Let’s examine your house of worship. It’s possible for members to deduct evangelism travel expenses, even if the charity (a church in this example) never initiated, controlled, supervised, or assisted with the trips. The church fostered missionary work in general. Before the trip, the church provided the taxpayers with letters of commendation serving as introductions to other interfaith groups during the trip. And after the trip, the charity publicized the member’s efforts to the other congregations. This allowed the taxpayers to deduct mileage at the prescribed IRS rate, air fare, lodging, and meals while on their missionary trip.

Consider the potential deductions for those taxpayers involved as board members to a charity, or simply significantly involved. In a recent decision, the Tax Court noted “control” by the charity is only one of the factors to be considered. You don’t have to necessarily be controlled or directed by the charity to make your deductions stand up. But there should be a strong affiliation with the charity, and the taxpayer must be accountable to the charity.

There are recordkeeping requirements. Noncash contributions greater than $250 must be acknowledged by the charity. The taxpayer will likely have to request this from the charity with a simple form, one which the charity will be happy to complete in order to secure your deduction and advance the mission of the charity.

Identify your tax opportunities for 2012.  There are many credits and deductions available to you in such areas as retirement, education, home ownership, and child care. Identify those that will reduce your taxes, and make sure to qualify for all of the deductions and credits that are available to you.

Plan your portfolio for 2012.  Take the lower tax rates on both dividends and long-term capital gains into account as you review your portfolio for 2012 changes.

Rid yourself of “stuff” you don’t use.  Are you paying for a cell phone you rarely use? A magazine you never read? A mail-order video service you forgot about? An extra cable box for that basement TV you never watch? A membership to a gym you rarely attend? If so, now is the time to dump those wasted services and pocket the cash.

Plan for your retirement.   Are you putting aside enough money for your retirement? Most of the available retirement programs allow you to put this money away while reducing your current taxes. Does your employer match some of your 401(k) contributions? Then consider making at least that much of a contribution in order to maximize the benefit of your 401(k) plan.

Get a grip on your debt.   Take a look at your current debt, especially your credit card debt. Consider transferring a balance on a high interest card to a lower interest credit card. Remember that personal interest isn’t deductible (such as credit card interest and auto loan interest), so you might want to consider paying off that debt with a lower-rate deductible home-equity loan.

Get that new filing system started now.  Purge your 2011 files. Destroy documents that you don’t need. Create new files for your 2012 documents. Keep a tax and financial calendar that shows all deadlines for making payments and filing returns. And if you don’t have a filing system, create one in order to organize and locate your tax and financial records. 

We can help.  These are only a few of the many things that you can do to get your financial house in order. If you need help on any of these, or would like additional suggestions, give us a call. We’re here to help you make the best financial choices and tax decisions.

The new law extends the 4.2% social security tax on wages through February 29, 2012. Without this extension, the employee tax rate would have gone to 6.2% on the first $110,100 of wages earned in 2012.

The law also extends benefits for the long-term unemployed for two months and prevents a scheduled cut in fees paid to Medicare providers from taking effect January 1, 2012.

These extensions will be paid for by an increase in fees charged by government-backed mortgage companies (Fannie Mae and Freddie Mac) for new home loans.

Included in the agreement is a requirement that President Obama make a decision within 60 days on the construction of the 1,700 mile Keystone oil pipeline.

Finally, the agreement calls for a House-Senate conference committee to negotiate an extension of the payroll tax cut through the end of 2012, as well as a longer-term extension of unemployment benefits and the Medicare reimbursement to doctors.

Companies that don’t want to keep track of the actual costs of using a vehicle for business purposes may use this standard mileage rate instead. An annual study of the fixed and variable costs of operating an automobile is used to determine what the standard mileage rate will be for a given year.

In addition to the mileage rate, a separate deduction may be claimed for parking fees, tolls, interest relating to the purchase of the automobile, and state and local personal property taxes.

The standard business mileage rate can’t be used for automobiles used for hire (e.g., taxicabs) or for fleets of automobiles used simultaneously by the taxpayer. Nor can the standard rate be used if the vehicle was previously depreciated by other than the straight-line method, including using bonus depreciation or the Section 179 deduction.

When the business mileage rate is used, depreciation will be considered to have been allowed at a rate of 23 cents a mile. This depreciation reduces the taxpayer’s cost basis in the vehicle.

The cost-of-living adjustments to social security benefits began in the 1970s and since then have averaged 4.2% annually. Monthly social security payments average $1,082 or $13,000 a year. According to the Social Security Administration, most retirees rely on social security for a majority of their income, and many depend on it for 90% of their income.

You can choose to deduct sales taxes instead of local and state income taxes. If you’re planning big ticket purchases (like a car or a boat), buy before year-end to beef up your deductible amount of sales tax.

If you’re a teacher, don’t overlook the deduction for up to $250 for classroom supplies you purchase in 2011.

