gooddecisions
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Joined: Dec 22, 2010 13:42:28 GMT -5
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Post by gooddecisions on Sept 11, 2011 10:12:50 GMT -5
Open enrollment for health insurance is coming up next month and I want to make sure I'm doing the right thing for 2012. I've had some change in circumstances with marriage and a baby, so my/our taxes may be a little more complicated.
I really want to reduce our tax burden as much as possible. Combined, our income we will be over 200K, not including 2, maybe 3 investment properties by 2012. Cashflow is pretty even on the 2 current rentals. We will likely buy a new home in 2012 and rent the one we're in out. We also have taxable brokerage accounts.
We'll have about 11,000 in daycare expenses for 2012. Should I sign up for a flexible spending account (FSA) to have some of this expense pre-tax or is there a child care/dependent care credit that we will qualify for which would be more beneficial?
The baby and I will be on a comprehensive plan through my employer and DH is on an HDHP sponsored by his employer. This means he could probably open an HSA if that makes any sense for future medical, dental and vision expenses. I have an HSA left over from my previous years on an HDHP, but the balance is now less than $500 and I can't make anymore contributions unless I switch back to the high deductible health plan.
We're already maxing out 401(k)s by contributing 16,500 each into our plans. We claim what we can on our owner occupied home and charitable contributions. We don't have student loans, car loans, credit card debt. Only the mortgages, none of which are underwater.
Any advice from the experts on what we should start setting up or enrolling in now?
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mwcpa
Senior Member
Joined: Jan 7, 2011 6:35:43 GMT -5
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Post by mwcpa on Sept 12, 2011 5:41:08 GMT -5
"We'll have about 11,000 in daycare expenses for 2012. Should I sign up for a flexible spending account (FSA) to have some of this expense pre-tax or is there a child care/dependent care credit that we will qualify for which would be more beneficial"
as your spouse works yes (if the he/she did not, then you may not qualify for the credit or the contribution may not be deductible), and she/he you may want to consider maxing out the child care FSA... the amount you can contribute is "pre-tax"... this is one of the few places where the "pre-tax" amount provides a better benefit than the credit (in most cases)
"Any advice from the experts"
Sit with a local qualified tax professional.... you have significant life changing events that cannot possible be answered fully or responsibly in a forum like this.... while posters here may give you some direction and stories about what they did, chances are your situation is not the same.... hire a pro....
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alabamagal
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Joined: Dec 23, 2010 11:30:29 GMT -5
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Post by alabamagal on Sept 12, 2011 12:28:29 GMT -5
I'm not a CPA, but have been through the tax thing quite frequently.
In general, you can't beat tax-free contributions at your tax level (FSA/HSA/401k). They all have limitations, as long as you are aware of them, I would go ahead with them.
Once you get investment properties and high income, you will likely need a CPA. Start interviewing them now.
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moneymaven
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Joined: Dec 26, 2010 10:05:04 GMT -5
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Post by moneymaven on Sept 12, 2011 13:46:54 GMT -5
Good - congrats on the baby and that things seem to be steaming along fairly well.
Any advice from the experts on what we should start setting up or enrolling in now?
I think this is an important question. One that should be asked of a CPA in your home state and in person. Take the time and spend a bit of money for this advice. I think it will serve you well to plan out loud with a professional. Best wishes for 2012!
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gooddecisions
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Joined: Dec 22, 2010 13:42:28 GMT -5
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Post by gooddecisions on Sept 12, 2011 16:06:24 GMT -5
Thanks for weighing in. I've done a bit more reading and my company does offer a dependant care flexible spending account up to $5000 (which would be pre-tax). I'm leaning towards enrolling in that program since it sounds like that will result in about a 30% savings. Neither of us have ever gone to an accountant and have always done our own taxes. If we have to go that route, I hope we can find a good accountant who knows what s/he is doing.
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mwcpa
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Joined: Jan 7, 2011 6:35:43 GMT -5
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Post by mwcpa on Sept 13, 2011 6:18:43 GMT -5
"Neither of us have ever gone to an accountant and have always done our own taxes. I hope we can find a good accountant who knows what s/he is doing." A good tax professional will do more than just "do your taxes".....a good tax professional will offer advise and be available to discuss life changes like the ones you note..... while "turbo tax" and others like that can "do your taxes" it cannot offer real advise for real situations.... that is were a qualified tax professional beats the computer..... If one is looking for a good tax professional....here is a link to some data from the IRS.... www.irs.gov/compliance/enforcement/article/0,,id=106775,00.html |
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moneymaven
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Joined: Dec 26, 2010 10:05:04 GMT -5
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Post by moneymaven on Sept 13, 2011 13:09:59 GMT -5
A good tax professional will do more than just "do your taxes".....a good tax professional will offer advise and be available to discuss life changes like the ones you note..... while "turbo tax" and others like that can "do your taxes" it cannot offer real advise for real situations.... that is were a qualified tax professional beats the computer..... 
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