Enjoy The Holiday Season While Being Financially Responsible

STUDIO CITY (KCAL9) — You can enjoy the holidays without financial stress.

Casey Mervine, a financial consultant from Charles Schwab, stopped by KCAL9 Thursday to give tips on how to enjoy the holiday season while still being financially responsible.

Tips to ensure an enjoyable and financially responsible holiday season: 

Develop a spending game plan:

• Create a budget and begin to set aside money for upcoming big-ticket items from gifts to holiday meals and celebrations.
• If you're having trouble staying on track, use a spending tracker to record each of your purchases.
• It will help you see precisely where your money is going and give your ideas on where to make changes (or budget corrections) throughout the season.

Turn Spending Into Saving:

• Instead of giving ties and socks this holiday season, you can reap potential tax benefits if you open or contribute to your kids' or grandkids' college savings plan of any sort before the year ends.  One option, for example, is a 529 College Savings plan, a state-sponsored program. Advantages to this option include:
  • Earnings in a 529 plan grow federally tax-deferred, which means your money has a chance to compound faster because you don't have to pay taxes on current investment income or capital gains.
  • Also, if you invest in your own state's 529 plan, you may benefit from state income tax deductions on contributions or state tax exemptions on withdrawals.
  • Here's another tax advantage: You can contribute a lump sum of up to $70,000 to one or more 529 plans in a single year (a married couple can contribute $140,000) without incurring the gift tax—the IRS views the money as an annual $14,000 (or $28,000 for spouses) gift over five years, excluded from gift taxes.

Charitable Gifts:

• Skip the gift exchange and choose a charity. Remember, your financial donations (money and appreciated stock) are tax-deductible, as are donations of goods (clothes, books, etc.) to qualified charities.
• The standard deduction for tax year 2013 is $6,100 for singles; $12,200 for married filing jointly. For public charities (churches or schools for example) you can deduct up to 50% of your adjusted gross income; for private charities (private foundations), 30%.
• Whether or not your charitable contribution is fully tax deductible depends on its form. Possible contributions include:
  • Cash: This is usually fully deductible, up to 50 percent of your adjusted gross income.
  • Tangible personal property: This can include used clothing and household items, even cars.
  • Income property: Includes items created or used in a trade or business.
  • Long-term capital gain property: If you donate appreciated long-term assets such as stocks, bonds or mutual funds you've held for more than one year, you can usually deduct the full market value of your donation, up to 30% of your adjusted gross income.
  • These things can be tricky, so if you're making large contributions, I'd check IRS publication 526 for details or talk to your tax professional.

Talk to a professional:

• The holidays are an overwhelming time for many, but one way to plan ahead and check one item off your list is to talk to a financial professional about strategies and options to plan and budget for your holiday finances.
• For additional resources and budgeting tools, you can visit SchwabMoneyWise.com and click the "Calculators & Resources" tab.