Happy New Year

Happy New Year, everybody.

Happy tax efficient new year, that is.

Given the start of a new year, it is a good time for most of us to think about how we can minimize our tax liability for the year.  Allow me to share some ideas with you.

1.  Start a business.  Have you ever thought of doing something on your own?  Ever think of going out on your own, or turning your passion into a part-time gig?  Now is a good time.  I will write an article on what business structure you might want to take.  For now, though, consider the liability that might exist if you were to form a DBA (doing business as - such as William Bennett DBA Boston-Banker.com).  Since nobody can slip and fall on a blog, my liability is limited.  No need to incorporate or form an LLC for this.  On the other hand, if you were thinking of opening a restaurant, you may want to consider incorporating.  Bear in mind that if you incorporate, the IRS allows businesses to run at a loss for up to three years out of five.  You can deduct (legitimate) business losses for this year, next year, and the year after that before you have to show a profit.

2.  Retirement savings.  While 2009 is gone, 2010 is open to us.  How about starting an IRA?  If you are under 50 years old, you can contribute up to $5000 to an IRA.  If you are over 60 years old, you can contribute up to $6000 to an IRA.  If you contribute to a traditional IRA, you can deduct the contributed amount from your income.  How about putting a hundred dollars per week into an IRA, and save yourself up to $2,000 in taxes at the end of 2010?  Also consider contributing to a 401(K) or a 403(b).  Often times, your employer will contribute a matching percent.  I can't recommend highly enough to contribute, at the very least, to get your employer's maximum match.  For example, if your employer will match 50% up to 6% of gross pay, contribute 6% of your wages, and get a free 3% raise.

3.  Go back to school.  Returning to school can have many advantages.  Not only do you gain marketable skills and increase your earning potential, but your employer will often pay for it.  If your employer does not pay for everything, or if you exceed your annual reimbursement amount, you can look into tax credits for which you may be eligible.  Another advantage is that your existing student loan payments may be deferred if you are enrolled at least half-time.  Something else to consider.

4.  Buy a home.  Since the economy is in the tank, and the real estate market is right there with it, some great deals are available.  If you were thinking of buying at any point, consider making this the year to do it.  Primary residence mortgage interest and points are tax deductible, and so is property tax.  Combine the tax efficiency of this with the depressed real estate values, and you get a good time to give home ownership a whirl.

5.  Move some investments over to municipal bonds for a tax-free low risk investment option.  The lower yields may be more than compensated for by the elimination of taxes on the earnings.

6.  Donate.  Donate used goods to charity for some easy deductions.  We all have clothes that we no longer wear.  Donate them for a quick break on taxes.  If you want to donate something bigger, and are in the market for a new car, help defray the added costs by donating the old car rather than selling it.

There are many ways to avoid taxes legally.  A little bit of planning can go a long ways on this front.

Happy (tax efficient) New Year, everybody!

-Bill

Avoiding overdraft fees

Well, this link is to an article that I wrote on how to avoid overdraft fees.  I'm just looking to pass the information along to everybody.

The rules have been changing, though, so I will likely post an update once it is appropriate to do so.

As always, feel free to ask anything, and I'll do my best to answer.

Thanks again!

-Bill

Welcome

Welcome to my first blog post. While I am not yet comfortable with blogging, I have been producing content for a couple of months now, mostly on http://www.associatedcontent.com.

Not to go off on a tangent, but I am quite impressed with AssociatedContent.com. It is a place for individuals to post articles, guides, and stories, and be paid for them. It is a neat concept, providing something like an "Associated Press" for the rest of us. But I digress.

I think that my Associated Content profile is located here:
http://www.associatedcontent.com/user/30669/william_bennett.html

From there, I believe that you can look at my posts. There are only two on there now, but there are two in the pipeline. I am looking to post information there, and here, that complement each other.

Here goes!

-Bill