Practical Financial Tips - 1st Quarter 2012

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Christy Fuentes Loan Officer Citywide Mortgage Phone: (405)514-6401 Fax: (405)794-4263 License: 218690 christyfuentesloans@gmail.com www.christyfuentesloans.net   Online Communities Help Raise Start-Up Cash   by Lisa Gerstner, Kiplinger.com For Phu Nguyen, 25, and Peter Seid, 22, inventing Romo, a robot controlled by a smart phone, was the easy part. The hard part for the co-founders of Romotive was gauging the market's interest in their prototype, finding developers to create phone applications for it and raising money to assemble more robots. They turned to Kickstarter, a Web site anyone can use to gather funds from supporters. Last fall, the Seattle pair raised more than $80,000 in about a month – more than double their $32,000 goal – and found like-minded innovators, too. Sites such as Kickstarter, IndieGoGo and Peerbackers help people raise money for projects of all sizes, from films to furniture-making. You explain your idea and offer rewards to backers. Romotive promised a button to folks who pledged $2, for example, and a trio of robots to those contributing $212. Some sites release funds raised only if you meet your goal. Many charge a fee, often about 5% of the money you raise. It helps to set clear and realistic goals for the money you want to raise and the number of products you can prepare and deliver. Think carefully about how you'll engage the network. Use videos and photos to showcase your vision. And set aside plenty of time. On top of developing the robots, Romotive's founders spend one to two hours per day updating their backers on the firm's progress and responding to e-mails, Nguyen says. Reprinted with permission. All Contents ©2012 The Kiplinger Washington Editors. www.kiplinger.com.   A Taxing Time of Year The new year means it's time to start gathering all of that dreaded documentation to send to good old Uncle Sam! Taking just a few simple steps right now will make your tax filing far easier and more accurate. Keep it together. Make a quick list of all the documents or statements that were needed to complete your return last year—or call your tax planning professional for a checklist. As you receive tax documents in the mail, grab your checklist, and mark the item as received. Then, keep all of the tax documents together in a large file or envelope marked "2011 TAXES." Do the math. According to the IRS, the most common mistake on tax returns is bad math—from transposed numbers to downright incorrect data. And with one form leading to another, those errors can make a huge impact. Even if you use tax software, you're not off-the-hook—since it only adds the numbers YOU put in. Double-check entries carefully. Every last cent. The IRS receives copies of your Form 1099 earnings each tax season. So, they know how much you make in interest and dividend income, and they will use that info to double-check your filing information. Make sure you collect all your earnings statements and document them on your return. Sign on the line. It sounds almost silly, but forgetting to sign a return is actually a fairly common oversight. And the IRS won't process a return that doesn't have a signature. So, make sure you sign to avoid resubmitting your paperwork and possibly paying late-filing fees. By following the tips above, you can help eliminate some of the frustration from tax season, as well as make sure you're on track for the coming year.    IRS Announces Mileage Rates for 2012 Drive a car, truck or van for work? If so, you'll want to make sure you know the standard mileage rates that the IRS has set for 2012. These mileage rates are used to calculate deductible costs for driving an automobile for business, charitable, medical and moving purposes. As of January 1, 2012, the standard mileage rates are as follows: Businesses = 55.5 cents per mile driven Medical or moving = 23 cents per mile driven Charitable organizations = 14 cents per mile driven The rate for business miles is unchanged from the mid-year adjustment that became effective on July 1, 2011, and the medical and moving rate has been reduced by 0.5 cents per mile. Before you calculate your deduction, make sure you qualify. The IRS reminds taxpayers that they cannot use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously. However, the IRS is accepting public comments on this policy. The IRS' standard mileage rates provide ease and convenience. However, you're not required to use them. If you prefer, you can calculate the actual costs of using your vehicle instead of using the standard mileage rates.

13 Tax Deductions You Can't Ignore

Tax time is quickly approaching and I'm sure many of you need all the help you can get.  Check out this great information I recently found on USAA.  Then, if you have questions about your mortgage, give me a call.  I'm happy to help!!

Before tackling your tax return, brush up on this baker's dozen of deductions that could cut your tax bill.

1. Traditional IRA Contributions

You have until April 18, 2011, to contribute up to $5,000 to a traditional IRA for 2010 and deduct it on your tax return. Here are some guidelines.

If you weren't covered by an employer's retirement plan in 2010, you can generally deduct your contribution in full.
If you were covered by an employer plan, you can only take a deduction if your adjusted gross income was below $66,000 ($109,000 for married couples).
If your spouse was covered, but you weren't, you can take a deduction if your combined adjusted gross income was below $177,000.
If you were age 50 or older on the last day of 2010, you can contribute up to $6,000.

2. Self-employed Retirement Plans

If you work for yourself, you can open a Simplified Employee Pension-IRA by April 18, 2011, and deduct your contribution on your 2010 return. SEP-IRAs are an easy way to create your own retirement plan, and they can allow much higher contributions than traditional IRAs.

3. Mortgage Interest

You can deduct interest paid on your primary mortgage, as well as home equity loans and lines of credit. In general, you may deduct interest on up to $1 million of primary mortgage debt and up to $100,000 of home equity balances.

4. State and Local Taxes

Feeling like every single government entity is after your money? Fortunately, the federal government cuts you a little slack, letting you deduct property and income taxes imposed by state and local governments.

5. Sales Tax

If you paid little state income tax, or live in a state that doesn't tax income at all, you can choose to deduct sales tax instead. And you don't need receipts. Simply calculate an assumed amount using an IRS table or online calculator.

6. Charitable Gifts

Donations to charity can ease your tax burden, but only if you have the right documentation. Cash contributions, regardless of the amount, require a cancelled check or dated receipt. Any contribution of $250 or more requires a written acknowledgement from the charity. Noncash contributions valued at more than $5,000 generally require an appraisal.

7. Student Loan Interest

Some or all of interest on loans taken out to pay qualified higher education expenses is generally deductible if your adjusted gross income is less than $75,000 ($150,000 if you're married and file a joint return). You may also be eligible for the Hope or Lifetime Learning tax credit (See IRS Publication 970).

8. Medical and Dental Costs

The government sets a high hurdle for these expenses. You can only deduct them if they exceed 7.5% of your adjusted gross income.

9. Health Insurance

Self-employed taxpayers get a big break on one of their biggest financial headaches. In general, they can deduct all of their health insurance premiums.

10. Health Savings Accounts

If you were covered by a high-deductible health insurance plan in 2010, you can contribute up to $6,150 to a health savings account ($3,050 if it only covered yourself). Contributions are deductible and withdrawals for qualified medical expenses are tax-free. Similar to IRAs, you have until April 18, 2011, to contribute for the 2010 tax year.

11. Job-related Moving Expenses

If you moved to take a new job, you can deduct your expenses if you pass these two IRS tests:

Your new job must be at least 50 miles farther from your old home than your previous job was. If you didn't have a previous job, your new one must be at least 50 miles from your old home. If you're in the military with PCS orders, you do not have to meet these rules.
If you're an employee, you must work full time for at least 39 weeks during the 12 months after you arrive in the general area of your new job. If you're self-employed, you have to work full time for at least 39 weeks during the first 12 months and 78 weeks during the first 24 months.

12. Guard and Reserve Travel Expenses

If you traveled more than 100 miles to attend a drill and spent the night, you can deduct your lodging expenses, half the cost of your meals and 50 cents per mile for travel. You can also deduct tolls and parking fees.

13. Out-of-pocket Teacher Expenses

Teachers, aides, counselors and principals -- kindergarten through 12th grade -- can deduct up to $250 for classroom supplies purchased in 2010.