Finance

Being Charitable

Power Outage Costs Money Identity Thieves A New Venture Choices Better Money Management Back-to-School Budget Tips Maintaining Benefits Avoid Financial Exploitation

Tips On The Benefits Of Being Charitable

(NAPSI)—Paying it forward can pay off on your next tax return, if you keep track of your donations.

“Giving to charity, even if you’re simply donating clothes and furniture to a thrift store, can reduce your taxable income,” explained Jessi Dolmage, of the popular digital tax preparation brand TaxACT. “To maximize your deduction, just follow a few simple tips.”

• First, be sure you’re giving to an eligible organization recognized by the IRS. Search for the group using the IRS’ Exempt Organization Select Check at www.irs.gov. Even if it’s not listed in the database, most religious organizations and government agencies are eligible.

• Second, keep detailed records for accurate valuation (and, in turn, your tax deduction) and in the unlikely event of an audit. These should include organization name, donation date and amount.

• For noncash donations, document the charity name, date and location of the donation and a reasonably detailed description of the items. If you receive a receipt from the charity, keep it with your records. The IRS requires additional documentation for vehicle donations. You must receive a written acknowledgment or a Form 1098-C from the charity for the vehicle.

• For monetary gifts, keep the written acknowledgment from the organization with the donation date and amount. A canceled check or card statement with the transaction date will do for gifts under $250.

• If you get merchandise, benefits or privileges in exchange for the gift, you must subtract the value of those from the original gift amount. If your payment is more than $75, the organization must give you a written statement with a description and estimated value of the merchandise, goods or services.

• Noncash donations, such as clothing, kitchen gadgets and furniture, must be in good condition or better. The tax-deductible amount of those items is the fair market value (FMV), the price if they were exchanged between willing buyers and sellers. Special rules apply to cars, boats, airplanes, property subject to debt, investments that have appreciated in value, and inventory from your business.

• Mobile apps can make donation tracking easier. For example, TaxACT’s free Donation Assistant app tracks cash, noncash and recurring gifts, with FMVs for more than 1,300 commonly donated items. The app can save photos of donations and receipts. Come tax time, the information can be imported into the TaxACT Deluxe program, which calculates the maximum deduction and completes related tax forms.

Charitable gifts made between Jan.1 and Dec. 31 can be deducted if you itemize deductions on Form 1040 Schedule A. To do so, all itemized deductions must exceed the standard deduction amount based on your adjusted gross income and filing status.

Additionally, you must file Form 8283 if your noncash contributions total more than $500, and include a qualified appraisal of property worth more than $5,000.

You can download the free app at www.taxact.com/apps and learn more about the tax rules of charitable giving at www.irs.gov and www.taxact.com/taxinfo.

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Five Ways A Power Outage Can Cost You Money

(NAPSI)—Despite increases in their frequency and severity, power outages are still viewed by many people as merely inconvenient. Short outages—perhaps four hours or less—certainly fall within that category. Beyond that, power outages can start to cost you a lot of money. Here are five ways an extended power outage can impact your checkbook:

• Lost refrigerated and frozen goods. The USDA recommends throwing away refrigerated foods stored for more than two hours at over 40 degrees Fahrenheit. Because refrigerators and freezers can’t stay cold without electricity, an extended power outage can cost you hundreds in spoiled and wasted food.

• Damage to your home. Without a sump pump to keep the basement dry, air-conditioning to prevent moisture and mold, or heat to keep pipes from freezing, you could suffer damage to your home in the thousands of dollars.

• Expenses from staying at a hotel or eating out. If you have no heat or running water, you might have to move the family into a hotel for a night or two. Add restaurant tabs to that and you’ve lost another couple hundred dollars.

• Additional costs for short-term goods. If you choose to remain in your home, you will need to invest in batteries for radios and flashlights, coolers to store food, and ice to keep that food cold.

• Loss of income. Depending on the impact on your home and family, you might have to spend a few days away from work. If you work from home, you stand to really lose income during a power outage.

To learn more about backup power systems that can help you avoid additional costs related to power outages, visit the Generac website at www.generac.com.

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Identity Thieves Can Steal Your Financial Stability

(NAPSI)—All your hard work to become financially stable can unravel if you become a victim of identity theft.

Identity theft occurs when someone steals personal information such as your Social Security number, birth date or mother’s maiden name. Many people don’t know they’ve been victimized until a collection agency comes knocking on their door.

Identity theft is a growing problem but there are steps you can take to prevent it.

• Never give out personal information over the phone, on the Internet or through the mail unless you initiate the transaction or know whom you’re dealing with.

