End-of-the-Year Checklist for Divorcing Women

Most women wait until after the holidays to move forward with their divorces --and that’s completely understandable. Many don’t want to disrupt family traditions for their children. Some welcome the distraction offered by the hustle and bustle of the season. And, of course, others want to avoid the discussions that inevitably seem to arise whenever and wherever relatives gather.
Interestingly, though, January is the month when most divorces are filed. Obviously, turning the page towards a New Year inspires a fresh start –and that’s completely understandable, too. If you’re headed in that direction, it makes sense to spend a little time this month planning ahead. You can do so discreetly, and then know that you’ll truly be ready to start the New Year on the right foot.
To help get you begin, here are a few things you can do now to help make the divorce process smoother in 2012:
1. Start collecting financial documents. Watch the mail for year-end statements from banks, credit card companies, etc.  As we outline in our Divorce Financial Checklist, preparing for divorce requires gathering all the relevant documents related to your bank and brokerage accounts, credit cards, mortgages, etc. Once you have collected them, make copies, and take them to a trusted friend/family member, or use a safe deposit box that your husband can’t access.
2. Check your credit report. While you’re gathering your financial records, keep a careful eye on your credit card statements, and if you haven’t already done so, request a copy of your credit report. Once you have the report, monitor your score carefully so you’ll be the first to know if any unusual activity occurs.  (For example, is your husband using your joint credit cards to buy his girlfriend gifts this holiday season?)  See my post, How To Protect Your Credit Score During Your Divorce, for more tips
3. Research divorce professionals in your area. If you want to ensure the best possible outcome for your divorce, take the time to build a qualified divorce team. I recommend you start with these three players: a matrimonial/family law attorney, a divorce financial planner and a therapist/counselor. Spend some time this month researching divorce professionals and create a short list of candidates for each position. Schedule interviews with each top contender in January, and rest easy knowing that by February 2012, you’ll be benefiting from the expert guidance of a top-notch divorce team.
4. Open new accounts in your name. Moving forward as a single woman in 2012 will require that you have a bank account and credit cards in your name. Lay the groundwork now.  Don’t use the bank where you currently have your joint accounts. Go to a different bank and open both a savings and a checking account in your name. You’ll need your own credit card, too, so you should start that process now, as well. New federal regulations are making it harder than ever for women with little or no income to establish credit on their own. You can do it. But, plan accordingly and know that securing credit is going to be more complicated than just filling out an application or making a single phone call.
5. Remain vigilant. Is your husband using the good cheer of the holidays as cover while he dissipates family assets? Be attentive, and if you are concerned at all about financial shenanigans by your husband, you may want to think twice about filing a joint return with him for 2011.
Some women who are considering divorce let the holidays get them down. Don’t be one of them. Use this opportunity to start planning ahead, and you’ll be able to start the New Year confident that you are on the way to a more stable and secure financial future.

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It's Not Too Late: Year-End Tax Moves

Once you’ve reached the last month of the tax year, your options are limited to minimize your income taxes. But there are a few things that could still be done, so don’t give up hope.
For example, you could double up your real estate taxes by prepaying next year’s tax during December. Doing this with, for example, a $3,000 per year real estate tax bill could result in a reduction of tax for the year of $750 if you’re in the 25% bracket. Keep in mind though, that you’ll have forked out this money long before it is actually due in most cases, and for the next year you won’t have this deduction available if you used it in this year.
The same could be done with your charitable contributions - there’s no reason that you can’t make additional contributions to your favorite charities at the end of this year instead of waiting until next year.
You could also send your final estimated state income tax payment due in January of next year during December and claim that payment on this year’s itemized deductions as well.
Prepaying your January mortgage payment will credit that mortgage interest to this year as well, further increasing your itemized deductions.
Other itemized deductions could be “stacked” in one year, such as medical expenses (subject to the 7.5% floor) and miscellaneous deductions (subject to the 2% floor).
It’s important to keep in mind that the moves that you make this year might reduce your tax now - but you might have an adverse impact on next year’s income tax by doing so. It will pay to run the calculations based on what you know about this year’s tax and next year’s tax to make sure that it is in your best interest to do this.
Here’s how it might play out: if you prepaid your next year’s real estate tax during this year, it might reduce your deductions below the Standard Deduction - which could be a good thing. In doing this, you would get to use the Standard Deduction to increase your tax deductions on next year’s return when you specifically reduced your deductions for that year by prepaying the deductible real estate tax in during this year. In this fashion you might be making the most of the standard deduction and your itemized deductions year after year - one year using the “stacked” deductions, the next using the standard deduction.
These prepayment options could have a negative affect if you are subject to the Alternative Minimum Tax (AMT). Prepaying your state tax, mortgage interest and some medical expenses might trigger or cause an increase in AMT. One tactic that you might consider is selling a taxable investment that has an inherent loss; this is especially useful if you’ve sold another investment at some point in the tax year that has resulted in a taxable gain. Losses can be used to offset those capital gains dollar for dollar, and an additional $3,000 in capital losses can be used to reduce your ordinary income as well.
You can also make up for underpayment of estimated tax by taking a withdrawal from an IRA (especially if you’re over age 59½) and having tax withheld from the withdrawal. This can also be accomplished by having more tax withheld from your paycheck if you’re still working, by filing a new W4. Another significant move you can make includes the Qualified Charitable Distribution from your IRA, 401(k) or 403(b) - allowing you to bypass recognizing that income, including your RMD. This can only be done if you’re at least age 70½ and subject to Required Minimum Distributions. The charity receives a contribution, and you get to lower your year-end balance in your account, therefore reducing your RMD for next year.  For more details on this, you should check out the IRA Owner's Manual.
You can also delay your first RMD (if you reached age 70½ this year) until as late as April 1 of next year, although that will mean you have to take two RMDs next year. But in some circumstances that may be the better option.
You can also make a deductible contribution to your IRA, if you qualify - but you don’t have to do that before the end of the year, you have until April 15 to do that.
This isn’t an exhaustive list of year-end tax moves, just several of the more prominent ones. Hopefully you’ll find what you need here to help with your year-end tax plans.

