Tax Withholding: Should You Change Yours?

With tax season now in full swing, many tax and financial experts are encouraging taxpayers to review their 2012 withholdings now, as it may be that, due to economic conditions, taxpayer’s income may be reduced due to layoffs or cutbacks on the job.

Essentially, this means, you could be having more tax taken out of your pay than you will be liable for at the end of the year.

Most workers have their employers withhold taxes from their paychecks. If you correctly fill out the W-4 Form that your employer gives you, then the amount taken out of your paycheck should be enough to avoid any interest and penalties.

Typically, as long as you owe less than $1,000 in tax after you account for withholding and tax credits, you’re in the clear. Also, if you paid at least 90% of the tax you owed in the current year, you usually won’t get hit with a penalty.

The following circumstances should prompt any taxpayer to adjust his W-4 Form to lower both his federal and state withholding taxes:

1. A taxpayer or his spouse has been laid off in 2011 or 2012. Usually, when both spouses are gainfully employed the taxpayers tend to increase their W-4 withholdings. The loss of the job for either of the spouses could be reason enough to reduce the federal and state tax withholding by claiming the maximum allowable exemptions.

2. Taxpayers whose spouse’s own and operate a business may have in the prior years increased their federal and state withholdings at their regular job to ensure they meet the income tax obligation from their spouse’s business profits. However, for the tax year 2012 the profits from their spouses business may have either been eliminated or substantially reduced. These taxpayers might find it prudent to file a new W-4 Form and drastically reduce their federal and state income tax withholdings to reflect the reduced tax liability from the spouses business.

3. Taxpayers who have recently had a baby or claiming elderly parents as dependents may also find that they are entitled to additional dependent allowances. Thus, they should consider filing a new W-4 Form to reflect the additional dependent allowances the taxpayers are entitled to claim on their tax returns.

4. Taxpayers who have sustained substantial capital losses in the stock market are entitled to deduct up to $3,000 of the capital loss against their salary and other ordinary income. These taxpayers may be entitled to claim an additional withholding allowance.

5. Taxpayers faced with reduced taxable income due to a salary reduction, the taxpayer might find themselves being placed in a lower tax bracket. Both these factors would entitle the taxpayers to reduce federal and state income tax withholdings by claiming additional allowances.

A taxpayer’s previous strategy of overwithholding so as to plan for a tax refund may not be a smart idea for 2012 if you’re faced with an extremely difficult time meeting your current financial obligations. It’s better not to use credit cards or lines of credit to fund your current obligations and instead, increase your paycheck by maximizing your dependent allowances you are legally entitled to by the IRS.

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.T

Spring Lawn Care Advice

When March arrives, a lot of people start thinking about their lawns. Some think, “oh no, here comes mowing season again…. work, work, work.”

Others relish in the fact that winter is almost over and the grass will start to turn green again soon.

Our advice… “Don’t work harder.  Work smarter.” 

That is an adage from the business world that is also pretty good advice about how to approach the management of your lawn.  We can do all the right things by buying good tools, quality fertilizers and weed killers and setting aside time each weekend for lawn maintenance.  But along with devotion, some wisdom about how to go about the art of lawn care is necessary to be successful.

A good example is how you use your lawnmower.  Just rolling it out of the box and starting to mow is not the smart way to use this tool.  You must adjust it and use it purposefully so each mow accomplishes the goals of the season your yard is in. 

For example, in the early spring after the yard has sat idle for several months, it is a good move to bring the mower out and put it on the lowest setting and mow a lawn that is not active.  It seems silly but “scalping” the grass removes the extraneous material from the grass seedlings as well as cleans the soil around the grass to make early growth more effective.

As the season continues, keep raising the height of the blades every 3-4 weeks until you are finally leaving your grass blades standing about three inches tall.  This may seem like a shaggy grass but if you mow faithfully each week, it will be long, but well-groomed.  The general rule is, the depth of the roots matches the height of the plant above the ground.  So if you let your grass get longer in the summer months, it will develop deeper roots and gather moisture and nutrients more easily at that depth.

Also, be sure to keep your mower in good repair.  A well tuned machine uses the gas you put in it more efficiently and produces less smog, which is good for the environment.  But by putting your mower in the shop early in the season, the mechanics can make sure there are no leaks of oil or gas that could get down into your turf and kill sections of your lawn.  They can also make sure the blade is balanced to cut evenly for the entire span of the blade which is crucial for a smooth cut each time.

Consistency in maintenance is the heart of any good lawn care program.  Along with a routine of mowing, maintaining a disciplined watering schedule keeps your lawn on a steady diet of moisture that is critical for growth.

Also, use a scheduled but restrained discipline for weed control and fertilizer.  Apply applications every 2-3 weeks alternating weed killer and fertilizer but do not exceed that schedule or you will overwhelm your grass.  If the weeds need more work than this schedule can provide, pull them by hand.  This kind of attention to detail and discipline from you as a homeowner is the smart way of managing your yard and it will reward you with the healthy turf that you want to surround you throughout the year.

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Home Price Index Lowest Since 2003

Single-family home prices ended 2011 on a downbeat note as a drop in prices in December sent the seasonally-adjusted index to its lowest level since 2003.

The S&P/Case Shiller composite index of 20 metropolitan areas declined 0.5 percent on a seasonally adjusted basis, in line with economists’ expectations, after falling 0.7 percent in November.

The 20-city index fell to 136.63, the lowest level since January 2003.

“After a prior three years of accelerated decline, the past two years has been a story of a housing market that is bottoming out but has not yet stabilized. Up until this latest report we had believed the crisis lows for the composites were behind us,” David Blitzer, chairman of the index committee at Standard & Poor’s, said in a statement.

“The pick-up in the economy has simply not been strong enough to keep home prices stabilized. If anything it looks like we might have re-entered a period of decline as we begin 2012.”

Prices in the 20 cities dropped 4.0 percent year over year, topping expectations for a drop of 3.6 percent.

For the fourth quarter, the national index fell 1.7 percent on a seasonally adjusted basis.