• Don’t reveal any personal information before you find out how it will be used and shared with others. When someone requests your Social Security number, ask if you can provide alternate information. At medical offices, use an identifier that is not your Social Security number.

• Ensure the passwords to your credit card, bank, phone and all other online accounts aren’t easily available and can’t easily be guessed. Avoid using obvious information such as your birth date, digits in your Social Security number or your mother’s maiden name. Change your passwords periodically, particularly those associated with financial accounts.

• Keep items with personal information in a safe place, such as a locked storage device or password-protected electronic file. Tear up or shred all unnecessary papers containing Social Security numbers, account numbers and birth dates before discarding them so “dumpster divers” can’t retrieve them.

• Protect your mail. Keep your eyes open for bills and statements. If you think one of your statements is missing, quickly call that company to let it know. Take outgoing mail to a postal mailbox or the post office. If your mail suddenly stops, go to the post office. Thieves sometimes submit change of address forms to divert mail to their address.

• Check your bank and credit card account activity promptly upon receipt of a written statement. If you see any problems, immediately report them to your financial institution. The Federal Trade Commission offers guidance on immediate steps to take to limit the harm.

For more tips and resources, visit www.SaveAndInvest.org/LearnMore.

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Making The Right Choices When Incorporating A New Venture

by Jennifer Friedman

(NAPSI)—If you’re passionate about starting a new business, you may have the urge to jump right in without considering several key factors. One of the most critical is selecting a type of business structure and the tax implications that result from that choice.

While there is no business structure that is right for every legal entity, there are potential benefits (and drawbacks) associated with each option. Before reviewing some of these, here is a basic explanation of three common business formations:

Limited Liability

Limited Liability Corporation (LLC): Incorporating as an LLC provides the flexibility and control of a partnership, and the credibility and asset protection enjoyed by a corporation. The operating agreement determines how the business is managed and how profit and loss are allocated among owners.

Corporate Credibility

S Corp: This is considered a business corporation under state law, and is formed by filing incorporation documents and appointing a registered agent. S corporations offer the credibility and structure of a corporation but allow for profits and losses to be passed through its shareholders and reported through individual income tax returns. The business itself is not taxed.

Tax-Related Benefits

C Corp: Owned by its shareholders, a C corporation is a legal business entity under state law formed by filing incorporation documents and appointing a registered agent. Operating as a C corporation positions the business for tax-advantaged expansion while offering unique tax-planning strategies.

Given a basic understanding of the different business structure options available, small-business owners should be sure to take into consideration two primary tax implications before making the decision as to which business structure is right for them: income tax liability and employment taxes.

Income Tax Liability

Income tax liability relates to how businesses are taxed as a result of a taxable event, or any transaction that has tax consequences, while employment taxes are what a small-business owner must pay to fund Medicare and Social Security.

In the case of LLCs, the company is not a separate taxpayer: Income simply flows to the owners. As a result, the business owner cannot be taxed twice on the same income. Because, in most cases, a business that operates as an LLC is not a taxpaying entity, it will not pay employment taxes on the income of the owners. The owners will pay self-employment tax on their individual income tax return for all the income that is passed through to them.

A Variety Of Options

An LLC can also elect to be taxed as a corporation. However, it’s important to be mindful of a strong caveat in this case. If an LLC elects S Corp taxation, it still has to satisfy all the S Corp tax rules and states differ in how they treat this IRS election. But if all requirements are met, LLC owners can enjoy the best of both worlds, so to speak, by electing S corporation federal taxation. While this is not a common strategy, it’s important to talk through the potential implications for your business with a tax advisor.

Many small businesses opt for S corporation status, which means that the corporation itself does not pay income taxes, and double taxation of dividends will not apply. S corporations also provide flexibility in structuring owner compensation, as owners can lower overall tax liability by receiving both salaries and dividends.

C corporations are separate taxpayers: they file their own tax returns and pay corporate income tax on their taxable income. C corporations tend to have more complex tax and legal requirements than an LLC or an S corporation, but they also have more flexibility in restructuring and in increasing ownership in the business.

S and C corporation owners do not pay self-employment taxes. If they receive income as a salary, then payroll and income taxes must be paid. In these situations, business owners pay only the employee share of Social Security and Medicare taxes on their wages. The corporation pays the employer’s share of these taxes and reduces its income accordingly. This can result in a substantial total tax savings for the owner-employee.

Assessing the total tax impact of the business structure is an important factor for any entrepreneur starting a business, and understanding the variations between the different options is crucial in making the right decision.