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New Website Takes Social Approach To Personal Finance

The Internet is a great source of information on personal finance, but often this information lacks the personal touch. The new website MyMoneyCircles.com aims to provide that personalized element by taking an interactive, social media-style approach.
Though it focuses on the human element, MyMoneyCircles is anything but soft and fuzzy. The website refers to its approach as a "boot camp" for personal finance. But what exactly does a personal finance boot camp entail?
Getting financially fit
The boot camp method at MyMoneyCircles involves pushing participants to get their personal finances in the best shape possible. And the boot camp analogy is apt, because it highlights the simple fact that financial responsibility often isn't easy, and building robust savings accounts is often an act of sacrifice.
MyMoneyCircles will conduct a series of boot camps to address a variety of financial goals, including:
Saving money
Managing credit and debt
Protecting family and assets
Planning for the future
The personalized support system at MyMoneyCircles is designed to help users make the changes necessary to meet these goals. By engaging participants throughout the process, and providing advice tailored to their needs, the site aims to lead them each step of the way toward financial improvement.
Here are some of the methods MyMoneyCircles will use to engage, encourage, and energize those who want to improve their personal finances:
Personal assessment. A 10-question quiz will kick off each boot camp, to provide users with a clearer picture of their needs on each topic.
Customized advice and education. Participants will receive emails related to their areas of interest and access to online materials. Online resources will allow users to submit questions to financial experts through MyMoneyCircles.
A defined action plan. MyMoneyCircles will present participants with specific steps designed to get them to stop procrastinating and to start meeting their goals.
Community support. MyMoneyCircles is designed for users to share their personal experiences with other members of the community, especially those with similar needs and goals. In this way, users can help each other make progress.
Continued growth opportunties. MyMoneyCircles aims to provide multiple levels of informative material, allowing users to build on what they've learned.
Access to expertise
Central to the program is the expertise of Lynnette Khalfani-Cox. Khalfani-Cox, also known as "The Money Coach," is a best-selling author and frequently-quoted expert in the national media. Khalfani-Cox's input drives both the design and content of MyMoneyCircles, and she will answer individual participant questions too. A variety of financial specialists--full disclosure, this author will be one of them--will also be available to provide advice.

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Low prices boost SF home sales to 5-year Jan. high

LOS ANGELES (AP) — Home sales in the San Francisco Bay area reached a five-year high for January, as prices and mortgage rates plunged, a real estate tracking firm reported Thursday.
However, many of those purchases involved properties that were subject to foreclosures or short sales, indicating the housing market is far from recovered.
The survey by San Diego-based DataQuick also showed the median sales price in the region fell nearly 3 percent last month from December to $326,000 — less than half the peak price of $665,000 reached in 2007 but up from the low of $290,000 recorded in 2009.
A total of 5,479 new and existing homes were sold in the nine-county area, according to DataQuick. The figure was down nearly 27 percent from December but marked a 10.3-percent improvement over January 2011.
The December-to-January drop was normal for the season, while the January-to-January jump showed real improvement, DataQuick said.
The year-over-year increase in January marked the seventh annual jump in a row, the firm said.
Home sales were buoyed by "lower prices, ultra-low mortgage rates, a modestly improved economy and a record level of investor purchases," DataQuick said in a statement.
The lower median price in January was "a reflection of how skewed the market has become toward distressed, lower-cost properties," DataQuick President John Walsh said in the statement. "The higher-end sales have slowed in recent months as many struggle to qualify for loans and others just sit tight."
Distressed property sales — the combination of foreclosure and short sales — made up more than half of all sales of existing homes. Absentee buyers, who mostly are investors, bought more than a quarter of all homes sold, DataQuick reported

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Why the Slowest Investors Win the Race

Anyone who attended kindergarten remembers Aesop's fable about the tortoise and the hare. The story's moral has implications for investors: Slow but steady wins the race.
Hare investors try to sprint to the finish line of a comfortable retirement without girding their portfolios against the perils of volatility — frequent ups and downs in asset value. So they tend to lag far behind tortoise investors, who take these precautions, which I'll explain in a moment.
Volatility reflects uncertainty, and markets tend to punish uncertainty with lower prices. Yet just because an investment is volatile doesn't mean it has no place in your portfolio. Because they may be less likely to go down with other assets in the portfolio, volatile investments may add highly beneficial variety, known as diversification.
Let's say you own tech stocks like Apple and IBM. Adding more tech stocks to your portfolio doesn't decrease overall risk, so you add a gold-mining stock instead. Though highly volatile in itself, the gold-mining stock is less likely to go up or down with tech stocks, so it increases the portfolio's diversification.
Because there's little correlation between gold-mining stocks' price movements with those of tech stocks, these categories are said to have a low correlation. That sounds complicated, but you can easily look up the differences in price movements between different types of investments to see whether they're correlated, and if so, how closely.
Aware of the downsides of volatility, tortoises avoid it by assembling highly diversified portfolios. That means traditional investments such as U.S. stocks and bonds, mixed with a dash of non-traditional (alternative) assets. These may include emerging market stocks, Treasury bonds and real estate securities. The price movements of these investments have a history of not being highly correlated with U.S. stocks or bonds.
Tortoises are like a savvy retailer on a tropical resort island who wisely sells umbrellas as well as sunscreen to help cover losses during rainy periods. Every once in while, the rain falls on everything -- which is what happened in late 2008, much to the dismay of investors. In the financial meltdown, stocks, bonds and real estate both in the US and abroad swooned, leaving little quarter for investors.
Tortoise-style investors add a touch of alternative investments, knowing this may cut their overall returns some years, but they'll sleep more peacefully with the knowledge that it can counter-balance heavy losses in traditional investments.
Hares aren't focused on this balanced approach. Instead, they assemble highly aggressive portfolios of assets that tend to rise or fall in lockstep. They're not concerned with cutting their losses because, compelled by greed, they're not planning to have any losses ior they believe they can defy gravity. This was not unlike the employees who loaded up on their company's shares before the recession, only to see their investment go south along with their job.
Like the Aesop's hare, hare investors are overconfident and turn a blind eye to the ravages of volatility, which take a long time to recover from. Tortoises, having sustained less damage, continue their slow but steady progress.
The math of recovering from hits may astonish you. Let's say your portfolio loses 33 percent of its value, leaving you with two thirds of what you had. Many believe they'd be back where they started if they gain 33 percent. But this gain wouldn't restore their losses. They would actually need to make a 50 percent gain to get back to where they started. The reason is that the gain is based on a lower value than what you started with.
Heavy gains followed by just a large losses from volatile investments is comparable to the hare in Aesop's fable sprinting for periods and then, winded, lying down to take a nap. Like the tortoise, investors with adequately diversified portfolios don't tend to need as much recovery time.
Such losses are even more damaging than they appear at first blush. Not only do hare portfolios lose time that could be used to make progress toward the goal, but they also miss out on the benefits of compounding from reinvested gains . Though tortoises' gains may be far lower than those made by hares during their sprints, they're more likely to enjoy the benefits of compounding.
These awkward reptiles plod steadily toward the finish line while the halting progress of hares leaves them far behind.

