Money & Finance

MONEY SENSE

WINTER

PLANNING STRATEGIES

Since we are in the middle of winter, one of the things that we do every year at this time is to look at tax planning strategies for our clients over the coming year. It is too late to change most things from last year, and so we want to make sure that you can take advantage of more things for this year, hopefully.

If you are self-employed and you have some plans in place, you can contribute to SEP IRA plans for last year and do more matching contributions or profit-sharing contributions for your individual 401K plans. You can get a deduction if you do it correctly. Otherwise, you can contribute for this year and make sure that you have not only the deductions, but also money being put away for your retirement, which is never a bad strategy.

Even though it is winter, it is a good time to get ready for spring cleaning and to clean out things from your home that you will never use or things that your family doesn’t want or need anymore. It could be a good time to make gifts to family. Once you have exhausted giving away things that you don’t need, you should see if there is anything else that can go to a charity so you can get two benefits. You can get rid of things, and you can get a tax deduction if you itemize your taxes for the donation you make of the items that were just cluttering up your house. This gives you extra motivation to clear things out from clothing and furniture to books, DVD’s and cd’s.

Another option, if you have time, is to try to sell the things that you don’t want. eBay is a great option; you can mail things to the buyers, and you don’t have people coming to your home to which carries its own set of risks.

While some people try to sell things, sometimes it’s just easier to donate if they’re small and not very valuable. If you have a house full of “stuff” that you want to sell, then maybe a yard or estate sale by a professional may be in order in the springtime.

Other winter planning strategies are to run tax projections to see if there are any tax efficiencies that you can take advantage of to lower your taxes. I am writing this in early December and am unsure if there will be any tax changes. If there are some, what will they be and how can the tax impact be minimized? I am guessing that it will take a few months for things to shake out on the tax front.

Other winter planning strategies are to call your service providers such as cellphone, internet, cable, gas and electricity providers as well as insurance providers to see if you can get better rates or higher service plans more efficiently. Some of the providers offer better rates or options in the winter when business may be slower for them. If you have any credit card debt, it is also a good time of year to call your credit card companies to see if you can reduce your interest costs and your credit card fees. It is always a good idea to check with the credit card companies, they may offer some good promotions.

Once spring hits, you can hopefully be saving money on your expenses and paying less in taxes. In addition, you may have some extra money from selling the things that were laying around the house gathering dust. Then you can look at investing some of those funds or paying down debt to reduce your annual cost of living.

If you have any questions or need any help with your financial needs, please feel free to email me at marcs@equityplanning.com . I hope you have a great winter.

This piece is not intended to provide specific legal, tax, or other professional advice. For a comprehensive review of your personal situation, always consult with a tax or legal advisor.

Equity Planning Inc. 7910 Woodmont Ave., Suite 900, Bethesda, MD 20814

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Distributions from traditional IRAs and employer sponsored retirement plans are taxed as ordinary income and, if taken prior to reaching age 59½, may be subject to an additional 10% IRS tax penalty.