Sign Up to Receive Our
Monthly Newsletter Via E-mail|
Enter your email address below to receive our
monthly tax newsletter:
HAVE YOU SIGNED UP FOR THE "UPROMISE" YET?
When you join Upromise, you'll save for a child's education just
by doing what you normally do everyday. Through the program, companies
contribute a portion of what you spend into a Upromise account for your child,
grandchild, or any other future college student. Believe it or not, you'll earn
college savings when you buy toys, office supplies and gas, dine out, shop
on-line - and even buy or sell a house or get a new mortgage. To find out more
about this great program, check out
INTERESTED IN JOINING OUR
a CPA who provides tax planning and preparation services to young health
care professionals, and you’d like to find out more about The MDTAXES
Network, please give us a call at
(800) 471-0045 or e-mail us at email@example.com.
forget to include your mailing address.)
First Annual MDTAXES
We're pleased to be hosting our
first annual MDTAXES conference, exclusively for our member CPA
firms, in New York City, on Saturday, November 16th.
During the conference, we'll focus on the various tax and
financial planning issues applicable to young health care
All CPAs who are members of The
MDTAXES Network are invited to attend. For information,
please e-mail us at
ARE YOU DOING ALL THAT
YOU CAN DO?
Taking full advantage of the current tax rules can really
help you stretch your savings dollar. Are you on track to take full
advantage of the current rules?
Will you contribute $11,000
into your 401(k) or 403(b) account at work for 2002? If you'll be 50
or older by December 31st, your maximum contribution this year is $12,000.
self-employed, do you intend to contribute the maximum into either a
SEP, SIMPLE, or the new One-Person 401(k) Plan by April 15th?
you set up a 529 College Savings Account for each of your children, and
will you fund that account with the maximum of $11,000 this year (or
$55,000 to fund the plan to the extent allowable in one year)?
FOR YOUR MONEY THROUGH YOUR FLEXIBLE BENEFITS
Andrew D. Schwartz, CPA
Trying to get more for your money has become an
American pastime. Retailers are always having sales, the auto industry is
continually offering different incentives, and restaurants come up with new
promotions all the time. Over the years, consumers have embraced these
discounts and have become accustomed to paying less than full price whenever
Besides paying discounted prices, a great way to get
more for your money is by purchasing goods and services with "pre-tax
dollars" versus "after-tax dollars". Remember, because of income taxes,
$100 of pre-tax dollars has the same purchasing power as approximately $166 of post-tax
The Cafeteria Plan
One place to find a variety of pre-tax opportunities is
your benefits package at work. These days, most employers offer benefits to
their employees through a "cafeteria plan", which allow you to select your
benefits, such as medical and dental insurance, from the options provided
through the plan, and pay for only those benefits that you select.
As a participant in a cafeteria plan, your employer
will provide you with an allowance to purchase your benefits through the
plan. If your allowance exceeds the cost of the benefits selected, the
excess is included in your paycheck as taxable wages. If the cost of
the benefits you select exceeds the allowance, you'll pay for the
shortfall with pre-tax dollars.
Flexible Spending Accounts
As part of your benefits package, you probably have the
option to set aside a portion of your salary, pre-tax, into a flexible
spending account. Most plans allow their employees to designate quite a
bit of money for out-of-pocket medical and dental expenses, and up to $5,000
per year per family for dependent care expenses. By taking advantage
of your flexible spending account, you're able to pay for certain personal expenses with
pre-tax dollars, thus getting more for your money.
One downside to flexible spending accounts is that if
you don't "use it, you lose it". In other words, if you set aside
money in your flexible spending account, but don't have enough expenses to
cover the amount you set aside, the excess won't be paid out to you. Instead, any
money remaining in your flexible spending account at the end of the year
will be lost.
Annual Benefits Review
Since many employers allow you to change certain
benefits only once a year (usually in the fall), now's the time to contact
the benefits department to review your options. Make sure to ask
about the different pre-tax opportunities available through your employer's
benefit plan. Only by planning ahead will you be able to maximize your
personal expenses that are paid with pre-tax dollars.
Are you taking advantage of these
reduced rates? Lower rates will help you cut down on the time it takes you to
get out of debt by minimizing the interest you pay each month. Remember, the
lower the interest rate, the larger the portion of your monthly payment that
will get applied against your outstanding balances.
If you're carrying a balance on
your credit cards, there's plenty of opportunities available to cut your
interest rate. Check out CardOffers.com to find the best deals
If you still owe student
loans, see how much you'll save by consolidating your loans into one loan
with a lower interest rate at FinancialAid.com.
For more information, go to our
February, 2001 Newsletter
You work hard to keep your credit report as clean as possible.
Even so, the current credit reporting system allows for incorrect items to
appear on your report that could adversely affect your credit score. Make sure
that the information on your credit report is accurate by ordering a free copy
of your credit report on-line at OnlineCreditInfo.com
or by purchasing a merged credit report reflecting information from all three credit reports at
TAX AND FINANCIAL PLANNING CALENDAR FOR
Saving and Investing
- For 2001, the standard deduction for a single individual is
$4,550 and for a married couple is $7,600. A person will benefit by
itemizing once allowable deductions exceed the applicable standard deduction.
Itemized deductions include state and local income taxes, real estate taxes,
mortgage interest, charitable contributions, and unreimbursed employee business
expenses. Our February, 1998
newsletter addressed the issue of itemizing your deductions. For 2002,
the standard deduction has increased to $4,700 for single individuals and to
$7,850 for married couples.
- For 2001, the personal exemption is $2,900. Individuals will claim a
personal deduction for themselves, their spouse, and their dependents. For
2002, the personal exemption has increased to $3,000.
- The maximum earnings subject to social security taxes has been
increased to $84,900 in 2002 from $80,400 in 2001.
- The standard mileage rate has been increased to $.365 per mile in
2002 from $.345 per mile during 2001. Deducting automobile expenses was
addressed in our February, 1996
- The maximum annual contribution to a 401(k) plan or a
403(b) plan has been increased to $11,000 for 2002 from $10,500 in 2001.
And if you'll be 50 or older by December 31, 2002, you can contribute an extra
$1,000 into your 401(k) or 403(b) account this year.
Tax and financial planning calendar for October, 2002
The Millionaire Next Door. Find out the habits of America's
wealthy. You'll be surprised at who comprises the bulk of America's millionaires.
Organize Your Finances with Quicken 2001 in a Weekend
Both these books are available at Barnes&Noble.com.
If you have a friend, colleague, or family member who is always bragging
about things they have done to cut their taxes, then
check out our new gift items with the saying - "Everything is
deductible...until you get audited!"
our CPAs everyday on
The MDTAXES Message Board
Join our Live Tax Chat on the first Wednesday of each month at 9 pm
Save for your child’s college education just by doing
what you normally do every day.
Insurance.com - Life Insurance Quotes