“The beginning is always today.”
– Mary Wollstonecraf

With less than two weeks to go in the holiday season we can sometimes neglect the fact that it’s also less than three weeks left for the calendar year.

And that means that you’ve got a bunch of decisions to make these next few weeks which can directly affect your tax bill this coming season.

So…that being the case, I also wanted to remind you about Flexible Savings Accounts (FSA), and make sure you use everything you have in yours–as well as a few ideas for using your Health Savings Account (HSA).

A couple items of note:

Filed under: This is a little ridiculous
http://seattletimes.nwsource.com/html/dannywestneat/2010435946_danny06.html
Don’t EVER believe that you’re immune to an IRS audit…and I don’t write that to scare you. It’s just that when we see that a woman who makes less than $20K per year can get audited–well, anyone can. Ask us about our different options for “Audit Protection” for this coming tax season when you meet with us.

Filed under: The IRS’ Delta Squad (or some such)
http://www.reuters.com/article/idUSTRE5BA45320091211

I’m not exactly sure why the IRS is positioning this special task force this way, but last week there was a bunch of publicity about gathering a couple hundred agents specifically tasked to pursue tax fraud and high-earners with “aggressive tax strategies”. It remains to be seen how they’ll define this (we’ve always been pretty aggressive about helping our clients keep money in their pocket, after all!)… but it’s a good reminder that it’s always nice to have someone in your corner when the IRS comes a ‘knocking.

Now…to this week’s Strategy Note.

Next week, I’ll be letting you know of some last-minute moves you can make, as well as information on expiring deductions to know about.

And listen: I know that we get paid to take care of all of this so you don’t have to think about it, but the point in my sending you this information is that we’d like to see you be *pro-active* about your spending and financial decisions BEFORE we get to “cleaning it up” for you.

Yes, we’re pretty skilled at cleaning up financial messes on behalf of our clients (with minimal tax implications), but we can’t spend your money for you. So, unlike many other tax professionals, we don’t send you “re-heated leftovers”. As you can tell, we put a bit more effort into our notes so that you are prepared and we can serve you best.

That’s why we’re known as the most trusted tax professionals in our area.

Anyway…to the Strategy Note. And, as always, I would love your feedback!

“Real World” Personal Strategy
Don’t Waste YOUR Health Care Spending

It’s a fact: the average American family spends $2,000 on personal health-care expenses each year.

But the majority of these families miss out on the tax benefits available to them through that spending.

You see, if you contribute that amount to a Flexible Spending Account (FSA), you can reap a federal tax savings of more than $500 (assuming the average 27% tax bracket). The kicker, though, is that if you don’t use all of the funds in one calendar year, the money vanishes. Make sure this doesn’t happen to you; try spending some of it on these handy, healthful items.

Now, this is NOT the case if you have a Health Savings Account (HSA)–those never expire. However, they must be linked to a qualifying “high deductible” insurance plan, which is not the case for an FSA.

Yet those who don’t have an HSA often forget about the FSA option. The tax savings really can add up.

What makes these accounts so great is what you can purchase, and cut your tax bill at the same time. Here’s just a few often-overlooked items which qualify…

Cold Remedies: FSA often reimburses for over-the-counter cold remedies, including cough drops and syrups, throat lozenges, and multi-symptom cold medicines. Buy now and avoid the rush, particularly if you require a formulation that doesn’t exacerbate high blood pressure.

Hand Sanitizer: Does anybody NOT have a pump-bottle of hand sanitizer on their desk anymore? Not only can you purchase a desktop version, but there are also portable formats as well. A recent study shows that only about 50% of middle-school and high-school students wash their hands regularly. Pack your kids off to school with an FSA-approved sanitizer spritz and wave bye-bye to H1N1.

Gym-Bag Essentials: Keep your athletes healthy and fit by spending your flex dollars on bandages, antibiotic ointments, and even anti-fungal athlete’s foot treatments. Maximize your FSA dollars by purchasing a variety – boo-boos come in all shapes and sizes, as do bandages.

Sunscreen: You knew this was coming, right? Dermatologists recommend wearing sunscreen year-round to protect against UVA and UVB rays, and, thankfully, sunscreens with SFP ratings of 30 and above are typically covered by FSA. SPF moisturizers are not covered, though, so try to find a sunscreen product that is lightweight enough for year-round, everyday use.