• Our deficit is now up to 14 trillion dollars and our country is spending double what it brings in from income tax revenue- taxes have no where to go but up.
• Shelter what you can now by using vehicles such as:
• Roth IRAs
• Employer plans
• Fixed annuities as a substitute for CD’s id you are 59 ½ or older
• 529 plans for education savings
• Take advantage of low capital gains tax rates- sell highly appreciated property now if it makes sense to do so.
• Make sure you have the right beneficiaries on your retirement plans so your heirs can take income over time and avoid a big tax bill.
• Lump discretionary medical expenses into one year, especially if your income is down, so you can exceed the threshold for deductions.
• Convert traditional IRAs to Roth IRAs in years that your income is down or your account value is low to minimize the tax.

* Best Financial Tips *

• Refinance now!!! Will we ever see opportunity like this again? If you do refi, you might also have a big write off of points from previous refinancing. Make sure you mention this to your preparer.
• Trim costs. Write down a monthly budget and look at where your money goes. Spend wisely!
• Social security, as we know it, is going away. Most likely, it will be means tested, phasing out based on income and assets. Pensions are dinosaurs too, so start saving now. A little over time is easier than a lot at the end.
• One great way to temper volatility in your portfolio is to add dividend-producing funds to your portfolio. Reinvesting the dividends monthly helps you buy more shares when prices are low. This is called dollar
  cost averaging. This strategy works best in tax-deferred accounts because taxes on divs are postponed until withdrawals are taken.
• Create a foolproof strategy for retirement income that will last as long as you live. Start choosing your investments based on what you will need and then solve for that. – Invest with a purpose!

* Best Business Owner Tips *

• Cash flow, cash flow, cash flow.  Keep a reserve to sustain you in down cycles.
• Use a corporate entity to protect your personal assets.
• Look at your numbers monthly- even when you are too busy.

These 2012 Tax Tips were provided to you by Julia Brufke Wenger, Owner of Phoenix Tax Consultants, LLC.

10 Important Financial Considerations when Experiencing Employer Transition

Written by Julie Brufke Wenger:

While the economic crisis seems to be winding down and while some people may be hopeful about the future, one major uncertainty remains for others: how to handle a job transition. Job transition is a time of change, challenge and opportunity. Addressing a few key points can make the process easier and, in turn, allow you to maximize the outcome. Even if you aren’t currently in the middle of a job transition, these points can help you navigate your way to success.

1. Roll over your retirement plan using an advisor who can assist you in designing a retirement strategy in order to gain control of your investment options, eliminate the potential difficulties accessing your account
   in the future, create the ability to access partial withdrawals if liquidity is needed while in transition, and to design a customized strategy that will address both accumulation of funds and retirement fund distribution.
2. Review your options for health insurance (including COBRA). If you decide to transfer to another plan, do not discontinue your in-house plan until the new coverage begins. Continuation of coverage is important in qualifying for a new plan and minimizing rates.
3. Life insurance is usually not portable and it is important to have some insurance outside of your employer. Begin research before changing jobs as the underwriting process may take several weeks.
4. Inventory your existing assets and determine liquidity. Prioritize which assets you would use if you needed to access your savings while taking into consideration taxation and penalties.
5. If you have not yet secured new employment, create a budget plan that includes cash flow projections using sources that may include unemployment compensation, savings accounts, and employer severance payments. This can help to make the transition period less stressful.
6. If you are currently employed, review the choices available through the new benefit plan and make choices that consider the “big picture” and are also compatible with your existing portfolio structure.
7. Project your tax liability for the year and adjust withholdings. Multiple jobs, large severance payments and unemployment compensation all take your tax withholdings off autopilot and shift them into proactive mode. Avoid surprises and make tax-minimizing choices by working with an advisor to make projections and adjust payments to the IRS.
8.  Consult an advisor if you have stock options and your company is being purchased or merged. Formulate a plan that includes a diversification strategy and determine the tax impact to maximize the opportunity.
9.  Review group benefits you may loose like disability insurance, pretax programs for childcare, access to a group long term care policy, or education savings through payroll deduction and determine a gap strategy.
10.  If you are married and were using the plans provided by your employer, gather information regarding your spouse’s plans so you can compare them to your new options and make the best choice.

Julia Brufke Wenger is Principal JBW Enterprises and Founder  of Phoenix Tax Consultants, LLC. She has been a member of the Phoenixville business community  since 1990 and currently serves as an active member of the Phoenixville Regional  Chamber of Commerce. Julia is graduated from Villanova University with a BA in  Accounting.

Read the Article Online at Phlare Magazine.

For more information on the Women Owned Business Network visit: http://wobn.eventbrite.com

As a CPA, I handle all of our business mowners that are incorporated as corporations and partnerships; however I do not meet with everyone who is self-employed and files a Schedule C.  As a sole proprietor, there are many ways that you can minimize your tax liability.  Some people have heard the business term “LLC” but do not know what this stands for.  If you are self employed and receive 1099 income, incorporating as an LLC at a minimum should be something that you consider.  The term “LLC” stands for Limited Liability Company and stands for the liability protection that you receive as an unincorporated business.  If you incorporate as an LLC, your personal assets are protected from anything that arises from the business.  This is the biggest advantage of filing as an LLC.

One way to minimize your taxes if you file a Schedule C is to invest in a SEP plan.  The SEP plan is the retirement plan for self employed individuals.  you are able to defer your contribution until the filing date of your tax return.  Depending on the income of your business, you may be able to contribute more money to your SEP than you would be to your IRA.  Julie is able to set up SEP plans for our tax clients.  If this interests you, please ask your tax preparer.

As I have recently experienced two tax audits over the course of 2011, the best advice that I can give you is to retain all of your support.  Schedule C audits are on the radar of the IRS.  Although time-consuming, audits are not something to fear as long as you have the support for the deductions that you are taking.  Auto deductions are a favorite of the IRS.  You are entitled to claim either the actual expenses of the auto or the standard mileage rate.  In tax year 2011, the mileage rate is split – from January 1 through June 30, you receive a deduction of $0.515 per mile and from July 1 through December 31, you receive $0.555 per mile.  If you are claiming the mileage deduction, please have record supporting the mileage that
you drove for your business.

If you have any questions about your small business, please feel free to email me @ mmalazita@taxtacklers.com. I look forward to seeing many of you again this tax season.

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