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US rate on 30-year mortgage hits record 3.83 pct.

WASHINGTON (AP) — Average U.S. rates for 30-year and 15-year fixed mortgages fell to fresh record lows this week. Cheap mortgage rates have made home-buying and refinancing more affordable than ever for those who can qualify.
Mortgage buyer Freddie Mac said Thursday that the rate on the 30-year loan ticked down to 3.83 percent. That's the lowest since long-term mortgages began in the 1950s. And it's below the previous record rate of 3.84 percent reached last week.
The 15-year mortgage, a popular option for refinancing, dropped to 3.05 percent, also a record. That's down from last week's previous record of 3.07 percent.
Low mortgage rates haven't done much to boost home sales. Rates have been below 4 percent for all but one week since early December. Yet sales of both previously occupied homes and new homes fell in March.
There have been some positive signs in recent months. January and February made up the best winter for sales of previously occupied homes in five years. And builders are laying plans to construct more homes in 2012 than at any other point in past 3 1/2 years. That suggests some see the housing market slowly starting to turn around.
Still, many would-be buyers can't qualify for loans or afford higher down payments required by banks. Home prices in many cities continue to fall. That has made those who can afford to buy uneasy about entering the market. And for those who are willing to brave the troubled market, many have already taken advantage of lower rates — mortgage rates have been below 5 percent for more than a year now.
Mortgage rates are lower because they tend to track the yield on the 10-year Treasury note. Slower U.S. job growth and uncertainty about how Europe will resolve its debt crisis have led investors to buy more Treasurys, which are considered safe investments. As demand for Treasurys increases, the yield falls.
To calculate the average rates, Freddie Mac surveys lenders across the country on Monday through Wednesday of each week.
The average rage does not include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.
The average fee for 30-year loans was 0.7 last week, down from 0.8 the previous week. The fee on 15-year loans also was 0.7, unchanged from the previous week.
The average on one-year adjustable rate was 2.73 percent last week, down from 2.7 percent the previous week. The fee on one-year adjustable rate mortgages was 0.5, down from 0.6.

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Home market being held back by wary first-timers

WASHINGTON (AP) — This should be a great time to buy a first home. Prices have sunk to 2002 levels. Sellers are waiting anxiously as homes languish on the market. Mortgage rates are their lowest ever.
Yet the most likely first-time homeowners, especially young professionals and couples starting families, won't buy these days. Or they can't. Or they already did, during the housing boom. And their absence helps explain why the housing industry is still depressed.
The obstacles range from higher down payments to heavy debt from credit cards and student loans. But even many of those who could afford to buy no longer see it as a wise investment. Prices have sunk 15 percent in three years.
"I've looked for a home, but the places we can afford with the money we have are not that great," says Seth Herter, 23, a store manager in suburban St. Louis. "It also doesn't seem smart anymore to buy with prices falling. Buying a home just doesn't make sense to us."
The proportion of U.S. households that own homes is at 65.1 percent, its lowest point since 1996, the Census Bureau says. That marks a shift after nearly two decades in which homeownership grew before peaking at 70 percent during the housing boom.
The housing bubble lured so many young buyers that it reduced the pool of potential first-timers to below-normal levels. That's contributed to the decline in new buyers in recent years.
In 2005, at the height of the boom, about 2.8 million first-timers bought homes, according to the National Association of Realtors. By contrast, for each of the four years preceding the boom, the number of first-timers averaged fewer than 2 million.
Still, the bigger factors are the struggling economy, shaky job security, tougher credit rules and lack of cash to put down, said Dan McCue, research manager at Harvard University's Joint Center for Housing Studies. The unemployment rate among typical first-timers, those ages 25 to 34, is 9.8 percent, compared with 9 percent for all adults.
"The obstacles facing first-time buyers are big, and it's changing the way they look at home ownership," McCue says. "It's no longer the American Dream for the younger generation."
First-timers usually account for up to half of all sales. Over the past year, they've accounted for only about a third.
A big reason is tougher lending standards.
Lenders are demanding more money up front. In 2002, the median down payment for a single-family home in nine major U.S. cities was 4 percent, according to real estate website Zillow.com. Today, it's 22 percent.
And one-third of households have credit scores too low to qualify for a mortgage. The median required credit score from FICO Inc., the industry leader in credit ratings, has risen from 720 in 2007, when the market went bust, to 760 today.
Homes in many places are the most affordable in a generation. In the past year, the national median sale price has sunk 3.5 percent. Half the homes listed in the Tampa Bay area are priced below $100,000.
The average mortgage rate for a 30-year fixed loan is 4 percent, barely above an all-time low. Five years ago, it was near 6.5 percent. In 2000, it exceeded 8 percent.
When the economy eventually strengthens, the housing market will, too. More people will be hired. Confidence will rise. Down payments won't be so hard to produce.
The question is whether first-time buyers will then start flowing into the housing market. That will depend mainly on whether they think prices will rise, said Mark Vitner, senior U.S. economist at Wells Fargo.
"It's a guessing game as to when things will turn around," Vitner said. "But until they do, you won't see young people buying homes.

