Acclaro Blog

Archive for February, 2012

Maximize Your Deductions

Tuesday, February 21st, 2012

Did you know that US taxpayers itemize more than $1 trillion worth of deductions? $1,000,000,000,000, a number most of us have a hard time comprehending.  And those who don’t itemize claim about $700 billion using standard deductions.  Those of you who don’t itemize may very well be missing the opportunity for a larger refund.

Also, Child Care Credit: If you run your child care expenses through your employers flexible spending plan you are limited to $5,000. per year.  If you have expenses over $5,000. you can claim a credit of up to $1,000. more.

It’s very easy to miss one of the many opportunities to reduce your tax burden. A number of years ago, the head of the IRS at the time told Kiplinger’s Personal Finance magazine that he figured millions of taxpayers overpaid their taxes every year. So, we thought you might like to review the following article:

The Significance of February

Tuesday, February 14th, 2012

We are currently in a Leap Year, and February 29 is a Leap Day. And it is not just a day for the calendar to catch up with the earth’s rotation, it has significant social implications. According to an old Irish legend, or possibly history, St Bridget struck a deal with St Patrick to allow women to propose to men – not just the other way around – every 4 years. This is believed to have been introduced to balance the traditional roles of men and women in a similar way to how Leap Day balances the calendar.

In some places, Leap Day has been known as “Bachelors’ Day” for the same reason. A man was expected to pay a penalty, such as a gown or money, if he refused a marriage proposal from a woman on Leap Day. During the middle ages there were laws governing this tradition.

In many European countries, especially in the upper classes of society, tradition dictates that any man who refuses a woman’s proposal on February 29 has to buy her 12 pairs of gloves. The intention is that the woman can wear the gloves to hide the embarrassment of not having an engagement ring.

So watch out eligible bachelors!  This could get expensive.

Retirement Plan Limits Increased

Wednesday, February 1st, 2012

Recently, the IRS announced that retirement plan limits had been increased for 2012.  For the preceding three years all limits had remained constant.  If you are trying to maximize your retirement savings, these changes will be important to consider.

401k Contributions: The annual amount you can contribute to your 401k plan has increased to $17,000. per year.  That calculates to $1,416.66 per month.  Remember, 401k contributions are taken out of your pay check before taxes, so the deduction is less in actual out of pocket cost.  Combine that savings with any match your employer might make and you may have the best possible vehicle for retirement savings.

Defined Contribution Annual Limit: This is the amount you are allowed to contribute to your plan from all sources.  This would include: 401k contribution; employer match; catch up; profit sharing contribution, etc.  When you add up all of these sources the amount can not exceed $50,000.  That is an increase of $1,000. from current levels.

Catch Up Contributions: Catch up contributions, the amount individuals over age 50 can contribute to “catch up” (because they did not contribute enough when they were younger) has not been changed and remains at $5,500. per year.

See your Human Resources Department to update your retirement savings contribution instructions.

There are several other changes that have taken place: such as definition of highly compensated employees and key officer compensation.  If you wish a complete list of the changes please contact us at Acclaro Wealth Management.

This information is not intended to be a substitute for specific individualized tax advice.  We suggest that you discuss your specific tax issues with a qualified tax advisor.