Plan now for the tax impact of the health care law

 

Did you adopt the wait-and-see approach to tax planning this summer? With the Supreme Court decision on the health care act removing a level of uncertainty and the end of the year approaching, it’s time to stop waiting and start doing.
Here are three questions to consider.

• How will the increased medical deduction threshold affect me? Beginning in 2013, your unreimbursed medical expenses will have to exceed 10% of your adjusted gross income in order to claim an itemized deduction, unless you’re 65 or over. For your 2012 federal income tax return, the threshold is still 7.5%.
  
  Tip: Consider shifting elective medical expenses into 2012.

• Should I convert my Roth in 2012? Starting January 2013, a 3.8% tax on unearned income such as capital gains, dividends, and interest applies if your modified adjusted gross income (MAGI) is more than $200,000 ($250,000 for married filing jointly). Distributions from Roths do not increase your MAGI - but conversions do.
  
  To do: Calculate your tax exposure before year-end.

• Will the additional Medicare tax on earned income apply to me? The new 0.9% Medicare surtax takes effect in January 2013, and will apply when your compensation and self-employment income exceeds $200,000 ($250,000 when you’re married filing jointly). Your employer is only required to take your wages into consideration when withholding the tax.
  
  Result: Your estimated tax payments or withholding amounts might need to be adjusted next year.

Please call to discuss how the health care law will affect your taxes for 2012 and future years.

© MC 2012

aconner@atconnercpa.com

Home equity loans and lines of credit: Consider the pros & cons

 

It's a simple calculation. Deduct the outstanding balance on your mortgage from your home's market value. The difference is home equity. For example, if your house is worth $300,000 and your outstanding mortgage (including any other liens tied to the property) is $200,000, your home equity is $100,000. And as lenders are quick to point out, that equity represents a ready source of cash. It can be used to pay for emergencies, home improvement projects, debt consolidation, tuition payments, even a cruise in the Bahamas.

The two main vehicles for tapping your home's equity are home equity loans (HELs) and home equity lines of credits (HELOCs). With a HEL, you get the loan proceeds in a lump sum and establish payment terms (loan amount, payoff period, and interest rate). In that sense, a HEL is similar to an automobile or consumer loan. A HELOC, on the other hand, acts more like a credit card. The lender establishes a limit against which you may borrow, and the interest rate tends to be variable.
Before using the equity in your home to bolster your bank account or pay off high-interest debt, consider the following:

• A home equity loan is best used for a one-time goal, such as remodeling a kitchen. Using the proceeds for a project that increases the home's value may even pay for itself in the long run. A home equity loan provides the security of a fixed monthly payment, a stable interest rate, and a definite term (typically ten to fifteen years), making it a good choice for planning purposes. On the other hand, if your income suddenly dries up or your home's market value drops, you're still on the hook to make those payments.

• Home equity lines of credit provide more flexibility, making them useful for, say, a remodeling project to be completed over an extended period of time. You take on only as much debt as needed to complete the next step in the process. On the other hand, a line of credit's variable interest rate makes it more risky when rates are climbing. And like a credit card account, a line of credit is easy to abuse.

The decision to tap your home's equity using either of these vehicles will depend, to some extent, on your tolerance for risk. Remember, if you fail to make the required payments, your house is on the line.

Vacations: All-Inclusive vs. Seperate Food Expense

From Wallet Happy Vacations

After being stressed with life’s every day challenges, reaching the decision to take a vacation is, at most, the easiest yes you’ll ever say! After all, who wouldn’t pass up a weekend of pampering filled with spa treatment? Or, 7 whole days on the sunny beaches of the Caribbean Islands just to get away from it all? Even paying for the trip is a breeze with so many travel professionals partnering with destinations and resorts to offer unbeatable value! So you call up Wallet Happy Vacations, get your family together, book, pack and go!

Fast forward…

What happens after you’ve arrived to your destination and, after 2 days, have already spent more than $150 on just food? Yup! That seems to be the not so new but, new thing these days. Seems like where ever I go people are asking about the true benefit of booking an All-Inclusive vacation versus being surprised by the expense of food and entertainment with choosing not to have an All-Inclusive vacation.

So, the question today is: To be All-Inclusive or NOT to be?!

Before I tell you why I recommend the All-Inclusive option, allow me to provide the meaning of All-Inclusive for those who aren’t sure.

 All-Inclusive is having unlimited access to all of the amenities and food/beverage options you would otherwise have to pay separately for while on vacation. At most, the All-Inclusive resorts include some of the following under the All-Inclusive option to every guest during their stay:

·         Unlimited Meals

·         Unlimited Beverages(inclusive of alcohol)

·         Unlimited Use of in room Mini Bar

·         Unlimited Snacks

·         Unlimited SELECT Resort Non-Motorized Activities

·         Unlimited Resort Activities & Entertainment

·         Roundtrip Ground Transfers upon arrival to your destination

·         Tips & Taxes (Yes! It will include tips as well. But remember to take good care of the servers who took good care of you!)

