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Charitable Contributions


The final countdown is on…that’s right, 2011 is almost over. Are you ready for your 2011 tax bill? With one month to go, you still have a few more options to lower your amount due to the federal government. Let’s start with one of the most popular methods of deduction…

Charitable Contributions

Giving is a traditional part of many of our holiday celebrations at this time of year. Thankfully, when we are eligible to itemize deductions, the government honors our efforts by letting us deduct our gifts from our taxes; a fact which helps us be even more generous than we might otherwise be able.

However, I am sure you join me in an even greater reason to give…the shear joy. With so many people in need and excellent charitable organizations facing a significant drop in donations, our help is needed more than ever.

So, during this countdown to the new year, take a few minutes to review your giving for 2011. Use the following guidelines to take advantage of tax deductions.


Be sure you get a written receipt from the organization showing its name, the date and place of the contribution and the amount given. For donations under $250, only, you can also use canceled checks or bank records to prove your deduction.

Non-cash Contributions

Worth over $500: You will need to file Form 8283 (Noncash Charitable Contributions) with your 1040.

Worth over $5,000: Obtain a written appraisal of the value of the item(s) and complete Section B of Form 8283. Signatures of both the appraiser and a representative of the charity are required on the form.

Publicly traded securities worth over $5,000

No appraisal needed. However, with appreciated securities in any amount, only donate those you’ve owned for more than one year or your deduction will be limited to cost rather than current market value.

Used Clothes and Household Items

Includes furniture and furnishings, electronics, appliances, linens, etc., which are at least in good condition. “Junk” items cannot be deducted.

Donated Vehicles

Your deduction depends on the charity’s use of the vehicle. If the charity sells it (and does not use it significantly for making improvements or for other charitable purposes), your deduction will typically be the amount of gross sales proceeds. Also, be aware that the charity is required to issue detailed written acknowledgments on Form 1098-C to you and to the IRS…which the IRS can use to verify the information on your tax return.

I am thankful for your generosity to our community and world and want to make sure you get the tax deductions you deserve. If you have any questions or concerns about how you can optimize the tax write-offs of your 2011 charitable contributions, please give me a call to discuss.

Four Different Types of Life Insurance

generic insurance policy with pen; could be life, auto, health etc

Life insurance… We typically think of it as a retiree’s portfolio product. It’s the end-of-life planning that we much rather not think about. However, life insurance is a critical component to financial planning for all ages. Life insurance does pay death taxes, but also provides income for family expenses such as college bills or mortgages. And the benefits (proceeds) of the policy, usually far exceed the cost of the premiums.

 Here are the four most popular types of life insurance:

 1.     Term Insurance-Term insurance is the purest form of life insurance and is typically low cost. It is only valid for a specific time period, such as 10 or 15 years (after which the insurance coverage ends), and provides a fixed amount of protection for a fixed premium.

 2.     Whole Life (Permanent) Insurance-In this version, the premium remains the same during the length of the contract. As a cash value accrues, the insured can borrow against the cash value or can “cash out” that value by canceling the policy.

 3.     Universal Life-This type of policy combines the two previous policy types. Part of the premium is invested in a cash fund while the balance is used to purchase renewable term insurance. This type of policy separately states and defines the investment, expense, and mortality elements and offers greater flexibility for paying premiums. The insured chooses a death benefit that may:

  •  increase with time, or
  • be linked with increasing cash value, or
  • remain the same.

 4.     Variable Life-A variable life is similar to whole life…with one major difference. Both the death benefit and the surrender value are not guarantee because they may vary based on investment performance of policy assets. The benefit is the investment could possibly grow (or not-thus the higher risk).

 Which type of insurance will suit the needs of your and your family? Don’t wait to decide. The younger you are when you purchase, the better your rates. But at any age, options exist to meet your needs. Give me a call to discuss how we can help you with your life insurance decisions.

5 Ways to Prepare NOW for Tax-Free Retirement Income


Whether you are many years from retirement or it’s just around the corner, the idea of paying taxes on your retirement income is not a pleasant thought. We know that retiring typically means having a fixed income, so how can you prepare now to avoid taxation worries later?

The key is where you place your money. Here are four locations to set aside your savings today.

Health Savings Account: While we generally think of this as a current benefit for uninsured medical costs, this tax-free-contributions plan can be used in retirement to reimburse yourself for past or present health care costs…including Medicare premiums! Long-term investment options are offered per plan and funds remain until you retire. As long as you follow the plan’s rules, no taxes are paid on withdrawal (not even on the gains).

Roth IRA: Your money is only taxed when deposited and not when withdrawn in retirement…and that tax-free status covers your investment gains. However, tax bracket and contribution limits mean this option is not for everyone.

Roth 401(k) or 403(b) account: Available to any income level, this option lets you make Roth contributions inside your 401(k) and 403(b) accounts. While the withdrawal of contributions and earnings in your retirement years are tax-free, you do pay taxes on your contributions during the year the funds are deposited. Also, the contribution limits are higher.

Municipal Bonds and Funds: Income from municipal bonds is federal-tax-free (though sometimes taxed by states). However, these bonds typically pay a lower interest than taxable versions and are subject to taxes if bought or sold on a secondary market.

Life Insurance: After you have exhausted all your other tax-deferral opportunities, it could make sense to consider a cash value life insurance policy. Cash value builds up in a whole life insurance policy on a tax-deferred basis. There is no tax on the cash value until surrender, and then only if the value exceeds the policyholder’s cost basis. If a policyholder wants access to the cash value without surrender, he can borrow up to a designated percentage of a cash value.

Which tax-free options fit best with your current situation and retirement plans? Call me to review your portfolio, now. Then you can rest assured that all of your retirement savings will be ready for you to use, later.