Finance, Looks

Money Monday – Leather Weather and Tax Planning









Tunic • Nordstrom | Skirt • Similar here | Tights • Talbots | Shoes • Zappos | Bag • Louis Vuitton (mine is older; I’ve linked several pre-owned options below, some with an initial $25 sign-up credit!) | Sunglasses • Tory Burch | Lipstick • M·A·C Dark Side

One of the things I enjoy about cold weather is leather.  (You’ve probably noticed that already.)  With a sleek sweater and heels, a leather skirt works perfectly at work.  I like that it gives me a bit of an edgy look without going overboard about it.  Just remember, it’s easy to miss the mark with leather: if you plan to wear it to the office, keep it simple and keep the length modest.  You can move from chic to cheap in a matter of a couple inches.  However, with an appropriate style I wouldn’t hesitate to make leather an office look.

Speaking of the office, we’re getting close to the end of the year.  That means there is still a small amount of time for last-minute tax planning, especially if you have income that changes from year to year.  Take a look at your business profit and loss statement.  Your profit shouldn’t be a surprise. (If it is, I know a great CPA who can help you.  🙂 )  If you find your profit is higher than expected and you’re looking to drive down taxable income, there are still some things you can do to help achieve that goal.

If you own your own business, do you have business expenses you can pay before the end of the year?  If cash flow allows, pay them now.  If you need a new computer or printer, or possibly a larger piece of equipment, consider buying it now.  You’ll need to place that equipment into service (i.e., use it) before the end of the year to take a deduction for it.

If you file your tax returns on the cash basis as most small businesses do, can you hold off invoicing for services you performed until January?  If you receive payment for services, holding checks on your desk until January doesn’t count.  The tax law has a rule of “constructive receipt,” meaning if you have the money or could get the money (your customer asks you to swing by and pick up the check), just because you haven’t deposited it doesn’t allow you to keep it out of this year’s income.

There are also non-business strategies, such as making additional donations to qualifying charities or churches, prepaying the second half of your property taxes or making your January 1 mortgage payment before December 31st.  Be sure to make those payments with enough lead time to allow vendors and creditors to post your payments by year end.  It makes things cleaner if your donation receipt or mortgage statement show record of your payment in 2016.  Otherwise you may find yourself with a letter from the Internal Revenue Service telling you their records differ from the amounts you reported.  That’s never fun.

One of the best options you have, whether you’re a business owner or an employee, is to put money into a retirement account.  As a Certified Financial Planner® I’m all for that.  Depending on the type of account you use, you can either defer income now and let it grow tax-deferred until you begin withdrawing it (preferably not until retirement age) or you can contribute after tax money and watch it grow tax-free, paying no tax later when you withdraw it!

There are many retirement plans to choose from, and I’ll devote a separate blog post to them.  You can still get a 2016 deduction for some of them, even if you don’t make a contribution before the end of the year.  If you work for a company with an employer-sponsored retirement plan such as a 401(k) or SIMPLE IRA, you have to defer salary into it in 2016 in order to receive any tax benefits in 2016.  Check with your employer today to see if there are any last minute options to defer any salary into the plan.  If not, check out the upcoming post on retirement plans to find out what you can do if you missed out.

To your better wealth,