge you, but if your tax planning takes them some time, you may have to pay a fee.  Don't let that possibility detour you.  Tax planning can save you a good deal of money.  Even if you have  fee for the consultation, the information is too valuable to pass up.

Until next time,
Happy Planning!

Sunday, October 4, 2015

Weddings: Saving money on out-of-town events..

Have you ever noticed that other people's lives tend to cost you a lot of money?  People graduate, have birthdays, anniversaries, and weddings.  You want to participate.  Some of you agree to the festivities without thinking of the cost because you can't imagine missing their event.  Others reluctantly agree to join the festivities, but secretly cringe, not knowing how you will finance your end of the obligation.

This month, I am attending an out-of-town wedding.  Out of town weddings come with a lot of expenses, some that are easy to overlook.  Planning ahead, and using these simple tips can help save you hundreds!

  1. Transportation:  Consider driving. While this won't work for events across the country, things that are in your region may be a drive-able distance.  I live in New York City.  The wedding I am attending is in Virginia.  In order to fly to this wedding, I would need to purchase two adult airfares plus rent a car at the other end (the wedding is not in a city with an airport).  Instead, I rented a car.  I got a cheaper rate by renting out of New Jersey, so I will spend the 30 minutes on public transit to get there.  I am paying $126 for the car rental for the entire weekend.  This is way cheaper than flying.  The miles are unlimited.  I will have to pay for gas.
  2. Transportation:  Consider a ride share.  Find out if there is anyone else in your area that is traveling to the wedding.  If so, they may want to consider a ride share.  I found a gal in Brooklyn that is also going.  She is going to ride with us, and contribute to the car rental and gas.
  3. Hotels:  Typically the bride and groom get a "block" reserved at a local hotel or two.  The hotel will set a price for all rooms in that block, and you have to reserve by a certain date in order to get a room at that rate.  You would think that this would be a discounted option, and it very well may be.  That being said, do some of your own hunting.  Check online well enough before that "reserve by" date.  See if you can find something near where the other hotels are, but less spendy.  The rates for the "reserved block" in this Virginia town were roughly $150 per night.  I did some searching, and found a hotel on the same street that looked nice enough for half that price.  I will be staying for two nights, and paying only about $150 for that entire time.
  4. Breakfast Counts:  When you are looking for hotels, look for one with free breakfast.  Don't pay a higher rate in order to get one, but you will likely find some choices that include breakfast.  Hotel breakfasts are typically not gourmet, but they have come a long way since the doughnut and coffee trend of the 1980's.  If you stay in the hotel two nights, and breakfast is included, you are saving the cost of two meals out.
  5. What to wear:  There is a good deal of pressure in this department.  Weddings are a time when people size you up to see if you look good, or have "let yourself go."  Don't get sucked into this madness.  Ask the bride and groom what level of formality it is, and select something from your closet accordingly.  Most likely you have something that is appropriate that you have ALREADY paid for.
  6. The Gift:  You are not to look at the registry until you set a dollar amount.  Mine is $50.  Once you have set your budget, you may look at the registry.  Personally, if I don't find something I like for my set amount, I will give them the cash.  People feel strange giving cash, thinking that it is "impersonal."  The truth is, the couple will appreciate it.  They will appreciate it for two reasons.  First, they will not get everything on their registry.  Maybe they asked for 4 bath towels, and got 2.  Things like this happen.  If a few thoughtful people have given them cash, they can use it to purchase items that were not selected by their guests.  Secondly, they might want to use the money for their honeymoon.
The above list represents what I plan to do to make it through this wedding in style, and without spending too much.  I will spend about $65 on the car rental, $150 on hotel costs, $40 for gas, $60 for food (2 lunches, 1 dinner for two of us), $50 for the wedding gift.  This brings my grand total to $365.  This is great compared to my original estimates.  When I priced this out for two people to fly, stay in the hotel that had the blocks reserved, etc. the price came out closer to $1500,  a definite budget buster!  My way creates a relaxing, stress-free, mini-vacation that I can fully afford!

Feel free to add any money saving tips of your own when it comes to out-of-town events!