JoeTaxpayer

10 days remain in 2010. It’s not too late to make a few moves to help your tax situation for this year and next.

• If you are 70-1/2 and taking RMDs (required minimum distributions) from your IRA, the just-passed tax bill allows you to donate directly to charity. If you don’t itemize, this is a way of turning that donation into an effective tax deduction.
• If you are already retired, try to forecast your taxable income for the year and convert just enough IRA money to a Roth to “top off” your present bracket.
• Check out Fairmark and see where you’re aiming to land tax-bracket-wise. If there’s a bit of room before hitting the next bracket consider a partial Roth conversion. e.g. you’re single with a taxable income of $28K. (This is after exemption, standard or itemized deductions, etc) Since the 15% bracket goes up to $34K, you can convert $6K and still be in the 15% bracket. If you overshoot, just recharacterize.
• If you have an FSA (flexible spending account) and have any balance remaining, there are some easy ways to spend on items you can submit for reimbursement. Visit the eye doctor, and get new glasses. Review the list of reimbursable drugstore items and stock up. Band-aids, Ace Bandages, aspirin, cold medicine, birth control, there are quite a few things you can buy that are covered by FSAs. Don’t lose the chance to get your money back.
• This is a good time to look at how much you are depositing to your 401(k) or other retirement accounts. Time to bump it up a bit.
• Year end is also a good time to review your account beneficiaries. Have you had any change in family status? Marriage, divorce, new child, family member pass away? Check the beneficiaries on your IRAs, 401(k), insurance, and any other financial accounts. Many a wife has lost her husband’s 401(k) account or IRA to a former wife who was left as the primary beneficiary. Ouch.
• Last, don’t forget, if you sell stock at a loss, up to $3K per year can be used to offset ordinary income, if you are over this figure, the excess carries to the next year.

Let’s put these final ten days of ’10 to good use. For more tips, check out Neal Frankle’s Financial Tax Planning Tips To Save You Money.

Joe

This week, Five Cent Nickel discussed his Roth IRA Conversion: What a Long Strange Trip It’s Been. And was it ever. You see, one way to avoid taxes on a conversion (of traditional pre-tax IRA money to a Roth) is to make sure there’s no pre-tax money to convert. The way to do that is to transfer the pre-tax money into your 401(k) account. So Nickel first had to open a Solo 401(k) and then…… well you get the idea, why not visit his site to get, as they say, the rest of the story.

Next, Fiscal Fizzle offers a 6-Step Analysis of a Grocery Store Receipt. While Wojo looks at the high/low cost, best/worst deal it helps him view his buying in a certain light and adjust accordingly next time. A few days back I tweeted “Bag of tortilla chips supermarket 8oz $2.50 / #Costco 40oz $3.90 1/3 the cost. Just saying why I don’t like Jane or J2 to go to store.” So that’s what I do, I obsess a bit on the fact that within a day or two of Jane buying something, I pass our Costco and could have gotten it cheaper.

It appears my good friends to the north (in case I have any non-NorthAmerican readers – In the US when there’s a draft, many flee to Canada. I’m too old to get drafted, but still like having friends there just in case I need a place for a while, ooops, I digress) are considering saying Bye-Bye Penny – Hello Swedish Rounding? It now costs the Royal Canadian Mint 1-1/2 cents to mint a penny. In the US, until 1982 our penny was mostly copper. Those pennies were about 146 to the pound. With copper trading at over $4, these pennies are worth 3 cents in melt value. So if you loaded up on these in 1982, your rolls of pennies increased about 4% per year till now. Not bad considering. Back to the point, pretty soon no pennies up north. (Edit – and no link to the article, they redecorated and many articles were moved)

In Personal Finance By The Book, Joe Plemon offered his view on The Problem With Tithing Your Time. If you aren’t aware, tithing is the practice of giving 10% of your income to charity. First a disclaimer – I am not a follower of this practice. I donate, as I’ve shared in a number of posts, but don’t follow a rule of any particular percent. I have been known to run across people who are so buried in debt that I’ve suggested that if they are unable to raise more money by working more hours than perhaps they can donate their time to a charity. That suggestion  is in conflict with Joe’s view. My logic is that if one worked overtime and donated that money, it’s the same result as donating one’s time and not having the money change hands. Since most references within the Bible are to farmers and sheep herders, I wonder. How did the cobbler tithe? Did he sacrifice 10% of the shoes he made?

