"I hired Jo Ann to write some letters for me and she did a great job. I will never have to write another letter again!" Robin Shields, C.P.A.. RP Shields & Associates

Dear Client,  

As we approach the closing of 2008, I want to congratulate you for surviving a “roller coaster of a year.” However, we still have a few more weeks to go and I would like to offer

some suggestions to help you regroup and decide how to make your money work for you. 

One of the first things I recommend is reorganize your spending habits.  This is a good time to tighten your belt some and be more careful in how you spend your money.  Think about ways you can save a little more each week.  You would be surprised just how fast a “few” dollars each week put away adds up.  Despite banks getting bailed-out by the government, don’t panic about putting your money into savings accounts.  Congress has temporarily increased FCIC deposit insurance from $100,000 to $250,000 per depositor through December 31, 2009.  Changes have also been made to other account types.  So, your money is perfectly safe.

At the same time, if you are worried about money you have already invested don’t be.  Funds from the SIPC reserve are available to satisfy the remaining claims of each customer up to a maximum of $500,000.  This figure includes a maximum of $100,000 on claims for cash.  In addition, customers share pro rata in negotiable securities held by the bankrupt firm for its customers.  Any remaining assets after payment of liquidation expenses for a failed brokerage firm may be available to satisfy any remaining portion of customers’ claims on an equal footing with other creditors. 

If you are in a good financial position, i.e. have some extra cash to spend, this is the time to consider investing.  There are some bargain stocks out there.  Or, consider investing in additional housing—interest rates are low and you can get a good deal.   

This is also a good time to spend in retail stores.  You can find great bargains because the stores want to move their inventory.  For example, According to BusinessWeek, the Sear Outlet store had to give away a free washer with every $700 dryer purchase.  If you’re a good bargain shopper, you can do very well. 

It is also important to discuss some of the changes in the tax laws.  The Kiplinger Tax Letter, Oct. 31, 2008 discusses year-end tax planning.  It states that if you make the right moves now…you can save a bundle on your taxes.  Here are some suggestions for you: 

• Look at the overall impact on 2008 and 2009 tax year
• You want to cut your tax bill over both years.  If you expect to be in a higher tax bracket in 2009, consider accelerating income and delaying taking deductions.  If your 2008 itemized deductions won’t quite hit he standard deduction amount, you can delay taking some of them so you can itemize in 2009. 

• Retirement Plans—you may get relief on required year-end distributions from IRAs and plans.
• Treasury is considering waiving the mandatory payout requirement for   2008. To make these payouts, retirees would have to sell securities in their retirement accounts at a large loss. If you are 701/2 or older and don’t need the money in your IRA to live on…do a direct payout from the IRA to charity. However, you do not get a deduction for the donation.  

• If you owe minimum tax
• You cannot use many of the strategies we previously discussed.  The minimum tax is a lot like a flat tax—many write-offs are not allowed.  You pay the AMT to the extent that exceeds your regular tax bill.

·        You may want to wait until ’09 to make energy saving home improvements.

Congress reinstated a tax credit for energy efficient improvements but it doesn’t kick in until 2009.  Also, the existing cap of $2000 for installing solar water heating equipment has been repealed.

·        If you’re facing an underpayment penalty, jack up your withholding in Nov. and Dec.

Taking more out of your paycheck or retirement plan payouts is an easy way to avoid a penalty.  As long as you prepay 90% of this year’s tax bill, there’s no penalty.

·        Investments

There may be opportunities to save taxes.  If you were considering dumping some losing stocks, do it in 2008. Capital losses can offset your gains. 

·        Companies that want the benefit of 50% bonus depreciation must act soon.

Assets must be placed in service by Dec. 31 to be eligible for the write-off, which allows half of the asset’s cost to be deducted up front.

·        Business Taxes

Professionals can delay their year-end billings to collect less in 2008.  Or speed them up if they expect to be in a higher tax bracket next year.

This is just an overview of some of the changes.  To help you with any of your financial needs, please do not hesitate to call me.  I am here for you.   

Have a Wonderful Holiday Season and a Prosperous New Year.