Tag Archives: 2012

Disaster Preparedness

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As the East Coast works to recover from Super Storm Sandy, and closer to home, Duluth and other areas of North East Minnesota do the same after last spring’s significant, unexpected flooding, now seems a good time to go through a few tips for preparing for what you hope never happens.

  • Keep important documents, such as birth and marriage certificates, Social Security Cards, and titles to cars and homes in a portable fireproof safe.  If you live in an area prone to flooding, be sure to store it in a high place, such as an attic.
    • If you live in a place where you are likely to need to evacuate, such as flood plains or areas prone to wild fires, keep your financial and legal documents in the safe as well.  Also consider scanning them and keeping a USB flash drive loaded with them in a safety deposit box or with trusted family outside the potential danger zone.
    • Keep the receipts for your major purchases, such as cars, furniture, appliances, electronics and sporting equipment in the same manner.  These can help if you need to file an insurance claim.
  • Keep copies of tax returns, as well as the documents to support them, in a waterproof container.
  • Take the time to make a “video tour” of you home, and keep it offsite in a safe location. Narrate the video to describe the makes and models of your valuables, and be sure to record things like valuable landscaping or upgrades that might be easy to miss.
  • Discuss flood insurance with your insurance agent, and be sure you understand what is, and isn’t, covered under your current policies.  Also be sure to keep your insurance for personal possessions (everything inside your house) up to date over the years.

Vacation Donation – Hurricane Sandy

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After large scale natural disasters, many companies allow employees to donate the value of unused vacation time, sick time, or general paid time off (PTO) to a charitable organization.

In the case of Hurricane Sandy, the IRS has announced that donations made to qualifying charities for hurricane relief prior to January 1st, 2014 will not be considered income to the employee.  Since the employee does not pick up the value of time donated in income, there is no charitable contribution deduction allowed on the employee’s tax return.

Also, in this case, the employer deducts the value of the donation as  a charitable contribution rather than as salary expense.

Election Day

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Today’s blog is a short one.  After many months of campaigning from all sides of elections from the President on down to local officials, today is the day Americans decide who will lead the country in to the future.

Based on the outcomes of today’s elections, we’ll likely see some significant action on expiring and expired tax provisions once the new leaders are sworn in.  We’ll keep an ear to the ground to see how this all plays out.

Tax Planning – A Tricky Proposition

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This time of year we start talking to our clients about tax planning, but this year things are taking a somewhat different twist.  With the November elections still to be determined, and additional parts of the Affordable Care Act going into effect in 2013, below are a couple of new things we’re thinking about this planning season.

  • Are you considering selling stocks, bonds, or investment real estate at a considerable gain?  If so, you may want to consider doing it at the end of 2012, because in 2013, you may find yourself paying an additional 3.8% tax on those gains.
  • If you own a business, are you considering a bonus for yourself?  If so, doing that in 2012 may save you from paying an additional .09% in Medicare tax which goes into effect for certain taxpayers in 2013.
  • If you’re under age 65, it may pay to push as many deductible medical expenses into 2012 as possible, as less of them will be deductible in 2012.

These are just a few of the items in the wind for the end of this year.  If you’re a client of ours, expect to see a tax planning letter with even more ideas in the coming weeks.

Kids and Money

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Teaching kids to respect money and manage it well seems to be a life-long process for parents.  According to a survey conducted by the AICPA though, it’s a lesson that is not being taught at all in 3 of 10 American households, despite most parents believing it was an important one.

The National Financial Literacy Commission suggests the following when talking to your kids about money.

Start early. As soon as children are able to express a want, discuss basics like delayed gratification that are the foundation for budgeting and saving for a goal. Require children to save some of their birthday cash and money earned in after-school jobs. Give them small jobs to earn an allowance to pay for toys or other wants. Make saving fun by giving them a grocery list, and have them clip coupons and comparison shop by reviewing store fliers. Split the savings with them to reward their effort.

Speak in their terms. A child might not care about money for college and may be more interested in money to buy a toy or spend with their friends. Create teachable moments around things your children care about. Also, show them the statement for their college savings account to build an understanding of compound interest and saving toward a long-term goal. The real learning will occur when your child tries to figure out how to earn and save for a toy or other item you decide not to purchase for them.

Repeat often. The more you discuss good financial habits, the more likely your child is to make them a part of their daily life. During dinner, talk about saving for a big purchase, such as a family vacation, and how it might affect the budget. Show them your pay stub to talk about taxes and saving for retirement, and review their savings account and college account statements with them.

Walk the talk. No matter what you say to your children about money, your actions are even more important. If you cave in easily when they make a fuss over a toy at the store, you will have difficulty convincing them to delay gratification and stick to a budget.