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First Person: I Repaid My Student Loans While Still in College

Note: This was written by a Yahoo! contributor. Do you have a personal finance story that you'd like to share? Sign up with the Yahoo! Contributor Network to start publishing your own finance articles.
The first two years of my college experience was spent at a community college. My tuition was covered, but I took out a loan for $20,000 to cover living expenses. Upon transferring to a costly four-year university I received a hefty scholarship, which covered most of my expenses. Still, my loans were at $11,500 per year. The day of my graduation, I received the coveted diploma and a not-so-coveted array of bills for my student loans.
However, the difference between other students and myself was the large sum of money lingering my savings account that I started four years prior. Let me explain how I managed to pay off my bills on the same day that I graduated from college:
Federal Loans Only
The first goal during my college career was to stay away from private student loans because they are nightmares. Trust me, I know. I took out a $5,000 private student loan in my first year of college and watched it as it was passed around from lender to lender and the interest rate jumped around, ranging from 8% to 20%. Not to mention the compounding of interest that increased the loan nearly $1,500 in eight months. Needless to say, I paid that off with every dime that I had to give to it by taking on a job. Please, if you can avoid them, do not take out alternative loans.
The government offers student loans at wonderful interest rates and the government will pay the interest of the loan while you are pursuing your education.
Monthly Payments While in School
Let's evaluate my loans. During years one and two, I took out $7,500 for each year. My plan was to get a job that I could take the money that I would need to pay off the loan in one year and pay it into a high-interest savings account. That meant that for years one and two, I paid $625 into my savings account each month. During years three and four, I took out $11,500 per year, which meant that I had to contribute $960 each month to the savings account. This may seem like a lot of money, but at the time I was single and still didn't have my daughter (until the fourth year), so it was easy to have all of my expenses paid, get a job on the side and contribute all of that money into a savings account.
At the end of the four years, I had contributed $43,000 to my savings account and earned about $1,000 in interest on the money.
On the day of my graduation I was able to pay off my student loans and never had to pay a cent of interest. If you are financially capable to do this, then I suggest that you do it. All it takes is finding extra income through a part time job or funding. You will save thousands of dollars in interest if you can manage this. If you cannot afford to pay the monthly payment, then pay half of it or pay what the interest would be on the loan. That way you can make a lump sum payment at the end of your college education.

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End-of-the-Year Checklist for Divorcing Women

Most women wait until after the holidays to move forward with their divorces --and that’s completely understandable. Many don’t want to disrupt family traditions for their children. Some welcome the distraction offered by the hustle and bustle of the season. And, of course, others want to avoid the discussions that inevitably seem to arise whenever and wherever relatives gather.
Interestingly, though, January is the month when most divorces are filed. Obviously, turning the page towards a New Year inspires a fresh start –and that’s completely understandable, too. If you’re headed in that direction, it makes sense to spend a little time this month planning ahead. You can do so discreetly, and then know that you’ll truly be ready to start the New Year on the right foot.
To help get you begin, here are a few things you can do now to help make the divorce process smoother in 2012:
1. Start collecting financial documents. Watch the mail for year-end statements from banks, credit card companies, etc.  As we outline in our Divorce Financial Checklist, preparing for divorce requires gathering all the relevant documents related to your bank and brokerage accounts, credit cards, mortgages, etc. Once you have collected them, make copies, and take them to a trusted friend/family member, or use a safe deposit box that your husband can’t access.
2. Check your credit report. While you’re gathering your financial records, keep a careful eye on your credit card statements, and if you haven’t already done so, request a copy of your credit report. Once you have the report, monitor your score carefully so you’ll be the first to know if any unusual activity occurs.  (For example, is your husband using your joint credit cards to buy his girlfriend gifts this holiday season?)  See my post, How To Protect Your Credit Score During Your Divorce, for more tips
3. Research divorce professionals in your area. If you want to ensure the best possible outcome for your divorce, take the time to build a qualified divorce team. I recommend you start with these three players: a matrimonial/family law attorney, a divorce financial planner and a therapist/counselor. Spend some time this month researching divorce professionals and create a short list of candidates for each position. Schedule interviews with each top contender in January, and rest easy knowing that by February 2012, you’ll be benefiting from the expert guidance of a top-notch divorce team.
4. Open new accounts in your name. Moving forward as a single woman in 2012 will require that you have a bank account and credit cards in your name. Lay the groundwork now.  Don’t use the bank where you currently have your joint accounts. Go to a different bank and open both a savings and a checking account in your name. You’ll need your own credit card, too, so you should start that process now, as well. New federal regulations are making it harder than ever for women with little or no income to establish credit on their own. You can do it. But, plan accordingly and know that securing credit is going to be more complicated than just filling out an application or making a single phone call.
5. Remain vigilant. Is your husband using the good cheer of the holidays as cover while he dissipates family assets? Be attentive, and if you are concerned at all about financial shenanigans by your husband, you may want to think twice about filing a joint return with him for 2011.
Some women who are considering divorce let the holidays get them down. Don’t be one of them. Use this opportunity to start planning ahead, and you’ll be able to start the New Year confident that you are on the way to a more stable and secure financial future.
--------------------------------------------------------------------------------------- Jeffrey A. Landers, CDFA™ is a Divorce Financial Strategist™ and the founder of Bedrock Divorce Advisors, LLC (http://www.BedrockDivorce.com), a divorce financial strategy firm that exclusively works with women, who are going through, or might be going through, a financially complicated divorce. He also advises women business owners on what steps they can take now to “divorce-proof” their business in the event of a future divorce. He can be reached at Landers@BedrockDivorce.com.
All articles/blog posts are for informational purposes only, and do not constitute legal advice. If you require legal advice, retain a lawyer licensed in your jurisdiction. The opinions expressed are solely those of the author, who is not an attorney.

