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When you’re a work at home mom, juggling career and family obligations during the holidays, every penny counts — so why not leverage all the tax breaks you can?

Financial moves
to make before year end

In this issue of Working Mom 3.0, writer Stephanie Taylor Christensen reveals money-maximizing tax strategies to take advantage of before 2012 ends.

The holidays present a unique conundrum for work at home moms. It's great to be home with the kids over the winter break, but it's that much more challenging to focus on your work. But, although your mind is fixated on all the things you need to do to give your family a memorable holiday, there are a few tasks you must add to your pre-New Year's to do list to maximize the value of the money you worked so hard for this year.

Establish and contribute to a solo 401k plan

Remember that 401k plan you had when you worked for someone else full-time? You've got similar retirement plan options as a self-employed, work at home mom — especially if you don't intend to hire employees. The solo 401k (also called an individual 401k) allows businesses with only one full-time employee-owner to contribute up to $17,000 pre-tax dollars in 2012. Major investment brokerages, like Fidelity, Vanguard and Charles Schwab, all offer the plans, and they're a simple way to invest in your retirement goals — while minimizing the amount you'll owe the tax man. The catch is, you must establish the plan by Dec 31, 2012 to make contributions for this tax year, and it may take at least a week to set up. If you haven't established an EIN for your business yet, take a few minutes to do so online. (You'll need one in order to get a solo 401k.)

Buy the assets you need now

Add any business-related equipment, like a new computer or office furniture, to your holiday shopping list this year. These and related items for business use that you purchase and place into service before the end of this year qualify you to take an immediate write-off of up to $139,000 towards the cost of new or used assets. (If you wait until next year to buy, the deduction amount could decrease to just $25,000.) Business vehicles purchased in 2012 also count for a deduction of up to $11,160 or more, if you purchase a larger SUV or truck.

Start projecting for next year

If you're rushing to finalize billing and collect outstanding payments this holiday season, take a moment to consider what will best suit your needs this year, and next. If you expect to make more income next year, expediting this year's billing might help to minimize your higher tax bracket exposure in 2013. If you expect to make about the same or less income next year, waiting to collect a few payments into 2013 might weigh your tax burden for each year more evenly.

*This article is intended for entertainment purposes only. Always consult a tax professional for specific tax-related guidance.

Working Mom 3.0

The modern woman is redefining what it means to have a successful career. Rather than feeling torn between climbing the corporate ladder and having a happy family life, many women are choosing to merge the two and transition careers from a traditional role to a more flexible one. Working Mom 3.0 is reinventing the definition of "working mom," as office hours are held at home and revolve around nap times.

This column begins by chronicling the experiences of Stephanie Taylor Christensen, a former marketing professional turned self-employed stay-at-home mom, writer and yoga instructor, as she strives to redefine having it all" on her own time and terms.

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Tags: tax deductions

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Comments on "Working Mom 3.0: Holiday money matters"

Erin December 05, 2012 | 12:08 PM

Great tips, especially regarding purchasing office equipment THIS year instead of waiting until next. I forgot it can be used as a write-off, and have been wanting/needing a desk.

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