Summer's Unofficial End Marks Beginning of Financial Planning Season by Howard Hook, CFP®, CPA As published in The Princeton Packet, August 30, 2012 With the unofficial end of summer upon us, now is a good time to start thinking about some year-end planning items. While it may seem a tad early, the year-end will be upon us before you know it and you'll be glad you started planning now. The past few years have seen many changes to the tax code that affect all taxpayers. 2013 is not expected to be any different as the Bush Tax Cuts expire at the end of 2012. There is a great deal of uncertainty over whether Congress will let those cuts expire, making tax planning difficult at this time. It is better to hold off discussions about year-end tax planning strategies until there is more clarity about what will happen at the beginning of next year. For now, however, please consider the following ideas: Credit Report Check-up: With the start of the holiday shopping season a few months away, now is a good time to review credit reports. Identity theft is one of the fastest growing crimes, and the best way to prevent it from ruining your credit is to diligently monitor your credit reports. Start by requesting a copy of your credit report from the three credit reporting agencies. Everyone is entitled to a free copy of their credit reports from these reporting agencies once a year. These reports can help alert you to any unauthorized attempts to steal your identity as well as any errors or mistakes on the reports. The best way to get a copy of the free report is to go to www. annualcreditreport.com and follow the link to request these free credit reports. Review these reports to see if anything looks unusual. Requests for credit from companies with which you haven't done business could indicate that someone may be trying to steal your identity. Other red flags indicating potential identity theft can be listings for addresses where you never lived, slight variations in the spelling of your name, and newly opened accounts that you do not recognize. Give To Charity: Cold weather and indoor parking go hand-in-hand. If you are like me, once the warm weather starts the car stays on the driveway and out of the garage. The empty garage then becomes the temporary holding area for items once in the basement that have been earmarked for throwing out or giving away. Despite the best of intentions, this “stuff” in many instances occupies the garage all winter until the spring. Why not turn this into a win-win situation and donate the items to charity? Charities have felt the brunt of tough economic times as people have cut down on donations. One way to still give is to donate items to charitable organizations, which can then sell them and receive cash. You receive a tax deduction for the fair market value of the items donated, and an empty garage in which to park your car. There are a couple of things to watch for, however. First, make sure the charitable organization you wish to donate to will take the items. Second, if the tax deduction is important to you, make sure you receive a receipt for the goods given away at the time of your donation. A recent tax court decision disallowed the deduction for a charitable donation ultimately because a letter substantiating the donation was not received within the time frame required by the IRS in order to take a deduction. Review Medicare Coverage: The rules surrounding Medicare are quite complex. Enrollment dates, types of plans, and services covered are some of the more important issues surrounding Medicare. October 15 marks the beginning of the open enrollment period, in which people already on Medicare can change the type of policy they have, change providers, or add or drop a prescription drug plan. Even if you don't intend to make any changes, it is still a good idea to review coverage prior to October 15 to make sure it is still appropriate for you. The best way to start is to contact your current Medicare provider and ask if anything is going to change in 2013 for your specific plan. If you have never looked at your plan's details, request a copy of the coverage as well. It is likely that coverage may change for some plans since a significant portion of the new health care law is expected to be paid for by reductions in the cost of Medicare and Medicaid. Given this, it may be more important than ever to review coverage. The open enrollment period ends December 7, and any changes made will go into effect January 1, 2013.