There are many business formation and legal compliance ser-vices available to entrepreneurs and small-business owners; for example, working with an accountant can be helpful in determining the best formation option.

Once entrepreneurs decide on the structure that is right for their business, they should look for an online service provider that has the right tools, forms and expertise to understand the specific requirements of each state to ensure a seamless incorporation process.

To learn more about incorporation, visit ct.wolterskluwer.com.

Jennifer Friedman oversees marketing activities for the Small Business segment of CT, a Wolters Kluwer Company providing legal compliance solutions to the small-business community. As the Chief Marketing Officer (CMO) of CT Small Business, she directs all activities related to digital marketing and advertising to help build the brand through innovation, partnerships and enhancing the customer experience.

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Practical Steps To Better Money Management

(NAPSI)—Investing a little time and effort to cultivate a healthier relationship with your money can pay dividends in more ways than one.

That’s the word from the experts at Springleaf Financial. Here are their tips for managing your money:

• Gather the right tools. There are a number of free online tools designed to help people create budgets and make better saving and spending decisions. Take a look at what’s available to find the right tool for you.

• Run the numbers. Use the available budgeting tools or make a simple list to track where you spend your money. Include categories such as groceries, gas, utilities, entertainment, housing and debts.

• Face the facts. Once you’ve taken a look at where your money goes, you have to distinguish between things you “need” (for example, utilities, debt payments and rent) and things that would be “nice to have” (for example, eating out). Consider credit card minimum payments and loan payments as fixed expenses in the “need” category, to avoid costly mistakes and missed payments. Subtract what you have to spend on “needs” from your monthly income to determine what you have left for “nice to haves.”

• “X” out the extras. Once you’ve identified how much you can spend on “nice to haves,” look at what you’ll need to cut. Going out to eat, clothes shopping and travel are items that can add up and may need to be reduced or eliminated to maintain your budget. Take a look at how much you’re spending on these non-essentials each month—and how far over budget you go each month.

• Look forward. As you create your monthly budget, try to anticipate your long-term or reoccurring costs. Is your car getting old and needing more trips to the repair shop? Are the holidays approaching? Are you planning your next vacation? The experts at Springleaf Financial believe effective budgeting is a way of life. It involves looking at each month, as well as thinking “big picture” about financial needs. This will also help you avoid using credit cards to pay for one-time expenses.

• Find a balance. Saving is a crucial part of effective budgeting—consider it a “need.” Investigate available savings options, such as a simple savings account or certificate of deposit (CD), or contributing to your company’s 401k or Roth IRA that can help your savings grow. Whichever way you choose, identify what you can save monthly and stay consistent. Try to pay yourself first by setting aside savings before spending on things you want but don’t need.

• Expect the unexpected. No matter how well you budget, life may throw the unexpected at you. It’s important to prepare for these difficult situations by un_derstanding your options. If you don’t have enough savings to manage an unexpected expense, you may need to consider borrowing. Choose a type of loan or credit card that offers low interest rates and fees (APR), and establish a plan to pay it back as quickly as possible.

• Stick with it. The most important part of budgeting is staying committed. Once you’ve identified the tools you need to monitor your spending, determined what expenses can be adjusted in order to stay within your income, made the necessary adjustments and started saving, your job is to stay on track. At the end of each month, take time to prepare for the coming month and anticipate any large-scale future expenses so there are no surprises and no errors.

For more information, visit www.springleaffinancial.com.

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Back-To-School Budget Tips

(NAPSI)—Preparing to go back to school used to be as simple as stocking up the latest textbooks and grabbing a calculator. Today, college students and their parents regularly spend an average of over $800 on apparel, electronics, dorm furnishings and more. As a nation, that means spending for back-to-college reaches over $45 billion. When you add in monthly fees for Internet access, phone data plans and other ongoing technology-related expenses, the "basics" are more costly than ever before.

These costs, however, are dwarfed by the rising costs of tuition that often follow students well into their post-grad life. The average student now leaves school with nearly $30,000 of debt, making it hard to get ahead in post-college life-but there are ways you can save.

Budgets and Transportation

Students, and even post-grads, can go far toward putting a dent in their debt by finding smarter ways to budget their personal transportation.

For example, bringing a car to campus or into the city comes with high costs and hassles that go beyond the initial price tag. Parking rates, gas, maintenance and repairs can add up quickly for a car that may often sit unused up to 90 percent of the time. Insurance, especially for young adults, can cost more than the car itself.

Redirecting even a few hundred dollars per month from car costs could knock off nearly half the average student debt by the time graduation comes around.