One Money Design asked his readers one simple question – What Are Your 2011 Financial Goals? I’ll add my own – do you have any goals for ’11? Do you write them down and review how you performed to those goals?

And to wrap it up – Kay Bell announced Merry Taxmas! House OKs tax bill. So it appears that the tax bill has passed. I’m a bit surprised, but not floored by this. I’m sure we’ll be discussing more over the next weeks.

Sorry, when a political cartoon comes up that features a Trek reference, I’m there. Traveled last week, no patdown, no crazy see through my clothes search.
Joe

For whatever reason, many of us tend to make our charitable donations toward year end. It’s that way for us, and this was the week our donations were sent in. I’d like to share the top charities I’ve tried to support.

First is Perkins School For The Blind. This has been a regular on my list for some time, and I’d like to share their remarkable story with you. From their website: “The rich history of Perkins began with its founding over 175 years ago as the first school for the blind in the United States. Within a few short years, Perkins became known for its effective instructional techniques, including teaching Laura Bridgman, the first known deafblind person to be educated. Later, a much more famous student, Helen Keller, came to Perkins on her way to breaking down barriers and perceptions about what people who are blind or deafblind can accomplish.”

Next, New England Center For Homeless Vets. Their mission is spelled out on their site : “The Mission of the New England Center for Homeless Veterans is to extend a helping hand to homeless men and women veterans who are addressing the challenges of: addiction, trauma, severe and persistent mental illness, and/or unemployment, and who will commit themselves to sobriety, non-violence, and working for personal change. We are recognized as one of the most effective private veteran’s transition programs in the country.”
In addition to a monetary donation, I’ve made a habit of turning up there toward year end and dropping off clothes and a few cases of coffee. It’s heartwarming to see the people that are being helped to get back on their feet. The center isn’t a hand out, it’s education and training to help these men get back into the mainstream. They do a great job.

Dr. Means (who used to be my wife’s primary care doctor) went two steps beyond “put your money where your mouth is.” She gave up her regular medical practice to found this charity. From her web site: Roseanna H. Means, MD founded Women of Means in 1999 “to improve the lives of women who are homeless or marginally housed through quality health care, education and advocacy.”
From 1990-1998, Dr. Roseanna Means, a practicing Internist in the Boston area, worked for a program that operates health clinics for the homeless. She observed that homeless women were underrepresented at the clinics and learned that using traditional health care access venues, even when staffed by doctors trained in caring for the homeless, is overwhelming for women impaired by exhaustion, mental illness and fear. Consequently Dr. Means founded Women of Means, sending volunteer physicians into shelters to provide care where the women feel safest.

Last, Abby’s House. “Abby’s House is a multi-service, non-profit organization in Worcester, Massachusetts that serves homeless and battered women and children. Founded in 1976 by a group of activists led by Annette Rafferty, Abby’s House has helped thousands of women and children make their way out of the chaos of homelessness.”
We’ve donated to Abby’s House for such a long time, I don’t recall how they came to our attention. We get an occasional newsletter and know they are doing some excellent work.

Do you notice the common theme here? All these charities are local, I can drive to them in 30 minutes or so, and I feel that I can visit to see the good our money is doing. Also, they help people directly. I know there are medical charities doing research and they need money as well, they just don’t make the top few I’ll share today.

If you are looking to add a charity to your donation list this year, please consider one of the above. Charity is a very personal thing for each of us, I think we donate to the ones that touch our heart a certain way. I was careful to not include some others such as religious organizations, my high school, or the local public radio station. I donate to those as well, but if you live in California do you really care to donate to my high school in NYC?

Let me know how you decide where to donate. Do you spread the wealth, donating to a dozen or more with smaller amounts, or a limited few who get a larger check? Either way, ’tis the season to give.
Joe