You can lower your taxes for this year now, but not after December 31.

It’s that time of the year again when you are preparing for holiday parties, agonizing over gift lists and rushing to get everything done in time. Take a breather and consider the following ways in which you can save money on taxes this year. Most of these money saving tips expire on Dec 31 though, so hurry!

1. Sell and claim capital losses: If the recent downturn in the markets left you with losing investments, you can sell them and use the loss to reduce your taxable capital gains. After your capital losses cover your capital gains, you can further use them to deduct your taxable income by up to $3000. Moreover, you can carry over any remaining capital losses to next year and beyond. All of this will reduce your tax bill. However, be careful in selecting the stocks/bonds you want to sell. Don’t end up selling something promising just to reduce your gains because you won’t be able to buy it back for another month without losing the tax advantage (wash sale rule). Also, this idea works only for taxable accounts such as your brokerage account. There is no point selling in your IRA where your investments are tax sheltered anyway.
2. Prepay expenses that are deductible: If you expect to be in the same or lower tax bracket next year, prepay mortgage interest or property taxes this year. This will allow you to claim the deduction early. For example, if you or your spouse expects to be without a job next year, you as a couple are probably going to be in a lower tax bracket soon and will have less taxable income to deduct from. To reduce this year’s higher taxes, consider increasing deductions by prepaying deductible expenses.
3. Donate stock to charities: Instead of writing a check, donate to charity stocks that have appreciated a lot since you bought them. You will be able to deduct the entire market value of the stock for tax purposes. The charitable organization will be able to cash it without paying as much taxes as you would have. Everyone wins.
4. Take advantage of energy and home buyer credits: Get your share of the stimulus goodies by claiming energy or home buyer credits. If you’re house hunting, remember to take advantage of the $8000 first-time home buyer credit, or the $6500 existing home buyer credit. If you had eco-friendly improvements done to your home (solar-powered heater, energy saving windows etc.) you can deduct 30% of their cost up to $1500.
5. Contribute to your IRA: If you are under 50, you can contribute up to $5000 to your traditional or Roth IRA in 2009. If you are over 50, you may contribute an additional $1000 in catch-up contributions. If you have extra cash, salt it away in your IRA because not only will you be saving but your savings will multiply tax-deferred.

Tax is like an extra expense. Avoid it anyway you can and the time to think about it is NOW.

This is a guest post from Ritu Agrawal, who used to work for JPMorgan Chase and will be writing to you from time to time. Check out her bio page here.

With just over a month left in 2009, it’s time to start thinking about your finances in 2010. Back in late October, the IRS released details regarding income tax changes for 2010, including (very slightly) modified income tax brackets. Here’s a quick rundown.

2010 Federal Income Tax Brackets

Here’s a quick rundown of Federal income tax brackets for 2010. If you compare to the 2009 income tax brackets, you’ll see that they’ve hardly changed at all:

Tax Bracket	Married Filing Jointly	Single
10% Bracket	$0 – $16,750	$0 – $8,375
15% Bracket	$16,750 – $68,000	$8,375 – $34,000
25% Bracket	$68,000 – $137,300	$34,000 – $82,400
28% Bracket	$137,300 – $209,250	$82,400 – $171,850
33% Bracket	$209,250 – $373,650	$171,850 – $373,650
35% Bracket	Over $373,650	Over $373,650

A few other points:

• Personal and dependency exemptions will be unchanged at $3650
• The standard deduction for heads of household increased from $8350 to $8400, but will remain unchanged for others
• The gift tax exclusion will remain unchanged at $13000

Minimizing your income taxes

Regardless of what the income tax brackets look like next year, you should start planning now to minimize your tax hit. Be aware (and take advantage) of the most common income tax deductions as well as those commonly missed tax deductions. Adopt tax efficient investment strategies. And be sure to take advantage of perks at work like a flexible spending account (FSA) or a health savings account (HSA).

Link - http://www.fivecentnickel.com/2009/11/27/2010-income-tax-rates-whats-your-bra...

Features Money Saving Gadgets for Your Home

Link - http://www.moolanomy.com/2144/21-gadgets-which-actually-save-you-money/

It is no mystery to anyone that the US government has pumped trillions of dollars into the economy, all while holding interest rates at record lows over the past two years. Anyone with a basic concept of supply and demand, with all of these dollars in our economic system, will fear that rising inflation is becoming more and more imminent as each day...

Read Original Complete Article Here - http://moneyning.com/investing/5-effective-ways-to-protect-yourself-from-risi...

This is a guest post from Kevin Mercadante of Out of Your Rut. Kevin is also author of Lighten Your Load, an e-book focused on reducing living expenses while still maintaining a comfortable lifestyle.

Credit limits are cut. Interest rates are increased to 29.9% after just one missed payment. Rewards programs are reduced and perks eliminated. Credit card “agreements” are now dozens of pages long, and written in some language you can almost decipher, but you’re pretty sure it isn’t English. $39 overdraft fees have become the new standard on checking accounts. And now the darker side of debit cards has started to emerge.

Do you ever feel the desire to somehow fight back, to say I’m done playing this game? Well, maybe there’s a way…

How did we get to this point?

