Getting in financial shape

September 7, 2008 7:25:23 AM PDT
Now that the summer is almost over, it's time to start thinking about getting your financial house in order. Alan Kahn, president of the A-J-K Financial Group offered these tips:

1. Review Contributions to 401(k) & SIMPLE IRA Plans

Contributions Reduce Your Taxes

401(K) $15,500 + $5,000 (catch up) = $20,500

SIMPLE IRA $10,500 + $2,500 (catch up) = $13,000

*2008 Contributions must be deducted from your current salary!!

2. Think About Gifting to College Savings Plan

Tax Deductions & Tax Benefits - Contributions by Dec. 31st

State Tax-Deduction with NYS & CT Plans (NYS & CT Residents)

$5,000 state tax deduction per person
$10,000 (Married couples filing jointly)

New Jersey Residents - No State Deduction

New York, CT and New Jersey Residents - earnings exempt from Federal and State Taxes

3. Review Credit Card Debt - The Holidays are Coming

Avoid Additional Credit Card Debt:

Make Holiday Purchases with Cash or Debit Cards
(Avoid using overdraft privilege on debit cards)

Switch & Consolidate to a Lower Interest Rate Credit Card
Lower Rate Home Equity Line of Credit - Tax Deduction for Interest

4. Track Your Flexible Spending Account - Use It or Lose It

  • Pre-tax programs to pay for unreimbursed health care, child care or elder care expenses?(Drain Your Flexible Spending Account)

  • Use It or Lose It Rule Relaxed - Claims Deadline Extended - 2 ½ months after plan year to March 15, 2009

    5. Time to Review Your Portfolio

  • Review and rebalance portfolio before year-end to offset any long-term gains by selling long-term losers.

  • You can deduct up to $3,000 per year against ordinary income

  • You can also carry forward balance to future years

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