Although I’ve traveled where the All-Inclusive added value is not offered, both, All-Inclusive and having a food expense have worked out rather well for me and my family. But, I’ll admit, the All-Inclusive vacations were the most fun and beneficial to us! Why? Well, for start, taking a teen anywhere food is is enough reason to book All-Inclusive! Besides not having to worry about the pricing of each person’s plate, there is also relentless entertainment from sun up to sun down and for all ages!  Remember, one of the concepts of the All-Inclusive option is to give people like you and I a break when it comes to having to pay for things we would paid for separately like food and activities. It’s a good idea to utilize this feature!

 Now, of course, we know the option to go without your family’s vacation being All-Inclusive could amount to as much as your monthly mortgage payment depending on how many your traveling with! Yup! It’s true.

The biggest question I ask my clients when vacation planning is, are you taking the kids? That pretty much sums it up! As a Travel Professional, I recommend that if you are taking children on vacation with you, you want to consider All-Inclusive packages or take a cruise. These options will cover all food & beverage expenses. Except for cruises where carbonated beverages are additional. Plus, with these options also comes unlimited activities and entertainment. The best thing about this is, the fee is paid upfront and incorporated in your package so there are no surprises!  

In sum, there are many options resorts will offer to you and your family to help make your vacation one that is memorable. The last thing you want is for your spending money to go on food for 7 days. Why not take advantage of your vacation and stay with resorts that will take care of you and your family including unlimited meals, beverages, snacks and entertainment? It’s a true money saver indeed!

"Leaves alot to be desired"

My mother used this phrase a lot.  This morning as I was having my usual one-sided conversation with her, reminding her of how she left too quick with so many of my questions unanswered, I ended the sentence with “that left a lot to be desired.  Now what exactly does that mean woman/!”  lol

As much as I remember hearing her say it, I never really thought about what it meant.  Like so many of her little hip quips, I just laughed and said ‘yeah okay mom.  That’s real hip.”  Not realizing at the time just how really hip her quips were…

 

Then I ended by telling her that's the way I feel about this upcoming election.  It leaves alot to be desired.

Education tax benefits can offset college costs

Planning your college course schedule is important — and so is planning for the tax benefits available to help offset the expense of paying for those courses.

For 2012, federal education tax benefits include two credits: the American opportunity credit and the lifetime learning credit. Each has different rules, and you can only take one per student in the same year.

In addition, you're limited to receiving one tax benefit from the same expenses. For example, say your employer provides educational assistance, and you use the money for qualified expenses, such as tuition. The employer-provided assistance is generally tax-free, so you do not include the expenses for which you used the money when calculating your American opportunity or lifetime learning credit.

The one-benefit rule also applies to expenses paid with scholarships, grants, or other tax-free assistance, or that you deduct elsewhere on your federal income tax return.
You can, however, claim whichever credit applies for other out-of-pocket education expenses. That's true no matter whether you pay by cash, check, credit card, or loans.

If someone in your family is headed to college this year, please give us a call. We'll help make paying for the courses a less taxing experience.

*Corporate office: 8000 Old York Road Elkins Park, PA 19027 (215) 782-8833 Fax: (215) 782-8933 Branch office: 6319 Germantown Avenue Philadelphia, PA 19144 (215) 849-0733 Fax: (215) 849-6130 E-mail: aconner@atconnercpa.com

How to cut car maintenance costs

contact: aconner@atconnercpa.com

Insurance, fuel, loan interest, maintenance, repairs, depreciation — all the expenses associated with owning and driving an automobile can take a huge bite out of your family budget. Some of these are sunk costs. Because the money's already been spent — the down payment to purchase your car, for example — such costs are irrelevant when budgeting for the future. But other costs of owning and operating a vehicle can be pared down substantially. Shopping around for a better insurance rate or discovering a station that sells cheaper gas may save hundreds of dollars over time. Being vigilant about routine maintenance is also a great way to reduce operating costs and avoid major repair bills.
To make a dent in your car maintenance budget, follow these five tips from the pros.

• Read the owner's manual. That little booklet in your glove box is full of detailed information about your car. It also includes a recommended maintenance schedule, which is more reliable than the sticker the auto shop attaches to your windshield after an oil change. If you've lost your owner's manual, maintenance recommendations for your car are often available on the Internet at websites such as www.carcare.org.

• Shop around for repairs. Generally speaking, independent repair shops tend to charge less for repairs than dealerships. But be cautious. Ask family and friends for recommendations, and don't be afraid to get several estimates. If possible, find a shop with at least one certified automobile technician.

• Change your oil regularly. Depending on your car's make and model, as well as driving conditions in your town, "regularly" will vary. Again, the owner's manual should be your first stop to determine how frequently to change lubrication fluids. How long an engine functions without major repairs is often directly correlated to how routinely the oil was replaced.

• Use cruise control. In general, driving at a constant speed improves gas mileage. You'll need fewer trips to the gas station if you keep an even pressure on the accelerator instead of lurching through town like a student driver.

