1. If you are caring for a friend, you can deduct their personal exemption.

This tax break is for anyone supporting a friend financially. You may be able to deduct your friend's personal exemption amount on your own income tax return as long as these requirements are met;

(1) You provide more than one half of your friend's support during the year,
(2) your friend is a member of your household for the entire year,
(3) your friend's income is less than the exemption (amount varies year to year) and
(4) your friend is a U.S. citizen or resident.

Why should your friend let you use his or her personal exemption on your income tax return? Because when people have little or no income, their standard deduction, by itself, is large enough to squash any income tax they might owe. They eliminate the possibility of their exemption going to waste by giving it to someone else. Contact us to find out if this trick applies to you.

2. You can use your credit cards for year-end tax planning.

Since effective tax planning takes into account not only what you spend your money on but on when you spend it, you should always think about timing your tax-deductible expenses. Look ahead to the end of the year and consider deductible contributions to retirement plans and estimate your state income tax payments along with your tax-deductible purchases. The idea is to pay for them in the order that minimizes your income tax and maximizes your positive cash flow.

Again, timing is everything. A credit card can give you the tax deduction that you need at year-end. If you charge a tax-deductible purchase to a bank credit card--not a store card--you can easily take the write-off (even though the credit card charges will be paid after the end of the year).

Note: Try and use your card after you have already planned your current cash flow around other deductions.

There are many different options for using this strategy and they differ between employers and employees. We recommend you call today to find out exactly what your options are.

3. There is a way around your current home equity deduction limits.

A deduction for the home equity interest you already pay can mean big tax savings! Ordinarily, this interest deduction is limited to home equity debt of $100,000 or less. Don't shortchange yourself! Hidden in the IRS regulations is a way for you to increase your home equity interest expense and deduct more than is ordinarily allowed. You qualify for these savings if you use a portion of your household for business purposes, rent out a portion of your home, or if you use a part of your house for any other business reasons.

The end result is that most taxpayers are stuck with deducting home equity interest only up to the $100,000 debt limit. Don't feel "stuck" if you use a portion of your home for business. All you have to do is make a special IRS election to treat your home equity debt as something other than home equity debt. Doing this lets you take a bigger home equity interest deduction.

4. Did you know you can use your previously funded IRA to fund the current year's deductible contribution?

Well, you can. If you don't have enough cash to make a deducible contribution to your IRA by April 15th, here is how you can still take the tax deduction and have until June 12th to make the full $4,000 contribution! To get started, all you need is an IRA funded in previous years.

Start by having $4,800 distributed to you from your IRA on April 15th. Your bank is required to hold 20% (income tax withholding), so you'll actually receive $4,000. Once you have the $4,000, immediately deposit it back into your IRA. If you do this before April 15th, this counts as your deductible contribution for the year.

The best part of this is that you have 59 days to "make up" the withdrawal-or to be taxed. Simply redeposit $4,800 into the same IRA account by June 12th. This "rollback" deposit lets you avoid the tax on the original distribution made to you. This is a type of short-term loan from your IRA to make this year's deductible contribution before the April 15th due date.

Note: Not all banks realize it is required to withhold the 20% from the original $4,800 withdrawn from your IRA. Call to find out which way we can help you work with this "extra" amount. There are many options, so get informed before you miss out on the full benefits of your retirement plan.

5. You can take distributions from your IRA without paying the 10% early withdrawal penalty.

We all know that our best bet is to try and keep our retirement savings until we retire. There might be situations that arise where you'll need to make early withdrawals from your IRA (like helping to pay for your child's education or caring for an elderly parent). Making these early withdrawals puts you at risk of the early withdrawal penalty. This penalty can seriously add up over time and can shrivel your hard-earned retirement plan.

No matter how old you are, there is an income tax on any distributions from your IRA. But fortunately, there's a way around the 10% early withdrawal penalty. You can use an IRA annuity that sets you up to make withdrawals (the size is based on life expectancy tables provided by the IRS) until you are 59 1/2. You have to make withdrawals for a period of five years. You can continue to make withdrawals, or wait, to when you are 70 1/2. At that point you have to start making withdrawals anyway. So it is a flexible plan we can help tailor to your needs.

This strategy works very well for people in their 50's who have unusual expenses to meet, but do not want to be forced into withdrawing everything from their IRA before retirement.

It’s not hard to find advice on how to manage your money these days. You can find plenty of it on the Internet, in books, magazines and newspapers, from well-meaning friends and relatives, and of course, from professional advisors.

But while finding financial guidance is easy, judging the worth of it can be a much tougher task. Even hiring a professional adviser is no guarantee you’ll get great advice. If you’re paying someone for a personalized plan, though, you especially want to make sure you’re getting your money’s worth.

The true test is whether you reach your goals. But if your goal is decades away – retirement, for example – you don’t want to wait until age 65 to see if you made the right moves.

I would encourage people to look at their overall situation no less than annually and assess the quality of the service they’re getting.

So what things should you look at? Ask yourself these questions when gauging money advice:

What are the numbers? The most obvious way to judge investment advice is by performance. But make sure your expectations are realistic.

If you have a diversified portfolio, you’re going to outperform the worst asset class but under perform the best. With that in mind, don’t look at just your pure rate of return. You don’t have to be in the year’s highest flying mutual funds and stocks to succeed.

Instead, you and your advisor should quantify your goals when creating your financial plan.

That plan should include periodic, realistic mileposts to check your progress against. If your net worth isn’t growing as fast as you’d forecast, examine why. Maybe it was just a down year in the market. Or maybe you’ve been too cautions with your investments and need to make a change.

What does your gut say? Can you stomach the investment risk they’re taking?

The real key is to remain invested.

Some discomfort is normal. You’re not going to gain anything without taking risks. But if you’re so nervous about the risk you’re taking that you cannot stay invested, you need to talk to your advisor. If you’re always buying at the top and selling at the bottom, you won’t build wealth.

You also should pay attention if your gut feeling is telling you that your advisor isn’t being honest with you.

If it doesn’t feel right, it probably isn’t. If your advisor doesn’t listen to you, doesn’t return your phone calls, does some kind of trading in your account that you didn’t know about, you need to raise your hand and say something.

Have you been following the advice?

If you haven’t put your plan into practice, what’s stopping you? If it is because the suggestions are too complex, and you don’t understand them or they make you uncomfortable, talk to your advisor.

Why pay for counsel you’re not going to use? If your planner won’t listen, you may need to hire someone else.

Is the advice clear to you?

I really believe that the way an advisor speaks to a client is very important. Sometimes people who aren’t confident about something use lingo to make themselves appear to be an expert.

Also, it’s crucial for you to understand the money moves you are making – and why you’re making them.

We need to be responsible for our financial futures. If you abdicate responsibility and say ‘So-and-so will take care of it’ you may find out when it is too late that so-and-so wasn’t taking care of it.

Is your advisor a good listener?

Responsiveness is a key thing. Many people have questions. Are you getting good answers to those questions?

I would be concerned if an accountant said ‘don’t worry about those details. Just trust me.’ People are entitled to understand what they are doing and why.

You should feel comfortable enough with your advisor to ask anything.

Most of us don’t want to embarrass ourselves or admit we don’t understand something, but it’s very important to feel OK saying ‘I don’t have a clue what you’re talking about.’