College Financial Aid Seminars

I want to talk with those of you that have students entering the 11th and 12th grade.

For those of you with juniors in high school, it is not too early to start to college discussion. SAT and ACT tests should be taken during this fall. Your student should start narrowing down his/her choices of what schools they want to attend. College visits need to be planned. Part of that choice centers around cost.

For those parents with seniors, your students should already have a good idea of where they are applying and be ready to fill out applications. Again – an important part of that choice is cost.

Many families are caught in the middle. They make too much money to qualify for most needs- based financial aid. Yet they do not make enough money to pull $100,000 out of their budget in the next four years without it causing a problem. This is where non-needs-based financial aid comes into play.

Financial aid can be in the form of grants, scholarships, loans or work study. It may come from the federal government, the state government, the college itself or from private sources. The basis for awarding most financial aid is the FAFSA. Private institutions may also require a CSS Profile form.

How you complete the FAFSA form can have a major impact on the amount of financial aid you receive. Like tax planning, you can do financial aid planning to achieve the most beneficial numbers for the FAFSA. Much of this financial aid planning needs to be done during the student’s junior year, but some can still be done in the senior year.

Gerri Harrison Financial Services will be conducting financial aid seminars this fall to provide you with the basics about financial aid. The schedule of seminars is listed below. If you would like to sign up for one of these seminars go to www.GerriHarrison.com or call 607-729-4144.
 

Tax harvesting can reduce your taxes for 2008

Many of you have recently received your 401(k) statements in the mail or reviewed them on line – and some are now calling them 201(k)s. Unfortunately the losses that you have in your retirement plan are not deductible.

If, however, you have any taxable, non-retirement investment accounts in which you have losses you may be able to claim them to reduce your current years’ taxes. There is a process known as tax harvesting that you may want to consider.

I am in agreement with most financial planners that selling assets simply because of a downturn in the market is generally not a wise idea. Good reasons for selling include: if you have taken more risk than you are comfortable with; if you are not diversified properly; if you feel you own a stock or mutual fund that will never increase in value; or if you will need cash in the near future. Tax harvesting is also another reason to sell.

With tax harvesting you sell enough mutual funds, stocks or other investments to generate up to a $3000 capital loss. If you have capital gains from other sources you can generate capital losses up to the amount of the capital gain plus the additional $3000. On your income tax return you will then reflect the $3000 capital loss. If you are in the 25% tax bracket the tax savings would be $750 federal plus your state tax savings. For NYS taxes that savings would be an additional $210.

Any loss in excess of the $3000 will have to be carried forwarded to the next tax year.

To avoid the loss being disallowed you cannot re-purchase the same mutual fund or stock for at least 30 days. The plan is if you want to own the same mutual fund/stock is to put the money in a money market account for the 30 days and then re-buy the asset. If you do not want to re-purchase that same mutual fund/stock you sold then you can take the money directly and re-invest in the asset of your choice.

The 30 day waiting period is very important. If you do not wait the 30 days you cannot claim the loss, it is disallowed. This is known as the wash-sale rule.

There is, of course, a risk. If the stock or mutual fund increases in price in the next 30 days you will miss that part of the up-swing. You need to consider the possibility of an increase in stock price against the tax savings.

Be sure that prior to selling a mutual fund or stock that you actually have a capital loss. Just because the value dropped in the current year does not mean there is a tax loss. There is a loss if the value of the asset now is less than what you originally purchased it for.

If you bought a stock ten or fifteen years ago you may still have made a profit on the stock even though it is not as large as it was at the beginning of 2008.

If you have stocks or mutual funds that you bought over a period of time you may have some shares that would currently sell at a loss and some shares that would currently sell at a gain. You can specifically identify which shares you want to sell to generate the tax loss. Inform in writing your mutual fund family or brokerage house exactly which shares you want to sell. Identify them by the stock number if available or by the date of purchase.

For many of you who received a check from the involuntary sale of Energy East stock when the merger occurred, tax harvesting of other stocks you own can be a way to reduce the amount of tax you may have to pay on the sale of the Energy East stock.

Your stock/mutual fund sale needs to be transacted prior to December 31st to claim the loss for 2008.

If you need assistance in determining if you have losses that are eligible or what the effect would be on your personal tax situation be sure to call Gerri Harrison CFP EA at 607-729-4144.


Why Gerri Harrison Financial Services?

Gerri Harrison Financial Services is an incorporated business involved in all areas of financial services. It is our mission to provide you with a lifetime of services. We want to be part of the family. We want to pack your child off to college and you off to retirement. We want to be there through the christenings, weddings, illnesses and deaths. Whenever there is a financial matter you have a question about, I want the first thing you think of to be "Gerri will know how to handle that".

• provides tax preparation for individuals and small businesses including sole-proprietorships, partnerships, corporations and LLCs

• assists in tax planning to minimize taxes being paid

• does small business consulting including recordkeeping assistance, sales and payroll tax help, software training, financial statement analysis and business start-up help

• provides cash and debt management services including assistance to get debt paid off, lower everyday expenses and create a personalized spending plan

• provides financial education through www.FinancesForEveryday.com and seminars

• assists students in getting maximum college financial aid (seminar information below)

So, are you ready to start your personal financial planning process?

Call me today - Gerri Harrison - (607) 729-4144

If you would like a copy of Gerri's articles from prior submissions, just click on the archives link above. All articles are provided by Gerri Harrison and cannot be copied or reproduced without prior written consent.

Please check back soon for more articles that can help you with your financial future.