If you are worried about making ends meet as heating bills rise this winter, take a look at your household budget. It's a good time to figure out how to make the most of your money and still stay warm. Here are 10 tips to do so, offered by Crystal Faulkner, a partner at the Cincinnati accounting firm Cooney, Faulkner & Stevens LLC.
Estimate your tax liability for 2005 and 2006 now. If you estimate that you will have a refund for 2005 and/or 2006, adjust your tax withholdings to keep more of what you earn now. Having more tax withheld than necessary is the same as giving Uncle Sam an interest-free loan.
If your employer offers a flexible spending account for medical or childcare costs, consider enrolling for 2006 to take advantage of the tax savings. For example, if you contribute $5,000 to a flexible spending account and your marginal federal and state tax rate is 30 percent, you will get a $1,500 tax break to help you pay for these types of costs.
If you are currently enrolled in a flexible spending plan for 2005, make sure that you use the entire balance in your accounts. Any money that is withheld from your paycheck pretax for a flexible spending account must be used before year end (if your plan allows, you may have an additional 2½ months after year end) on qualifying medical or dependent care expenses or lost.
If you are carrying balances on a credit card that is charging a high interest rate, consider taking out a home equity loan to pay off the debt. You will likely get a lower interest rate, plus, the interest expense will generally be tax deductible. Be sure to pay off all of your credit card balances each month to avoid excessive interest charges. If you do use credit cards, consider switching to cards that offer cash rebates rather than airline miles or other bonuses.
Crystal Faulkner, CPA, is a business and financial consultant with Cooney, Faulkner & Stevens, LLC. She can be reached at (513) 768-6798 or cfaulkner@cfscpa.com .
This is cache, read story here
