It's estimated that over 4,000 charities are aggressively soliciting contributions of vehicles. Concerned that taxpayers may be getting oversold on how much such contributions actually benefit a charity, the IRS recently issued a consumer alert. The IRS suggests that before donating a car to an organization, you check to be sure the group is a qualified charity. Then calculate the actual fair market value of the car. Only the current market value of the vehicle may be deducted, says the IRS, not the original purchase price or what you think your car is worth.

Last November, President Bush signed the Military Family Tax Relief Act of 2003 providing a number of important tax breaks for those in the armed forces.

* Survivor benefits. The law doubled to $12,000 the benefit paid to survivors of those killed in military service and made the entire amount tax-free.

* Home sale exclusion. The law liberalized the home sale gain exclusion rules so those on extended duty in the armed services can still qualify when they sell their homes.

* Travel expense deductions. The new law provides an above-the-line tax deduction for the overnight travel expenses of National Guard and Reserve members.

* Retroactive provisions. Some provisions are retroactive and could provide tax refunds on amended returns. Contact us if you would like details. You can contact us at (781)453-8700.

If you pay your salaried employees weekly or biweekly on Thursday or Friday, you have a decision to make.

Because 2004 is a leap year, there are 53 Thursdays and Fridays in the year. This means that your employees could be getting an extra paycheck during the year. You must decide whether to decrease each salaried employee's paycheck or to allow each employee to receive extra pay for the year.

For example, an employee earning a salary of $52,000 per year would normally get $1,000 each week. In 2004, that same employee will get $53,000 unless you decrease each check to $981.13.

If you have not yet made provisions for this "leap year" payroll adjustment, you will need to recalculate the per paycheck amount accordingly. For example, if you wait until April to start your adjustment, you would need to make each check for $975 to make the annual salary total $52,000 (13 weeks already paid at $1,000 and 40 weeks at $975).

Business owners should determine whether their payroll software or outside payroll service has taken this special situation into account and is making the proper adjustments. For any assistance you need, give us a call. You can contact us at (781)453-8700

Running a business is hard work. Making a profit is the reward. Wouldn't it be nice to have a tool that shows where the profits begin and how they will grow? Well, breakeven analysis is that tool.

As all business owners know, everyone else gets paid before the company makes a profit. Breakeven analysis shows the relationship between the costs of doing business and the revenues and profits of a business.

"Dynamic Dolls" is a regional toy company that sells a variety of action dolls. Each of the action dolls sells for $10, and each costs the company $6 to produce. The other monthly costs of doing business (rent, insurance, etc.) are $50,000. How many dolls must the company sell before it makes a profit?

The company makes $4 on each doll it sells ($10 minus $6). Let us assume that for every doll sold the company throws $4 in a large bucket that has a $50,000 capacity. How many times must it throw $4 in the bucket to fill it? If we divide $50,000 by $4, we get 12,500 times. At that point the bucket is full, and we have enough to pay the monthly costs of doing business. The company has broken even. It hasn't made money, but it hasn't lost money either.

Once the bucket is full, the next $4 causes the bucket to overflow. The bucket has "runneth over," and each $4 falls to the floor as profit. If the company sells 20,000 dolls, it will make a profit of $30,000 ($4 for each of the additional 7,500 dolls past the 12,500 breakeven point).

Breakeven analysis can help you plan and manage your business. For assistance in using breakeven analysis to improve your profits, give us a call. You can contact us at (781)453-8700

Make 2004 a better year than last by tidying up your financial and tax house. Here are some tips to get you started.

* Identify your tax opportunities for 2004. There are many credits and deductions available to you in such areas as retirement, education, home ownership, and child care. Identify those that will reduce your taxes, and make sure to qualify for all of the deductions and credits that are available to you.

* Plan your portfolio for 2004. Because of the lower tax rates on both dividends and long-term capital gains, think about restructuring your portfolio in 2004 to take advantage of the lower taxes provided by that income.

* Rid yourself of "stuff" you don't use. Are you paying for a cell phone you rarely use? A magazine you never read? A mail-order video service you forgot about? An extra cable box for that basement TV you never watch? A membership to a gym you rarely attend? If so, now is the time to dump those wasted services and pocket the cash.

* Plan for your retirement. Did you know that you could put more money into a retirement account than ever before? If you're age 50 or older, you can even make additional catch-up contributions. And all of these retirement programs allow you to put this money away while reducing your current taxes. Does your employer match some of your 401(k) contributions? Then consider making at least that much of a contribution in order to maximize the benefit of your 401(k) plan.

* Get a grip on your debt. Take a look at your current debt, especially your credit card debt. If you have good credit, and you have greater than a 12% rate on any of your cards, ask the credit card company for an interest rate reduction. Or consider transferring that balance to a lower interest credit card. Remember that personal interest isn't deductible (such as credit card interest and auto loan interest), so consider paying off that debt with a lower rate deductible home-equity loan.

* Get that new filing system started now. Purge your 2003 files. Destroy documents that you don't need. Create new files for your 2004 documents. Keep a tax and financial calendar that shows all deadlines for making payments and filing returns. And if you don't have a filing system, create one in order to organize and locate your tax and financial records.

If you need help with your tax and financial affairs, give us a call. You can contact us at (781)453-8700

With today's low interest rates, homeowners have been flocking to refinance their mortgages. But instead of reducing their payment by the maximum amount, many have increased the size of their mortgage to tap into the home's equity. Part of the new loan pays off the old mortgage, and the remainder is paid in cash.

Although instant cash is always tempting, you should think carefully before cashing out the equity in your home. Whether it's a good or bad idea depends on your financial situation and how you intend to use the cash. For example, using the cash to pay off high-interest credit card balances might seem like a good idea. But first you should look carefully at your personal economic situation. If you can't make the loan payments, you stand to lose your home.

The economy seems to be recovering, but there's still high unemployment and more job cuts being announced every month. Even though interest rates have fallen, mortgage foreclosures are still high. Many individuals are stretched well beyond their financial means. This is not the climate to casually take on extra debt.

Before you increase the size of your mortgage, consider your financial situation. Is your job secure, or is there a possibility of losing your job? If you lose your job, how are you positioned to meet your monthly payments? How quickly could you find another job? What if you need to relocate, but you can't sell your home for enough to cover the mortgage? Do you have a cash reserve for unexpected financial emergencies?

While refinancing might make sense to lower your interest rate or shorten your loan's term, exercise caution when it comes to cashing out your home's equity. Call us if you want to discuss whether refinancing makes sense in your situation. You can contact us at (781)453-8700.

The information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance. For more information on anything in ONLINE ADVISOR, or for assistance with any of your tax, business, or financial strategy concerns, contact our office. You can contact us at (781)453-8700.

Chuckle of the Month

Truths adults have learned —

* Raising teenagers is like trying to nail Jell-O to a tree.

* Middle age is when you choose cereal for the fiber, not the toy.

* If you can remain calm, you don't have all the facts.

*You're getting old when you stoop to tie your shoes and wonder what else you can do while you're down there.

*You appreciate the fact that wrinkles don't hurt.