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It's Not Too Late: Year-End Tax Moves

Once you’ve reached the last month of the tax year, your options are limited to minimize your income taxes. But there are a few things that could still be done, so don’t give up hope.
For example, you could double up your real estate taxes by prepaying next year’s tax during December. Doing this with, for example, a $3,000 per year real estate tax bill could result in a reduction of tax for the year of $750 if you’re in the 25% bracket. Keep in mind though, that you’ll have forked out this money long before it is actually due in most cases, and for the next year you won’t have this deduction available if you used it in this year.
The same could be done with your charitable contributions - there’s no reason that you can’t make additional contributions to your favorite charities at the end of this year instead of waiting until next year.
You could also send your final estimated state income tax payment due in January of next year during December and claim that payment on this year’s itemized deductions as well.
Prepaying your January mortgage payment will credit that mortgage interest to this year as well, further increasing your itemized deductions.
Other itemized deductions could be “stacked” in one year, such as medical expenses (subject to the 7.5% floor) and miscellaneous deductions (subject to the 2% floor).
It’s important to keep in mind that the moves that you make this year might reduce your tax now - but you might have an adverse impact on next year’s income tax by doing so. It will pay to run the calculations based on what you know about this year’s tax and next year’s tax to make sure that it is in your best interest to do this.
Here’s how it might play out: if you prepaid your next year’s real estate tax during this year, it might reduce your deductions below the Standard Deduction - which could be a good thing. In doing this, you would get to use the Standard Deduction to increase your tax deductions on next year’s return when you specifically reduced your deductions for that year by prepaying the deductible real estate tax in during this year. In this fashion you might be making the most of the standard deduction and your itemized deductions year after year - one year using the “stacked” deductions, the next using the standard deduction.
These prepayment options could have a negative affect if you are subject to the Alternative Minimum Tax (AMT). Prepaying your state tax, mortgage interest and some medical expenses might trigger or cause an increase in AMT. One tactic that you might consider is selling a taxable investment that has an inherent loss; this is especially useful if you’ve sold another investment at some point in the tax year that has resulted in a taxable gain. Losses can be used to offset those capital gains dollar for dollar, and an additional $3,000 in capital losses can be used to reduce your ordinary income as well.
You can also make up for underpayment of estimated tax by taking a withdrawal from an IRA (especially if you’re over age 59½) and having tax withheld from the withdrawal. This can also be accomplished by having more tax withheld from your paycheck if you’re still working, by filing a new W4. Another significant move you can make includes the Qualified Charitable Distribution from your IRA, 401(k) or 403(b) - allowing you to bypass recognizing that income, including your RMD. This can only be done if you’re at least age 70½ and subject to Required Minimum Distributions. The charity receives a contribution, and you get to lower your year-end balance in your account, therefore reducing your RMD for next year.  For more details on this, you should check out the IRA Owner's Manual.
You can also delay your first RMD (if you reached age 70½ this year) until as late as April 1 of next year, although that will mean you have to take two RMDs next year. But in some circumstances that may be the better option.
You can also make a deductible contribution to your IRA, if you qualify - but you don’t have to do that before the end of the year, you have until April 15 to do that.
This isn’t an exhaustive list of year-end tax moves, just several of the more prominent ones. Hopefully you’ll find what you need here to help with your year-end tax plans.

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New Website Takes Social Approach To Personal Finance

The Internet is a great source of information on personal finance, but often this information lacks the personal touch. The new website MyMoneyCircles.com aims to provide that personalized element by taking an interactive, social media-style approach.
Though it focuses on the human element, MyMoneyCircles is anything but soft and fuzzy. The website refers to its approach as a "boot camp" for personal finance. But what exactly does a personal finance boot camp entail?
Getting financially fit
The boot camp method at MyMoneyCircles involves pushing participants to get their personal finances in the best shape possible. And the boot camp analogy is apt, because it highlights the simple fact that financial responsibility often isn't easy, and building robust savings accounts is often an act of sacrifice.
MyMoneyCircles will conduct a series of boot camps to address a variety of financial goals, including:
Saving money
Managing credit and debt
Protecting family and assets
Planning for the future
The personalized support system at MyMoneyCircles is designed to help users make the changes necessary to meet these goals. By engaging participants throughout the process, and providing advice tailored to their needs, the site aims to lead them each step of the way toward financial improvement.
Here are some of the methods MyMoneyCircles will use to engage, encourage, and energize those who want to improve their personal finances:
Personal assessment. A 10-question quiz will kick off each boot camp, to provide users with a clearer picture of their needs on each topic.
Customized advice and education. Participants will receive emails related to their areas of interest and access to online materials. Online resources will allow users to submit questions to financial experts through MyMoneyCircles.
A defined action plan. MyMoneyCircles will present participants with specific steps designed to get them to stop procrastinating and to start meeting their goals.
Community support. MyMoneyCircles is designed for users to share their personal experiences with other members of the community, especially those with similar needs and goals. In this way, users can help each other make progress.
Continued growth opportunties. MyMoneyCircles aims to provide multiple levels of informative material, allowing users to build on what they've learned.
Access to expertise
Central to the program is the expertise of Lynnette Khalfani-Cox. Khalfani-Cox, also known as "The Money Coach," is a best-selling author and frequently-quoted expert in the national media. Khalfani-Cox's input drives both the design and content of MyMoneyCircles, and she will answer individual participant questions too. A variety of financial specialists--full disclosure, this author will be one of them--will also be available to provide advice.

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White House defends offer as 'good faith effort'

 The White House is defending President Barack Obama's proposal to set a higher threshold for tax increases than what he vowed to do during his presidential campaign. The White House says Obama has moved halfway to meet House Speaker John Boehner on a "fiscal cliff" deal that raises $1.2 trillion in tax revenue, down from the $1.6 trillion Obama had initially requested.
White House spokesman Jay Carney says that offering to raise taxes on taxpayers earning more than $400,000 rather than the $200,000 he ran on demonstrates, in Carney's words, Obama's good faith effort to reach a compromise.
The new tax proposal is contained in a broader plan that Obama gave Boehner Monday that would cut spending further and lower cost-of-living increases for most Social Security beneficiaries.