The good news is that it's never been easier to get on, off and around campus without owning a car. To help maintain a budget-friendly university lifestyle that can also translate to reasonable post-grad living, here are four easy ways to cut transportation costs without sacrificing convenience.

Tips To Lower Transportation Costs

• Shuttle Services: Seek out free shuttles both on-campus and around town, or university provided transit tailored for students.

• Wheels By the Hour: Check out a car sharing service such as Zipcar, which lets students pay for a car by the hour, with gas, insurance, 180 miles per day and 24/7 assistance included in the cost.

Zipcar is on more than 350 campuses across the U.S. at a discounted student price, and continues as a benefit after graduation for smarter city living.

• Get Fit and Get Where You're Going: Alternative transportation, biking or walking when a car isn't needed is a financially savvy and healthy transportation option. Bike sharing is another great option for occasional use with more than 21,000 shared bikes in at least 36 urban areas throughout the U.S.

• Mobile Transportation Apps: Smartphone owners can often use mobile apps to find the best option for transportation in seconds. Download the RideScout app to view all of the transportation choices in your area.

To learn more about what cost-saving options are available on campus, visit your university transportation website or check out zipcar.com to learn more about car sharing.

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New Survey: Small-Business Improvement; Employees Concerned About Benefits

(NAPSI)—Small-business owners have something to be optimistic about, according to a recent study, which found that 84 percent of small-business leaders say they’re either maintaining or growing sales in 2014.

This is continued good news for the future of the economy, as small businesses make up the vast majority of companies in the U.S.-96 percent, according to the Small Business Administration.

However, the 2014 Aflac Work-Forces Report also found that small-business owners remained cautious about hiring.

Notably, small businesses hired at a slower pace than medium-size and large companies last year, 12 percent changed employee hours from full- to part-time, and 34 percent gave smaller raises than in previous years.

“This year’s study shows an interesting dichotomy between optimism and caution when it comes to small-business owners’ sentiment,” said Teresa White, executive vice president and chief operating officer, Aflac Columbus. “On one hand, you have noticeable growth and improvement, but on the other, there’s still hesitation to parlay that growth into spending on hiring, better benefits and perks.”

However, the lack of trickle-down does not seem to have affected employee morale. Small-business employees remain the happiest, with 23 percent saying they’re extremely satisfied with their job, compared to 17 percent at large companies and 19 percent at medium-sized.

Although 57 percent of employees say they’re likely to accept a job with slightly lower compensation but better benefits, the data suggests that although employees may be perfectly content with their jobs, better benefits could entice them to seek employment elsewhere.

These simple benefits-related tips can help small-business owners cultivate a productive workforce while keeping employees happy:

1. Maintain benefits offerings. According to the study, more than one-third of small-business employees said maintaining health care benefits is their most important benefits concern right now.

2. Diversify benefits offerings so employees can fill in gaps in coverage. Voluntary insurance is a great way for small businesses to boost current offerings at no direct cost to the company. In fact, 85 percent of small-business employees consider voluntary insurance part of a comprehensive benefits program.

3. Communicate about benefits options. Employees appreciate face-to-face meetings when it’s related to new or changing benefits and small businesses do that better than their medium and large counterparts. Sixty-eight percent of small businesses communicate face-to-face while medium and large companies prefer e-mail.

4. Consider insurance broker or agent assistance when it comes to understanding health care reform. Small-business owners are less likely than medium and large companies to feel extremely or very prepared to address changes to the health care system this year. Experts can help small-business owners navigate the new health care landscape.

To learn more about the latest benefits trends, visit www.AflacWorkForcesReport.com or the Aflac Small Business Blog.

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Tips On Avoiding Financial Exploitation

(NAPSI)—There’s good news for older Americans. While financial abuse and scams are believed to cost seniors an estimated $3 billion annually, you can help prevent them and protect yourself.

For example, here are some steps you can take:

• Plan your financial future with trusted family members, friends and professionals. If managing your daily finances is difficult, consider engaging a money manager.

• Talk with a lawyer about creating a durable power of attorney for asset management, a revocable or living will, and trust and health care advance directives.

• Don’t be pressured or intimidated into quick financial decisions or sign any documents you do not completely understand.

• Never provide personal information (Social Security number, credit card) over the phone unless you placed the call and know with whom you are speaking.

• Tear up or shred credit card receipts, bank statements, solicitations and financial records before disposing of them.

For more tips on avoiding exploitation, or if you suspect you or someone you know is being exploited, call the Eldercare Locator at (800) 677-1116 or visit www.eldercare.gov. The Eldercare Locator is a public service of the U.S. Administration on Aging.

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