• Check your tires. Another key to better gas mileage is keeping your tires properly inflated. The best place to find proper tire pressure or PSI (pounds per square inch) is on your car's door jamb. Regularly rotating the tires also helps distribute wear and tear and may keep shocks from needing replacement as often.

Participating in a Travel Club has many benefits

If you’re like me, you’ve heard all kinds of reasons why people won’t travel. From the distance of the destination to the expense, I can’t keep up with the reasons why people put off traveling.  But, after having to put off another trip in 2010 because friends & family had backed out, I decided to start my own travel club. Travel clubs are the ultimate way of meeting new people and exploring destinations you once put off because you had no one to travel with. Joining travel clubs opens doors one would have never thought otherwise! Below, I’ve listed the top 8 reasons I feel travel clubs not only broaden your likeliness to see the world, but being an active member of a travel club also exposes you to the many diverse settings us earthlings have to offer!

8 > Budget friendly when traveling in a group. Traveling with your club members can offer you lots of savings depending on when and where you are traveling to. At most, when I’ve booked my club members on group travel to the Caribbean Islands for instance, we’ve saved a nice $100 per person. That’s enough to grab a few souvenirs to tease those who backed out of traveling with you! Or even better, take the $100 and purchase an excursion!

7 > Invited to come back by city host. Well organized travel clubs whose members are on their “best behavior” are always welcomed back. Group leaders can expect friendly emails from hotel management thanking them for their business and to invite them back again. This is a plus because when you return, you’re almost guaranteed to get all group request fulfilled like room upgrades.

6 > Discover personal interest. Sometimes we think we know everything about ourselves, right? Well, uh…WRONG! Sometimes you have to be exposed to things you wouldn’t do in order to discover that you like them after all. Take snorkeling for example. Being terrified of water higher than a foot, I thought I was literally going to die in Coho Rios, Jamaica this past April when I discovered that snorkeling wasn’t so bad and that I absolutely loved it! Until this very hour, I still thank the crew for “pushing” me in the water after holding up about 20 other people who were ready to jump in the shallow end of the sea.

5> Experience places you never thought you’d go. Travel clubs open the door for endless travel opportunities. Many people seek to fulfill their bucket list while being travel club members. After all, the only reasoned they joined was to travel, right? Being a member is where you discover your interest for South Africa or Costa Rica.  These are places you’ve always turned down because you just couldn’t picture yourself being there.  

4 > Brush up on your social skills. Believe it not, being a member of a travel club also helps you brush up on social and networking skills! Meet and greets are popular in my travel clubs. Knowing how to communicate and get along with others is critical. Good social and networking skills makes it that much easier to choose travel buddies and plan your next adventure.

3 > Exposure to diversity. Knowing who else lives in the world and how they live their lives is, for many, a very high interest, hence, creating a historical and culturist traveler. As a member of a travel club, you are exposed to various cultures and backgrounds worldwide depending on where you are traveling to. Learn how to say hello in Swahili or good bye in Mandarin. How about how are you in Spanish? The locals will love you for it!

2> Make new friends and go places! Travel clubs are all about meeting likeminded people and traveling the world! I’ve met many good people since organizing my own clubs. Lots of people who live and breathe to see the world. They are passionate about traveling and are offered endless travel options as members. No matter if it’s a day trip to our nation’s capital or a 10 day journey to South Africa; you can find buddies and go!

#1 reason to join a travel club…

Endless travel opportunities. That’s right! The opportunities for travel are endless when you’re a member of a travel club! While you may not always be available to travel with the group, there are always options posted for another time. In my clubs for example, I have a large trip which consist of 7 + days and an extended weekend trip posted for each month from January to December. With over 700 club members combined with all of the clubs I organize, there are always options available and it helps keep everyone motivated to travel.

Next time you have the travel bug but your friends don’t, find a travel club and join in on the fun of exploring the world! I invite you to join me and my travel clubs on meetup.com. Below is a list of the clubs I organize and the requirements to join. 

The Philadelphia Single Travelers Connection- Designed especially for those who don’t like traveling alone and who are trying to avoid single rate travel fees. Age requirement is 25 and older. Meet & Greets are held every 4^th weekend. To join us, follow the link > http://www.meetup.com/The-Philadelphia-Single-Travelers-Connection/

The Philadelphia Travel Club – Designed to bring those who live in or near Philadelphia together through travel. The group focuses on seeing the world with endless possibilities. Open to ages 25 and older. To join us, follow the link > http://www.meetup.com/travel-596/

The Globe Trotting Ladies of Philadelphia – Especially designed for women aged 35 years and older. The group focuses on women whose passion is to travel, but fear having to travel with those who aren’t peers. Believe it or not, many people won’t travel with someone who is 5 + years younger than them because they feel the experiences won’t have meaning. This group is new and has a focus of bringing together women who are passionate travelers and who are within the same age bracket, whether it’s a group of 35 year olds or 50 years old, either way, we’re focused on bringing age together through travel.  To join THE GLOBE TROTTING LADIES OF PHILADELPHIA, Click Here!  

The next time your travel desire is turned down, travel with us!

Anita Byers, CEO

Wallet Happy Vacations