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Factbox: U.S. House "Plan B" tax bill likely to have short shelf life

The U.S. House of Representatives is likely to vote this week on what is being called "Plan B" on avoiding the "fiscal cliff."
The Republican-sponsored legislation aims to extend current low tax rates for most families. Without such action by Congress, across-the-board income tax rates will rise on January 1.
The combination of $500 billion in tax hikes and $100 billion in spending cuts, which are scheduled to start in the new year, could push the U.S. economy into recession, according to experts.
House Speaker John Boehner, the top Republican in Congress, and Democratic President Barack Obama have been trying for weeks to avoid the fiscal cliff with an alternative tax and spending-cut deal. Boehner says he is offering this very limited alternative in case negotiations with Obama fail.
Here are key elements of Boehner's Plan B:
* A House vote is expected on Thursday.
* Boehner expressed confidence on Wednesday that the measure would pass but some House Republican aides were not yet predicting that.
* The White House has said Obama would veto the Boehner Plan B in the unlikely event it made it to his desk.
* Democrats are viewing Plan B as nothing more than a diversion from attempts to reach a broad deficit-reduction deal to avoid the fiscal cliff. They see it as a way for Boehner to give his conservatives a vote on a measure that they can tout as a tax-cut bill for all but the wealthiest and inoculate them against Democratic accusations of obstruction.
* Republicans argue that they are acting responsibly by providing a backstop against massive tax increases in case the Obama-Boehner negotiations fail.
* Once Plan B is dealt with, all attention will shift to whether Obama and Boehner can work out a broad agreement by December 31 or whether the country will go off the cliff. If that happens, there is speculation that some sort of deal might be worked out in the early weeks of January to avoid the full brunt of the tax hikes and spending cuts.
* Under Boehner's Plan B, current low tax rates would be made permanent for families with net annual incomes of up to $1 million. The measure would let tax rates rise on income above $1 million. Without action by Congress, all income tax rates are set to rise on January 1 with the expiration of tax cuts enacted a decade ago by then-President George W. Bush.
* Plan B includes a grab bag of other expiring tax provisions. It would permanently fix the alternative minimum tax so that middle-class taxpayers do not creep into a tax bracket intended for the wealthiest. Annual AMT fixes have prevented tens of millions of households from paying a higher tax rate.
Also included are moves to maintain estate taxes at their current 35 percent rate per individual after a $5 million exemption. The White House backs reverting to the 2009 estate tax levels of 45 percent tax after a $3.5 million exemption per individual, though some moderate Democrats back keeping the current law.
Plan B legislation would raise dividend and capital gains tax rates for those earning $1 million and over to 20 percent, from its current 15 percent for most who pay such taxes. Most Democrats back raising the current 15 percent tax rate on investment income to 20 percent for households earning more than $250,000.
* The Joint Committee on Taxation estimates the plan would reduce U.S. revenues by around $4 trillion over 10 years.
* The plan does not address spending issues, including automatic across-the-board spending cuts also looming at year's end.
* The bill does not address how to resolve a looming stand-off over the government's borrowing authority. The government will need to raise the "debt ceiling" in the next few months to avoid default, and Obama wants higher borrowing authority approved promptly. House Republicans continue to want to hold back and use it as leverage in ongoing fiscal cliff talks, according to aides.
* Senate Majority Leader Harry Reid already has warned there are not the votes in his chamber to pass Boehner's plan. But if the House sent the Senate such a bill, Reid could respond in one of a few ways. He could declare that the Senate in July passed its version of this legislation, but with a $250,000 threshold, and take no further action. Or, he could offer a variation of the Senate-passed bill. Obama has proposed a $400,000 cut-off for maintaining low income tax rates. Reid could embrace that level or another one.
* The legislation is being inserted into an existing bill that originally had to do with Burma trade policy. A House Rules Committee spokesman said this was being done to avoid some potential procedural delays.

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U.S. charges three Swiss bankers in offshore account case

 Three Swiss bankers accused of conspiring with American clients to hide more than $420 million from the tax-collecting U.S. Internal Revenue Service were indicted, the U.S. Attorney's Office in Manhattan said on Wednesday.
The indictment named Stephan Fellmann, Otto Huppi and Christof Reist, all former client advisers with an unnamed Swiss bank. None of the bankers have been arrested, authorities said.
Their attorneys were not immediately known.
The indictment said the unnamed bank did not have offices in the United States.
Banking secrecy is enshrined in Swiss law and tradition, but it has recently come under pressure as the United States and other nations have moved aggressively to tighten tax law enforcement and demanded more openness and cooperation.
In April, two Swiss financial advisers were indicted on U.S. charges of conspiring to help Americans hide $267 million in secret bank accounts.
In January, prosecutors charged three Swiss bankers with conspiring with wealthy taxpayers to hide more than $1.2 billion in assets from tax authorities.
UBS AG, the largest Swiss bank, in 2009 paid a $780 million fine as part of a settlement with U.S. authorities who charged the bank helped thousands of wealthy Americans hide billions of dollars in assets in secret Swiss accounts.

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"Fiscal cliff" turmoil could hit 100 million taxpayers: U.S. IRS

WASHINGTON (Reuters) - U.S. tax authorities warned on Wednesday that as many as 100 million taxpayers - far more than previously estimated - could face refund delays if lawmakers' "fiscal cliff" negotiations fail to fix the alternative minimum tax (AMT) before year-end.
The Internal Revenue Service said in a letter to lawmakers that it was raising its estimate on AMT impact from 60 million.
"It is becoming apparent that an even larger number of taxpayers - 80 to 100 million of the 150 million total returns expected to be filed - may be unable to file," IRS Acting Commissioner Steven Miller wrote.
The AMT is a levy designed to ensure that high-income taxpayers pay a minimum tax. Democrats and Republican typically agree to adjust the tax for inflation to prevent unintended taxpayers from being hit by it.
This year, however, its fate is tied to heated negotiations - primarily between President Barack Obama and House Speaker John Boehner - over future taxes and federal spending as they try to avoid the automatic tax increases and spending cuts known as the fiscal cliff.
The AMT fix for calculating 2012 income tax has broad bipartisan support, but so far been drowned out by the larger federal budget questions.
Without action soon to fix the AMT, there could be "lengthy delays of tax refunds and unexpectedly higher taxes for many taxpayers," Miller said.
The IRS needs congressional authority to update tax-filing software and forms so that Americans can start their tax returns next year. Inaction by Congress on the AMT has left IRS unsure which taxpayers will need to pay the AMT tax.
An IRS spokesman declined to comment on the agency's AMT preparations to date.
"Failure to act on the fiscal cliff will throw the 2013 tax filing season into chaos," Representative Sander Levin, a Michigan Democrat, said in a statement.
About 4 million taxpayers pay the AMT now because Congress routinely "patches" it for inflation to keep it from reaching down into middle-income tax brackets.
Without a patch for 2012, up to 33 million taxpayers will have to pay the AMT, according to IRS.
Obama's most recent offer to Republicans included a permanent AMT patch.
House Republicans plan to vote Thursday on a bill to address the fiscal cliff that also includes an AMT patch.