In Five Secrets Your Bank Doesn’t Want You to Know (Yahoo! Finance, August 5th), Laura Rowley writes:

“Banks are squeezing customers with historically high fees and penalties, from overdraft charges to account service fees to new surcharges on foreign debit transactions…

Last year, overdraft and insufficient-funds charges totaled nearly $35 billion and comprised about 90 percent of banks’ consumer-fee income, according to a study by the consulting firm Bretton Woods Inc. Three-quarters of banks automatically enroll consumers in their “overdraft protection” programs without formal permission, and more than half of banks manipulate the order in which checks are cleared to trigger multiple overdraft fees, according to a Federal Deposit Insurance Corporation study.”

Increased fees and restrictions aren’t a figment of our imaginations, but we’ve all gotten so comfortable with the way things are that we pay these fees, complain to our friends and neighbors about it -— or sound off on weblogs —- and then… We continue to pay them. As long as we keep this up, banks won’t have to court us as customers, and we’ll get what we richly deserve.

I’d like to suggest that the best way to fight back against the relentless skimming of our financial accounts is to limit their use. While it isn’t practical to completely eliminate banks from your life and still be fully functional in the modern world, we certainly can reduce our usage, and therefore our exposure to the increased fees, interest rates, and restrictions.

Cash on the barrel

Talk about using cash, and you get the usual litany of drawbacks: there’s no buyer protection on purchases, you won’t earn credit card rewards, if it’s stolen you can’t get it back, “I’m not comfortable carrying around hundreds of dollars,” and so on. All of these objections have some merit, but I’d also suggest that none are insurmountable.

In fact, by accepting total reliance on bank cards, you’re accept a different set of risks. It’s unfortunate, but there will be advantages and drawbacks no matter how you proceed, which is why it’s never in our best interest to take any one method off the table entirely.

The advantages of paying with cash:

• You will never pay more than you can afford for anything, the way you do when you pay with credit. In other words, no more month-end spending hangovers.
• You will be more likely to stay on budget; studies have shown people will spend more if they pay by credit card than by cash.
• Though you can lose your cash to theft, your loss will be limited to the amount of cash you had with you. But there is zero chance of identity theft because cash carries no record of you.
• With credit and debit cards, a paper trail is created each and every time you have a transaction, so paper with identifying information—often including your signature—is floating around all over the globe. There is no paper trail with cash, other than the receipt, which will be in your possession.
• Cash is the ultimate form of financial simplicity. You pay and you go, and there’s no chance that additional charges can be added to your bill after the fact. There are no “gotcha provisions” with cash as there are with credit cards.
• Privacy. When I was in the mortgage business, people were often hesitant to turn bank statements over to us because there was a record of their every move showing up; where privacy is the issue, cash is the best transaction method by far.

A happy medium

By creating a tiered spending system, we can minimize reliance on bank cards without eliminating them entirely.

Consider using cash for routine purchases, especially for anything under $100, where most transactions fall. Is it really worth incurring transaction fees, or risking overdraft/overlimit charges or identity theft in exchange for the convenience of being able to swipe a card for a $3 cup of coffee?

Use debit cards for purchases in excess of $100, which will also minimize the amount of cash you need to carry. An exception is gas purchases, since there’s a major advantage to swiping a card at the pump as opposed to abandoning your car to pay a store clerk for an undetermined advance purchase.

Finally, restrict credit cards to an only-as-needed basis. This would include major purchases where buyer protection is advisable, or airline tickets if your card offers travel insurance.

What ever combination you settle on, the important thing is to come up with a mix that will reduce your reliance on both credit and debit cards, and the fees, high interest, and other restrictions that come with them.

You thoughts

How do you feel about switching to cash for your everyday purchases? Are you for it or against it? Why or why not?

This is an article reprint.

Original link - http://www.fivecentnickel.com/2009/12/02/is-it-time-for-cash-to-make-a-comeback/

Mortgage Rates Set New Record Lows

By Sally A. Runyan/Thomson Reuters

December 3, 2009

The 30- and 15-year and one-year ARMs rates all moved to new record lows in the week ending Dec. 3, according to Freddie Mac's weekly survey. 

The 30-year fixed mortgage rate declined to 4.71% with an average 0.7 point from 4.78% last week, 15-year fixed rates slipped two basis points to 4.27%, and one-year ARMs dropped 10 basis points to 4.25%. 5/1 Hybrid ARM rates rose one basis point to 4.19% and is near its record low.

Fixed mortgage rates have been on the decline now for five straight weeks. 30-year rates in particular have dropped 32 basis points over this time.

Meanwhile, the Mortgage Bankers Association's Refinance Index has been just modestly responsive to the rate decline. 

When rates fell from 5.03% to 4.98% (week ending Oct. 23 through Nov. 6), the Refinance Index jumped 27% to nearly 3000. However, as rates have tumbled an additional 27 basis points through Nov. 25, the Refinance Index has declined 9% to ~2720 as of the week ending Nov. 27. 

Credit Suisse analysts said they do not expect a major increase in the Refinance Index unless mortgage rates decline to 4.50%.

For more information on related topics, visit the following:

• ABS
• MBS

This is an article reprint.

Original link - http://www.structuredfinancenews.com/news/-200428-1.html

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