Preparing for a Mid-Year Financial Tune-Up
Matthew Paulson
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Yes, of course it's the holiday season and the year is coming to an end pretty soon. If you're financially savvy, you're getting ready to handle your taxes this year and selling off poor performing st 
ocks to minimize your capital gains tax, but in just a few months, you'll already need to be having a mid year financial checkup! Here is what you will need to do to have a financial tune-up when the time does come around.
Check your withholding. You might be looking forward to a nice refund when tax time comes around, but realize that over-withholding is nothing more than a savings account with the IRS that is giving you 0% interest. If you want to save money, just put it in a savings account; don't let the IRS keep your money for no interest.
Maximize the effectiveness of your retirement plan. You should see if you are on track to have enough money when it comes to retirement, and make adjustments if necessary. You should also remember that retirement plans often come with tax deductions, so be sure your money's in the right place. If your employer offers a match, don't pass it up!
If you have a cafeteria or flex plan, make use of it! This money is to help you to pay for medical expenses, dental expenses and the like. If you have made use of some of those services, be sure to gather your receipts and submit them for reimbursement. Since that money is really just "found money" that wouldn't be there otherwise, consider taking a big chunk of it and investing it for retirement.
Be sure to take into account the recently passed Tax Prevention and Reconciliation act which was signed into new. Fifteen million taxpayers will now benefit from higher AMT exemption amounts, which is now $62,550 for married couples and $42,500 for single tax payers. You should also note that dividends and capital gains tax rate cuts have been extended through 2011, so you should consider that when considering your financial future.
Check your withholding. You might be looking forward to a nice refund when tax time comes around, but realize that over-withholding is nothing more than a savings account with the IRS that is giving you 0% interest. If you want to save money, just put it in a savings account; don't let the IRS keep your money for no interest.
Maximize the effectiveness of your retirement plan. You should see if you are on track to have enough money when it comes to retirement, and make adjustments if necessary. You should also remember that retirement plans often come with tax deductions, so be sure your money's in the right place. If your employer offers a match, don't pass it up!
If you have a cafeteria or flex plan, make use of it! This money is to help you to pay for medical expenses, dental expenses and the like. If you have made use of some of those services, be sure to gather your receipts and submit them for reimbursement. Since that money is really just "found money" that wouldn't be there otherwise, consider taking a big chunk of it and investing it for retirement.
Be sure to take into account the recently passed Tax Prevention and Reconciliation act which was signed into new. Fifteen million taxpayers will now benefit from higher AMT exemption amounts, which is now $62,550 for married couples and $42,500 for single tax payers. You should also note that dividends and capital gains tax rate cuts have been extended through 2011, so you should consider that when considering your financial future.
- Check your withholding, a big refund is essentially a certificate of deposit with 0% interest.
- Make use of your flexible spending plan if it's available to you.
- Make sure to maxmimize the tax benefits of your retirement income.