The Economic Stimulus Package + Other Helpful Tax Strategies

We’re entering the heart of tax season so I figured now would be a good time to do this post. If you are a client and haven’t brought in your tax documents for 2007 yet, please get in touch with us sooner than later. For those who read my blog from other parts of the world besides New York, here are a few tips that may help you this tax season. Let’s start with the best part: free money the government may give you this year as an ‘I’m sorry’ for the recessionary pressures hanging over all of us. I’d like to thank the broader financial services sector for creating a $500 billion liability we all must grapple with.


Economic Stimulus Package Payments
You’ve probably heard about this economic stimulus package which was recently signed into law. Fortunately, all you need to do is file a 2007 tax return to get your payment. The IRS will automatically figure out how much you are owed and send a check out to you. Here is the once over:
In most cases, payments will range from $300 to $600 for individuals and $600 to $1200 for joint filers. Taxpayers may receive $300 for each qualifying child. Payments could be less, depending on tax liability and Adjusted Gross Income. Phase-out reduction begins at $75,000 for single filers and $150,000 for joint filers.
Stay Organized
Why is it that my clients are always struggling to figure out what is and isn’t tax deductible when tax season rolls around? We should be keeping a tab on our tax-deductible purchases so that when April rolls around they are at our fingertips. How can one do this? The old-fashioned method is to write a note to oneself on the back of a receipt. That note might say “business lunch with Mel” or something like that. The more modern way to do this is by designating one credit card for your business or tax-deductible expenses. This way you can simply reference your credit card statements (paper or online) at the end of the year to know what you can deduct.
On a separate note, good organization can keep your tax preparation fee lower as well. Often CPAs and tax preparers will charge you based on how much time it takes them to prepare and file your return. If you come in with an excel sheet which shows your income sources, itemized deductions (if that applies to you) and above-the-line deductions (student loan interest, IRA contributions, etc) you’ve just saved your tax preparer some time. If your fee is $300 instead of $500, it makes a difference, right? Make sure you collect and organize all of your w2s, 1099s, and other tax documents which ultimately are given to your tax preparer.
Establish a Retirement Plan
If you read my blog from time to time you know by now that I strongly recommend establishing a retirement plan. It’s a tax-savings concept established and encouraged by the IRS. The more you save, the less the government needs to save on your behalf. For this reason, there are lots of different retirement plan options. The plans generally vary depending on whether you work at a for-profit corporation (where you would likely encounter a 401k) to non-profits (most likely a 403b) to self-employed individuals who could see a variety of plans ranging from a SEP IRA to a profit-sharing plan or a smaller version of the 401k.
You can even establish and fund certain retirement plans by April 15th of the following year, rather than by December 31st of the tax year. If you aren’t contributing to a retirement plan at work don’t have an IRA, I recommend you start asking about it.
Always Double-Check your Return
Tax preparers make mistakes–plenty of them. Last year when I was looking over my completed return I noticed that my student loan interest, $860 that year, hadn’t been included on the front page of form 1040. That little error would have cost me a few hundred dollars had I not caught it. Errors can be made when copying figures from one sheet to the next, when calculating tax owed, even missing a 1099 or w2. When your preparer gives you back the return to look over, read through it and try to make sense of the numbers, even if taxes bore you to tears.
Questions or Comments? E-mail me.
Russell Bailyn

Wealth Manager
Premier Financial Advisors
14 E. 60th Street, #402
New York, NY 10022
P: 212-752-4343 *31
F: 212-752-7673
rbailyn@premieradvisors.net
Securities and certain investment advisory services offered through: First Allied Securities, Inc., a registered Broker/Dealer. Member: FINRA/SIPC. Premier Financial Advisors, Inc. is a Registered Investment Advisor. First Allied Securities & Premier Financial Advisors are not affiliated entities.

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