Monday, December 26, 2016
Countdown to Financial Fitness: Tips for Charitable Giving: Late December is probably the most popular time of the year for charitable giving. People are still in the holiday spirit, and those who it...
Late December is probably the most popular time of the year for charitable giving. People are still in the holiday spirit, and those who itemize deductions may be thinking about ways they can reduce the year's taxable income.
There are so many worthy causes out there. How do you choose which ones to support? And all charities are not created equal; some are better stewards of your donation dollars than others.
Here are some tips for deriving the most benefit from your charitable contributions:
1. Don't respond to solicitations by telephone, unless it is a charity you recognize and plan to support. Ask the caller to send you some literature or refer you to its website (which should end in .org, not .com). A legitimate charity will not mind. The crooked ones will insist that you give them your personal information over the phone. Keep in mind that many fake charities have names that sound similar to the legitimate ones.
2. Make your gift online by credit card or mail a check so you'll have a record of it. Most charities will immediately send a thank-you email confirming receipt of your online donation, with the date and amount—documentation you will need to support your tax deduction. And try to give directly to the charity, rather than through a paid fundraiser, who will most likely keep a portion of your donation.
3. Research the charities you are considering supporting. Charity Navigator (www.charitynavigator.org) assigns ratings of one to four stars based on the organization's financial performance, accountability and transparency. You can see how much its leaders are paid, how much of its income goes to programs—as opposed to administration and fundraising—as well as how the charity compares to other organizations doing similar work. You may be surprised to find that some of the better known charities don't score very well.
4. Charity Navigator only rates charities that have at least a million dollars in revenues, so many small, local charities will not have a score. Check Guidestar (www.guidestar.org) for copies of the organization's tax return (Form 990), mission statement, customer reviews, and programming/governance information shared by the charity.
5. Ask if your donation is tax deductible. The organization's IRS status as a 501(c)(3) or similar should be clearly noted on its website, receipts, and/or other materials. If you're unsure, visit the IRS website to verify. Also, if you accept a "thank-you gift" such as a tote bag, dinner, magazine subscription, etc., in exchange for your donation, the fair market value of that "gift" must be subtracted from your tax deduction.
6. Think about supporting small, local charities so your donation dollars will stay in your community. Many of these organizations are run entirely by volunteers and thus have lower overhead costs than the national powerhouses headed by CEOs making six-figure salaries. Also, you might be able to visit the site, meet and talk to some of the volunteers, and observe how well the charity executes its programs. And if you can't help with your checkbook, perhaps you can spare a few hours of your time?
What charities do you support, and how do you choose them? I'd love to hear your comments.
Friday, December 16, 2016
Countdown to Financial Fitness: Year-End Financial Strategies: The year is almost over, but there are still a few things you can do to get your financial house in order. The goal? Don't leave money ...
The year is almost over, but there are still a few things you can do to get your financial house in order. The goal? Don't leave money on the table, and try to optimize your tax situation for 2016 and 2017.
Here are some suggestions:
Spend the money in your Flexible Spending Account (FSA). Most accounts are use-it-or-lose-it, and funds have to be depleted within same calendar year. Refill that prescription, have your teeth cleaned, order a new pair of glasses or contact lenses.
Make charitable contributions. If you itemize deductions, you can reduce your taxable income and help the causes you care about at the same time.
Evaluate deductions. For example, maybe you can accelerate property tax payments, business expenses, professional dues, or make your January mortgage payment early. Or you might be able to defer or accelerate certain income and/or expenses for the most favorable tax impact.
Contribute to your retirement account. You only have until the end of the year to fund your 401k (maximum $18,000; an additional $6000 if you're over 50), but you can make 2016 contributions to an Individual Retirement Arrangement (IRA) through April 15, 2017. If you have a Health Savings Account (HSA), you can also make contributions for 2016 through next April.
Evaluate your investments. If you have capital gains, see if you can unload some losing investments to offset them. While taxes should not determine your investment strategy, you can take the sting out of a bad investment decision or mitigate the tax impact of a gain with a little clever balancing.
Give appreciated securities. Kill two birds with one stone by donating assets such as stock or mutual funds instead of cash to a qualified charity. If you sell the stock first and donate the proceeds, you'll only be able to deduct the amount of cash generated by the sale, and you will pay income tax on the gain, which could be sizable if the value of the asset has increased since you acquired it. But if you transfer the asset directly to the charity, you pay no capital gains tax, deduct the fair market value of the asset at the time of transfer, and the charity gets more money out of the deal. Check with the institution holding the asset and the charity receiving it to work out the details.
What suggestions to you have for end-of-the-year financial moves? I'd love to hear your comments.
Saturday, December 10, 2016
Countdown to Financial Fitness: Avoid Overspending During the Holidays: Get in the Christmas spirit! The holidays are the time for indulgences, to treat yourself! Don't be a Scrooge! Sale! Buy now, pay l...
Get in the Christmas spirit! The holidays are the time for indulgences, to treat yourself! Don't be a Scrooge!
Sale! Buy now, pay later!
Temptation to overspend abounds, especially during the holidays. Here are some tips to keep it under control while you're shopping:
Make a list. And then stick to it. Decide in advance whom you will shop for, and how much you are prepared to spend.
Compare prices ahead of time. If you know what items you plan to buy, check around online and also peruse the ads for the brick-and-mortar stores in your area. Some stores will match a competitor's price, so take the ads with you, or print out the online display.
Set a budget. If you view a credit card as a magic plastic wand, leave it at home. Bring only the amount of cash you've allocated for your shopping trip. Or if you're uncomfortable carrying a lot of cash, load a prepaid card with your gift budget. Once it's gone, you're done.
Be realistic about your weaknesses. If you know that, for every gift you buy for someone on your list, you'll find something you just have to have for yourself, add your name to your shopping list, and budget accordingly.
Eat a healthy meal before you shop. That way, you'll have more energy and be less tempted to refuel on overpriced junk food at the mall.
And lastly, if you do overspend, don't beat yourself up. Just like a dieter overeating at a holiday feast, don't use your slip-up as an excuse to declare failure and cave in to temptation for the rest of the season. Get back on plan tomorrow.
How are you managing holiday shopping? I would love to hear your comments.
Wednesday, December 7, 2016
Book Nook Nuts: Author Interview with Sharon Marchisello: 20 Questions (Author Interviews) Brought to you by Debby P. 1.Tell us about your current project. My 70,000-word mys...