Year-End Clean Up

December 4, 2009

Money-Guy 12-04-2009

As we wind down 2009, what sort of things should you be thinking about? Well, in my life, it seems like every December there are a million things going on both on the personal side and on the business side. In today’s show, I want to focus on two things that I bet you and your family are thinking about, and if you’re not thinking about them, maybe now is a good time to start.

Since this is a personal finance show, it should come as no surprise that the two issues I want to talk about involve money. Whenever money or finances are talked about, there is always one consideration that you cannot avoid and seems to have an impact on almost everything, and that issue is… taxes!

As you listen to the show, I touch on four tax topics that you should probably consider:

  1. Loss Harvesting – Even though 2009 has been good to us in the form of market performance, and you were probably able to harvest more than enough losses at the end of last year, there may still be some holdings in your portfolio that can provide you with an opportunity to lock in losses. For those who don’t know, tax loss harvesting is the practice of offsetting your capital gains liability by selling securities at a loss. Remember, too, that if you have a net excess loss in any year (including carry forward from previous years) you can use a portion ($3,000)  to offset your ordinary income.
  2. Year-End Capital Gain Distributions – Make sure that if you are purchasing mutual funds at the end of the year, you know when and if they are issuing large capital gains distributions. The last thing you want is to pay taxes on gains that you weren’t able to participate in!
  3. Changes to Home Buyer Credit – There have been a number of changes to the 2009 first-time home buyer credit including some that can even benefit current homeowners. Check out this link for the IRS’s press release. As you listen, I also share two personal stories that may help you with the entire process.
  4. 2010 Roth Conversion – Even though this is a great planning opportunity for some, you need to take a look at your individual situation to decide if it is a good move for you. Here are some of the considerations we discuss in the show:
  • Total IRA balances taken into account. Potentially rolling IRAs back into qualified plans.
  • Outside cash to pay taxes.
  • Tax rates now vs. tax rates in the future.
  • Years to accumulate vs. years to distribute.
  • Tax diversification.
  • No Required Minimum Distributions for retirees in 2009.

The second thing that may be on your mind as we wind down this year is shopping (whether it be for others or buying for yourself). As you listen, I give you my “tried & true” method and process for getting the very best deal out there which will allow you to stretch your dollars as far as possible! As always, if you have any questions or thoughts, feel free to leave them below!



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