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What's on the table now in 'fiscal cliff' talks

An update on the latest offers on the table in negotiations to avert a year-end avalanche of federal tax increases and spending cuts known as the "fiscal cliff":
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INCOME TAXES
House Speaker John Boehner would allow income tax rates to rise for people making more than $1 million per year and would hold rates where they are for everyone making less. The top rate on income exceeding $1 million would go from 35 percent to 39.6 percent.
President Barack Obama would freeze income tax rates for taxpayers making $400,000 or less and raise them for people making more.
The two sides are moving closer together. Previously, the Republican House leader opposed allowing any tax rates to go up; Obama wanted higher taxes for individual income above $200,000, or $250,000 for couples.
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PAYROLL TAX
Obama has dropped his proposal to extend a temporary cut in Social Security payroll taxes paid by 163 million workers. Republicans want that tax to go back up.
Raising the payroll tax by 2 percentage points to its old level would cost a worker making $50,000 a year another $1,000 — or a little more than $19 per week — during 2013.
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SOCIAL SECURITY
Obama is offering to reduce cost-of-living increases for Social Security recipients. Republicans have been seeking this as a key to long-term deficit reduction. But many congressional Democrats oppose it.
Government pensions and veterans' benefits would also get smaller cost-of-living increases.
In addition, taxpayers, especially low- and middle-income families, would pay more because of changes in the way that tax brackets are adjusted for inflation.
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MEDICARE
Obama continues to reject Republicans' plan to raise the eligibility age for Medicare from 65 to 67. Boehner now says raising the eligibility age is not essential to a deal.
Obama wants to limit cuts in Medicare and other health care programs to about $400 billion over 10 years; Republicans want to overhaul Medicare to save even more money.
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DEBT LIMIT
Obama wants a deal that would raise the amount the government is allowed to borrow to cover the next two years, to avoid another debt showdown with Congress until after the 2014 midterm elections.
Previously, Obama had demanded permanent authority to increase the debt ceiling without congressional approval. Republicans want Congress to be part of the decision-making process so they can demand budget-cutting in exchange for additional borrowing.
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OTHER TAXES
Obama and Boehner both propose raising taxes on dividends and capital gains from 15 percent to 20 percent.
Both sides would reduce the number of deductions and exemptions that wealthy taxpayers can claim.
Obama would also let estate taxes revert to a 45 percent rate, after the first $3.5 million of an estate is exempted. Boehner backs a plan for a 35 percent rate and $5 million exemption.

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Toll Brothers 4Q net income soars on tax benefit

NEW YORK (AP) — Toll Brothers says its fiscal fourth-quarter net income soared, helped by a large income tax benefit and a 48 percent rise in revenue. The luxury homebuilder delivered more homes and its order backlog increased.
CEO Douglas C. Yearley Jr. said in a statement on Tuesday that higher home prices, low interest rates, pent-up demand and improving consumer confidence prompted buyers to return to the housing market this year.
Last week a batch of government reports showed that rising home values, more hiring and lower gas prices pushed consumer confidence in November to the highest level in nearly five years. On Tuesday, Core Logic reported that a measure of U.S. home prices rose 6.3 percent in October compared with a year ago, the largest yearly gain since July 2006.
For the three months ended Oct. 31, Toll Brothers Inc. earned $411.4 million, or $2.35 per share. That's up sharply from $15 million, or 9 cents per share, a year ago.
The latest quarter included an income tax benefit of $350.7 million.
Excluding the tax benefit and other items, earnings were 35 cents per share.
Analysts expected earnings of 25 cents per share for the quarter, which typically exclude one-time items, according to a FactSet poll.
Revenue increased to $632.8 million from $427.8 million, topping Wall Street's forecast of $565.1 million.
Homebuilding deliveries climbed 44 percent to 1,088 units, while net signed contracts jumped 70 percent to 1,098 units. The average price of homes delivered increased to $582,000 from $565,000 a year earlier.
Toll Brothers, based in Horsham, Pa., may benefit by catering to the luxury sector. Its target market includes households that typically make more than $100,000 a year, can afford to make a down payment of as much as 30 percent, have great credit record and an unemployment rate about half that of the general population.
Backlog, a measure of potential future revenue, rose 54 percent to 2,569 units. The cancellation rate declined to 4.6 percent from 7.9 percent.
The company's full-year net income jumped to $487.1 million, or $2.86 per share, from $39.8 million, or 24 cents per share, a year earlier. Annual revenue climbed 27 percent to $1.88 billion from $1.48 billion.
Toll Brothers anticipates delivering between 3,600 and 4,400 homes in 2013 at an average price of $595,000 to $630,000 per home.
Its shares fell 57 cents, or 1.8 percent, to close at $31.86 Tuesday. Its shares peaked for the past year at $37.08 in mid-September.

