Four Tips To Save For College

Depending on grades a great score on the ACT or SAT, your future college student could have a big scholarship in his or her future. If you – and your student – haven’t been saving for college, how can you save as much as possible before the first tuition bill arrives? Whether you have a short amount of time or a decade, these four tips will give you a start on how to save for college.

Start with a goal

A college savings goal consists not only of a dollar amount but also includes a date or deadline. The most common way to compute a college savings goal is to divide the total dollar amount needed by the number of years you have to save. Another popular goal-setting method is to multiply the student’s age by $2,000. This will give you roughly the amount you should have in savings to cover 50 percent of the student’s college expenses.

Use the 10 percent rule

Could you live on 90 percent of your household income for a period of time? Probably so. Most people could, simply by looking for ways to reduce their spending. While you budget to live on 90 percent of your take-home pay, the other 10 percent goes into an educational savings account (ESA), 529 college savings account or even an interest-bearing savings account (or some combination of these). Depending on your total household income, 10 percent a year could add up to quite a bit between now and the start of college.

Save income from part-time or summer jobs

Even better than the 10 percent rule is the 100 percent rule – but only make it apply to income earned from part-time or summer jobs that your student works. A student earning $8 an hour working year-round in a part-time job can earn up to $8,000 during a single year. That’s a sizeable contribution toward college expenses! Parents can double that amount by offering to match dollar-for-dollar the amount their student saves each year.

Sell unused and unwanted items

Collectibles, antiques and even used appliances have the potential to bring in a handsome sum when sold online or in yard sales. Put your family and relatives to work scouring their attics, basements, and garages for anything of value that can be sold to add to your college savings account. The more unused or unwanted items you can sell – even for small dollar amounts – will eventually add up to help meet college expenses.

Need help developing your college savings plan? Donohoo Accounting can get you started. Contact us today to schedule your free consultation or call 513-528-3982.

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Get Your Money in Order for the New Year

This year is quickly coming to a close. Get ahead of the game and get your money in order for the new year. Don’t know where to begin? No worries! Here are some helpful tips.

Get Organized

Organize Concept Metal Letterpress Word in Drawer

You can file taxes after the new year, so now’s a good time to get all your ducks in a row. In January and early February, you’ll be receiving important documents in the mail including your W2, mortgage interest statement (1098), or student loan interest statement (1098-E.)Most companies, by law, have until January 31 to mail statements, so keep an eye out.

Designate a single location where you’ll keep these documents so they are easily accessible when you’re ready to file taxes. You can use a folder, drawer, box or other container. Put a large “taxes” label on it and use the container for tax-related documents only, not other mail or bills. But you may want to keepit near where you sort mail, so you can immediately put the documents in their home.

Then start gathering other items you’ll need for filing taxes, including charitable contributionand expense receipts. Qualified expenses depend on your situation, but could include expenses related to childcare, medical, job (mileage, supplies, relocation) and education. Donohoo Accounting Services can help you navigate the complicated tax structure. In addition to income tax preparation, we handle payroll tax prep, tax levies and liens, back taxes, end tax penalties, estate tax return preparationand more.

Make Year-End Charitable Contributions

Many charities do a final fundraising push at the end of the year, so you’ll probably receive solicitations asking for support. If you want to help non-profit organizations while also possibly reducing your taxable income, make your donations by December 31. Contributions are deductible in the year made. Thus, donations charged to a credit card before the end of the yearwill count in that year – even if the credit card bill isn’t paid until later. You’ll want to make sure the charity is eligible. Many times, the charity will note its “501c3” status, which is IRS speak for tax-exempt. You can also use the IRS Tax Exempt Organization Search.

Take an Assessment of Where You Stand Financially

Magnifying glass showing assessment word on grey background

Now’s a good time to take a hard look at your income, debt, expenses, retirement funds, college and emergency savings. Are you on track to meet financial goals? If yes – great! If no – why are you falling short? To properly move forward into the next year, you need a realistic picture of where you are now. Put pen to paper and write down all the numbers. It helps to see everything in black and white.

Make a Financial New Year’s Resolution (Or Better Yet – Create APlan You’ll Stick With All Year)

Once you know where you stand currently, you can create a plan for the upcoming year. Perhaps you want an emergency savings fund. You never know when the furnace is going to go out, someone in your family has a medical issue or there’s a company layoff. Experts say you should have enough emergency savings to cover three to sixth months of expenses. Maybe you have all your financial bases covered but want to take an exotic vacation? Set the goal, create a plan and start saving for that overseas beach trip. Although it’s a busy holiday season, set aside time to get your money in order for the new year. Once you’re ready to file taxes, turn to Donohoo Accounting Services, locally owned and operated by Cincinnati native, Duane Donohoo.

Tips For Budgeting For The Holidays

The holidays are fast approaching and so are the bills associated with them.  Donohoo Accounting has a few tips for budgeting for the holidays.  We are going to start by making a list and then checking it twice, review your receipts from last year to judge spending habits, and shop for bargains once you have an idea of what you must buy and for who you are shopping for.  Should I pay cash or use credit?  Using our tips for budgeting for the holidays will help you decide.