Consider prepaying college tuition you’ll owe for the first semester of 2012. This year you can deduct up to $4,000 for higher education expenses. Income limits apply.

Max out your retirement plan contributions. You can set aside $5,000 in an IRA ($6,000 if you’re 50 or older), $11,500 in a SIMPLE ($14,000 if you’re 50 or older), or $16,500 in a 401(k) plan ($22,000 if you’re 50 or older).

Establish a pension plan for your small business. You may qualify for a tax credit of up to $500 in each of the plan’s first three years.

Need equipment for your business? Buy and place it in service by year-end to qualify for up to $500,000 of first-year expensing or 100% bonus depreciation.

Review your investments and make your year-end sell decisions, whether to rebalance your portfolio at the lowest tax cost or to offset gains and losses.

If you’re charity-minded, consider giving appreciated stock that you’ve owned for over a year. You can generally deduct the fair market value and pay no capital gains tax on the appreciation.

Another charitable possibility for those over 70½: Make a direct donation of up to $100,000 from your IRA to a charity. The donation counts as part of your required minimum distribution but isn’t included in your taxable income.

Install energy-saving improvements (such as insulation, doors, and windows) in your home, and you might qualify for a tax credit of up to $500.

These possibilities for cutting your taxes are just the starting point. Contact us now for a review of your 2011 tax situation and tax-saving suggestions that will work best in your individual circumstances.

Precious metals Scams take many forms, but those involving gold and precious metals are especially problematic right now. Buying gold is trendy, and it can appeal to a senior’s desire for tangible security. Naturally, scammers will take advantage of this appeal. If someone you know is elderly and considering a gold-related investment, make sure they do their homework and work with a reputable company. Anyone pitching gold as a safety net against doomsday scenarios or hyperinflation should be carefully vetted.

Investments Of course, more traditional investment vehicles can also be dangerous. Life insurance, annuities, and other potentially complex deals can be marketed to prey on an elderly person’s fear of running out of money. Investment advisors should only offer products suitable for the age, health, and financial wherewithal of their client. A perfectly legitimate investment can still be all wrong given certain circumstances.

E-mail offers By now, repetitive e-mail requests from some foreigner to wire funds to your bank account might seem almost comical, but to those who fall victim to a carefully crafted ploy, it is all too serious. Some very smart people — young and old — have been taken in by these types of scams, and when it happens to an elderly person, the fear of looking incompetent often adds to the problem. Educate the senior in your life to always reject these offers.

Pre-paid services Not only do the elderly dread running out of money, they sometimes have an unhealthy concern for being a burden to others. This can manifest itself in attempts to prepay for certain services or signing up for strategies that will pay for bills owed at the time of death. Every so often, when the time comes to cash in these plans, the company is nowhere to be found, or the policy doesn’t cover nearly as much as was expected. Like any other investment, the company behind the pitch should be scrutinized.

So, can you protect your senior from all the criminals out there? Probably not. But creating a fire wall around your loved one might call for a softer touch. Stay connected to their daily routine. Who are they spending time with? What are they reading? Become a stronger presence in their life, and the fears and loneliness that often initiate a wrong financial move could be reduced.

The law creates the “Returning Heroes Tax Credit” and the “Wounded Warriors Tax Credit.” Employers may qualify for a credit of up to $5,600 for hiring a veteran who has been looking for employment for more than six months. A credit of up to $2,400 applies for veterans who have been unemployed for more than four weeks but less than six months. Employers who hire an unemployed veteran with service-connected disabilities who has been looking for work for more than six months may be eligible for a tax credit of up to $9,600.

The credits apply to new hires after November 21, 2011, through December 31, 2012. For more information about the new law, contact our office.

Contacting the employee at all times for work-related emergencies.

Requiring the employee to be available to speak to clients when the employee is not in the office.

Requiring the employee to speak to clients located in other time zones at times outside the employee’s normal workday.

Conversely, if a cell phone is provided to an employee as a nonbusiness benefit, it is not treated as a tax-free fringe benefit.

While new rules require your broker to provide certain basis amounts to you on the annual statement you’ll receive early next year, you’ll need additional information about other assets.

And since tax basis is affected by how you acquired the property — and in some cases, on events that happened afterward — the determination may not be straightforward.

For example, your original basis in shares of stock you purchase is generally what you paid for those shares. Yet factors such as wash sales or dividend reinvestments can change your original basis and affect your gain or loss.

In the case of assets you inherit, cost is not a factor in figuring your basis. Instead, you need to know the fair market value of the assets, either on the date of death or six months later. Special rules can apply to assets inherited during 2010, depending on elections made by the personal representative of the estate.

Basis may also be adjusted for tax benefits you receive, including credits and depreciation.

Give us a call. We’ll help you figure out what basis rules apply to your asset sales.