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IRS finalizes new tax for medical devices in healthcare law

WASHINGTON (Reuters) - The U.S. Internal Revenue Service on Wednesday released final rules for a new tax on medical devices, products ranging from surgical sutures to knee replacement implants, that starts next year as part of President Barack Obama's 2010 healthcare law.
The 2.3-percent tax must be paid, effective after December 31, by device-makers on their gross sales. The tax is expected to raise $29 billion in government revenues through 2022.
Companies including Boston Scientific Corp, 3M Co and Kimberly-Clark Corp have been lobbying the U.S. Congress for a repeal of the tax.
A repeal bill passed the Republican-controlled U.S. House of Representatives in June, but it has not been voted on by the Democratic-controlled Senate.
"The excise tax is on the medical device manufacturers and importers (who) will now have access to 30 million new customers due to the health care law," Treasury Department spokeswoman Sabrina Siddiqui said in a statement.
Many medical devices that are sold over-the-counter - such eyeglasses, contact lenses and hearing aids - are exempt from the tax, as are prosthetics, the IRS said.
The tax applies mostly to devices used and implanted by medical professionals, including items as complex as pacemakers or as simple as tongue depressors.
Products sold for humanitarian reasons, such as experimental cancer treatment devices, are not exempt from the tax.
Some medical device companies are hoping to delay the tax's start date as part of a resolution of the "fiscal cliff" deadline at the end of the year involving many tax and spending measures, said Steve Ferguson, chairman of Cook Group Inc.
"We would like to be part of the punt," Ferguson said, referring to an extension of current tax policy into 2013.
In one potentially problematic aspect of the tax, companies selling dual-use products to medical and non-medical customers must pay the tax on those products, potentially putting them at a competitive disadvantage, said Lew Fernandez, a director at PricewaterhouseCoopers LLP and a former IRS official.
For example, it remains "an open question" when latex gloves come under the tax, he said.

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H&R Block 2Q loss narrows as revenue rises

KANSAS CITY, Mo. (AP) — H&R Block's fiscal second-quarter loss narrowed, helped by cost-cutting efforts. Revenue climbed mostly because of a strong tax season in Australia.
The nation's largest tax preparation company typically turns in a loss in the August-to-October period because it takes in most of its revenue during the U.S. tax season. H&R Block's quarterly performance beat analysts' estimates and its stock hit the highest level in more than two years.
The company is optimistic and gearing up for its busy season.
"The U.S. tax season is right around the corner and we believe we're on pace to deliver significant earnings and margin expansion in fiscal 2013," President and CEO Bill Cobb said in a statement on Thursday.
For the three months ended Oct. 31, H&R Block Inc. lost $105.2 million, or 39 cents per share. A year earlier it lost $141.7 million, or 47 cents per share, for the quarter.
Its loss from continuing operations was 37 cents per share. Analysts surveyed by FactSet expected a bigger loss of 41 cents per share.
Selling, general and administrative expenses declined and the quarter was free of any impairment charges. The prior-year period included a $4.3 million impairment charge.
Revenue rose 6 percent to $137.3 million from $129.2 million. This topped Wall Street's forecast of $129.6 million.
Shares of H&R Block gained 89 cents, or 5.1 percent, to close at $18.26. Earlier in the session the stock reached $18.40, its highest point since May 2010.
Tax services revenue increased 7 percent primarily due to the strong Australian tax season. Corporate revenue fell because of lower interest income from H&R Block Bank's shrinking mortgage loan portfolio.
H&R Block disclosed in October that it hired Goldman Sachs to help it explore options for its banking arm, H&R Block Bank. Those options, Block said, could result in the company no longer being regulated as a savings and loan holding company by the Federal Reserve.
The Federal Reserve announced some proposed rules in June that would impose higher capital requirements on savings and loan holding companies. H&R Block contends that if the proposed rules are enacted it would have to hold on to significant additional capital.
H&R Block, based in Kansas City, Mo., prepared 25.6 million tax returns worldwide in fiscal 2012.

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SALEM, Ore

WASHINGTON (Reuters) - The top U.S. tax collector warned on Thursday of a delayed start to 2013's tax season if Congress fails to reset the alternative minimum tax (AMT) on high-income taxpayers so that it does not sweep in millions of middle-income people.
Without another adjustment by lawmakers soon to the AMT, "many of us will see a delayed filing season," said Steven Miller, named just last month as Internal Revenue Service acting commissioner.
Miller did not give an exact date by which Congress must approve an AMT "patch" to prevent a delay to the tax season, which is scheduled to begin on January 22.
"We don't have any drop-dead time in mind," Miller told reporters after a speech at a conference in Washington.
But his remarks came on a day of continued stalemate in Washington between Democrats and Republicans over what to do about the "fiscal cliff" approaching at the end of the year.
The AMT is a crucial part of the assorted tax increases and automatic spending cuts that make up the so-called "cliff," a convergence of events that, absent congressional action, threatens to plunge the U.S. economy back into recession.
"Many people don't realize that they could potentially face a significantly delayed filing season and a much bigger tax bill for 2012," if the AMT is not dealt with, Miller said.
"In programming our systems, the IRS has assumed that Congress will patch the AMT as Congress has for so many years.
"And I remain optimistic that the fiscal cliff debate will be resolved by the end of the year. If that turns out not to be the case, then what is clear is that many of us will see a delayed filing season," Miller said.
The AMT is a tax intended to make sure that at least some tax is paid by high-income people who otherwise could sharply reduce or eliminate their regular income tax bills through using tax loopholes. About 4 million people annually pay the AMT.
Unlike the regular income tax, the AMT is not indexed for inflation. So the thresholds that determine who must pay the tax have to be regularly raised. This prevents the AMT from hitting middle-class people whose incomes may have crept upward on the back of inflation, but who are not wealthy.
Congress last patched the AMT in late 2010. Without another patch, the AMT could hit as many as 33 million people for the 2012 tax year, according to the IRS.
Democratic Senator Charles Schumer of New York said on Thursday he is "hopeful" that the AMT problem will be fixed with a broader "fiscal cliff" resolution before December 31.
Republicans in Congress may see the AMT as leverage in their "fiscal cliff" negotiations with President Barack Obama and the Democrats.
The IRS might have until mid-January to implement an AMT patch and still start the tax season on time, if Congress approves the fix as expected, said Richard Harvey, a tax professor at Villanova University and a former IRS official.
The AMT "is a ticking time bomb that is going to go off some time in January," Harvey said.

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