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Tax Tips Newsletter
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November 2008 - Vol 3, Issue 7
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Greetings!
Me at Great Wall

Just back from vacation. Hopefully you can tell by the picture that I was in China. The Great Wall was, well, pretty great! A little chilly. It was a fabulous trip. We saw a lot of beautiful sights and had a wonderful cruise down the Yangtze River. It's good to get home though. Rested and ready to go.

With all of the changes in the stock market this year, you don't want to be surprised when tax time rolls around. If you are in need of year end tax planning, please contact me as soon as possible so I can get started on a year end tax projection for you.

The office will be closed for the Thanksgiving holiday on Thursday, November 27th and Friday, November 28th. The office will be open on Monday, November 30th.

Pig with money in background
If the current financial turmoil has you concerned about the safety of your bank accounts, here is some information that will interest you.

First, the "Emergency Economic Stabilization Act" that President Bush signed into law on October 3 increases the federal insurance on individual bank accounts from $100,000 to $250,000. The higher coverage applies from October 3, 2008, through December 31, 2009.

Second, the Federal Deposit Insurance Corporation (FDIC) has an easy-to-use online program to help you determine the extent to which your accounts are insured. Called "Edie the Estimator," the program is located online at www.fdic.gov/edie. In a matter of minutes, you can use "Edie" to see if you have funds that are not insured.

The site also gives information on how to realign and/or retitle accounts to extend your insurance protection. For example, you can name a beneficiary on an account, making it payable to that person on your death (POD) and increase coverage by up to $250,000 per beneficiary.

An important tax note: Changing title on accounts or using beneficiary designations to increase insurance coverage may adversely affect your current estate planning documents. So before making any changes, discuss them with your estate planning advisor.

For more information or assistance, give us a call.
Tax Coffer
Year-end is an opportune time to review and rebalance your investment portfolio. In the current state of market uncertainty, only you can decide whether you want to hold or sell a particular investment. But if you decide to sell, here are some year-end tips for keeping the tax consequences to a minimum. .

* Adjust your cost basis for reinvested dividends. If you forget to make this adjustment, you'll pay more tax on your gain or show a smaller capital loss than you are entitled to.

* If you decide to sell just to rebalance your portfolio, consider selling investments in your IRA or 401(k) where sales can be done without paying taxes.

* Selling some losing stocks can offset capital gains on the winners you sell. If you have more losses than gains, you can use the excess to offset up to $3,000 of ordinary income.

* If you sell some but not all of a mutual fund or stock, sell the highest cost shares first to minimize your taxes. You must specify the particular shares you're selling at the time of sale.

* Consider donating appreciated stock to charity in lieu of cash; you can generally deduct the appreciated value and avoid paying any tax on your gain.


For assistance with the tax issues in your year-end investment review, give us a call.
Golden Egg
The Tax Tip this week has to do with making sure that your W-4 form or final 2008 estimated tax payment will be enough to cover your liability for 2008.

The Business Tip of the Month are hiring mistakes that start-up companies should avoid. All are top notch ideas that I have seen in action and they aren't pretty when they don't work out.

The Financial Tip of the Month deals with whether or not you should withdraw funds from your 401(k). If you are nervous about your retirement plan, this article should answer some questions for you.

The Fraud Alert deals with gift card scams. Especially appropriate now that it's holiday season.

Photos © Bigstockphotos.com, istockphoto.com

Sincerely,
Linda Heineman
Linda L. Heineman, CPA, CITP

phone: 626-577-0979
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