Make a list and check it twice.

A list will help you budget!
A list will help you budget!

Professionals agree that it helps to write down a list of all the people for who you plan to shop before you venture to the stores or turn the computer on. Next, to each person’s name write down your gift idea for that person, and how much you can spend. By doing this you will have a clear idea of your total dollar amount needed to buy the gifts for your family and others.

Review your receipts and bills from last year.  

Don't forget to save your receipts!
Don’t forget to save your receipts!

Reviewing receipts will help give you an idea of the dollar amount you spent last year on the holidays and if you used a credit card how long it took you to pay them off.    Make sure to save your holiday receipts from this year if you do not have the ones from the previous year to watch spending for next year.  The holiday costs add up quickly and being able to see the totals will

Save your holiday receipts from this year and either total them daily or add them up two weeks before the actual holiday.  Expenses add up fast during this busy season.  Seeing your totals will surprise you with a reality check as to how much more you spent this past year on the holidays.

Using credit during the holidays?

Don't go overboard with your credit cards!
Don’t go overboard with your credit cards!

Think twice before you use your credit card this holiday.  If you do decide to use them take only the ones with the lowest interest rates or bonus offers.  After using the credit cards be sure to check for unauthorized charges.  If you do find charges not made by you report these changes to your credit card company immediately.

TIP: Before you go shopping label envelopes with everyone’s name on them and put the appropriate amount of cash into each envelope.  This will help you not to overspend.

Shopping for bargains.

Shopping for bargains can be done earlier than later.  Once you have decided what to buy each person on your list start watching online advertisements and ads.  Shopping from the same retailer can save you money on shipping costs. 

You may have been a last-minute holiday shopper last year, but planning now can help you have a happier, stress-free holiday season this year. If you follow some of these simple tips, you should have a successful and financial stress-free holiday season! Looking for more ways to save money than call Duane Donohoo at 513-528-3982 or visit our website at Donohoo Accounting Services.

 

 

What Qualifies As A Donation On Your Taxes

The IRS defines a charitable contribution as “a donation or gift to, or for the use of, a qualified organization.” You must abide by certain rules to claim charitable donations on your taxes legitimately. Do you know the tips for handling donations on your taxes?

 

You must abide by certain rules to claim charitable donations on your taxes legitimately.
You must abide by certain rules to claim charitable donations on your taxes legitimately.

 

Charitable Contributions what Are They?

Donations include property such as vehicles, household items, clothing, land and cash contributions.  You can only deduct the fair market value (FMV) of any property you donate.

How Do You Determine The Fair Market Value?

Fair market value includes donations of noncash property of items like clothes, household items, land and cars additionally stocks may qualify. The FMV comes down to the price the item you are donating and how much it would sell for on the open market.

Do Your Expenses Qualify as a Charitable Tax Deductions?

You can claim a tax deduction for expenses you acquire:

  • To cover a live-in student who is sponsored by a qualified organization.
  • Out of pocket while serving as a volunteer for a qualified organization.

For questions of what counts as a deductible charitable contribution, consult Donohoo Accounting Services.

 

For questions of what counts as a deductible charitable contribution, consult Donohoo Accounting Services.
For questions of what counts as a deductible charitable contribution, consult Donohoo Accounting Services.

 

Which Organizations Qualify to Receive Charitable Contributions?

The government allows the following types of establishments qualified to take tax-deductible donations:

  • Religious (such as churches, mosques, synagogues and temples)
  • Literary
  • Educational (such as nonprofit schools)
  • Charitable (such as American Red Cross, Boys and Girls Club of America, Goodwill, Salvation Army and United Way)
  • Those working to prevent cruelty to children or animals
  • Scientific
  • Federal, state and local governments (for contributions intended for public purposes)

These Charitable Contributions Are Not Tax Deductible?

As a general rule, donations to individuals, political organizations and candidates for public office are not tax deductible. The same goes for gifts of money or property given to:

  • Homeowners associations
  • Sports clubs
  • Chambers of commerce
  • Civic leagues
  • Social clubs
  • Labor unions
  • Civic leagues

How Can I Be Sure I’m Donating to a Tax-Exempt Organization?

The easiest way to confirm that you are donating to a tax-exempt organization is to ask the organization directly for proof of their tax-exempt status. You also can search for charities using the Exempt Organizations Select Check tool or confirm tax-exempt status by calling the IRS at (877) 829-5500.

Cash Donations Receipts To Keep

If you donate by check, cash or some other monetary gift, you must provide written communication such as a bank record, payroll deduction records or written acknowledgement from the tax-exempt organization with your tax return. This written proof must include:

  • The name of the organization.
  • The date you made the contribution.
  • The amount of your contribution.

 

The amount of your contribution.
The amount of your contribution.

 

If you still have questions about what is a taxable donation or what constitutes a taxable donation please contact Donohoo Accounting at 513 528 3982.  We specialize in helping small businesses with all you taxable needs.