Year-End Preparations

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As the end of the year approaches, it's time to prepare for two things.

As we enter the last month of the year, two things are right around the corner – holiday gift giving and tax-time. This month, I’d like to offer a little advice on how to be prepared for both.

Holiday Gift Giving

All reports from Black Friday and Cyber Monday indicate that this is shaping up to be a good year for holiday gift-giving. It appears that a record number of shoppers visited stores and websites during the kick-off to holiday shopping and that average spending per person rose 9.1% over last year.

While this is good news for retailers, it also means that consumers are loosening their wallets and spending more than they have in recent years. For many people, this means running up big credit card bills because they have not set aside money during the year to pay for these holiday purchases.

At Middleburg Bank, we have two great ways to help you build a nest egg for next year’s holiday shopping:

Round Up Savings is a quick and easy way to save. When you enroll in this free service, every debit card purchase posted to your Middleburg Bank checking account is rounded up to the nearest whole dollar and the difference is transferred into your savings account. This money can add up fast, and provide the extra cash you need to buy holiday gifts next year. Click here to find out more about Round Up Savings.

Club Accounts are a great way to save for a specific purpose, like holiday gifts. With a Club Account, you make regular deposits into the account throughout the year and the funds are paid out to you in October. That way, you have cash in hand when you are ready to start your holiday shopping.

Tax Planning

A few simple steps in December can make a significant difference on April 15^th. If you want to minimize your tax bill, here are four year-end tax planning tips to consider.

Charitable Contributions: While you can always make cash donations to qualified non-profits, don't overlook other options. For example, if you own that has appreciated, you can donate it to charity and take a deduction worth the market value at the time of the gift, thereby avoiding capital gains tax. You also can contribute goods to a charity and deduct the market value of the donated items. Be sure to get receipts for your contributions and keep good records of estimated values.
Tax Withholding: If you receive large tax refunds each year you may be having too have too much tax withheld from your paycheck. Estimate your tax bill for the year and compare it to the taxes that will be withheld from your pay if you make no changes. If it appears that you will be getting a refund in 2012, contact your payroll department and find out how to reduce the amount withheld each paycheck to give yourself a raise every payday.
Retirement Plan Contributions: For many people, retirement plan contributions are tax deductible. As a result, taking full advantage of your opportunities to set aside money for retirement, if you can, makes sense for the long haul. Not only will it help reduce your tax bill this year, it can also help to build your retirement nest egg. Keep in mind that some contributions, such as to IRAs, can be made after year-end and still applied to this year's taxes.
Medical Expenses: Medical expenses in excess of 7.5% of adjustable gross income (AGI) are tax deductible if you itemize. Take a look at what you have spent year to date and if you project that your expenses are near or above 7.5% of your AGI for the year, consider accelerating spending on health care prior to year end since some or all of the additional spending may be tax deductible.

Of course, you should consult with your tax advisor on any of these tax planning strategies to see if they apply to your specific situation.

I hope you have a great December and a wonderful Christmas and holiday season, taking a moment or two to reflect upon our many blessings over the past year.

As always, if you have a suggestion that would make your banking experience with Middleburg Bank even better, please send me an email at garyshook@middleburgbank.com.

Gary R. Shook
President & CEO

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Year-End Preparations